Dáil Éireann debate -
Tuesday, 5 Dec 1967

Vol. 231 No. 9

Committee on Finance. - Vote 6—Office of the Minister for Finance (Resumed).

Debate resumed on the following motion:

That the Vote be referred back for reconsideration.

—(Deputy T.F. O'Higgins).

Mr. T.J. Fitzpatrick

(Cavan): The Estimate for the Department of Finance has been availed of to provide the House with an opportunity to discuss the devaluation of the pound sterling which took place a short time ago. Following the devaluation of the pound sterling by the British Government, our Minister for Finance announced, practically simultaneously, that his Government had decided to follow the decision of the British Government and to devalue the pound sterling to the same extent. It appears that the Government have no alternative but to take this step. That decision, followed by the state of affairs which has been highlighted by the foot and mouth disease in England, clearly points out how closely associated our economy is with the British economy. It clearly demonstrates that our economy and the British market and the British economy are interdependent.

The Minister for Agriculture and Fisheries has spoken of what a catastrophe it would be if the foot and mouth disease were to strike this country. Television and other advertisements point out clearly that the cattle industry is our principal industry and that were it to suffer an attack of foot and mouth disease, it would put back this country several years. I do not propose to indulge in a historical survey or to speak on those lines further than I think necessary.

It is a good thing that the Government at least now realise how important agriculture is to this country, and, in particular, our cattle industry. I say that because I can clearly recollect a period in our history, not so very long ago, when the Fianna Fáil Party and some of the present members of the Fianna Fáil Government preached throughout this country that we could carry on independent of the British market. As a young boy on an Irish farm, I remember distinctly listening to speeches by some members of the Government such as Deputy Aiken, Deputy MacEntee and others who at that time were trying to create a public opinion in this country, which suggested that it was a crime to own ten or 11 cattle. I distinctly remember the speeches of those Ministers who tried to create the feeling that there was something dishonourable in owning cattle, in having ten or 11 bullocks—"the land for the people and the road for the bullocks." I do not want to go on on that line beyond saying that I think it cost this country's economy a great deal of money. Were it not for that silly policy advocated by Deputy MacEntee, Deputy Aiken, Deputy S. Lemass and other senior members of Fianna Fáil, this country would now be in a much better economic position.

I am convinced, as much as I can be convinced about anything, that when the Second World War came along in 1939, if instead of having an agricultural economy here in a state of chaos, with farmers impoverished, the land derelict and not carrying anything like the stocks of cattle it should have been carrying, as a result of Fianna Fáil policy over ten years, we had had a healthy agricultural community, land that was rich and producing as much as it should, land well stocked with cattle, this country would have been in a position to reap a rich harvest during the years of the Second World War. We would have been able to put the farmers on their feet and the economy generally on its feet. The present Fianna Fáil Party and the Governments of that Party who ran the country, down through the years, have a good deal to answer for, but at least it is refreshing that after all these years, they do accept the fundamental truth preached by this Party from 1922 on, that the backbone of the economy of the country is the agricultural industry and that the backbone of that industry is production of cattle, as has been proved beyond yea or nay over past years.

I should like to ask the Minister what proposals the Government have to offset some of the disadvantages devaluation will bring. I am told that the cost of house building will increase directly as a result of devaluation. Can the Minister give any assurance that the Government will do something to offset that? Since the standard grant for private houses was fixed at £275 in 1948, the Government, by taxation, have reduced the effective value of that grant to about £150 by the turnover tax and wholesale tax. That reduced grant will be further attacked and reduced in value by devaluation. I hope the Government will do something to offset that.

The cost of living will definitely go up as a result of devaluation. There is not much use in the Minister telling the House and country that the increase will not exceed two per cent because those who have given the matter considerable thought believe that it will increase by approximately four per cent. The Minister may say that there was devaluation in 1949 but he should remember that there were food subsidies in operation then and as a result the increase in the cost of living was cushioned and controlled. There are no food subsidies now. On the contrary, we have since had a direct tax on food and on the necessaries of life and the cost of living has been increased by the turnover tax and the wholesale tax. Has the Minister any proposals to deal effectively with the altered situation compared with 1949 when the cost of living was controlled through food subsidies which the Minister's predecessors or seniors undertook not to remove but which we know they did remove? That is the altered situation and I should like to know what the Minister proposes to do about it.

The cost of living will be increased by increases in various commodities and the increased cost of fuel for transport of these commodities. If the cost of living is to be kept under control, the Government must immediately reduce taxation. In fact it is thought that taxation could and should have been reduced before now.

In this debate there has been considerable discussion about the "Save the West" campaign. I come from a constituency which is very often allowed to fall between two stools. Cavan constituency is not regarded for all purposes as being one of the western counties. I know it is included in one of the 12 western counties but for the purposes of various sections of the Land Act, 1965, it is not regarded as being in the West. It is not regarded as one of the congested counties. As a result, Cavan is suffering. Here and now I want to make a special appeal for Cavan constituency. It is a county and constituency that deserves and should get special treatment. Its population is declining rapidly. We are at the stage when, according to a report from consultant town planners, the death rate is about to exceed the birth rate. If that happens, as is forecast by these consultants, then even if emigration were totally arrested—and we have very considerable emigration from Cavan—the population will continue to decline, and decline drastically over the next number of years.

I should like to say something about drainage in Cavan. The principal river affecting the county is the Erne, and the local representatives in the county have been agitating for a number of years to have it drained. We were told that until Lough Erne and the part of the Erne in Northern Ireland have been drained, nothing could be done about it. The Northern authorities have now drained their portion of the Erne and, notwithstanding that, nothing at all is being done about the drainage of the River Erne in Cavan.

An Ceann Comhairle

A discussion on drainage would not be relevant on the Department's Estimate.

Mr. T.J. Fitzpatrick

(Cavan): I am making the point that, like the other western counties, the county of Cavan is in need of special treatment, and I am seeking to point out to the Minister in this economic debate that the Government have fallen down in their treatment of Cavan and what is necessary to be done. I do not intend, Sir, to attempt to go into a detailed debate on drainage or on some other matters I have to mention. As I say, the county badly needs drainage and the Government have done nothing about it, and, as far as we can see, there is no hope of their doing anything in the foreseeable future.

When a Government spend money on a large scale in subsidising industry, they should see to it that that money is well spent, that the industry is properly vetted, and that the money which is to be put into it provides employment. I speak about an industry in Cavan town which we all welcomed and which we all hoped would provide much wanted employment in the town and, indeed, we welcomed the then Taoiseach, Deputy Lemass, down to Cavan about three years ago to open this undertaking. There is £176,000 of public money in this factory and there are at present 11 people employed in it. You can count them on the fingers of your two hands plus one, and there never were more than about 35 people employed in it.

Whether or not this was a Common Market mishap, or an industry built in anticipation of entry into the Common Market on 1st January, 1964, I do not know, but I can tell the House this, that it is a source of great disappointment to find that £176,000, approximately, has been allocated for this factory, of which £150,000 has been drawn, and yet there are only 11 people employed in it at the present time. This is a disgrace and a waste of public money.

I do not know whether there were any loans or other assistance given to it or not, but I do ask that if the Government have not sufficient control over undertakings like this which benefit so much out of public money they will see to it that proper employment is given and if proper employment is not given, that the buildings, et cetera, will be made available to other undertakings who are prepared to give employment. If they have not got that authority and if that condition does not apply to this grant, then the sooner it applies the better. I think any Deputy will agree with me that the spending of £170,000 of public money for the provision of 11 jobs of an uncertain nature is something that cannot be justified and something that should be deplored.

I wonder was this undertaking properly investigated before the Government sanctioned the grant of £176,000. I am not against industry, I am for industry. I am for industry in rural Ireland. Cavan badly needs worthwhile industry that will give a return for the money spent in it in the provision of employment, but there is an obligation on the Government and these semi-State bodies to make sure that before they encourage an industry to be started and public money to be spent on it, it is worthwhile and has a reasonable chance of getting off the ground and providing employment. This undertaking never got off the ground and never looked like getting off the ground.

An Ceann Comhairle

Deputy Fitzpatrick is under a misunderstanding if he thinks this is a general economic debate. The debate is confined to the Minister's Estimates and to devaluation. The questions of industry and agriculture do not relevantly arise in the debate on this Estimate.

Mr. T.J. Fitzpatrick

(Cavan): I am sure the Minister provided the money for the industry I am talking about, because it did not come out of the sky, and I think that the Minister, as the Minister in charge of grants, is providing the money for such undertakings. I am suggesting to him that he should have seen to it that he and the country got better value from the money invested in this. It is not fair to a county like Cavan in need of help that it should be helped in this way, because a failure does harm. It discourages other industrialists from coming.

Mr. Haughey

If you do not try, you will not have any failures.

Mr. T.J. Fitzpatrick

(Cavan): I quite agree with the Minister in that, and I would understand this venture if it had gone on for a few years and provided employment for 60, 80 or 100 people and then ran into trouble which could not be anticipated. This thing never got off the ground.

An Ceann Comhairle

The matter does not arise on the Minister's Estimates. Perhaps on a general economic debate the Deputy would be relevant but certainly he is not relevant now.

Mr. T.J. Fitzpatrick

(Cavan): I do not wish to ask the Chair any questions but the Minister is the Minister who provided the money.

An Ceann Comhairle

That would widen debates very much.

Mr. T.J. Fitzpatrick

(Cavan): Surely, Sir, the provision and the spending of money is relevant on the Minister's annual Estimate?

An Ceann Comhairle

The Minister is responsible for his Estimates and for the various subheads; certainly not for the development of industry per se.

Mr. T.J. Fitzpatrick

(Cavan): Is he not, Sir, responsible for the Industrial Development Authority or is it his colleague, the Minister for Industry and Commerce?

Mr. Haughey

Industry and Commerce.

Mr. T.J. Fitzpatrick

(Cavan): Well, the Minister provides the money. At any rate I have made the point and I hope it has got home that the Minister and the Government are expected to see that this money that has been given to this undertaking in Cavan produces some employment. That is all I want to say about that.

We were glad to see the pilot areas in Cavan have been extended. We have got two other pilot areas. We welcome them; we are thankful for them but indeed I think the whole county should be treated as a pilot area. We hope that these two instalments are an indication that the entire county will be treated as a pilot area.

There are a number of other matters concerning rural Ireland in general and Cavan in particular that I would like to deal with but I quite concede, Sir, that they would probably be out of order in this debate and I shall have an opportunity of dealing with them on the Estimate for the Department of Local Government later on. I leave it therefore at that, that I think the county of Cavan deserves special treatment with, of course, the other neighbouring counties and I appeal to the Minister to take steps to see that his devaluation of the Irish pound will not put the cost of house building beyond the capacity of the people to bear and that it will not put the cost of living beyond the capacity of the people.

Mr. S. Dunne

In the course——

Mr. Haughey

Did the Deputy not speak last night?

Mr. S. Dunne

If I do as well this time——

Mr. Haughey

Did the Deputy not speak last night?

Mr. S. Dunne

A good House.

In the course of the discussion which followed the announcement of devaluation in Britain, somebody—I forget who it was—said that Wilson had devalued the Englishman's word or something to that effect. This is devaluation of the Irish nation which we are at here this morning. Painful though it is to me and to Deputy Corry, Deputy P.J. Burke, Deputy Browne and other patriarchs with whom this House abounds, painful though it will be to all of us, collectively and individually, I am going to bring their minds back to other and more idealistic days.

The whole reason for their existence could be said to be based on the proposition: "Break the connection with England, the never-failing source of all our evils." I do not know how many Fianna Fáil Deputies will recognise the source of that. I am sure that well-known savant, Deputy Corry, will, because it comes from the writings of the father of Irish republicanism, Theobald Wolfe Tone: "Break the connection with England, the never-failing source of all our evils." I have no doubt whatever in my mind that when Deputy Corry raided his last police barracks in 1927, some few months before he came into Dáil Éireann, he did so from a position of principle; that he accepted that Fianna Fáil meant what they were saying; that they were going, in fact, to break the connection with England and that they were only taking an oath to abolish an oath, a little bit of a jig but nevertheless securing the end result.

What do we find? We find this ancient and indeed, to his credit, this worthy warrior now trooping in with the rest of them giving his unqualified support to the sustenance and the maintenance of the last tottering pillar of the British Empire. Who would have thought it some 40 years ago? Nonetheless, here we are faced with the situation that Britain having devalued, ergo we must devalue. Not alone do we devalue or must we devalue with Britain but our watches must be synchronised to the very second. It was not that we were let know an hour later or the day after but by some extraordinary alchemy of communication, we were all sitting peacefully and no doubt wearily around our firesides when suddenly we were confronted with the not unpleasant though familiar visage of the Minister telling us that a few seconds before Britain had devalued and therefore we would do so. The arguments were trotted out with all the facility of mind for which he is noted. You cannot get away, do you see, from first principles, no matter how hard you try and if you erect——

Mr. Haughey

I am afraid you have lost one of your audience.

Mr. S. Dunne

Probably recognising the signs of distance. If you erect a structure from certain foundations and certain propositions whether it is a physical structure, Euclidean or logical or what have you, inevitably if the foundations are found to be false, the structure collapses and in this structure to which I refer, the Fianna Fáil Party, the whole concept on which it was based, built and thrust upon the vision of the Irish and shoved down the throats of the Irish—I once heard a man saying "Could I inveigle a half-one down your throat?"—it was inveigled in that sense down the throats of many of the Irish. However, I wonder how it feels; how does Deputy Corry feel? It is very hard to get a response from him this morning. How does he feel in these circumstances?

Mr. Corry

Surely the Deputy is not looking for help?

Mr. S. Dunne

Devil a bit. I have a deep and abiding concern for Deputy Corry and his conscience. No doubt at a later stage, now that Deputy P.J. Burke has departed, as he is next in line, perhaps Deputy Corry will tell us how it has hurt him to his national and republican quick.

It is true, quite apart from anything light which might be said in the House concerning this situation, that to people of my age and generation who came to the use of what knowledge there was lying behind that which I shall not call the use of reason——

Mr. Corry

You have not come to that yet.

Mr. S. Dunne

I doubt if any Deputy who crosses the threshold of this House can be said to have reached the use of reason, and, for Deputy Corry, I say that there is a certain inherent foolishness attached to taking up public service unless one is already so well provided with the goods of the world that it does not matter. But, for people of my generation who listened at the impressionable age—I am talking about the late 20s and early 30s— to the professions of the Fianna Fáil Party who now constitute the Government and to their claims that what could be done by a native Government acting with complete independence from England, relying first, last and all the time on our own economic strength, you would not want to have blood in you at all not to be stirred by it. Even in the long, hard days of what was called the Economic War when the wading was done not through the blood of brothers but through the blood of cattle and calves, we know that changed. The people were sustained by this concept which had first been promoted by Griffith, and those who helped him, that we had sufficient in this green and pleasant land without relying on any outside source.

At the end of it all, and this is the puzzling thing to people of my age and generation, when we look back and consider how worthy men, men with whom I would not find myself in political agreement in a thousand years —not that that has any significance— were blackguarded and hounded and their characters torn to ribbons because they enunciated the policy that is now being followed by the Fianna Fáil Party, a policy which in fact ends up now in devaluation, that advocacy of this policy was at one with treachery of the deepest and vilest kind, how can politicians claim to be integrated as the Fianna Fáil Party do in that situation? They have done no more than pre-empt the pro-Treatyites' position of 30 or 40 years ago all the time.

We are back, as I say, wondering what was it all about. The most worrying thing about devaluation or anything that occurs in the British economy and which, in turn, provokes this kind of financial reaction is the effect it will have on employment in this country. As far as I and the Labour Party are concerned, we have to examine devaluation from one principal aspect primarily, that is, to find out will it mean more or less employment. It cannot mean more as far as one can judge except in a sense to which I will come in a moment. Will it mean an increased cost of living in so far as it is a reduction in purchasing power, as it must be, of the value of the pound? It must mean an increase in the cost of living. Had we any alternative but to follow after Britain, to trot along like a docile, toothless, somewhat decrepit pensioned Irish terrier, long past his best days, in the trail of the British bulldog, also not in his first health and strength? Had we any alternative but to trot behind the bulldog?

Not having had the benefit of a classical education, not knowing much more about economics than one picks up from the table of life or from having met the scholars from school, it would be difficult for me to give a theoretical economist's answer to that question. But it would appear to me that we had little choice but to follow Britain and to do as she has done in the matter of devaluation. It could, of course, be argued that it is only a fractional devaluation and it has been justifiably said that it is a tribute to Mr. Wilson, and indeed Mr. Callaghan and the present British socialist Government, that they seem to be in a position to bring the British economy into some kind of equilibrium by so fractional a move as this.

We remember looking back to the last devaluation. It represented a far more serious alternation in the position of the pound, both nationally and internationally, so that this was nothing like a revolutionary financial convulsion. To that extent it could be said it should not of itself produce an intolerable or indeed any substantial increase in the cost of living. But let me forecast this, or to put it more fashionably, let me make this projection: the first time we have any sign of difficulty of a wide nature in the economic field, we will be told by this Government that it is due to the fractional devaluation which has occurred in England. The moment it suits the Government to try to brush it lightly aside and describe it as something of little or no consequence, it is put on the shelf for future use, just as world crises have been brought into play by the Fianna Fáil Party, with no little skill but with absolute lack of conscience, in order to buttress their political position.

It is well I remember ten years ago when every country in the world was struck by a financial onslaught, much worse than the present one which afflicts Britain. Then, deflationary methods were being applied to every economy we know of, including this one here; but because there happened to be in power an inter-Party Government, the Fianna Fáil propaganda machine successfully persuaded the Irish people that that world crisis was the work of the inter-Party Government, that the fact that there was unemployment, that there was international recession, that there was credit restriction on a scale which had not been known for many years, was due not alone to the ineptitude of the inter-Party Government, but it was suggested, if not stated, that it was due to the downright deliberate treachery of that Government whose intention it was to disrupt and destroy the Irish nation.

That was the picture painted then. We do not get it now. During the past 18 months or two years, we had credit restriction here in a far more obvious and far more damaging form than we had it ten years ago. We had the banks refusing money at the direct instance, it might be said, of the Government on the advice of the Central Bank. It was deliberate Government policy to reduce the availability of money and to restrict credit. In that situation, however, the Fianna Fáil propaganda machine did a successful about turn and proved to their own satisfaction, and apparently to the satisfaction of some people at byelections, that it was a world problem that had caused it and not any conscious act of the Government.

What lessons are to be drawn from all this? One lesson certainly may be drawn from the Fianna Fáil about-face from diehard republicanism to true blue 100 per cent unionism and conservatism—from their execution successfully of a somersault in the matter of presenting the economic facts to the people: they blame world recession on the Government only if it is not a Fianna Fáil Government; and when Fianna Fáil blunder, they blame it on world recession. One thing that must be said for them is that they are extremely successful as political acrobats. However, this success is transient. It cannot last forever, though I am sure some Fianna Fáil members live in the euphoric dream that it will last forever. It will not. We are coming nearer and nearer to the time when people will say to themselves: "What are we doing? What are we letting them get away with?"

Mention has been made here of the effect of devaluation on housing. I have seldom intervened in a debate when opportunity offered to mention housing that I did not mention it, and I cannot resist the temptation now because I wish to bring home to the House one fact about housing, and I hope it will be understood outside the House. It will be understood certainly by house purchasers. Because it is related to devaluation, it will be in order to mention it. Previous speakers made the point that there has been no increase in the grant given to persons building their own houses. The present grant of £275, the grant allegedly made available for house builders, has not been increased in a very long period.

Speeches have been made urging the Minister for Finance to take steps to get the Minister for Local Government to increase this grant. I should like to say to the Minister for Finance that before he does anything of the kind, he should cause a public inquiry to be made into the question of where the £275 goes now because the applicant for the house, the person who is trying to build his own house, never sees a halfpenny of that £275. I can produce here in Dáil Éireann, if I have to, building contracts which have in them a clause providing that the grant which is supposed to go to the house purchaser goes directly from the Department into the pocket of the builder and the house purchaser never sees hair or hide of it.

An Ceann Comhairle

I hope the Deputy is not embarking on a debate on housing. The question of grants would be a matter for the Department of Local Government.

Mr. S. Dunne

The point was made during the debate that all Government payments are reduced in their worth by reason of devaluation and the point was also made that this particular grant, a very important and vital matter, should be increased to make up for the loss it suffers by reason of devaluation. The point I am making is that it is all one to the house purchaser whether it is increased because it is the builder who gets the grant: the purchaser never sees it. It goes directly from the Department to the builder.

An Ceann Comhairle

It seems to be a matter for another Department and another Estimate. It does not arise on Finance.

Mr. S. Dunne

It is a scandalous thing. It is supposed to benefit the purchaser but all it is additional profit for the builder.

As well as devaluing, a very serious step was taken by the Government in increasing the bank rate. Whatever arguments may be adduced in support of this step, the effect of it is to impose on borrowers, that is to say, small business people, shopkeepers, publicans, small companies trying to run factories or anybody who has to depend on bank credit for his business, and that means I suppose 80 per cent of commercial interests in this country——

Mr. P.J. Burke

TDs.

Mr. S. Dunne

It is the lucky one who would be able to persuade a bank manager that he is a good proposition. For all those small business people, the bank rate is of vital importance because in their plans many of them who borrowed last year a certain amount of money with which to extend their premises, to expand their business, employ more people, buy more stock, or whatever they want, will have estimated the cost of what this is likely to be. They will have estimated what it will cost them to meet competition in a more competitive world. We know it is becoming more competitive, particularly with the growth of supermarkets. Now we have the bank rate going up without any prior warning. This means a big additional impost on the kind of persons to whom I refer.

It is a meaningless exercise to be talking about expansion of industry or expansion of commercial activity on the one hand, and on the other, making it more difficult for people to carry on, to meet their existing commitments, by making the obtaining of further money to improve their business more difficult still. As I say, we know the arguments advanced for the increase in the bank rate. The simple one is that if we did not increase the bank rate here there was a likelihood of large scale withdrawals of money in Britain and deposits here. That, to my mind, is a likely tale. I do not believe that would occur in any sort of a proportion that would mean a real problem to England. I would like the Minister to say in his reply, in answer to this, did we get any request from Britain that the bank rate here should be increased coincidental with devaluation? Did this come up at all or was it purely voluntary to show how closely we are knit now with the Union Jack? It seems to me to be an unnecessary exercise but the most worrying part of it, and this has been represented to me by people in business as a worrying thing, and one which would give them great cause for concern, is that their whole prospects in the matter of trade, their commitments, their debt and so on, have been thrown out of focus by reason of the fact that they have now got to pay 1¼ per cent more for money than they originally contracted to pay.

It is not a very fair way of carrying on. What steps can the Minister take to redress that injustice? I would suggest to him that the best thing he can do in that situation, where there is definite evidence of financial hardship, and indeed where the employment of workers may be put in question by the increase in the bank rate, is to see at Budget time what can be done to relieve such people in the matter of tax.

The Minister's statement referred to decentralisation, so I assume that I am in order in referring to it as well. I do not want to roam over the whole conspectus of the Irish economic scene any more than the Chair will encourage me to do.

Mr. P.J. Burke

Not even to go down to Croagh Patrick?

Mr. S. Dunne

Where is that?

Mr. P.J. Burke

Near Castlebar.

Mr. S. Dunne

I must confess to being guilty of many things and to having probably a great deal more sins on my shoulders than other people but I have yet to climb the Reek in pursuit of votes.

Mr. P.J. Burke

That is what decentralisation could mean.

Mr. S. Dunne

It would be a right place for a meeting. Last night I was at a very important function and it occurred to me to mention the fact that I read in the Sunday papers that General Franco has decreed that there must be a reduction in the siesta hour in Spain, from three hours to two hours, for civil servants. I am not saying that there is any significance in this for Irish civil servants. Far be it from me to make any such suggestion but it is a well-known fact that the west of Ireland has a very soporific influence so that many of you sleep far fresher than those of us on this side of the country. It is also alleged that there is a great deal of Spanish blood there which dates from the Spanish Armada. Deputy Burke might turn his mind to this and take up the matter when he is in the running.

Decentralisation is to be theoretically welcomed but there is another side to it. There is the position of people who have worked in Dublin all their lives, who have their families here, whose children are being educated here and who have houses here. One must look at the question of whether it is socially just to uproot such people and bring them down to the west of Ireland, albeit that some of them would be doing no more than going home. Still, home is where you spend most of your life, and many of them have their homes here. That is why Deputy Corry never feels at home until he is in here. A lot of them, I am sure, would be very distressed by such a move if it were imposed on them. I should like the Minister to say definitely in his reply that while he is going to pursue the concept of decentralisation, with which none of us would disagree as far as it is practicable, he will give a definite assurance that no civil servant with a family who has been long resident in the city will be uprooted, required to sell his house and go down to start life anew in the west of Ireland, pleasant though it is there and inhabited, as we know, by very kind, nice and dear people. In spite of all the amenities over there, there is still a lot to be said for this old city.

Mention was made of the cattle industry. I do not know whether it is properly relevant to this debate. If the Chair will permit me, I should like to say it is of great importance to us. It is also affected by devaluation and even more seriously now by foot and mouth. If we are to think seriously of going into Europe within the next decade—that is as near as it can be put— we will also have to consider seriously that our cattle industry may at some stage face fierce competition. We must develop alternatives for the purpose of creating a favourable trade balance. So many things are changing so rapidly today that we can easily find that many of the things out of which we have lived up to now, such as cattle, may need to be replaced by some other products. This matter of change, which most of us sought so urgently for most of our lives, has suddenly come upon us with an astonishing rapidity. It can be seen no place more clearly than on television, and is indeed to be heard in the views expressed on television from the most amazing quarters.

I mentioned at the outset how devaluation can affect us as far as employment is concerned, but in a remote way. The reason given for devaluation in Britain is that they want to establish an export-led boom. The economists tell us, for what it is worth, that this means expansion and expansion means more employment. If it means more employment for Britain's workers, it must certainly mean more employment for Irish workers. To that extent it will affect us as far as the earnings of our people in Britain are concerned. Recently I saw on the "24 Hours" programme on BBC television a group of workers, including two Irishmen, being interviewed. I was struck by a fact which underlined the degree of change which has occurred in England over the past 25 or 30 years. One of the Irishmen interviewed was a carpenter and the other a bricklayer. One was asked was he working and he replied that he was unemployed. This was in Birmingham or Manchester. He was asked could he get work and he said he could. He was asked at what wages and he said at £18 or £20 a week. He added: "That is no good to me; I am used to getting £35 a week." This struck me as illustrating more clearly than anything else what is meant today by unemployment in England and what was meant when we were young in the thirties. At that time unemployment meant absolute hunger, that no matter where you went, you could not get a job, even at 25/- a week. But as a result of the efforts of socialist Governments in Britain and as a result of the tremendous upsurge in the power of the workers there, unemployment today means not the dire conditions and semi-starvation of the thirties, but the lack of the opportunity to be selective and the lack of a job at the rate at which you want to work.

How far are we away from that? Devaluation certainly does not help us towards it. We are not anywhere near full employment even at inadequate wages. We will not be until this country and the workers get wise to themselves and take over the Government in the same democratic sense as the workers did in Britain. No matter what attacks may be made on the present British Government, the thought of a conservative administration in power there would be simply appalling. We have a conservative administration here. Indeed, it strikes me that we have worse. We have an administration that does not even conserve but lets things drift on. I understand the phrase is laissez faire—do not give a damn. Everything is going all right for the moment, so do not do anything about it. Even the conservatives claim that they tried their best to maintain what is good. We know their conception of what is good and that is where we disagree with them.

An Leas-Cheann Comhairle

I do not want to interrupt the Deputy, but would he bring this back to devaluation?

Mr. S. Dunne

I will try, Sir, and thank you for your guidance. I am sure you understand one can easily stray from the central matter of discourse here. As well as devaluation, we are dealing with the Minister's Estimate. You will agree that at the best of times it is a difficult Estimate to deal with. In the light of the fact that in the heel of the hunt it is on the desk of the Minister for Finance that the bills for all the Government's activities will land, some slight indulgence might be given to those of us who want to touch upon other matters. However, there will be another opportunity next week, please God, for us to go into the whole performance of this Government in greater detail, I hope, on the Taoiseach's Estimate. I must confess I have nothing further to offer at this stage.

Mr. P.J. Burke

This is the first time I have been called by the new Leas-Cheann Comhairle. I wish him luck and I hope he will carry on for many years. This morning was a bit of a revelation in the House. I listened very carefully to the two speakers. I am always a student, always anxious to learn something. I thought this morning that I would hear something original, but Deputy Fitzpatrick went back to the days of the Economic War and blamed the Government for everything that happened then. He forgot to tell us that we did not start the Economic War. Britain started the Economic War, but I will not follow him on that.

He also said we were not concerned about the farmers, but the farmers were getting very little when Deputy Fitzpatrick's Party left office in 1932. In 1957, the farmers and the workers of Ireland were getting less from that Party. Yet Deputy Fitzpatrick says that we are not concerned about the farmers, good, bad or indifferent. I have often said that we are concerned with the wellbeing of every section of the people, irrespective of class or creed. It is the aim of the Government and this Party to concern ourselves with everyone.

I am very happy to congratulate the Minister on doing a very good job with the housekeeping of this State since the became Minister. He has succeeded in righting our balance of payments. This is most essential for any country. If our socialist friends on the left have anything to offer as a shortcut to prosperity. I should be anxious to hear it. The only way to prosperity so far as I can see is the policy adopted by the Government on the advice of their financial advisers in the Department of Finance, and others. Prosperity can be brought about in one way only, and that is the way we are doing it. This has been tried and proven in other countries which have enjoyed their freedom for 1,000 years It is all right to hear all this claptrap that we are slipping away and not doing this, that or the other but we are doing the things the Irish people want us to do. This is a responsible Government. We are trying to increase production.

We have succeeded in giving almost £70 million to our main industry, agriculture, directly and indirectly. Yet the Opposition say we are doing nothing and that we are not concerned with the farmers. The sowing of the seeds of illwill by some members of the Opposition—I do not wish to mention any names—during the recent national dispute was most discreditable. I hope they will examine their consciences as to whether they are helping the people who put them here, and are representing them properly.

On all sides of the House we have a number of Deputies of goodwill, men who are not anxious to create illwill or do anything to upset the economy. I am sorry the Minister is not getting the co-operation from all Deputies which he should get in the national interest. We have to be political here. We have to consider the political and economic philosophy of our own Parties. I have seen men in this House who put the overall national issues before personal politics. They have been in this House for a long time and they will be in the House for a long time, but there are also some people who try to score a political victory during some crisis started by some pressure group. I have no regard for that type of representation.

An Leas-Cheann Comhairle

I do not want to interrupt the Deputy at this stage, but perhaps he will come to the Minister's Estimate.

Mr. P.J. Burke

The Minister's statement was made by a Minister who knows his job. He dealt with everything in a factual way. His Budget was the essence of statesmanship and was economically shrewd.

Mr. James Tully

"Slick" is the word.

Mr. P.J. Burke

Any money that was left over was distributed among the weaker sections of the community, and used also to build up our production and industry generally. I have yet to be convinced that there is any other way to prosperity. May I claim the indulgence of the Leas-Cheann Comhairle, who is a very gracious gentleman, to say that the countries that claim to be socialist and the countries that claim to be communist have found that their philosophy was a cod, because they have not succeeded in doing what they believed could be done. Our economic philosophy has succeeded in doing what we have done for our own people. This State has to depend on its own resources and on the resources of the people as a whole. The Minister, his predecessor and this Party as a whole believe in the philosophy of increasing production to bring about an equilibrium in our balance of payments situation, and when there is a surplus, giving it out for social services, housing, roads, health services, hospitalisation, schools and increases in old age and widows' and orphans' pensions. We hope to continue in that way, which is the only way.

We have heard a good deal about devaluation in this debate. It did not make two hoots of a difference whether we had our own financial system or not, when our next door neighbour with whom we have been trading as a free and equal country devalued, we had also to devalue from a bargaining and trading point of view, as had other countries that had trading relations with Great Britain.

People may say that we are tied hand and foot to Britain. We are tied as equals. We are trading as free, independent, and equal partners. Surely the Gospel of 2,000 years is good today? We have been taught that our neighbour is all mankind of every description, without any exception of persons, even those who injure us or differ from us in religion. Nobody can do without his neighbour. The same applies to countries.

A great deal of play was made about things that happened in the past. None of us would like to reveal his past, individually or collectively. He who never made a mistake never made anything. Deputy Fitzpatrick spoke of investment in factories and so on. We encouraged industries. If we have made mistakes, at least, that is better than not to have tried to do something for the country. We have succeeded in industrialisation to a considerable degree. If we had said, do not give a grant to John Murphy or to Paddy Swan, do not subsidise industry, there would be no industrial production in this country today. We had to take chances and the chances we did take have paid the country well.

I was very sorry that the Minister was out of the House when I was referring to the efficient manner in which he had carried out the nation's housekeeping. The Minister will go down in history as one of our greatest.

Mr. James Tully

And Deputy Burke will go down in history as the greatest thanker in the House.

Mr. P.J. Burke

No. I am a very just man and I like to be just to people of whom I think highly in the performance of their duty. That is only ordinary courtesy. There are people who are critical of commonsense activity and I am critical of those people.

An Leas-Cheann Comhairle

I must bring the Deputy back to the matter before the House.

Mr. James Tully

We are not closing until Christmas. There is no rush.

Mr. P.J. Burke

With reference to devaluation, the Minister did what any Minister of any Party would have done in the same circumstances. I have been listening here to economists. The same economists were to be heard in 1956 and 1957. The same economists let this old ship go on the rocks. Now that they are in Opposition they have the cure for all ills.

Mr. James Tully

It is not fair to say that the economic advisers to the Government are in Opposition.

Mr. P.J. Burke

At that time Deputies here now did some great things from the economic point of view. They sold the aeroplanes: I had forgotten about that. They wanted to leave the country in the position that we could not get in or out of it. They were not concerned with production or national development.

Mr. James Tully

Some of your people were going to sink the ships.

Mr. P.J. Burke

I am naturally a man of great charity and hate to refer to these things, but when one hears members of the Opposition suggesting that they have the cure for all our economic ills, one must refer to the fact that they were in office for six years and not one constructive thing was done from the economic point of view during that period. The policy at that time was to carry on and to let the devil take the hindmost. We have changed that policy. We have a policy. We are not living on some little crisis or other, as the Opposition do, putting down questions in an effort to embarrass Ministers at the behest of certain pressure groups outside.

The Minister should continue along the lines he has adopted and I want to tell him that the nation is greateful to him. He has been a good captain of the ship and posterity will regard him as amongst our greatest. Thank you very much.

Mr. O.J. Flanagan

Deputy Burke should remind himself, if reminder is necessary, that economists are not to be found advising a Government or any one political Party. Economists advise wherever their advice is sought. I have the greatest respect for the advice of economists. Economists are qualified to diagnose economic ills and to prescribe remedies. Their advice is usually sound in relation to matters of proper management and good national housekeeping. However, in my experience, economists are the world's worst politicians. The advice they give is based on sound economics. There is not a very close relationship between sound economics and good, sound politics. The production of a political policy should be a job for politicians. A politician who acts on the advice of economists may be doing the right thing from the point of view of good housekeeping, but his action may be disastrous from a political point of view.

Great tributes have been paid by Deputy Burke and others to the Minister for Finance. The Minister must realise that criticism of him in the discharge of his duties as Minister for Finance is not of a personal nature. We are not criticising the individual: we are criticising the office he holds. We are criticising the Government of which he is a member. It makes me smile to hear Deputies like Deputy Burke appealing for unity, co-operation and support for the Minister. It is the duty of an Opposition to oppose. It is the duty of an Opposition to make constructive criticism in an effort to mould the Government into thinking along constructive lines. Members of the Fianna Fáil Party ask Opposition Deputies what they would do, how they would do it and what means they would adopt. The fact is that is not the job of an Opposition. It is the Government who have the responsibility, the very serious responsibility indeed, of steering the country along an economically sound path. It is not the duty of the Opposition to advise the Government; it is their duty to show the Government where they may be on the wrong track.

That brings me now to the devaluation of the pound. I cannot understand how the Minister could state that the devalued pound would have a lower purchasing power, and, at the same time, assure us that nobody need worry. Surely the fact that the pound will purchase less is a cause for worry. The Minister seems to be taking this whole question of devaluation as something of no importance, something of little significance which will have a very minor effect on the whole economic structure of the country.

It is time the Minister and the Government made an overall examination of our financial and economic structure. There should be a re-assessment of tariffs. For some time past we have been cutting tariffs and allowing in imported goods at reduced tariffs in order to prepare us for entry into the European Economic Community. As a result of the reduction in tariffs, depression has been created in business; there has been widespread unemployment and a resort to short time. This has had a very detrimental effect on the workers in the industries involved. The Government should take some practical steps now, knowing that we will not enter the European Economic Community in the foreseeable future.

It is common knowledge in Britain at the highest levels that it is not only during the lifetime of President de Gaulle but for many years after Britain will not be a member of the European Economic Community and, if Britain is not a member, we will not be in the Community either. It would not in all probability be practicable for us to enter the Community without Britain. Another generation may pass before we become members. Are we going to continue the present policy of the Government of cutting tariffs, permitting reasonably free entry of foreign goods into our markets? If we are, then that will have a very serious effect on employment and on our industries. Since our prospects then of entering the European Economic Community are slender indeed, why not take some practical steps now to prepare the country for a long waiting period, perhaps a generation, until it becomes possible for us to join Europe?

An Leas-Cheann Comhairle

I do not want to interrupt the Deputy——

Mr. O.J. Flanagan

I know what you are going to say, Sir, and I come back now to the question of devaluation. The British Chancellor of the Exchequer gave solemn undertakings that devaluation would not be resorted to; he was wrong in that. When the pound was devalued, Mr. Callaghan immediately resigned as Chancellor of the Exchequer. That shows the high standard of integrity in Britain's political life. It is a pity the same standards do not operate here. When Ministers in Britain make statements which they cannot subsequently stand over, they resign from office. Mr. Callaghan is to be admired for his courage and integrity in resigning. Were our Ministers to adopt the same high standard, we should have resignations week after week.

It is admitted that devaluation will have serious consequences in Britain. Surely it will have equally serious, if not more serious consequences here? The Minister's colleagues have paid him many tributes. My advice to him is to follow the example set by Mr. Callaghan and resign. Let somebody be appointed to Finance with the courage, foresight and ability to do what should be done. We are heading towards economic disaster because of the monetary policies of the Minister for Finance. The burden of taxation has become insupportable. Our whole tax system needs replanning.

The Minister has been asked many questions in relation to devaluation. I am sure that before he made his announcement at the dinner given by the Institute of Bankers that the pound was devalued, he was aware for ten days, at least, before that time that devaluation was coming. I think Parliament has a right to ask the Minister if devaluation of the pound is in the best possible interests of this country. Did the Government examine any alternative means of getting over this problem? Did they seek any advice in this matter and, if so, from whom? Were they advised to follow the same pattern, step by step, with England?

It all boils down to the fact that the Government had no choice but to do exactly as England did in the matter of devaluation. Assuming that the economic position in Britain does not improve within the next 12 to 18 months, necessitating a further devaluation of the pound, provided the present British Government are there that long, shall we have to devalue again?

Mr. James Tully

The Tories would not devalue.

Mr. O.J. Flanagan

It is neither my job nor my place to make any comment on British politics: I do not know anything about them. Britain is now reduced from a once prosperous country to a condition in which she can be described as an international pauper—and we are the nearest economic orphan. If she goes down, we go down financially and economically. If Britain is an international pauper, naturally enough we cannot be described as other than a fellow-pauper with Britain.

This Fianna Fáil Government failed to introduce legislation to give themselves power to very parity with sterling and therefore we had no option but to follow England in this connection. Is it proposed to introduce such legislation in the immediate future so that our hands will not again be tied and so that we shall have the same power to control our currency as other independent States have? This very serious responsibility rests on the Government and they should not remain silent about it.

The Minister says that this devaluation will not have any very serious consequences. I cannot see where it will not have serious consequences. As reported in the Sunday Independent of 19th November, 1967, the Minister said he could see no reason why the cost of living should be affected. I fail to understand such a statement. The Minister must be trying to hide the ever-soaring cost of living which is causing grave hardship to workers, business people, the aged, the sick and the thousands of unemployed we have with us. There does not seem to be any question of a halt being called by this Government to such an enormous increase. Fianna Fáil are recklessly allowing the cost of living to rise at its own will, without any regard for our people. In the past four years, the cost of living has risen annually by over 5 per cent.

Within the next 12 months, there will be another very serious rise in our cost of living due to this devaluation of the pound. Is it not correct that most, if not all, of our imports will very drastically be increased in price? Bread, foreign fruit, tea and coffee, petrol and cars, tyres and electrical goods, aluminium, wine, houses, wooden goods, refrigerators, copper tubing, imported timber, brandy, wool, and so on, will all go up in price. That being so, how can the Minister say that this devaluation will not have any serious consequences on the lives of our people?

The most serious rise will be that in the price of bread and flour. Recently, the Irish Flour Millers Association said they do not know what increase will take place in the price of bread or flour until they examine the increased wheat imports and the intake of Irish wheat. An increase in the price of bread or flour will have a serious bearing on the cost of living in every home in this country. We have also seen that supplies of fruit— apples, pears, oranges and all dried fruits—are likely to be seriously affected. I cannot understand the Minister so lightly assuming that devaluation will not have a serious effect on the cost of living when we find that the price of oils and petrol will be substantially increased. What explanation has the Minister in regard to the statement he made on November 19 telling us this would not have a very serious effect on the cost of living when last week there was a jump of 23/- per ton in the price of American coal and 24/-per ton of Polish coal? Quite recently there was a substantial increase approved by the Minister for Industry and Commerce in the price of briquettes manufactured at home. Surely there is a very serious rise in the cost of living even if one only takes the single item of fuel, something no home can do without?

I cannot understand why the Government have not taken some practical steps to control the cost of living or have some machinery to ensure that the cost of living will not run amok as it has been permitted to do, particularly in the past two or three years. We now see these prices will be, and, according to the Minister, must be increased and it is only right that we should ask him what steps he has, or the Government have in mind to stimulate employment. If we see living costs rising, the cost of providing houses being seriously affected, interest rates on loans for housing seriously affected, insurances of all kinds substantially increased, is it not only right to say that in the midst of all this that we cannot describe ourselves as living in anything other than a very much depressed economy with a very gloomy and dreary outlook, holding out no hope of any general relief for the Irish taxpayer?

Already the economy has been sufficiently depressed by Government action. Every action of the Government over the past two or three years has resulted in depression. The increases in the prices of bread and flour, tea, sugar and coffee and all the other items to which I have referred will cause very grave hardship to workers and recipients of social welfare benefits and indeed to every section of the community but particularly to those who are on fixed incomes and have no means of getting increases. There must be many hundreds of such people. The fact that the Government have no plans to relieve or assist them in any way shows a very high degree of failure by the Government in providing, as they should provide, for such a large section of the community.

I have little doubt that the Minister will tell us, now that he has had time seriously to consider all aspects of devaluation and its effects, and what we might describe as its most depressing effect on every sphere of activity, and if that step is being taken because of the fault of our Government and the absence of suitable legislation, what drastic steps he will now take to pull our economy out of the depression into which it has been plunged in recent years?

It is a very serious matter that interest rates have been forced up by the rise in the British bank rate and that cheap money is no longer available to stimulate our economy. Every local authority knows that it is not possible to provide money at cheap rates of interest to stimulate the economy and provide necessary schemes of national development. That is a very serious situation. Local authorities find now that it is becoming impossible for them to borrow for housing because of the high interest that must be paid and the consequent high rents and rates which tenants, particularly those in new housing schemes, are faced with. It is taken by the Government as a matter of course. They are not taking positive definite action to remedy the high rate of bank interest which is crippling every local authority and preventing general development of the economy. This high rate of bank interest, when it is preventing development, must be contributing substantially to the pool of unemployment and to the depression that exists in many parts of the country.

The Opposition have made suggestions and offered constructive criticism of the whole handling of this situation by the Government. There is only one way left to stimulate the economy— provide work, get down to business, and see that money will be provided at reasonably cheap rates of interest to enable local authorities to go ahead with their many planned schemes of housing, waterworks, sewerage and general development.

We have reached the stage when taxes must be reduced and the time has come for the Minister to consider courageously the deplorable circumstances in which the poorer sections of the community now find themselves living, that is, all who are in receipt of social welfare benefits, because an effort must be made to raise the spending power, get demand rising and, generally speaking, get the economy out of the rut into which it has been driven. I should like to know from the Minister which taxes he proposes to cut and by how much he proposes to increase all rates of social welfare benefits in order to help people——

Mr. Haughey

Cut taxes and increase expenditure.

Mr. O.J. Flanagan

That is what I am asking the Minister to do. That is not the job of the Opposition. It is the job of the Government. That is why we have a Minister for Finance and a Government charged with that responsibility. We remember the occasions on which the then Taoiseach, Deputy Lemass, used to refer to the national cake.

Mr. L'Estrange

In 1957 he was going to reduce taxation.

Mr. O.J. Flanagan

He was referring to the division of the national cake among different groups, and he said he could not slice it because he could not make bigger slices for what we describe as the poorer sections of the community. If the cake were made bigger, would there not be bigger slices made available? That is exactly what we want. The cake cannot be made bigger unless we stimulate the economy by providing more employment, facilitating greater investment and enabling the development of our housing, health, educational and other services on which we are spending money today. We must also take steps to reduce substantially the bank rates in order to allow local authorities to proceed with their many schemes of development which they cannot do at the moment.

Mr. Haughey

The Deputy would want to send for the man in the moon.

Mr. Donegan

The best place to send the Minister.

Mr. Gallagher

Deputy Flanagan has a policy of monetary reform.

Mr. Donegan

The Minister and I are smiling, and let us leave it so.

Mr. O.J. Flanagan

These are things we expect from the Minister and I cannot see that it is a cause of laughter. It is certainly not a cause of laughter for the poorer sections of the community who have to endure this wave of depression, in regard to unemployment, the high cost of living and the very low rates of benefit that we must hand out to them. At the same time, a halt must be called to the ever-increasing bank interest rates, and a halt must be called to any form of credit restriction if we are to stimulate the economy.

Mr. Haughey

There is no credit restriction at the moment.

Mr. O.J. Flanagan

We have a difference of opinion on that. Money is tight, and where is it readily available, can the Minister tell us?

Mr. Haughey

The total amount of bank credit, an increase in which has been recommended by the Central Bank, has not been taken up yet by the private sector.

Mr. O.J. Flanagan

Is it the rate of interest or the difficulty in obtaining it that is preventing the private sector from availing of it? It is not that the private sector does not want it. It must be that the private sector cannot get it.

Mr. Donegan

If the private sector were listening to the Minister there would be a queue outside the banks in the morning.

Mr. O.J. Flanagan

The Minister is a very fine fellow but he is living in Cloud Cuckooland. Most definitely the Minister has not his ear to what is going on down the country.

Mr. Haughey

There is no shortage of bank credit for productive purposes, none at all. If the Deputy tells me of any case, I shall look into it.

Mr. O.J. Flanagan

There is no shortage of money for productive purposes?

Mr. Haughey

Bank credit.

Mr. O.J. Flanagan

In any shape or form?

Mr. Haughey

As far as I know.

Mr. O.J. Flanagan

I most readily accept the Minister's word, but I should not like to quote him in certain parts of my constituency. However, the Minister for Finance will agree that we have in this country the dearest possible motoring in the world. If we are to be faced with further increases in the price of oil and petrol it will have a serious effect on people who have motor cars as a matter of necessity, not for pleasure or joyriding but as a means of getting to and from work. The Minister should now take the necessary steps to cut the duties on petrol and oil and take similar steps in regard to tobacco. In addition to that, he should increase by at least five per cent our social welfare and social assistance benefits. Furthermore, these steps cannot be left until the next Budget. This is something the Minister is expected to do now. It cannot be postponed until next year if we are to assist people in the most practical way.

The Minister has said time and again that our economy is sound. Our economy cannot be sound when our agricultural community are living under the most depressed conditions possible. Surely the Minister is aware that there is great need for further investment in agriculture, a great need for increasing the amount of capital to be made available, particularly to small farmers in order to assist them to increase their production, to increase their livestock, to improve the quality of their land and the general layout of their holdings. This cannot be done in present circumstances. If we want to get our farmers to produce more wheat, more oats, more beet and more barley, and to contribute their share to the general standard of the nation's economy you must first help them financially. One of the greatest needs for the building up of Irish agriculture at the moment is the lack of credit facilities for small farmers and the manner in which people are curtailed because of the lack of credit from stocking their lands as fully and as well as they could. How many of us realise that our greatest exports are our cattle exports and without our cattle exports where would we be? Yet, when we go up and down the country every rural Deputy knows that there is grazing available, there are lands available and there are farmers available and if one asks them why they have not got their lands better stocked or why they are letting grazing or setting grazing they will say that it is because they cannot afford to stock it. There must be something very seriously wrong.

Acting Chairman (Mr. Booth)

I think the Deputy is straying from the Estimate.

Mr. O.J. Flanagan

That may be, but I want to say that the more cattle we have for export the better for the country. Everyone agrees on that because the agricultural community depends to an enormous extent on the amount of our exports of cattle to Britain, to the Continent and elsewhere. Therefore, it will help the economy of this country if we can step up on our exports. The only way we can do it is to plough money into the agricultural community to buy stock, to keep stock and to improve the quality of their lands. Then we will have more for export which will be an enormous help towards our balance of payments. That is why I feel the Minister has not seriously tackled this problem or is not seriously tackling it when the principal section of our economy, the agricultural community, is and has been in such a deplorably depressed condition.

What else has the general economy of the country to depend on but agriculture? We have seen that industry has had its difficult period by the tariff cuts, short time and the amount of unemployment and by the flooding into this country of what we can describe in many instances as dumped goods which are permitted to come in here under the trade agreement with Britain. I feel that the time has now come, when there are no immediate prospects of our getting into the Common Market, to enter into a new trade agreement which will be more beneficial to this country, more beneficial to Irish industry, more beneficial to Irish agriculture and more beneficial in keeping our Irish people in productive employment at home.

Acting Chairman

The Deputy is straying away from the Estimate for the Department of Finance.

Mr. O.J. Flanagan

I am inclined to agree but, nevertheless, I feel that this is a thought which the Minister should very seriously consider.

Acting Chairman

I am glad we are in agreement but if we can cooperate on this and get back to the Estimate——

Mr. O.J. Flanagan

The Chair will have little difficulty in soliciting my fullest co-operation on that. Now that the Government have decided on a policy of decentralisation of Government offices shall we have the next chapter which we are all waiting for, the decentralisation of industry, something that will give employment and improve the general economy of rural Ireland? I agree in principle with decentralisation. I think it is a good thing. I do not think that it is right that everything should be centred and built up around Dublin. We are reaching a stage in which rural Ireland will be completely denuded of its population and if the present trend continues practically the entire population will be centred around Dublin. The tendency now is to flee from the land and come to the cities. The cities have their own problems and God knows, their problems are great.

As well as embarking on a policy of decentralisation of Government Departments, some practical steps should be taken to decentralise industry and the Government should take steps to see that industries, instead of being centred in Dublin, should be set up down the country. That is the place for them. If this is done, the Minister for Finance will earn the gratitude of the thousands who live in rural Ireland and want to stay there and only need a little encouragement to stay in their native districts but must leave for the cities and big towns, for Britain, Canada or the U.S. because of lack of employment and good living standards at home. Therefore, in addition to the recent pronouncements on the decentralisation of Government Departments, we hope and trust for a general review of the whole industrial structure of the country and that we will hear from the Minister for Finance that not alone is he about to decentralise State Departments but that an effort will be made to decentralise worthwhile industries which will provide employment for the manpower that is available in rural Ireland. If such a programme is embarked on it will yield a very good economic return by keeping our people at home in rural Ireland and providing them with the wherewithal to live there.

We have reached a position now in which practically every worker is obliged to pay income tax. Under the PAYE system the amount of income tax that has to be paid by workers is very great. I would seriously appeal to the Minister to take some practical steps to see that ordinary labouring men will be exempt from the payment of income tax. We see workers in bacon factories, in the ESB, Bord na Móna and other State organisations obliged to have large amounts deducted from their wages. The time has come for a general review of the allowances. I am sure we will be able to debate it more fully in the Minister's next Budget. The Minister for Finance has a responsibility to these taxpayers. With the cost of living at its present level it is an awful thing for the Government to have both hands down into both trousers pockets of Irish taxpayers to drag out the last penny piece that is available and leave less to the taxpayer for spending, which means that there will be less in circulation. This is a very serious matter. A general review should be undertaken and substantial increases in allowances made if we expect our workers to remain in this country and attain a decent standard of living here.

They are the only comments I wish to make and I make them knowing that the Minister realises that they are addressed to him in his capacity as Minister for Finance, also bearing in mind that we as an Opposition have a duty to criticise, and to criticise constructively, as I have endeavoured to do during the past hour.

The whole economic position of the country is in a deplorable mess due entirely to the bad handling of the Government and I would have wished the picture to be more pleasing. I can see nothing ahead of us except more claims and more depression with added unemployment and a substantial addition to present living costs. The Minister and the Government should take practical steps to stimulate our economy, to make more money available for planning, and to see to it that the poorer sections of our community are looked after. There is a vast amount of hidden poverty that has not come to the surface. These are the people who will be affected by increased living costs and the Government have a serious responsibility to such people Immediate steps should be taken and every effort made to prevent further hardship being imposed on such people, particularly the working classes.

The devaluation of the pound has added considerably to the already overburdened taxpayers and it will have a further detrimental effect on the general economy. The Minister has not satisfied this House, or, indeed, the country as he said on the 19th November, that this will not have serious consequences. It will have serious consequences and I feel it is something that will be felt by every section of our community. We are all waiting with eager and attentive ears to hear of the solutions, remedies and assistance of a sound and practical nature which the Minister has to stimulate our economy and assist our people in the future.

Mr. Moore

Anyone with an unbiased mind would recognise the masterly handling of the present situation by the Minister for Finance. He was faced with the devaluation of the pound and this Government, like all Governments who have met with grave obstacles before, will progress. The Minister gave a very able explanation of what he did and of what might have to be done. He has convinced most Members of the House with his usual expertise that he has made the right decision and one which will benefit the people of this country, more so than if the country had either a Fine Gael or Labour Government at this time.

Devaluation will, of course, have some ill effects. Those we naturally think of are the lower paid workers and the pensioners. The Minister has shown in his last Budget his concern for pensioners. He gave them increases and free electricity and free travel. Devaluation will have more effect on these people and we are hoping that next year, when the Minister introduces his Budget, he will be as generous as he was this year and so ward off the full effects of devaluation.

I have heard Fine Gael speakers talk with monotonous misery about the state of the country with regard to emigration, unemployment and other matters. There is one fact they did not mention and that is that the last census figures show that for the first time in 100 years the population of this country has increased—admittedly a small amount; I think it is 61,000. It is a change and we can look forward to greater progress at a more rapid rate.

We have been accused of slavishly following the British but the Minister has shown that we were free to make a choice on devaluation. Most people who look at it think honestly that the right decision has been made. We have not had to go like other countries to the World Monetary Fund to get a loan to tide us over our difficulties.

Fine Gael speakers attacked the Government for their borrowing. Fine Gael are touchy on this point because whenever they issued a loan there was a marked lack of confidence shown by the people in the Government at the time. The history of loans by the present Government is different and they have been taken up avidly by all sections of the community. This is a marked vote of confidence in the Government.

An important matter also in the Minister's statement was that of the decentralisation of some Government Departments. Nobody will say that this decision is wrong. It is the best thing to be done. We must recognise the fact that many civil servants and their families living here are in fear about a possible forceful transfer to Castlebar or Athlone. The Minister has assured them that as far as possible transfers will be on a voluntary basis. I feel that in the case of a man who has his family in school here and who does not want to go, plenty of young people will be found instead to go to the new towns. This move will revitalise those particular areas and play a big part in the general build-up of our economy. The Government have been attacked over this, but this is something which every Party has had at some time to face when handling the mechanics of something which may hurt some people. We are assured that the Minister will discuss these plans with the Civil Service associations and I feel a good solution will be found and that this will prove a great shot in the arm for towns like Athlone and Castlebar. It shows, too, that the Government appreciate that the city of Dublin is overcrowded and that this has put a tremendous strain on the finances of the city in regard to houses, roads and general services. Here, again, the matter is thrown back into the Minister's lap because he must provide funds for housing and other services.

We have heard the present situation of housing in Dublin attacked. I have never seen as much progress being made with regard to housing in the city. People may have seen protests about so few houses and nothing being done about it. We have well over 2,000 dwellings being built and we have plans for 17,000 new dwellings by 1971. However, unless the money is there we just cannot build the houses. I remember the time when we used to go to the Bank of Ireland to plead for more money when they told us there was no money for us and the Government said there was no money. The Government at the moment are not short of money. At no time in our history have we made such progress.

It is the wish of Members on all sides of the House that we overcome our problems. To do so we must have the necessary finance and we shall not have that without a sound economy. There seems to be an idea in some quarters of the House that the Irish people have a God-given right to prosperity. This, of course, is not so. Nations which are prosperous are those whose people work hard to build up the economy to meet the demands on it. We cannot say this too many times. Neither can we emphasise too often that the Government cannot just go to the printing machine and print money. Unless we can produce our goods at such competitive prices that we can sell them freely in competitive markets, our economy will not show the progress we all hope for and we shall still suffer from imbalance.

We cannot drive this lesson home hard enough. Our salvation is in the hands of our people and unless all sections, workers and employers as well as people who are neither workers nor employers, play their parts we shall not reach the goal we should strive for.

I cannot see what alternative steps to devaluation the Minister could have taken. It was the sanest action he could have taken and I am sure that in their hearts the Opposition agree. The Minister handled the situation so well that I believe we shall get over the extra burden—I know there will be a retarding of the national effort for a while—and, as the Minister stated, if we accept the challenge posed by devaluation, devaluation in itself will not have the effects prophesied by the Jonahs.

Last year when the Minister was preparing his Financial Statement he surprised many of us by his treatment of the weaker sections. As a result, there is no more popular man among the old age pensioners, the blind and the other less well off sections of the community. This Minister did this, though at the time we were only emerging from a particularly bad period. As a result, he has given us all confidence to face the future, whatever that may bring.

Emigration is still too high but there is consolation in the fact that the population has increased for the first time in a hundred years. The only cure for emigration is the provision of more jobs. I gather from figures issued by the Department of Industry and Commerce that it costs £5,000 to provide employment for one person. That includes the capital money needed for the establishment of the factory and so forth. Therefore, if we are to abolish or reduce unemployment we need a lot more money and we shall get that only if we attain a sound economic position. It is not wise to go into the hands of international financiers but unless there is some external investment in the country it will be impossible for our people in the space of the next ten years or so to create sufficient finances so that every man and woman who is able to work and wants to work will have a job and so that every family will be properly housed and so that the standard of living will reach the level we all hope to see.

It has been said that people who cannot get employment at home must emigrate. We can do a lot towards easing that situation but we must have confidence in our people. The former Taoiseach spoke on television last night and said that in the 1950's people lost hope. They believed that even the go-ahead man at that time had to leave. This trend is disappearing and the manner in which the Minister and the Government have handled the devaluation situation as well as the general economic problems has been an indication that here is a country which can progress through wise Government and hard-working people, that we can reach an economic level through which there will be work for everybody, proper homes for each family.

Mr. Donegan

It was interesting to hear from Deputy Moore the excellent situation we have. According to him things are going well. For once, we can report a slight increase in our population. Immediately afterwards, the Deputy spoke about the emigration figures and about lack of confidence during the mid 50s. One of the things we have decided on this side of the House is that neither the line taken by Deputy MacEntee in 1949 nor the line taken by the ex-Taoiseach in the 1950's will be followed. As far as we are concerned, contributions from the Opposition will be constructive and will help towards the framing of proper Government policy. Assistance from the Opposition is one way in which Government policy can be framed. That is all we can do until the next election.

As a result of the banking set-up and of the activities of the Minister for Finance during the previous period, there was no doubt the Minister had to stand up at the bankers' dinner and announce devaluation seconds after it had been announced in London. It is quite clear that Popo the Puppet can do anything if somebody else pulls the strings. If Britain has a bad balance of payments situation, a fall in exports, an increase in personal consumption without, at the same time, capital rebuilding, then Britain's pound becomes weak. It does not follow, ipso facto, that we must follow that pattern. However, we get the ill results. The only difference is that we are not quoted on the gold exchanges of the world.

In this situation we had an extraordinarily contradictory position. While our balance of payments stood well and while our revenue, as far as we can judge at this time of the year, was good, we were faced with the situation that the Second Programme had failed abysmally, that there had been no spectacular development in new industry. Deputy Moore quoted a figure of £5,000 as the capital cost of putting one person to work. The last time I did the sum the figure was £3,000. We had, therefore, two quite contradictory matters which indicated bad Government housekeeping, bad Government policy. We had all our financial indices satisfactory but at the same time we had a fall in employment. The Minister sneered across the House at me a few years ago when he quoted the "Deserted Village":

Ill fares the land to hastening ills a prey Where wealth accumulates and men decay.

This is not so far from the truth at present. I attended a dinner where I had a nice social chat with the Minister in Drogheda last week. He repeated a phrase I have never heard before in regard to the way he was approaching the Second Programme for Economic Expansion. The phrase was "excessive quantification", that no longer in the Third Programme, as soon as it is produced, would there be excessive quantification, in other words, would there be too many figures. When you set figures and they are set too high and not reached then you must accept failures. In future, the Government do not intend to produce targets. This is not very convincing to anybody. We always said that more than targets were needed. We said that planning was needed, especially more detailed planning and that we would then have better results.

We find that the situation now is if we had a separate monetary unit of our own, which we have not, it would appear from the financial figures as if there would have been no need to devalue but yet our employment situation would have indicated that we were doing badly. This is all the more extraordinary because we are a developing country and with the particular events in Europe, with the Common Market coming along and the Free Trade Area with Britain, one would have thought that the quite natural happening would be that more industries would have been coming here and picking up the excellent labour force we have available. One would have thought if we had set our own house in order in a developing economy that we would have had more jobs yet we have fewer. I am aware that we have marginally more jobs in industry and colossally fewer in agriculture. Nevertheless, one would have thought if we did nothing except keep our own house in order there would have been a greater increase in the number employed in industry because of the advent of the Free Trade Area Agreement with Britain and that we would have had industrialists coming here in greater numbers.

It is sad to recall that the Minister for Industry and Commerce in introducing his Estimate a week or so ago indicated that there was deceleration in regard to the establishment of new industries here and that he saw fewer people coming forward this year than before. This means more emigration and it also means that we are not progressive at a time in our history when we have taken a very deep plunge into very cold water, when with our two eyes open we have entered into a free trade agreement with Britain which can injure industry here and that our real problem may be the preservation of existing jobs even more than the creation of new jobs.

As I said, it is sad that the Minister for Industry and Commerce should come in here in this year when we may expect a further drop in our tariffs in January next and say that we have a deceleration in regard to new industries and this shows bad housekeeping. We are a developing country and there is no doubt about the fact that if our labour force became known to the nations of the world, if our own housekeeping was in order, many industrialists would come here and establish new industries. One would have thought with free entry into Britain that there would have been more people in jobs.

A few years ago it was infra dig for anybody to mention the banking system in this country. You could take your pick that if you did you were meant to be a radical or a communist. I am happy to say that this position has improved and it was as a result of Deputy Sweetman, when he was Minister for Finance, taking the decision not to change the bank rate, that we would not for the first time follow suit. At the time this was regarded as quite radical and extraordinary but it has been repeated since. Deputy Sweetman took the plunge at that time and it was a start. It is true that there was an urgent necessity for a change in the pattern of the banking system here. That does not mean that anybody, especially the Minister for Finance, can trot down to the Governor of the Bank of Ireland, or any other man in such a position, and tell him what to do. The banks here are licensed and the pattern has been that while they are commercial banks thy consult with the Government. While saying this, I should like to point to two things. While Deputy Dunne said earlier this morning that there is always the fear that if you have a different deposit rate from that in Britain, especially a lower deposit rate, your funds will fly away, this, of course, would be disastrous to the commercial banking system. That does not mean that you cannot vary your interest rates and it does not mean, as the Minister for Finance indicated quite clearly to bankers, not only how much credit he would wish to see extended, but that there could be an indication given as to what purpose this credit was extended for.

We must accept the fact that the banks here are commercial banks and as such, operating for their shareholders, they have responsibility to those shareholders to see to it that they get the maximum profits available. That would indicate to me that the person making the decision in regard to overdrafts, whether he be the director, the area controller or the manager, might be more inclined to give an extension of credit to some organisation that could very quickly repay, even if it was an organisation which employed very few people because of the commercial nature of its transactions and that it was quite clear that they could repay very quickly rather than give it to an organisation which would employ a greater number of people but yet be an industry which would take a longer number of years to repay any major capital expenditure. There was also the fact that while the Minister indicated that their credit which it was indicated to the banks would be extended, even be taken up by the private sectors, the fact is there has been a radical change in the approach to banking here. That change has been because up to a few years ago the banks were saying that they were in favour of short term and were not lending money for long term capital projects. The fact was that they did lend money for those and that they are not at the present moment so lending. The banks here address themselves to short term credit as commercial banks do in other countries. The snag is that while in other countries there are other financial institutions, where such money can be got, such institutions do not exist here, with the exception of the Agricultural Credit Corporation. There has been criticism about the amount of money made available by the Minister for them.

I have adverted to this on the Estimate for Industry and Commerce. We are in a situation whereby it is much more difficult, with the size of firms here, for firms to go public, to use a common term, and float themselves on the Dublin Stock Exchange, such as it is, than it would be in other countries, where there are larger industries and certainly, if not larger, be as fish swimming in a larger pool. While the Minister may say there is sufficient credit extended to the private sector from the banking system, the fact is it is only extended for short-term borrowing, for stocks and for the extension of credit to customers who repay in a short time and not for the long-term capital investment which is so important if we are to provide employment, particularly for men. I do not advocate for a moment control of the banking system. I do advocate an indication by the Minister through the Central Bank that there should be an extension of credit to the commercial bank for long-term projects that will employ men.

I believe there is something in the system used in other countries whereby there are different grades of overdraft interest for different projects. Take the case of a person employing a large number of men and who in the course of time and the carrying out of necessary adaptation measures in his industry finds himself borrowing large sums over long periods in order to employ these men and to extend the number of those employed. If it were possible to do this and, at the same time, ensure that the shareholders of banks got their due reward for the investment of their money, there should be different rates of interest for different projects. I have no doubt there is no need for control of the commercial banks. An indication from the Minister, seriously spoken, of such a desire would result in an examination of the situation and some improvement, if not the complete improvement I suggest.

I think I have proved that when the Minister attended the bankers' dinner he sat in a situation of status quo that had existed right through the present Taoiseach's rather somnolent occupancy of the Department of Finance, that he arrived in the same situation as he had been before, that Popo the Puppet could devalue if somebody else pulled the strings. The Government have not been livewires in this matter. Without being radical or in any way frightening as far as our economy is concerned, without taking risks, there is a need for us to buy a tailormade suit so far as our financial policy is concerned, to realise we are different from Britain and that we as a nation have the duty and opportunity to tailormake our financial arrangements to suit us and that that has not been done.

There has been too conservative and too slavish an approach to this whole problem. We may accept that this question of the British umbrella as far as our financial institutions are concerned is a leaky umbrella. I do not think the British economy is half as bad as many people seem to think. The strain of acting as an international currency market is too heavy for a nation the size of Britain. If Russia does not do this sort of thing, and she does not, there is only one other nation in the world that underwrites currency, and that is America. The great trade build-up in Britain over the centuries, which culminated in the peak of her Empire, is now gone so far as the real recompense to Britain is concerned. The pound is more overworked than in trouble. In future we may see some international form of backing currency which will relieve Britain of the heavy responsibility she bears at present. This has been said before, but it bears repetition. The Minister was most complacent about the whole affair.

Mr. Haughey

Do not use that word again.

Mr. Donegan

This is it.

Mr. Haughey

Every Fine Gael speaker used it. Can you not think of a different word?

Mr. Donegan

Laissez-faire. Would you like that one? I know a politician who has left this House who believed if you kept on saying one word, whether it was right or wrong, they will bite at it one day.

Mr. Haughey

I am the least complacent man in Ireland about the economic state of the country.

Mr. Donegan

On television and in your public pronouncements since, you were being very slick: I mean that in no derogatory fashion. How you could approach this as Minister for Finance with a sort of happy mind and how you could say to the Irish people that everything is all right, when the dogs in the street who study the matter know it is not, is beyond me. For instance, our exports to non-devaluing countries are about a quarter of our total exports. We are going to get an advantage there temporarily. In relation to the other three-quarters we are not. Many of the raw materials of our industries come from non-devaluing countries. There we have to pay more. It is a question then of whether we use the finished product here or re-export it. If we re-export it back to these countries we are all right. Of course, the real truth of the matter is that we export only one-quarter to these countries. Therefore, the likelihood is we will not be re-exporting. This means we are in trouble.

There was one thing not mentioned by the Minister which it is desirable to state here. There is a common external tariff against us when we want to send goods into the Common Market countries. In the case of cattle, for instance, it has excluded all our cattle from the Continent.

Mr. Haughey

Devaluation has, in effect, wiped it out.

Mr. Donegan

Devaluation has not wiped it out. To use the cattle situation as a simple example, I suggest the common external tariff on a bullock entering the Common Market is about £25 to £28.

Mr. Haughey

The common external tariff is only 16 per cent. There are levies as well.

Mr. Donegan

If the Minister wants to take me up he can do so. The total tariff paid on a bullock value £80 entering the Common Market is around £25 to £28.

Mr. Haughey

It changes all the time.

Mr. Donegan

I think the Minister will agree with me that the average figure is about £25 to £28 which, on a value of £80, represents a tariff well over 30 per cent.

Mr. James Tully

Even if it changes up and down the percentage will be the same.

Mr. Donegan

It is much greater than any advantages from devaluation.

Mr. Haughey

The tariff is fixed at 16 per cent. The levies are determined by the prices on the world market. The levies go up and down according as the prices in the world market move up and down in relation to the fixed price in the common market.

Mr. Donegan

We have done our homework and we know that. The proof of whether devaluation has allowed us to export cattle to the Common Market countries is in whether or not they went since the Minister spoke at the bankers' dinner. The truth is that they did not. Whether or not the Minister wants to pick me up on some details of the trading arrangements, the proof of the pudding is in the eating. I have heard no cattlemen yet say that because of devaluation they were able to export cattle to the Common Market. I accept the Minister's correction in regard to the levies. I use cattle merely as an example because they are so important.

I suggest that the opportunity for increasing exports to the Continent is minimal, that we are not going to get as good an increase in exports as the Minister suggested, and that, in fact, we are just going to be in the same position so far as Britain is concerned, with this very serious exception. We entered the British Free Trade Area Agreement on the very serious basis that we were moving towards Europe, and it now looks, according to General de Gaulle and others, as if we are moving towards it very slowly.

On this particular point I should like to refer the House to an article under the heading "The Economy" in "Business and Finance" of 24th November, 1967. I want to refer most particularly to the date because it is now a week later. I quote:

The big question mark is whether Britain has done enough to put right its balance of payments, and, more importantly, to convince France that it should be in the Common Market. Devaluation has always looked like the last card up Mr. Wilson's sleeve in his efforts to enter Europe, and the sterling crisis of last weekend may have done no more than precipitate the situation.

The prospect of Ireland having to depend almost entirely on the U.K. market in the 1970's is an unhappy one. Tariff protection will be disappearing——

There will be another cut in January——

——and export opportunities could be limited by stagnation across the channel. It is in the interests of both countries that Britain succeed in its Common Market bid.

I would refer the House to a statement made by General de Gaulle since that article was published, and I would even refer the House to his photograph in the Irish Times. Perhaps the Minister would cut it out and frame it and he would then realise that the words, “Everything is as it was”, “Nothing is worse”, “A lot is a little better”, are not really true, and that this country is facing quite a difficult situation because of devaluation. The Minister may object to that, but there is no reason why he should, because the criticism due to the Government on this matter is that they did not look after their financial arrangements in the previous two years. Perhaps they were more tied up with the succession to power. Perhaps they were so tied up that they stagnated.

Mr. Haughey

You have your problems yourselves.

Mr. Donegan

None in the wide earthly world.

Mr. Haughey

There are a few rumours going around.

Mr. Donegan

So long as Fianna Fáil are in the country we may take it that there will be rumours. They are very good at that sort of thing.

Mr. Haughey

I am afraid that we are the victims of most of the rumours, as the Deputy knows.

Mr. Donegan

There is a great difference between rumours and the truth. If we have to accept the rumours, you have to accept the facts.

Mr. Haughey

You are not in the race yourself.

Mr. Donegan

Deputy Flanagan dealt very lucidly with the situation so far as increased costs are concerned. We will pay more for imported wheat; we will pay more for hydrocarbon oils; we will pay more for coal. In fact, we are already paying more for coal. A few days after the announcement of devaluation a statement was made by the trade unions that they were seeking a general increase in wages. We are right up against another wage round.

Many people in this country fail to appreciate the position or the attitude of the trade unions. I am not going to say whether it is right or wrong, bad, good or middling. The trade unions believe that these people have not got a proper slice of the cake, and they desire to increase that slice. For people who are paid a weekly subscription by their members that is not an extraordinary point of view. I would say it is a most normal point of view. On top of the increases on the major heads I have mentioned, and which were so lucidly dealt with by Deputy Flanagan, the position is that we are going to have a general increase in costs if there is another wage round. I do not see how another round can be avoided. There is no point in sticking our heads in the sand and saying we cannot have another round: "wrap the green flag round us, another round would be disastrous." It appears today that the trade union activities will precipitate another round. I am not asking for it, nor am I trying to sink the boat or rock the boat. As an observer for some years it seems to me that this will happen. That means we will have a further increase in costs.

If that occurs, so far as exports are concerned the minimal advantage which I indicated as a result of a devaluation to this country from non-devaluing countries, the majority of which have protective tariffs set up against us anyway, will be completely eroded. That means that the economic ill that besets us before devaluation was mentioned will clearly remain. This economic ill is that the ingredients of the national cake and the shape of the policy adopted by the Government have failed. The Minister referred to excessive quantification. I have not yet looked up the Oxford Dictionary to see whether that is correct.

Other people referred to the position of the agricultural industry. It is most necessary that this should be referred to. Our agricultural exports and particularly our cattle exports are the bulwark of the financial structure. When we export a bullock we are exporting probably 70 per cent of the grass he has eaten and the milk he has drunk. That means that while it is an excellent thing to employ people in importing raw materials from abroad, in this case we are exporting good Irish labour. That is an excellent thing to do to pay for the raw materials and to achieve a sound economy. We must have a steep increase in our agricultural production. In fact this year we had an increase in the export of cattle but that pattern may not continue after next May. What we want is a constant increase in the export of these goods.

I should like now to quote from the Irish Times, Thursday, November 23rd, an article written by Mr. Michael Dillon in which he deals with devaluation and says devaluation will raise costs. I quote:

In all the talk about the devaluation of the pound there has been little mention of farming, but the fact is that there will be increased costs for farmers as a result of this move. The increases will cover a fairly wide field, and there will be no advantages for exports.

That is a very strong statement. The article goes on:

The raw materials that we can expect to become dearer will include fertilisers, because all our phosphate and potash come from non-sterling areas, and we can expect nitrogen prices to increase also because the fuel oil used in the manufacture of nitrogen will be dearer. The fuel oil for the tractors will also be dearer, and petrol is another material which is very important in farming because so much has to be carried in and out of the farm by road. Our high protein meals generally come from non-sterling areas and we can expect the cost of these to go up, which will affect the pig feeders, calf rearers and winter milk producers, and any grain we import will probably also be dearer. We buy a great deal of our farm machinery from the Continent now, too, and all of this will go up, and there will surely be some increases in building costs. Finally, we will have to pay more for the extra money we will be forced to borrow because of all these other increased costs.

Mr. Haughey

He is a brilliant man.

Mr. Donegan

He is factual.

Mr. Haughey

We should all go away and cry—is that not the way he should have finished up?

Mr. Donegan

You are the person who did not tell the people the seriousness of the situation.

Mr. Haughey

I certainly did.

Mr. Donegan

You certainly did not. I would be very interested if the Minister would indicate when he is replying where he did, and when. I continue the quotation:

On the export side we gain little. Britain takes the bulk of our farm produce and the only country to which we have substantial exports of farm produce outside of that is the United States which has been buying a lot of manufacturing beef from us in the past year. They are taking pretty well all of this beef that we have to offer so we will not increase our exports, and will not get any more for the old cows than competition forces the factories to give. It is a poor outlook for an industry where profits were so low in 1966 that even the good cattle trade of this year has not yet restored the balance.

Mr. Haughey

Ochón agus ochón.

Mr. Donegan

I do not want to delay the House in reading long extracts from this article. I would refer the House to what the President of Macra na Feirme, Mr. Joe Rea, had to say. Deputies can see that in the Library.

Mr. Haughey

This country never lacked its quota of banshees.

Mr. Donegan

We want to know what the Government will do about it. Would the Minister tell us when replying to the debate, if we accept that France has now well and truly put a spoke in the wheel as far as entry to the Common Market for Britain and Ireland is concerned, does the Taoiseach intend to go back to Britain and say that we should delay reduction of our tariffs so as to set up this rearguard action that I referred to, the defence of existing jobs here? Have the Minister and his Government assessed the number of these jobs that are in danger and will he say a word about that when he is replying?

Has the Minister assessed the effect of the price increases to which I have referred on the poorer members of our community and can he give any indication now of an early or immediate alleviation of their lot and suffering? Has the Minister any plans that will indicate to trade unions how they could behave and how it would be possible to give them a better return without at the same time increasing our export costs and placing us in the position of being in rather the same mess of pottage as Britain is in?

Has the Minister anything to say about the proposal from Fine Gael that the taxes on hydrocarbon oils should be reduced? The Minister is in a buoyant revenue situation, no matter what he says. At this time of year it is not so easy to know the final figures but all the figures produced indicate good revenue this year. If there is going to be a general increase in costs as a result of the cost of movement of all goods in this country for agriculture, industry or any other purpose, and of passenger transport, if the Minister wanted to give the economy a good fillip one of the things he could do is to take the plucky step of reducing taxes on hydrocarbon oils, particularly diesel oil. Will the Minister indicate if he intends to do this?

What view has the Minister got on the suggestion made by me that he might suggest to the banks that different interest rates should be applied for different purposes so that there would be an attraction for people to invest in long-term heavy industries which would employ men? Does the Minister think that it is wise to wait for the Budget before dealing with a situation that is moving rapidly to its climax, with increases in costs and in certain import costs on one side and very little opportunity for increased exports on the other side and the devaluation correcting itself as all the international forces take their push against it and as prices change, so that in nine or 12 months' time or less the effects of devaluation may be eroded and we may be far worse off because of all the impending things coming towards us if we have done nothing about them? I have mentioned the things I wish the Minister would do.

Moving now to the Estimate for the Minister's Department, I should like to refer to decentralisation and to say that in my opinion it is a political gimmick. I believe that you will have half the Department of Lands in Castlebar and the other half in Dublin because it would be impossible to divorce a Government Department from the other Departments of State. I believe that the decision to move to Castlebar was prompted by the fact that in the two Mayo constituencies and the Roscommon-Leitrim constituency, in all cases, Fianna Fáil are less than 1,000 votes behind to get another seat and the mind of the Cabinet is so conditioned to remaining in power that they would do far more than that and say far more than that in order to achieve that purpose. In Longford-Westmeath the difference was seven votes and in Roscommon-Leitrim one finds the same situation. In my view, Fianna Fáil hope to cod the people of these constituencies past the next election, not for the first or last time? The early 1970s may see portion of both Departments in each place but nothing like the size of development that has been indicated and nothing like the benefits for the people there that Fianna Fáil would have them believe are, as usual, around the corner.

I want to conclude by mentioning the Kennedy Memorial Hall. I have come to the conclusion that a memorial to the late President Kennedy, on the committee for which some of the members of my Party sat, is a worthy thing. In this country the memory of the great President Kennedy should be perpetuated. Having said that, I want now to advert to another method of perpetuating a memory. There is a committee at the moment examining the question of perpetuating the memory of General Michael Collins. Their method—which I am not advocating in the case of the Kennedy memorial—is by way of scholarships.

At the moment there are throughout the country retarded children who cannot find a place to go for training. If you can bring retarded children together for special training they can, at 18 or 19 years of age, return to their homes and live an almost normal life. The project to build a £3 million concert hall in the Phoenix Park is mad. If President Kennedy were alive, the thing he would like would be the building of two homes or hospitals for retarded children. I have made that suggestion more than once. I put it now as a very serious suggestion indeed. A concert hall would be excellent; even though it might only be used a few times in the year, it is, however, something the country should have, but surely my suggestion would more suitably perpetuate the memory of this great man.

Minister for Finance (Mr. Haughey)

The word "complacent" has been used a great deal in this debate. In fact, I doubt if any Fine Gael speaker refrained from using it; all accused me of being "complacent" about the problems presented by devaluation.

Now, during the devaluation weekend, I had a very serious responsibility to discharge. Devaluation to most people is a mysterious and, indeed, a peculiarly emotive word. When a prominent European country devalued some years ago some old people actually committed suicide in the mistaken belief that their life savings had been wiped out by that act of devaluation. That is the sort of atmosphere that can be generated and my concern that weekend was, therefore, to point out as calmly and as objectively as I could precisely what was involved and to show that there was no need for either panic or hysteria. It was my concern to do what I could to steady public opinion and public reaction. I believed it was important to show our people that devaluation, while not welcome, was not something which should be regarded as a major disaster nor was there any reason why we should not or could not take it in our stride.

I thought that was the right attitude to take and the proper approach. As a Government we acted swiftly and with clear purpose on the basis of a decision already taken in advance. We were ahead of the situation. We did not permit ourselves to be dragged along in its wake. What would those who now criticise me, and say I was complacent, have wished me to do? Do they think I should have given the impression of being unprepared? Do they think we should have hesitated? Do they think we should have helped to create an atmosphere of panic, called midnight Cabinet meetings, and so on?

It is the job of the Government to anticipate developments and to act decisively, when decisive action is necessary. It is the job of the Government to give leadership to the nation. It is the job of the Government to warn the nation, when warning is necessary, and to act to restore public confidence when this is necessary. I was very, very anxious also that no act or statement of mine would do anything at all to set off a wave of price increases or to encourage speculation or profiteering. Do not forget all these things were very real possibilities. As everybody knows, there are many people in our community only too anxious to avail of any development of this nature to feather their own nests.

I wanted to make it clear, to put on record as specifically as I could, what exactly devaluation meant and what exactly it did not mean so that the general public might be as clear as possible about its effects.

Many Deputies during the course of the debate referred to the statutory parity which exists between our pound and the pound sterling. None, however, referred to one particular aspect of the situation, which we have been considering for some time. It can be argued that there is some incompatibility between the legislative proposals contained in the Currency Act of 1927 and those contained in the Bretton Woods Agreement Act of 1957 in regard to the external value of our currency. We joined the International Monetary Fund in 1957. We were obliged by the rules of the Fund to declare in 1958 a par value for the Irish pound in terms of gold. The same rules laid it down that we are not permitted to change that par value by more than ten per cent except with the agreement of the Fund. That agreement can only be given by the Fund if it is satisfied that a fundamental disequilibrium exists in our external payments. Those are the provisions of the Bretton Woods Agreement Act.

On the other hand, the Currency Act of 1927, passed 40 years ago, provides that our currency is convertible at par into sterling. It would probably be as well now to clear up this discrepancy and provide in our legislation that the external value of the Irish pound as declared formally to the International Monetary Fund would be the rate at which the Irish pound would be convertible into sterling and, indeed, into all other currencies. We have been considering this, as I said, for some time. In particular, we have been considering it in relation to the new banking legislation which is on its way. I am sure I do not have to emphasise that a change of this nature would be a strictly technical matter. The relationship of our pound to the pound sterling would, of course, remain unaltered. The external value of the pound sterling, and of most other currencies, is defined in the way I have mentioned—that is, so many grains of fine gold represent the par value of the currency as declared to the International Monetary Fund. The relationship between these par values determines the exchange rates for the various currencies.

We could not have made any such move at any time during the recent past without obviously raising questions which might have had very serious repercussions, repercussions of which I think every Deputy must be aware. The way is now clear for us to make the change over, but to have attempted to do so in the recent past as Deputy O'Higgins suggested, and others also, to have sought to amend the Currency Act of 1927 to give us freedom to adopt a different sterling value for the Irish pound in the recent past, would have been both dangerous and unnecessary. It would certainly have been interpreted as a clear indication by us that we believed devaluation was imminent, at the very time when the British Government was doing everything in its power to avoid devaluation. It was also unnecessary, because we had decided that on this occasion our best interests dictated that we should follow sterling, if it were devalued.

We had been studying this problem, in consultation with the Central Bank, for some considerable time and we had come to the conclusion that the least disadvantageous course for us was to follow suit when Britain devalued. I do not think any Deputy will seriously challenge that proposition.

Mr. L'Estrange

Except Deputy MacEntee not so many years back.

Mr. Haughey

Various other countries came to the same decision and no one suggests that their decision was not taken freely. Even if our currency had not been statutorily linked to sterling, we should still have had to decide what to do in the interests of our trading and general economic position. That is something every country has to consider and decide upon when the par value of a major reserve currency is changed.

When Britain devalued, countries all around the world assessed their own particular situations from their own point of view. Some decided it would be in their best interests to follow suit while others decided they should not change at all. A still further group of countries decided they should change but not to the full extent. Each country looked to its own best interests and acted accordingly and so did we. We took our decision in regard to this matter, motivated solely by considerations of our national welfare.

As I have said before I cannot understand what satisfaction some Deputies appear to get out of denigrating the financial status of this country. Why, for instance, did Deputy O'Higgins, the Fine Gael spokesman on finance, actually have to go to the Music Halls to get a term which would belittle the status and standing of the Irish Minister for Finance. That just does not make sense to me.

I want to put the record right: I am not doing it in any false motives of nationalistic beating of drums but simply because I think it is right that the people should know the truth about our currency. Ours is a separate, independent currency and is one of the highest standing in the world of international money. It is backed by more than ample reserves and by a sound external payments position.

We carry on the overwhelming part of our trade in the sterling area. In these circumstances, it is clearly to our advantage to have our £ on a par with the £ sterling. If it ever became clear that our advantage required a different rate of exchange, we should be free— indeed, we always have been—to make that change. These are the simple facts and I do not think there is any need for either denigration, on the one hand, or exaggeration, on the other.

There has been some criticism during the course of this debate about the Government's handling of the economy during recent years. It is suggested that the Government were responsible for bringing about inflationary pressures in 1964 and then prolonging unnecessarily the deflationary measures which had to be taken in 1965. Deputy Cosgrave, especially, seems to think there was deflation at all in this country until September of this year when some comparatively unimportant hire purchase restrictions were abolished. The restrictive measures which had to be taken in 1965 were necessary to correct the excessive balance of payments deficit which came about in that year through a combination of internal and external factors.

Deputy O'Higgins made no reference to the difficulties created for us by the British import surcharge, by the slowing-down of expansion in the United Kingdom economy and by the falling-off in the net capital inflow to this country in 1965 as a result of restrictive measures taken by Britain and the United States. The record shows clearly that these restrictive measures which we had to take were entirely successful. The deficit on our balance of payments were reduced from £42 million in 1965 to £16 million in 1966 and in this year, 1967, it is fairly clear that there will be a small surplus. That clearly shows that the corrective measures were carefully gauged and judiciously decided upon. The idea was to put the situation right on the external payments front and, at the same time, to minimise the effects of these measures on output and employment within the country.

As soon as it became obvious that our external payments position was improving and that the situation was coming right, we initiated a series of reflationary measures: this began as early as the summer of 1966. In July, 1966, we made extra money available for housing and sanitary services with the idea of maintaining the level of building activity: I forget whether the figure was £1 million or £1½ million but it was of that order. In the following month, hire purchase restrictions on various commodities were removed to help to boost consumer demand. Later in 1966 the Central Bank advised the commercial banks to make an additional £10 million available to the private sector to help to encourage growth and investment. In the Budget, in April, we increased current Government expenditure by £23 million, without any appreciable increase in taxation. At the same time, we increased the public capital expenditure programme by £10 million. All of these measures were designed to give stimulus to the economy and to encourage expansion. There were other measures also but the ones to which I have referred are the most important.

The whole purpose of these series of measures was to get the economy moving forward again without upsetting the corrective trend we had established in the balance of payments. The record clearly shows that there is no justification whatever for the criticism that the Government did not reflate the economy quickly enough: we did. We started as far back as summer, 1966, on the process of reflation. The measures we took led to a substantial acceleration in growth which started in the second half of 1966 and continued into 1967.

It is quite clear now that, for the year 1967, we shall achieve a growth rate of 4 per cent which can be regarded as satisfactory by European standards. This growth rate, this performance of the economy, is all the more outstanding because it was achieved in conditions where the balance of payments was stable and also in conditions where there was a general slowing-down of growth throughout the world. We are now back to the high growth rate that we achieved in the first half of this decade.

I think I am justified in reminding those who now advocate reflationary measures, as did Deputy Cosgrave— indeed, most of the principal members of the Fine Gael Party supported him —that reflation has, in fact, taken place. We now have a satisfactory growth rate. I believe that the various influences now at work in the economy, together with the stimulation, which will be given by devaluation will enable us to keep national production rising at this rate of 4 per cent.

I did not understand Deputy Donegan's references at all to the prospects of improvement in certain areas from devaluation The common external tariff of the EEC on industrial products is something around 14 or 15 per cent, on average. It is quite clear that one effect of devaluation will be to offset to a greater or lesser extent that common external tariff as far as we are concerned. If that does not give our exports of industrial goods an excellent chance of getting into these markets I do not know what will.

I mentioned that Deputy Cosgrave kept talking about getting the economy moving forward. He seems to think it is still in a depressed state which of course it is not. The truth is that the whole free world suffered a serious setback in economic growth during 1965 and 1966. All the impartial commentators, all the institutions agree that this was so. The point is, however, that our economy, having suffered the setback for the various reasons which I have outlined and in common with most other western countries, pulled out of this recession far more quickly and effectively than most. Any objective examination of the statistics shows this clearly, shows that far from our economy stagnating it is, in fact, moving forward at a satisfactory rate—four per cent this year, and I cannot see anything to indicate that we cannot keep up that growth rate. I want to point out that a growth rate of four per cent is exactly twice the average of the OECD countries

The recovery of our economy began in the second half of 1966 when output of transportable goods industries rose by eight per cent and that rate of expansion was carried on and improved upon in 1967.

In the first half of 1967 the volume of output was 12 per cent up on what it was in the first half of 1966. Productivity in industry has also increased very substantially this year. In the first half of 1967 it increased by 8½ per cent and at the same time the real incomes of workers in industry rose by six per cent. I think the most satisfactory aspect, however, of our economy during 1967 was the notable rise in our industrial exports. They increased by what I regard as the remarkable figure of 28 per cent in the first half of this year. Most Deputies are very well aware of what a key role the building industry plays in our economy. It is a very good barometer of the general economic climate. During the first nine months of this year housing starts— and this I think is one of the best indicators one can have of the level of activity—rose by 98 per cent. The number of grants which were approved by local authorities for private houses is up by 1,000 on the same period for last year.

In regard to employment also, while the situation is not as satisfactory as one would wish, there has been very considerable improvement. Revised figures show that for the period 1961-1966 a total of 59,000 new jobs was created in the industrial and services sector of the economy. That was an increase of practically 12,000 new jobs each year. The figure of 59,000 in these sectors was offset, of course, by a fall of 45,000 in the agricultural sector. That resulted in a net increase in employment for the period of 14,000. If we had not had the decline in agricultural employment which is a feature of most European countries the position in regard to the creation of new jobs and employment would have been very satisfactory indeed.

The rising trend in industrial production which I mentioned is continuing to provide more jobs. In the second quarter of 1967 employment in transportable goods industries was 4,200 more than in the same quarter of 1966 and, as Deputy Seán Moore pointed out, this rise in employment has been accompanied by a very sharp fall in emigration. Net emigration in the intercensal period, 1961-1966 was 17,000 a year. That figure represents a reduction of 25,000 a year on the preceding period when the annual average was 42,000. Comparing the two intercensal periods the net emigration figure has fallen from 42,000 to 17,000.

Perhaps a more important figure still is that the same census return shows that our population has increased. Between 1961 and 1966 there was a rise of 63,000 in the population. This is the first registered increase for over a century——

Mr. L'Estrange

That is wrong. It increased from 1945 to 1951.

Mr. Haughey

——apart from marginal increases. This is the first substantial increase——

Mr. L'Estrange

It was 55,000.

Mr. Haughey

There was only a temporary and marginal increase in the other period.

An Leas-Cheann Comhairle

The Minister must be allowed to proceed without interruption.

Mr. L'Estrange

Yes, but we want to have truth.

Mr. Haughey

The high marriage and birth rates indicate that at present that there is a permanent upward movement in our population. Most Deputies are familiar with the situation in regard to our balance of payments and it is a satisfactory achievement to have been able to wipe out a deficit of £42 million and turn it into a surplus. It would be wrong however to be too doctrinaire about these balance of payments figures because I think there is no doubt that if we are to get the expansion in the economy here that we need we shall have to contemplate balance of payments deficits. Perhaps at the moment there is a need to generate more imports to encourage economic expansion. While these figures on external account are very satisfactory as an indication of what our economy can do, we should not get ourselves into a frame of mind which would regard a surplus on our balance of payments as something we should seek to maintain in the long term. But it is important for us to establish that we can achieve a surplus. It also of course provides us with a cushion against difficulties which may arise in the future when the terms of trade or some other developments may go against us.

Deputy Hogan referred to the cost of foreign borrowing. In my introductory speech I pointed out that devaluation had, of course, unfortunately increased the cost of servicing our foreign debt. The non-sterling foreign indebtedness of the Government comes under three headings, first 107 million dollars in Marshall Aid loan, next, 21,500,000 dollars loan from the International Monetary Fund and finally 19.7 million dollars outstanding on the sterling-deutschmark loan. The effect of devaluation is to increase our liability, in terms of Irish currency, by the full extent of the change. This means that the value of the principal sum to be redeemed in terms of Irish currency has to be increased by £8.74 million. Interest payments, of course, are also affected. The major effect of devaluation is on the $107 million worth of Marshall Aid loan which is still outstanding and we had actually considered, before devaluation, whether it would be a good thing to redeem the loan but, having regard to the low interest charged—it is only 2½ per cent —and the current cost of borrowing, we decided against. There would have had to be a devaluation of from $2.8 to $2 to the pound and that appeared unlikely, before it would have been worth our while. Most of the drawing from the IMF is, of course, free of interest.

The loss on devaluation which we have suffered is partly offset by the saving in interest that the alternative borrowing would have entailed for us. There is also a loss in terms of non-devaluing currencies, in the value of the sterling reserves of the banking system which amount to £270 million.

However, I want to make the point that this devaluation of our external assets is more apparent than real, because as reserves these are held in the sterling area, and are most likely to be used in the sterling area. It is only really if we decided to take all our external reserves and to transfer them into non-devaluing currencies that we would feel the full effects of devaluation. In so far as we continue to hold them in sterling for use in the sterling area, then their value is the same as it was before devalution.

It has been suggested that we should have, over the years, diversified our external holdings We did not do that, or at least we did it only to a very limited extent, because of the facts of the situation. First, there was the consideration that any large-scale sale of sterling by us would have contributed to the severe pressure already on sterling. Indeed, if we and other countries who hold sterling balances had joined in this queue of speculation, then we would almost certainly have made things much more difficult for sterling and perhaps have brought about a bigger devaluation than actually occurred. But perhaps the more important consideration is that if we had changed from sterling into gold or dollars it would have involved a very considerable loss of revenue for us. Gold, of course, is a non-earning asset and dollar securities do not pay anything like the same rate of interest as we are getting from our sterling investments.

Deputy O'Higgins, Deputy Flanagan and others put forward the intriguing suggestion that we should immediately increase social welfare benefits and, at the same time, reduce taxation. I have already given an assurance, and this really only reiterates the policy of this Government, that the position of social welfare recipients will, as a minimum, be safeguarded should there be significant price increases from any cause, devaluation or otherwise. Deputy O'Higgins and others proposed that at the same time as we increase social welfare benefits we should also reduce the duties on tobacco and petrol. Taking these two commodities, I do not think there is any need for a rise in tobacco prices for some time in view of the large stocks which are held, and any eventual increase should not amount even to a penny on the packet of 20. The situation in regard to oil prices is complicated by the Suez situation, but it is again not clear that there will be any immediate increase in petrol prices as a result of devaluation. So far as I understand, no proposal for an increase in either the price of tobacco or petrol has been made to the Department of Industry and Commerce.

Deputy O'Higgins linked these two proposals together, and made the extraordinary suggestion that we should, for its own sake, increase expenditure and reduce taxation. He called that being flexible. What it would amount to in fact would be creating a Budget deficit without regard to whether or not our economic circumstances would justify such a course. Fine Gael clearly have in mind an ad hoc way out of temporary difficulties. They emphasised that the tax reductions would be merely temporary. Can anyone tell me what real benefit it would be to reduce duties for a few months on these commodities and then put them back on again, perhaps at a higher rate, in order to make good the revenue lost which had been suffered in the meantime? It is quite a nonsensical proposal.

Deputy Corish and others made the point that we had no choice in regard to the changing of our bank interest rates. There is nothing peculiar at all about the fact that Irish interest rates tend to follow movements in rates in other countries. This happens all over the world. No country, not even the United States, can isolate itself entirely from international movements in interest rates. Rates have gone up in Canada, in the European countries as well as in the USA. I said in my opening remarks that we had to raise our bank rates in order to prevent any outflow of capital and to ensure that our domestic savings would be kept at home and would continue to be available to finance our various development programmes. However, we do not automatically follow the British rates nor do we follow them to the same extent. There was no change here in our rates following the increase in Britain in October and November, that is, prior to devaluation and, as Deputies know, our bank overdraft rates at present are a full one per cent below those obtaining in Great Britain and Northern Ireland.

Some Deputies asked me for an assurance that there would be no credit restrictions here. I have already indicated that there will not be. In announcing the increase in interest rates, the Irish Banks Standing Committee emphasised that they expected to be able to continue to meet the normal demands for new and additional bank credit for the private sector. Deputy O'Higgins suggested that we should subsidise interest rates for housing. We have decided not to increase the Exchequer lending rate. The 7 per cent rate at which money is made available to the Local Loans Fund for small dwellings loans and other local authority housing will not be changed. It will stay at 7 per cent, even though this 7 per cent is now well below the cost of borrowing in the open market.

Under considerable provocation last week I referred to Deputy Dillon as a fraud. Some Deputies may regard that as a bit harsh and, on reconsideration, I want to withdraw it and to say that in his approach to economic matters he is inconsistent; indeed he is inconsistent to the point of being totally unreliable.

Mr. L'Estrange

He was very reliable in his forecast of your crisis in 1965 and 1966 two or three years before.

Mr. Haughey

I always try to be orderly in this House and I am always sorry afterwards when I have been provoked into those exchanges but I do not think that I can be expected to sit quietly here and hear Deputy Dillon accuse me and my colleagues of being fraudulent, dishonest and so on. I am always suspicious, maybe unreasonably so, of those who feel it necessary to go around parading their honesty and their idealism and by inference, of course, impugning the honesty and idealism of all the rest of us. For my part I am, in public life, prepared to take the honesty and integrity of most people for granted until it is proved otherwise.

I shall leave aside what I regard as some of Deputy Dillon's more out-of-date views, his propensity to see the world in black and white terms, the goods and bads, just like a television serial. I would, however, like to deal with his economic views strictly on their merits. I have said before, and Deputy L'Estrange probably thinks this is harsh too, that Deputy Dillon is easily the worst economist in this House. I think that is so because he mixes up a lot of other things with his economics.

Mr. L'Estrange

He was one of the best Ministers for Agriculture we ever had.

Mr. Haughey

He mixes his economics with his other preconceived notions.

Mr. Fanning

1/- a gallon for milk.

Mr. L'Estrange

That was a minimum. They are getting less now if one takes money values into consideration.

An Leas-Cheann Comhairle

The Minister must be allowed to speak.

Mr. Fanning

1/- a gallon.

Mr. L'Estrange

They are getting about 10d per gallon now when you take money values and devaluation into account.

An Leas-Cheann Comhairle

Deputy L'Estrange and Deputy Fanning will have to carry on this conversation somewhere else.

Mr. Haughey

When Deputy Dillon was giving his performance here last Wednesday—I use the word "performance" advisedly—it was quite clear to me that he was reflecting the real essence of Fine Gael philosophy. The benches behind him all filled up and his colleagues were nodding and smiling their approval. I wonder would they do that if they knew the full extent of the philosophy to which they were so readily nodding their approval. Deputy Dillon held up to us the ideas of the late Per Jacobsson as the only true gospel. Let us look at some of those ideas as they are set out in the Banking Commission Report of 1938, in the drafting of which Per Jacobsson played a very large part.

I do not think I need remind Deputies that the whole trend of that report was conservative, to say the least of it. In particular, it criticised the policy of the Government of the day for borrowing for housing purposes and the subsidisation of various housing schemes on the grounds that this adds to the growing burden of dead weight debt. I want to say that, while my colleagues and I reject that philosophy, we are prepared to grant that Deputy Dillon and his Fine Gael colleagues may legitimately believe in it, but they cannot have it both ways. Deputy Dillon last April and again when he was speaking last week told us of the coalition Government's last period in office and said that though they were told it was wrong to spend money on building houses they went ahead and built them anyway. But, of course, the Jacobsson philosophy which he espouses so clearly says the direct opposite. It can be fairly well summed up in this way. The Jacobsson philosophy is that if the financial situation is difficult, you should not build any houses and even if it is not difficult, you should not build houses if you have something better to do. There is the basic inconsistency, the fundamental inconsistency of Deputy Dillon in all its stark reality.

Mr. L'Estrange

That must be the Government's philosophy today.

Mr. Haughey

He holds the great Per Jacobsson up to us as the man who has all the truth and at the same time, a couple of paragraphs later in the same speech, flings him out the window.

Mr. L'Estrange

There are 5,000 people in hovels here in Dublin and no houses available for them.

Mr. Haughey

Not that there is any obligation on me, but I think for the record it would be fair to say that Deputy Dillon was very sweeping and very unfair in his presentation of Keynes as an apostle of inflation. Keynes had no such doctrine. His contribution was to show us—and I think we should all be grateful to Keynes for this—that depression was not a necessary evil and that only proper management of demand would ensure that a nation's resources were fully used. There is no evidence at all that he considered that constantly rising prices were essential to economic progress.

The First and Second Programmes for Economic Expansion have been attacked here. Indeed, they have been scoffed at. That is quite incomprehensible to me. The inauguration of economic programming changed the entire economic history of this country. It has altered the trend of centuries and set us moving forward at something approaching a satisfactory rate of growth. The First Programme was entirely successful and the Second Programme has been moderately so. Let us just look at the record for a moment. The First Programme raised national output by 23 per cent in five years. During the five years 1959 to 1963 the following growth rates were achieved. 1959—4.9 per cent. 1960— 4.8 per cent. 1961—4.7 per cent. 1962 —3 per cent. 1963—3.9 per cent. The average growth rate, therefore, for the five years was 4 per cent per annum. During the first four years of the Second Programme the following growth rates were achieved: 1964, 5 per cent; in 1965, 2.3 per cent; in 1966, 1 per cent, and in 1967, 4 per cent. That is a total of 12 per cent for the four years, or an average annual growth rate of 3 per cent. The achievement of an annual average of 3 per cent is to be compared with the target figure of 4 per cent, so that we achieved 75 per cent or threequarters of the growth rate we set out to achieve. While that is not entirely satisfactory, at the same time it is not bad and compares favourably with most other European countries. What we must do now is see why we did not reach the 4 per cent target. That examination is in hands and we hope to publish the results of it early in the new year.

We have been criticised for not publishing a review of the Second Programme earlier on. We have also been criticised for not revising the targets in the Second Programme when it became clear that we were not reaching them. I can give valid answers to both those criticisms. In regard to the suggestion that we should have published a review before now the simple fact of the situation is that many of the reliable figures and final data necessary, are only now becoming available to us. If we had published a review before now it is almost certain that it would have had to be revised. However, the examination is practically completed and the results will be published early in the New Year.

With regard to the criticism that we did not revise the Second Programme targets there is a very valid answer to that criticism also. It must be borne in mind that the external environment in which the economy will have to perform is of critical importance in regard to economic programming. We did not revise the 1970 targets because, in the circumstances which exist now in regard to our EEC application, to do so would be quite unrealistic. However, I want to assure Deputies that there is no question whatever of our abandoning economic programming or indeed allowing the next stage of our planning to be postponed for any length of time. We have now had a great deal of experience in economic programming. We have much more expertise and knowledge at our disposal now than when we began. Above all I think the lesson of the First and Second Programmes is that while we can do much to control external circumstances, our economic future is not entirely beyond our control. There is a great deal we can do to manage the economy and direct it in the way we want it to go.

We had earlier this year an excellent report furnished by the National Industrial and Economic Council. That report shows what further progress must be achieved if we are to achieve full employment. The Government has made it clear that we are in broad agreement with the Council's report and that we accept the challenge of full employment. To increase employment has always been one of our basic aims and it was one of the motivating forces of the First and Second Programmes. We have started work on the Third Programme. It will be a programme of economic and social development. It will come into operation as soon as possible after our application for membership of the EEC has been clarified. Should it appear that the decision on our application will be unduly delayed then we shall have to prepare this Third Programme on the basis of the alternatives which are open to us. I said in Drogheda that in the Third Programme there will be less prominence given to figures and more to strategic policies. That does not mean that there will not be any quantification as Deputy Donegan seemed to imply. There has to be quantification. Indeed, in Drogheda I outlined that as a minimum the Programme would have to include figures for gross national product and its main constituents such as industry, agriculture and services and on the other hand figures for gross national expenditure——

Mr. James Tully

You will not be introducing it then for some years. Not until the EEC situation has been clarified?

Mr. Haughey

Until our application has been clarified.

Mr. James Tully

That could be some years.

Mr. Haughey

If a decision on our application is going to be delayed then we will have to go on another basis.

Mr. James Tully

If you are aiming at targets on EEC membership surely something different would mean that you would have to start on square one again.

Mr. Haughey

One possibility is that our application will be dealt with speedily and we will get a decision and know where we are going. In that set of circumstances the Third Programme will be devised in a certain way. We will know soon if that is likely. When we know that we will be able to decide in what direction the Third Programme should be aimed.

Mr. Corish

Do you expect to get a decision at the end of this month?

Mr. Haughey

The ideal thing from our point of view is that we would know that our application would be agreed to and then we could pitch the Third Programme to coincide with the transitional period. Part of our experience from the First and Second Programmes is that a period of eight years is too long. In future Programmes we should opt for shorter years and greater flexibility. If there was anything wrong with the Second Programme it was, I think, that there was undue emphasis on quantification. I agree that figures and quantification are necessary, first of all to devise a programme and, secondly, as guidelines against which to measure the progress you are or are not making. There has to be a great deal of arithmetic and quantification, but these should not have as much prominence given to them as the Second Programme did.

Mr. James Tully

More planning than programming.

Mr. Haughey

It will be a programme of economic and social development. In addition to the necessary quantification and figures and arithmetic there will be much greater emphasis on the strategies to be followed in key areas like industrial development, manpower policy, management training, investment and so on.

Mr. L'Estrange

Can we take it it will be a three-year programme?

Mr. Haughey

I have not said that. It is not possible to decide on some aspects until something is known on the EEC situation. The Second Programme was certainly too long—from 1964 to 1970.

Mr. James Tully

That was one of its faults.

Mr. Haughey

It had not many. Perhaps the Deputy was not here when I pointed out that in the first four years of the Second Programme we achieved 75 per cent of what we had aimed at. The target was four per cent per annum and we achieved three per cent per annum.

Mr. Corish

The big one was not achieved.

Mr. Haughey

Employment was the principal area of failure. As I pointed out earlier there was a net increase in total employment of 14,000.

Mr. L'Estrange

There were 100,000 less in employment than ten years ago.

Mr. Haughey

And there were 8 million people here in 1840.

Mr. L'Estrange

The man in the park said at one time when he was a younger man that there would not be——

Mr. Haughey

I am disappointed at the attitude that Fine Gael Deputies are taking towards the Government's policy of decentralisation. I would, first of all, expect that this would be welcomed in principle on all sides of the House. I would also have welcomed a good discussion on the implications of the policy, on the problems it will involve and perhaps have expected suggestions from Deputies in regard to it. I want to contradict the suggestion that this announcement of ours, the decision to decentralise two Government Departments was a spur of the moment decision, or political gimmick. I want to point out that as far back as 1964 the then Minister for Finance, Dr. Ryan, announced that it had been decided in principle that certain Government offices should be transferred from Dublin, and the statement of the Taoiseach on 16th November simply brings the Government's policy in relation to decentralisation up to date. It seemed to us in the Government that the only way to achieve more satisfactory progress in regard to decentralisation was to take a firm decision to send certain named Departments to certain named provincial centres. We realised when we were deciding that we were laying ourselves open to criticism for not sending other Departments to other centres. We decided, however, to make a start and when the Government had come to this primary decision I was authorised to meet representatives of the Staff Associations and tell them of our decision in advance of the Taoiseach making a public announcement and also to assure them that they would be fully consulted and full regard had to their wishes and requirements at every stage of the decentralisation process.

Deputies have asked me if the staff were consulted. I want to say they were not consulted because they could not in the nature of things be consulted, but they were seen and informed that there would be full consultation with them as matters proceeded. In fact, that consultation is now under way through the recognised machinery.

Progress reported; Committee to sit again.