In any event, I am sorry Deputy Dillon did not have more time because Deputy Dillon is an interesting speaker and he had some theories which I should like to have seen him develop in relation to economic thinking, and so forth. I offered him some extra minutes but, like the good parliamentarian he is, Deputy Dillon preferred to conform with the order of the House that was made yesterday.
If I may refer generally to the debate, it really only came to life in the last hour or two with the intervention of Deputy Dillon and the forceful contribution of Deputy Tully and, since he is in the House, not to detract from the speech made by Deputy O'Higgins, who made as good a case as he could on behalf of the Fine Gael Party. Rather than deal with the performance of Fine Gael as a Government or part of a Government set-up, Deputy O'Higgins spoke instead about the division of votes between Fianna Fáil and Fine Gael in recent elections. That is not relevant at all. What is relevant now is a review of the current economic position in the country, especially as evolved and developed over the past 12 months.
It was very difficult for me in the course of this debate to identify a theme on which I could accept the Opposition as challenging or criticising the Government's administration or the Government's policies over the past 12 months. Time after time, Opposition speakers came up with the assertion that nothing had been done over these 12 months. It is very difficult to know how they came to that conclusion. I should like to remind them in this context of some of the things that did happen in the year under review.
Let us remember that at the beginning of this year, we were only barely emerging from the throes of the economic depression that hit this country in common with the United Kingdom, the United States and many European countries. It was a kind of depression caused to a large extent by the same factors as caused the depression in 1956. However, instead of running away from these difficulties and running away from the effects of this depression, we, unlike our predecessors, faced up to these difficulties, and that was the first achievement of the incoming Fianna Fáil Government. Let me repeat that success did attend our efforts, efforts which included timely and adequate action to redress the position. When we saw the time was opportune and when we thought it prudent to do so, these efforts also included the reflationary action that we took. That action did prove timely and, I suggest, in the circumstances proved adequate. In 1966, we took these necessary reflationary steps, and the results have now begun to flow from them.
Deputy Cosgrave suggested yesterday that whatever good results have attended the economic situation would have happened in any event, without any Government activity or without any Government intervention. I am sure Deputy Cosgrave does not wish to have it both ways and hold that if things go wrong, the Government must accept the blame but if things go right, then something else was responsible, not the Government. I think we are entitled to take pride and encouragement from the fact that things have begun to go right.
Deputy Cosgrave yesterday, and other speakers outside in different media, referred to the necessity for reflation at the present time. It must be obvious that, as with much of Fine Gael economic policy, it is hindsight policy. They are not only days behind the times but they are even over a year behind the times. I refer again to the fact that, from July, 1956, onwards, £40 million credit was made available for the generation of economic activity, and that came after a positive decision and after positive advice given to the commercial banks by the Central Bank. This is an increase of 11 per cent. Surely an increase of £23 million of extra Government current expenditure, made possible through Budget activity and through fiscal activity in April of this year, without a serious increase in taxation, was nothing but reflationary action? The Fine Gael spokesmen, who now apparently and belatedly expound the policy of reflation, ignore or chose to forget these facts.
In relation to economic reflation generally, I might say that I am no Keynes and, in the context of what I am about to say, I am certainly not a Keynesian, but I do not have any blind admiration for those who favour the consistent balancing of Budgets. I am not against imbalance in Budgets. Neither am I against imbalance in international payments so long as that imbalance is moderate and can be handled and so long as, in the long term, it can be for the benefit of the country.
The rise in external assets this year, to which Deputy Corish referred, and which, indeed, he criticised a great deal, is attributable to two main factors. The first was the substantial improvement in external account resulting from a rise in exports, a rise four times greater than the rise in imports. The second factor was the large capital inflow. Let me say at once that I am not relying to any extent on the rate of capital inflow we enjoyed this year being repeated next year any more than the rate of inflow in 1964 could be relied upon to be repeated in 1965 and 1966. It was not. Both of these factors were of an exceptional nature.
The improvement in the balance of payments has been such as to lead to a surplus on current account, a situation which, I candidly admit, is unlikely to be maintained, and for good reasons. A continuance of the present buoyancy in the economy will inevitably lead to imports of plant, machinery and materials for industrial development and, at the same time, higher living standards will call, as has been the pattern over many years, for increased imports of consumer goods. It is improbable that exports will be able to keep pace with the higher imports required and the likelihood is that a steady economic growth will be maintained over a period and, even if a moderate deficit again emerges on the balance of payments, I think we will manage that.
In regard to the capital inflow, it would be foolish to count on this continuing at the rate of £35 million to £40 million a year. Indeed, it is a considerable tribute to the confidence that foreign investors have in our economy that the management of foreign companies can continue to invest at such a high level in our economy. The present level of reserves — they are in the order now of £290 million — provides room for inflow in the future and will allow growth to be maintained even in circumstances of a moderate balance of payments deficit and reduced capital inflow. This year's capital inflow, therefore, does not support Deputy Corish's contention that the economy is starved of investment funds. His suggestion of fiscal control over money leaving the country would no doubt — I am sure he knows this: I intervened while he was speaking — cause deterioration in the funds for investment because, if we take action of the kind suggested, foreign investors would almost certainly be frightened off in view of the danger of their being unable to repatriate any investments they might make here. I also indicated that there would be danger of retaliatory action on the part of other Governments.
Since I am dealing with external assets and external influences, I want to say now to Deputy Dillon that the Government are conscious of the difficulties operating in the British economy, difficulties which may yet operate in the United States economy. We contended with these difficulties before and I think we can take encouragement from the fact that, even last year, when the British economy was stricken by a general depression, by a seamen's strike, followed, more recently, by a dockers' strike, all of which affected her growth rate, we achieved the satisfactory growth rate we did over the 12-month period.
Deputy Corish and others referred to what they described as the abandonment of the Second Programme for Economic Expansion. Deputy Corish, in particular, pooh-poohed the increase of four per cent in our economic growth over the 12 months and seemed to suggest that this was only a flash in the pan — he did not use the actual words "flash in the pan"— and he also said, quite rightly, that the growth rate cannot be confined to one particular year; it must be taken over a period as a whole. That is a fair enough comment. But let us look now at what the growth rate was over a reasonable period in the past. The Deputy will remember that up to 1956-1957, the growth rate was about one per cent. Then for the first time, I think, in living memory, the growth rate went the other way. Our economy started to go downhill. But from 1958 to the end of the First Programme for Economic Expansion, the total growth rate was 23 per cent, or over four per cent per annum in that period. From 1964 to date, the growth rate has been an estimated 12 per cent. Taking the two periods together, 23 per cent and 12 per cent, it is clear that there has been an average growth rate since 1958 of 4 per cent, which is exactly the figure for this year. Even on the test, therefore, applied by Deputy Corish himself, we can, I think, say we have been making reasonably satisfactory progress.
Before I leave Deputy Corish, I should like to mention his repeated reference to the teach-in in University College, Cork. I was not present at it, but I know one or two of the students involved in the organisation of it. I saw six or seven of them in a television interview and they struck me as being sincere young people. They are to be congratulated on their initiative and on the successful organisation of this event. We, as a Government, welcome public debate on public affairs, particularly debate by independent, competent and objective people. Apparently there were many such present at this debate and the proceedings were all the better for their presence.
Deputy Cosgrave yesterday referred to the impact of devaluation on consumer prices and worked out, by reference to a report of the National Institute of Economic and Social Research, a British-based institute, published in November, 1967, that there might be a 6½ per cent increase in consumer prices directly related to devaluation. Now this review does state that over the next 12 months the rise in import prices in the United Kingdom as a result of devaluation is likely to cause a 2½ per cent increase in consumer prices. Export prices do not normally rise as fast as does the general domestic price level and, therefore, since we also have devalued, it is reasonable to assume that the average rise in the price of our imports from Britain as a direct result of devaluation will be less than 2½ per cent. That is in relation now to goods we import from Britain.
The estimated increase of seven per cent in British export prices quoted by Deputy Cosgrave takes account of a number of factors which have nothing whatever to do with devaluation.
The National Institute of Economic and Social Research review, this British review, clearly states that its estimate is based on the fact that "there are several reasons why export prices may be expected to rise in the United Kingdom" over the next year or so, and these several reasons are not related to devaluation. If we assume that as a result of devaluation the prices of our imports from Britain and other devaluing countries increase by as much as three per cent, then this will only add an estimated 6 per cent to our general price level. This estimate is arrived at in the following way: about 65 per cent of our imports come from devaluing countries; imports of goods and services constitute 30 per cent of total final expenditure so imports from devaluing countries represent about 20 per cent of final expenditure. The rise in the general price level which would result from an increase in import prices of three per cent would then be 6 per cent. Imports from non-devaluing countries represent about 10 per cent of final expenditure. If the price of imports from non-devaluing countries rose to the full extent of devaluation, that is, 16? per cent, it would add 1.7 per cent to the general price level and this can be regarded as an outside estimate because it does not take account of possible shifts from devaluing countries to cheaper sources of supply in devaluing countries, and this is quite likely to happen in our own case because Britain can be a more competitive purchaser of some of the capital goods which we have occasion to import from the Continent and it may be that there would be a transfer of imports from these countries to Britain. The total increases in the general price level resulting from devaluation would therefore be of the order of 2.3 per cent, and this estimate takes account of imports from both devaluing and non-devaluing countries.
Deputy Cosgrave yesterday, in part of his speech, used the November report, or commentary, as it is called, of our own Institute for Economic and Social Research and quoted a reference from that to deal with certain building operations. He suggested, as appeared in that report, that if following increased activity in house building and office building, industrial building, that is the building of factories, went ahead at the expected rate, the building industry would be strained. That may be so, but it is a pity that when Deputy Cosgrave was consulting our own Institute's report, which I think is objective, and whose officials are as efficient as those of the British Institute, he did not turn over the page. He was reading from page 4, and on page 3 — there are only 4½ pages altogether in the summary for November — he would have seen that the opinion of our own Institute of Economic and Social Research agreed with this figure of 2 to 3 per cent ultimate increase in consumer prices, and this contrasts with the 6 to 6½ per cent increase which the Deputy worked out from the British report.
Let me get back, however, to the alleged lack of progress for which many of the Deputies opposite said we were responsible. Most of the Opposition speakers said that there was no progress, but, as I said, Deputy Cosgrave admitted that there was some progress but attributed it not to the Government but to some other unknown factors. In the first place, I think nobody has attempted to deny that this four per cent increase in national growth this year is likely to take place. I think it is a certainly, and I believe that was a quick recovery, having regard to the difficulties of a year or a year and a half ago, and a worthwhile recovery, and was due directly to the reflationary action taken by this Government.
Labour speakers tried to suggest that this four per cent increase in gross national product meant nothing to the man in the street. Unless there is a four per cent or some other percentage increase in our national growth there cannot be stimulation of our economy generally. I think it has been stimulated and I propose to show that industrial expansion has taken place. The volume of production in transportable goods industries for the first half of this year was 12 per cent higher than in the same period last year and this kind of thing cannot happen without involving the man in the street, who is the worker who receives wages. I repeat as I said yesterday, that over 15,000 more people were in employment this year compared with last year and more of these were men than women. Here I might take up Deputy Tully's challenge to me that I have produced figures which could not be stood over.
I said yesterday that the figure of 715,500 insured persons, persons in insurable employment, was the highest figure ever attained in the history of the country. Deputy Tully challenged this and said it could not be right, that at least it could not be the highest figure because by reason of the extension of the insurable limit more people already in jobs were able to continue in insurance. However, if I ignore insurance, I hope to establish for Deputy Tully in another way that more people are in employment in transportable goods and industries and commerce than at any other time in our history. The total for all these industries is 732.7 thousand as compared with 673.8 thousand in 1961. That is a rise of 58.9 thousand or nearly 60,000 over a fiveyear period, or 12,000 a year. Deputy Tully can challenge these figures by reference to insurability or non-insurability or increased insurability of people if he wishes.
Deputy Tully accused me also of either being misled in my brief or trying to mislead the House itself in relation to emigration when I asserted that our emigration figures are going down. As Deputy Tully is aware, our best means of assessment of emigration is the net difference between outflow and inflow of passengers. In the year ended 28th February, 1958, that figure was 59,860 — 60,000 or as near as makes little difference. There was a gradual steady decline until 1963 to 12,000. A rather sharper increase took place up to February of 1966, 30,000, but it had gone down to 21,000 in the period to February of 1967. These are the figures available from the Central Statistics Office, figures supplied to me on which I based my statement that emigration was declining again, and what is more there is a population increase which we are happy to record also since 1961 up to 1966 of 63,000.
May I say one thing more in respect of the unemployment figures? I was accused also of misleading the House in this respect, that I gave figures that indicated a lower rate of unemployment than was indicated by the figures available to the Labour Party. The figures available to the Labour Members were figures as of 15th November as compared with the corresponding date last year. Since 15th November the reduction in unemployment has been no less than the difference between 6,100 and 3,800 — 2,300 by some quick mathematics. So that far from misleading the House, everything I have told the House has been fully justified.
However, I was dealing with the increased industrial activity which has been generated in the recent few months. Industrial exports rose by 22 per cent to a record total of £84 million in the first nine months of this year. The gross total was £202 million, which was the highest ever recorded. Surely this is progress? Surely this represents wages on the part of the man-in-the-street and, as well, surely this represents some benefits as a result of the Free Trade Area Agreement which has so many detractors in this House? Let us look at the alleged lack of progress in other spheres. In the past year or so we promised, we introduced and we implemented the free post-primary educational scheme. It was at the promise stage just before the 6th December, 1966 and it was at the implementation stage after the 9th November, 1967.
Now, there were two important political events in that period of less than 12 months, even though Deputy Corish has suggested that there were other political events which overshadowed these events. Deputies will remember that before the 6th December, 1966, the Fine Gael Party tried to suggest to the electorate that they had a free educational programme which was far better than ours and which would cost a fraction of what ours would cost and which would be financed from buoyancy. They said it was far better than the Fianna Fáil Party proposals. We told the electorate in the two areas in which the by-elections were being held that our scheme would cost money and we gave an estimate and said that when it was expanded, as it will be, it would cost considerably more. The electors in Waterford and South Kerry apparently believed us because that seemed to be one of the most topical issues at the time. Again, the electorate in Cork city and West Limerick were apparently glad that the people in Waterford and South Kerry believed us 12 months before. No matter how the Opposition may decry these election successes, they were successes, successes of which we are proud and we are not one whit disappointed with them, I can tell you.
It was easy for the people of Waterford and South Kerry at that time to assess the bona fides of the claims that the Opposition Parties were making then in relation to their educational programmes because they remembered well that in the difficult years of 1956 and 1957 one of the first things that came under the Coalition axe, one of the first things to suffer in order to maintain the faltering financial position of the Government, was education. There was a reduction of ten per cent in the grant to secondary education and a reduction of six per cent in the grant to vocational education. Is it any wonder then that the people of these constituencies were suspicious of the promises made by the Opposition Parties? I need not say that, when the Fianna Fáil Party returned to office in 1957, the first thing they did, because of their realistic approach to education, and because they realised its importance to the economy, was not only to restore but to increase the grants made available to secondary and vocational education and, indeed, university education as well.
I will refer later to education but I do not want to go into any great detail. Deputy O'Higgins was looking for some little stick — and stick is perhaps apt in this context — with which to beat the Government because he said the chairman of the Clondalkin Paper Mills said in his annual address yesterday that he could not get information quickly enough from the Department of Lands in regard to how many trees would be made available to them for their business. The comment apparently was, as well as I can remember it from the quotation read by Deputy O'Higgins, that the chairman of the company said that Government Ministers were exhorting companies to do everything in their power and to make no delay in their preparations to enter free trade area conditions, but that a Government Department was deliberately or negligently withholding information which was vital to them. The statement of the Chairman of the Clondalking Paper Mills, if he is correctly reported in the newspapers of today, to the effect that his company has repeatedly failed to receive forecasts in regard to pulp which will be available, is not in accordance with the facts. The Clondalkin Paper Mills, in accordance with other users of pulp, have always been furnished by the Department of Lands with all available information on this matter and I have a long statement indicating that, but I do not think it is necessary to read it out.
Before I go on to something of a more general nature, I should like to refer to the comments made on a number of occasions in regard to the high incidence of rates, particularly in relation to the impact of the health services on them. It is true that rates will rise this year, at least as estimated by the local authorities. The total revenue expenditure in the present financial year, of local authorities, if we excluded vocational education committees, committees of agriculture and harbour authorities, is estimated at £104.71 million. That was an increase approximately of £9 million on actual expenditure in 1966-67. It is important to point out that the percentage of the State contribution to the relief of rates has increased considerably and steadily over the past few years, again by deliberate Government action.
If we go back as far as 1938-39 the contribution paid by the State was 39.2 per cent; in 1956-57 it was 42.6 per cent and it is now 52 per cent, so that the Exchequer has come to the relief of rates to a considerable extent in recent years and to a higher extent than ever in the current year. Let me say that that is not the sum of the Government's concern about the increase in rates. As the House is aware an Inter-Departmental Committee on Local Taxation was set up in 1963 or 1964 and its first report was published in summarised form in 1965. That dealt broadly with valuation as a basis for rating. The committee's second report was published last July and it reviewed a variety of the rating concessions which exist. It made certain recommendations as to which concessions should persist and which should not. The third report, which will deal in a comprehensive way with rates and alternative sources of local revenue is, I believe, at an advanced stage and will probably be published in the course of the next few months. The House will appreciate that this is a very complex problem and it is not easy to decide what should be done, but I can assure the House that as soon as all the facts are available to them the Government will not be slow to act.
Before I go further, I should deal with references which have been made by a number of Deputies, particularly Deputy O'Higgins, to the foot and mouth epidemic. I acknowledge gladly the co-operation offered by the Opposition Parties and the understanding that is implicit of their co-operation in the present difficulties. It is, I suppose, an outright remedy to close the ports at present. It is something that naturally has to be considered, but we have been meeting consistently and receiving reports about the adequacy of the present precautions and there is behind a decision to close the ports a lot of other considerations, a lot of serious repercussions that any Government would have to think very seriously about before taking that step. I am talking of the closing of ports to passengers not the closing of ports to passengers and goods because I agree that closing the ports to passengers and goods would have very serious consequences.
In regard to the offer made by the NFA of personnel, it was a reasonable offer but in the event, not a very practical one because the powers that the Minister for Agriculture could exercise in relation to activities at ports of entry can be effected only by authorised officials of the Minister and, in many cases, no matter what personnel you had at the ports, unless they were duly authorised and in many cases duly qualified, it would add little, if anything, to the effect of the precautions.
It has become the practice in the debate on the Taoiseach's Estimates for the Taoiseach to review the economy. It is a practice but not a tradition because I understand that years ago it was not done. It has been done recently but, having time now, I think it might be as well to have a look at the year ahead. This is not anything in the nature of a Queen's speech but it is an opportune time to give an indication of what the Government propose to do in the immediate future, of the plans it has in hands and not only plans that are in the offing, but things that we know we are going to implement. Already, the Redundancy Payments Scheme has been implemented by legislation. It will become effective on the 1st January and a part of that will be the resettlement scheme. This will be a costly scheme and one difficult to administer but one on which we are determined to make a start as early as possible. This will be made on the 1st January.
Industrial relations legislation, the purpose of which is to improve conditions in this vital sector, will be introduced here early in the New Year. The educational system which is attracting so much public comment and debate in recent years will be further improved and extended. Because of the special place that skilled manpower will occupy to make good our deficiencies I should like to make reference to the regional technical colleges. As the House is aware, eight regional technical colleges were already planned, one in Cork, in Limerick, in Galway, Waterford, Carlow, Dundalk, Athlone and Sligo. To this we are adding one in Letterkenny, making nine in all. Between these colleges and the existing technological colleges in Dublin, technical education at an advanced level will be provided for the whole country.
Building work on six of the colleges is scheduled to commence in the spring and it is hoped to have them in operation by September, 1969. Work on the remaining colleges will commence at a later stage. More schools, more hospitals, more houses will be built in the coming year and may I say that is not just a pious hope because, already, the Capital Budget provides increased moneys for these projects. The industrial grants legislation is now being reviewed. The whole structure of our industrial promotion generally is under active review and it is the Government's intention, having reviewed it under the various Departments and at Governments level, to introduce an improved scheme so as to accelerate our industrial expansion programme.
The small farms incentive scheme will be put into operation early in the coming year. This scheme will help small farmers not only in the West but throughout the whole country to expand their output and so increase their income and improve their standard of living. The Minister for Social Welfare is now engaged on a comprehensive review of the whole structure of social welfare. This code, with the single exception of old age pensions which were in existence at the commencement of the State, may I remind Deputies opposite, Deputies who claim such advanced social policies, was introduced by a Fianna Fáil Government and it will be a Fianna Fáil Government that will expand it and bring it up to date. I hope that will be done very soon.
All this will mean further progress under what I think I can describe as a progressive administration. Fianna Fáil was founded as a national, social movement. It remains that and always will do so. We believe and we know that the people recognise that social advances can be made only when they are based on a sound economic structure. As my colleague, the Minister for Local Government, remarked yesterday, the idea of a social progress without economic expansion is nonsense. That is one of the things Deputies opposite should get into their heads because they can promise social advances far beyond the capacity of the country to pay and the economy to sustain but we have to implement the social advances and ensure that the economic progress that is necessary will be made, before we can implement them.
There was a good deal of reference to complacency in the course of the debate. Several Deputies used the word several times in relation to my speech. I was not complacent but I think I was entitled to point out whatever success attended our efforts to improve the social and economic position of the country over the past year just as the Opposition would be entitled to criticise our lack of success or progress. We have made progress but we are not smug or complacent about it. On the contrary, the successes we have had will only help to ensure that we shall make greater efforts in order to bring about improvement in the lot of all our people.
I still have time to go but I should like to see the House adjourned by 7 o'clock. It is usual at this time for the Taoiseach to wish the Members of the House and its officials a happy Christmas. I do so sincerely and, whether they like it or not, I think they will have a happy New Year.
