Financial Statement. - Old I.R.A.
The Government have decided that some small extra token of recognition might well be given this year to that declining band of people, those who served in the War of Independence and are still with us. Accordingly the existing limitation whereby only the first £80 of their pension or allowance is disregarded in calculating means for old age pension purposes will be abolished so that the entire amount will in future be disregarded. In addition arrangements will be made to make available to such persons the benefits of the free electricity and travel schemes for old age pensioners introduced last year and the new free television and radio licence scheme to be introduced this year.
Agriculture
Despite the upset to the livestock trade resulting from the outbreaks of Foot and Mouth Disease in Britain, 1967 was a good year for agriculture. Family farm income in that year is provisionally estimated at about £148 million, the highest figure so far achieved. It was £13 million above the 1966 figure—which was, of course, affected by the decline in cattle prices in the second half of that year—and approximately £6 million higher than in 1965 or 1964. Notwithstanding higher costs of production, there is likely to be a further appreciable increase in family farm income in 1968, particularly in view of the outlook for cattle and the prospect of another good year for milk production.
The increase in farm income is in large degree due to Government measures of various kinds including price supports for all the main farm products, fertiliser subsidies, rates relief and schemes for improving the structure and productive capacity of farms. These have involved a substantial increase over the years in the total amount of money spent in relation to agriculture. This total went up from £38 million in 1963/64 to almost £72 million in 1968/69, which is a clear demonstration that the Government are effectively implementing their policy that farmers who work their land fully and efficiently should share equitably in the growing national prosperity and that a reasonable relationship should be maintained between farm income and other incomes.
The Government have decided that additional money should be devoted this year to the development of certain sectors of agriculture which are of particular significance to the small farmer —the production of pigs, sheep and oats. There has been some fall in output under these headings during the past few years, although total agricultural output has been showing an upward trend. These areas of activity can be further developed so as to make possible a worthwhile increase in the income of the small farmers, including in particular those in western areas who are unable to derive the same degree of benefit as farmers elsewhere from the guaranteed prices for wheat, sugar beet, barley or even milk.
The Government have, therefore, decided on the following measures:
As from Monday, 29th April, there will be an increase of 12s. per cwt. deadweight in the guaranteed price for the two top grades of pigs (A Special and A) and upward adjustments also in the prices for certain other grades. There will also be an increase in the guaranteed export price of bacon. The grants for piggeries will be substantially increased.
A new scheme of grants will be introduced for large-scale pig fattening units on the basis of one-third of the capital costs involved.
There will be a special farrowed sow grant scheme for the western counties, designed to encourage farmers in those poorer areas to keep more sows and increase their pig output. The grant will be at the rate of £10 per sow, payable in two instalments, and the scheme will be introduced in June, 1968, when the current Farrowed Sow Scheme is due to terminate.
Improved incentives will be introduced under the Accredited Pig Herd Scheme.
The total cost to the Exchequer of these measures in support of the pig industry will be nearly £1 million in a full year. They should enable farmers generally, and more particularly the smaller farmers, to make substantial additions to their income.
The rate of subsidy under the Mountain Lamb Scheme will be raised from 10s. per head to £1 per head. The extra cost will be about £180,000.
Beginning with the 1968 harvest, there will be a floor price, corresponding to the feed barley floor price, for clean oats of good feeding quality, and a grants scheme will be brought into operation to encourage the provision of drying and storage facilities in oats-growing areas, such as parts of the west, where these facilities are at present deficient. We are providing £180,000 for these purposes in the current financial year.
It is proposed to relax the rule which debars a farmer from claiming rate relief for workers whose land valuation is £5 or more. In future, the employment rebate may be claimed in respect of workers whose land valuation does not exceed £15.
These new measures will cost virtually £1½ million in a full year, and nearly £1.2 million in the current financial year and will supplement the Small Farm Incentive Bonus Scheme, which begins next month. This, of course, is in addition to the increased cost in 1968/69 of maintaining existing Exchequer commitments, including £1.7 million extra for creamery milk and £1.7 million extra for relief of rates on land.
In their review of the position of agriculture, the Government gave careful consideration to other products, such as wheat, barley and milk. The Irish wheat price is in line with the Common Market price. As regards barley, the repercussions of a further increase in price on the economics of pig production cannot be overlooked. The total cost of the price supports for milk has, in the past five years, moved up from £3.2 million to over £19 million in 1967/68 and is expected to rise by a further £1¾ million in 1968/69. The total creamery milk cheque in 1967 was over £52 million compared with £27 million five years earlier, and, given reasonable weather conditions, it should show a further rise in 1968. While the percentage of milk, and of milk suppliers, qualifying for the quality premium on creamery milk has shown a very welcome increase, there is still a fairly large number of suppliers who have not yet earned the 2d per gallon premium but who should be in a position to do so with the help of the milk cooler grants introduced last year. The price of calves is higher than last year. The total return to dairy farmers from milk and calves will be at least £5 million higher than in 1967.
The international market for dairy produce presents a disquieting picture and it is becoming increasingly difficult to see where our growing surplus can be disposed of. In all these circumstances the Government felt that an increase in the price of milk this year could not be justified.
Farmers will also benefit from changes in the taxation code which have been decided upon and which I shall come to now.
Schedules A and B
I have received representations from many sources to raise the various personal income tax allowances. Even a moderate general increase would cost many millions of pounds and could only be considered in relation to the sort of general review of our tax structure about which I shall be speaking later. Pending any such change I have sought around for ways of giving relief in specially desirable directions at reasonable cost.
It seemed to me that the abolition of tax under Schedule A would give just such relief. The tax falls mainly on the owner-occupier of a private residence and its abolition should give wide relief and be especially welcome to old persons living on pensions or fixed incomes as well as to the general body of householders.
It seemed to me also that, as a logical corollary, and to give additional help to the farming community, I should abolish Schedule B as well, that is, the tax on income from the occupation of land.
The removal of these two Schedules will simplify the administration of income tax. Because of the considerable preparatory work involved, the decision to abolish them can become effective only from next year, 1969-70.
Married allowance
The financial problems of young couples getting married to-day are considerable and, in order to ease them somewhat, I am granting a special increase of £100 in the personal allowance for married men in the year of marriage. This will apply only to the tax year in which the marriage takes place. The increase will be allowable for both income tax and sur-tax. The cost will be £150,000 in the current year and £190,000 in a full year.
Relief from estate duty for widows
A related matter about which I have received a host of representations is the situation of widows and children in regard to estate duty—especially in cases where the estate includes the family home and the capitalised value of a pension or annuity.
The Finance Act of 1965 introduced a new type of estate duty relief in the form of an abatement of the duty payable in respect of property passing to the widow and dependent children.
As extended in 1966, the abatement for a widow is £350 and for a dependent child, £250. This has the effect of entirely relieving from duty an estate of £13,750 passing to the deceased's widow where there are three dependent children. The benefit is, however, confined to estates not exceeding £25,000.
In response to representations that the present reliefs do not obviate hardship in some cases, I now propose to increase the abatement to £1,000 for the widow and £500 for each dependent child and to make it available in estates not exceeding £100,000. This will effectively exempt an estate of £20,000 passing to a widow with three dependent children.
The cost is estimated at £50,000 this year and £200,000 in a full year.
Public service pensions
Several increases have already been given in the pensions of retired civil servants, national teachers, gardaí members of the defence forces and other public service pensioners who retired before February, 1964. The most recent was the rise of 12 per cent granted last year on the pensions which had been increased in August, 1965. The Committee on Post-Retirement Adjustments in Public Service Pensions recommended that pensions should be increased only when there is a general pay increase for serving personnel in all categories. In deference, however, to the representations I have received, I propose not to wait for this eventuality but, in general, to increase by 5 per cent from 1 August next the pensions which were increased last August. This will cost the Exchequer £200,000 this year and £300,000 in a full year, with a small addition for the Exchequer share of increases in local authority pensions.
Industrial development
The National Industrial Economic Council has estimated that industrial output will have to increase one and a half times by 1980 if full employment is to be achieved by that year. Experience since the Council reported suggests that this estimate may understate the effort required. The fact that the main contribution to full employment must come from industry underlines the importance of this sector and of national policies for its development.
In the seven years which have elapsed since the Committee on Industrial Organisation was established, the Government have, through every means open to them, encouraged industry to adapt itself to free trade. The CIO saw modernisation of plant and machinery as a basic need of most Irish industry and this was given priority by the Government. The scheme of adaptation grants has resulted in an upsurge of investment in new plant and machinery: total capital expenditure involved in cases for which grants have so far been given amounts to almost £90 million. Adaptation grants have recently come to an end but, as already announced by the Minister for Industry and Commerce, a new scheme will be introduced to provide continuing help for re-equipment and modernisation.
The incentives for major industrial development and promotion have been under consideration for some time by the Government in the light of recommendations made by a firm of international consultants and revised facilities will shortly be announced. The aim is to have a fully integrated system of incentives which will encourage existing firms to go forward with major expansions of their activities and will also promote the establishment of new industrial enterprises both of home and external origin.
A National Science Council has recently been established to advise the Government on science and technology with particular reference to economic development. One of its functions will be to link general development policies with science policies and to advise on priorities in the allocation of funds for research and development. I understand that it is considering the question of State assistance towards promoting the widespread adoption by industry of technological developments and I may be anticipating the Council in some of the proposals I shall announce in a moment.
Capital allowances
Last year, in addition to introducing free depreciation for industrial plant and machinery in the western areas, I increased from 40 per cent to 50 per cent the rate of initial allowance for new plant and machinery in the rest of the country. I did this to encourage higher investment in manufacturing industry and to improve our competitive position in free trade conditions. I consider that the time is opportune for a further incentive to industrial investment. I propose to increase the rate of initial allowance from 50 per cent to 60 per cent in the case of plant and machinery on which expenditure is incurred in the period from 1 April, 1968, to 31 March, 1971. This will not involve any cost to the Exchequer until 1969/70 and it is estimated to cost £550,000 in that year, rising to £1,140,000 in a full year.
It has been suggested to me that there are too many wear-and-tear rates in use in relation to new plant and machinery. I propose to reduce the number of these rates and rearrange them so that there will be no additional charge to the Exchequer.
The period of operation of the existing initial allowance in respect of expenditure on industrial buildings will be extended from 1 April, 1968, to 31 March, 1971.
“Know-how” and scientific research
Certain other measures can be taken in the field of taxation to aid industrial efficiency and encourage expansion. The steps I propose relate to the purchase of "Know-how" and to scientific research.
Under existing tax law it is necessary to determine on the facts of each case whether money spent on acquiring secret processes, formulae or specialised techniques is allowable to the purchaser as a deduction for taxation purposes. In order to remove doubts in the minds of intending purchasers of "know-how" I am proposing that all payments of this kind will be allowable for tax purposes. The allowance will be given as and when the expenditure is incurred.
I also propose to extend the relief available to firms for sums spent on scientific research by removing the condition that the research must be related to their trade. I hope that this may encourage them to give more widespread support to activities of a general nature and in particular to those undertaken by the Institute for Industrial Research and Standards.
The cost of these two measures will not be significant.
Sur-tax: earned income relief
As a further stimulus to industrial efficiency I intend to carry a stage further the sur-tax reliefs which I introduced last year in the interest of attracting to Irish industry the best managerial and technological talent available. Although last year's measure partially eased the tax burden on these taxpayers, they still pay more tax than their counterparts in Britain and elsewhere over a considerable range of incomes. I have decided to raise the special sur-tax allowance for earned income from £1,250 to £2,000. Some of the cost will be recovered by narrowing from £3,000 to £2,000 the range of income subject to the six shilling rate so that the net cost for the current year will be £120,000. The changes will apply to sur-tax payable on 1 January, 1969. The position will now be that in the range of income with which we are primarily concerned in this regard tax payable here will be slightly less than in Great Britain. I propose to make good the loss of direct tax revenue by an increase in indirect taxation on the more expensive forms of imported liquor.
Corporation profits tax: directors' remuneration
In computing the profits of a director-controlled company for purposes of corporation profits tax, the maximum deduction which may be claimed for the remuneration of a director is £2,500. A number of representative bodies have urged that this figure be raised and I propose that a new limit of £4,000 should apply from 1 January, 1968.
The cost of this increase is estimated not to exceed £50,000 a year.
The arts
In my Budget speech last year I spoke about the necessity of ensuring that an adequate variety of cultural and recreational facilities of the highest standards would be available for our people. I promised to consider how Government aid for this purpose could be improved, particularly in relation to the live theatre. Because of the diverse interests which had to be consulted I have not been able to proceed in this direction as rapidly as I had hoped at this time last year. However, I have recently been able to announce the new institutional arrangements decided upon, namely, the setting up of three councils instead of the present Comhairle Ealaíon—one for the visual arts, one for drama and literature, and the third for music, opera and ballet. A sum of £60,000 has already been provided in the Book of Estimates for An Chomhairle Ealaíon. I am adding £100,000 to this sum as the amount that may be required during the coming year to meet the new expansion of activity. The legislation to establish the new bodies will be proceeded with as quickly as possible.
Tax proposals
The foregoing measures will cost £4.99 million in 1968/69 and bring the deficit to £8.6 million.
Having regard to last year's experience and to the rising trend of economic activity, a deduction of £4 million for errors of estimation may be conservatively made.
I propose to find the additional revenue required to meet the remaining deficit by increasing the duties on tobacco, petrol, beer, wine and foreign spirits—principally brandy. The specific proposals and the expected additional yields in 1968/69 are:
|
£ million
|
|
Tobacco—the equivalent of 2d per packet of 20 standard size plain cigarettes and a corresponding levy on manfacturers' stocks
|
1.45
|
|
Petrol and diesel oil (other than diesel oil for buses)— 2d a gallon
|
1.2
|
|
Beer—equivalent of 1d a pint
|
1.4
|
|
Wine—equivalent of 1 shilling a bottle
|
.2
|
|
Imported spirits (other than spirits of U.K. origin)— 6d a glass
|
.35
|
In determining the precise additions to the taxes on these commodities I have made allowance for the incidence of turnover tax.
The increased duties on foreign spirits and wine will more than pay for the sur-tax, death duty and corporation profits tax reliefs.
Revenue receipts from Irish-made spirits in the year just ended were lower than in the previous year and I have decided that the home products could not be asked to bear additional taxation this year. On the other hand, receipts from imported spirits generally show a significant increase. However, since the duty on home-made spirits is not being increased, it is necessary under the Free Trade Area Agreement to exclude spirits of United Kingdom origin from the additional charge on imported spirits.
The measures I have outlined bring estimated revenue into balance with expenditure as is consistent with our financial policy for 1968-69.
I must, however, refer again to the need for careful stewardship throughout the year to ensure that spending power is not allowed to rise unduly because of excessive income increases or other causes. If that should happen, early counter-action will be taken. Some liabilities will necessarily arise for which specific provision has not been made. The allowance I have made for errors of estimation is possibly conservative enough to provide some cover against these. If, however, this cover is seriously deficient, I must give notice that the Government, in discharge of their general responsibility for good management of the economy, may have to introduce additional taxes or charges to prevent any sizeable deficit emerging on current account.
Miscellaneous taxation changes
Among the matters that will be provided for in this year's Finance Bill are relief for Irish investment trust companies from the charge to corporation profits tax on dividends received by them which are payable out of profits which have borne British corporation tax; the abolition of corporation duty, which was originally imposed in 1885 and now yields little more than the cost of collection: a measure of double taxation relief to be given unilaterally where foreign tax is borne on certain company income; and the exemption from corporation profits tax for a further period of three years of certain public ultility companies and other concerns.
Taxation policy
The growing awareness of developments in the field of taxation abroad, and especially in the EEC, has created an increasing interest here in the question of what is the most suitable tax system for this country. The fact that the EEC has prescribed a common system of added-value taxation for adoption by all the member countries not later than 1970 has focussed attention on the TVA—as it is commonly called—and created the presumption that this is the best method of taxing expenditure.
This system of taxation has been the subject of close examination by officers of my Department who have had consultations with the authorities concerned in many European countries. It is my intention to publish, within the next month or so, a white paper giving full information about the TVA system. I hope that this will arouse interest and stimulate discussion of the subject by industrial and trading bodies and associations and, of course, by the general public. I shall be glad to receive views and to facilitate consultations with my Department by representative bodies.
The general taxation policy of the Government is that outlined in the Second Programme for Economic Expansion. Reliance will continue to be placed chiefly on indirect rather than direct taxation on the ground that taxation of expenditure has less of a disincentive effect on economic activity than taxation of income. It discourages excessive spending but not earning or saving. The corresponding moderation in the taxation of income is a stimulus to individual and corporate effort.
The constant demand for improvements and extensions in the services provided by the State will require that loss of revenue caused by reductions in direct tax rates be made good. Despite the extension of the tax base by the turnover tax and the wholesale tax, the bulk of our revenue from indirect taxes still comes from a narrow range of commodities—tobacco, petrol, beer and spirits. Broadly-based taxes on goods and services offer the best possibility of a substantial move from direct to indirect taxation, and the TVA system has many attractions for this purpose. It is a system which can be made progressive by having different rates for different categories of expenditure.
Following a reference in the seventh report of the Commission on Income Taxation, the Government indicated that they favoured separating company taxation from personal taxation and were inclined towards a company tax on undistributed profits only and a separate tax or taxes on personal income including dividends. An intensive study of the principles involved has already been carried out and, as a result, some doubts have been expressed whether a company tax confined to undistributed profits would be the best arrangement in present circumstances. I have directed that a comprehensive statistical survey be undertaken of all companies, their capital structure, profits, growth, investment policy, dividends and so on. My main objective will be to devise a system of company and personal taxation which will favour industrial growth and encourage savings.
In conjunction with this study of company taxation, I propose to have further consideration given to the possibility of introducing a current year basis of assessment under Schedule D for traders and professional persons. There would seem to be advantages in aligning, as far as possible, the tax treatment of such persons with that of employees under PAYE. In all this, I shall look forward to the continued co-operation of the accountancy and other professional bodies without whose help the tax machinery could not function effectively or efficiently. I shall welcome their suggestions towards achieving a tax system that will ensure accurate and early settlement of tax liabilities in the interest of both the State and the taxpayers.
Decimalisation of currency
In June, 1967, I issued a booklet summarising the case for and against each of the decimal currency systems which it would be possible to adopt in this country. This was intended to give an opportunity for the submission of considered views prior to a decision by the Government. The reponse was quite satisfactory.
The weight of opinion favoured the introduction of the same system as will be in operation in Britain and Northern Ireland—the pound, newpenny, half newpenny system—and the Government have decided to adopt this course as being less inconvenient and costly than introducing a different system. The change-over will commence on 15 February, 1971, the same date as in Britain and Northern Ireland. The necessary legislation is being prepared and will be introduced in the Dáil as soon as possible.
The cost of converting machines to the decimal system will be offset, to a large extent, by tax relief. Expenditure on adapting existing machines will be deductible as an expense in computing profits for tax purposes. Expenditure on the purchase of new machines or on major adaptations of existing machines will be eligible for capital allowances. Outside the western areas, there will be an initial allowance of 60 per cent of the expenditure and annual wear-and-tear allowances on the usual basis. In the west, free depreciation will be allowable under the provisions introduced last year.
I shall be making an announcement shortly about the organisational arrangements for effecting the change-over to decimal currency and the coinage for the new system. In view of the benefits to be gained from decimalisation, I am confident that all bodies directly affected will play their full part in implementing the plans for the new currency.
Banking developments
Much progress has been made in preparing the legislation to control, through the agency of the Central Bank, the establishment of banking institutions and to keep their operations here under review. A Bill is being drafted and I hope to introduce it in the House later this year.
The past two years have seen considerable changes in Irish banking. The majority of the Associated Banks are now organised in two groups. These are steadily expanding the range of their services, particularly in the fields of merchant and industrial banking. One of the groups has announced that it intends to work towards a complete merger of the clearing banks in the group. This is in line with developments in other countries. Within the past year bank mergers have taken place or have been announced in Britain and in continental countries, because bigger banks are necessary to meet the growing needs of the great industrial combines and to make economical use of the large-scale computer services now available.
It is good to see the banks extending and improving their services. National development requires the efficient mobilisation and use of savings and the provision of adequate credit at reasonable cost. The banks are responding to that need. There is, however, still room for a considerable rationalisation of banking business and the proposed legislation will contain general provisions to facilitate this.
As I mentioned in my reply to the debate on the Estimate for my Department in December last, the opportunity is being taken in the Bill to express the relationship of the Irish pound to sterling and other currencies in a way consistent with our membership of the International Monetary Fund. The traditional parity relationship between the Irish pound and the pound sterling is maintained by the par values declared to the International Monetary Fund on 18 November last.
The expert examination of how a money market might be developed here, on which the Central Bank and my Department have been actively engaged, is nearing completion and I hope that it will be possible to start practical preparations during the present financial year. This will represent a further step in providing ourselves with a range of banking and financial services suited to modern requirements.
Public services reorganisation
The group which was set up to examine and report on organisation in the public services at the higher levels is continuing its investigations. This work has proved to be even more exacting and time-consuming than expected; up to the present over six hundred people have been interviewed or have made oral submissions. Steady progress is being made and it is hoped to have a report about the end of this financial year.
A special review was carried out during the year of recruitment procedures to the Civil Service. I am glad to be able to say that, as a result, a number of significant changes will be made. As a help to the parents of young candidates, fees for the medical examination of applicants have already been abolished and this will be followed by the abolition from 1st June next of entrance fees as well.
Another idea in mind is the holding of a special open competition for positions as Executive Officer at which candidates above the present age limits could compete. This would provide a means of entrance at that level for persons who are already in employment or who had followed a post-secondary course of studies.
The efforts to maximise efficiency in the public service are continuing. Organisation and methods surveys and work study are yielding useful results. Departments are gradually extending automatic data processing and the use of computers. An expert unit has been set up to enable the techniques of operational research to be applied in the process of decision-making. The unit is attached to my Department but its services will be available to Departments generally. Its strength will be increased according as suitable staff can be recruited and trained.
The year has seen a further advance in the training of civil servants. The number and variety of training courses provided within the service have been expanded and civil servants are also sent to suitable outside training courses both here and abroad.
Second Programme for Economic Expansion
The recently published review of developments in the first four years of the Second Programme shows that, although performance was not fully up to expectations, the economy made considerable progress. Gross national product grew at an annual average rate of 3.3 per cent or at three-quarters of the projected rate. Growth in investment and in private consumption was close to what might have been expected, given the reduced rate of growth in GNP. The performance of exports was particularly satisfactory. Substantial increases in employment in the industrial and other domestic sectors were accompanied by a fall in the numbers engaged in agriculture. Though total employment failed to increase, the long-term downward tendency was all but checked and there was a marked improvement in the composition of the labour force in terms of better-paid and more continuous employment. The contrast between the reduction in total employment and the substantial growth in national output underlines the fact that increases in employment are not easily won, and require a greater effort than was expected in the Second Programme or in the NIEC Report on Full Employment.
There are other lessons to be drawn from the analysis of the period 1964-67. These have been set out in the review, and reinforce the warning in the Second Programme itself that the progress aimed at was conditional, depending for its achievement on the co-operation of all concerned in creating the conditions of success.
Third Programme for Economic Expansion
As already announced, the Government have decided that the Third Programme for Economic Expansion will come into effect in January, 1969, and will cover the four years to 1972, by which date the position regarding membership of the EEC should be clarified. The new programme will be prepared within the framework of the NIEC Report on Full Employment and will, therefore, focus attention on the policy changes and action required for progress towards the achievement of this national objective. The intention is to concentrate on a number of key areas which can make a major impact on the economy. Examples are industrial training and management education, research and development, agricultural credit and co-operation, marketing and tourism.
Economic progress is not an end in itself. It is pursued for the better living standards which it makes possible. The main social services have made great advances since the First Programme for Economic Expansion was introduced. Public expenditure on housing, health, education and income maintenance has risen from £80 million to about £200 million. When allowance is made for changes in the value of money the annual increase in real terms works out at 5 per cent as compared with an increase of under 4 per cent in real gross national product. It will be a major objective of the Third Programme that all sectors will share in the rising standards of living arising from economic growth. A great deal of the information needed to formulate a long-term social development programme related both to national resources and changing community needs is not available but the Government have arranged already with the Economic and Social Research Institute for a start to be made on the studies required to provide it.
Conclusion
I have now completed my statement of budgetary policy for this year. I hope that as a result of the measures in the Budget our economy will be in even better shape 12 months from now. The budget itself will directly improve the lot of many of our people, in particular those receiving social welfare payments, small farmers and public service pensioners. The incentives it contains should aid and encourage economic expansion. The additional taxes I have announced are relatively light; their impact on the cost of living will be small and they will, I trust, be accepted for the good effects they make possible.
The budget underlines the Government's confidence in the nation's ability to maintain a high rate of economic progress even in difficult international conditions. At a time when many countries whose economies are much stronger and more diversified than ours have had to accept severe budgetary measures and stiff economic policies, we are placing our faith in expansion and in the capacity of our people to meet from their our resources any challenges the year may bring.
TABLE I
COMPARISON BETWEEN (i) BUDGET ESTIMATES AND (ii) ACTUAL REVENUE AND EXPENDITURE IN 1967/68.
|
Estimated
|
Actual
|
|
Estimated
|
Actual
|
|
£m.
|
£m.
|
|
£m.
|
£m.
|
|
1. Tax Revenue (excluding 2 below)
|
238.51
|
247.98
|
1. Central Fund Services (excluding 2 below)
|
54.58
|
54.16
|
|
2. Motor Vehicle Duties
|
11.50
|
11.60
|
2. Payments to Road Fund
|
10.00
|
10.22
|
|
3. Non-Tax Revenue—
|
|
|
3. Supply Services (non-capital)
|
234.64(a)
|
241.24
|
|
Post Office
|
20.50
|
20.50
|
4. Deduction for errors of estimation
|
4.00
|
—
|
|
Miscellaneous
|
24.71
|
25.33
|
|
|
|
|
4. Deficit
|
—
|
0.21
|
|
|
|
|
TOTAL
|
295.22
|
305.62
|
TOTAL
|
295.22
|
305.62
|
(a) The original provision was £227.71 m. to which was added £6.93 m. in the budget for social welfare, public service pensions farmers and the West.
TABLE II
MAIN HEADS OF CURRENT GOVERNMENT EXPENDITURE
£000
|
1962/63
|
1963/64
|
1964/65
|
1965/66
|
1966/67
|
1967/68 Pro- visional
|
1968/69 Estimate
|
|
Service of Public Debt
|
34,374
|
38,156
|
42,849
|
49,035
|
56,462
|
63,718
|
74,969
|
|
Social Services
|
57,515
|
63,243
|
75,181
|
84,165
|
93,095
|
102,227
|
109,920
|
|
Social Welfare
|
27,889
|
30,941
|
34,854
|
38,683
|
42,975
|
44,902(b)
|
45,286(b)
|
|
Education
|
18,908
|
20,600
|
26,132
|
29,586
|
31,257
|
35,269
|
41,093
|
|
Health
|
10,718
|
11,702
|
14,195
|
15,896
|
18,863
|
22,056
|
23,541
|
|
Economic Services
|
35,039
|
39,199
|
47,877
|
55,172
|
59,877
|
75,324
|
78,462
|
|
Agriculture
|
22,320
|
23,966
|
29,967
|
35,795
|
40,802
|
53,602
|
54,522
|
|
Industry
|
1,927
|
3,090
|
3,664
|
4,693(a)
|
4,775(a)
|
6,431(a)
|
7,602
|
|
Transport
|
9,422
|
10,729
|
12,208
|
12,518
|
12,131
|
13,158
|
13,716
|
|
Forestry and Fisheries
|
1,370
|
1,414
|
2,038
|
2,166
|
2,169
|
2,133
|
2,622
|
|
General Services
|
30,799
|
33,630
|
41,088
|
43,016
|
44,126
|
45,171
|
48,539
|
|
Post Office
|
9,694
|
10,092
|
13,323
|
13,846
|
14,866
|
14,621
|
15,471
|
|
Defence
|
8,065
|
8,686
|
11,330
|
11,666
|
10,368
|
11,185
|
12,452
|
|
Justice, including Gardaí
|
6,336
|
7,317
|
8,189
|
8,431
|
9,274
|
8,836
|
9,587
|
|
Public Service Pensions
|
6,704
|
7,535
|
8,246
|
9,073
|
9,618
|
10,529
|
11,029
|
|
Other Expenditure
|
10,921
|
12,234
|
15,016
|
16,599
|
17,060
|
19,181
|
20,179(c)
|
|
TOTAL
|
168,648
|
186,462
|
222,011
|
247,987
|
270,620
|
305,621
|
332,069
|
|
Remuneration included in above figures
|
51,164
|
55,276
|
71,032
|
75,502
|
80,935
|
84,758
|
88,088
|
|
1962
|
1963
|
1964
|
1965
|
1966
|
1967
|
|
|
£m.
|
£m.
|
£m.
|
£m.
|
£m.
|
£m.
|
|
|
Gross National Product
|
780
|
837
|
947
|
1,010
|
1,061
|
1,146
|
|
|
Current Government Expenditure as % of GNP
|
21.6%
|
22.3%
|
23.4%
|
24.6%
|
25.5%
|
26.7%
|
|
(a) Excludes temporary assistance to industry of £2.10 m., £2.21 m., £0.29 m. respectively.
(b) Services transferred to the Department of Labour now appear under Economic Services (Industry).
(c) Excludes part of subhead E of vote for Public Works and Buildings, formerly classified as current expenditure, and now classified as capital.
TABLE III
ROAD FUND
RECEIPTS AND ISSUES
|
RECEIPTS
|
ISSUES
|
|
1967/68
|
1968/69 (Estimated)
|
|
1967/68
|
1968/69 (Estimated)
|
|
£000
|
£000
|
|
£000
|
£000
|
|
1. Opening balance
|
—
|
—
|
1. Road grants (a)
|
9,190
|
9,440
|
|
2. Motor taxation, etc.
|
10,217
|
10,700
|
2. Administration, etc.
|
1,027
|
1,260
|
|
TOTAL
|
10,217
|
10,700
|
TOTAL
|
10,217
|
10,700
|
(a) Including payments on foot of previous years' allocations.
TABLE IV
CERTAIN RECEIPTS AND EXPENDITURE OF THE EXCHEQUER AND OF LOCAL AUTHORITIES
|
Exchequer
|
Local Authorities
|
|
Revenue
|
Non-capital issues
|
Expenditure from revenue (a)
|
State grants received
|
Rates collected
|
|
£000
|
£000
|
£000
|
£000
|
£000
|
|
1958-59
|
126,410
|
126,250
|
53,064
|
23,666
|
20,561
|
|
1959-60
|
129,856
|
128,682
|
55,104
|
24,480
|
21,412
|
|
1960-61
|
138,839
|
139,565
|
57,885
|
26,476
|
22,058
|
|
1961-62
|
151,686
|
152,393
|
64,165
|
28,792
|
23,203
|
|
1962-63
|
163,478
|
168,335
|
67,379
|
32,725
|
22,776
|
|
1963-64
|
184,419
|
186,638
|
71,323
|
34,871
|
24,466
|
|
1964-65
|
219,045
|
222,011
|
82,973
|
41,210
|
26,061
|
|
1965-66
|
240,761
|
248,542
|
90,588
|
46,465
|
29,761
|
|
1966-67
|
272,843
|
272,051
|
100,164(b)
|
51,745(b)
|
32,594(b)
|
|
1967-68
|
305,409
|
305,621
|
110,150(b)
|
59,350(b)
|
33,522(b)
|
|
1968-69
|
328,460(c)
|
332,069(c)
|
120,000(c)
|
65,000(c)
|
36,000(c)
|
NOTE:—(a)The revenue of local authorities comprises broadly rates, State grants and other receipts, e.g., rents, fees, etc.
(b)Approximate.
(c)Estimated.
TABLE V
STATE EXPENDITURE IN RELATION TO AGRICULTURE
FROM 1964/65
|
1964-65
|
1965-66
|
1966-67
|
1967-68 Provisional
|
1968-69 Estimate
|
|
£000
|
£000
|
£000
|
£000
|
£000
|
|
Products subsidies:
|
|
|
|
|
|
|
Butter and other milk products
|
8,174
|
10,704
|
13,781
|
19,295
|
21,000
|
|
Wheat
|
127
|
—
|
—
|
—
|
—
|
|
Bacon
|
1,950
|
3,100
|
1,200
|
1,418
|
1,700
|
|
Carcase beef and lamb
|
43
|
89
|
923
|
5,287
|
1,900
|
|
Fat cattle (temporary scheme)
|
—
|
—
|
656
|
—
|
—
|
|
Subsidies to reduce production costs:
|
|
|
|
|
|
|
Ground limestone
|
717
|
889
|
900
|
1,145
|
1,150
|
|
Phosphatic fertilisers
|
3,025
|
2,741
|
3,167
|
3,777
|
3,600
|
|
Potash
|
791
|
791
|
830
|
952
|
1,000
|
|
Livestock headage grants:
|
|
|
|
|
|
|
Calved heifer scheme
|
3,153
|
2,852
|
1,999
|
1,233
|
990
|
|
Sow headage scheme
|
—
|
—
|
284
|
275
|
100
|
|
Mountain sheep scheme
|
—
|
—
|
46
|
175
|
185
|
|
Incentive scheme for small farms
|
—
|
—
|
—
|
—
|
150
|
|
Drainage, land reclamation and general improvement schemes:
|
|
|
|
|
|
|
Arterial drainage
|
1,857
|
1,421
|
1,165
|
1,230
|
1,464
|
|
Land Project
|
2,363
|
2,386
|
2,729
|
3,442
|
3,500
|
|
Improvement of Land Commission estates
|
844
|
937
|
756
|
850
|
1,029
|
|
Other improvement schemes
|
477
|
492
|
211
|
299
|
469
|
|
Gaeltacht and Congested Districts schemes
|
324
|
276
|
317
|
262
|
315
|
|
Elimination of disease, livestock improvements, etc.:
|
|
|
|
|
|
|
Bovine T. B.
|
3,124
|
2,058
|
1,946
|
2,100
|
2,110
|
|
Brucellosis eradication
|
23
|
70
|
219
|
344
|
1,141
|
|
Livestock improvement
|
140
|
85
|
71
|
80
|
144
|
|
Administration of improvement and regulatory Acts
|
456
|
587
|
600
|
830
|
730
|
|
Grants towards buildings and equipment:
|
|
|
|
|
|
|
Farm buildings, water supplies and milk coolers
|
2,064
|
2,283
|
2,441
|
2,426
|
2,841
|
|
Poultry houses and equipment
|
66
|
111
|
89
|
95
|
92
|
|
Forage harvesting equipment
|
60
|
73
|
79
|
71
|
70
|
|
Horticulture
|
3
|
1
|
1
|
165
|
211
|
|
Education, research, advisory and technical services:
|
|
|
|
|
|
|
Education
|
618
|
773
|
877
|
1,098
|
1,345
|
|
Research
|
1,201
|
1,633
|
1,635
|
1,805
|
1,959
|
|
Advisory services
|
575
|
693
|
786
|
834
|
866
|
|
Rural organisations
|
40
|
44
|
44
|
39
|
44
|
|
Technical services
|
260
|
378
|
373
|
417
|
401
|
|
Departmental land and buildings
|
239
|
267
|
140
|
220
|
349
|
|
Land annuities:
|
|
|
|
|
|
|
Halving of land annuities
|
843
|
906
|
955
|
989
|
1,044
|
|
Bonus to vendors and other costs
|
119
|
120
|
123
|
124
|
126
|
|
Relief of rates:
|
|
|
|
|
|
|
Agricultural Grant
|
11,188
|
12,487
|
13,333
|
15,625
|
17,330
|
|
Rural electrification
|
1,250
|
1,133
|
901
|
1,166
|
1,200
|
|
Capital for the Agricultural Credit Corporation Limited
|
3,850
|
3,148
|
1,200
|
900
|
1,200
|
|
TOTAL
|
49,964
|
53,528
|
54,777
|
68,968
|
71,755
|
NOTE:—Figures are net of appropriations in aid.
This Budget contains few surprises. When the demise of the Second Programme for Economic Expansion, of which the obituary notice was given in the review published a few days ago, became clear, it was to be expected that in this year's Budget, as so often before, the Fianna Fáil Minister for Finance would deal with the obvious and the things which circumstances made it necessary to deal with.
In that regard the plight of social welfare recipients has been universally recognised and it is to be welcomed that this obvious and necessary step has been taken. At the same time, one must recall that whatever measure of social justice the Minister has been able to give to social welfare recipients in this Budget, it is necessarily very much less and very much more restricted than could have been provided had not the grave errors been made in 1964 and 1965. If we had had competence in Government and dedication to public service over the last two or three years, we would have made the desired expansion in our economy and much more could have been done by the Minister to-day.
The fact, of course, is that the mistakes made in the early days of the Second Programme resulted in a lack of economic progress for two decisive years and in the year on which the Minister reports, the last financial year, we have only been able to get back to the rate of progress which had been enjoyed in 1964.
We welcome what is being done for social welfare recipients, but let us not think that we are doing anything more than is absolutely necessary. The Minister in his Budget Statement said that since the increases in social welfare payments in last year's Budget took effect, the cost of living increase has risen little more than two per cent. I am sure the Minister is correct if the date from which he speaks is mid-August of last year. It should not be overlooked that in the last 12 months, since February, 1967, the cost of living has advanced from 150.6 points to 157.5 points, an increase of five per cent.
In addition, as is indicated in the review for 1968 published by the Minister's Department, on page 22, fair warning is given that consumer prices are likely to rise more than last year due to the effect of devaluation on import prices, and to the foot and mouth disease on prices. It is clear from that paragraph that a rise of something around 4½ points is likely to be experienced in the coming year. Therefore, the Minister's intention to give social welfare payments of around nine per cent is something that in the year that lies ahead will just in all probability compensate those people for what they may have to experience in relation to prices that have risen and prices likely to rise.
But may I say again that this Budget contains no surprises? It was clear that the Minister would have to tackle the obvious case of real injustice but there are other things he has not done. I know one scribe in ascribing to me prematurely my Budget speech said I was going to refer to omissions in the Budget. In effect, there are omissions. What is being done about children's allowances? They were last adjusted in 1963. I think it is fair to say that children's allowances represent for families in the lower income group, where the wage earner is earning something around £10 a week, the only measure of assistance for the transfer of purchasing power given by the State. It is true that of the 950,000 children who are covered by children's allowances, something around 800,000 are in the lower income group. There is no increase here, no effort to deal with this problem in the Budget. It is being long-fingered. The Minister says there is an examination taking place with regard to this difficult problem. I am sure there is. It was taking place last year and the year before. Are we to face a situation in which, just because it is difficult, this mode of transferring purchasing power to the lower income group is not going to be tackled?
May I say, with regard to children's allowances, that our sense of social justice is very strange indeed? We recognise that those who pay income tax, those who pay sur-tax, may get an allowance of from £40 to £110 per child. In addition, in relation to many salary structures, in particular, civil servants', there is a provision whereby an ingredient in the salary structure is related to the number of children. Again, in the case of those who send children to the universities, who will not qualify for the present university scheme, who pay for their children at the university, each parent who sends a son or daughter to the university benefits from a Government grant of around £130 per student. So that, in relation to every category of our population except the lower income group, we recognise that the responsibility for children should, in the interests of justice, engage the State.
I just want to emphasise to the Minister, who, I am sure, will be anxious to regard this Budget as a great step forward in relation to the provision of some form of social justice, that we applaud what he has done but we want to indicate that a great deal more requires to be done.
Omissions: it was personally of interest to me to hear the Minister say that a detailed examination is being undertaken of the feasibility of introducing an insurance or contributory scheme to finance at least part of the cost of the health services available to the lower income group. Maybe the penny is dropping at last. It is fair to indicate that I, having the responsibility at that time, on behalf of this Party, put forward a detailed health contributory scheme——
——wrote it out, dotted every"i", put in every comma, and crossed every "t" and submitted it to Deputy Seán MacEntee as Minister for Health and to his Committee and the then Taoiseach charged into this Dáil and said this scheme cannot work, using Deputy MacEntee's scheme, because it is a poll tax on people. The plain fact is that that unfortunate, impetuous decision taken by Deputy MacEntee and his colleagues at that time has led to the complete frustration of the responsible growth of the health services in this country and has meant that nothing has been done. For as long as that decision remains we will not get the expansion that is desired. At the same time, the burden of rates on ordinary people has grown and grown and grown. What is being done about that today? That is one of the problems of our time—the burden of rates on families of limited means in every part of our country, particularly in the small towns and in our cities. For them there is no relief in this Budget. There is not even the usual reference that our whole system of rating is being examined.
The sooner we realise that as a system of taxation the rating system is unjust, the better. As soon as we realise that and do something about it, circumstances in this country will being to improve. The impact of rates applies to and affects people irrespective of the number of their dependants, irrespective of their personal income, irrespective of the losses, troubles, anxieties or difficulties they may have had in the preceding year. Due to Government negligence, due to an obstinate refusal to take the obvious step, merely because we in Fine Gael pointed out the step, this burden has been increased in each successive year. I have no doubt that we on these benches will have a great deal more to say about this in the weeks that lie ahead. May I conclude on the subject of rates by saying that this was clearly a year for action and it is to be regretted that, once more, nothing is being done?
I want to say a word about housing. The Minister referred to the Capital Budget, of the details of which the House and the country were already aware. It is to be noted that in the Capital Budget of this year there is a very large increase in capital expenditure of £25 million but of this increase, only £2.3 million is referable to housing. It is clear from the Capital Budget statement that this sum is intended merely to maintain the number of completions achieved in the last year. In fact, the increase of £2.3 million will not, I am informed, cover the increased cost of building and construction arising from devaluation and other causes.
The plain fact is—and let there be no doubt about it, because we will say it here and outside—the housing situation at the moment is a national scandal. We were promised under the demised Second Programme that we would have 13,000 houses a year. At the moment we are not even achieving 12,000 and with a scanty provision of this kind, it is clear that in the coming year there will be a reduction. If one wants to seek further proof of that, one has only to look at the Capital Budget in which the provision for sanitary and miscellaneous services for servicing of land for housing is now about half what was ear-marked in the Second Programme. These problems being so clear and so chronic, I would have expected that there would be some indication from the Minister for Finance of the Government's intention to tackle housing as an urgent social problem, for that is what it is.
Apart from the lack of provision for housing, there are other factors. I may remind the House and the Minister that today many tenants of local authority houses are finding that the rents which they have to pay are being increased substantially. Why is that? What has caused it? The reason is that the Minister for Local Government, acting on behalf of the Government, has told local authorities that he will pay a housing subsidy only related to a notional value of £1,650 per new house when local authority houses are costing £2,500 and £2,700 today. He has told local authorities to get the difference by extorting it from their own tenants.
The result has been that in every local authority area throughout the country unfortunate people, in the lower income group in particular, find with rapidly increasing rents, the purchasing power available to them for their families has been reduced. Why is something not done about that? I feel the reason is that this Government have lost touch with the social problems affecting the people. There is a bottleneck in housing, a bottleneck by reason of insufficient money and by reason of an insufficient supply of serviced land—a bottleneck also because local authorities are being discouraged from embarking on needed housing schemes.
Agriculture: the Minister in his Budget Statement referred to an increase in agricultural output this year. I detected a very definite air of complacency in the manner in which he dealt with agriculture. This year there was an increase—about time—but the plain fact is that over the past ten years we have had stagnation in relation to agricultural production. Agricultural output this year was £111.4 million. That is higher than last year and it is lower than in 1964 and over the last decade, agricultural output has increased by only about half per cent per year. What was promised? This has nothing to do with the Common Market. In the years before we got into the European Community, we were promised, under the Second Programme, that agricultural output would increase by 3.8 per cent per year. The Minister expects cries of admiration because this year we struggled into about three per cent by lowering the output achieved three or four years ago. It is perfectly clear that what is wrong with agriculture is that we have an unsuitable Minister and wrong policies being adopted. The sooner these things are changed the better.
There is to be no increase in milk. The demands made by the NFA and the creamery milk suppliers for an increase in the price of creamery milk and an increase in the quality bonus are not being met. I wonder why? There is to be no calf subsidy. The increase in the guaranteed price for pigs is about one-third of what was expected. There is to be no increase in wheat or barley and we have this slight thing done about employment. The sooner we stop codding ourselves the better. About 11,000 people have left rural employment in the 12 months which have ended. The flight from the land is continuing unabated. This year all farmer organisations suggested that the employment allowance might be increased from £17 to £50. It has been £17 since the year of the flood, but nothing has been done in that regard.
There are many other aspects of the Budget we will deal with in more detail when the debate takes place, but I want to make one final and general observation. This Budget comes at a stage in our economic development when we should have passed finally from Bleak House and be entering a situation of Great Expectations. But the fact is that, some three or four years after the heady promises given to the people by the leaders of Fianna Fáil, today we have 65,000 people unemployed and today we have 33,000 people emigrating. We have gone backwards in relation to what a Fianna Fáil Taoiseach, Deputy Lemass, said many times was the real test of a policy—work and the provision of work. We have an unemployment rate now which must be causing concern to the Government and is certainly causing concern to us. We see nothing in this Budget that indicates that Government attention is to be devoted to that problem. We have 65,000 unemployed and continuing emigration. That means whatever 4½ per cent growth rate we had last year, whatever amount of advance of wealth the country made, that was shared by certain sections but those who want to work and live and earn their daily bread in this country are still as numerous as ever before and the tendency is upwards.
These are the problems that require attention. I believe they will only get attention when we have in office a Government with a policy. I believe the situation now, with the collapse of the Second Programme, with its demise and with the vague promises of a Third Programme some time in the spring— when: next year or perhaps the year after? —is that we are going to struggle on under this Government having no policy or plan of their own. Therefore, these problems will remain until in due course the Fine Gael Party assume office in this country.
I am sure the Minister for Finance read his Budget Speech many times before he presented it to the House. I am sure if he re-reads it now, he will readily agree with me that the claim he made in the concluding portion certainly could not be sustained. In the last page of his speech he said:
The budget itself will directly improve the lot of many of our people, in particular those receiving social welfare payments, small farmers and public service pensioners. The incentive it contains should aid and encourage economic expansion.
I and we gladly welcome the concessions in this Budget but have not yet recognised any great incentives proposed by the Minister which are going to cause any dramatic expansion in our economy. To my mind—I must confess it would have to be read again—this appears to me to be a safe Budget, a cosy Budget, but one which also camouflages the inactivity of the Government. The main proposals the Minister has announced today are not the be-all and end-all of the Irish economy. If this is, as I say, a safe and cosy Budget, we still have our problems. It is unspectacular. I do not see any evidence of great imagination in it. I have been in this House for 23 or 24 years and I have heard the same speech from various Ministers for Finance since I came here. I do not think anybody would regard it as an exciting Budget. It follows the same old pattern. There are not many new ideas in it.
There is talk and promise of new ideas by the Minister with regard to the distribution of certain forms of social welfare and the possibility of the introduction of a new form of indirect taxation like a value added tax.
We had the usual review of last year and the usual forecast of the prospects for the present year and exhortation as to what we should do in the future. I know that in the newspapers and on television those who talk about the Budget will be mainly concerned with what are described as reliefs and taxation. Unfortunately in this country, these two things, reliefs and taxation, seem to be the only things which occupy the minds of the majority of people. Ministers for Finance have got away with it in their Budget speeches in the knowledge that all that people would talk about was what was in them for social welfare, who had to pay, and how much.
I do say that the reliefs are welcome. Not to disappoint some newspaper correspondents, I suppose I can say they are not enough. I concede that what the Minister has done is no small measure, but again I think more could be done if the Minister and the Government looked for sources of revenue other than the traditional sources which have been called upon, I think, every single year in the past 20 or 30 years. I wonder what would happen if two campaigns which are going on in this country were successful. If the Minister for Health were successful in his campaign to induce people not to smoke, where would the Minister get this money in a number of years time? If various other societies were successful in inducing people not to drink or to drink less, the Minister for Finance, no matter what Government he might be a member of, would be in serious difficulties.
However, I trust that these measures, these reliefs and these forms of taxation to which I have referred, will not be the sole criterion of the success or otherwise of the Minister's efforts in this Budget. I should prefer people to judge it as I judge it on the state of the economy and not on the performance of the Minister. Again let me repeat— because it needs to be repeated—the request to the Minister that the recipients of these increases in social assistance will not have to wait until 1st August. I know this has been done by various Ministers for Finance and by various Governments. I do not think there are any legislative difficulties or any administrative difficulties. I think it could be done within a week as it was done on one occasion back in 1932 when a stamp or a booklet to restore pensions which had been cut was sent out within a week of the Fianna Fáil Party coming into office. Do not let anyone say that the reason for not giving these payments quicker is that there are administrative or legislative difficulties. It could be done in a week, and if money is the problem, that should be said and let us be honest about it.
I believe also that in view of the fact that the Government will not have to contribute such a lot, these increases to those who are in the Social Insurance Fund should be given quicker still because the contribution of the Government is relatively small. May I say also that I believe the Minister or perhaps the Minister for Social Welfare will have to examine the whole social welfare code and he has not given an indication that he will do so.
We have said in this House for a long time that we believe the employers should be required to pay more. The systems in various European countries are such that the employer pays a far bigger contribution than the employer pays here and possibly in Great Britain. We also believe there should be a graded rate for the insurance stamp and there should be a graded system of payment for the various social welfare recipients. I know the Minister says this will cost £5.4 million in a full year which does not appear to be a lot of money for the number of things it is possible to do and which he has done in this Budget.
I have a note here to ask the Minister—and I am glad he has done it— to provide free television and radio licences for old age pensioners. I think the House and the country will certainly applaud him for that gesture to people whose only comfort may be a radio or television set. The fee of £5 for a licence is a very heavy burden on them. I do not know what date the Minister mentioned but I assume this relief will be given at the date of the next renewal. I assume that non-contributory old age pensioners and the social assistance classes will benefit and not those in the social insurance class.
It is the same as the free electricity.
That is the social assistance class. I would also ask the Minister to carry out as quickly as possible a review of children's allowances with a view towards increasing, even within the amount he has, the payment to parents of large families. I think I am correct in saying that in the British Budget a proposal was introduced whereby income tax would be paid at a certain level of children's allowances. So far as I am aware, in this country there is no such tax and children's allowances are exempt.
We in this Party are not enthusiastic about a means test but it always occurred to us that a lot of money was being given, to put it bluntly, to people who did not really need it. There are many thousands of families who could benefit from that money which is going to people who do not really need it and who put it in the bank or in the post office and and leave it there for years. That was not the original intention behind the children's allowances which were introduced by a former member of the present Government to assist people in rearing large families. We should get back to that idea and ensure that they will have an adequate amount.
We are not particularly happy about the 7/6 and we believe it could be more. We believe that if the people were approached in the proper way, taxwise, by the Minister, they would be prepared to give a far better standard to social welfare recipients. I believe that the community would be prepared to contribute to a well thought out plan, and again let me advocate something I have advocated before and which I will continue to advocate until there is a gleam of hope that it will be accepted, a separate Budget for social welfare recipients. I know that when we talk about social welfare and include health, social welfare as we know it, and social assistance, this represents a colossal amount so far as expenditure and contributions are concerned. If there were a separate Budget for social welfare and the people knew exactly what they were paying for there would be a greater response.
We will vote for the new taxes the Minister has proposed because even though there will be objections from certain people, we will be voting for them in the knowledge that a good portion of the money is going to provide these increases in August and January next. I have referred to graded contributions and benefits. This also is a system which is employed in many European countries and one to which serious thought should be given by the Minister and the Government. We also applaud the introduction of the marriage allowance for a couple in the first year of marriage. I do not think that needs to be expanded on because everyone is aware of their difficulties in relation to setting up a house. I am not particularly happy about, and I do not intend to vote for, the Minister's proposal to increase the special sur-tax allowances for earned income from £1,250 to £2,000. There was a proposal last year whereby those in the sur-tax bracket got £150,000 worth of relief. It is now intended to give another £120,000. The Minister said this was to attract the best managerial and technological talent. He was concerned that British counterparts, I think he said, had this sort of concession or maybe a little better. As far as managerial and technological talent are concerned, the difficulty here is that they cannot get jobs and must go to Britain. They are not attracted by the incentives to which the Minister referred. There are other sections that could well do with the £270,000 which is now being given— including what was given last year— and I certainly do not propose to vote for this proposal on this occasion.
The relief given to agriculture will certainly be welcomed by pig producers and also the proposal to abolish Schedule B in respect of, I think, a certain type of farmer. I am not certain if it goes entirely. Undoubtedly that will be of benefit. Whilst we welcome that sort of benefit for agriculture, may I say that the whole system of aid to agriculture in this country needs to be revised?
As far as I can gather, 60 per cent of the farmers of this country have holdings of under 50 acres. The proportion of State aid is £50 to £60 million or maybe over £60 million. Sixty per cent of that sum does not go into those particular holdings. If we are to get agriculture out of the state in which it has been for decades then I believe that, of the money available for agriculture, there must be much more assistance for and investment in the type of farm owned by 60 per cent of the population of this country, the 50-acre farm and under. I am not saying we should draw the line at that. The farming industry as a whole should be assisted but the concentration of effort should be on the small type of farm, say, the farm of 50 acres or less.
I am surprised at the complacency of the Minister with regard to the economy and the performance of this country in 1967. This is not the Minister's form. We are told that GNP in 1967 rose by 4¼ per cent. The Minister compared that with the performance of other European countries which had attained only one per cent or two per cent, forgetting, of course, the sustained increase in those countries for the past ten or 15 years. In comparison with 1966, the figure is very good and in comparison with 1965 it is extremely good. However, there was a reason for it and, to some extent, it was artificial.
I do not think we should assume or that anybody could assume from the Minister's speech that things will be just as good, or maybe better, in 1968. Our exports increased in volume and in price and, in no small measure, that was because of the epidemic of foot and mouth disease in Britain. We are not hoping Britain will have a foot and mouth disease epidemic next year in order that we might export more and dearer cattle to them in such circumstances. It is unlikely, therefore, that 1968 will be as good, as far as the export of cattle is concerned, as 1967 because, as the Minister knows, I am sure better than I do, it would mean we should have to eat into our breeding stocks, which would be a catastrophe for this country.
We are very pleased the net surplus in our balance of payments was £10 million. However, the reason for it was peculiar to 1967 and may not obtain in 1968 although we hope it will.
Import prices fell. They will rise this year—because of devaluation—certainly from countries other than Great Britain.
The growth in investment in 1967 was low and, therefore, there was a low amount of capital imports. This should be our first concern. There was a low increase in personal consumption—2½ per cent compared with four per cent in other years. It is satisfactory that the people saved more and thus made a little more money available to the Government for investment here.
Speaking about this £10 million surplus, the NIEC Report said it was neither undesirable nor unsustainable. It was undesirable because we are a developing economy. We should be prepared, for a certain number of years, to have a deficit in our balance of payments because we need to import capital goods. I am glad to note that the Minister nods approval. On the other hand, we had a report from his Department forecasting that our balance of payments position would more or less continue as it was last year, namely with a small surplus from year to year. If that is merely our aim, our economy will never progress. We need capital imports, particularly for industry. If we keep a main eye on the balance of payments all the time, our economy will not develop.
I find a conflict in this, inasmuch as there are members of the Department of Finance who prepared that review of 1967 who are also members of NIEC. I see a conflict there: I do not know whether or not the Minister does. However, if the GNP increase was good last year, and if our balance of payments was favourable, we have to look at the other side of the picture, to which Deputy O'Higgins referred, and to which the Minister hardly referred in his speech. I find it peculiar in politicians such as the Minister and his predecessors in Fianna Fáil Government that they devote very little attention in their Budget speech to the problem of unemployment and to getting down to specific facts. I looked up the Minister's speech to see in what paragraph there was a reference to employment or to unemployment but it was not there. We are talking vaguely about progress and further development this year. We must think of industrial improvement in terms of people.
In this year, compared with 1966, there were 3,000 fewer at work. In 1961, the figure was 1,052,000. There was an increase in the total numbers at work between 1961 and 1964 but, in 1965, 1966 and 1967, there was a steady decline. When he is replying next week or the week after, perhaps the Minister will explain this. Was it as a result of the restrictive and panic measures the Government took in 1965?
I do not want to go into all the details which, I am sure, will be referred to ad nauseam in the debate. In manufacturing industry—where all our hopes lie—we fell flat on our faces. In the two years from 1965 to 1967, we got an extra 4,000 jobs in manufacturing industry. Where are we going, when we remember that, in 1967, 11,000 people left the land and that thousands left it in the years before that and that thousands will continue to leave it, if we are to believe the Minister for Transport and Power, for very many years to come?
It is long past the time when the Second Programme for Economic Expansion should be reviewed when we remember that it was forecast or anticipated that, in each of those years, there would be an extra 7,800 new jobs. We have not attained anything like that number. As a matter of fact, since 1964, I think a year or two or three years after the introduction of that Programme, we have had the smallest number at work in the past three or four years. Unemployment is at the highest figure since 1961 with an average of 57,000 during the year.
The only conclusion I can draw from those figures, related to the Minister's speech, is that the balance of payments seems to be the first priority of the Government with unemployment a poor second. The NIEC gave pretty sound advice on that when they said we should be prepared to have a deficit for many years to come, that is, if it is resulting from the importation of capital goods for the building up of industry. I think that the slow-down in the importation of capital goods also needs an answer. Last year—and the Minister was very bouncy then—the Minister said that the major objective was to step up investment. He said investment had been stepped up in 1967 but if that is so, there have been no good results as regards employment. I do not know where Deputy O'Higgins got his figure of 33,000——
It was announced by the British.
I take my statistics from over here. I do not think investment has been stepped up and if it has been, money-wise, we have not got real results from it because there has been very little progress in 1967. We must ask ourselves whose fault that is. Do we blame Irish industry, private enterprise or the Government? I do not believe the Government do enough. I have said on many occasions that it is not sufficient to give incentives; initiative must be shown and there must be push from the Government and, if necessary, action and intervention by the Government. I do not believe that Irish industry has exploited the potential of the home market. All the evidence is there for the Irish housewife to see. As a result of the Ango-Irish Free Trade Agreement and as a result of the lowering of barriers retained up to a few years ago under the Lemass plan, there are many more foreign articles on display in the shops here now. We are going into the era of free trade, private enterprise, and we must meet this competition but it appears to me that as far as the home market is concerned Irish industry and management have been lagging behind and that for their own sake and particularly for the sake of their employees they will have to do something to ensure that they will be able to do more than compete with British and European manufacturers if they are to keep their market at home.
What have the Government done? They have provided adaptation grants and other incentives but—and this is typical of many facets of Irish industry —it appears that the money offered by the Government was not taken up and on two or three occasions the Minister for Industry and Commerce had to come into this House to say that they were extending the time limit. Irish industry has not availed of the help offered by the Government and the Minister for Industry and Commerce had to re-offer it. We cannot go along in that position for ever. Something more positive must be done at least to see that those who fall down on the job in Irish industry and management will do the right thing as far as the nation and the community is concerned because they have a responsibility to both.
Perhaps I am wrong in this but the Minister has talked at length about our external reserves and I feel the question should be asked : what is the safe level for our external reserves? Is there some magic formula? I know the external reserves held by the Central Bank and by the commercial banks cannot all be related to money reserves. I do not know what the formula is but I know that in 1967 these had reached an all-time record level. I ask, as any ordinary person who does not know much about economics might ask, what is the level. Also, why have all that money in Britain? I know it is necessary to have reserves but I remember the present Taoiseach went to America and I think also to Bonn looking for money, a miserable £7 million or £15 million. Aer Lingus have had occasion to go abroad to borrow money; likewise the Irish Sugar Company, and here we have a record amount of money in Great Britain. I do not say we should have none of it but could not the Central Bank and the commercial banks take back money needed for the development of Aer Lingus or Bord na Móna or some other State institution? These questions will, I think, have to be answered by the Minister for Finance at the end of this debate.
Somebody asked how we could invest this money if we had it. There has been a very successful venture in this country in recent years which I think is called the Northgate Mining Company. They have been exploiting the mineral wealth we have in Galway and I now believe they are embarking on what is expected to be a very successful operation. We have been very lazy in this country for the past 30 or 40 years and it was only in the past seven or eight years that some returned Irishman from Canada came here and discovered that there was something of value in the ground in Galway. Now he discovers there is something of value in Athlone. I have heard questions asked in this House for the past 20 years about geological surveys to discover if there was any wealth in the country.
We were all told since we went to school that we had no natural resources except green grass and good cattle, and that was the end of it. Yet, this man discovers we have real wealth. Is it not possible that in the Parliamentary Secretary's constituency there might be other mineral wealth or even in the Minister's farms or in my own constituency, but nobody is bothering? We have to wait for private enterprise which is getting a pretty good profit out of it. Why cannot some State institution make some effort to see whether there is a similar type of wealth elsewhere in the country?
It was the State institutions that told us for years that there were no minerals in this country.
I am asking the Minister to think deeply about this and to try to discover whether we may have some other natural resources besides the rain and the grass.
On one occasion last year, I had the pleasure of hearing and seeing the Minister on television and he said that indirect taxation hits poor people hard. I do not know how he can reconcile that with his statement today. There is this principle that there should be greater emphasis on indirect taxation. I am not against certain forms of indirect taxation but I and my Party are against this blanket spread that we always seem to have, the spread like that of the wholesale tax and the turnover tax and the added value tax. All these will hit everybody. I think the Minister must come down to what may be described as the lowest denominator so far as wealth is concerned and realise the old age pensioner, the man who will now get £3 5s 0d a week, is being taxed in the same proportion as the wealthy man who decides to buy an expensive yacht. We have always regarded indirect taxation as taxation on everybody and believed that there could not be any exception, but I think that if the Minister wants to pursue the policy of indirect taxation, he should think in terms of luxury and leisure goods for some indirect taxation.
That is all I want to say at this stage on the Budget. It is not a Budget that is going to solve our problems. It is a cosy and safe Budget for which, no doubt, the Minister will be applauded by many people but there is a vast number of people who get nothing out of this Budget but who will have to pay the piper as usual. They will have to pay in indirect taxation. Nobody could regard the goods concerned as essential commodities but this Budget follows the same old pattern. If the campaign to stop drinking and smoking were successful, I do not know what the Minister would do to balance his Budget.
