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Dáil Éireann debate -
Thursday, 25 Apr 1968

Vol. 234 No. 3

Committee on Finance. - Resolution No. 9—General (Resumed).

Debate resumed on the following motion:
That it is expedient to amend the law relating to customs and inland revenue (including excise) and to make further provision in connection with finance.
—(Minister for Finance.)

When I reported progress, I was dealing with two facts in relation to an analogy made by the Parliamentary Secretary to the Minister for Agriculture. I do not want unduly to dwell on it, but in view of the reference to housing, I want to reemphasise that we readily admit to the balance of payments problems we created for ourselves in 1956 by our housing programme and that the results were effectively referred to subsequently not by a member of our Government but by the then Taoiseach of a Fianna Fáil Government, speaking at column 1807 of volume 194 of the Official Report of 11th April, 1962, when Deputy Lemass stated in this House:

There was a stage two or three years ago when Dublin Corporation had 1,500 empty dwellings available for people who needed them...

That is the proudest boast of the inter-Party Government of which I had the honour to be a Member.


We pledged ourselves to provide homes for our people and we did it to excess and we faced the consequences and the economic difficulties into which we undoubtedly ran the country in pursuit of that objective.

Now, I want to deal with the essential elements of the budgetary situation by which we are now confronted. Fianna Fáil evolved the delicious procedure of government by programming. We first had the grey book, the germ of which was born upon the tossing waves of the Atlantic Ocean. That was the hallmark of our economic progress, the grey book, an interesting document. We got the First Programme for Economic Expansion which was as relevant as a Hans Andersen fairy tale but which was a most welcome alibi for a period of crazy inflation that led us to the catastrophe which overtook us in 1965-66 and brought Deputy Jack Lynch to say: "What happened to my Budget of last year?" Then we produced the Second Programme for Economic Expansion. This was to provide the reliefs from all the frustrations and bewilderments that had brought Deputy Jack Lynch to such straits on the occasion of his second Budget. The Second Programme for Economic Expansion which was going to bring us at least to the top of the mountain from which we could look down upon the promised land left us ultimately like Sisyphus—was it Sisyphus who tried to roll the stone up and found that the stone rolled down on him? To explain that distressing development we produced another book and now we have A Review of Progress, 1964-67. I suggest it might be more appropriately entitled “Why the Stone Rolled Down”. But let no Deputy be dismayed, they are in labour. They are in labour and it is not human labour, it is an elephantine labour. The next programme for economic expansion is going to take 18 months to gestate. It will be a beauty when we get it.

Twelve? Is that so? The process of gestation in this case, perhaps is more appropriate to a rhinoceros than an elephant but in any case something superhuman. Pending this development we are to wait with bated breath——

It will be twins.

So long as it is not a monster we will not worry about its multiplicity. Certain it is that like all the others it will be followed by a yellow book in God's good time. I have got sick of this fraud of programmes. I have got sick of this vicious, cursed delusion which Professor Keynes foisted on the people of the world. I said in this House before that there were two great evil influences in the world in the last 100 years. There was Rousseau's philosophy of the world at the end of the 18th century. His horrible illusions have begotten the whole horrors of communist totalitarianism. Keynes in the post-war period after 1918 foisted on the world a new economic theory which was the advocacy of endless inflation and the illusion that such a thing as controlled inflation exists. It has wrought more havoc in the world than anything else has wrought and there have been many in my time.

I warn you today that if we cannot revise our views and recognise the fact that controlled inflation is a complete illusion, the younger men among you will live to see the death of freedom and individual liberty not only in this country but in every other country in which that illusion is suffered to prevail. It is true to say that some of the most tragic words that ever were uttered are "No one shouted stop".

Those of us who have seen inflation know that one of the horrors of it is that when it is in full flood, no one is more detested, no one is more unpopular and no one more disregarded than the person who warns of what the ultimate consequences can be. I am glad the Minister for Finance is here to hear me say that I smell 1929 in the air. I remember as a young man working in America and when I first went to America, I could walk out of my job, any job I had, and in less than one city block, I could get at least as good, and very frequently, a better job. I was there when President Hoover, who was one of the ablest Presidents the USA has had in the last century, said that his aim, which he hoped to realise, was a chicken in every pot and two cars in every garage in the USA. Within five years of those words being uttered, I think up to 5,000,000 men were on the streets of the USA shaking tin cups in the streets and asking: "Brother, can you spare a dime?"

I know, and the Minister for Finance knows, that conditions then were not the same as they are now. There were elements in that situation that are no longer there. I know that in 1929 and 1930 there was built into the American system the restriction of branch banking and the resultant multiplicity of small private banks all over the USA which had recklessly got into the practice of borrowing short and lending long on mortgages to the farmers of the USA. When the farmers defaulted and were unable to meet their mortgage requirements, the banks began to close all over the USA.

I know in 1929 and 1930 there was no SEC. By that I mean the controlling organisation of the New York Stock Exchange. There was no control of the purchasing of securities in the Stock Exchange, on credit and margin. I remember the time when the boy operating a lift would run out of it between the time of bringing it down and bringing it up and he would slip around to his broker's office around the corner. I know these things have now been brought under control and I know you have a system of federal bank insurance and your have larger banks. I know you have strict control of SEC operating to prevent marginal investment on the Stock Exchange but you have to bear in mind that new elements have entered into our economic life since then.

In those times I refer to, there was no hire purchase debt in this country at all. The procedure was unknown. Today we have £50 million and I do not think I exaggerate that figure. In the days about which I speak, the total hire purchase debt in the USA was in the order of £50 million or £100 million. Today it must run into billions. That is one new feature we have in the world in which we live. Remember that the hire purchase system is one of the most dynamic forces for expanding industrial output.

We have another. In 1929, the £ was on gold, as was the dollar. People and economists still spoke sophisticatedly of being as safe as the Bank of England. In 1925 the influence of Montague Norman was there. It now transpires that he was as mad as a coot, as anyone who reads his biography published in the last six months will see. Fort Knox was over-flowing with gold. People used to say that all the gold which was not in the Bank of England was in Fort Knox. The idea that you could dissociate the dollar from gold was as remote as that you could land a man on the moon. Today the £ is being devalued and people are asking themselves all over the world if it is enough. The balance of payments situation in the USA is extremely crucial.

People may ask: "What has this got to do with us?" We are caught between two great powers like a nut between a nutcracker. If devaluation should become the current feature of the two reserve currencies in the world, the dollar and sterling, there will develop a trade recession in the world such as the majority of you have never seen in your lives. If such a trade recession were to transpire, this country has never been in a more vulnerable position than it is at this particular moment.

I do not believe in being unduly pessimistic but I want to warn of the difficulties of the situation in which we are now as distinct from that in which our fathers found themselves 30 years ago. In 1932 when I first came into this House, we had reached the end of ten years of what had been a relatively conservative system of government. It was peculiarly conservative economically and financially and this island in which we live, Ireland, is practically the only country in the world which sailed through the period from 1929 to 1932 when Franklin Delano Roosevelt took over, almost unscathed. So unscathed were we that when Mr. de Valera took office as Prime Minister and launched the country into an Economic War, we were able, out of our own resources without borrowing a penny outside, to finance the huge housing drive and the huge programme of public works which were designed to mitigate the impact of the Economic War on the small farmers of rural Ireland and on the workers in the cities and towns. Do Deputies realise the miracle that was performed? We may say it was purchased at the expense of unduly slow economic expansion in the first ten years of our existence. I do not want to go into that story now but if anyone does say it, I do not believe it is true. I am merely trying to wake us up to the distinction between the situation in which we find ourselves today and the situation in which we found ourselves in the days of the last world depression.

Recently I said to a certain financier in the city: "I smell 1929 again in the air." It is very hard to put your finger on any particular feature which justifies you in saying that but you get, by studying world information coming through various press, radio and other communication sources available to you, a certain atmosphere and it was very remarkable that McChesney Martin, Chairman of the Federal Bank of the US, came along and said what I had said to my friend in Dublin 48 hours later. I feel that McChesney Martin was speaking with the same excessive emphasis as Enoch Powell used to describe the race relations and race problems elsewhere, but remember that while you may deprecate the emphasis a man uses, these men have learned by bitter experience the futility of stating the truth in simple words, for no one will listen and they recoil from the tragedy of having to concede that no one shouted "Stop". I believe that McChesney Martin and Enoch Powell were shouting: "Stop, listen and consider and, while the time is still appropriate, take measures to prevent uncontrollable evil overwhelming the world."

What McChesney Martin is talking about is the grim fact that prices have begun to rise in the US in the past 12 months or so and that the balance of payments is getting daily worse. When you look around the world at stable countries with prosperous, comfortable communities, outstanding among them you will find Switzerland. There are various explanations for that, but there is one feature which Switzerland and the US shared up to about 18 months ago, and that was that, despite vastly expanding prosperity and economic resources, their cost of living remained virtually stable. It is still relatively stable in Switzerland; it has begun to soar in the US, and when you have a soaring cost of living and chronic balance of payments difficulties, any country in that situation is heading for trouble. But since that situation manifests itself in both countries whose currencies constitute the reserve currency of international trade, then the world may well tremble because if these countries break down, there will be a collapse in international trade. If that transpires, then the whole pyramid of our instalment credit would begin to crumble in this country and thousands of men and women would be thrown out of work, and the cries we heard last night on the BBC by unemployed men in England that it was time the Irish went home would be redoubled in violence.

Those are the true economic facts of the background against which this country is working and when we talk about the Minister for Finance doing this or that, we should remember that we are all doing it together: Parliament is doing it. It is not only the Minister for Finance; it is every member of the House who should be conscious of the background against which we are working because we are jointly responsible for the long-term welfare of our people.

I want to say very definitely that I believe we are living in a period of acute difficulty and crisis and that it is one for which we should gird our loins economically to meet contingencies of which few people, outside those who really understand the problems of finance, know anything at all. I admit that the Minister for Finance, any Minister for Finance, has difficulty, in an atmosphere such as pertains at present, in explaining these things to the people, but the fact that they are difficult and unpopular imposes a peculiar obligation on the Minister for Finance to do just that and let the people know how dangerous the times in which we live really are.

I should like to hear the Minister tell us if he remembers Dr. Ryan as Minister for Finance introducing the turnover tax which was the root of most of the inflation that cursed this country for the past seven or eight years. Does he remember him telling us in this House that the reason he had determined to introduce the tax was that the traditional sources of taxation would no longer yield the revenue requisite to run the State? How is it, if that was true then, that since then those very traditional sources of revenue, beer, wine, spirits, tobacco and petrol, have yielded three times the total amount raised by the turnover tax? It was dishonest the day he said it; it was false then. He may have been misled into believing it but it was a very tragic day for this country when he staked not only his own reputation but the reputation of the Irish Minister for Finance on the veracity of that proposition which events now prove to be transparently false.

I want to say something in that context to which I think the Minister for Finance ought to give immediate and careful consideration. We have always maintained since the State was founded the tradition that when the Minister for Finance issued a National Loan and announced it here, the Leader of the Opposition got up and recommended it to the people as a sound security which he advised them to invest in; and the Leader of the Labour Party followed suit. The National Loan was then launched on the basis that there was universal agreement that it was a safe, prudent investment for all types of investors, including those who had relatively small contributions to make, to put their saving in.

I want to suggest that we can no longer in conscience make that recommendation to the small investor. It has been a source of acute concern to me that on many occasions I have participated in that ceremony either as a member of the Government or as a member of the Opposition, and the people to whom I made that recommendation have, in fact, lost their money. I want to suggest to the Minister that we should seriously consider adopting the practice of the Government of Finland, that is, in respect of any future national loans, that we should issue it at possibly a lower rate of interest, appropriately relative to the rates obtaining in the world, but with a proviso that its capital value will be attached to the value of money.

We have a cost of living index here which might provide a suitable index for that purpose, but which would mean that, if a person put £100 in the National Loan of 1968, when it fell to be paid in 20 or 30 years time, he would receive back capital the real value of which would be identical with that which he originally invested. I believe that would enable the Minister to secure a loan on terms which would enable all of us honestly to commend this investment to all sections of the people with a clear conscience. It would also justify the practice that has been consistently followed of demanding that insurance companies engaged in industrial insurance and the banks, who are the custodians of the savings of the simple people of this country, should invest a substantial part of their resources in loans of this character. However, it is not right and it is not just that the funds of industrial insurance companies should be virtually coerced into this type of security in the knowledge that is common to us all that it involves substantial loss of capital at the expense of a type of saver who cannot afford such losses.

Of course, we are all glad the Minister for Finance gave 7/6d to the old age pensioners, and everybody knows on this side of the House that the average Minister in any Government wants to give as much as it is physically possible to give to old age pensioners, just as the Fianna Fáil Government know that when we were in office, we wanted to do the same, but the limitation on what we were able to do was within the limitation of the resources available to us and the priorities we had to meet. Of course, we are glad, and I think it is an imaginative thing to do, to give them the radio licence and the television licence free. It will cost very little and it is a sensible thing to do.

I regret the imposition of the tax on petrol on purely economic grounds, because I believe the taxation on power works down through the whole economy and ultimately makes the maintenance of low export prices much more difficult. It is a hardship on many categories of the community, such as commercial travellers and other people, who must use a car to earn their bread, to pay that extra money. We voted against that.

I am sorry we have to put a tax on plug tobacco and on the pint of stout, because I recognise, as I always did in this House, the fact that we are giving it with one hand and taking it back with the other. However, the Minister is inclined to say: "I have got to get the money somewhere and can you tell me any better place to get it?" I am obliged to say to him: "If you want money to improve the old age pensions and you propose to get it from brandy, tobacco and wine, I have no serious complaint against you, save that you would want to watch your step in regard to brandy. I think you are approaching the point of diminishing returns." The Minister has said himself it has been already reached in regard to whiskey. He is in great danger of approaching the point of diminishing returns in regard to brandy, and bear in mind what happened 20 years ago. When the duty on wine was pushed up, one whole trade disappeared 25 years ago. Port wine was widely drunk in rural Ireland, much more widely than spirits or gin, and it completely disappeared as a result of one Budget. There was a ghastly miscalculation made. The price of port wine was pushed up beyond the level that people were prepared to pay and the whole trade moved over to spirits of one kind or another. The port wine trade never recovered. That is the peril of pushing a tax to the point of diminishing returns, particularly if you do it to excess, and the Minister is in great danger of approaching that point with brandy.

I do agree that the right thing to do is to push taxation on luxuries to the limit, but he would be very well advised to abandon this cursed turnover tax which has become a source of loathsome fraud, which is corrupting a large, decent section of our community, which is arbitrary and thoroughly evil, and substitute for it an added value tax. These concepts evolve slowly and I have really become fully informed on the workings of an added value tax only relatively recently. It has a selective potential; it has relative ease of collection and certainty of liability. If I had known as much about it in 1965 as I do now I would have said cheerfully: "Abolish the turnover tax and substitute for it an added value tax." It is in every sense a superior tax and, as I say, it is free from almost all the objections of the other tax, particularly in as much as it can be so selective and directed away from those areas of expenditure which involve an immediate hardship if an additional burden of tax falls upon them.

In the euphoria with which the Minister introduced this Budget, I doubt if there was absent from his mind the significant fact that the cost of living went up by five per cent in the past 12 months. How many Deputies realise that it has gone up 100 per cent in the past 20 years? The value of money has dropped by 50 per cent in the past 20 years. As we expand, or as we believe we expand, the social services, the steady erosion in the value of money means a reduction in the real value of what we believe are extra benefits which we are giving to those who avail of the social services. Does it not alarm the Minister for Industry and Commerce after all the programmes, after all the effort—and I do not deny that there was effort; I do not deny that there were hard work and good intentions on the part of the Minister for Industry and Commerce, Deputy Colley, and the Minister for Finance himself, and on the part of other Ministers with whom he shares responsibility and on the part of the Taoiseach—that 23,000 young people sought work in Great Britain last year? That is the heavy drain of emigration that is going on at this level at this time, after the cataclysm of the emigration that took place over the past ten years. It is not only to be deplored in itself, for the loss of the young who are going, but it is much more to be deplored for the fact that these young people are the producers and they are leaving the children and the old behind them who must be provided for.

That economic reaction is largely cloaked by the fact that these young people going to Great Britain do not get married for the first three or four years and during the period when they remain single, whether they are boys or girls, they steadily send home money. Anyone with a country shop is familiar with the picture. When I first stood behind a counter in my own shop in Ballaghaderreen, 90 per cent of the money which came in at Christmas came from America. Then, when the great tide of emigration to America subsided, that flood of American money did not collapse at once; it only subsided slowly as the diminishing level of emigrants progressively married and set up homes of their own in America. But then there began to rise the flood of English money. With the great tide of emigration to Great Britain in the years before and after the war, vast quantities of money came back not only by way of gifts but by way of investment when the emigrants asked their parents to put the money in the banks. I need not go into the reason for that particular phenomenon; it was partly done to avoid the impact of income tax in Britain. So the economic consequence of the immense loss of the productive element in our community is partially concealed, but the fact that it is still continuing ought to be a cause of the gravest possible alarm not only to the Minister for Finance but every Member of the Government.

Sometimes I think that members of the Fianna Fáil Party permit themselves to be deceived about the fundamentals of the present situation. It is true that the most agonising problem exists still in regard to housing and the answer to it is perfectly simple and there for anyone to read. Take a quinquennial period and we find that in the five years between 1948 and 1952, the total number of houses built was 52.251 and in the quinquennial period from 1953 to 1957, the total number was 51,701, which gives us a total of 103,000 houses built in that ten-year period. During that period and since that period, the old houses have been deteriorating and so many houses have fallen down and have become unfit for habitation every year. In the following quinquennial period, instead of building 52,000 houses, we built only 30,000 in the period 1958 to 1962 and from 1936 to 1967, we built 51,000. In the last decade, we built only 81,000 houses whereas in the previous decade we built 103,000 houses.

That is the root of our present housing problem. I am sure the Government have come to realise that but we are paying a terrible price in human suffering for our lack of foresight in reducing the rate at which we were building. In 1958 when Deputy Lemass sent for Dublin Corporation, he honestly thought that we had been building improvidently, that we were building too many houses and the time had come to call a halt. That was a terrific mistake and let it never happen again. There is no use talking about mistakes if we do not learn from them and this is a lesson we ought to learn.

I am obliged to the Minister for the valuable Budget material with which we were furnished prior to the Budget speech. I want to refer the House to the current Budget Tables for 1968. In Table II on page 5 there occurs one of the most significant factors in all the pre-Budget material supplied to us. At the bottom of this page, you will find that current Government expenditure is expressed as a percentage of the gross national product. In 1962, it was 21.6 per cent; in 1963, it was 22.3 per cent; in 1964, it was 23.4; in 1965, it was 24.6; in 1966, it was 25.5; and in 1967, it was 26.7. If you add to that the social service expenditure, you will find that taking social welfare expenditure and general expenditure, our outlay must represent 30 per cent of the total gross national product. That brings us fully half way up the table of all the States in Europe and higher than a great many much more affluent States than Ireland can ever hope to be.

One always feels a warm glow of satisfaction in spending more and more. We used to recoil in horror from having a figure in excess of £100 million on the Book of Estimates but the figure now is in excess of £300 millions. That is usually justified by a reference to our increasing gross national product but the percentage of the gross national product, represented by the figures I have given, is still climbing, and if you include, as you ought to include, the social services contribution, which remember now amounts to over £1 per week in respect of every man in employment, one-half of which is contributed by the employee and one-half by the employer by the cost of the stamp, it is no small additional levy upon the resources of the country.

But there is another figure on that page, the first figure on it, the service of the public debt. That figure has risen. Even since 1962 it has more than doubled. In 1962, interest and annual repayment for the reduction of national debt amounted to £34,370,000. The estimate for the coming year is £74,969,000. I wonder do Deputies realise that that represents more than £15 a head for every man, woman and child, including the infant in the cradle, for the service of debt? And it will grow substantially because the whole scheme on which we are proceeding is based on the borrowing of money. Now, so long as the expansion continues, everything in the garden will be lovely, but watch what may transpire if, with world developments, the position should be reversed.

I want to warn the House that there is a certain euphoria about our balance of payments that ought to be corrected. Our balance of payments is referred to at page 83 of the Government publication, Review of Progress 1964-1967, Table 24. At current prices and at constant prices, constant 1960 prices, there was a deficit in our balance of payments of £21 million in 1963, £39 million in 1964, £47 million in 1965, £28 million in 1966 and £12 million in 1967. Now, at current prices, the picture is substantially the same except that the deficit of 1967 was turned into a surplus of £10 million.

Does anyone ask himself of what does that surplus consist? I think the Minister will agree with me that it consists of imported capital. Some years imported capital was government borrowed, to wit, when we borrowed from the Bank of Nova Scotia and the Bank of Zurich; but it also consisted of people coming in here and investing money in real estate and property in this country. Thirdly, it consisted of people coming in to invest money in the promotion of industry and the establishment of industry for the employment of our people here and the export of the products. The third category is desirable from every point of view, though it can be carried to excess, and France and Canada are beginning to complain very bitterly, France that she will not allow it and Canada that she has allowed it to go too far.

Of what benefit is it to us if foreign capital comes in and proceeds to buy up the distributing services? Remember, in respect of every £1 million that is coming in here now in capital designed for the acquisition of Irish assets, the plan is that there shall be an annual export of £70,000 of interest on the investment here. If that is an investment which will generate exports that will pay that interest, then it is an economic advantage to the country over and above the social benefit of providing employment. But suppose it generates no exports and it becomes a levy on the gross national product of the country, then the advantage of such investment requires a very careful re-evaluation.

I should like the Minister for Finance—I do not want to delay the House unduly—to ask himself this question. He was himself Minister for Agriculture for a time, as I was. Bearing in mind the existing rise in the cost of living, how does he expect, or does he really expect at all, the small farmer, the man with 40 acres or less, to survive on the land of Ireland? How does he expect the man, the nature of whose calling is that he works seven days a week and, for the greater part of the year, 12 hours a day for a substantially constant income, the value of which is being steadily eroded by the decline in the value of money, how does he expect that man to survive on the land of Ireland? Sooner or later we shall have to face that problem because I warn the Minister that a very dramatic change took place, of which, I think, he has some knowledge himself, consequent on the collapse of cattle prices in 1965. Up to that time livestock was regarded as a kind of sheet anchor for the small farmer. Pigs went up and down. Sheep went up and down. You had a good year and you had a bad year, but there was always the steady saleability of cattle and relative stability of prices. That was the pattern for the past 20 years.

In 1965, however, the small farmer —the man who produced the store cattle, not the fat cattle—suddenly found himself walking the roads from fair to fair, as he did in the Economic War, but with a horrible apprehension, which did not exist during the Economic War, that this was not a purely political situation. Something had gone wrong basically economically and it was not possible to go over to London and settle the Economic War and the whole nightmare would be over. These small farmers began to doubt for the first time that they could live, that they could carry on, and I think a great many of them made up their minds they could not. That is why 23,000 of them went to England last year. The whole flow of emigration has been activated once more.

I do not underestimate the difficulties of restoring confidence to the small farmer. It is a very formidable problem. I think the present Minister for Finance when he was Minister for Agriculture and when he evolved the pilot scheme which, in substance, was a revival of the parish plan, and determined to concentrate all the resources of the advisory services of the Department on the congested areas was perfectly right. My only fear is that this was done too late and too little. From the collapse of that whole pattern of society in the West and North-west I recoil in horror. If the Minister wants to know why, I shall not trespass on this House to recite for him the whole of the contents of "The Report" but he will find it on the last page of Emily Lawless's book "With the Wild Geese"—not the one published by the Department of Education, which, God forgive them, they had the infamous audacity to bowdlerize but the original edition, which is rare and which was printed in 1906.

I do not think it is nostalgic on my part to feel we are making a terrible mistake if we throw away the last vestiges of a rural Irish society that survived in a deteriorating world, and which, because of its charm, dignity and nobility, draws admiring tourists in ever larger and, I am obliged to add, more incongruous hordes every year. As far as I am concerned, the only blessing is not, if winter comes, can spring be far behind but, "Oh! winter, if summer should come, can winter then be far behind?" in this our own beloved land?

Here is a question that I want to ask the Minister for Finance, a categorical question to which I should like an answer as early as it will be convenient for him to give it. He has abolished Schedule A and Schedule B of the income tax code. I can understand all the implications of the abolition of Schedule A. It means that income tax will no longer be payable on the five-fourths basis of the poor law valuation. What are the implications of the abolition of Schedule B?

The abolition means that farmers pay no income tax and there is no intention of substituting any alternative basis of assessment following the abolition of Schedule B?

The last question that I want to raise with the Minister is this: I admit that the full terms of the new university education scheme have not been fully assimilated by everybody yet but the position is, particularly in rural Ireland, that a number of young lads attending secondary schools at the present time are already entered for county council scholarships and their parents have been depending in preparing their family budget on the hope that these children would get these scholarships. There are certain categories of parents in rural Ireland who, if they correctly understand the new schedule, are virtually excluded from scholarships or university grants or benefits for their children, owing to the means tests but whose children heretofore had been qualified for county council scholarships to the appropriate university to pursue an academic career. Are we to understand that the existing system of county council scholarships continues in the interim or when does the new scheme actually come into operation? I think we ought to know. I do not know if the Minister is himself clear in his own mind as to how the new system of grants for university education is to operate. It may well be that it would need a word of consultation with the Minister for Education to clarify it. Confidentially, I very much doubt if the Minister for Education himself knows.

It will come into operation in the next university year— next autumn.

Then it means that there will be no more county council scholarships? There will not be? I think the Minister ought to have a look at that and ought to ask his colleague, the Minister for Education, to have a look at it because (1) the scheme imposes a very severe means test on the people in the £1,500 to £2,000 bracket whose children were entitled to a limited number of county council scholarships, especially if the family were large; and, secondly, the basis on which the four honours is to be the qualifying test seems to be utterly haywire because you can get a situation in which a boy who obtains four honours in the five subjects submitted and scores a total of about 900 marks over the whole five subjects taken gets a scholarship while a child who has got two or three honours but has got 1,400 to 1,500 marks is excluded. This, clearly, can never have been intended and yet, as the scheme is at present drawn, that is the way it will operate.

I direct the Minister's attention to certain matters that I think are of vital interest to us all. I do not think that anything he said in his speech or I do not think anything he did in his Budget effectively dealt with the particular matters to which I have referred. I hope our good luck may continue but the time has long passed when we should continue to trust to good luck. The Minister may have the consoling knowledge that any catastrophe that overtakes him will consume us all but there are trends manifesting themselves both to the east and west of us which are full of menace.

I had occasion to issue that warning once before. It was not then attended to. We paid a great price for our inattention. I would exhort the Minister for Finance to have regard to the dangers now so that we will not have to go through the same agony again because, while we came scarred and bleeding but relatively safe out of 1965, if we were to meet the kind of emergency that could develop as a result of the situation in the United States of America and Great Britain at the present time, we might not come out alive at all as an independent sovereign State.

This I want to say in conclusion: Whatever the economic developments are, the world is not going to fall down. This island is not going to be overwhelmed by the consequences of economic catastrophe. The danger is the loss of liberty, the death of freedom. That is the treasure that is at hazard. That is the treasure which nations enjoy—sovereignty—so long as they be able to defend it.

There were very few people in the world who believed when I was speaking in Ballinasloe, in the by-election in Galway, that I was approximating to reality when I said to the people standing on the streets of Ballinasloe: "Remember, if we follow the course we are at present following, a day will come when the legislation of this country will be written, not in Dáil Éireann, but in Zurich or in Washington". So far as I am concerned I do not care whether it is written in London, Zurich or Washington; the day it is not written in Dáil Éireann this nation ceases to be free. How many people dreamt that that fate would overtake Great Britain before it caught up on us? How many people at this moment realise that a Socialist Government in Great Britain had to accompany its application for a loan to the Bank of International Settlements and the banking system of Switzerland with a declaration of intent, a promise to be good, a guarantee that certain types of legislation were no longer within the ambit of the authority of the parliament in England?

I do not think we have ever yet had to sink to that depth. I trust we never shall. No Minister for Finance lightly promises that should a very short fall in our resources materialise, we can always have recourse to the Bank of International Settlements or other institution, because while we can go there once without conditions being imposed should we thereafter return we will be asked for the same humiliating declaration of intent. I hope I will never live to see an Irish Government constrained to give it, because the day we do we will have surrendered for money to international bankers what generations of our people took from foreigners at the cost, not of sweat, but of tears and blood.

Mr. Dillon has dealt with the Budget and all its aspects in a very comprehensive manner. Earlier we had Deputy Davern, the Parliamentary Secretary to the Minister for Agriculture and Fisheries, giving the impression it was one of the greatest Budgets that ever came before the House. Over the years Budgets here have varied very much. We are not rejecting this Budget out of hand because it has provided for social welfare a little more than the usual 5/-to which we had become accustomed. However, we believe that 7/6d is still not enough. I am prepared to say on my word of honour as a rural Deputy that there are homes throughout Ireland where starvation is rampant and the money available to these people is not sufficient to keep body and soul together. However, the Government were moving in the right direction by giving this 7/6d, but it was not enough.

Deputy Davern, the Parliamentary Secretary, said it was very hard to say what was the less fortunate class in our community. He said that as far as he was concerned it was a matter of Irishmen and Irish women. I want to say most sincerely that this country is reeking with class distinction. It is evident even in the church on Sundays and even with the children in school. It means that if you have not your pocket lined with money you are not wanted and you are not the class that will be respected by any other section of the community.

Deputy Davern tried to convey to us that down through the years miracles had been done for agriculture. I have never seen anything spectacular done for agriculture by this or any other Government. I heard it referred to time and again by way of lip service as the primary industry, which it is. What incentives have been given? It is not the fault of the farmers that we have this figure of 15,000 or whatever it is leaving the land each year. The truth is that the farmer is no longer able to pay and because of this his employees have to seek employment in England.

Part of this Budget seems to be whitewashing the cracks in the wall, hiding things behind the scenes. We know very well that no young couple in Dublin today can attempt to get married unless they have thousands of pounds. There is no question of a house being made available for them. The same applies throughout the country. This has not been referred to, nor was unemployment or emigration referred to. As long as we have these cancers on the soul of Ireland no progress will be made. No Government in the past have tackled it and it remains for some Government of the future to tackle and cure these problems. I would have given credit to Fianna Fáil if they had tackled this. It is not going to be easy. It is no good letting on that we have done wonders when we have not.

It is true that the major political Parties think they have been elected by the people for one reason alone— to try to get a punch in at each other, going back maybe to the days of the Civil War. That is not what any Deputy was elected for. Let us, in the name of God, try and get together, pool our resources and the limited amount of knowledge some of us may have, and let the Government have respect for the submissions of the Opposition. Only in that way will there ever be any hope of curing the terrible national evils to which I have referred.

The Budget is not a bad one. It is not the best that ever came before us, but neither is it the worst. The Labour Party accept it, not in toto but in part, as an honest attempt to do something, particularly in the field of social welfare. Under no circumstances has the work been completed. I believe the Government have convinced themselves that they are able to do nothing about housing, unemployment and emigration. They are determined to leave these matters to cure themselves, to leave this haemorrhage of our people continue until there are no more to go. Then whoever are in government will shove out their chests and say: “The people went when we were not in government and we have no more problems of housing, unemployment and emigration.” That seems to be the attitude. The same thing is happening year after year since the foundation of the State. Let us pool our resources, let the Government have some respect for the submissions of other Parties, let the intelligence of the House be pooled and let us realise that those of us elected to this House have a responsible part to play. I hope that will be accepted and honoured by the Government.

Very few anticipated that the Minister for Finance would be so generous and would have the money available to give an increase of 7/6d per week to old age pensioners and all social welfare recipients. It is the first time that an Irish Government have seen their way to do so much for the less well-off sections of our community. That 7/6d is much more than the Inter-Party Government gave in their last three years of office. We all realise how the cost of living has risen. Since we came into office we have always increased our social welfare benefits at a higher rate than the percentage increase in the cost of living. This can only be done by good management and good housekeeping.

Now for the second year the Budget has been balanced. In the context of so many millions having to be planned and budgeted for well over a year in advance, when at the end of the year you have your stocktaking and see that you have achieved what you originally anticipated, you realise that it takes a very good head and a very good team to be able to do that work and still deal with the everyday problems which arise during the year. This Budget is progressive and looks after every section of the community. The money has to come from somewhere. I do not think any person in the State feels really aggrieved at having to pay an extra 2d for cigarettes or an extra 1d for the pint, because everyone realises they are luxuries and they see the amount of good this money does when it is put to good effect.

Taxation is one part of the picture, but the main part for the Government is the rate of growth which we are able to achieve each year. Last year we had a growth increase of practically four per cent on the previous year. This is a most significant factor. It means that industry is moving, and more revenue is coming in. This brings money into the country and counteracts unemployment. The real kernel is where the money can be provided to keep the country going and keep our people in employment.

I heard Deputy Dillon trying to justify what they did when they were in office. He was also lamenting the unemployment position. He must have a very short memory when you think that in 1957 we had an unemployment figure of 95,000. It is well under one-third of that figure at present. There was also the serious problem of an emigration figure of 60,000 at that time. It was so bad that almost every week the unemployed were marching in Dublin. A man was elected to this House as a person representing the unemployed. That is a very long cry from what we have at present.

In dealing with the Budget, the Minister has always shown imagination in helping industry and helping the people generally. He has realised the importance of new machinery and new techniques. This year again he is giving tax relief to people who will modernise their plant. If we are to compete in foreign markets, we must have new machines and the most up-to-date and efficient methods, because the profit margin over the cost of production and the selling price is inclined to get tighter as we go along. We must have more up-to-date and efficient methods if we are to compete favourably abroad. Even against England where their factories are all very old, we have the advantage of more modern industry and modern factories, and that gives us a chance to compete favourably against Britain on foreign markets. Most of our factories employ around 200 or 300. This is recognised as the most efficient unit. The staff relations seem to be better in that type of factory. The Government have always gone out of their way to try to help new industries and existing industries to compete. This year the necessity for this has not gone unnoticed.

We have heard speakers on the Opposition benches saying it was not fair to give the managerial class certain tax concessions, to give them the same as they have in Britain. I can assure the House that in any town in Ireland where there is a good factory and good management, the value of management is realised. In Newbridge in my constituency, where there are quite a number of industries, there is one going exceptionally well and the management is very often compared with others throughout the country. The people understand the importance of having the best brains we can get. If we have the best brains, the costs of production can be kept low, and the management can be farseeing. This bears fruits in the following years. Giving the managerial classes a little concession— the same concession as they have in England—can be justified because we have quite a number of factories here which are tied up with existing factories in England, and if these people felt they would be better off in England, it would be very easy for them to get a transfer. It is very important that we should do our utmost to keep the best brains we have in this country. This will bear fruit in the years to come.

The Minister has shown more imagination in the Budget. Last year he provided free transport for the old. That was received exceptionally well. It meant that old people could travel to see their children without being under an obligation to them. On their pensions only, they would find it hard to travel any distance to see their families. They felt it was not fair on the families. Now they can travel where they like. This year, the Minister gave them extra help in the way of free television and radio licences. They are people who watch television and who listen to the radio quite a lot.

A very welcome benefit to young people is the wedding present of £35 which the Minister for Finance is giving to every pair getting married. Very few countries are prepared to be that generous. If any person gave a pair a wedding present of £35, it would be regarded as a tremendous present. The Minister is to be complimented on this courageous step and he will be remembered for it. Down through the years, we have heard complaints that the tax system is so heavy on the single people that they find it very difficult to save sufficient money to get married. Then, again, they have many commitments in the year they are married. Hitherto, they received no assistance except that they could claim relief of income tax for the year in respect of the wife. The Minister has now devised a workable system which is a wedding present to a pair on their marriage.

With an eye to the future, the Minister has provided extra money for education which is certainly no load for any child to carry. Parents with clever children were worried if their financial situation did not permit them to provide a university education for them. I have a case in mind. The son of a personal friend of mine got a scholarship three years ago. The parents discussed the matter with me as they were worried about a university education for the boy. He got six or seven honours in his intermediate certificate examination and now he is going on for the leaving certificate. The boy has his mind set on a certain career and the parents have been very worried for some years past about their lack of resources to enable them to send him to the university. They were afraid that he would have to look for an office job and that he would not be able to use his ability to the utmost benefit of all. There are hundreds of thousands of such cases throughout the country. The Minister's step in this Budget will take a great burden off the minds of parents of clever children who are not wealthy. The Minister realises the value of making the utmost use of the brains of our children. Every aspect of life requires that the services of the finest brains are available to our country.

At present, scholarships will be awarded to qualified persons with two honours more than the required entrance level to the university. As the years go by, I trust the Minister will be able to improve on that. It is a start. There is now a target at which the student can aim. The student now knows that if he can get four honours in his leaving certificate, he will not be a financial burden on his parents from the point of view of his university education.

In the agricultural sphere, the Minister pointed out that our pig population is dwindling and that strong encouragement is needed to restore the industry. I believe the high price for skim milk is an important factor in the decline in our pig population. If we examine the figures, we shall see the falling-off that has occurred in pig-rearing in the creamery areas. A very big inducement is required to remedy the situation and the Minister has provided it by devoting most of the money that agriculture will receive in this Budget to an attempt to restore the pig industry. I am glad he has gone so far as to give further incentives to the farming community. This is one of the few industries you can really streamline where big numbers are needed because the profit margin is low. It is very much like a factory and you must compete on factory lines. It is about ten years since I had this idea about the fattening of 1,000 pigs at a time. The main thing in the fattening of pigs is the designing of bigger units.

The day has gone when a person could economically fatten two pigs at the back of the house. You cannot get grading in that way. The profit margin is too small because the houses are unsuitable. They are too cold and the pigs may not thrive and you will probably end up with a loss. The future lies in these bigger units. Unfortunately the enthusiasm displayed in starting this scheme has stopped there because of the raw material for feeding.

I am glad the Minister has realised the importance of getting that type of unit going. At present they are having their feeding problems in the matter of raw material. I have been firmly convinced for the past five or six years that this is the only way you will get an increase in pig production and make it an economic proposition. It also fits into our system here particularly well as the small farmer can keep a sow and the bonhams.

No person can produce cheaply without large capital outlay and the greatest profit would accrue from that end of the business. If we were to go in for the fattening of pigs, we would require an amount of capital expenditure and it is doubtful if a farmer would have an efficient unit at the end, even if he had a number of pigs. Apart from that, a sow does not take up much of the ground. This system would add to the production of the farm and still leave grass. Therefore, it is extra production on the farm and every small farmer would need to have it going at full production to make a success of it. The one aspect of it which is ideally suited to the small farmer is the production of bonhams.

One of the problems has been the up and down market for pigs. When the price of bonhams is bad, the unit can get plenty. When prices are high, production goes up and it is important to compete on that basis. This is an idea I am glad to see the Minister pursuing because in the end it is the only profitable way of fostering pig production.

Oats has been the cinderella of the crops of this country. When you look at the figures, you will see that the acreage under oats has always been exceptionally high. It has been grown by small farmers particularly in the West and North, but it was always a marginal crop. Most people kept it for themselves, and if there was any surplus, they would not sell it. Now we are to provide a floor price as for barley, at the same price per ton. If there is any surplus, those people would have oats for the feeding of livestock. It is a pity that over the years people who had a little over had no market or no way to dispose of it. This is of great assistance to the small farmer.

In his Budget last year, the Minister gave relief of rates and this year he has gone for the two traditional items of the small farmer—the bonham and the oats crop. As well as that, the Minister has seen his way to abolish Schedules A and B. Possibly the Schedule B tax does not affect many of our farmers. It is only the larger farmers whom it would affect but Schedule A affects a number of people owning property. This will straighten out and simplify our tax system to a certain extent. People have a tremendous amount of taxes to pay under Schedules A, B and C but the Minister has cleared it up by relieving people of it and simplifying it to a great extent.

The Minister has realised the worry for a number of people where the breadwinner dies and the widow is in a bad way and he has given assistance in the matter of estate duties. I am thinking in terms of businesses or farms. In my part of the country, it does not take many acres to run up to £25,000. As it was, it would take all the capital in that farm if the breadwinner died. The Minister has seen fit to increase the abatement to £1,000 for the widow and £500 for each dependent child. This means that a widow and three dependent children are completely free of death duty.

I knew quite a number of farmers who were going well, fully stocked, everything paying its way and overnight they died. The death of a farmer is a very big loss in itself to the unfortunate widow and children but the death duty makes the loss crippling. An estate of £20,000 would be reduced by thousands of pounds and this is a terrible worry to a widow and a young family. I hope therefore that as time goes on, the Minister for Finance will ease the plight of the widow and young family.

We should compare our Budget this year with that introduced in England because there is a good deal of similarity between the trading and money systems of the two countries. We must remember also that when they applied credit restrictions some years ago, it had an adverse effect here. The British Chancellor of the Exchequer this year brought in a Budget which increased the revenue by nearly 50 per cent. Had that been done here, it would have meant bringing up the turnover tax to 7/- in the £ and income tax would have had to be increased by 3/- or 4/-in the £. What an outcry there would have been in the country. However, by good planning and good management the Government have been able to get us out of the difficulties we were in a few years ago and we are now able to look hopefully to the future. We must remember this always when we compare ourselves with Britain, a big industrial country comparatively, with great resources.

Here, the Minister for Finance has given the business people four years notice of the introduction of the decimal system which will be similar to that in England. We should like to bring in a system of our own but the economy in England is so similar and trade between the two countries so great that it was best to bring in a system equivalent to that in Britain. Otherwise, it would have meant that coin machines and other equipment here would have to be different and it would also have meant difficulties for business people. The Minister has assured business people that there will be tax reliefs for them for the reequipment necessary because of the change over. That type of planning has been the hallmark of this Government since we took over in 1957. Business people know ahead of time our plans for the future.

Deputy Byrne said that 11,000 people left the land last year. We do not like to see so many people going from any industry. The main reason for the decline in agriculture has been that in common with other industries, farms have become streamlined. Long ago there was a lot of mixed farming and consequently each farm had to have a number of hands employed. Modern production methods have called for a curtailment of the number of lines any one farm can engage in. Another reason people are leaving the land is that they realise the building industry is paying high wages and has been enticing men from the land. From my part of the country, men travel 40 miles to come to Dublin to work in the building industry. One has only to drive around the city to see the number of houses going up on every side. It is that I think as much as anything that has brought that extra number off the land, that terrific demand by the building industry which is paying exceptionally high wages and looking for people who have been used to an open-air life on the farms. That as much as anything is the reason why there is this excessive number moving off the land.

As well as that, of course, there is the streamlining of production on the farm itself. When one looks at any other industry—wages may be a little better than agricultural wages—but the people in those other industries would not be interested in going into the building industry even at higher wages because of the moving around and because it is not so secure. The only place the building industry can turn for extra labour is the agricultural industry. That is the reason for it and I cannot see why people are decrying it to such an extent when those men are getting £4 to £8 more per week in the building industry. Patriotism can go a long way but the amount of money going into a man's hand is the important aspect to those people and to their families. We cannot blame them for this when they see that there is ready work available for them.

Deputy Byrne also mentioned that people cannot get houses unless they have thousands. I can only ask him to look at the evening papers any week and he will see houses available for deposits and loans over a long-term period. That goes for any part of the country. If it is down the country, the people can get their grants and their loans and the amount of money they require to have themselves is a very small fraction, possibly only five per cent, of the actual cost of the house. The loan will even take into account the cost of the site. I cannot see any State or any Government being able to facilitate people better in regard to housing, particularly if they are interested in building themselves.

Here in Dublin the bigger builder will build estates and provide houses and the people themselves can get the loans. I think the builder will even go out of his way to assist these people to get loans. There are loans to cover every section of the people. There are the SDA loans which were devised for people who would not be able to get loans from banks, building societies and insurance companies. In the bigger cities, there are the building societies and insurance companies which cover most of the loans being provided. It may be hard to get sites here in Dublin but the bigger builders are able to build estates and supply houses and that has met, to a fair extent, the needs of this city.

The Government went out of their way to provide the Ballymun scheme where we were short of houses as a result of the bad policy of the Coalition Government during 1955, 1956 and 1957 when the corporation stopped building. There was a terrific demand for houses here in the city, but we went in and provided the Ballymun scheme, which will remove the crisis in housing in the city. This is the biggest system-built housing scheme in Europe. It just shows how big the Government think. When the Government feel there is a job to be done, they are not afraid to do what is required. Even if it must be bigger than anything in Europe, they are not frightened; they will go ahead. That shows the kind of Government we have here. Our Budget reflects that.

Some of the newspapers said there was nothing spectacular in it. Of course the newspapers would love something really spectacular but if one looks at business firms that have been there for generations, one will never see anything spectacular about them. It is always a gradual expansion. The same thing applies to a farm. From a farmer's point of view, when you see a farm growing too spectacularly, you know the money will not last. I would compare the Government here with some of the firms that have been there for hundreds of years and have been successful and expanding over the years. The Government in their Budget have shown proper planning, nothing spectacular but a gradual expansion. This year they increased their capital. It had been set at around £110 million and it is up to £135 million this year. That shows that there is a consistent capital increase over the years. We will be doing it next year as we have done it in previous years and this is where you see that it is an expansionist policy. We have done more expansion this year, but when it is being done every year, there is nothing spectacular about it.

Progress reported; Committee to sit again.
The Dáil adjourned at 5 p.m. until 3 p.m. on Tuesday, 30th April, 1968.