I should like the Fine Gael spokesmen to remember that they tried to ridicule this whole concept of economic programming and I do not think I can put it better than to use the words of the person who has been, perhaps, their outstanding economic spokesman, Senator Garret FitzGerald. Writing about four years ago, in the Irish Times of 26th February, 1964—that was about a year or a year and a half before he threw his cap into the Fine Gael ring—he said in relation to the Fine Gael attitude towards economic programming:
The Party that is so remote from the realities of the country's economic life as to be misled into rejecting the Second Programme as no more than "a pious hope" and "ballyhoo" will get short shrift from the people who have accepted the concept of economic programming as the most appropriate weapon in the State to raise our living standards and to establish a modern and competitive economy in this country.
That is what Mr. Garret FitzGerald, as he then was, now Senator Garret FitzGerald, thought of the Fine Gael attitude at that time towards programming. Now Fine Gael apparently want the people to believe that they were, and are, all for economic programming and, if they had responsibility for the nation's affairs, things would be very different. I agree they would be very different, very different in the way that we had sad experience of at the end of 1956 and early 1957.
Even if we had not achieved the targets that were set over these ten years and even if all our expectations were not realised, that is not to say that all our efforts ended in failure. The facts are, as I will show to support my contention, that it was, first of all, a Fianna Fáil Government which secured general public support for the concept of economic programming. It was a Fianna Fáil Government which has used this economic programming with, I suggest, great success as the most appropriate and effective weapon in our efforts to raise the living standards of our people and to establish here a modern and competitive economy. It has not been all a success story, I readily admit, but the successes are there to record, and I want now to give a few examples, to record them deliberately and accurately, so that between now and the resumption next week, the remaining Fine Gael speakers, who will no doubt continue to criticise the Second Programme and allege its failure, will have ample opportunity to examine my figures and, if they see anything wrong with them, to challenge them.
To go back to 1958, when the First Programme for Economic Expansion was introduced, gross national product at current market prices rose from £601.1 million to £1,146 million in 1967. That was an increase of £545 million or 91 per cent. Now that is at current prices. It might be a better yardstick to examine these figures in what are called "real terms" or at constant 1958 prices. In these terms, the rise was from £601.1 million to £833 million, a rise of £232 million— that is at the 1958 prices—or 39 per cent, which was equivalent to an annual average growth rate of 3.7 per cent. This rise in overall national output was made up of real growth equivalent to two per cent per annum in agriculture, forestry and fishing, 6.6 per cent in the industrial sector and 2.8 per cent in the other domestic sectors. These are significant figures. They are figures that I am deliberately taking from the statistics that have been supplied in order to facilitate the lethargic Fine Gael Deputies who may not want to go through them in detail; they will find them in my speech in a concise form for the purpose of any further criticism they may like to offer.
As far as consumption within the country is concerned—that is, the use of resources—again at 1958 prices, continuing at a constant level, consumption rose from £459.3 million in 1958 to £599 million in 1967; that is an increase of 30.4 per cent or three per cent per annum. In the same period total investment rose from £72.1 million to £163 million, a rise of 126 per cent or 9½ per cent per annum. Again, that is a significant indication and, I think, a satisfactory indication of an increase in the national wellbeing and the standard of living of our people over that period.
As far as our external markets are concerned, exports of goods and services rose by no less than 95 per cent in that period, that is, from £172.6 million to £337 million, which was equivalent to an annual growth rate of 7.7 per cent. Imports of goods and services rose from £206 million to £395 million in real terms, an increase of 92 per cent or 7.5 per cent per annum. There is a consistent pattern of growth over that ten year period, over that period during which, it is alleged, the Second Programme was a failure. During the First Programme, our balance of payments was virtually in equilibrium. In the Second Programme, we planned deliberately, in order to encourage expansion, to suffer or incur a deficit of about £16 million a year. There were, of course, fluctuations in this figure and we had in 1964 an excessive deficit, reducing gradually by reason of the Government measures taken then to last year's surplus. The external assets of the banking system and departmental funds rose by £90 million, from £205.8 million in December, 1958, to £295.1 million in December, 1967.
I have just referred to the undue adverse balance that we suffered in 1964. Fine Gael speakers, for the past two days, both inside and outside the House, have been referring glibly to the mistakes of 1964 and 1965. There were some mistakes but those mistakes were common, practically, to every democracy, not only in Europe, but in the world. The international situation, which was one of serious inflation, shortage of capital for development, affected us as it affected all these other countries. But, if there were mistakes, it took courage to stand up to them and it took ability to overcome their effects, and that is what we did. Again, I should like to remind the Opposition that we took courageous action, we took action based on foresight, in circumstances which were almost exactly similar to the circumstances the inter-Party Government faced at the end of 1956 and 1957. They ran away from their mistakes, if they were their own mistakes only. They ran away from a difficult international situation. We faced up to that, overcame that, and have now recovered better than any other country that suffered from the same economic difficulties as we faced then and I propose to demonstrate that —I hope very effectively.
It may have been a mistake to encourage the two-year wages pact or wages agreement that was effected between employers and workers in 1963-64. I think the concept was not a mistake because the intention was that employers would have a better opportunity of gauging their costs over a two-year period and, therefore, a better opportunity to sound out markets and to ensure that they would be able to fulfil orders at prices quoted. The mistakes, perhaps, arose in the implementation of that two-year pact. The mistakes arose in many ways. Unfortunately, some manufacturers, some traders, sought to get compensation too early on for the increases in wages that were paid. They having put up their prices in order to get premature compensation, the workers in certain industries sought, again, compensation to overcome these increases in prices. That did not happen in all cases. It happened only in a minority of cases but that was the kind of thing that upset this concept of the two-year agreement, the two years of industrial peace, two years of stability, so that workers on the one hand and employers on the other hand would have an opportunity of assessing their income and assessing their costs.
The NIEC have since reported that smaller increases covering shorter periods would, possibly, be better for the economy but, nevertheless, as I have said, that was one of the mistakes. If there are any other mistakes to which the Fine Gael speakers allude, I should like to have them mention them. I am only assuming that this is one of the mistakes to which they referred.
Notwithstanding the inflationary position that mistake produced, which, again, was not exclusive to this country but which was shared by almost every other country in the world, we were able by the measures we took to overcome the adverse effects, whether they were internally or externally caused—we were able to overcome these adverse effects more quickly and more effectively than almost any other country in the world.
Our growth rate in 1967 was 4¼ per cent, as indicated by the Minister in his Financial Statement, compared with one per cent in the United Kingdom and the average of two per cent in European countries, including OECD and EEC countries. There were some exceptions. Italy, Norway and the Netherlands were marginally over our growth rate of 4¼ per cent but all others were below ours. That is a clear indication that the policies we have been pursuing since then, within the framework of the Second Programme for Economic Expansion, have been successful, by and large. Over the whole period of ten years since 1958 we have achieved a growth rate of 3.7 per cent per annum on average. Ten years ago anybody who would have set that programme before him would be well satisfied if he attained that growth rate.
I come now to agricultural and industrial production. I want to give some figures which will indicate that we have not been suffering from stagnation, as has been alleged. The volume of gross agricultural output rose by 28 per cent or 2.8 per cent per annum over this period. The increase in net output was 18 per cent or 1.8 per cent per annum. The volume of output in manufacturing industry increased by 74 per cent or 6.4 per cent per annum. The volume of output of transportable goods industries rose by 77 per cent or 6.6 per cent per annum and the volume of output in all industries rose almost exactly the same, 77.5 per cent, or 6.6 per cent per annum.
It is true that when we come to overall employment there has been a decline and it has been suggested that this is the one marked feature where the Second Programme has failed. Deputy Cosgrave yesterday joined in the facile criticism of the failure of the Second Programme to bring about the planned increase in total employment. I will admit at once, of course, that total employment has, regrettably, not gone up since 1963 as fast as we would have liked. The causes, however, should be clearly recognised. This has happened, not because employment in industry and in services failed to rise. Indeed, between 1963 and 1967, the number of new jobs created outside of agriculture was 38,000. The reason total employment did not rise—in fact, it fell by 3,000—was that employment on the land dropped by the unexpectedly large figure of 61,000.
Now, I want to examine home what this employment on the land means. Is there anybody who seriously believes that those who left the land in postwar years or, indeed, at any time, lost what we describe as worthwhile gainful employment? Had the majority of those people who left the land been remunerated on a basis of being in full-time jobs which they gave up or lost for some reason? That was far from the case. The employment figure for agriculture is and always has been an artificial statistic. Those who left the land left it because they were not getting an acceptable income from it. There has been no fall in agricultural output as a result; on the contrary, it has risen. It is completely wrong to be relating employment statistics for agricultural employment as if they meant exactly the same as statistics in industrial employment. Sons and daughters, young and old, leave farms. They do not get weekly wages like persons in industry. Nevertheless, they count in this overall figure. It is alleged, because of their inclusion in this overall figure, that we have failed in our efforts to increase employment. We recognise that here, as in every other country, the number of those engaged in agricultural employment is declining. Our object is to produce and provide for them alternative employment in industry. We have a worthwhile record in the creation of new, reasonably paid and respectable jobs outside of agriculture. The total figure for employment is being constantly improved in its composition and we hope shortly to make progress again as we did in the years 1961 to 1963.
It must be remembered that since 1963 we have had a difficult international economic situation. We have also had the uncertainty of our accession to the EEC. The international situation will disappear and our accession to EEC will be only a matter of some years. Notwithstanding that situation and our accession to EEC, I believe our employment situation will be improved in the near future. Notwithstanding this small average decline in the number of people actually engaged in agriculture and industry, I should like to say, in regard to emigration, that there has been an overall increase in our population. Emigration since 1958, when it stood at 34,000, has been more than halved, being down to an estimated 15,000 in 1967. Total population showed a net rise of almost 40,000, that is, from 2.853 million in 1958 to 2.892 million in 1967.
Coming to wage rates, we can point to a steady and indeed substantial increase. Average weekly earnings in our industries have risen from 135/11d. in 1958 to 260/10d. in 1967—an increase of 91 per cent or 7.5 per cent per annum. On the agricultural side the minimum agricultural wage rates— these are the minimum rates which are not applicable in all parts of the country—grew by 75 per cent or 6.4 per cent per annum in the same period.
These facts and figures I have given should be sufficient to refute the assertion—the brazen assertion, I suggest —that the economic programmes of the Government have achieved nothing. On the contrary, they show that our economic programmes have achieved a very large measure of the kind of success they were designed to achieve, that was, to get the economy moving again after the years 1956 and 1957, to increase the national prosperity, to create a situation in which the less well-off sections of the community would get an ever-increasing share, to raise living standards generally and to establish a modern, competitive economy. This Budget is another substantial step forward on the road to further expansion and is another product of the sound and prudent management of the nation's affairs.
I said earlier I would deal more fully with agriculture and I should like to do so now. I want to indicate that over the years this Government have been generous to agriculture. This Budget in particular, having regard to what it had to cover, having regard to last year's and next year's expenditure, is also generous to agriculture. In regard to State expenditure on agriculture, the following figures should be borne in mind. If we go back to 1960-61, from then to 1967-68, current Government expenditure on agriculture more than trebled, that is, current expenditure apart from capital, from £14.1 million in 1960-61 to 53.6 million in 1967-68. This increase is equivalent to an average annual rate of 21 per cent and—this is a significant figure—compares with an average annual rate of 11.9 per cent for total Government current expenditure including agriculture and 10.5 per cent for Government current expenditure exclusive of agriculture. Therefore, if you exclude agriculture, the increased current expenditure on agriculture itself is double that of the current expenditure on every other service.
In that period from 1960-61 total State expenditure in relation to agriculture—and that includes all kinds of services, grants, university subventions for agricultural students and so on— rose from £26.3 million in 1960-61 to £68.9 million in 1967-68, representing an average annual rate of 14.8 per cent compared with a rate of 11.3 per cent per annum for the total State expenditure excluding agricultural expenditure. Again, when one takes all these things into account—forestry and everything else—one sees the increasing trend of support for these land activities compared with any other.
The President of the NFA said the other day that farmers' costs will rise by £9 million or the equivalent of an eight per cent increase during 1968. The crucial point here is what happens to farmers' incomes rather than farmers' costs. Farmers' incomes depend more on the level of output and prices than on the level of costs. The agricultural price index is likely to be higher on average in 1968 than in 1967. The value of output will therefore rise substantially, bringing with it an appreciable rise in family farm incomes, despite the higher costs of production. From 1963-67 farmers' incomes overall rose by 22.3 per cent, while in the same period, the numbers engaged in agriculture fell by 12.7 per cent, so that income per head of those on the land rose by 40.1 per cent. This compares with a rise of 35 per cent in the average weekly earnings of those engaged in the transportable goods industries in the same period. Nevertheless, we have to take into account the effect of the consumer price index, and if we deflate by the consumer price index, we find real income per head in agriculture rose by 17.5 per cent compared with 13.3 per cent for earnings per head in the transportable goods industry, again an indication that earnings in agriculture are increasing at a faster rate than earnings in industry. I am not suggesting that we have caught up yet, but it is an indication as I said before of the manner in which Government support is helping to increase agricultural income.
It is not true to say that incomes per head in agriculture in 1967 went up only because of the decline in numbers. Farmers' income is estimated by the Central Statistics Office to have risen by over nine per cent, while the number engaged in agriculture in 1967 fell by 3.3 per cent and that resulted, therefore, in incomes per head in agriculture increasing by nearly 13 per cent. Every year the farming community look to the Government to provide additional assistance towards increasing farm output and incomes. The main reason for this is that about 50 per cent of sales of farmers have to be disposed of one way or another on export markets. In these markets, as everyone knows, prices are artificially low because of deficiency payments by Governments or subventions in other forms. When we export to these markets, we have to export at an economic price, that is, at less than the support price given by the home Governments to their own farmers.
The Government have provided in one way or another measures of support for the main products of these farmers. Without these price support measures, farmers' incomes would be considerably lower than they are. In addition to price supports, Government assistance is also directed at reducing input costs, that is, the cost of production, by subsidising fertilisers, by giving rate reliefs, and by improving the structure and productive capacity of farms. In that connection it should be borne in mind that about one-third of the total working population of our country are engaged in agriculture. Therefore the remaining two-thirds cannot provide supports out of taxation on the same scale as many other Western European countries. If we take Denmark, our main competitor on the British market, we find that less than one-sixth of the working population is engaged in agriculture, and in Britain the proportion is as low as four per cent. Therefore, one can readily understand how much more easy it is for Britain and Denmark to provide price supports for agriculture at a higher level.
I have already mentioned that we have provided more for agriculture in the Estimates by £11.5 million than was provided last year. In recent years, we have been expanding and intensifying the various measures designed to alleviate the small farmers' problems in particular. Some of these measures, particularly those aimed at the structural improvements of farms, increasing the size of farms, the consolidation of fragmented holdings, are long-term and even at their best will become effective only gradually.
Measures to alleviate the problems of small farmers have assumed increasing prominence in the Government's programme. One difficulty in the whole question, of course, is that the classical instruments for agricultural policy, that is, an improvement in the level of farm prices, commodity subsidies, and so on, are less effective in the case of small farmers because of the limited scale of their operations. They are less effective than they are for large farmers. Against this background the Government have pursued various measures aimed specifically at small farmers and small farm areas, measures such as the recently introduced small farmers incentive bonus scheme, the derating of farms with valuations under £20, the improvement and expansion of the advisory services in the West in particular, the promotion and development of co-operatives, changes in the unemployment assistance code in so far as it refers to smallholders, the introduction of pilot areas, and measures such as those.
These measures are very valuable but we recognise that they do not provide the whole answer. It has become universally accepted in recent years by all countries faced with problems of this nature similar to our own that these problems can be met only through measures pertaining to the general economy and by a synchronisation of programmes of development aimed specifically at small farm areas offering an opportunity of work outside agriculture for as many small farmers as possible and in this way freeing more land for those who are operating uneconomic holdings or for those who choose to remain on the farms, farming little holdings, at the same time trying to get for them secondary work in order to maintain a viable rural community. It will continue to be Government policy to support small farmers and to devote special attention to the problems of small farmers and at the same time to encourage other lines of development such as industry and tourism.
Little has been said about social welfare and social expenditure in the course of this Budget debate. I think I should give some indication as to the extent of social spending in this country in recent years. Social expenditure over the broad categories has increased considerably, that is, on social welfare itself, education, health, and so on. In the past decade it has more than doubled. Expenditure under this heading totalled £47 million in 1958-59, and increased to almost £110 million in the current year. On social welfare itself provision has been made in every single Budget since the Fianna Fáil Government resumed in 1957. Social welfare increases have far exceeded the cost of living increases so the living standards of those in receipt of these benefits have substantially improved. The scope of the social welfare services in the period has also been expanded.
Deputy Cosgrave referred yesterday to the level of expenditure by our Governments in general on the social services, and said we compare very unfavourably with other European countries. We do not compare very unfavourably even though I will admit our expenditure as a percentage of our gross national product is somewhat less than most, but not all, European countries. Deputy Cosgrave related that expenditure to gross national product. But our expenditure in relation to the revenue of the country is higher than in other countries in Europe of which we have particulars.
In Ireland, the State contributes 67.7 per cent of the total cost of social services compared with the highest next—47.3 per cent in the United Kingdom and coming down to 9.7 per cent in the Netherlands. It is obvious that we are doing well, in fact very well, in comparison with other European countries in relation to the amount of money we pay out of State funds for social welfare services. I think the answer to the discrepancy here is that in these other countries the contribution from employer and worker is far higher than that expected from employer and worker in our country. It is quite obvious that, with such a high percentage—67.7—of State contribution, much more will be expected from employer and worker in this country if we are to conform to European standards.
On the subject of education, let me say that the Government's determination to give every child the highest level of education for which its natural talents will enable it to benefit is reflected in the very substantial increase in the current expenditure on education which totalled £13.5 million for 1958-59 as compared with the provision of £41.1 million for 1968-69. The annual capital expenditure has increased from £1½ million to an estimated £10¾ million in the past decade.
It was amusing to hear Deputy Cosgrave allege yesterday that we had been stealing some of Fine Gael's ideas. He included post-primary education, if you please, as one of the items of Fine Gael policy that Fianna Fáil had stolen. His memory must be very short or else he must have been reading the wrong document because in the South Kerry and Waterford by-elections, we announced our policy in relation to post-primary education while Fine Gael, on the eve of the poll, announced their programme which would cost some millions of pounds a year without imposing extra taxation: it was to be got out of buoyancy of revenue, if you please. It was amusing, therefore, to hear Deputy Cosgrave assert, so soon afterwards, that we stole Fine Gael's ideas on post-primary education.
The same trend is indicated in health services. The total Government expenditure was £8 million in 1958-59 while, for 1968-69, the provision is £23.5 million. These are some indications that, over the whole period of ten years, all the economic indicators, whether in GNP, standard reserves, output in agriculture, show a general and consistent increase in our wellbeing. This Budget is designed to continue that increase.
Before I come to the Capital Budget, I should like to refer to a criticism made by Deputy Corish about our attempt to develop our mineral resources. He says we fell down in developing our mineral resources. Since 1958-59, it is generally accepted—in any event, throughout the mining world —that we have the best mining legislation in the world, the mining legislation most conducive to encouraging effective and profitable mining operations within our country. Even in last year's Budget, the Minister for Finance announced that the profits of new mining enterprises would be exempt from taxation for 20 years, that is, for most, if not all, of the life of a mine— again a further inducement to encourage mining activities here.
Deputy M. O'Leary was critical that we did not develop our mines. Mining development is a matter of tremendous expertise. It requires a very long tradition in mining operations. We have tried it ourselves on occasions and have not been very successful. I think the Fine Gael Party will agree that, in fact, they have favoured, to a considerable extent, the participation of foreign mining expertise by way of tax concession, and so on, to exploit whatever resources we may have. There has been an increase in mining exploration. Just consider the following figures in that respect: the number of prospecting licences valid at the end of 1967 was 492 compared with 292 in 1966 and 56 in 1960. The figures, generally, for applications for licences show the same trend. The export figures in relation to metal ores and concentrates were £3.7 million in 1966 compared with £16,000 in 1965—again another indication that the Government's measures and the legislation and incentives are certainly producing a marked increase in our earnings from mining.
It is estimated that the value of exports from deposits already discovered will amount to over £10 million in value by 1970. I think a further expansion in this income may be expected from deposits likely to be discovered as a result of the present intensive exploration. Apart from the balance of payments aspect, the economy also benefited by direct injections from mining operations. The development at Tynagh, Gortdrum and Silvermines has cost over £13.5 million. Expenditure on current prospecting is estimated to be about £400,000. At the same time, royalties are steadily increasing. They were about £160,000 in 1967-68 as against £11,000 in 1955-56. In 1970-71, they are expected to be about £400,000. That is an indication that Deputy Corish's allegation that we are not adequately developing our mineral resources is not justified by the facts and the figures.
Yesterday, Deputy Cosgrave referred to the decision announced by the Minister for Finance about the decimalisation of our currency. While he appeared to agree with the decision, nevertheless he said we should not have made up our minds just now. That is the advantage of being in Opposition: you do not have to make up your mind. Being in Government, we had to make up our minds and to come down on the side of what we thought was best for the economy and for the country generally. The Government's decision to introduce the £, the new penny and the new halfpenny system was arrived at as democratically as we could do so. Informed public opinion was invited on the basis of the booklet issued by the Minister for Finance some time ago, a booklet in which the various possible systems were dealt with from the point of view of advantages and disadvantages. The Government came to the decision by reason of the tremendous volume of support for the £, the new penny and the new halfpenny system, because it was the one most generally acceptable and because, I suppose, it will be in operation in the United Kingdom and in the other part of our country. It was for these democratic and practical reasons that the Government came to this decision.
I should like to say just a word about the Capital Budget. If anybody suggests that the Capital Budget is not an expansionist one, then I can only conclude that he is just hostile to this Government. There have been outside comments suggesting that it has not been an expansionist Budget. The capital programme amounts to £136.4 million this year as against £111.4 million last year and as against £45.7 million in 1956-57. I do not think one can conclude anything but that it is a generally expansionist Budget. The increase in expenditure on buildings, building of houses, schools and hospitals is almost £6.4 million; that is an increase from £41.6 million to £48 million. That will give adequate scope for continued expansion in the building of houses, hospitals and schools and can give continued scope for the expansion of ancillary industries. In fact, of this Capital Budget one can say it had a compound capital content and that every £ spent will not only generate productive employment in itself but will generate productive employment far outside the Government capital field.
In schools for example, there is a 35 per cent increase, from £7.8 million to £10.7 million. That again, I suggest, is more than a compound capital exercise. In industry, there is an increase from £7.10 million to £15.8 million in the present year, which is also an increase of 35 per cent. In this connection, I should like to comment on what Deputy Cosgrave said yesterday, having charged the Minister for Industry and Commerce of not indicating what his capital programme is, and I should like to refer to the statement of one of the trade union representatives when an interview was being held on television on the night of the Budget. That representative of the trade union said he was disappointed that the Budget took no account of industrial expansion or that the Minister for Finance did not take the opportunity of indicating what measures the Government propose to introduce as a result of the A.D. Little Survey Report on the industrial programme.
This significant increase of 35 per cent is a clear indication of extended activity from capital input into our industrial programme. I have announced, and the Minister himself has announced over a number of weeks past, that the whole concept of our industrial programme has been under review by the Government in recent months. It has been an extensive operation, one that has been undertaken thoroughly and energetically by the Government, and as a consequence the Minister for Industry and Commerce will be bringing before the Dáil in the next couple of months legislative proposals involving a major overhaul of our existing industrial development system.
Therefore, not only on the current side but on the capital side this Budget cannot qualify for any other kind of definition than that it is a most expansionist Budget. Even though we are using £136 million in capital this year there will still be ample capital for the private sector. That is, I think, a tremendous tribute to the economic progress our country has made in the recent past, a tribute to the economic management of our affairs. We will not have to borrow particularly from any outside financial sources in order to make up our Capital Budget. We can get it from internal sources, from the savings of our own people, from our own banking resources and from our own Government resources. That is a clear indication that the policies we have been pursuing are successful policies, making this country as economically independent as we can and at the same time, ensuring that if we enter into whatever international organisation we can join, we will be able to do so as a fully competitive and viable economic nation.