I want to say this, and I will not be diverted from it, that we are discussing today a Budget, the second Budget in this year, which has imposed in a full year some £19½ millions in fresh taxation. It may be of interest to the Minister, although he probably knows it, and it may be of interest to the Fianna Fáil Party and to Deputy Dowling who is in the House and who in certain circumstances talks a great deal about the trade union movement, to know that this Autumn supplementary Budget, once referred to as a mini-Budget, has imposed the highest amount of taxation ever imposed by any Budget in the history of the State. This mini-Budget, this supplementary Budget, has imposed £19½ millions which is a record taxation increase. The previous highest taxation was imposed by the Budget which introduced the famous turnover tax. This £19½ million has been imposed by this Budget which apparently was introduced as an afterthought, in the after-wash of the referendum. We know from Ministerial speakers at dinners and banquets and so on that money does not grow like apples on the trees. We know because Ministers have told us so often that their dark locks are going grey worrying about where money is going to come from for different things. We know, of course, that ultimately the money has to come from the ordinary people. £19½ million as an afterthought, as a by-the-way just before the financial year ends, is being taken from the people and it is being from the people who will pay it as they buy the things which they are told are luxuries. They will pay it on the pint, on tobacco and on the ordinary things people wish to buy, through the wholesale tax and so on.
There is no regard in this enormous increase in taxation for the lowly paid worker. Let him just suffer on. There is nothing in it for the old age pensioners, they will pay just the same as the best, well-off member of Taca. This is the Government we now have, the Government that I am going to suggest do not know what social justice means. This burden of new taxation, this £19½ million, is imposed on the backs of the ordinary people, on the backs of the largest number of people where the base is wider. We are expected to accept this. I do not know the basis for this Budget. This debate ends this evening as it began, with utter confusion amongst ordinary people as to why this Budget was necessary.
There are those on this side of the House who are sufficiently uncharitable—I do not know whether I am one of them or not-to suggest that this Budget became necessary because the spring Budget, the ordinary Budget, was a dressed-up facade of a Budget designed to make straight the way of the referendum. That may be so and it may not be so. If it is not so, then it seems to indicate that in the spring of this year the Government of which the Minister for Labour is a member presented a Budget orientated for a 12 months period, designed to shape the financial policy of this State for 12 months, and they did not know what was necessary. It is not surprising that the Minister for Agriculture and Fisheries—I am sorry he is not here now because he spent the whole of his turgid speech on the Budget talking at me—apparently did not know in the spring of this year that all the arable land of Ireland was being broken up to sow wheat. He did not know that. Of course, it is not surprising that he did not know it because he had not got a farmer friend in the country. No farmer would talk to him. If he had a farmer friend who knew anything about agriculture he would have told the Minister that we were in for a record year as far as wheat was concerned.
But that was not known and so one puts that down to what might have been. One "might have been" that might have been, had there been a Minister for Agriculture in the spring of this year en rapport with matters agricultural, would have been that the Government would have had sufficient advice to make proper arrangements in regard to wheat subsidy requirements and in regard to milk. Apparently our Minister for Agriculture and Fisheries did not know what every farmer in the country knew, what even the Minister for Finance knew because he referred to it in his Budget Statement; every farmer in the country and the Minister for Finance knew there would be a dramatic increase in milk this year. But the Minister for Agriculture and Fisheries did not know that and, accordingly, the Government did not know the score. In regard to these two headings there was under-budgeting to the extent of close on £6 million. That is, perhaps, understandable. Any Government which has to suffer the present Minister for Agriculture and Fisheries, because no one has the guts to boot him out, will go from crisis to crisis and from difficulty to difficulty.
What about the £9 million for civil servants? Did the Government not know about that? It is hard to believe that in the spring of this year no one told the Government that wage and salary increases were, in fact, already taking place. Apparently, no one did and we have in office now a Government so far removed from what is taking place in the country they are supposed to govern that they did not know that in this financial year the salaries and wages of public servants would increase to the extent of £9 million. Everybody else knew it, but the Government did not know it. I find it very hard to imagine these 13 or 14 gentlemen, entrusted with the Government of this country, displaying such sheer incompetence that they proceed to budget in regard to our economy not knowing what is happening in agriculture and not knowing what is happening in the State service, the service they themselves are supposed to be running.
I doubt if that is the truth of the situation. While the choice may be between incompetence and dishonesty, one is driven towards the conclusion that the spring Budget this year was a deliberate makeshift Budget, a makebelieve Budget, designed to cod people into thinking that budgetary requirements did not necessitate any significant increase in taxation and that everything could carry on with the Minister for Finance in the role of Fairy Godmother. Whatever the real motive was, we have had a result which is most unfortunate for the country. This Budget, coming at the time it does, is bound to have a deflationary effect. It is bound to depress the economy. It is bound to lead to another spiral in wage demands and no amount of Ministerial tut-tutting will prevent that happening. This Budget is bound to increase the cost of living by at least 4½ per cent. It is bound to increase the anxieties and the difficulties of those with slender means, pensioners, social welfare recipients, people at the very lowest point in the income grouping. All these will suffer. This Budget is bound to arouse a sense of social justice on all sides of this House. It is bound to increase the demands that will fall to be made on the Exchequer in the next few months. These demands will depress the economy still further. This Budget will shove up costs of production. It will make our export trade much more difficult and much less competitive.
This comes at the end of the period in which we have put behind us two miserable years of deflation. The year 1966 and the first part of 1967 were periods in which the workers and the less well-off sections of our community were forced to pay bills entered into by an incompetent Fianna Fáil Government in the inflationary years of 1964 and 1965. The inflation of those years had to be paid for in 1966 and 1967. It was paid for by the people. It is they who always have to pay. It was paid for by those who were thrown out of jobs. It was paid for by increased unemployment and increased emigration. It was paid for by increased taxation.
The tragedy is that this year and in the latter half of last year—the Minister referred to this—the economy was beginning to recover. The Minister said the economy is fundamentally sound. It is, thanks be to God. It has withstood the assaults of successive Fianna Fáil Governments and, after a little medication, it has come up smiling again. I am sure it will come up smiling again even after this Budget but, in the latter part of 1967 and this year, the economy was beginning to advance. We were beginning to get the kind of significant growth so absolutely essential for a small country such as ours, if we are to survive. It is in these circumstances that we have now a fresh dose of deflation introduced deliberately by this Government as part of their policy, some £19½ million of additional taxation imposed on the economy at a time when the economy was beginning to surge forward once more I do not know what the outcome will be. Not only have the people to face these additional taxes but the taxes themselves are being followed up by an increase in bus fares, by an increase in the price of bread, and, apparently, by a complete collapse in the control of the Government over the stresses facing the country. At the same time, the Government are out of control over what is happening in the country at the moment.
The Second Programme for Economic Expansion was buried some six months ago. Nothing was put in its place. The evidence of that lack of plan and policy is now clear to the people. It is bread one day and bus fares another. It is a Budget one month and another Budget the next month. One does not know now from week to week what crisis is likely to face the people.
The Minister for Labour talks about collective bargaining. Is it not clear that one of the difficulties that has faced the country over the past two or 2½ years has been the complete lack of any policy by the Government in relation to incomes and prices? For the past 2½ years we have had a succession of wage rounds which seemed sometimes to come of their own momentum, and sometimes to be triggered off by direct Government action. We have had wage round after wage round. Now we have a situation in which the 10th round is chasing the 11th round and in which we will have a merging of wage rounds. At the same time, you have one causing the other, and one does not know which is the causa causans. But at the end prices go up.
May I remind the Minister that two years ago in this House we had a debate on a prices and incomes policy. The difficulties were recognised by every Deputy. The aim behind such a policy was also recognised and appreciated by every Deputy. The motion in relation to prices and incomes which was moved from the Fine Gael benches was passed unanimously by the House. It was accepted by the Government. That did not mean that to achieve an incomes policy would be easy. No one expected that it would. Now 2½ years have gone by with nothing whatsoever done in furtherance of what was the unanimous view of the House. That is a significant dereliction of duty on the part of the Government.
The Minister talked about difficulties. Of course there are difficulties, but I should like to know what the Minister for Labour and his colleagues have been doing about getting a policy of that kind off the ground. I have no doubt that in a country as small as we are, a country that has the difficulties we have—we must export to survive— if we do not get some reality, some constancy, some normalcy in our earnings, we will have a recurrence of the type of difficulties we are now experiencing.
Prices must be related to production, as incomes must be. There has to be a general understanding between the business people, the entrepreneurs, those who hazard capital and management generally, and labour, and the Government have a responsibility. They cannot sit on the sidelines and say: "It is up to the pair of you. Tell us what the result is and we will see it is enforced." That will not do. As long as that continues, as the Minister himself has recognised, the lowly paid workers will continue to suffer and the social welfare recipients will continue to find that whatever measure of social welfare help they get is eroded and destroyed by rising prices. The entire economy will continue to suffer from new incursions on the value of money spiralled off by increases in the cost of living and prices generally.
The Government have a responsibility and they cannot shrug it off by saying it is a difficult and a dangerous task. Of course it is. These are dangerous days, and if we have not got a Government willing to live dangerously and act, the country will not survive. We in Fine Gael believe in an incomes and prices policy. We stated that in the general election of 1965. We announced it before they endeavoured to introduce it in England. We still believe in it. We think it is the only salvation for a country such as ours, and we expect some action by the Government in this regard.
Before I conclude I want to say a word about the situation now confronting this country. It is unfortunate that we have had this Budget. The way in which it was introduced and the taxation it imposes were bad enough, but it is particularly unfortunate that this Budget should have preceded the developments in recent days in Europe and in Britain, particularly in so far as they effect us.
Reference has been made to the Free Trade Agreement between this country and Britain. I do not want to debate the terms of that agreement but I should like to remind the House, through you, Sir, that when the Free Trade agreement was debated here a little over two years ago, we on these benches had considerable reservations about the benefits claimed for that agreement. In the first place we deprecated the fact that the agreement which was concluded by our Government appeared to condone and accept the import levies which the British Labour Government had imposed on our exports some short while before. What has happened in the past few days indicates the validity of the reservations which we expressed then.
In my view the 50 per cent deposit now required by the British Government in relation to exports from us is in clear and open defiance of the provisions of the Free Trade Agreement. That agreement does permit either country, in the event of a balance of payments difficulty, to impose quantitative restrictions on imports from the other partner. What the British are now doing in effect is taxing or imposing a form of levy on exports from this country. It is not within the terms of the agreement. It is in open defiance of the agreement. They are doing it unilaterally and doing it because they apparently feel they can get away with it.
When one remembers that this agreement which was supposed to give such tremendous help to the agricultural industry—I will not go into the claims made for it two-and-a-half years ago— and the great expectations that were entertained in relation to that agreement when debated and when one looks at the score since, one begins to realise that there were some defects in the negotiations for the agreement itself.
In an exchange of letters between the then Minister for Agriculture and the British Minister of Agriculture Deputies will recollect that the British, at the time of this agreement, said that they were going to take all our creamery produce and all our creamery exports in the sense that the target set out in the Second Programme would be absorbed by them. What has happened since? They have cut down on butter. Last year they grudgingly allowed imports of some minor amount in excess of 1,000 tons of butter. They are now threatening our chief exports. Indeed, three or four days after the announcement of their plan to make Britain selfsupporting in agriculture the British Minister of Agriculture—I do not know his name—when speaking to British farmers said that the Free Trade Area Agreement caused some difficulties in relation to the British Government's new plan but when it came up for revision the British Government would remove these difficulties. He said "when it came up for revision". This agreement is supposed to be irrevocable and it is supposed to be a permanent statement of our trading relations with the British but a member of the British Government describes it as something temporary and says they will remove the difficulties in it when it comes up for revision.
I should like to suggest to the Minister that he might convey the view to his colleagues in the Government that we should tell them first it is coming up for revision here and now. They have broken it in the last two or three days and their breach is merely a repetition of the way in which it has been disregarded when it suits British purposes in the last two years. We made these reservations clear indeed. This agreement was debated and I certainly feel so far as this country is concerned that we have not got from this agreement the kind of benefit we were led to expect. There will have to be new thinking on our trading relations with Britain. In saying that I have no doubt that what will be done in that regard by the Government will be adequate and necessary. In relation to any representations that will have to be made and any point of view that will have to be expressed, I have no doubt that the Taoiseach or whoever may meet the British Ministers will represent fully the point of view of most people in this country.
Before I conclude there are one or two other things I want to say. I am sorry Deputy Andrews is not here. I saw him here earlier. I was interested to watch him on television last night serving a certain notice on the Fianna Fáil Government. One could call it a challenge. I wonder will it be taken up? We have had a surfeit in this country of Government by dictatorship. A very good example of what I have in mind is now coming to take his seat in the House, the Minister for Local Government. People of this country have reacted violently against ministerial dictators who have paraded themselves around the country saying: "You take it from me."