Dáil Éireann debate -
Thursday, 8 May 1969

Vol. 240 No. 6

Committee on Finance. - Resolution No. 13—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.)

Mr. Cosgrave

The circumstances in which this year's Budget is being introduced inevitably arouse suspicions that it is designed to meet the electoral needs of the Fianna Fáil Party rather than to put the finances of the country on a sound basis. This Budget has been introduced on the eve of a general election. Press comments this morning emphasise what was said yesterday. It was said that the indications are that this Budget has been expressly designed for reasons of political expediency. The experiences we have had in this regard in recent years reinforce this view.

On many occasions in recent years, we have seen the long-term interests of the country sacrificed for the purpose of gaining some immediate electoral advantage. Prior to the Cork and Kildare by-elections we had the 12 per cent wage increase. Four years ago, on the eve of the 1965 general election, Fianna Fáil promoted a false sense of prosperity. Subsequently in that year, and in every year since then in which we have had some electoral contest, the Budget has been followed by an autumn Budget of considerable severity. Now, on the eve of the general election, we have something which looks like repetition of the same formula. We have the Third Programme: Economic and Social Development, 1969-72, and assurances from the Minister for Finance that the economy is booming.

At this stage nobody, not even Fianna Fáil Deputies, accept the warnings issued by the Minister for Finance or by any member of the Government. A short while ago the Minister for Finance went on television and radio in what was possibly an unprecedented operation. He expressed the very gravest concern not only to the public but to the Irish Congress of Trade Unions. So grave was the crisis painted by the Minister for Finance that the Irish Press stated:

Everything we have is at stake. We face crisis, says Haughey.

The leading article in the same newspaper emphasised and reinforced the gravity of the situation. It stated that it was no secret that the Minister for Finance was faced with a very difficult task in preparing his Budget. It went on:

Mr. Haughey's appeal is for real restraint, before the abyss opens before us as a nation.

In an earlier sentence it stated:

What Ireland is now facing is national insolvency unless immediate measures can be instituted quickly.

An Ceann Comhairle

Perhaps the Deputy would give the date?

Mr. Cosgrave

The Irish Press, Wednesday, 19th March, 1969. That approach met with a chilly response from the Fianna Fáil Party. One Friday we learned from the news that the Government had decided to take a 15 per cent cut in their salaries, as a headline. Nobody believed that a gesture of that sort was anything more than an attempt to create an atmosphere in which further action would follow in other spheres, but when the proposal was brought to the Fianna Fáil Party they rejected it.

Mr. Crotty

Hear, hear.

Mr. Cosgrave

Nobody suggests or believes that even if all—and I said this at the time—elected public representatives had their salaries reduced it would make anything other than a minimal contribution. The purpose of an exercise of that sort is to lead public opinion by setting an example. However, when this proposal was brought to the Fianna Fáil Party to have some action taken it was rejected.

We now find the Irish Press, in its editorial today, two months later, stating that there is little doubt that whatever qualms there may have been about putting too great a strain on our resources are now dispelled and we can look forward to stability in development in the future. No action whatever has been taken in the meantime, no effective remedial or corrective measures, no major economic or political change has occurred, to alter the picture that was presented when on 19th March the Irish Press reported that the country was facing national insolvency. What has happened in the meantime? Nothing has happened except the fact that the election has come nearer. Nobody has any doubts about that least of all the leader writers in today's papers. The leader in the Independent deals with this matter and stresses that:

Whether politically motivated or not, Mr. Haughey has shown remarkable ingenuity in accomplishing the twin aims of diverting money to the needy—and favourable attention to his Party.

Then there is the pertinent comment:

For the moment.

The position that has now arisen is that this Bulget is presented in the same way as all recent Budgets, on the basis that if we can get over the electoral problems it does not matter about the consequences of a severe autumn Budget. This cynical manipulation of the national finances for short-term political gain must be fully exposed and condemned. Indeed the Minister for Education yesterday, in his usual blunt fashion, said that it was a good Budget for the chapel gates.

This is the opposite of sound economic planning. It is the kind of activity which, in the long run, works against confidence, confidence both in the competence of the Government and in the stability of our economy. Confidence in these things is extremely important if we are to secure the highest possible rate of economic growth. Most people, however, are now aware of the deceptive tactics that have prevailed in recent years in the introduction of an easy Budget in the spring and a severe Budget in the autumn. In considering this Budget on the eve of an election, it is important not merely to review the immediate effects or the immediate preceding circumstances of the Budget but to review the whole record of the present Government.

One of the matters which has been the subject of discussion and examination here for many years is the system of taxation. A Commission was established and brought in a whole list of reports and recommendations. With two possible exceptions—the introduction of PAYE and the introduction of the turnover and wholesale taxes—no major change has been introduced or no reform which was advocated by this Commission has been brought into effect. It is now becoming increasingly argent to carry out an overall review of taxation in this country. The object of such a review would be to make available a comprehensive system of collecting the necessary finances which would share equitably the burden according to the concepts and requirements of social justice.

One of the frustrating and depressing facts about the present Budget is that when the turnover and wholesale taxes were introduced, they were introduced on the basis that the existing traditional sources of revenue could bear no more. This year we find that in this Budget the traditional sources of revenue are obliged to bear a further £9 million. In no sphere of public finance has the dissatisfaction and hardship reflected by the present system been more clearly shown than in the case of the burden and problem of rates. This tax was originally introduced and imposed in totally different economic circumstances, when wealth was concentrated in very few hands and largely took the form of land or property. It was relatively simple and easy to finance services such as roads and other public requirements on this basis. Modern conditions, however, have changed this situation. Ownership of property is no longer a fair guide to the capacity and ability of the individual to pay taxes, the concentration of a high rate of taxation on one special form of wealth produces great injustices.

Here again it teems with politics. A month or six weeks ago, when the local authorities were striking the rates and were faced with appalling increases in charges and the steep rise in the demands which would have to be met, and in the rates which would have to be struck, they sought interviews with the Minister for Local Government and the Minister for Health and, in some cases, with the Taoiseach, and no action was taken. On 29th April some sort of obscure and ill-conceived circular emanated from the Custom House suggesting that a revised system of rating in respect of certain categories would be introduced. Its only effect would be to provide some minor reliefs for a limited number, and to increase the burden on the already overburdened ratepayers in each local authority area.

This again indicates that the approach of Fianna Fáil and the approach of the Government to the problems are political rather than economic. Deputy O'Higgins and others have advocated for many years a completely different approach to the health services, an approach based on insurance rather than on portion of the burden being paid for out of rates. At present the approach is to impose an immense burden on a relatively small number of ratepayers, irrespective of their capacity to meet the charges imposed on them. We have recommended in our social welfare policy that health and social welfare can be financed satisfactorily and distributed equitably on an insurance basis. This was recognised in the Budget last year by the Minister when he said that it was proposed to examine the position, but the Health Bill which has been introduced merely continues the existing situation in another way and by other means.

In considering the economic situation and the problems which confront us, we have to consider not merely the warnings given by the Minister in his speech a month ago but also the warnings that have been reinforced and repeated by every responsible body and by every body representing the economic and financial interests in the community. The National Industrial and Economic Council referred to this matter in their Report No. 25 on The Economy in 1968 and the Prospects for 1969 and expressed concern at the trends in the economy. This was published in April and it was followed by Review of 1968 and Outlook for 1969 issued by the Department of Finance. All these organs, and particularly that of the NIEC, which, as the House is aware, are representative of trade unions, industry, State bodies and the Department of Finance, expressed the greatest concern at the trends in the economy.

Despite those warnings, despite the concern expressed by them, and despite the indications given in the statistics, and the trends in the economic and financial reports, the fact is that the Government have disregarded them for political considerations. This Budget is economically irresponsible. It is framed at a time when the record of the Government has been shown to be a failure in every single sphere of activity.

Mr. P. Belton

Hear, hear.

Mr. Cosgrave

That is not the view expressed by a politician or a political Party. The Irish Banking Review, published in March of this year, adverted to the failure of incomes to keep in line with output and expressed the view that that was one of the most important contributory causes to the failure of the Second Programme. Over the period of that Programme as a whole, disposable incomes rose by 7½ per cent compared with a rise of about three per cent in real output. With that situation, and with the failure of the Second Programme, the Government had the temerity this year to announce the Third Programme, a large volume costing 8s 6d. You could not give it away. No one accepts it. Of course the general aims it outlines would be agreed on by anyone, and generally accepted by any group in the community, but what steps are being taken to implement it and make it a reality?

This Government have now been 12 years in office. During most of that time they have had an absolute majority in this House. During most of that time they have been preoccupied with and concerned solely with political considerations——

Mr. Donegan

Hear, hear.

Mr. Cosgrave

——disregarding the national interest and inattentive to the real needs of the economy.

Mr. Haughey

We improved the economy by nearly 50 per cent.

Mr. Cosgrave

In the NIEC Report published recently it is stated:

The second major feature of the economy in recent years on which we wish to comment is the large number of days lost through industrial disputes.

It goes on to give details of the number of days lost and continues:

The incidence and duration of Irish disputes is by now well known internationally. The effects on foreign industrialists cannot be ignored: the achievement of the Third Programme's targets for the industrial sector depends to a large extent on success in attracting new firms.

The only inducement which the Government can offer, the only contribution which the Government can make, to encourage industries and to expand the base upon which they are built, is to continue the export relief introduced by Deputy Sweetman as Minister for Finance 12 or 13 years ago. That is the only suggestion. The only idea is to continue that for a further spell.

We now have a Minister for Labour. We have had a Department of Labour for just two years and, during that period, our industrial record as far as industrial disputes are concerned is one of the worst in Europe. What are the Government doing about it? Nothing. They are introducing pieces of legislation. They are talking about it, but they are failing to take any positive or constructive steps. They are preoccupied with political considerations and with gimmicks such as sending out a circular on 29th April, a month after the rates had been struck by the local authorities, to try to take the heat off the Minister for Local Government and the Government. That is the position which has arisen. The NIEC Report is so concerned at this that it devotes a special paragraph to it. The position which has now been reached is emphasised not merely by this Report but by Review of 1968 and Outlook for 1969 which refers to the failure to provide a prices and incomes policy.

Prices continue to rise. Last year there was a rise of just 5 per cent. It has been said that largesse has been distributed to try and ease the problems of pensioners, lower paid workers and others who are adversely affected by rising prices. With the increased taxes on beer, whiskey and petrol, the wholesale and turnover taxes, the benefits that are given will be wiped out before they actually come into effect. The extra taxes imposed on the traditional sources of revenue provide a sum of £9 million. That does not take into account the extraordinary increase in post office charges. If Deputies look at the figures in Irish Oifigiúil they will find that for the period from 1st April this year to 2nd May, Post Office receipts amounted to £2,300,000 compared with £1 million last year. In one month Post Office charges increased by more than 100 per cent.

These are the items that are increasing the cost of living, because nowadays every single item affects people in their business, in their daily lives, in fulfilling their personal or family obligations. The Budget provides no relief and no help for small shopkeepers. We now have the turnover tax and the wholesale tax at different rates. We have, as was stated in the Budget Statement, a three-tier system of taxation and a threat that an added value tax is under consideration.

Small shopkeepers are facing very difficult times. They are facing the competition of supermarkets, some of them businesses coming in from outside the country. They are facing the rising burden of rates and a complex system of taxation. It is time to make some effort at reform and to introduce a system of taxation that will obviate the necessity for small businesses— many of them family concerns run by the owner and possibly his wife and a son or daughter, or by a widow—to keep a whole series of accounts because of the complexity of the present three-tier system of taxation. Under this system they will be obliged to deal with wholesale tax in two forms and turnover tax.

These are problems to which the Government should be devoting their attention. The solution of the Government whenever a difficult situation arises is to establish a committee or commission, to say that the committee or commission is examining the position, and when it gives its report to do nothing about the problem. That situation is intolerable so far as small businesses and small traders are concerned.

In regard to industry, the time has come to review the operations of the Anglo-Irish Free Trade Area Agreement. Within a month we face the prospect of a further tariff reduction. No action is being taken other than consultation with the British Government to offset, by the postponement of further reductions, the effect of the British measures that were taken against imports from this country.

Because of the terms of the Anglo-Irish Free Trade Area Agreement we are prevented from differentiating the tax on Irish whiskey and the tax on Scotch. The Irish distilling industry, giving worthwhile employment, in the main, to male labour, using native raw materials, established by the exertions, skill, capacity and capital of the people involved in it, has to face severe competition from imported spirits with no differentiation except the differentiation that existed prior to the Free Trade Agreement.

Concern is felt by many industrialists that, unless some action is taken, the recent measures that were introduced in Britain will have very serious effects. This problem has been adverted to by the Irish Banking Review, by the Department of Finance Report as well as by the NIEC. The time for action has arrived. It is not sufficient to say that consultations are proceeding. The Government must protect industry by taking the action we are entitled to take under the Trade Agreement, to postpone the prospective ten per cent reduction in tariffs which is due to take effect in July of this year.

The employment position is equally unsatisfactory. It is so unsatisfactory that the Department of Finance admit at paragraph 18 of the Review that because of the change in the coverage of the live register accurate comparison between unemployment in 1967 and 1968 is difficult. However, they say that, allowing for the distortions caused by the change of coverage, the indications are that unemployment in the first three quarters of 1968 exceeded that for the same period for 1967 but in the last quarter it was lower than in 1967. The figures camouflage the facts. The alterations that have been made in recent years are so considerable that the Department of Finance uses the phrase "allowing for the distortions caused by the change in coverage". That is a very serious reflection on the accuracy of published statistics, on the accuracy of the information which should be provided and on the system of compiling statistics.

With the taxes imposed in this Budget, it is inevitable that prices will rise and rise steeply. Last year, with the original taxation in the Budget and with the increases that were imposed in the Budget introduced in November, very substantial burdens were placed on people. The Minister for Finance, in the course of his speech yesterday, said that the only sum that could be permitted for errors of estimation was £2 million, that the Estimates had been pruned and examined as carefully as possible. Last year Supplementary Estimates amounted to £28 million. No one believes that the Estimates are pruned. No one believes that this is the end of the burden that will be placed on the taxpayers this year. No one accepts, whoever has the task of introducing the necessary measures to provide the extra sums needed, that in this year supplementary estimates will not be necessary.

The situation has been reached now in which it is alleged that £2 million is all that can be saved in a Budget of £400 million. The supplementary Budget introduced last year not merely placed very severe additional burdens but imposed extra taxation on many sections of the community and the position in respect of this Budget is that it does nothing in regard to industry and it does even less in respect of agriculture.

Deputies

Hear, hear.

Mr. Cosgrave

As was said yesterday, there is not in this Budget any single incentive, except a very small incentive in respect of sheep, in regard to agriculture. There is no action taken to deal with the small farmers who are most severely pressed.

Deputies

Hear, hear.

Mr. Cosgrave

Of the entire agricultural community the most seriously affected members of that community are the small farmers.

Mr. Haughey

The 500 cow man.

Mr. Cosgrave

The small farmer gets nothing out of this Budget. The only concession is the relief of rates on agricultural land up to a certain valuation, but that concession has been there for a number of years. The only inducement offered is in regard to sheep. Apart from that, there is nothing in the Budget for the small farmer.

Mr. Haughey

Do they not have children?

Mr. Cosgrave

There is nothing to give encouragement. There is no form of assistance to enable them to meet rising costs. There is nothing to encourage them to face up to the problems they have to meet. There is a suggestion that whatever sum is necessary for regional development will be made available, but it is only a suggestion. There is no inducement in regard to co-operation. There is no suggestion as to how they can pool their resources to enable them to meet the economic problems with which they are faced, nothing to suggest that the gap that exists between rural employment and rural conditions and urban employment and urban conditions will be filled. It is no wonder that the Irish Press endeavoured to describe this Budget as “the poor man's Budget”. Everyone knows that the thing which has militated mostly against public confidence, the thing which has operated in every section of the community, with the exception of Fianna Fáil, is the fact that Fianna Fáil in recent years have governed solely in the interests of the “Tacateers”.

Deputies

Hear, hear.

Mr. Cosgrave

It is that which has created a lack of confidence in the country. We saw how that split the Fianna Fáil Ard Fheis. Fianna Fáil have since tried to water it down by introducing a two-tier system of "Tacateers"; there is the lower echelon and there is the upper echelon.

Mr. Haughey

The Deputy is hard up.

Mr. Reynolds

But the "Tacateers" are not hard up.

Mr. Cosgrave

I want to repeat now something someone who always supported Fianna Fáil, as far as I know, in the past said to me recently: "One fifth of the Party are disenchanted with the present leadership." That was the phrase he used. They are disenchanted because of the "Tacateers" and because of the situation that has developed, a situation in which there is what I describe as the luxury approach with luxury spending. Everything was all right until the grim warning of 18th March; then, because of the advent of the general election, a change had to take place.

This Government have failed to provide an effective and efficient system of industrial relations. They have fought with the farmers; they have fought with the teachers; they have fought with the universities; they have fought with the doctors. Now, with their backs to the wall, they introduce the Criminal Justice Bill. We reject that Bill not because of the good in it dealing with offensive weapons; for years I have advocated that there should be legislation dealing with such things as flick knives and other weapons which may be put to offensive uses.

An Ceann Comhairle

Surely this is not relevant to the Financial Resolution.

Mr. Cosgrave

There is no proper order of priority. The Government put this measure before the people at a time when other more important problems should be solved. The real problem of industrial relations and getting maximum output and co-operation through discussion with farmers' organisations, with the trade unions is ignored. The approach should not be one of issuing a warning and then, within a month, recanting on that warning, of approaching the universities and subsequently issuing an ultimatum: "There is the plan. Accept it." The only policy seems to be a policy of coercion, not of co-operation with responsible sections of the community. There is no confidence in the Government today, no confidence because they have condemned themselves by their own inability to deal with the situation and because they have reneged on the guidelines they laid down yesterday.

A situation has developed in which we now have a record high cost of living with additional imposts which will raise the cost still further, raise it on the old, the infirm and on those who are living on fixed incomes. It is true there are some paltry reliefs given in respect of certain income tax payers but, as Deputy T.F. O'Higgins said yesterday, the reliefs granted will be offset almost completely by the increase in the tax on cigarettes and drink. Taking only one pint a day and smoking only one packet of cigarettes the income tax payer will get relief to the tune of only 1/-.

Mr. Sweetman

And that only if he does not smoke or drink on Sunday.

Mr. Cosgrave

Exactly. It is a simple calculation of the relief granted vis-ávis the effects of the burdens imposed in the Budget. We have repeatedly expressed the view that the only prospect of improvement in this country lies in a change of Government.

Deputies

Hear, hear.

Mr. Cosgrave

We know, Fianna Fáil know, the Labour Party know, and the public know that Fianna Fáil is on the way out. They are going out of office. No temporary expedient, such as those designed in this Budget, can save them from the wrath of public opinion. The time has come when this Government no longer represent the people, when this Government no longer reflect public opinion, when this Government no longer have any effective authority to speak on behalf of the country. Public confidence is essential if we are to face up to the competitive challenge of the future, to the problems not merely of EEC membership—the prospect here is indeed very doubtful— but to the acute trading difficulties that exist with Britain. Public confidence is essential if we are to face up to the problems of industrial relations, shortage of housing, rising costs and additional burdens on every section of the community. There has been an overt failure to plan an effective and efficient system of education, an overt failure to grapple with the problem of university education, to provide an effective economic and social plan for the whole community and not just a series of gimmicks or temporary expendients in a series of proposals which, when they are put into operation, simply do not work. It is like the position with the Second Programme, which failed half way through and was then abandoned, and the only monument today to that Second Programme is the abandoned Potez factory on the Naas Road. These are the facts. They must be faced. These are the problems that must be overcome.

Towards the end of his speech yesterday, the Minister trotted out once more a promise to review the Civil Service. He will try to get numbers as low as possible. Twelve years ago, when Dr. Ryan was Minister for Finance, he came in here with a great flourish of trumpets: action would be taken to deal with rising numbers in the Civil Service; it was too large and too complex. So impressed were some people that articles appeared in the press saying this was the proper approach. We have now substantially greater numbers of civil servants than we had two years ago. The only action taken by the Government was to appoint a commission two years ago to report on the Civil Service. We are promised that computers and modern techniques are being adopted in order to keep numbers down and to try to operate an efficient system. This is more of the commission attitude. You establish a committee or a commission to investigate it, and that is the last that is heard about it.

Finally, the Minister comes to the question of culture. There is no doubt I always think that Fianna Fáil and culture are uneasy bedfellows. Some way or another, it does not ring true.

Mr. Haughey

The Deputy said that before.

Mr. Cosgrave

Yes, but I said it in a slightly different way. There is something synthetic about Fianna Fáil and culture. When you see Fianna Fáil dealing with culture, well, I suppose you have to genuflect to this just as you have to genuflect to the Third Programme. The time has now come for the dissolution of this Dáil.

Deputies

Hear, hear.

Mr. Cosgrave

The public, generally, know that an election is due in the relatively near future. This is a matter which affects public confidence. The public interest is involved as well as the interests of politicians and political Parties. The Taoiseach has a clear duty either to dissolve the Dáil forthwith or, if there is some national reason why an election should not take place, to say so. This kind of cat-and-mouse game in which people are speculating that it will be on the 11th, the 4th, the 5th, the 21st or the 29th, is not in the national interest. That is not in the interests of the country. That is not in the interests of the Irish people. This Government, as I have said, are going out. They know it. The Fianna Fáil Party know it. No steps that are now taken as a deathbed repentence can save them.

The referendum proved two things. It proved, above all, the fact that for the first time in the history of this State or in the history of a political Party in this State there was wholesale desertion by supporters of that Party who were concerned at the way things were being run, who were concerned at an arrogant, intolerant, incompetent Government.

Deputies

Hear, hear.

Mr. Cosgrave

They expressed their repudiation. Their views must be respected. It is obvious that what happened at the Fianna Fáil Árd Fheis is reflected in this Budget: The people's views are being respected. However, it is too late. I said recently in this House that the national interest transcends Party or personal considerations. The national interest now demands that this Dáil be dissolved. It is nonsense to proceed with the Health Bill and with the Criminal Justice Bill because neither can be put through in this session. It is waste of public time and the people's money to keep Parliament in being to deal with these pieces of legislation. The Financial Resolutions of this Budget were made effective by the decisions taken yesterday. Whatever good may come out of it, Fianna Fáil are welcome to it. The public are indignant and angered at the manner this country has been allowed to drift and at the manner the economy has been allowed to drift along while grave social and economic problems have been left in abeyance with political considerations uppermost. With public support, Fine Gael will come in. We will govern firmly but impartially in the interests of the nation.

Deputies

hear, hear.

Mr. James Tully

I was looking at television last night and was interested in the comments made on the Budget. One of the people who were asked what the country thought about the Budget said he was not yet in a position to say what the country thought about it but that he had discussed the matter with a number of Deputies—he gave the number—of all Parties and none of them could make up his mind about it. I was not surprised when he said that even quite a substantial number of Fianna Fáil Deputies were not prepared to agree that the Budget was a good one. There are good things in the Budget. There are things in it which we have all been asking to have dealt with for a long time. However, I think we must go away back in order to assess this Budget properly.

For instance, we all heard the comments by the Minister for Finance when he appeared on television on 18th March, 1969—six weeks ago. I do not know what he meant. I do not know how he did it. Quite frankly, I am amazed—knowing him as I think I do —how, six weeks ago, on 18th March, he could go on television and tell us that the country was in a parlous state.

As I mentioned to him over the past few days, even his very expression was one of sorrow and bewilderment that unless something was done the country which he loved so much was going down the drain. He did not use the old cliché "tightening belts" but he said everything else which would indicate that unless there was very careful watching of the economy and the country we very definitely had "had it".

Last week, in an interchange across the floor of the House, Deputy Haughey, the Minister for Finance, explained to me that we had misunderstood him: in fact, he might have eaten something that did not agree with him and that was the reason for his expression: he was quite happy that the economy of the country was quite good; there was no reason for a credit squeeze or restrictions of any kind. Then, yesterday, he came along and made his Budget speech and said that 1968, the past year, was the best year in our economic history. Yesterday's Evening Herald carried the banner headline “ The Best Year of our Lives —Haughey”.

I have great respect for the intelligence of the Minister for Finance. As a matter of fact, again and again I have given it as my opinion that he is the cleverest man in the country so far as economics are concerned. I believe he usually knows what he is doing and that, if he does something, he does it for a particular reason. Would the Minister, when he is replying, for my own information, tell me why the terrible state of the country on 18th March last—six weeks ago—has suddenly turned into the best year of our lives?

Would he tell me why it was that he said that, unless all sorts of restrictions and all sorts of measures were taken, we should have an economic catastrophe? How is it that, in a short six weeks, that threatened catastrophe has disappeared? Would the Minister tell me whether he or his economic advisers made a mistake? I would not accuse him of an untruth. I would not say he deliberately went on television for the purpose of using the old gag which Deputy MacEntee perfected years ago of saying, before a Budget, that the country was in a bad way— implying that there would be a tough Budget—and then, when the Budget did in fact come and was not as tough as people feared it might be, the people would say that it was not as bad as they thought it would be. I would not accuse Deputy Haughey, our present Minister for Finance, of doing that.

Either a very serious economic mistake was made or the Minister was trying to cod the country—either one or the other. We can say that we are now on the eve of a general election and that therefore he had to make things look in good shape. Six weeks ago is not so far away and we were then on the eve of a general election. Therefore, that could not be the reason. What is the reason? Perhaps the Minister will tell us? Have they found some wonderful way of resolving our financial difficulties? Is there a magic wand somewhere in the Cabinet which can be waved and which can turn an economic disaster into "the best year of our lives"? I think it was Sir Anthony Eden who, when he was Prime Minister of Britain, used the phrase "We have never had it so good". Occasionally we hear of Sir Anthony Eden. We know what became of him.

Mr. Cosgrave

It was Mr. Macmillan who said that when he was Prime Minister.

Mr. James Tully

Sorry, of course it was Mr. Macmillan—and we all know where he is now. Last year, a Budget was introduced here which we criticised but, nevertheless, most of us felt it was a relatively soft Budget. It was the "give-away" Budget in the spring, and when the referendum was over the Acting Minister for Finance came along with his "take-away" Budget and took millions of pounds from the taxpayers. I would have no hesitation in describing the first Budget of last year as a very dishonest Budget. Even the second Budget, which some people wanted to call a mini-Budget was the most severe Budget ever inflicted on the country since the disastrous Budget of 1952 which again our good friend Deputy MacEntee had the houour, if that is the word, to introduce. There were no food subsidies to be removed in November but I am sure they would have got a slashing if they had been there.

The Minister, having made this statement on television, came along with his Budget speech yesterday and said:

The main objective of economic policy during the year was to keep the economy on the path of steady and substantial growth without imposing an undue strain on the balance of payments. We achieved a growth rate of 5½ per cent

Did he not know that it was heading towards that in March, did he only discover this the other day when he started looking at his Budget, or has something happened in the meantime? He went on to say:

The actual deficit, of £20 million, was not much above the £15 million projected at this time last year, though it represented a swing of £25 million from the surplus of £15 million in 1967.

Did the Minister not say on the 18th March that the deficit was going to be very much more, that he felt sure that the position was going to be disastrous as far as the deficit was concerned? He says:

Industrial production increased at the remarkable rate of 11 per cent and reached a record level in 1968.

Was he not aware of this in March?

Mr. Haughey

We are talking about different years. I was talking about what was likely to happen in——

Mr. James Tully

Oh, no, the Minister was talking about what had happened up to then, talking about the position up to that time having become so bad that something had to be done or the position in 1969 would be terrible. The Minister should have known the position up to then. He was either hiding the facts or he was badly misinformed by his advisers. The position seems to be that, according to the Minister, we have got badly bogged down——

Mr. Haughey

It is with great sorrow that I have to suspect the Deputy is playing politics.

Mr. James Tully

I would never do that because playing politics is something at which the Government are experts, or they thought they were until they sent the Minister for Finance on television on the 18th March. Certainly they need a refresher course on politics because that is the one speech most people will remember. The Minister's speech last night and his efforts to gloss over what had happened on 18th March proved to anybody who wanted to study it that on the 18th March he was attempting to play politics, a particularly dirty type of politics because it would appear that what he wanted to do was to try to frighten trade unionists in particular and workers generally. If that is so, then we can understand it. If that was the only objective we can understand it. How does he reconcile what he said on the 18th of March with the statement yesterday:

The stability of unit wage costs resulting from a productivity rise which virtually offset a sharp increase in wages contributed to a 30 per cent expansion of industrial exports.

How does he say, as we know from our own investigations, that in fact the increase in output balanced the increase in wage costs so that the unit wage cost did not increase, and yet say that wages were putting us out of the market, that we were becoming less and less competitive?

Mr. Haughey

The Deputy's whole speech is based on mixing up 1968 and 1969, two different years. Please get that into your ceann if possible.

Mr. James Tully

The Minister will not put me off.

Mr. Haughey

I want to put the Deputy right.

Mr. James Tully

I am trying to put the Minister right. If this debate continues, if it is not axed by the Taoiseach next Tuesday, then in the normal way the Minister for Finance will get hours and hours to reply and we will sit listening to him trying to explain what he meant, but there is no doubt in anybody's mind that when he was speaking on the 18th March he spoke about the position as he found it up to then, which was for 1968-69, and he forecast what was likely to happen in 1969. I am comparing those things

Mr. Haughey

In spite of his mistaken political view I am fond of Deputy Tully and I deplore seeing him make a fundamental mistake of this nature. I am sorry to see him going so totally off the rails. I am trying to help him.

Mr. James Tully

Long ago I learned to beware of Greeks bearing gifts.

Mr. Haughey

I am only giving the Deputy advice.

Mr. James Tully

Thank you very much, but I would suggest that some of the Minister's backbenchers, and some of those on his Front Bench too, will need advice in the next few months and I suggest he reserve advice for them.

Mr. Haughey

Come back to the Budget. Talk about social welfare.

Mr. James Tully

I will, and also about incentives to foreign industrialists and whether the Americans are getting the benefit of the incentives which we are supposed to be giving. The Minister's colleague, Deputy Colley, the Minister for Industry and Commerce, who is sitting beside him, was also a little mixed up on that. The Minister referred to employment. We were all glad to see last year that it appeared as if for the first time the number who came into new employment exceeded the number who had lost employment by 2,000 and it appeared as if the outturn would be 11,000 as against 9,000. We are glad of that. We feel this is an attempt, but it is a long way away from what we were told by the Minister's predecessors and former Taoiseachs about the numbers who were to be employed in 1969-70—the 100,000 new jobs are a long way off and it looks as if the rate of 2,000 which we got last year is not helping. However, from a net emigration figure in 1967 of 17,000, an extra 1,000 emigrated in 1968 when the figure was approximately 18,000, so I am sure the Minister will agree that that did help the unemployment position. He was able to say that it appeared as if the number unemployed was slightly less than it had been in the previous year.

The Minister referred to the Anglo-Irish Free Trade Agreement with, I believe, his tongue in his cheek. He said:

The most important element of our foreign trade is our trade with Britain. The Anglo-Irish Free Trade Area Agreement is working well and has substantially justified the hopes we held when entering into it.

Would the Minister tell me if my figures are correct?

Mr. Haughey

Read the figures in the paragraph.

Mr. James Tully

The Minister read them yesterday.

Mr. Haughey

They are worth hearing again and then the Deputy can tell us the price of cattle at the moment.

Mr. James Tully

I will give the Minister some figures and by the time the Minister is finished with them it will be interesting to know whether the Anglo-Irish Free Trade Area Agreement is the great "buy" the Minister seems to think it is.

Mr. Haughey

The cattle trade was never better, thank God.

Mr. James Tully

Surely the Minister does not claim credit for that. Does he not know why the cattle trade was never better? Exports went up by £47.5 million to £332.5 million, a 16½ per cent increase. Imports went up by £97 million to £389.5 million, a 25 per cent increase. The trade surplus of £8¾ million with the United Kingdom in 1967 was turned into a deficit of about £17 million in 1968. The Minister denied that that was so, that from a £8¾ million surplus in 1967 we turned it into a £17 million deficit in 1968—an adverse swing of £25.5 million. The Minister says the Anglo-Irish Free Trade Agreement is working well. Is it not true that this country at present is being swamped by British goods and that no matter where we turn, even in the case of public contracts, we find a stipulation that Irish or British materials may be used instead of a stipulation in favour of Irish materials? We have reached the stage at which we are selling out to Britain.

Mr. Haughey

We are selling to Britain.

Mr. James Tully

Selling out to Britain. If we are selling to Britain would there be an adverse swing of £25.5 million in 12 months?

Mr. Haughey

British exporters are outdoing other exporters. It is only a swing between exporters. British imports are substituting for other imports. That is all.

Mr. James Tully

No, because the Minister's colleague in reply to questions the other day said that this adverse trade balance was growing all over the world. So that argument will not work either. Something should be done about this matter of the Anglo-Irish Free Trade Agreement. We know that because there was a foot and mouth epidemic in Britain it was necessary to re-stock and for that reason the number of cattle they purchased went up substantially but we do not seem to have reached the 638,000 figure for store cattle which Deputy Lemass and his colleagues, including the present Minister for Finance who was then Minister for Agriculture, boasted about. They came home waving flags and we were told how hard they worked to get this guarantee which, in fact, never existed. What they were told, as we pointed out, was that Britain agreed to purchase up to 638,000 store cattle, which was an entirely different thing.

The shoe is on the other foot. If we continue to lower our tariffs as we may expect—the Minister for Industry and Commerce was asked about this and said he was considering it but had not yet made up his mind—by another 10 per cent in July we shall find that the supply which is coming in here as a steady stream at present will become a torrent and will affect our manufacturers very adversely. The Minister must be aware it has already affected some of them badly and will put a number completely out of business. I do not know what is the Government's idea in regard to the Agreement. We were told that agricultural products would be allowed into Britain. Then came the special arrangement under which Britain imposed a special levy and we overcame that by agreeing to make money available to pay it. If British spokesmen were correctly reported as saying their levy was imposed to prevent imports, why did they allow us to subsidise our exports to Britain? Were they seeking free money even though it was only a small amount?

We also have the question of our cheese markets. The Minister says:

In making the arrangements for exports of cheese to the UK market for the two year period ending March, 1970, we emphasised that we do not regard voluntary restriction arrangements as a normal feature of the Free Trade Area Agreement and we reserved all our rights in regard to the future. This position was accepted by the British Ministers.

A fat lot of good that will do us. All we have done is to say that we accept that if Britain at any time wants to restrict the import of agricultural products we will point out that this will not be taken as a precedent and that we do not regard voluntary restriction arrangements as a normal feature of our agreement and, of course, the British Ministers will agree and say that they understand. As usual they will have got the better of the bargain. This has in fact put our position in regard to cheese exports to Britain in a perilous position. We must accept even while we talk about diversification of markets that Britain is and will continue to be the country which takes most of our products but why cannot we reach some reasonable agreement with them? If Britain is importing from us very much more than they are exporting to us and if it happens that that trend is reversed, do the Government accept that we will be in a very serious economic position? Or are they prepared to let things slide with the attitude that Britain is only another country with which we have an adverse trade balance? That is not the position; it is the country to which we export most and if we are not able to make an agreement with them and at least maintain the balance we shall be in a very serious position.

The Minister in his speech then said:

In the long-term the best prospect for diversification of markets lies in membership of the EEC.

General de Gaulle has hardly descended from his hot seat when we begin throwing out the lifeline again: "It is all right; we shall get into EEC". I thought that the Government which for quite a time played around with this prospect and made promises which they should know were not likely to come to anything had eventually decided to forget it and hoped the country would do likewise. Now we seem to be going back to the same idea. I am sure EEC will be used to a great extent in the general election. We shall be told about the wonderful things we shall have.

If we are to talk of EEC let us consider what the Minister said later in his speech when he dealt with agriculture. He said:

The cost of supporting creamery milk has risen from the comparatively modest sum of £6 million in 1963-64 to an estimated £27 million in the present year. The dairy industry is of course a key one and is closely linked with the cattle industry, which gives us our largest single export.

Do the Minister and the Government not know that there is over-production of milk products in EEC? Some years ago it reached a figure of 2 per cent; I am quite sure that has increased now and that they are stockpiling butter and cheese. I believe that if we go into EEC we shall not find a market in which we can sell our milk products because in fact we shall be going in with Britain and allowing other producers to try to take the British market from us. When we tell the farmers about the wonderful values in EEC will we also tell them there was a subsidy for killing cows, that we had to kill calves to try to solve the problem of agriculture in the early thirties? Will we tell the farmers that one of the solutions they had in Europe to their problem of over production of milk products was to butcher cows. It does not do credit to the Minister when he makes statements like this. Some gullible people might believe the mere mention of the magic name of EEC would solve all our problems. In fact, it is likely to make the position much worse.

To mention the beef subsidy briefly, there is one bad feature and that is that the scheme tends to ensure—the Minister for Agriculture admitted this in the House—that the farmer who gives milk to his employees or who sells milk to oblige a neighbour who may not be able to get bottled milk, will be precluded from getting the subsidies on the grounds that he is a seller of milk. It could easily have been provided by regulation that such farmers would be excluded but instead it appears to have been left open and the only advice that the Minister for Agriculture could give was: "Do not say anything about it: it will only draw attention to it." Are we children trying to hide something? Could not a regulation have been made to deal with this position properly?

Reference was made to the 500 cow man. I know as well as, or better than most Deputies because in my constituency we have quite a number of such gentlemen, that there is no difficulty for them in switching from one line of agricultural production to another, because they are wealthy enough to do it and if it pays them to switch from one to the other, they will do so. The people who will get caught by this are the little fellows, the small man who has some mixed farming and who, as a result, will be left. He will put all his eggs in one basket or, if not, he will not get the subsidy.

This is a ridiculous situation and it should have been dealt with by the Minister who is responsible, the Minister for Agriculture, and it was not and I would appeal to him even at this stage to make some effort to deal with this problem.

The Minister said, on page 9 of his Budget Statement:

The autumn Budget was designed to moderate the rate of increase of domestic demand in 1969 and make it possible to maintain economic growth at a satisfactory rate without allowing the balance of payments to get out of hand.

The autumn Budget was introduced because of the fact that the spring Budget was inadequate, that there was a referendum coming along and he wanted to let the people of the country think that the land was flowing with milk and honey. In this case, while he has not gone as far, he has done the same with regard to taxation and I would suggest that the autumn Budget of last year is simply and solely an example of what is going to happen this year.

As soon as the election is over, if Fianna Fáil return to power and have a four or five-year term before them, they will then feel free, and will have no compunction whatever about doing it because they have done it before, to lay on the taxes right, left and centre and will make no apology to anybody.

There was a time when I used to believe that a statement made by the Leader of a State, the Taoiseach of any country, was a statement one could expect to be honoured, until the famous statement made by Deputy Lemass, at Doyle's Corner, about food subsidies. The ink was not rightly dry on his name in the book of attendance in this House when he came back as Taoiseach until he had in fact reversed everything he said. So, no matter what promise we may get about no autumn Budget, it is quite obvious that the intention is to have another "go" as soon as the political scene is a little calmer.

Mr. Donegan

And his son-in-law was trained in the same school.

Mr. James Tully

I refrained from making that comment.

Mr. Donegan

It was made in a friendly way.

Mr. James Tully

At the bottom of page 9 of the Minister's brief he says:

During the early months of this year certain adverse trends persisted. Demand pressures remained high despite the appeal which the Government made in January for restraint in requests for pay increases. The settlement of the maintenance craftsmen's dispute at a level far beyond any likely increase in production would have had the gravest consequences for the economy if, as seemed possible at one stage, it set a headline for general pay revisions. The Government were, understandably, concerned since such a development would have made it impossible to sustain the rate of growth which the economic indicators showed to be within our capacity this year. Thanks to the responsible reaction of the trade unions and other groups, that danger seems to have receded...

Does anybody here remember when the Government made the appeal which is referred to here, in January? Does the Minister for Industry and Commerce remember that it was after the people involved in the maintenance craftsmen's dispute had refused a very substantial increase that out of the blue the Taoiseach appealed for restraint and said that if what were referred to as the higher paid workers did not look for maintenance of differentials he would be prepared to recommend substantial increases for low paid workers?

This was in the middle of a dispute when it was quite obvious to everybody that a substantial increase would be granted in order to try to settle the dispute. The Taoiseach, like somebody who had never heard of labour relations in his life or knew nothing about them, came out and said that he would recommend substantial increases for low-paid workers, or that the Government would do it, in the event of the people who were highly paid not looking for maintenance of differentials. It could do nothing but harm. It certainly did no good. This was coming from the Taoiseach of the Government who last year, when everybody else was prepared to give increases over a two-year period of £2 upwards, attempted to get away with an increase for the lowest paid of the State employees of 15/- and, when this would not be accepted by the trade unions, then offered £1 per week when there was a service pay of 5/-, 10/- 15/- or £1, according to the number of years service, given by practically everybody else in the State from 1st April, the Government refused to pay it until 1st July, 1968. The Taoiseach of that Government had the hard neck to say in the middle of a dispute that he would be prepared to recommend substantial increases for low-paid workers. Nobody passed much remarks on it. Nobody passed any remarks, as a matter of fact, and the position remains until now.

This year, demands have been served for those who got only £1 or slightly more last year, including State employees. Demands have been served for the balance of that from 1st April. It was generally accepted that the £1 would be paid from 1st April. Everybody paid it except the State. The State have not honoured their commitments. They refused even to give the £1 per week extra and then, as a face-saver, persuaded the Irish Congress of Trade Unions, to which my trade union is affiliated, to agree to go into discussions with them for the purpose of having a natonal increase granted.

In the very interesting part of his speech yesterday where he referred to the amount of money which was likely to be available, the Minister said that for error of estimation the normal figure would be £4 million on the size of the Budget but that he was taking only £2 million into account and that the other £2 million was being earmarked for increases for low-paid workers. Deputy MacEntee, speaking from a back bench, old mischief himself, put in his spoke later on and said that the error of estimation referred only to expenditure. Let himself and the Minister for Finance argue that one out at a later stage. If, in fact, £2 million is the amount which the Minister for Finance feels will meet the claims of low-paid workers, I suggest that he should divide £2 million by 52 and divide the answer by the number of persons employed who fall into the category of low-paid workers and he will see how far that will bring him. If he thinks he will get away at this stage, for a period of 12 months, 18 months or two years, with an increase of another £1 or another 30/- a week, he should think again because it will not work this time.

The whole idea behind the Budget Statement of the Minister for Finance was to try to undo his statement on television on 18th March. He made this Financial Statement here as if the 18th March statement had never been made. He tried to say that the fellow who appeared on television must have been somebody else, that it was not he. He now, in fact, says what I quoted earlier on from the Evening Herald of yesterday evening: “The best year of our lives—Haughey”. If Deputy Haughey thinks that he can change the terrible things he was predicting on 18th March into the best year of our lives, with a few pages of a brief in this House, he has another think coming because people do not forget that easily.

Mr. Colley

There is surely a difference between the year we had and what one would predict for what may come?

Mr. James Tully

I do not know if the Minister for Industry and Commerce was listening for long. The Minister for Finance, when there, tried the same trick. We were talking and the Minister for Finance—when he was talking on television—was talking about the year 1969-70.

Mr. Colley

And what might happen.

Mr. James Tully

——and was saying that because of the fact that in 1969-70 things were so terribly bad we were to have a very severe Budget and that unless we were very careful, the country was down the drain. The Minister now says that 1969-70 was the best year of our lives. How can he get around that?

Mr. Colley

The Minister was speaking about the year 1968-69.

Mr. James Tully

The year he is now speaking about is the one about which he spoke on television. The Minister could not have predicted that. He does not have a crystal ball. That is the exclusive property of Deputy MacEntee who, occasionally, attacks the Government in the Irish Times. However, in so far as the Minister for Finance was concerned, he was comparing like with like. Nobody will accept that the year about which the Minister spoke on television and the one about which he is now speaking— 1968-69—are not the same. No matter what way he wriggles now, he cannot get out of that. Either he made a mistake or was misinformed by somebody and he would now like us all to forget it.

We have here, of course, a few gems. The Minister says in his statement:

The indications are that the growth rate will be about 4½ per cent.

This is down one per cent on last year. The Minister continues:

This means that 1969 will be our third successive year of satisfactory growth...

He says:

Export expansion is likely to be slower than last year because of less favourable conditions in our main export markets, and the recent interruption of industrial production has probably lost us a number of export opportunities.

I do not believe that. While the maintenance men's strike held things up, I cannot see how we could have lost any export opportunities as a result of it.

The Minister continues:

At the same time, the pressures carried over from last year are likely to cause a large rise in imports of consumer goods and raw materials for further processing.

The Minister gives the impression, which is a false one, that the Government do not want to have anything done abroad which could be done here.

I am sure that the Minister for Industry and Commerce will remember, from a question I put to him the other day when he was replying for his colleague, the Minister for Posts and Telegraphs, that not only have arrangements been made for the telephone directory to be printed abroad but some test printing has already been done in West Germany. This is something which could and should be done in this country. It may be only a small matter but it is a scandalous situation when a Government, who talk about trying to prevent excessive imports, allow a State Department to have this printing job done abroad. They may say that it can be done better abroad but there is no evidence of this.

Mr. Donegan

It is not a small matter. It involves about 325,000 copies.

Mr. James Tully

It is a relatively small matter when compared with some others but, small or big, there is no reason why it could not be done in this country. Those of us who use the telephone directory will not complain about the print or about the way in which it is produced.

Last year, too, the CIE calendars were printed in Italy. I am quite sure they could have been printed in this country. Perhaps the Minister for Posts and Telegraphs and Transport and Power considered that an Irish production would not meet his views as to what is art and he therefore decided to have the calendars printed in Italy when an Irish produced one would have been just as good, if not better than, the imported one.

Getting back to the low paid workers, the Minister says in his statement that:

There is widespread agreement that any general restraint should not extend to lower-paid workers and that a special effort should be made to improve their position and that of the poorer and weaker sections generally.

I should like to make two things clear. One is that most of the long-term agreements—agreements of two, two and a half and three years—do not expire until the end of this year and the trade unions say they do not propose to alter this arrangement. What is the Minister talking about when he refers to "general restraint"? Is he suggesting that there will be a wages standstill this year or is he saying that next year he will feel free to ensure that wages are not increased except to the extent that he will lay down? I should like the Minister to let us have an explanation of this.

The Minister says that the general restraint will not apply to the lower paid workers and, without wishing to repeat myself, I would remind the House that the employers of the worst paid workers in Ireland are the State. It would hardly be credited by anybody inside or outside the House that, in this year of 1969, the State is paying £9 15s per week gross to those whom they call manual workers. Granted, some of these people have an incentive bonus scheme which enables them to earn a certain amount of money extra. But a number of them, because of the fact that they are not in the same category, are doing jobs and doing them permanently which, according to the State, cannot be considered for bonus purposes. These people are paid £9 15s per week, less the amount of their insurance stamps, and those of them who are single also have to pay tax. To have a situation like that at the present time is absolutely ridiculous.

Another matter about which Deputy Cosgrave spoke this morning is that, while the number of civil servants is growing, it is also true that the required number of lower paid civil servants, those required to do routine work, do not seem to be available. The Department of Social Welfare is a typical example. The reason for delays, I am told, is because typists and clerical workers are not available. Why is it that there is no longer the rush to join the Civil Service that there used be? The reason, apparently, is that these girls are not being paid enough. I understand that by the time the girls have paid for their "digs" in Dublin, they do not have enough money left to buy meals.

A lot of publicity has been given in our national newspapers to the effect that trainee nurses in Britain do not get enough to eat but I am told that it is not unusual for girls working in the Civil Service, after paying for "digs", not to have enough money left for what is known as bread and spread. It is a shocking state of affairs that these educated people should be put in such a position. It is ironic that one of the sections worst hit by the shortage of staff is the Department of Finance. The PAYE people tell me that they are inundated with applications for tax free certificates which they cannot send out because of staff shortages. The reason is simply that the wages offered are not sufficient.

Government expenditure is mentioned in the Minister's statement and I quote:

The Government's continuing desire to increase social expenditure and to help agriculture is again evident in this year's volume of Estimates. The total of non-capital outlay is £298½ million. This is £41½ million or 16 per cent up on the figure in last year's volume. Over £31 million, or more than 75 per cent, of this rise is devoted to the social services and to agriculture.

When we talk about grants to agriculture would the Minister be able to say how much of this is paid in salaries and wages? Surely, if we are going to say there have been substantial increases to agriculture, we should find out if in fact the money is going to the farmers or to the people who operate the service? I believe those who operate the service must be adequately paid. I believe it is right they should be paid the best possible rate; I believe their conditions should be good, but I do not think they should say that because of an increase in the rates of wages or rates of salaries, there has to be an increase in the amount of money voted to the Department and that this can be counted as a help to agriculture. It does not do anything for the farmer. As I say, I am particularly interested in the small man who is getting it very tough despite what appears to be said in this statement of the Minister yesterday.

There is a great song and dance made about the relief on the agricultural rate. I have made this comment on a number of occasions and I have discussed it with small farmers all over the country. The small farmer who is already getting a certain amount of derating on his agricultural land did not dance a jig when it was entirely derated because the amount of derating of his agricultural land amounted to shillings per week. This must be accepted. There was very little incentive or very little addition to the small farmer's income because of the fact that, instead of paying 5/- per week for rates, he had to pay none at all. A payment of 5/- per week is not an awful lot of money.

Mr. Colley

The Deputy must remember that until there was derating the rates were a back-breaking burden on the small man.

Mr. James Tully

The Minister, if he takes the trouble—and I am sure he will not—of reading previous speeches I made in this House will see that again and again I have made the comment I am making now.

Mr. Colley

They were a back-breaking burden on him.

Mr. James Tully

They were not a back-breaking burden on the small farmer. The difference between the amount he paid before there was derating and what he is now paying certainly will not make him to "go to town" on his holidays. In fact, it is a very small sum. This continual reference to it, as if it was a very substantial item, is not good enough. He will need an awful lot more. I know that the small farmers—and there are a lot of them in my constituency—are finding it very hard to live. In fact, one of the things which annoy me about it is that many of them have had to go out and work for hire. One finds some of those people driving from the heart of the country in County Meath to Dublin to work on a building site. They do that for a couple of years. Then, when there is no employment in the job for them, they go to the labour exchange to sign for unemployment benefit. They are told the value they could get from their land is more than 10s per day and even if they had 15 children—I know a fellow I made a claim for or tried to help who had, in fact, 15 children—they are not entitled to get unemployment benefit, although they have paid three or four years stamps. This is one of the things which we are not going to settle now, but it shows that the small farmer, if he does not live in the south or west of Ireland, gets very little consideration from this Government.

Mr. Donegan

If he had triplets, of course, he would get a little help.

Mr. Nolan

You have very good land in Meath.

Mr. James Tully

The Minister for Health has made that comment on a number of occasions. Might I comment, for Deputy Nolan's benefit, that a poor man in Meath is every bit as poor as if he lived in Carlow.

Mr. Colley

There is good land in Carlow, too.

Mr. James Tully

They have good land in Carlow and they have good land in Meath; but the poor man in Meath is just as poor as if he lived in Carlow or anywhere else. A lot of people, particularly Government Ministers, do not seem to appreciate that point.

Mr. O'Connor

We have bad land in Kerry.

Mr. James Tully

There is a distinction between Kerry and Meath. If a small farmer is unemployed in Meath, even if he has sufficient stamps put on, he gets nothing. If he were living in Kerry he could draw the dole the whole year round and work on his farm, as Deputy O'Connor knows. That is what they call equal rights and equal opportunities for all. I am not grudging them this.

Mr. Nolan

The Deputy wants the same in Meath?

Mr. James Tully

Let us treat the man who is entitled to this benefit in the same way from one end of the country to the other. Sorry, a Leas-Cheann Comhairle, I know you are getting a bit restive.

Mr. O'Connor

You have got a lot of land in Meath.

Mr. James Tully

You have got so much in Kerry that you have to put it up in reeks.

Mr. Donegan

It is not much use looking from across the ditch when you do not own it.

An Leas-Cheann Comhairle

Deputy Tully, please.

Mr. James Tully

Of course, it is not. I referred before this to the beef cattle incentive scheme. Again, might I comment, there is no point at all in running the scheme or talking about helping the small farmer in any way if it is intended to insist that the man who sells any milk does not qualify for this scheme. The Minister for Agriculture and Fisheries said it could even include giving a pint of milk per day to a farm worker and that that would put the farmer concerned outside the scheme. That should be looked at in some way.

There is a reference here to the question of payment of rates by instalments, which is a good idea. There is also reference to the question of exempting people who are in poor circumstances. I wonder if the Minister would go into a little more detail when he is dealing with this because at present the most unfortunate person where rates are concerned is the man or woman who owns either a very small business in a town or a fairly sizeable house in a town and who has fallen into poor circumstances. That person is required to pay 100 per cent of the rates and very often he has to go without many other things he would like to have or would require in order to pay the rates. Perhaps the Minister, when he is replying, would explain whether or not this will make any difference.

The Minister makes a comment in his speech which I think he will find extremely difficult to stand over. He says:

Agriculture again made very good progress in 1968.

I know in 1968 there was a lot of wheat grown but this year it is down quite considerably. As a matter of fact, I heard a Deputy yesterday inquiring why it was down. Of course, everybody protects his own interests, even in Dáil Éireann, and a drop in the acreage of wheat will be a considerable loss to hauliers. The Minister also says:

Agricultural exports totalled £155 million. It is provisionally estimated that farm income went up by about 16 per cent, as compared with ten per cent in 1967, and that those engaged in agriculture not only held their position relative to the rest of the community in 1968 but improved it somewhat.

Government Ministers, deliberately or otherwise, try to generalise in this way and expect they will not be challenged. It is true that wealthy farmers had a great year but it is also true that small farmers had not a good year. To add the lot together and to say that, because agricultural income went up by 16 per cent, that meant everybody in agriculture did very well is just not good enough. Again, may I ask the Minister to try to do something for the small man. The bigger man is very well looked after.

On education, I consider the Government are doing reasonably well. I know there are teething troubles which will have to be dealt with. The question of transport is still a very big problem. In a family with four boys, the eldest of whom has asthma, they travel by school bus until that boy reaches ten or 11 years of age. Then he cannot be brought in the bus and he walks almost three miles while other perfectly healthy children travel on a practically empty bus. It is hardly fair to expect the Minister to straighten out this type of problem. It is in the best interest of everyone to see that these services are run on humanitarian lines. Some bus drivers prefer to drop children at a specified point in order to avoid making several stops at points more suitable to them. This sometimes results in children being dropped more than a half a mile from their home. It would not be fair to expect the Minister to iron out all the little details but it would be helpful if general directives were issued.

The number of children being educated is expected to increase from 695,000 in 1968 to 760,000 in 1972. These numbers could be increased still further if very bright children in poor families were enabled to continue their education. Sometimes the eldest child in a family is unable to avail of free education when he reaches the age for it. His parents cannot afford to keep him at school and he must get a job. Could some subsidy be paid to such children who want to continue their education? Many excellent brains are lost to this State because such children have to take a routine job in a factory whereas if they had an opportunity of remaining at school they would become useful, well-educated members of the community.

We all welcome the social welfare increases, but I wonder does the Minister realise that these increases must compensate for the November Budget as well as for this Budget? The Minister said that the percentage increases more than compensated for the increase in the cost of living. I have had disputes with various Ministers of Finance about this during the years. When an old age pensioner with £2 10s per week gets an increase of 10s it is a substantial percentage increase but it does not compare with somebody who has £20 per week getting an extra £1 or £2. Though the increase, percentage-wise, is good, percentages do not buy food. The food is bought by hard cash.

The increases will not be paid to the non-contributory pensioners until 1st August and to the contributory pensioners until 1st January. I cannot understand this. The extra taxes have been put on now. Why must the benefits be deferred? We have been complaining about this for a number of years and we feel that it should be possible to bring forward the dates of operation of the increases. If it is not possible to pay the increases immediately perhaps lump sum payments could be made from the date on which the Budget became operative to the date of payment. It is hard to see a reason why this should not be done.

No reference was made by the Minister to the increase in the cost of the social welfare stamps. No reference was made to such an increase on previous occasions either, but when the expenditure was due there was an increase in the price of the stamps in order to subsidise the amount which the Government had to find. I should like to know whether it is proposed to increase the cost of the stamps and, if so, by how much? Will there be increased contributions from employer and employee?

We all welcome the increase in children's allowances. I will deal with the income tax later in reference to these allowances, because it appears as if somebody has made a serious mistake about all this. The percentage increase in social welfare benefits is still dropping. I do not know why this is so. We should at least keep up, percentage-wise, with the amount which was being expended some years ago.

Mr. Colley

A few minutes ago the Deputy told us that percentages did not really count.

Mr. James Tully

Percentages do not count to the person buying a loaf. It is no use saying to him that 10s is 20 per cent of 50s and £1 only 5 per cent of £20. To such a person 10s is just 10s. and not a percentage of his £2 10s.

Mr. Colley

Surely the same logic applies now.

Mr. James Tully

Why mention percentages in all cases other than social welfare? The cash benefit is mentioned only where social welfare benefits are being increased. Coming now to the question of health, the Government have not made any effort to improve the position which has caused such an uproar here. There is a Health Bill before the House at the present time. When the late Deputy O'Malley introduced his White Paper I felt that he intended to do something reasonably good about health services. Having listened to the debate on the Health Bill in this House, I am terribly disappointed. We did not vote against the Health Bill because we felt there were some improvements in it and because we hoped for further improvements by way of amendment during the Committee Stage. Any relationship between the Health Bill and the original White Paper introduced by the late Deputy O'Malley is purely coincidental.

No effort is made to find a solution to the problem of the cost of the health services. It does not matter whether they are administered by the county councils, health authorities, or regional authorities. Unless there is a change in the system by which the health services are paid for, we are still in the same old groove. A point is proved by the fact that the Dublin City Council was dissolved because they would not find money for the health services. We in the country districts get another grant with our health subsidy: we have a subsidy by way of agricultural grant, which was mentioned a few months ago. This grant is not provided in the cities. This is one of the big mistakes which the present Government have made. If the Government looked at the situation and realised their mistakes, we would not have the schemozzle which we have in Dublin City at the moment.

The Minister said in his Budget Statement: "The Bill includes a new structure of administration for the health services". We commented on that on the Second Stage of the Bill. It appears as if the new structure of the health services will be controlled by the Minister himself and that he is making sure that he, or his successor, will be in a position of control. The Minister also said that the Bill "provides for the replacement of the dispensary system by a service offering a choice of doctor in the general medical service for the lower income group in so far as this is practicable". In many cases there will be no doctor at all in a district. The choice of doctor, where there is no doctor living in a district, is nil.

The Minister also said that the Bill proposes "that drugs and medicines will, as far as practicable, be issued through retail pharmaceutical chemists to the eligible groups". This is not quite what is in the Bill. There is a question of costing because at the present time the Minister is aware drugs and medicines are being bought in a certain way by the local authorities or by the health authorities at about 54 per cent of the retail cost and if they are being issued in a different way is it to be at the retail cost or at the wholesale cost?

At the bottom of page 23 of his statement the Minister said:

It must also be emphasised that the Government have decided that no part of the cost of new health services or further extensions of existing health services should fall on local rates.

This is a question which we were told in 1965 had been decided and we now have a solemn guarantee given for the second time that this is being done. I wonder will it get the same treatment as the original one. The statement goes on:

On the recommendation of an inter-Departmental committee, the Government have introduced legislation providing for the payment of rates in instalments and a flexible form of rates relief for necessitous persons.

I should like some information on that. I am not clear as to what is intended and I should like to defer judgment on it until I know what it means. The statement continues:

Other recommendations are being considered in conjunction with a review of the structure of Local Government at present being undertaken.

The amazing thing about all this is that again and again in the Minister's speech reference is made to committees that are studying things and that later there will be certain action taken on recommendations. Never, since I came into this House, did I see a Budget speech so spread over with promises of things to come. The Minister does not underline in red "If Fianna Fáil are elected at the next election", but I am quite sure the boys at the church gates will use that very well.

I referred to the question of the error of estimation of £4 million. I wonder if it could not have been dealt with in a different way. At page 26 the Minister says:

Despite the depressing effects of industrial disputes on tax returns——

This again is an effort by the Minister, repeated on different pages, to say that industrial disputes caused any trouble that was caused in the country—that anything that went wrong was caused by the trade unions. This is repeated again and again.

——revenue continued to be buoyant and at £345.5 million was £1.2 million above the November estimate. Receipts from Customs and Excise duties and from the turnover and wholesale taxes were greater than expected.

Of course, despite this taxes were increased in certain ways to which I will refer in a few minutes. Here is an extraordinary thing and I wonder whether this is not the keynote for an autumn Budget:

The public capital programme is reasonably expansionist without running the risk of undue inflation. Although it shows a substantial rise over last year's expenditure, the original proposals for capital spending have been reduced by some £23 million in order to keep the State's credit requirements at a reasonable level.

The estimates of current expenditure have undergone similar treatment. While they are £41½ million above the corresponding figure for last year, they would have been almost £25 million higher still but for the Government's determination to reduce them to a figure which could be met from the estimate of revenue at present rates of taxation.

Does this mean that it may be decided after the election that most of these things will have to be done? Does it mean that the present rate of taxation will have to be altered? Is this in fact the key to the whole problem? Does it mean we will have a Budget in the autumn for the purpose of increasing taxation again? It will be the take-away Budget; the present one is the give-away Budget.

The Minister says:

In all, £48 million has been lopped off public expenditure, current and capital.

We come now to the question of allowances. With regard to children's allowances, the increase to 30s for the second qualified child and to 40s for subsequent qualified children is very welcome. However, the present allowance of 10s for the first child remains unchanged. The only thing I should like to point out is that though this appears to be a substantial increase it is very small compared with that being paid in other countries.

I do not know whether the Minister feels that this is a help to lower paid workers. Some of the things he has done later on would give the impression that he does not think so. I am not sure whether the Minister understands it, but if he belonged to a working class family or if he had occasion to visit working class families he would know that when the allowance comes along there are certain items of household expenditure for which children's allowances are earmarked. It simply means that when they get these sums of money they are used immediately. These are not sums of money which are put away. They are used immediately. Therefore, they are one way of helping out the worker with a small wage.

I believe the Minister should have been courageous about this and should have dealt very definitely with the question of the person who draws children's allowance and who does not need it. I am amazed to find some of these people in the country who have the audacity to refer to an unemployed man drawing the dole as getting money for nothing and then walking into the post office and drawing children's allowance amounting to as much or more than that poor man gets to keep his family. There should be no hesitation on the Minister's part to deal with this problem. He could have increased children's allowances much more substantially than he did and he could have made arrangements to prevent those who are not entitled to draw them from doing so because they do not need it, because it is simply pin money.

The Minister may say they save this money, put it in a post office book or something. This is not what these allowances were intended for. They were intended to help our people who have not enough money to buy food for themselves. The Minister would have had the support of everybody in this House if he took the necessary steps to ensure that a substantial increase was given only to those who actually need it. He has dealt with this in a particular way because he says that he was trying to do what I have suggested. He would not have a means test and maybe we will not quarrel with him there but he says he has decided against the introduction of a means test but that he proposes to make a start towards selectivity by providing that part of the proposed increase in the allowances will be recovered from persons paying income tax. How does he do that? He says:

The allowance for children under the Income Tax Acts will be reduced by £15 for each child who qualifies for an increased benefit under the Social Welfare Acts. For children over 16 years of age who are attending an educational establishment the income tax allowance will remain unchanged because they are outside the scope of the Social Welfare Acts.

According to the Minister's thinking, only rich people pay income tax but with the low personal allowance which is given at the present time, people are caught in this income tax code and this £15 could be taken from people even though they need assistance, not to have some of it taken away. The Minister has blundered badly in this and I believe that he should have said the tax would be applied to people over a certain income and taken it from everybody——

Mr. Colley

That is a means test, of course.

Mr. James Tully

No, it is not.

Mr. Colley

Yes.

Mr. James Tully

The Minister can have his way. I think if he said people who are earning more than £20 per week or whatever is the figure he wanted to put on it, rather than saying that everybody must pay tax, it would be better. If a man has for himself, his wife and two children, say, a tax-free allowance of £13 and he is earning £15 a week, does the Minister know what will happen? He will be taxed on the two children's allowances. The Minister says everyone is going to benefit by this. He will not benefit, of course. He will be put in the position — and there will be many such people — that in fact he will have to pay income tax on children's allowances which heretofore he had not to pay. The Minister says he will take the £10 rate off them this year because the increase does not come into effect until 1st August.

He also talks about 10s to be paid to old age pensioners and recipients of contributory and non-contributory benefits. Is this 10s per adult? There is no increase for children in this. Is it 10s per adult? Does it mean the man himself and his wife, if she is eligible, or is it one 10s? I should like to be clear on this.

Will the Minister ever get around to understanding that dependent relatives in relation to social welfare benefits include more people than the man, his wife and his children? There are hundreds of people throughout the country who have their mother or sister housekeeping for them. This is not recognised. If they are not married they are treated as if they have no one except themselves to look after. Why can the Government not recognise that a family may consist of a working man and his mother who, because she is not 70 years of age, is not entitled to an old age pension? She is keeping the house together, as they say. When he is working he pays for the outgoings of the house but, when he is idle or sick, all he gets is what would keep himself. Nothing is given to the person who looks after the house. This has been raised here again and again, and it has been ignored.

There is also the case of an invalid sister. Someone has to stay at home to look after her. Perhaps there is also a brother working and that makes a family of three. When he becomes ill the family becomes one so far as the State is concerned. He gets a single person's allowance. Nothing has been done about that. The only reason I can think of why it has not been attended to is that the people who deal with this sort of thing just do not understand. If they moved in the same circles as these people move in, it would be dealt with. They are people who never knew what it was not to have enough money to buy what they needed, and they cannot understand that there are people in that position.

I welcome the improvement in the allowance in respect of daughters who look after aged parents or incapacitated old age pensioners, but why confine it to daughters? There is an improvement because up to now there was a provision that they had to leave insurable employment, and even British insurable employment was not sufficient. Now it applies whether they were in employment or not, or whether they always stayed at home. That is grand. There are very many cases where there is no daughter, and perhaps a son may be looking after two old parents. More often it is a niece or some other relative who is acting in the capacity of an adopted daughter. She has not been formally adopted but was reared with the family and now looks after the old people. Why can the State not recognise this and make some arrangement so that this allowance can be paid in those circumstances? Is there any flexibility in the scheme proposed by the Minister? It appears to me that there is not. It says, "a daughter or step-daughter".

There is a very slight improvement with regard to the children of widows in receipt of a contributory or non-contributory pension who are getting full-time education, or, I assume, who are serving their time. Will children who are apprenticed also be included up to the age of 21 years? I should like the Minister to confirm that fulltime education includes apprenticeships.

I have asked the Minister for Social Welfare questions about the free travel scheme. I appreciate that these things have to be done by stages. It is true to say that the free travel scheme, the free electricity and free radio licence schemes did not apply to people in receipt of old age pensions from Northern Ireland or Britain. They apply now. It is only right that they should be included and I am delighted to find that they are.

The cheap fuel scheme is not in operation in very many areas. This scheme is now being extended at each end. This means that, if a cold snap comes at one end or the other, they will be able to avail of it. Surely some effort could be made to try to ensure that it is operated on a wider scale than it is at present? It is very limited. They are many towns in which it is not operated at all. This needs attention.

Another example of wishful thinking by the Minister is:

The Government are concerned at the hardship caused to mothers and families who have been deserted by the father of the family. The Minister for Social Welfare is examining how to provide some financial assistance for those cases in this year's Social Welfare Bill.

He is examining it, but can we take it that something definite will be done and that it will be worthwhile? The danger is that the amount will be small and it will not overcome the difficulty. I suppose all of us have been approached at one time or another by people who told us the father had deserted his family 20 years ago. In one case, it was 31 years. Every effort was made to have him presumed dead, but the powers-that-be would not agree. If he had been presumed dead, at least a widow's pension could have been paid. In one case in which I was interested, it was just as well the man was not presumed dead, because he turned up two years later — on his own, too, which was rather unusual. Usually these people turn up with quite a number of——

Mr. Donegan

Appurtenances.

Mr. James Tully

"Appurtenances" is the word. If something is to be done for these people, I suggest it should be done now, and it should be substantial.

In regard to income tax allowances the Minister is again considering, considering, considering. He said:

I have been considering for some time the general structure of our income tax and sur-tax codes, particularly with a view to making improvements in the personal reliefs and allowances. The basic ones have remained unaltered for many years because, as Deputies will realise, the costs are enormous. Because of this, significant changes in our direct taxation structure could only be undertaken in the context of a comprehensive recasting of the general pattern of taxation — both direct and indirect. In addition, the machinery of our system of PAYE makes fundamental changes impossible during the course of the income tax year. A comprehensive scheme is being examined and it is my intention to introduce it, if possible——

I like that word——

——for 1970-71. This would mean making the necessary legislative and other arrangements before the end of the current financial year.

This has been talked about for years and it should be apparent to everyone that something must be done about it. Why must it still be a long way off? Why must the Minister be considering it? He talks about the improvements he is making. He said:

I think it is absolutely necessary to give some relief this year, and accordingly I propose to increase the allowance for married persons by £30 and to increase the allowance for single and widowed persons by £15.

Last November I introduced a motion in this House to try to get a tax remission for the lower paid workers. The Taoiseach, who was acting for the Minister for Finance, replied to my arguments. He made a statement to the effect that he could not agree to it because a £10 remission to single persons would cost £2,800,000 per year. I challenged him and told him I did not think he had got the right figure and he said he had. I had a question down the following week asking how many single persons were paying income tax, PAYE. The figure was 2,800 and I suggested that some lazy person had multiplied that figure by ten and handed it to the Taoiseach and said: "There is your figure". I knew is was incorrect. The fact that it was incorrect is borne out by the figure which the Minister gave us yesterday when he said that the amount which this will cost as far as the State is concerned in respect of both married and single people is £3.52 million in the current year. The Minister, I am sure, will agree that the figure which the Taoiseach gave to me last November could not be correct. The figure for a single person for £10 was £2.8 million, but the figure for £15 for a single person and £30 for married persons now only becomes £3.52 million.

Mr. Colley

Is that for part of the year?

Mr. James Tully

No, the current year. It will apply from 5th April, so I assume it will apply to the whole year. Therefore, somebody did not do his homework and it is just too bad that the Taoiseach or any Minister should come into the House so badly informed. At the normal rate of 5s 3d in the £ this allowance for a single person is 15 times 15 shillings, around £4, and for married people, around £8 a year. Does anybody seriously suggest that less than 2s a week remission in tax matters one iota to anybody? It may be a gesture but it is nothing more than a gesture. It is very bad form that something like this should be done.

It certainly will not be appreciated by the person to whom I referred yesterday evening who drives a motor car 40 miles from County Meath into town, works hard all day and drives it home again, an old car doing about 20 miles to the gallon; at 80 miles a day and at 3d a gallon, that is an extra shilling per day imposed on him. Then he is asked: "What are you complaining about? Are you not going to get an extra £4 a year remission in your tax?" The Department of Finance should do their homework a little bit better before they bring such proposals in. I am perfectly satisfied this will not be a vote catcher, as somebody said yesterday. It most certainly will not return any Fianna Fáil TD at the head of the poll in his constituency, not that I am worried about that.

When giving these remissions the Minister slipped up badly. There are a number of people to whom he should have given remissions. He should have allowed travelling expenses to be taken into account for income tax purposes. Many men engaged on arterial drainage work, and so on, drive a car or a motor cycle five to 50 miles to get to their employment. Merely because they do not drive in the course of their employment but only to and from their employment, they are refused remission for income tax purposes. This is wrong. One Deputy here yesterday evening, who obviously was thinking only of the employer, contradicted me flatly on this and said that buses transporting workers were tax free. Of course, they are. He was not talking about workers' transport at all. He was talking about buses owned and run by the company, transport which is tied down with a man's wages. If I am negotiating a wage increase with a firm where transport is laid on, the employer is quick to remind me that he is supplying transport and is saving the workers so much per week.

However, that is not what I am referring to. I am talking about the men and women who have to pay for their own transport, who pay tax and insurance, and pay for the upkeep of the car and for petrol. They drive to their work and back but do not get a red cent off for tax purposes. It would have been far better if the Minister had considered that instead of some of the suggestions for tax remission he has adopted in this Budget.

The Minister has also completely overlooked the working wife. A woman who is married and who, in order to supplement a low family income, goes out to work gets 30s per week tax remission. Take the unfortunate man down the country who works for £10 per week and whose wife gets a seasonal job in a hotel or holiday camp for which she gets £5 to £7 per week. There is a great deal of talk about inflation and the fact that extra money put in workers' pockets has an adverse effect on our trade balance. All the money these people get is spent immediately on requirements for the house, food, clothing and so on. They do not go out to buy Mercedes cars or anything like that. If they go into the higher income bracket, then possibly they may have some money to spare, but I am talking particularly of people, husbands and wives, whose combined income is less than £20 a week. These people have been badly treated. The working wife should have got a tax remission. I believe it would cost a relatively small amount in a Budget of nearly £400 million. Either the Minister did not think of introducing this remission or did not think these people were worth considering.

There is a new provision here in respect of a dependent relative. It is proposed to increase the amount of the non-contributory old age pension to £195. The Minister says:

Consequent on this increase I intend to raise the income limit for the allowance for income tax purposes of dependent relative relief.

£195—slightly over £3 a week. I do not know whether the Minister is able to sustain or has to sustain any relative on £3 a week. I do not know how this aspect of it arises. Why should a single man who is keeping his mother who is getting a non-contributory pension, not get as much by way of allowance for his mother whom he is helping to maintain as a married man gets for his wife? Instead of getting £195, why should he not get at least the miserly allowance which is given for a married couple? I believe this whole thing has just been skimmed over and has not been dealt with adequately.

There is another provision which I welcome but, again, I think a mistake has been made. The Minister says:

A taxpayer whose spouse is totally incapacitated and who employs a housekeeper to look after the incapacitated person does not qualify, under existing law, for any special relief. In response to representations that this causes hardship I propose to provide that a new allowance of £100 will be granted where such a taxpayer requires the services of a housekeeper to care for the spouse.

This is for somebody who is employed full time. I wonder is the Minister aware that when the mother of a family falls ill the breadwinner must get somebody to look after the children or stay at home from work and run the risk of losing his job. Why is there not some provision to cover a temporary period of illness? As far as I can see this applies only in the case of a person who is totally incapacitated. Anybody who is ill and confined to bed should be considered totally incapacitated whether it is for a week or for 20 years. The mistake again has been made that no provision is made here except for permanent incapacity. The idea of including handicapped children in the child allowance is a good one. With regard to medical expenses, only time and experience will prove whether or not this is much of a benefit.

I am glad the Minister for Industry and Commerce is present because he may have some views on this export sales relief. I read with interest some of his statements recently in the United States to the effect that the American Government were taking away the tax relief given as incentives to American firms in this country. If that is the position, why should we continue this relief? It is not an incentive at all and all we are doing is handing over money to the American Government which that Government do not need. They do quite well without our little widow's mite.

Mr. Colley

Hear, hear.

Mr. James Tully

I think we should have another look at this. Is there any incentive at all in extending the relief, as has been suggested? If a firm is established here and is doing well, surely it will not fold up just because this marginal relief is withheld? I have no expert knowledge on this and I should be interested to hear the Minister comment on it.

With regard to decimalisation, what is suggested here must be done because people would otherwise use outdated machinery and plant. With regard to holiday cottages, there was a plan by Bord Fáilte that 18 or 19 holiday cottages would constitute a village and a grant would be given. In the event of substantial sums being spent on modernising existing holiday cottages should something not be done to help in these cases, or are they included? This appears to apply only to new holiday cottages.

I welcome the assistance in regard to recreational facilities but the worker earning £6 10s a week will find it very difficult to accept the need for tax remissions in cases like these when his own needs are greater. He has to buy food and clothing with his money. While facilities of this kind are welcome, surely they could be paid for other than by those who have very little themselves?

The change in stamp duties is something no one will quarrel with. It is a good idea. The only thing is it applies only where the value of the house does not exceed £6,000. Because of the present cost of sites a £4,000 house will go over the £6,000 mark. This says "first purchase." Does it mean a new house only? There would need to be clarification of this.

I heard someone from the assurance companies say that the tax relief given is a big one. If it is a good idea and improves the position then, I suppose, it is the right thing to do. The abolition of Schedule A and Schedule B follows on last year's Budget. It is not a new arrangement.

Death duties cause a great deal of trouble. It would be a great pity if any effort were made to permit the very wealthy to get away with any more. The allowance given here is small. A house may be valued at £6,000, £7,000 or £8,000 and it may be very difficult to find the money to pay death duties on that sum.

The rebate of duty on disabled persons' vehicles is a good idea but it should not be confined merely to vehicles which are used for the purpose of going to work. The situation would be very difficult if a disabled person works for one week and does not work the next week. The amount of money involved is very small. Surely this rebate should be a global one?

Over £3 million is provided by way of assistance to farmers. This is not anywhere near what is required to help those who really need help. No Government in this country have ever made a definite effort to help the small farmer. It is no good giving him a shilling or two extra per week. He needs a decent income. Farmers in the west and south can get the dole. That is not the answer, but small farmers in other parts of the country cannot even get that. Most of this £3 million will be swallowed up by the big farmers. They can avail of everything that is going. There is a responsibility on the Government to give a decent way of living to the small farmer, and the sooner that is done the better it will be. The small farm incentive bonus scheme looks all right on paper, but how many can avail of it? The greatest difficulty the small farmer has is that he has not sufficient credit or capital to get him out of the difficulty in which he is. Every Government so far have given a blanket sum to agriculture, believing they are doing well. We know quite well, and the Government should know, that, spread over the whole farming community, the sum is infinitesimal. Those who really need it do not get it.

Could the Minister get on to the people responsible for administering these schemes and ensure that the long delays which occur are cut out? Would he not agree that it is extremely annoying to some farmer who attempts to bring water to his house and farm buildings to find that, month after month, an argument appears to be going on between officials of two Departments as to how much of the common cost each should bear? Apart from anything else, it is extremely annoying to find farmers waiting maybe 18 months for a simple grant which anybody at all could decide in five minutes. Numerous visits from inspectors do not seem to solve the problem. It usually finishes up with an argument over whether one or other Department is being asked to pay a few pounds more of the common cost. This is not a reflection on the Government: it is an administrative difficulty. A ministerial direction should be given that this sort of fooling should stop.

The same can be said in relation to other Government schemes. I know a man who was looking for a grant for a calved heifer some years ago. He had six visits from various inspectors before, eventually, he was told he could not get it. After a row was raised in this House about it, he was paid the grant. This sort of nonsense should not be allowed. I am not saying that this is true of all grants but it is true of those I have mentioned in particular.

I am a bit cynical about some of the statements made by the Minister for Finance. Here is what he had to say in relation to public service pensions. The reference is the end of page 49 and the top of page 50 of his Budget Statement.

In recent years the Government have increased public service pensions on six occasions. Pensions related to 1959 pay levels have been raised by 35 per cent and those related to 1961 pay levels have gone up by 28 per cent. This includes compensation for rises in the Consumer Price Index from those years, up to June, 1966, and, in addition, a further increase of 5 per cent was granted last year.

The pensioners longest retired are, of course, those whose needs are most immediate because of the lower pay rates to which their pensions are related. I have met the representatives of these pensioners many times and they have always pressed for parity with the pensions of those retiring now. This would be quite expensive. While I could not give full effect to it now, I have decided to adopt it in principle and to move towards it over a number of years. As a start, the pensions of those who retired before the general pay revision of 1 February, 1964, will be brought up to the level of the pensions of their colleagues who retired with the benefit of that pay revision.

Just listen to this. He says he has decided to adopt, in principle, parity. This question has been raised on a number of occasions by Ministers for Finance. When Senator Dr. James Ryan was Minister for Finance he was very definite about it. He did not say what Deputy Haughey said. He said he would do it definitely—that he would give parity: that promise has not been honoured. He ceased to be Minister for Finance in the following year and, from that time, which is a number of years ago, until now, the position has not been improved very much. Now, however, we have a definite statement, the very same as the statement Senator Dr. James Ryan made, that Deputy Haughey, the Minister for Finance, is prepared to look at it.

The 5 per cent increase, granted last year, was granted from 1st August. I have met quite a number of local authority pensioners who told me that, in May, they had got their increase, with arrears. How much did they get? They got an increase of 2d per month. Personally, I feel that, in a case like this, there should be a minimum amount. If there is a 5 per cent increase there should be a floor. At least, there should be some amount less than which they will not get. Otherwise, it becomes a bad joke on those people who are expecting something reasonable and then find they are getting very little. I appeal to the Minister to bring them up to parity. After all, the older men and women have died off and are dying off. Like the IRA pensions, if we wait another few years, they will not be necessary because these people will be gone to their reward. I hope they get a better reward in the next world than they got from the State in this world. Again, it is a 1st August increase and the amount is £500,000 this year and £800,000 in a full year. I feel the Minister should have gone the whole hog.

In another few years time, the Old IRA will have disappeared. Whoever will be here then will not, I am sure, see that heading in the Budget because the Old IRA are rapidly disappearing. I consider that some of these people have been treated shamefully. I have myself investigated the circumstances of a man who was given a medal and, when he applied for free travel, he was told that the medal was not correctly awarded. He and his brother were in a house which was attacked by the Black and Tans. His brother was shot but this man escaped because he was only a boy and small enough to get into a ditch and to be able to get away. He was told that the medal was not properly awarded. He applied for a special allowance but was refused. He applied for free electricity and free travel but was refused. It was said that there was no evidence that he was in the Old IRA. I had 16 people to certify that he was a member and I informed the Department of Defence of that fact three months ago but, apart from a curt acknowledgment, I have heard nothing further. The Minister talked in his Budget speech about the Old IRA. He wants to do whatever he can for those people to whom we are so indebted. It is saddening to reflect on the way they are treated by people who are now sitting in plush chairs and who will never again experience the frustration of wanting something and of not being able to get it — that is, if some of these people in plush chairs ever in their lives had that feeling or were ever short of money to buy something they really required. If they were ever short of money then they can understand the position.

The Minister proposes to increase the pension of a recipient of a special allowance who has a military service pension of less than £25 a year to that amount — almost 10s a week. Will that not be a wonderful day for such persons? On that £25 a year, they will be able to go on a holiday to Rosapenna in County Donegal. They can then qualify for the general pensions increase which, in this case, is about ten per cent and the special allowance will also share in that increase. These are people who are becoming very scarce. Should something not be done to try to give them better than that? There is a funeral grant of £25 for members of the Old IRA. Recently I was asked to approach a local authority about a bill for a simple funeral which was for £40. The funeral grant here is £25. What kind of funeral can now be provided with £25?

Widows of public servants whose husbands died or retired before 23rd July, 1968, will get half pension. Everything is not wonderful but it is at least meeting part of the requirements. I think it was a good idea. The only thing about it is that we are told that the administrative machinery to implement the scheme is only being set up and that it is proposed to administer it as soon as possible. How soon will it be administered? The Minister should have made some effort to give it now.

With regard to taxes, it was claimed by a representative of tobacco companies yesterday evening that the 2d extra per packet will reduce the amount of cigarettes that will be smoked and that this will cause unemployment. I should be sorry to think that such unemployment will occur. The traditional way of taxing is wrong. Nevertheless, in my opinion, far too many people smoke far too many cigarettes: that is a personal opinion.

The 3d per gallon on petrol, which is supposed to be not very heavy is, in fact, pretty bad. It is a fact that very many people actually require to use a car. As I mentioned earlier, 3d per gallon will be a substantial impost on those people. In addition, the cost of distribution is bound to rise because of the amount of money being paid for petrol used in delivery trucks, et cetera. Indeed, I heard somebody talking about the cost of collecting milk and the distribution of certain materials on to which this cost will go. I notice that buses are exempt, private buses, tour buses and public service buses. Delivery lorries, CIE or otherwise, are not. I will not make any comment about the increases in the price of beers and spirits, but I know many people feel strongly about this. There is also the question of the increase in the rate of wholesale tax on certain articles from 10 to 15 per cent. I think a mistake has been made here also. The Minister says:

As the principal social aim of this budget is to assist the lower-paid and weaker sections, it seems appropriate that some of the additional revenue required should be derived from spending on less essential items. I propose, therefore, to increase the rate of wholesale tax on certain articles from 10 to 15 per cent, with effect from 1st June, 1969. The articles concerned are motorcars, motor-cycles, scooters and mopeds...

and so on. Mark you, it does not refer to expensive cars. Will this increase affect the man who goes to buy an old second-hand car? Many people who do not need them use motor-cycles but a lot of people use them to go to their work. Motor-cycles, scooters and mopeds are mainly used by working-class people.

Mr. Donegan

Who cannot afford a car.

Mr. James Tully

Yes. Surely these should not be included as less essential items? Students use them and many of them use them to go to school. They need them. Then there are television sets and radio sets. I cannot understand the thinking of those who say: "We will give them free television licences but television sets are a luxury and, therefore, we will tax the television sets they are going to buy." Will this include the hire of television sets as well as their purchase? Radios which are carried by young people may be considered luxuries but in the normal way radios used by people in their own homes would not be considered luxuries in this day and age. In regard to radiograms, record players, gramophones and records, caravans, yachts and other pleasure craft, well, anyone who has these already will not have to pay any tax on them now. The position is that expensive motor-cars, or, in the famous phrase of the Minister for Education, Deputy Lenihan in Roscommon, "expensive motor-cars, furs and jewellery" are not included. I wonder why. Why should we not have something like that instead of what we have? Certainly it would be better to include them than motor-cycles, scooters and mopeds. The Minister went on to say:

A decision has not yet been taken on the question of introducing an added-value tax but, if at a later date it were decided to have such a tax, it would be quite feasible to retain the new three-tiered system.

This is what many of us suspected, that not alone was it intended to bring this in at a later stage but to have it in addition to what we have instead of a substitute. We will soon be taxed out of existence.

The Third Programme has been mentioned but in view of what happened the Second Programme the less we say about the Third Programme the better. Even the Government are prepared to agree that it is just a shot in the dark and putting things down in this way has been more of an embarrassment to them than anything else. As far as I can see, the Third Programme does not appear to be going to do anything wonderful for the country. Another reference in the Minister's speech is to culture and leisure and the Minister said that he would provide in the Finance Bill that painters, sculptors, writers and composers living and working in Ireland would be free of tax on all earnings derived from work of cultural merit. Who is going to decide what is a work of cultural merit?

Mr. Donegan

Charlie boy.

Mr. James Tully

This is going to be interesting because different people will have different ideas about what has cultural merit. If it is simply going to be a question of somebody who can be recommended by somebody to get freedom from tax it is a mistake. If it is going to be operated we should know to whom it will apply. The Minister will have to be very careful about this when he does introduce it and make sure that the scheme will not be turned into a racket and bear in mind the people who have to work hard to earn their living and rear a family.

As I said at the start, the problem now is whether or not the Budget is simply a Budget for the election, or a Budget, as used be the case, for 12 months. My opinion is that the Budget has simply been introduced for the purpose of giving the impression, to use the Minister's own term, that this is the best year of our lives. How he is going to persuade the people that that is the true description as compared with what he said on 18th March when he said, I think one of the phrases he used was that the country was down the drain——

Mr. Colley

He did not say anything of the sort.

Mr. James Tully

He did, he said that as things go unless——

Mr. Colley

"Unless", that is a different thing.

Mr. James Tully

If the Minister for Finance can bring the country from a point where it was almost down the drain on 18th March to the point where we now have the best year of our lives, on 7th April, he is wasting his time in Dáil Éireann. There are a number of countries who could do with somebody like that. Unless he has a magic wand which he has waved to improve the financial position in the meantime, then he was just trying to cod the people on 18th March and we very much fear he is trying to cod them again now.

The general election must take place within 12 months. The Taoiseach has been playing around with the idea that some political advantage is to be gained by sitting tight and not letting anything leak out, but the only people he seems to have confused are his own people. A number of his own backbenchers have come to ask me—why they should ask me I do not know because I neither know nor care when the election is coming—when it will be held. They seem to be terribly worried about when it will be held. If the Minister has any influence with his colleagues in the Cabinet he should use it to get them to grow up and behave like adults and decide that the election will be held pretty soon. This Budget has been introduced as what is necessary for the nation's housekeeping for the next 12 months. So the Fianna Fáil Party say. We say it is not; we say it is a gimmick and was introduced with the object of having a general election and while there is nothing in the Budget except a little bit of window dressing when the autumn comes we will have what is becoming to be recognised as the real Fianna Fáil Budget. When it comes we will be ground down again. The honest thing to do would be to let us have the date of the election. Let us have the election. If the Fianna Fáil Government are returned to power they are entitled to carry on with what they want to do.

Major de Valera

Does the Deputy really call this Budget a gimmick?

Mr. James Tully

I have been doing so for nearly two hours now.

Major de Valera

Then why does the Deputy not vote against it?

Mr. Geoghegan

The Deputy said nothing in the two hours.

Mr. James Tully

Deputy de Valera should not go away after firing a broadside——

Major de Valera

If the Deputy thinks it is a gimmick he should vote against it.

Mr. James Tully

Yesterday we made it very clear why we did not vote against it. Unfortunately, the Deputy could not spare the time to listen but we did not vote against it because it did offer marginal reliefs. We say it is a gimmick because, having experience of what Fianna Fáil do, we believe that, when the election is over and if they are back in power, they will get the extra taxation they feel is necessary but have not the guts to impose now in order to run the country. They did this twice before— and Deputy de Valera is as well aware of this as I am—and got away with it.

Mr. Geoghegan

The Deputy wants to have it both ways.

Mr. James Tully

Fianna Fáil want to have it both ways but the people want to have it their way. Therefore, let us have a general election as soon as possible, and we will welcome it.

Mr. Geoghegan

I warrant the Deputy will lose his seat.

Mr. James Tully

That will be our worry if we lose seats. At least the responsibility will then be for somebody else. But we feel we shall not lose.

Minister for Industry and Commerce (Mr. Colley)

I think the most important and significant aspect of this Budget, speaking purely politically, is the reaction of the Opposition because they have been telling us that this is a gimmick, a vote-gathering Budget and, as Deputy de Valera has pointed out, despite that they have not voted against it. In other words, in their view, this is a Budget which will be popular with the people.

In a way it is somewhat surprising that they should take this view because the Budget provides for additional taxation of about £12 million. Nevertheless, they feel it will be a popular Budget. I suggest the reason that it will be popular is that it is a Budget which has been framed within the basic philosophy of the Fianna Fáil Party. It is framed so as to give as much relief as possible to the weaker sections of the community while, at the same time, it is designed to help the sections of the community which produce the wealth of the nation. It is not oblivious to the claims of the weaker sections nor is it blind to the importance to our progress of encouraging and giving incentives to the sections of the community producing our wealth.

Of course, from the Opposition's point of view I should imagine their tactics and reaction to the Budget before they heard what it was were simple enough. I imagine they said to themselves: "If it is a popular Budget we shall accuse the Government of electioneering; if it is an unpopular Budget we shall accuse them of mismanaging the affairs of the country." Either way they feel they cannot lose, but the fact is that there is substantially increased taxation involved in this Budget and yet the Opposition appear to think that it will be a popular Budget. That is very revealing. I think it reveals just how much the Budget is framed to meet the requirements of our people today and how much the people will recognise this fact.

Considerable play has been made so far with the allegation that the Budget is not genuinely prepared and that in the autumn we shall, in fact, have another Budget. There is no evidence of this. Reference is made to what happened last year but these references conveniently omit the full facts of the situation. In last year's Budget, in the spring, the Minister for Finance made it abundantly clear that the Budget had been framed without having regard to possible claims for increases in salaries in the State service. He was in the position that the amount of those claims was not at that time known and he would find himself, if he had fixed a figure, accused of having determined in advance what this amount would be. We had a slight example of this in what Deputy Tully said earlier today in his reference to the £2 million. The point I am making is that the Minister for Finance at the time made it perfectly clear to the House and the country that no provision had been made for any increases which might take place in public service salaries and wages.

Further, it has been alleged that this was done with an eye to the referendum and with the intention of applying taxation after the referendum but, again, the Opposition failed to mention that not long before the referendum the Taoiseach made a speech which was widely reported in which he set out very clearly the economic situation and in which he clearly foreshadowed that it would be necessary to impose further taxation.

Mr. Donegan

He did something else also.

Mr. Colley

In other words, while it is possible to argue that there was deception of the people by the Government it is only possible to do so by ignoring the facts of what actually happened. I suggest that the Opposition are being reduced to this kind of approach because this Budget is, as I have said, a Budget which meets the requirements of the people today, a Budget which pays particular attention to the needs of the weaker sections of the community and, at the same time, does not by any means ignore the sources from which the wealth we have to distribute comes. I am now taking the opportunity to point out to him that when the Minister for Finance was introducing this Budget he said that we had had the best year we ever had and he was talking about the financial year just past—1968-69.

Mr. James Tully

To the 31st March. That would include the 18th.

Mr. Colley

On the 18th March he was talking about the future year and what was likely to happen in the future year unless certain steps were taken, particularly restraints in wage claims. I should like, Sir, to quote something from what the Minister for Finance said on the 18th March. He said:

In view of the serious economic position in which we find ourselves, the Government is compelled to ask the trade unions, in the interests of the workers and the whole community, not to seek increases based on the maintenance settlement. In making this request they would emphasise that it is the workers generally and particularly the lower paid workers who suffer most from an economic set-back as serious as that which is now in prospect. If employees generally are being asked in their own interests and in the interests of the community as a whole not to press excessive claims, particular responsibility rests on management to keep prices under strict control.

All of this is framed on the basis of what is coming, not on the past year, and on what would happen unless the request was complied with. That position has not altered except to the extent that the Minister has indicated in introducing the Budget that it now seems as though the appeals which have been made by the Government are being heeded and, of course, that does not mean, as Deputy Tully half suggested, that the Government are talking about a wage standstill. Restraint does not mean standstill. On the contrary, the Government have made it quite clear that in their view it was necessary to increase the earnings and the income of the lower paid workers but that the basic problem the economy finds itself in is that in endeavouring to improve the lot of the lower paid worker heretofore by insistence on maintenance of old differentials the overall cost to the economy is more than the economy can bear and, in fact, may well leave the lower paid worker worse off than he was before.

The efforts which are being made in this Budget within the limits available within the Budget are clearly directed to improving the lot of the lower paid worker but the necessity for restraint has not altered; it is still just as essential as it was on the 18th March. I want to say that there was a reference yesterday to the action of the Government in reducing ministerial salaries of members of the Government. I want to make it quite clear that the intention of the Government in doing that was to underline the serious possibilities facing the economy and to give a lead to those in the higher income brackets for restraint. It did not mean that those who are not in the higher income brackets should get no increases. On the contrary, it was intended to underline the necessity of increases for the lower income bracket and the consequential necessity for restraint in the higher income brackets.

One very important aspect of the prospects for the economy, of the prospects of succeeding with the kind of incomes policy outlined in the speech by the Minister for Finance, arises in connection with prices and, as the Minister has made it clear, it is intended to exercise very strict surveillance of prices.

Mr. James Tully

I think I heard the Minister for Industry and Commerce saying that before.

Mr. Colley

I am about to come on to the point that I think Deputy Tully has in mind. With the most strict surveillance of prices, price increases will take place. I want to make it as clear as I possibly can that in my view there is a great deal of nonsense, and misleading nonsense, talked by some people in regard to prices. I have heard Members of this House speak as though it were possible to continue to have wage rounds without increases in prices. Unless wage rounds are relatively small and kept within the increase in productivity in the economy, it is absolutely impossible to prevent price increases. Even if they are so kept within such limits, it may be necessary to have price increases, too, for reasons which I will explain in a moment. For anybody to say that you can go on having wage rounds and have no increase in prices is either sheer ignorance or deliberate misrepresentation of the position.

In fact, I rather suspect that the least educated worker on any factory floor knows that if the cost of his wages goes up, if the management cannot absorb that in some other way, the cost of the goods he is producing must go up. I think he knows this but there is another factor in this and that is the fact that in our economy we import a very high proportion of our raw materials and we do not control the cost of the raw materials which we import. We cannot control this. So that, built into our economy there is this possibility of price increases even with no wage increases.

Therefore, with increases in raw materials and with increases in wages it is almost inevitable that we are going to have price increases and anybody who suggests anything else is merely misleading the people. The effort which we want to make, the only practicable target we can have in this regard, is to ensure that such price increases as take place are limited to what is necessary, that we do not allow people to profiteer in their price increases. In practice, what happens is that in sanctioning a price increase I and my Department endeavour to make the management absorb some of the increased cost which they have incurred. We seldom agree to a price increase giving complete recoupment of increased costs to management.

Mr. James Tully

Is the Prices Body working?

Mr. Colley

There is price control operated by my Department all the time and if it were not operating I can tell you the prices would be an awful lot higher than they are.

Mr. James Tully

There was a body set up to investigate prices on which the TUC have representation. Have they met?

Mr. Colley

There were bodies set up to investigate different items.

Mr. James Tully

They have not met for years.

Mr. Colley

There were prices advisory bodies and I think the Deputy may be thinking of prices advisory committees. They have not met because they were operating only when there was no actual price control in operation. Price control is in operation on a day to day basis.

Mr. James Tully

That is not quite correct.

Mr. Colley

Perhaps, the most vital thing that people should understand is that if I, as Minister for Industry and Commerce, exercising price control, were to refuse to agree to price increases, many workers who are now in employment would go on short time and many of them would lose their jobs completely. This is a fact of economic life that must be faced.

If a firm has its prices so controlled that it cannot meet its overheads and make a reasonable profit, it will close down and this, of course, will result in people being put out of work. Let it be clearly understood that when costs increase it is necessary to allow some increase in prices if employment is to be maintained in this country.

The only real question at issue is whether the price increases that are sanctioned are excessive and it is towards this aspect that the efforts of the Prices Section of my Department are directed. I have no evidence to suggest that there have been excessive price increases but on the contrary it seems to me that in many cases some of our firms are working on a dangerously small margin of profit and the price control that we exercise is, as I say, directed to ensuring that price increases are limited to the amount that is necessary to enable the firm to carry on with a reasonable profit. Invariably, however, we oblige management in helping them to absorb some of the increased cost and this is a good exercise economically because by obliging them to do this they will continue to make an effort which they might not otherwise make.

An important provision in this Budget has been the provision for the extension of what we might call the tax holiday on exports. Deputy Tully raised some questions about that extension which I should like to answer. First of all, with regard to the USA, it is not true to say that the United States Treasury has been collecting the tax that we have foregone but it would be true to say that if their regulations had been operated as originally drafted this would have happened. In fact, it has not happened so far and my efforts have been directed towards ensuring that it will not happen. Deputy Tully asked also what the necessity for this extension was in the cases of people who had had the concessions for nearly ten years.

Mr. James Tully

Fifteen years.

Mr. Colley

I do not think they have had it for 15 years.

Mr. James Tully

It has been extended from 15 to 20 years.

Mr. Colley

It operated on a basis depending on when the firm started. There was a taxation exemption for ten years. I am talking about the past. The point I wish to make is that a number of firms—I am speaking now of Irish firms—were induced to go into the export market by this but they had to carry on for some years before they made any profit so that in order to build up an export market they had to work at a loss and then they would just break even for some time. Therefore, in effect, they did not get the benefits of this and the extension is a worthwhile reward for firms which made this effort and it is an inducement to them to continue in their efforts to expand. The more they export, the more profit they make and the more benefit they will get from this extension.

Mr. James Tully

So that it is a reward rather than an incentive?

Mr. Colley

It is an incentive to carry on but there are a number of aspects to it. Those who have not benefited because they had continued for a number of years with losses will get what it was originally intended to give them. Secondly, it is an inducement to them to expand their efforts. In a way, the most important aspect of this provision is that in promoting industrial development abroad one of the very important weapons we have is the offer to foreign promoters coming in here that they will not have to pay tax on profits derived from exports for a period of ten years.

The original ten year period is now running out so that if we did not give this extension now at this particular stage in industrial development the result could be very serious. We have a momentum now which it is necessary for us to keep up and this particular provision enables us to do that.

Regarding that momentum, I would remind the House that each of the past few years have shown a considerable improvement and that last year was by far the best we have ever had in so far as projects approved and started and those approved but not started but which are in the pipeline are concerned. The amount of capital and the employment involved is up by three times what it was two years ago. This kind of momentum does not happen overnight. It is the result of efforts during the years that have led to the building up to this crescendo. It is vitally important that we do not do anything that would hinder that growth and that is why I regard this particular provision as being so vitally important to the development of industry in the future.

Mr. Donegan

It is nice to see Fianna Fáil coming around to Fine Gael policy.

Mr. Colley

I told the Deputy before that I am not interested in arguing about who said what in the past. We could argue a long time on those lines but I am only interested in getting a job done and I would suggest to the Deputy that it does not matter to the people concerned as to who thought of the policy.

Mr. Donegan

Fine Gael thought of it in 1956 and Fianna Fáil voted against it.

Mr. Colley

We made it workable.

Mr. Donegan

Deputy Seán Lemass spoke against it.

Mr. Colley

Deputy Lemass amended it and made it workable.

Deputies

Hear, hear.

Mr. Colley

There is another aspect to our economic policy which is sometimes referred to in the House and which, in fact, was referred to quite recently. Deputy Dillon, in particular, seems to dwell on it at great length. I am speaking about the size of the national debt. Deputies quote the figures for ten or 20 years ago and compare them with today's figure which, of course, shows an enormous increase. What they do not refer to, however, is the fact that the national debt is only of importance when considered in relation to our total assets.

There has been a considerable growth in the economy and, therefore, the proportion between the two is what counts and not the actual size of the national debt. Furthermore, the kind of capital developments that we have had in this country and which have led to the growth in the economy would not have been possible without this considerable growth in the national debt. For me, the size of the national debt is relatively unimportant except in relation to the overall strength of the economy and the ability of the economy to service the debt. The amount needed to service the national debt is, of course, very substantial now. It will become more substantial as the years go on but this is nothing of itself to be worried about as long as our economy is growing and we are in a position to service this debt.

To me, then, this is the right approach for any Government to take. If we are to wait to keep down our national debt, if we have to look for the amount to service it, what we are doing is holding back this country for 50 years in order to meet the dictates of a very narrow bookkeeping point of view and one that does not make any kind of sense in an economy such as ours where it is necessary to put every possible effort into growth. For that reason I want to make it clear that I am happy to see within the limits I have mentioned the growth in the national debt.

I think the provisions in the Budget in relation to altering stamp duty levy on office block developments should be generally welcome. I know there is from time to time concern at the amount of office block development going on. Obviously some of this is necessary but I thing the general concern about it has been that there was a feeling that resources which should, perhaps, have been made available for housing and such like items were going into office blocks. The Government went into this very thoroughly on a number of occasions and the evidence available did not support this contention. Nevertheless, I feel the development of office blocks involves in many cases the provision of capital from abroad and the making of very considerable profits and I see no reason why this form of taxation should not be levied on those profits. As I say, I think this provision will certainly be generally welcome.

Deputy Tully talked at some length about the Anglo-Irish Free Trade Area Agreement and he spoke about British goods flooding in here. He suggested that some of our industries were in difficulty from this. I do not think, if he were put to it, he would find it easy to produce any substantial list of our industries which are in difficulty over this.

Mr. James Tully

I know of several.

Mr. Colley

Offhand, can the Deputy think of one?

Mr. James Tully

The Minister knows of one. I do not want to mention it here.

Mr. Colley

Could the Deputy mention the area? I am not aware of any.

Mr. James Tully

The Minister is well aware of it. It was discussed the other day.

Mr. Colley

The Deputy spoke before about an industry which he said was in great difficulty. In fact, he said it was closing down because of the Free Trade Area Agreement. I remember I told him at the time I did not know of any such industry, that I did not believe it was due to the Free Trade Area Agreement. I think he was informed later by the firm itself that it had nothing whatever to do with the Free Trade Area Agreement.

Mr. James Tully

That is not so.

Mr. Colley

I have the correspondence.

Mr. James Tully

I do not think that I have taken the same meaning as the Minister did from the letter I got. In fact, they were on short time.

Mr. Colley

It had nothing whatever to do with the Free Trade Area Agreement.

Mr. James Tully

It had to do with British shoes being sold here and they could not sell theirs. At least that is what they told me.

Mr. Colley

Roughly five per cent of the home market in shoes is imported. The fact is that under the Free Trade Area Agreement our trade with Britain, both industrially and agriculturally, has been growing very substantially. Correspondingly, of course, British trade with us has been growing but, on balance, we have gained more than the British.

Mr. James Tully

I do not want to interrupt the Minister but is it not true the adverse balance has gone to £37½ million?

Mr. Colley

I am coming to that. The fact is as the Minister for Finance pointed out when the Deputy said this at the time. What is happening is that British imports are substituting for other imports. This is understandable if you consider that the barriers to British imports are going down and not to imports from third countries. It is reasonable enough to expect that this would happen. What is happening there is that our importers are buying British instead of third countries but the overall balance, so far as we are concerned, is not altering so that you can read a great deal too much into this swing in the balance. It does not mean anything overall as far as we are concerned.

Mr. Donegan

Where did you get the £50 million balance deficit?

Mr. Colley

That, I think, is relevant to another question.

Mr. Donegan

It is dead on the ball on that question.

Mr. Colley

Of course, it is not. I think the figures have been published which would give some analysis of where that arose. The Deputy would find that most of it arose because of the importation of capital goods, that the problem does not really arise in relation to consumer goods and, therefore, it is not one to be unduly worried about.

Mr. James Tully

That was not what was said on the 18th March.

Mr. Colley

Obviously there is a limit as to how far you can go even with the importation of capital goods but if a substantial proportion of your balance of payments problem is caused by the importation of capital goods, provided you keep within limits, you do not have to worry as things are going all right. It is where your problem is caused by an excess importation of consumer goods that you have to start worrying.

Mr. Donegan

The Minister has an agile mind.

Mr. Colley

I am just speaking the truth. That is simple enough. Now, I want to say in this regard that it is true in the last six months of 1968 there was an alteration in the figures for balance of trade between this country and Britain and if this were to continue during the first six months of 1969 it would be a matter which would cause us some concern. We have discussed this with the British. They have contended, and they have given various reasons for this, that it was a phenomenon and that it should not occur during the first six months of 1969. We cannot say yet whether it is occurring or not but there is agreement between ourselves and the British that if this pattern were to be repeated action would be taken, and mutually agreed, between the two Governments to remedy this. I do not know yet whether this will be necessary.

Mr. James Tully

Will you know by the 1st July?

Mr. Colley

We will know then. As soon as we get the figures for the first six months of the year we will know.

Mr. James Tully

Will you know by the time the next 10 per cent comes off?

Mr. Colley

I think we will be able to handle that. The fact is that the Free Trade Area Agreement has been operating to our advantage. Deputy Tully, when he had finished about that, went on to talk about the EEC almost as though he hoped the Government had just been fooling about the EEC and they were not going to raise this silly little thing again. I want to assure Deputy Tully and the House that the Government were completely and utterly committed to the policy of membership of the EEC and still are committed to it. I do not know how long it will take, but we are going into Europe.

Mr. James Tully

If Britain goes in we will have to go in.

Mr. Colley

I do not know whether we will be going into the Common Market exactly as we know it now. There will obviously have to be some changes with the increased membership. The future of this country is bound up with the future of Europe. Though I could do so, I am not speaking politically on this aspect. I am speaking economically. This country is much more dependent on foreign trade than almost any other country in the world. It cannot afford to isolate itself. We are mistaken if we think we can continue on the basis of high tariffs and yet expect a continuation of our ability to trade with other countries. If we expect to be able to get into foreign markets we must face up to the realities of reducing our tariff barriers.

It is not true to think that we can hide behind our tariff barriers, ignore realities and assume that things will turn out all right. This country must be fully aware of the consequences for us unless we continue our efforts to adapt to free trade conditions. Anyone who thinks that we need not adapt to these conditions is gravely mistaken. Free trade between this country and Britain is certainly on the way. It is inevitable also between this country and the rest of Europe. If we are to have any hope for growth and if we are to create an improved way of life for our people, we must understand that our only hope of achieving these objectives is by increasing our exports.

We must have access to more markets in order to increase our exports. We must make such markets as we have here available to other countries in order to do this. This is a fact of life. Arrangements already made, as well as arrangements which we hope to make with the EEC, are designed to temper the impact of this, but free trade is inevitable and we must work on the basis of its inevitability. Our only hope of expansion and growth lies in this area. There is no use in telling people that the Free Trade Area Agreement or the EEC is going to do this or that damage unless you tell them what would happen to them if we did not have such an approach.

People must be told that thousands of jobs in factories in this country would gradually disappear and that we would become almost totally dependent on agriculture, which would have poorer markets for its products. We would not be able to buy abroad because we would not be selling abroad. The future of this country would be disastrous unless we faced up to the implications of free trade.

Deputy James Tully asked a question about the wholesale tax. The wholesale tax was not levied on the sales of secondhand motor cars or motor cycles or on the hiring of TV sets. I presume the Deputy will agree with me that this is an example of a tax designed to hit luxuries rather than necessities of life.

Mr. James Tully

Motor cycles, scooters or mopeds are not luxuries.

They are often a necessity to a working man.

Mr. Colley

Anybody who has to have a cycle or a moped for his work does not have to buy a new one.

Mr. James Tully

The Minister obviously never rode an old motor cycle.

Mr. Colley

I rode almost every type of vehicle. I have bought many secondhand cars because I could not afford a new one. It is a luxury to buy a new motor cycle or a new car, not a necessity.

Mr. James Tully

A working man must have a reliable machine to get to his work.

Mr. Colley

Deputy James Tully and the Labour Party have a much more exalted idea than I have of what is necessary for us in this country.

Mr. James Tully

A working man often pays hire purchase rates of a few shillings a week for a new machine. He must pay cash for a secondhand machine.

Mr. Colley

The kind of people I deal with buy secondhand cars on hire purchase.

Mr. James Tully

They use limousines.

Mr. Colley

The point I wanted to make is that the wholesale tax was not put on secondhand motor cycles. This is another example of the basic philosophy behind this Budget. The Budget is framed within the basic philosophy of the Fianna Fáil Party.

Mr. Donegan

Which end of it?

Mr. Colley

We are trying to assist the weaker sections of the community. The provisions of this Budget go a long way to meet some of the more pressing needs of the present time. The Budget cannot go the whole way to meet these needs. It will never be possible to meet all the problems, but this Budget goes a very long way to meet many of the more pressing problems of the weaker sections of the community.

At the same time, it has due regard for the interests of the productive sections of the community—agriculture, industry and, in particular, industrial exports and the necessity to develop further in this country the promotion here of industries from abroad. It strikes the right balance between increasing the productive capacity of the country and having regard to the social conscience of this Party. This being so, whether we have an election soon or in April of next year——

Mr. Donegan

Tell us the date.

Mr. Colley

——the electorate will realise that in this Budget this Government have lived up to their responsibilities and to their philosophy. The electorate will also appreciate the significance of the reaction of the Opposition and their failure to offer any real alternative. The Opposition did not vote against the detailed provisions of the Budget and they rely on the argument that this is an election Budget, which is the same thing as saying that it is a good Budget—that it is the kind of Budget people want. This is their reaction in the context of the increased taxation which amounts to about £12 million. It is a tribute to the increasing maturity of the people of this country and of politicians that this kind of increased taxation can be imposed without an outcry from sensible people to the effect that the Government are leaning too heavily on the ordinary people. We have now reached a stage of development where we can clearly distinguish between what are luxuries and what are not. We can recognise that the ordinary man-in-the-street can have his luxuries taxed because he has luxuries. There was a time when he did not have luxuries and they could not be taxed but now the ordinary man-in-the-street has luxuries and necessaries and we are taxing the luxuries. Most people realise that this is right, that this is the way to do it.

I believe that this Budget will contribute substantially to the development of our economy on the lines on which it has been going and I hope that it will also contribute eventually to the re-election of this Government to ensure that we continue the work which we have been doing in recent years, of which all of us are very proud, which we know is necessary for the future of this country and which we know the Opposition are not capable of doing. They would like to do it if they could because they know we are doing the right job, but they are not capable of doing it. They know it, we know it, the people know it and as long as that is the position I do not suppose we have too much to complain about.

Mr. Donegan

The "anything you can do I can do better" note in the Minister's speech is an interesting one and before I proceed to more serious consideration of this Budget I should like to know, in relation to what the Minister says about it being framed within the philosophy of Fianna Fáil, which philosophy he means. Is it the philosophy of my constituency colleague, Deputy Frank Aiken, the Tánaiste, and himself or is it the philosophy of Deputy Seán Lemass and the Minister for Finance, because if one were to look at the two philosophies on performance and on stated words one would find that they are diametrically opposed. However, I suppose that is only a little bit of mischief, if it is true mischief.

The Minister for Finance at page 61 of his circulated speech lays an egg when he says:

It is not always practicable in a particular budget to reconcile completely the conflicts between short-term and medium-term needs.

Indeed it is not, and I am afraid that this Budget is a short-term need Budget, the need being the re-institution of Fianna Fáil in office, as was said a few moments ago by the Minister for Industry and Commerce. However, if one neglects the medium and the longterm needs for political expediency and produces what might or might not be popular, then surely one is neglecting one's duty towards the country and the community as a whole—surely one is doing what was done last year.

I should like first of all to give what I believe to be the truth of the situation in 1968 which was described in such a detailed was by the Minister for Industry and Commerce. As I understand it, what happened in the spring of 1968, in the referendum and then in the mini-maxi-Budget in the autumn, was that all over this country—and I have said this before—industry was negotiating two year agreements with a wage increase on the first day of the agreement, with an equal wage increase on the anniversary day, with certain reductions in hours on the first day and certain further reductions on the anniversary day, with certain changes in conditions. This had spread itself right across the whole spectrum of industry to the extent perhaps of 50 or 60 per cent.

Then the Department of Finance, which had instructed all the semi-State bodies and all the State companies that they must also go for two-year agreements with increases on the first and on the anniversary day and a phased situation which would contribute towards an eventual prices-and-incomes policy, saw they were faced with trouble in the referendum and issued an instruction: "Nine per cent and no bargaining". The nine per cent was given for one year. There were no arrangements on productivity, no arrangements on what the increase would be the following year, no arrangments on the reduction in the number of hours at work, no arrangement of any kind as was being covered right across industry. The Government were defeated in the referendum, not as a result of this—it should have worked the other way—and then the necessity arose for a mini-maxi Budget in the autumn to dampen consumer spending. The first thing one must remember about yesterday's Budget is that £19 million of taxation was imposed last November and what we are getting in fact is a series of Budgets in serial form. When one thinks of the £12 million imposed yesterday one should also remember the fact that only six short months before £19 million of further taxation was imposed; in other words £31 million within six months.

However these matters are, I suppose, something the people know about because it is the people who pay. What I worry about is the fact that some of them may not be able to pay and there may be plenty of trouble in the future. The Minister for Finance was very glib, in reply to Deputy Tully, when he said that all that had happened in relation to the deterioration of our trade situation with Britain was that more British exporters were sending goods here and less were being sent from other countries because of the working of the Anglo-Irish Free Trade Agreement and that duties were decreasing as far as British goods were concerned whereas other countries' goods did not enjoy this advantage.

The Minister for Industry and Commerce repeated this and said that everything was all right. I asked him where the £50 million deficit in the balance of payments came in and he said that did not matter at all because when one examined it in detail it was largely capital goods which would be nonrecurring. What did the Minister for Finance mean on March 18th when, in discussing the trade union situation and the maintenance men's dispute, he yelled horror all over the front pages of every newspaper in the country and then he said this morning, and his colleague repeated it, that this did not matter at all and that in fact deterioration of our situation with Britain was a substitution of one country's exports to us for another? When asked about the £50 million deficit that was so serious on March 18th he now says it is not serious at all. When do you blow hot and when do you blow cold? If you are a politician when there is an election in the offing.

Mr. Dillon

Who will pay the banks the £50 million they are holding in Exchequer Bills that the Government cannot pay?

Mr. Donegan

That is just what I was about to say. I understand that at the moment the banks are holding £50 million worth of Exchequer Bills and that for the first time the Central Bank has told them that they are not going to redeem them. The result is that those banks will go out to their customers when they need the money and ask them for £50 million. The question is are the banks in need? When Deputy Dillon said this to me yesterday evening I went to the trouble of checking with certain bankers to ask them what was the position in the country at this moment in relation to the ratio of advances to money available on short call. In both of the major banking groups the situation at this moment in time is that the ratio of their advances to their money on short call is well above what is regarded by them as a permissible limit. At this moment it may be taken that it is quite impossible to get any new overdraft and that anybody who wants money will be in great difficulty in getting it. The result is a credit squeeze, unemployment and difficulty for everybody in the country. We have a £50 million balance of payments deficit in this financial year. Remember the difficulties of 1965-66 when the deficit was only £41.8 million. Yet it created a credit squeeze and a situation whereby local authorities could not proceed with their plans. It created unemployment and now, because there is an election in the offing, £50 million does not matter. I want to suggest that these two figures of £50 million—the £50 million in money that has been refused to be redeemed by the Central Bank and which is now in the form of pieces of paper in the hands of the commercial banks and the £50 million deficit in our balance of payments—are very serious figures.

Progress reported: Committee to sit again.