asked the Minister for Finance if he is aware that according to the OECD Observer of February, 1970, Ireland had the second highest official discount rate in 1969 of member countries; and if he will make a statement on the matter.
40.
Ceisteanna—Questions. Oral Answers. - Official Discount Rate.
39.
asked the Minister for Finance if it is intended to reduce the rediscount rate of the Central Bank; and if he will make a statement on the matter.
41.
asked the Minister for Finance what policies he intends to pursue in order to reduce the present crisis high bank rate which is inhibiting increased investment within the Irish economy; and if he will make a statement on the matter.
With your permission, a Cheann Comhairle, I propose to take Questions Nos. 39, 40 and 41 together. The publication referred to by the Deputy gives Denmark as having the highest official discount rate, Ireland the second highest and Britain with France and Canada the third highest.
Because of the freedom of movement of funds between this country and Britain, the rediscount rate of the Central Bank, and discount rates and interest rates generally, are influenced by rates prevailing in Britain. If rates were lower here, there could well be an outflow of funds, thus reducing resources for the financing of Irish production and development. For some time past interest rates have been exceptionally high all over the world. The high rates do not, however, appear to have adversely affected investment in Ireland. Domestic fixed capital formation has continued to increase as a proportion of gross national product, rising from 18.6 per cent in 1967 to 19.6 per cent in 1968 and an estimated 21.7 per cent in 1969.
Could I ask the Minister what domestic fixed capital formation means in this context of a bank rate? It is all right to string words together but they should mean something.
Does the Deputy find my words meaningless?
I do and I have said it many times not alone when the Minister said them but when others used them.
I wonder if the fault lies in myself or in the Deputy?
It is possible that it would be no harm if the Minister, as Minister, were to analyse those words.
All I know is that this question deals with the effect of interest rates on capital investment here and I have endeavoured to point out in the answer that the high interest rates which we have been experiencing in recent times do not appear to have affected capital investment here because the proportion of our gross national product invested has been rising steadily. If the Deputy finds that meaningless then I find myself in the same position in relation to the Deputy as my colleague, Deputy Boland, Minister for Local Government, finds himself in relation to Deputy Garret FitzGerald.
That is all right but when the Minister for Finance talks about gross national product he has, in fact, by the enormous expenditure of the Government pushed up gross national product. And is he not aware that, by borrowing and getting the banks to write up £25 million in their books a few months ago, he pushed up the gross national product by that very thing? These are rubbishy words, the "gross national product". The Minister may shake his head if he likes but they are rubbish because they are arithmetic, not reality.
It is very difficult for us poor laymen to wend our way among all these professors.
I do not think my mind is all that complicated.