In the interests of brevity, I am confining my Financial Statement this year as closely as possible to the measures I propose to take to deal with the economy as I see it developing during 1970. I am omitting much of the usual background material and commentry on the state of the economy. These will be found in the various official publications issued within the last few weeks and in a supplementary statement which is now being circulated in the House. This departure will enable me to go straight to matters of more immediate budgetary interest and will, I hope, commend itself to Deputies.
Outturn of Current Budget 1969-70
The Budget of May, 1969, was aimed at balancing expenditure and revenue at £393 million. The rising tide of inflation throughout the year carried both expenditure and revenue, virtually in balance, to the higher level of £411 million.
The steep rise in incomes, prices and consumer expenditure created remarkable buoyancy under the heads of income tax, customs and excise duties and sales taxes. Supplementary Estimates, excluding those giving effect to budgetary changes, amounted to over £20 million. Higher pay for public servants and a Supplementary Estimate for Agriculture were among the extra charges which fully absorbed the unusual growth in revenue.
While the higher level at which the Current Budget was balanced is an unmistakable reminder of the inflation we experienced last year, it is worth remembering that the achievement of a balance was a marked improvement on the preceding year's performance when the deficit of £8 million added to the inflationary forces then at work in the economy.
Outturn of Capital Budget 1969-70
Expenditure in 1969-70 on the public capital programme was £173.4 million —an increase of £6.6 million on the figure of £166.8 million originally provided. Excluding the air companies, expenditure on the programme amounted to £152.4 million which was £20 million, or 15 per cent, more than expenditure in 1968-69. Residual borrowing by the Exchequer was £60.9 million, of which £10.9 was raised by means of a Deutschemark bond issue and the balance of £50 million was provided by the Irish banks.
The external situation
Before turning to the current domestic situation, which holds the centre of the stage on which the Budget is presented, it is well to mention certain aspects of the external scene which bear on the likely trend of our development in the year ahead. As our main hope of economic growth lies in expanding our exports, especially to the British market, developments there are of special significance.
The British import deposit scheme, though reduced in scope, is being continued for a further year. As Deputies will be aware, however, the Government have also extended the special credit facilities for these deposits.
We have recently secured an increase of 4,000 tons in our quota for butter supplies to the UK market in 1970-71, making the quota, at 30,000 tons, our highest ever. Our quota for cheddar cheese exports for 1970 remains the same as for the last two years.
Live cattle and dead meat continue, under the provisions of the Anglo-Irish Free Trade Area Agreement, to do well.
All in all therefore it is hoped that our exports to the UK, the annual value of which increased by 58 per cent between 1965 and 1969, will continue to expand at a satisfactory rate this year.
On the other hand, the tariff cuts due on 1st July next mark the halfway stage in the elimination of tariff protection against imports from the UK and underline the urgency of using the time remaining to us to improve our competitive position.
Diversification of markets
A programme of special measures was introduced early in 1969 to encourage exports to markets other than the UK and efforts to conclude new trade agreements with countries with which we have not formerly done much business are being actively pursued.
EEC prospects and developments
In view of the progress made in the European Communities since the summit meeting at the Hague in December last, we can now look forward to the opening of negotiations within a few months. If they proceed satisfactorily, our accession could take effect in 1973.
The White Paper, which has just been published, sets out the implications of membership of the Communities. I hope it will help all those involved in the economy and indeed the public at large, to form a clearer view of what membership entails. The extent of the benefits we will gain from membership will to a great degree depend on the adequacy of our preparations. Much has been done already. Agriculture is more efficient and is in a better position to benefit from participation in the common agricultural policy than it was ten years ago. The industrial sector is more solidly based, more diversified and a good deal more competitive. But the overall state of preparedness of industry and agriculture is uneven and capable of considerable improvement. We must use the remaining time to push ahead with the work of preparation before our accession to the Communities takes place.
Review of 1969
On the home front, 1969 was a year which saw both welcome and unwelcome developments. Having regard to the information and comment already published I do not propose to do more than mention the highlights today.
The numbers employed in the nonagricultural sector are estimated to have shown a record increase of 16,000 between April, 1968, and April, 1969. This more than outweighed the estimated decline of 12,000 in numbers engaged in agriculture.
Exports rose by 11½ per cent in the year. For the first time, industrial goods formed a higher proportion of total exports than agricultural goods.
Imports rose by 19 per cent. The rise in exports and in net invisible receipts was not sufficient to match the rise in imports and there was an estimated balance of payments deficit of £60 million, a disimprovement of £38 million compared with 1968.
A significant proportion of the increased imports were capital goods which will help to broaden and strengthen our economic base. Given the level of external reserves and the extent to which capital goods will build up our productive and export capacities, the large rise in imports of these goods is not in itself perturbing. What is disquieting, however, is that the rise has been accompanied by a large increase in imports of consumption goods.
Obviously we cannot continue to maintain a high rate of increase of both capital and consumer imports. If we are to maintain a large volume of capital imports for development, we must accept a slower rate of growth in domestic consumption and therefore in imports of consumer goods.
Balance of payments
The widening trade gap of the past two years has been reflected in the growing deficit on the current balance of payments.
A surplus of £15 million in 1967 gave way to a deficit of £22 million in 1968: last year, the deficit was about £60 million. This year, despite a small improvement in the first quarter, the deficit could be substantially higher. This trend has grave implications for the economy. Unless we abate the excessive increases in domestic consumption and costs, the gains of the past decade and our potential for further progress in the seventies could be put in jeopardy.
Despite our balance of payments deficits, our external reserves have not fallen because the development policies which we have been pursuing have resulted in capital continuing to flow in here from abroad. We must not, however, allow this capital inflow to blind us to the very real necessity to reverse the present trend towards excessive deficits.
Our aim must be to get back, as quickly as possible, to the moderate external deficits envisaged in the third programme, or, indeed, to improve somewhat on that target in view of last year's large deficit. This year, we must make a start towards this objective by ensuring that the deficit does not exceed £50 million. To attempt deliberately to achieve a much smaller deficit this year might involve excessive disruption in the economy. To allow a deficit markedly in excess of £50 million could expose us to the dangers I have already mentioned. The Government will continue to keep the situation under review and will not hesitate to take such further corrective measures as may be necessary to ensure that the deficit is kept within manageable limits.
Besides the deterioration in the balance of payments, there were two other worrying developments in the economy in 1969. They were the sharp rises in incomes and in prices. Non-agricultural wages and salaries rose by more than 13 per cent, while consumer prices increased by 7½ per cent. These, in conjunction with the increase in the external deficit, were the outstanding features of the inflation which we experienced during the year.
Inflation
Prices here are now moving upwards faster than in most other countries in the OECD and the dangers for the future wellbeing of the country if the trend continues are obvious.
In the last two years the consumer price index in Ireland rose on average by 6 per cent, a rate exceeded by only three other OECD countries— Iceland, Yugoslavia and Portugal. The United States and the United Kingdom both registered increases of about 5 per cent. We cannot sustain such a rate of price increase and have satisfactory economic growth as well. If prices continue to rise and our unit wage costs to increase as they have been doing, our goods will cease to be competitive on either the home or the export markets. Employment will suffer and, before long, our living standards will fall well below the level to which we have become accustomed in the last decade and which we now take for granted.
Inflation, of course, brings many other ills in its train. It discourages saving and the continuing investment required to sustain our economic advance. It increases the cost of public and private borrowing. People on fixed incomes, pensioners and the poorer and needier sections are the most severely hit. If we are to realise our national objectives of an increasing prosperity equitably shared among all, of equal educational opportunity for our children, of better housing, health and social welfare services, we cannot allow the considerable advances already made to be halted by failure to bring the situation under control.
Increases in money incomes
The sharp increases in prices in recent years reflect the rising trend in demands for greater money incomes. Scarcely a year passes without claims for increases well above what the rise in national production would justify. Under threats of disruption of their business, the tendency of employers has been to buy industrial peace at too high a price in labour costs. The inevitable and unvarying result has been increased price levels which negatived part, at least, of the nominal gains. It is significant that the difference between the average annual rate of increase (8½ per cent) in money incomes in the decade to 1969 and the annual rate of increase of national productivity (4 per cent) is roughly equivalent to the increase in the consumer price index in the period.
Despite the evidence of the futility of excessive increases in money incomes, the trend is towards higher claims in each successive round. The enduring damage caused to the economy and the extent to which our potential for greater prosperity is irretrievably lost on each occasion, have attracted widespread comment. Less attention has been given to the real hardship caused to many of our people as a result of the selfish pursuit of larger incomes by their more fortunate brethren. Rising levels of social welfare benefits and the expansion of the social services have provided compensation for some, but there are many ineligible for those benefits who have been unable to prevent their living standards from being disimproved.
The Government are increasingly concerned about the position of the lower-paid and weaker sections. It is clear that no real progress can be made in improving their situation relatively if strong organised groups, by a brutal exercise of their bargaining power, not merely leave little or nothing to spare for anyone else but, by the very size of their inflationary gains, reduce the purchasing power of incomes which are already too small. The proposals which I shall shortly announce are evidence of the Government's determination to ensure that the weakest do not go to the wall in this process.
Total incomes have been rising more than twice as fast as national output, and employee income—which represents 60 per cent of the total—about three times as fast. The Government have availed of every opportunity to bring home to those directly concerned, both employers and unions, the need to act with restraint and moderation if the free collective bargaining system is to survive. At the beginning of 1969, guidelines on income developments for the year ahead were issued by the Government. Later, when the terms of the maintenance settlement were announced, every effort was made to bring home the consequences of a general extension of the settlement.
In the Budget in May, I provided for substantial improvements in children's allowances and other social welfare benefits in the belief that, if the position of the lower-paid workers were improved, existing pay agreements would be allowed to run their course and a policy of moderation adopted when new agreements came to be negotiated. In a further move to improve the income position of the lower-paid, I removed a substantial number of them entirely from the income tax net by increases in personal allowances. Around the same time, a public service pay agreement weighted in favour of the lower-paid workers was negotiated. We hoped that this would set a headline for new agreements in other employments.
In the event, however, while existing wage agreements were allowed to run their course, the inflationary scale of the maintenance pay settlement spread to other categories of workers according as new agreements were negotiated from the autumn onwards. In December the Taoiseach announced that, in the Government's view, increases in overall incomes in 1970 should be kept within a limit of 7 per cent. He suggested that, in this year in new agreements, the increase should be limited to about 30/- a week per adult male worker. Having regard to the expected growth in national productivity, this could not be considered particularly restrictive. The Government backed up this norm for overall pay increases by a policy in the prices field, in an effort to introduce realism into wage negotiations. It was announced that the Minister for Industry and Commerce, when considering applications for price increases, would disallow increases in labour costs attributable to pay increases in excess of 7 per cent or 30/- a week. In this way, the Government are trying to protect the consumer from having to bear the full cost of excessive pay increases.
It is beyond doubt that the principal need at present is for a more orderly and rational development of incomes if we are to bring the present inflationary situation under control and to avoid the widespread disruption which the increasing readiness to resort to strike action is causing. Now, more than ever, with EEC membership as well as free trade with Great Britain in prospect, we need to maintain our competitiveness both at home and abroad and to fight rising costs by every means at our disposal.
The suggestions put forward in the recent NIEC Report on Incomes and Prices Policy are broadly in harmony with views outlined in the third programme. They have already been welcomed by the Government as providing an institutional framework within which a more sensible development of incomes can be considered. Last week the Taoiseach and Government Ministers met the Irish Employers Confederation and the Irish Congress of Trade Unions to discuss the report. The meeting was helpful and constructive, and I look forward to continued co-operation from both sides of industry in putting into effect the report's recommendations.
While, however, institutional changes should help, they will not, in themselves, solve the problem. What is also required is a fundamental change of attitude, based on a full realisation that what is at stake is an increased standard of living equitably shared amongst all our people. If the arrangements recommended by NIEC are approached in this spirit, it should be possible to come to an agreement which would give the economy time to absorb the current wage settlements and avoid the recurrence of similar increases in the future. A development on these lines is essential if present inflationary pressures are to be eased.
Public service pay policy 1970
One of the most significant developments in 1969 was the pay agreement reached in May with the public service committee of the Irish Congress of Trade Unions concerning pay increases for State employees. This agreement made a valuable contribution, in the difficult circumstances then prevailing to an orderly advance in incomes over a wide range of public employments. The term covered by the agreement ended on 31st March last. While I do not underrate the many problems involved, I am hopeful that, with the goodwill and co-operation of the trade unions and associations concerned, it will be possible to make a new agreement on rather similar lines to cover the period from 1st April, 1970, onwards.
Monetary Policy
In the fight against inflation one of the principal weapons is monetary policy. In the past twelve months it has been employed to reduce pressures in the economy while maintaining investment in infrastructure and in the capital equipment necessary for further growth.
Credit restraint will continue to be necessary this year. The Central Bank has accordingly advised the Associated Banks to restrict the increase in lending to approximately the same amount as last year. This would enable bank lending to grow by about 12 per cent which is the maximum increase in lending compatible with the policy objective I mentioned earlier of a balance of payments deficit in 1970 of the order of £50 million. Finance for consumption goods and less essential services will be restricted to ensure that sufficient credit will be available for financing the requirements of productive investment projects and of exports. A scheme of favourable interest rates on credit for the export of capital goods is being prepared and details will be announced shortly.
Savings
Before credit restraints can be removed, we must achieve a substantial and sustained increase in the level of corporate and personal savings. Increased saving is a powerful weapon in the battle against inflation—and one available to most of us. By foregoing current consumption, savers can help to attack the problem at the core. In this way they play a significant part in the development of the economy and in the provision of employment.
New savings scheme
While savings have been increasing in recent years, they are not yet sufficient to finance the level of investment we need. The size of recent wage increases should enable a much larger section of the community to save and I look forward to an increase in the proportion of income saved in the years ahead. So as to give every encouragement to savers, I propose to introduce a new type of saving scheme under which those who save by regular monthly instalments over a period of a year, and retain their savings on deposit for a further two years, will be paid a bonus calculated at the rate of 9 per cent per annum compound interest. This bonus will be free of tax. The attractive terms of the scheme have been specially designed to encourage people to leave their savings intact for a number of years. The administrative arrangements are in train and the necessary legislative provisions will be included in the Finance Bill. The scheme will come into operation in the autumn.
Prize Bonds
Prize bonds continue to attract investment but it has been represented to me that the scheme would be more effective if the bonds were available for purchase at all times. I am happy to adopt this constructive suggestion and hope to introduce the revised arrangements shortly.
Public expenditure
The primary economic strategy of this year's Budget must be to keep the economy, which is already buffeted by the winds of inflation, squarely on course during 1970. This means that our objective must be to reduce the growing inflationary forces. I have already indicated how, in the area of monetary policy, our efforts are directed to this end. Also, I have pointed out that most of us can ourselves contribute to the achievement of this overall objective by saving more.
Public expenditure is a field where reductions are often vociferously demanded—generally, I might add, by people who, almost in the same breath, are urging increased State support for various purposes. The Government have been conscious of the need to moderate its growth in 1970 in order to make the fullest possible contribution to reducing inflationary pressures. To this end, the entire range of the expenditure proposals, both capital and current, for 1970, has been subjected to an exhaustive and critical review since the autumn. As a result, the Estimates presented by Departments have been substantially reduced.
The Government are satisfied that further significant reductions are not possible without policy changes of a major order and without drastically reducing or abolishing some of the services, benefits and supports provided by the State. Many of the significant advances of the 1960's would have to be sacrificed and there would be a serious upset of the existing economic and social patterns. The Government do not believe that measures of this type are necessary.
Current expenditure is particularly difficult to moderate in the short term. About one-fifth of the total is accounted for by the servicing of the public debt, which is mainly determined by the capital expenditure of earlier years. Approximately one-fourth represents the remuneration of the public service, that is, of the teachers, the Civil Service, the Army and the Garda Síochána mainly. About 45 per cent consists of other expenditure by way of grants and other payments in relation to social welfare, education and agriculture. A large part of the remainder represents moneys provided for State bodies engaged in work of a developmental nature. Given the present social and economic policy of the Government, the difficulty of making any substantial further reduction under these heads will be appreciated. Apart from the problem of maintaining the volume of existing activities in the face of steadily rising costs, pressure is constantly mounting for greater expenditure by way of an extension of the scope of the existing services and the introduction of new ones.
Capital Budget 1970-71
The public capital programme dominates national capital formation. It is therefore necessary to provide it with sufficient funds to maintain and, if possible, to increase national investment.
However, in view of the excessive demand pressures now building up, some check must be placed on the expansion of the public capital programme. The programme for 1970-71 has, therefore, been set at a level which represents an increase of 12 per cent, excluding the air companies, on expenditure in 1969-70, as compared with an increase of 15 per cent last year. If wages and other prices do not rise immoderately, the programme should ensure continued economic growth combined with reasonable provision for social investment.
When provision is made for other expenditures of a capital nature such as debt redemption and re-financing, the total of public capital expenditure comes to £223.6 million. After account is taken of the amounts likely to become available from normal domestic sources, a balance of £75 million remains to be found from banks and other sources, including borrowing abroad. Towards this amount, £6 million has already been raised by way of a dollar loan on the international bond market. Part of the balance may be obtained from the International Bank for Reconstruction and Development if discussions at present in progress are successfully concluded during the present financial year.
Current Budget 1970-71
Central Fund services
The estimates of receipts and expenditure published yesterday show that total current expenditure is estimated to cost almost £453 million in 1970-71 as compared with £411½ million in 1969-70; the percentage change is marginally greater than the corresponding figure for last year. The central fund services have risen from £77 million last year to £88? million for the year ahead. This increase arises almost entirely from the heavy Exchequer borrowing required to finance the public capital programme and the relatively high interest charges prevailing, which are an indication of the world-wide scarcity of capital at a time of exceptionally high demand.
As long as we are determined to provide more housing, more schools and hospitals, more factories to provide more jobs, and more development generally, we must be prepared to face up to a growing national debt and to meet the cost involved.
Supply services
The non-capital supply services, which comprise the bulk of current expenditure, are estimated to cost £351.7 million in 1970-71. This is £24 million greater than the amount provided for them last year. This increase, which of course does not include any changes made in the Budget, is accounted for in the main by increases in education (£6 million), health (£5 million), social welfare (£4¾ million), post office (£2¾ million) and agricultural grants (£1¾ million).
Revenue
The estimation of the likely revenue inflow at existing rates up to 31st March, 1971, is fraught with particular uncertainty in view of the exceptional buoyancy experienced last year and the difficulty of predicting the effects of inflation in 1970. However, I have taken the view that last year's buoyancy is likely to continue throughout 1970-71. On that view, the estimate of revenue is some £9¼ million above the estimate of expenditure as presented. Welcome though this is as an easement of the Exchequer financing problem, it is a symptom of the underlying inflation caused mainly by excessive income increases.
The published figures would appear to disclose an opening surplus of £9¼ million for budgetary reliefs. Unfortunately this is not so. The estimates of expenditure provide for the payments which we know will arise this year and which, when the Book of Estimates was being prepared, could be quantified with some precision. As indicated in the White Paper they exclude other contingent liabilities which could not be accurately measured at that stage but which will undoubtedly have to be met during the year. The principal item is the increase in public service pay which is due to be negotiated following the expiration on 31st March, 1970, of the 11th round pay agreement with the various staff associations and representative bodies. Furthermore, there are some associated items which, though considerably smaller, are still of significance and must be taken into account.
Taking a realistic view of these commitments, in the light of an over-all cost of remunerating the public service now in the region of £120 million, I am providing £10 million to cover them. This does not include the cost of any pay adjustments in the post office. As this service is intended to pay its way, these will have to be met by raising post office charges rather than by increasing taxation. My apparent opening surplus is thus transformed into a deficit of £¾ million.
In view of the extent to which I have taken revenue buoyancy and expenditure commitments fully into account, I could not make the usual deduction for errors of estimation. Departments are being informed that they must keep within their allocations and that any unforseen expenditure claims must be met from savings elsewhere.
Budget policy
I come now to the over-all strategy of the Budget. Need I say that it involved difficult decisions on priorities, the balance of advantage and the attempted reconciliation of conflicting requirements? I have been the recipient of a great deal of advice from a wide variety of sources and, while there has been general agreement on the diagnosis of our illness, there has been nothing like unanimity on the treatment to be applied.
The symptoms are easily recognisable. We have dangerous inflationary pressures which are threatening our future prospects for growth and development and at the same time are causing serious social injustice.
The Government believe that one of the major functions of this Budget must be to correct this social injustice to the greatest extent that fiscal action can achieve. This immediately poses the problem of raising considerable sums from taxation, either direct or indirect. I have come down firmly against direct taxation.
The incidence of direct taxation on individual taxpayers is already relatively high and there are sound general reasons for a reduction rather than an increase.
Income tax is paid by a comparatively small section of the community. Furthermore, it has changed significantly in character in recent years and can now represent a considerable burden on a wide variety of small incomes. Its weight falls on many individuals with incomes which are below the level in real purchasing power at which an income tax should normally apply. Nor does the argument which has been advanced for an increase in direct taxation on this occasion for its disinflationary effects really stand up to close examination.
Because of our system of PAYE, for most taxpayers the impact of an increase in income tax is immediately felt in the paypacket and consequently is little different in its effect on pay claims from a corresponding amount of indirect taxation.
In the Budget speech last year I pointed out that direct taxes tend to discourage effort and to have widespread disincentive effect but that significant changes in our direct taxation structure could only be undertaken in the context of a comprehensive recasting of the general pattern of taxation. I am taking a considerable step in this direction this year.
I am fully satisfied that, whatever our difficulties, some relief must be given this year to income tax payers and especially to those with small incomes upon whom it bears very heavily. The reliefs which I shall now mention have been framed as carefully as possible towards this end.
Minimum earned income relief
I propose to introduce a new feature in the earned income relief which will give a minimum allowance of £125 for single and widowed persons and £225 for married couples. The new provision will raise the exemption limits for earnings from £332 to £374 for single persons and from £365 to £399 for widows and widowers. The exemption limit for married persons will be raised from £565 to £649. The new relief will benefit all single and widowed taxpayers with earnings less than £500 per annum and married taxpayers with less than £900 per annum. About 50,000 taxpayers will be removed from the tax net.
Reduced rate of tax
I propose also to make another important change in the income tax system which, while it will be of advantage to all taxpayers, will provide a proportionately greater relief to those in the lower ranges of taxable income. My proposal is that the first £100 of taxable income will be charged at two-thirds of the standard rate, namely at 4s 8d in the £ instead of at 7s in the £. The principal objective of the relief is to introduce an enhanced measure of graduation into the system.
Age relief
For persons over 65 years, age relief is allowed on unearned income at the same rate as for earned income, but it applies only to the first £600 of such income. This allowance will be brought into line with the new form of minimum earned income relief. In the case of a single or widowed person over 65 years of age, there will be a minimum allowance of £125; a married couple will receive a minimum allowance of £225. The limit of qualifying income for age relief will remain at £600 for single and widowed persons but will be raised to £900 for married persons.
Small incomes
For persons with total incomes, whether earned or not, of less than £450, earned income relief or its equivalent is granted, irrespective of the age of the taxpayer. I propose to raise this limit to £500 and to provide that the relief will be a flat £125 where the total income is below that limit. Marginal relief will apply for income slightly above £500.
Wife's earned income allowance
Representations have frequently been made to me by various organisations that the tax code bears harshly on married women who take up employment and, because of its deterrent effect, causes a shortage of labour, very often highly trained, in certain sectors. I propose to increase the present allowance for wife's earned income from £45 to £74. The combined married allowance and wife's earned income relief will then be twice the single allowance.
PAYE
For the purposes of PAYE, the benefit of these various changes will be given by making appropriate adjustments in the employees' tax-free allowances. A special explanatory leaflet will be issued as soon as possible. The new system will come into operation as soon as the revised certificates of tax-free allowances reach the employers.
Cost to Exchequer
The cost of these proposals in the current year will be £7.4 million. The cost in a full year will be £8.5 million.
Agriculture
The vital contribution of agriculture to the development of the national economy is fully recognised by the Government. It is expressed in concrete fashion in the increasing amount of State expenditure in relation to agriculture which last year reached the record level of £90.5 million. Despite significant increases in agricultural output and State support, agricultural incomes continue to lag behind other sectors of the economy.
It is the Government's policy to do whatever is possible to promote a more equitable relationship between farm and other incomes. By far the best way to close the gap is by better husbandry, by improving and rationalising marketing, to increase the output and income of the individual farmer. Unfortunately, as many other countries besides ourselves have learned, this is not always easy to achieve and direct assistance from the Exchequer must be provided on a continuing basis. My problem of course is to find the resources to do all we would wish. The Government have given careful consideration to this issue and have taken into account the representations made by the various farmer organisations in their recent discussions with my colleague, the Minister for Agriculture and Fisheries.
It has already been announced that, as from 1st May, liquid milk producers will be getting an additional 2d per gallon which, with the increase of 1d last February, gives a total increase of 3d per gallon. This represents an additional £¾ million a year for liquid milk producers.
It has also been announced that the prices on which the export support payments for beef and lamb are calculated were being increased by 1½d per lb and 3d per lb respectively as from 6th April. The additional value of this to the livestock and meat industry is estimated at £1¼ million a year of which the Irish Exchequer will bear about £¾ million.
As the decision to increase the support prices for beef and lamb was made after the volume of Estimates was prepared, I must provide in this Budget for the extra cost of £¾ million to the Exchequer. The Government have in addition decided to provide a further £4¼ million in the present financial year making a total budgetary provision of an extra £5 million and bringing total Exchequer support for agriculture this year to £96 million. The additional £4¼ million will be applied mainly for the benefit of producers of beef cattle, creamery milk, sheep and pigs and for certain other items, including farm buildings and horticulture.
The need for developing beef production is clearly indicated by export possibilities and prospective membership of the European Economic Community. It has been decided to provide £1.5 million for the beef cattle incentive scheme in addition to the £2.4 million already included for 1970-71 in the volume of Estimates. This extra provision will enable the Minister for Agriculture and Fisheries to increase the present grant of £12 for all qualifying cows to a new scale of £21 for the first qualifying cow, £19 for the second and £16 for each cow thereafter.
Many farmers, particularly smaller farmers, are still largely dependent on creamery milk. These are faced with increasing wage and feed costs. To improve their position, the Government have decided to provide an additional 1d per gallon on up to 7,000 gallons a year for each supplier. This increase will apply as from 1st April, 1970. The cost to the Exchequer this year is £1 million.
The Government are especially anxious to encourage and assist sheep farming, both because the long-term market prospects for lamb seem reasonably good and because in the main our sheep farmers are less favourably situated than other farmers. We have decided to provide an additional £1 million for sheep farmers in the form of an increase in the hogget ewe grant from £1 to 30s, to extend this grant to all areas, and to increase the mountain lamb subsidy from £1 to 30s.
To help offset rising labour and feed costs, the guaranteed minimum prices of top-grade pigs up to 150 1b weight will be increased by 10s per cwt dead-weight with effect from 4th May, 1970. I am providing £240,000 for increases in the cost of bacon and pork export price support during the year.
The farm buildings scheme will be rationalised and improved at a cost of £260,000.
A new scheme of grants for mushroom units will be introduced at a cost of £150,000 and a sum of £10,000 provided to assist the marketing of horticultural produce.
Other additional aids and incentives include an improvement in the milk cooler grant scheme—£10,000—the promotion of group farming (£25,000), a classification system to ensure better presentation and marketing of Irish beef abroad (£50,000), the establishment of a shorthorn herd-book and intensified promotion of dairy products on the home market (£50,000).
I believe that these measures represent a well-balanced and effective package of aids and incentives and that farmers generally will recognise that, in the serious and difficult situation in which we find ourselves, we have made a special effort to meet their claims.
Social Concern
I come now to the social aims of the Budget. In pursuance of the policy enunciated in the programmes for economic expansion, the Government have consistently raised the level of the social welfare payments well above what would be necessary merely to offset increases in living costs and so have brought about a positive and real improvement in the position of the recipients. At a time when organised bodies and groups representing a wide variety of interests can bring pressure to bear in various ways for excessive income increases, there is a particularly strong moral obligation on all of us to ensure that those who cannot speak effectively for themselves are not left behind.
A genuine and widespread feeling of social concern is the hallmark of a humane and civilised society. It obliges us to see that the poor, the sick, the unemployed and the aged get as big an income increase as can be afforded. It also manifests itself in greater consideration for their physical and mental environment and in practical efforts to lighten their lot and make their lives brighter and better. While extreme poverty is, fortunately, no longer a general problem in this country, the human spirit can be wounded by the apparent indifference of the well-off to the deprivation of others. Many voluntary organisations are devoting their efforts to meet these needs and often find that sympathy and compassion are more appreciated than material help.
Social welfare
For some year's past, it has been the practice to give flat-rate increases in insurance and assistance rates, eroding somewhat the differentials which recognised the contributions paid by insured persons towards the cost of their benefits.
This year, it is proposed to give graded increases, involving higher amounts for the insurance classes. In this year's circumstances, these increases are considerably greater than heretofore.
For example, the basic rate of contributory old age pension will be increased by 17s 6d a week to £5 a week, and the non-contributory old age pension by 10s a week to £4 5s a week.
The personal rate of disability and unemployment benefit will be increased by 15s a week to £4 10s a week, and the personal rate of unemployment assistance by 10s 6d a week to £3 12s and £3 6s a week in urban and rural areas, respectively.
Widow's contributory pension will be increased by 15s and 12s 6d a week, as appropriate, to £4 10s a week, and the widow's non-contributory pension by 11s 6d a week to £4 5s a week.
The increases in other rates follow a broadly similar pattern.
A new scheme of assistance for deserted wives will be brought into operation on 1st October next. Under the scheme they will qualify for a weekly allowance equivalent to the non-contributory widow's pension which as I have said will then be £4 5s per week.
A new scheme was introduced the year before last and extended last year whereby an allowance is paid to a person who looks after certain incapacitated pensioners at home. This is now being extended to cover necessitous persons over 70 years of age, whether they are pensioners or not.
New insurance schemes for limited retirement pensions, at age 65, invalidity pensions and death grants will be brought into operation on 1st October next.
Last year, children's allowances generally were substantially increased at a net cost of £5 million a year. This year, I believe that it is necessary again to come to the assistance of families with children. It is proposed, therefore, to give an increase of 2/6d a week in the allowance for every dependent child in both the contributory and assistance classes. In addition, the age limit for these allowances is being raised to 18 years for all such children.
Under the general scheme of children's allowances, the present allowance is forty shillings a month for each qualified child after the first two. This allowance will be increased by five shillings in respect of each such child with effect from 1st October, 1970. The present allowances of ten shillings for the first qualified child and thirty shillings for the second qualified child remain unchanged. As with the increases granted last year, the increases now proposed will be recovered in part from persons paying income tax by reducing the allowance under the Income Tax Acts for each child who benefits from the increase.
The disabled persons maintenance allowance and the infectious diseases maintenance allowance, administered by the Department of Health, will be increased in line with the improvements in the social assistance rates.
The increases in the assistance rates and in the Department of Health allowances will take effect, as usual, from the beginning of August next. The increases in insurance benefits will be paid from the beginning of October, three months earlier than usual, and will coincide with the effective date for the increases under the children's allowances scheme.
The various increases in rates and the extension of services will cost the Exchequer £8.8 million in a full year, and £5.4 million in this financial year.
Care of the aged
The recent Report on the Care of the Aged examines the problems and difficulties confronting old people. It suggests guidelines for the co-ordination and improvement of the services catering for their needs and how public and voluntary organisations might best direct their efforts in this field.
The Minister for Health accepts in principle the recommendation that a National Council for the Aged be established and in the meantime will appoint a social work advisor in his Department who will visit local areas and encourage the establishment or extension of voluntary agencies to take care of the aged. He visualises a continuing extension of activity over the whole field of community service and is considering how best local community association development can be promoted, and the formation of some national organisation for this purpose.
The recommendations in the recent report aim at improving the existing services and providing new ones designed to enable aged people to remain in the community and avoid the need for institutional care. Many of the recommendations have already been implemented or are in the course of implementation. Many others have been accepted in principle and will be put into practice as soon as possible.
A basic concern must be to provide an adequate income for elderly people. With this end in view, old age pensions, both contributory and non-contributory, have been increased substantially in the past decade. This year again they are being increased further as I have already announced. The increases are well above what would be needed to offset the rise in living costs and so they should give the old age pensioners a modest improvement in real terms in their standard of living.
One of the most significant and encouraging developments in recent years has been the part played by voluntary bodies in undertaking specialised services such as home-nursing, meals-on-wheels, laundry services, community centres and so on. I would like to pay a sincere tribute to them for their dedication to the cause of providing care and comfort for those in greatest need. Organisations of this kind, because of their close acquaintance with local conditions and because they can be more flexible and compassionate in their approach, are able to ensure that public money provided for social and charitable purposes is spent to the very best advantage.
I have come to the conclusion that I should endorse in a very special way the work done by these voluntary organisations and provide practical assistance for them to intensify and extend their valuable work. The Health Estimate already includes £100,000 for grants by health authorities to these voluntary organisations. I am adding an extra £150,000 this year to this sum making a total provision of £250,000 for this purpose.
Free travel
The Budgets of 1967 and 1968 made free travel, free electricity and free radio and TV licences available for certain old age and blind pensioners. Last year, these schemes were extended in full to persons in receipt of Northern Ireland or British old age pensions.
It has often been represented to me that, if the husbands or wives of veterans of the War of Independence or of old age and blind pensioners are under 70 years of age, they are not eligible for the free travel and that this can detract unduly from the value of the facility where this type of married couple is concerned. I propose therefore to extend the concession to them.
Public service pensions
Inflation bears especially hard on pensioners. Last year I indicated that I had accepted the principle of parity for State pensioners but that because of the cost involved we could only move towards this position over a number of years. I went a good deal of the way in 1969 by bringing pensions up to a level based on the rates of pay in force on 1st February, 1964. It has been decided to make a further advance this year. The general effect for most pensioners who retired before 1st June, 1968 will be to relate their pensions to the rates of pay in force on that date. This involves an average increase of about 14 per cent for the various groups of public service pensioners, including retired civil servants, gardaí, teachers, members of the Defence Forces and local authority pensioners and their widows where service terminated before the eleventh round. Corresponding increases will be made in military service pensions and other Army pensions, including special allowances. The increases will apply as from 1st August next.
I have offered a new retirement scheme to temporary full-time State employees who have not hitherto been pensionable. Lump sums will be paid on the same basis as applies to established staff. The pensions will vary with the amount of social welfare benefits payable in each case. The scheme represents a major improvement in the terms of employment of upwards of 10,000 unestablished State employees. These pension improvements will cost £1.16 million in the current year and almost £2 million in a full year.
Itinerants
One of the welcome signs of an awakening sense of social concern and community responsibility has been the growing interest in our itinerant population and the widespread anxiety to reduce, if not eliminate, the particular hardships which are a feature of their mode of life.
Under the suspices of the Department of Local Government, a great deal of dedicated voluntary work has been put into helping them to settle in permanent locations and to become integrated into the community. I am satisfied that if this work is to progress as rapidly as we would wish, additional financial assistance is required to encourage local authorities and voluntary committees to intensify their efforts. This assistance will include subsidy for local authorities of up to 100 per cent of the cost of providing a fully serviced camping site, with separate accommodation for each family, on lines approved by the Minister for Local Government. In appropriate cases, accommodation provided for itinerants by the repair or reconstruction of existing houses will qualify for the subsidy.
It is also proposed to increase from 50 per cent to 90 per cent the existing subsidy payable to local authorities in respect of social workers employed wholly or partly on the work of rehabilitating itinerants. Assistance will also be given towards the cost of accommodation provided for itinerant families by voluntary committees.
The education of itinerant children presents special problems and financial assistance in certain cases will be made available to voluntary committees engaged in this work. The extra cost to the Exchequer will not be great in the beginning, but it will, of course, rise in proportion as the improved facilities are, hopefully, increasingly availed of.
Aid to developing countries
It is salutary to remember that general standards of living in Ireland are, even at the lowest levels, much better than those in many countries less fortunate than ours. One of the aims of the third programme is to increase aid to poorer countries—the developing countries as they are usually called. We have been helping these countries to the extent of more than £1 million a year, excluding private contributions. For 1969-70 the figure was £1.4 million, the increase mainly taking the form of extra purchases of World Bank bonds by the Central Bank. The subject of our future contributions to the developing countries is currently under review and it has been accepted in principle that we will increase our subscription to the International Development Association. We will also continue to increase our contributions in other ways according as our resources permit.
Conservation
This is European Conservation Year and we in Ireland are reviewing the growing problems presented by urbanisation and by rapid technological change and development. Conservation is about people and their natural surroundings and there is need of widespread enlightened regard for the preservation of our basic resources.
The greater leisure opportunities that we now enjoy create an increased dependence upon the natural environment for recreation and relaxation and, as a consequence, call for increased understanding, greater care and better management of that environment. We possess a rich natural heritage of great scenic and recreational value. Our rivers, lakes and coastal waters have as yet suffered little and in the main we enjoy freedom from the worst problems of atmospheric pollution.
Society at all levels must play its part and the Government must give direction and leadership to this collective effort. We have a large number of institutions which have contributed much to different aspects of nature conservation. The campaign sponsored by the Irish National Committee for Conservation Year has already done much to increase public awareness of the need to ensure that our environment retains its quality and that all our natural resources are wisely used.
To give practical assistance to this valuable national endeavour, I am making a special allocation of £100,000 to be administered by the Minister for Lands as the Minister primarily responsible for conservation. In the main this extra sum will be devoted to meeting the immediate organisational costs of the development of a comprehensive national programme for conservation. As improved facilities for environmental studies are also needed, part of it will be spent on building a new field study centre at Gartan Lough in County Donegal. This new centre will be available for environmental field studies by parties of teachers, university and secondary school students, and professional groups concerned with aspects of the environment; it will also provide a base for research activity.
Western development
The development of our western counties occupies a central and fundamental position in all our economic planning. A fair amount of success is now being achieved in development generally and particularly in industry, which is expanding throughout the entire region. The Industrial Development Authority which has primary responsibility for industrial promotion has been reorganised and strengthened and is establishing new regional offices to spearhead an intensive drive in each region in close co-operation with the county development teams, local authorities and local groups.
It is believed by many of those actively engaged in the work of western development that, in addition to the general campaign for industrial development, a special effort at local level is needed and can be generated in the smaller towns. The county development teams, working with local groups, will initiate a promotional campaign to attract projects suitable for location in these towns.
Experience has shown that very often success or failure in the establishment of a small local industry depends on the immediate availability of a premises in which either staff training or the operation itself can commence immediately. Suitable premises are not generally available. It has been decided to provide in each western county a limited number of prefabricated buildings for use in such cases. When permanent premises have been secured, the prefabricated building can be moved to service the next project to come along.
The cost of the promotional campaign and of the temporary buildings will be borne by the Special Regional Development Fund, which has already been widely used in providing facilities for development opportunities. A sum of £300,000 for the fund is already included in this year's Estimate for my Department and I am providing an additional £100,000 in the Budget for the fund for these purposes.
As a further incentive to industrial development in the west, the Minister for Industry and Commerce is relaxing the conditions on which the small industries programme operates in that area. He will shortly announce an extension of the upper limits of employment and capital investment for western industries.
The Gaeltacht
The economic and social development of the Gaeltacht continues to be a main aim of Government policy. This is reflected in the increased provision in the Estimates which will enable the Minister for the Gaeltacht to expand various improvements schemes, such as development of co-operatives, holiday accommodation, et cetera. In addition, substantial additional capital is being made available to Gaeltarra Éireann for grants for various industrial and other projects.
Additional taxation
When the cost of income tax reliefs, additional aid to agriculture, social welfare increases and other benefits are added to the opening deficit, I find myself requiring £20 million by way of extra taxation.
I have given careful consideration to the manner in which the total amount of money required for these purposes could best be raised. I have already indicated why I do not propose to have recourse to direct taxation. If the sum were to be raised solely from the "old reliables"—beer, spirits, tobacco and petrol—such high rates would be needed that diminishing returns would almost certainly result.
The rates of the selective wholesale tax have been increased twice in the past sixteen months. The additional sum I need could not be raised from this source without pushing up rates to undesirably high levels with, perhaps, the risk of dangerous side-effects on particular industries, and disturbing seriously the existing patterns of trade.
Turnover tax
The turnover tax, with its low rate of 2½ per cent, which has remained unchanged since it was introduced in 1963, and its broad tax base which covers virtually all goods and services, offered the best prospect of producing the amount required without significantly affecting the price of any particular commodity or service, or prejudicing the operation of any particular sector of production and distribution. The Government have decided, therefore, to increase the rate of turnover tax from 2½ per cent to 5 per cent with effect from 1st May, 1970. It is estimated that this will yield an additional £20 million this year.
I have already outlined the purposes to which this money will be devoted. I do not think that there will be any substantial opposition to the various benefits on which the money will be spent. There should not, therefore, be any great cause for complaint at the extra taxation required. In many ways the turnover tax is the fairest method for raising so large a sum. It is a tax on spending of almost every description. Those who spend most, pay most in tax. Each individual whose expenditure covers more than essentials can decide to moderate the impact of the tax by reducing his spending; if the yield of the tax falls short of expectations because of increased savings, I shall not complain. For a large number of wage and salary earners, the extra cost of essentials will be fully offset by the income tax reliefs I have already described. The increases under the social welfare code will more than compensate for the increase in living costs since the last revision of that code and for the increase in those costs likely to occur in the current financial year. I want to emphasise that the rise in prices attributable to the proposed increase in the turnover tax should be little, if anything, in excess of 2½ per cent, that is to say, about 6d in the £.
Before deciding to raise the rate of this tax, I gave very serious consideration to the economic effects likely to flow from it. Its impact on the economy is, in my view, not likely to be any greater than would the raising of the same amount by increasing the other indirect taxes, or the direct taxes, or any combination of them. Income increases already secured and still being obtained in the course of recent rounds have so far exceeded what could be rationally justified that they can, without any hardship, absorb the effect of the increase in turnover tax. I am seeking, in as comprehensive a way as possible, to cushion adequately the many sectors who have not participated in these increases. The tax on essentials will still be almost the lowest charged in any of the countries of continental Europe. Exports, of course, are not liable to the tax and will therefore be unaffected by it.
Added-value tax
The new structure will represent a system of sales taxation under which about two-thirds of the yield will come from a broadly based retail sales tax at a relatively low rate, and the remainder at higher rates from less essential goods. This system bears some resemblance to the system of added-value tax which is prescribed for the European Economic Community and which we will have to adopt as a condition of membership. A White Paper was issued in June, 1968, in which the nature and operation of an added-value tax was fully discussed.
I have come to the conclusion that the added-value tax is the most efficient system of collecting a turnover tax extending to the retail stage. It is also the form of sales taxation most suited to modern conditions. I would stress that such a change will basically merely be one in the method of collection— under the added-value system the tax is payable in fractions over the various stages of production and distribution instead of in one sum at the wholesale or retail stage. The system I have in mind will contain special provisions for small traders and for farmers and I am confident that it will not entail any serious problems for traders generally. It is the intention to have extensive consultation with all the trading and other bodies affected with a view to evolving a system which will be fully understood by all concerned and will be so designed as to facilitate them in every way possible within the framework of the tax.
Report of public services organisation review group
This completes the strictly budgetary part of my Financial Statement. Before I come to my conclusion, there is one other important matter to which I wish to refer.
The report of the public services organisation review group, which was published last September, contains a wide range of far-reaching recommendations for the reorganisation of the whole public service. Broadly, the report covers three main subjects—the structure and organisation of the public service, the management of that service and the distribution of functions among Departments of State and between Departments and other bodies. The central feature of the report concerns the arrangements for the overall organisation and management of the public service through the functions of planning, finance, organisation and personnel. The Government have decided, in accordance with the group's recommendation, to establish in Departments specialised staff units for these functions, separate from the executive functions of Departments. A first task of these units will be to examine systematically the executive operations so as to produce the most efficient allocation of responsibilities. The guidelines for each Department contained in the report will provide an excellent starting point for this examination.
The report makes a number of recommendations in regard to a central co-ordinating public service unit to operate under the Minister for Finance. The future shape of this unit has been engaging the Government's attention for some time. The Government accept the group's conclusion that the organisation and personnel functions should be strengthened and that new institutional arrangements are desirable. I hope to announce detailed proposals in the near future.
The group also identified a number of problems for immediate attention. In accordance with their recommendations, early discussions will take place with staff associations with a view to improving the present system of promotion at higher levels. Management advisory committees, consisting of the secretary and all officers at assistant secretary level, will be set up in Departments in order fully to involve the top staff in overall management; these committees are already in operation in some Departments. The adaptation of recruitment procedures will be continued. Consideration of other aspects of the report is proceeding.
Modern Ireland needs a modern public service. The Devlin Report provides a blueprint of how this might be achieved. The Government are determined to carry out the changes needed to ensure that the public service is efficient, economical and adaptable.
This is the first Budget of the nineteen seventies—a decade which offers hope of great technological advances and social improvements. In the sixties we were determined to shake off the economic stagnation and depression which we had tolerated far too long. We succeeded beyond the expectations of most.
The seventies hold problems of a different kind. Steady economic growth, gradually increasing employment and soundly based prosperity are well within our capacity provided we are willing to wait until the harvest and not try to pluck the fruit before it is ripe. In the past year or two we have shown signs of an impatient spirit, a wish to enjoy the product of our labour before we have earned it. This desire for advance payment is mortgaging the national future and is self-defeating. We have had an ample evidence of how costs rise when we try to take more in incomes than the increase in the national product. Nobody gains in the long run from this but many suffer immediately. I trust it is not too much to hope that we may have learned that lesson from the last decade and may be guided by it now.
We may for a while be able to achieve economic progress and increased employment in the face of rising prices and growing external deficits. This would, however, be a shortsighted policy. If we are to avoid economic disruption and upset, we must contain and reduce the inflationary pressures in the economy. This year we are aiming at a reduction—to £50 million or even less—in the external deficit. I have already made it clear that, if there is any danger that this objective may not be achieved, the Government will introduce further measures of restraint.
Our success in the field of economic growth has given us a greater awareness of the need to ensure that its fruits are justly distributed. Ours should not be a society of which it can be said that the rich get richer and the poor poorer. Our first concern must be to provide a decent minimum standard for all our people and to raise that standard progressively as our national prosperity advances. We should be proud to proclaim that those in greatest need have the first claim on the fruits of our progress.
We are a people who in the centuries of hardship and adversity were renowned for our concern for each other. I refuse to believe that this noble tradition will disappear at the first taste of material prosperity.
This Budget seeks, by a judicious redistribution of incomes, to protect those worst hit by inflation from its severest impact. If its purpose is recognised and its message of social concern accepted, then the one tax change it contains will be looked upon simply as a tempering, in the interests of justice, of increases already received and not as a stimulus to further demands. I believe that it will, and that a balance of equity having now to some extent been restored, all sections will combine in restraint to give the nation and its economy the respite it urgently needs.
SUPPLEMENT TO FINANCIAL STATEMENT
ECONOMIC GROWTH
1969 was the final year of a decade of exceptional progress in Ireland's economic history, a decade which opened with the country heavily dependent on the agricultural sector and on agricultural exports, which saw the spread of economic planning techniques in the public and private sectors and which witnessed the transformation of the country into an expanding and increasingly industrialised economy. In real terms, our GNP grew by almost 50 per cent over the ten years 1960/69 while the sectoral product of industry almost doubled. In 1959, over 35 per cent of the labour force were engaged in agriculture and only 24 per cent engaged in industry. Today, the numbers engaged in industry exceed those engaged in agriculture. This means that more of our labour-force are in better-paid, more productive jobs, average hours worked have fallen, and unemployment and emigration have been reduced.
The challenge of growing competition
All this has been achieved against a background of increasing competition on world markets. Most of the principal importing countries, including the UK, have consistently followed highly protectionist agricultural policies. On the other hand, our industrial sector has faced the growing challenge of the international movement towards free trade, represented in particular for us by the Anglo-Irish Free Trade Area Agreement and the prospect of membership of the European Communities. In these circumstances, the support extended to the agricultural community and the various tax-concessions and incentives offered to industry have undoubtedly been of key importance in ensuring a successful transition. In the depressed years of the 1950s, the idea was current that our economy was so dependent on external trade that we could do little to plan our own development. Today, even though a much higher proportion of our GNP is dependent on foreign trade, we can refute such a defeatist outlook and, backed by the experience of a decade of successful economic development, look forward to the continuing expansion of the economy with much greater confidence than seemed possible ten years ago.
Industrial output and exports
The expansion of the industrial sector has been outstanding. Since 1959, when the first Programme for Economic Expansion commenced, manufacturing output has increased in volume at an average annual rate of 7 per cent; over the decade as a whole it rose in value by an estimated £500 million—by 95 per cent in current terms and by nearly 70 per cent in real terms.
Exports have provided the basis for this development. Industrial exports have increased in value from £51 million in 1960 to some £218 million in 1969, including £38 million from the Shannon Industrial Estate; the increase in volume amounted to over 240 per cent. Industrial products now account for about one-half of our visible export earnings compared with about one-third of a much smaller total in 1960.
State aid to Industry
Much of this unprecedented growth can be attributed to the system of generous State aids and incentives to private industry developed over the years. First introduced in the 1950s, this system was improved and extended during the past ten years to ensure that industry would make the maximum contribution to the growth of the economy. New industry and adaptation grants amounting to £70 million were approved by An Foras Tionscal in the ten years ending 31 March, 1969, of which £34 million had been paid by that date. The Industrial Credit Company provided industrial firms with capital amounting to over £42 million, of which about £32 million represented direct financial aid in the form of loans and investments. The special tax reliefs applicable to new exports and capital investments have also provided a powerful stimulus to industrial expansion; some idea of their value to industry may be gained from the fact that they are estimated to have cost the Exchequer about £10 million in 1968/69 alone.
A variety of other State measures have supplemented the financial and fiscal aids, all of which were designed to evoke a rapid development of industry over a broad front; these include the promotional activities of the Industrial Development Authority, Córas Tráchtála and the Shannon Free Airport Development Company, the scheme of technical assistance grants, industrial training schemes, State-sponsored industrial estates, the Small Industries Programme and other specialist and advisory services provided by a number of publicly-financed organisations operating in this field.
Clearly, State assistance for the industrial promotion programme has been effective in generating the desired momentum of expansion. Fixed capital investment in manufacturing industry has risen strongly and is estimated to have amounted to a gross figure of well over £300 million in the ten-year period ending in 1969; over 350 State-assisted enterprises, representing a total investment of £100 million (including working capital), were attracted from abroad. Some 50,000 new industrial jobs have been created in that time, with the annual increment increasing in recent years.
These figures reflect solid achievements in the national drive to expand the industrial sector. The economy now has a broader and more sophisticated industrial base on which to build in the seventies.
Manpower Policy
Considerable progress is being made in implementing manpower policy. AnCO now have three training centres in operation at Shannon, Waterford and Galway, which can train about 1,000 people a year. Priority in these centres is given to training unemployed or redundant workers, including those who have left agriculture, to semi-skilled level. It is encouraging that those trained in the centres have been welcome in industry.
Training at all levels in industry must be improved. The main incentive will be the levy-grant system provided for in the Industrial Training Act which AnCO aim to have in full operation throughout manufacturing industry before the end of 1972. To reap the full benefits of this system it is essential that industry be equipped in time with the specialist skills needed in industrial training. An Industrial Instructor Training Centre has been opened in Dublin, and the Irish Management Institute, in consultation with AnCO, are running courses in the management of industrial training.
Manpower policy aims at making better use of the undoubted aptitudes of Irish workers; it also aims at making the working of the labour market more efficient and more humane. For this reason, a National Manpower Service has been established to take over responsibility for the placement and guidance functions from the Employment Service. It will aim at giving individual workers informed, objective and sympathetic advice about their employment problems.
Welfare and Economic growth
The increased prosperity brought about by the rise of almost 50 per cent in the real gross national product over the decade is reflected in a betterfed, better-housed and better-educated community. In the interests of fairer redistribution of wealth, the Government have applied a substantial share of this growing affluence towards financing substantial improvements in the social services as well as higher supports to the agricultural sector.
In 1959/60 total Government expenditure (including the public capital programme) amounted to £172 million or 27 per cent of GNP. Last year (1969/70) the total had risen to £588 million or about 41 per cent of GNP. This massive allocation of resources to purposes for the common good laid the foundation for the welcome improvement in general living standards that we experienced in the sixties.
EDUCATION
In 1959/60 public expenditure on education was £19¼ million. There were 492,000 pupils in primary schools, about 100,000 in secondary, vocational and technical schools and somewhat less than 11,000 in universities and colleges.
Ten years afterwards, in 1969/70, public expenditure on education has increased almost four-fold to £70 million, primary school numbers have remained fairly static: but there has been an increase of 100 per cent in the numbers attending full-time second level education and there are almost 19,000 students attending universities and colleges—an increase of over 70 per cent. The bare figures, however, only hint at the revolution in education that has taken place in the last ten years.
Primary education
In primary schools a new child-centred curriculum was introduced and is in operation in about 200 schools as a pilot project. It will be extended gradually to all primary schools as teachers acquire the necessary expertise and experience. Almost 160,000 new pupil places have been provided in modern schools with the latest standards of lighting, heating, cloakroom and sanitary facilities. Children living long distances from school may avail of the free transport scheme. There have been extensions and developments in the provision of facilities for mentally and physically handicapped children and the provision of further facilities is currently being examined.
Second-level education
At second level the decade saw the establishment of State comprehensive schools, the provision of a common intermediate certificate for secondary and vocational schools and the introduction of a generous scheme of grants for secondary school building. Then, in 1966, the free post-primary education scheme and free transport scheme were introduced together with rationalisation of the post-primary curriculum to provide a comprehensive range of subjects and facilities to suit each student's needs and abilities. In 1968, the foundation of the Career Guidance Service was laid when 32 selected teachers attended a Departmental summer course in guidance techniques. A further 90 teachers undertook a similar type course in 1969 and it is proposed to hold courses each year until the services of a guidance teacher are available in each post-primary school.
Technical and technological training
To cater for the expanded demand for skilled technical personnel as envisaged in the OECD report published in December 1964, a number of regional technical colleges were planned. Five of these are already in operation in Waterford, Dundalk, Carlow, Sligo and Athlone and it is expected that a further one will be opened in Letterkenny next September. The contract for the Galway college has been signed and the Cork college is at an advanced planning stage. A site is being purchased and planning has commenced on the Institute of Higher Education at Limerick which will cater mainly for the higher technological needs of this region.
University education
Increased demand in the sixties for university education has led to an ever-increasing involvement of the State in the financing of university institutions. In 1959/60 the State provided almost £1 million for universities; in 1969/70 the corresponding figure was in the region of £7½ million. In order to facilitate a continuous review of the demand and need for higher education and to further its development in the most efficient and economic manner possible commensurate with the maintenance of a high academic standard, the Higher Education Authority was set up in August, 1968, and will shortly be established on a statutory basis.
SOCIAL WELFARE
Growth in outlay
Total expenditure on income maintenance—employment contributions as well as public outlay—almost trebled between 1959/60 and 1969/70 rising from £33½ million to £96¾ million. Government expenditure on social welfare rose from £25½ million to about £59¼ million. During this period, increases in social welfare payments substantially exceeded the rise in the cost of living with the result that the old, the unemployed and other under-privileged classes of our society are now far better off in real terms than they were in 1960. For example, in 1960 a married man on unemployment benefit with three children received a total of 61/- per week, whereas today he receives £8.19.0., virtually a three-fold increase, compared with a rise of 54 per cent in the cost of living.
Expansion of coverage
Apart from the substantial improvements in rates of benefit, the range of social welfare services is far wider than it was ten years ago. We now have old age contributory pensions, occupational injuries benefit, allowances for home-care for incapacitated pensioners and free travel, electricity and television licence schemes for pensioners. In addition, there have been notable improvements in existing schemes, in the provision of allowances for children of old age pensioners, the liberalisation of the unemployment assistance means test for smallholders, the abolition of the employment period orders, the doubling of the period during which unemployment benefit may be received, the continuation of payments for children of widow pensioners to age 21 where the children are undergoing full-time education, and the extension of the duration of the cheap fuel scheme by two months.
On the basis of the pre-budget level of services, Government expenditure on social welfare in 1970/71 will be over £64 million, while total income maintenance expenditure will be almost £106 million.
HEALTH SERVICES
The enactment of the Health Act, 1970, which provides the legal basis for the pattern on which the health services will be structured during the seventies, makes it appropriate to look briefly at what has happened in this field in the sixties.
The total of current and capital expenditure on health, inclusive of payments of the deficits of the voluntary hospitals, rose from £19 million in 1959/60 to an estimated £61 million in the past financial year. This steep rise illustrates the extent of the improvements made.
The financing of the health services has given rise to considerable problems at both local and central levels. The Exchequer has come to the aid of the ratepayers to a degree significantly beyond the 50 per cent which is its statutory obligation. In 1970/71, grants to health authorities will cover 60 per cent of their total health costs. If account is taken of the health element in the payment of the agricultural grant, three-fourths of public expenditure on health is now borne by the Exchequer. As well, the Exchequer makes grants-in-aid to cover the deficits of voluntary hospitals, thus reducing the cost to the health authorities for Health Act patients treated there. This grant-in-aid was £2¾ million in 1969/70 and an estimated £3.2 million in 1970/71. While the health authorities must continue to contribute to the financing of health expenditure, the national character of these services is acknowledged by the fact that the Exchequer bears such a high portion of their cost.
In 1966 the income limit for the middle income group was raised from £800 to £1,200, thereby rendering eligible a substantial additional number of persons for certain health services, of which the hospital services would be the most important.
Any major swing in the direction of free-for-all services would have been intolerably costly for the national economy and, indeed, would be possible, in the foreseeable future, only by calling on resources essential for development purposes, a diversion which would be self-defeating since it could not be afforded at this stage. However, we should not lose sight of what can be fairly described as the impressive advances made during the sixties both in the extension of the scope and the raising of the standards of the health services and the progressively larger sums made available to finance them.
AGRICULTURE
The ever-growing amount of State aid to agriculture reflects the Government's desire to promote the agricultural industry and enable the farming community to contribute to, and to share in, the national economic expansion. It consists of expenditure on education, research and advisory services, grants and subsidies to reduce production costs and increase productivity, and market aid and price supports.
The level of Exchequer assistance, which is now running at £90 million a year, has increased dramatically. It was £26 million in 1960/61, £54 million in 1965/66 and £77 million in 1968/69.
New schemes introduced during the past decade included support for beef, mutton and lamb exports, the calved heifer scheme, the brucellosis eradication scheme, the scheme of headage payments for farrowed sows and mountain sheep, the incentive bonus scheme for small farmers and the beef cattle incentive scheme. The largest single item in the present programme of State aid is support for milk and other dairy products which absorbs £30½ million, or one-third of the total, as compared with little over £2 million ten years ago.
The massive aid to agriculture is reflected in the growth of agricultural exports which doubled in the ten years to 1969. Cattle and beef are the main export items and last year these amounted to £87 million or 53½ per cent of agricultural exports. Other major agricultural exports last year were dairy produce: £21¾ million; bacon and pork: £14½ million; mutton and lamb: £5 million; and horticultural products: £5 million.
Wider use of modern machinery, extension of rural electrification and the application of new techniques have eliminated much of the drudgery traditionally associated with farm working. Total agricultural incomes at current prices amounted to little short of £200 million last year and were 50 per cent higher than the figure for 1960. When account is taken of the fall in the numbers living on the land, this represents a substantial improvement in income per head in farming.
PUBLIC CAPITAL PROGRAMME
Over the past ten years expenditure on the public capital programme, the main component of the capital budget, has increased fourfold. It amounted to £44 million in 1959/60, the first year of the first programme for economic expansion. It rose steadily during the period of that programme and was then stabilised in the region of £100 million over the years 1964/65 to 1966/67. Expansion took place again in 1967/68 and the programme is now not far from £200 million. It has exercised a strong influence on national investment and economic growth and has been one of the most important features of the economic development of the sixties.
During that decade there have been significant changes in the relative composition of the programme which reflect Government policy in regard to social and economic development. Investment in housing, education and health has more than kept pace with the overall increase in the programme and has represented about one-third of total investment for the last few years. There has been a steady increase in the proportion devoted to industrial grants and credit in pursuance of the policy of increasing industrial development under the three programmes for economic expansion. Expenditure on fuel, power and telecommunications has maintained a fairly constant proportion as has investment in transport and other essential infrastructural services which are needed in a developing industrial economy. On the other hand, investment in agriculture has declined proportionately over the period, mainly because of a reduction in expenditure on tuberculosis eradication following the achievement of attested status in the mid-sixties.
HOUSING
There has been a dramatic rise in housing output, in the reconstruction and improvement of dwellings and in expenditure on the provision of sanitary services facilities during the past decade.
Over 13,800 dwellings (of which about 4,650 are local authority dwellings) were completed in 1969/70, compared with 6,342 in 1959/60. Capital expenditure on local authority dwellings has risen from £3.3 million to over £17 million in the ten years and the subsidies on borrowing for local authority housing were £8¾ million in 1969/70, compared with £4½ million ten years ago. In all, more than 98,000 dwellings were completed in the sixties at a total cost to the State and to local authorities of £284 million in capital and subsidies. In the period 1967/68 to 1969/70, £3 million was provided for a special land acquisition and development programme in the Dublin area to assist in the provision of reasonably priced sites for private housing. As a result, the housing authorities concerned have over 50,000 sites available for housing schemes.
The total number of reconstruction grants paid in the sixties was over 92,000 compared with almost 53,000 in the preceding ten years. The further improvement of dwellings by the installation of water and sewerage facilities is evidenced by the almost seven-fold increase in the number of grants paid, from about 1,500 in 1959/60 to just under 10,000 in 1969/70. The total number of improvement grants paid in the decade was over 60,000.
In addition, capital expenditure on sanitary and miscellaneous services has grown from £1½ million to £5½ million in ten years. Loan charges incurred by local authorities on sanitary services capital works continue to be subsidised. Payments of State subsidy in 1969/70 amounted to £1.2 million compared with £0.3 million in 1959/60.
LOCAL AUTHORITY FINANCES
The significant feature of local authority finances in the past decade has been the threefold growth in Exchequer assistance towards current expenditure, from £24½ million in 1959/60 to £74¼ million in 1969/70, as compared with a doubling of the amount collected in rates from £21½ million to £43¾ million. In other words, every extra £1 from rates has been matched by about £2.5s. from the Exchequer. Rising costs of maintenance and the improvement and expansion of services are reflected in an estimated increase in Exchequer grants of £9½ million this year, while the additional charge on the rates is only £5¾ million.
To take one aspect of local finances, the Government's desire to ease the burden of the cost of the health services on ratepayers is evidenced by the increase of some £10 million between 1966/67 and 1969/70 in the Exchequer grants to the health authorities. The grant for 1970/71 will show a further increase of £4½ million on the 1969/70 figure. This includes a special contribution of £2½ million to ensure that the increase in rates attributable to health services costs does not go beyond 2/- in the £ this year.
FISCAL ASPECTS
The major developments outlined above could not have taken place without a substantial expansion in current Government expenditure. This entailed a corresponding increase in revenue which necessitated a number of changes in the system of taxation. Fiscal policy plays an important part in development. While it is now regarded primarily as a means of influencing the level of demand in the economy, its historic purpose is to provide the cash necessary to pay for expanding Government services. To fulfil these functions, the tax system must be so designed as to divert to the Exchequer an adequate share of the growing wealth of the economy. It is also used to provide incentives for the achievement of economically or socially desirable objectives and, by a suitable choice of rates and allowances, it distributes the cost of Government services among the different sections of the community in an equitable manner.
At the beginning of the sixties, Government tax revenues amounted to only 17 per cent of the gross national product (as against 24 per cent in 1969/70) and, of this, the bulk (62 per cent) was derived from customs and excise duties. Income tax, at the standard rate of seven shillings in the pound, yielded less than 4 per cent of GNP in 1960 and held little prospect of improving its performance under the existing machinery.
PAYE
The introduction of the pay-as-you-earn system in 1960, more than anything else, helped to transform the income tax into a modern broadly-based fiscal instrument, yielding a steady flow of revenue throughout the year and a growing proportion of GNP every year. In 1969/70, with the standard rate no higher than it was in 1960/61, and in spite of the granting of many personal reliefs and industrial incentives, the yield of the income tax had grown to an estimated 6¼ per cent of GNP.
Sales Taxes
The system of indirect taxation has also undergone change. The heavy dependence on customs and excise duties levied on a narrow range of commodities—tobacco, beer, spirits and oils—was not well suited to the needs of a growing economy. A sudden change in consumer tastes, or a disruption of world supplies, could result in a sharp reduction in revenue. It was necessary, therefore, to broaden the base of the indirect taxes. The introduction of the turnover tax in 1963 and the wholesale tax in 1966 has gone far towards achieving this aim. These two taxes now yield about 12 per cent of Government tax revenue (or nearly 3 per cent of GNP). Customs and excise, though still among the most important sources of revenue, account for slightly less than half of the total.
Like the pay-as-you-earn system of income tax, the sales taxes have smoothed out the rather severe seasonal fluctuations in the flow of tax revenue thus easing the day-to-day financing problems of the Exchequer.
THE PUBLIC SERVICE
The public sector here, as in most countries, has been called upon to play an increasing part in general economic and social development in recent years. In order to attract staff of the standards required for these new tasks, recruitment policies and procedures have been and will continue to be radically revised.
Certain basic general service grades have been reorganised, management consultants have been engaged, work measurement has been introduced in appropriate cases and the techniques of organisation and methods, management by objectives and operational research have been applied on a wide front.
Computers have made their appearance in many offices and a central computing unit is being set up in the Department of Finance to supplement existing services and to increase the facilities for the practical training of civil servants in the field of automatic data processing. Automatic data processing will play an important part in the extension and development of the planning, programming and budgeting system (PPBS) which, as envisaged in the third programme, is being applied in the public service.
There has been a spectacular growth in the amount of training given to public servants, either within the service itself or by agencies such as the Institute of Public Administration. A comprehensive policy of staff development for civil servants has been prepared by the Department of Finance including formal and informal training, education, career planning and systems of motivation and appraisal. The implications of this policy are being discussed with Heads of Departments and with the staff representatives.
Further changes are being considered in the context of the report of the public services organisation review group.
INTERNATIONAL MONETARY DEVELOPMENTS
Following the devaluation of the French franc and the revaluation of the deutschemark in the last half of 1969, the international currency situation has become relatively calm. Sterling has greatly strengthened which is a source of satisfaction to us since Britain is our principal trading partner and our major source of tourist income.
International liquidity has been improved somewhat by the special drawing rights scheme which the International Monetary Fund introduced last January. Drawing rights to the value of $3,400 million have been allocated by the Fund to the various participating countries, our allocation being $13.4 million, and further allocations of $3,000 million have been agreed for each of the next two years. It is hoped that in time the scheme will make a significant contribution to international liquidity.
The Fund has decided to increase the members' quotas or subscriptions by an overall amount of 36 per cent or $7,600 million. This will represent a sizeable addition to international liquidity which should help to keep up the volume of world trade. The amount of our increase is $41 million, i.e. about 50 per cent of our previous quota of $80 million. This will give us greater drawing rights on the Fund.
Basic problems in relation to the efficient functioning of the international payments system remain and are currently the subject of wide-ranging discussion at the IMF. Some time is likely to elapse before these discussions are concluded and it is too early yet to say to what extent they will be fruitful.
Last year a loan of $14½ million to finance part of the ESB's development programme was obtained from the World Bank, a sister organisation of the International Monetary Fund. The possibilities of obtaining further loan assistance from the Bank are at present being explored.
Interest rates
International interest rates reached record levels during the past year but have recently shown some tendency to decline. Rates have tended to be high because of the heavy and widespread demand for capital required to finance development programmes and the fact that savings are proving insufficient. Action taken in various countries to control inflation has also given a strong upward push to the cost of money.
It was inevitable that we should be affected by these developments but, fortunately, we have so far been able to maintain a relatively high level of investment. Our ability to continue to do so depends largely on our success in moderating excessive demand pressures and in increasing the volume of domestic savings.
NATIONAL SCIENCE COUNCIL
The application of the fruits of research and development can have an important influence on our economic growth. It is obvious that the development of new industries and methods, our competitiveness in international markets, the maintenance of employment and general economic and social progress will depend increasingly on the excellence of the scientific and technological knowledge which we can marshal and use.
The National Science Council is charged with the task of advising the Government in these matters. In the field of research, the Council considers that the encouragement of research in our universities and colleges is of great importance, so that the scientific thought in these establishments can be mobilised to the greatest extent possible for national objectives. In 1969 a new scheme of grants for research projects in science and technology was initiated and provision is being made for the continuance of projects begun last year and for the commencement of new ones.
Funds are also being made available for the promotion of university-industry co-operation. The National Science Council has advised that one important way in which the universities could co-operate with industry would be by establishing centres of excellence in particular technologies. These centres would help to raise the level of technology in existing industries and encourage the promotion of new science-based industries.
THIRD PROGRAMME
The first annual review of progress under the third programme has recently been published in the "Review of 1969 and Outlook for 1970". It shows that substantial progress has been made in line with the programme's projections—particularly the 4 per cent real growth in GNP in 1969 and the net increase of 4,000 in employment. While the sectoral product of agriculture showed a decline in 1969, both industrial and other domestic sectoral products exceeded their projected rates of growth. The rate of growth of exports was less than the programme's expectations, and some ground remains to be made up in this area. However, capital formation —a key element in the structural changes in the economy which the Government are trying to promote—rose very fast last year, largely due to a 14 per cent rise in real terms in the public capital programme.
The structural changes in our economy and in our economic and social environment which the third programme seeks to effect would make the achievement of full employment a feasible objective for this country by the end of the present decade. This the Government are attempting to accomplish by policies to promote individual enterprise and initiative, to improve the quality of our work force and human relations in the workplace, to eliminate restrictive practices and to develop procedures for the noninflationary determination of prices and incomes. Vigorous efforts are being made to increase the scientific and technological input into Irish industry and to rationalise industrial location so as to make Irish industry as competitive as possible in meeting the challenge of free trade within a wider European Community.
CURRENT BUDGET TABLES
NOTE: THE TABLES DO NOT TAKE ACCOUNT OF 1970 BUDGETERY ADJUSTMENTS
TABLE I
COMPARISON BETWEEN (i) BUDGET ESTIMATES AND (ii) ACTUAL REVENUE AND EXPENDITURE IN 1969/70
|
Estimated |
Actual |
Estimated |
Actual |
||
|
£m. |
£m. |
£m. |
£m. |
||
|
1. Tax revenue (excluding 2 below) |
321.22 |
337.57 |
1. Central Fund Services (excluding 2 below) |
76.45 |
76.98 |
|
2. Motor vehicle duties |
13.10 |
13.41 |
2. Payments to Road Fund |
11.50 |
12.00 |
|
3. Non-tax Revenue— |
3. Supply Services (non-capital) |
307.27 (a) |
322.57 |
||
|
Post Office |
27.10 |
27.35 |
4. Deduction for errors of estimation |
2.00 |
— |
|
Miscellaneous |
31.80 |
32.68 |
|||
|
4. Deficit |
— |
0.54 |
|||
|
TOTAL |
393.22 |
411.55 |
TOTAL |
393.22 |
411.55 |
(a) The original provision was £298.73 million to which was added a gross £8.54 million in the budget for social welfare, public servic e pensions, youth pensions, youth welfare and other items.
TABLE II
MAIN HEADS OF CURRENT GOVERNMENT EXPENDITURE
£000
|
1964/65 |
1965/66 |
1966/67 |
1967/68 |
1968/69 |
1969/70Provisional |
1970/71 Estimate |
|
|
Service of Public Debt |
42,849 |
49,035 |
56,462 |
63,726 |
75,923 |
88,836 |
101,647 |
|
Social Services |
75,181 |
84,165 |
93,095 |
102,928 |
118,748 |
144,232 |
160,811 |
|
Social Welfare |
34,854 |
38,683 |
42,975 |
45,110 |
49,055 |
59,220 |
64,158 |
|
Education |
26,132 |
29,586 |
31,257 |
35,758 |
44,005 |
52,882 |
59,631 |
|
Health |
14,195 |
15,896 |
18,863 |
22,060 |
25,688 |
32,130 |
37,022 |
|
Economic Services |
47,877 |
55,172 |
59,877 |
75,187 |
84,433 |
97,482 |
103,370 |
|
Agriculture |
29,967 |
35,795 |
40,802 |
53,342 |
60,008 |
70,795 |
73,590 |
|
Industry |
3,664 |
4,693(a) |
4,775(a) |
6,604(a) |
7,458 |
9,166 |
10,824 |
|
Transport |
12,208 |
12,518 |
12,131 |
12,990 |
14,365 |
14,422 |
15,527 |
|
Forestry and Fisheries |
2,038 |
2,166 |
2,169 |
2,251 |
2,602 |
3,099 |
3,429 |
|
General Services |
41,088 |
43,016 |
44,126 |
46,429 |
51,236 |
58,245 |
62,068 |
|
Post Office |
13,323 |
13,846 |
14,866 |
15,348 |
17,206 |
19,898 |
21,816 |
|
Defence |
11,330 |
11,666 |
10,368 |
11,376 |
12,860 |
14,397 |
14,308 |
|
Justice, including Gardaí |
8,189 |
8,431 |
9,274 |
9,383 |
10,238 |
11,806 |
12,600 |
|
Public Service Pensions |
8,246 |
9,073 |
9,618 |
10,322 |
10,932 |
12,144 |
13,344 |
|
Other Expenditure |
15,016 |
16,599 |
17,060 |
18,687 |
20,467 |
22,755 |
25,031 |
|
TOTAL |
222,011 |
247,987 |
270,620 |
306,957 |
350,807 |
411,550 |
452,927 |
|
Remuneration included in above figures (b) |
71,032 |
75,502 |
80,935 |
84,803 |
93,898 |
110,580 |
118,460 |
|
1964 |
1965 |
1966 |
1967 |
1968 |
1969 |
||
|
£m. |
£m. |
£m. |
£m. |
£m. |
£m. |
||
|
Gross National Product |
950 |
1,018 |
1,071 |
1,159 |
1,288 |
1,444 |
|
|
Current Government Expenditure as % of GNP |
23.4% |
24.4% |
25.3% |
26.5% |
27.2% |
28.5% |
(a)Excludes temporary assistance to industry of £2.10m., £2.21m., £0.28m., respectively.
(b)Comprises the pay of civil servants (including industrial employees), national and secondary teachers, the Defence Forces, Gardaí, and the Exchequer contribution to the pay of health authority staffs and vocational teachers. The 1970/71 figure makes no provision for any public service pay increases which may be negotiated following the expiration of agreements on 31 March, 1970.
TABLE III
ROAD FUND
RECEIPTS AND ISSUES
|
RECEIPTS |
ISSUES |
||||
|
1969/70 |
1970/71 (Estimated) |
1969/70 |
1970/71 (Estimated) |
||
|
£000 |
£000 |
£000 |
£000 |
||
|
1. Opening balance |
— |
— |
1. Road grants (a) |
10,609 |
11,225 |
|
2. Motor taxation, etc. |
12,000 |
12,850 |
2. Administration, etc. |
1,391 |
1,625 |
|
TOTAL |
12,000 |
12,850 |
TOTAL |
12,000 |
12,850 |
(a)Including payments on foot of previous years' allocations.
TABLE IV
CERTAIN RECEIPTS AND EXPENDITURE OF THE EXCHEQUER AND OF LOCAL AUTHORITIES
|
Exchequer |
Local Authorities |
||||
|
Non-capital issues |
Expenditure from revenue (a) |
State grants received |
Rates collected |
||
|
£000 |
£000 |
£000 |
£000 |
£000 |
|
|
1959-60 |
129,856 |
128,682 |
55,104 |
24,480 |
21,412 |
|
1960-61 |
138,839 |
139,565 |
57,885 |
26,476 |
22,058 |
|
1961-62 |
151,686 |
152,393 |
64,165 |
28,792 |
23,203 |
|
1962-63 |
163,478 |
168,335 |
67,379 |
32,725 |
22,776 |
|
1963-64 |
184,419 |
186,638 |
71,323 |
34,871 |
24,466 |
|
1964-65 |
219,045 |
222,011 |
82,973 |
41,210 |
26,061 |
|
1965-66 |
240,761 |
248,542 |
90,588 |
46,465 |
29,761 |
|
1966-67 |
272,843 |
272,051 |
98,959 |
50,676 |
31,534 |
|
1967-68 |
305,409 |
305,621 |
107,430 |
57,472 |
34,702 |
|
1968-69 |
345,480 |
353,849 |
125,558(b) |
63,811(b) |
38,758(b) |
|
1969-70 |
411,012 |
411,550 |
142,218(b) |
74,303(b) |
43,780(b) |
|
1970-71 |
462,190(c) |
452,927(c) |
155,511(c) |
83,778(c) |
49,470(c) |
NOTE:—(a) The revenue of local authorities comprises broadly rates, State grants and other receipts, e.g., rents, fees, etc.
(b) Approximate.
(c) Estimated.
TABLE V
STATE EXPENDITURE IN RELATION TO AGRICULTURE
FROM 1966-67
|
1966-67 |
1967-68 |
1968-69 |
1969-70 Provisional |
1970-71 Estimate |
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
|
|
Education, Research and Advisory |
|||||
|
Services: |
|||||
|
Education |
877 |
967 |
1,331 |
1,667 |
1,696 |
|
Research |
1,635 |
1,785 |
1,935 |
2,390 |
2,522 |
|
Advisory services |
786 |
796 |
848 |
998 |
1,017 |
|
Technical services |
373 |
373 |
434 |
490 |
489 |
|
Department land and buildings |
140 |
220 |
140 |
190 |
190 |
|
Rural organisations |
44 |
38 |
35 |
41 |
41 |
|
Livestock improvement and eradication of disease: |
|||||
|
Improvement of livestock |
71 |
85 |
107 |
205 |
352 |
|
Bovine tuberculosis |
1,946 |
2,104 |
2,366 |
2,480 |
2,000 |
|
Brucellosis |
219 |
335 |
318 |
369 |
1,500 |
|
Production and development aids: |
|||||
|
Lime |
900 |
1,145 |
1,002 |
1,250 |
1,150 |
|
Phosphate |
3,167 |
3,777 |
4,601 |
4,635 |
4,570 |
|
Potash |
830 |
952 |
1,213 |
1,174 |
1,150 |
|
Land Project |
2,729 |
3,443 |
3,576 |
3,854 |
3,656 |
|
Arterial drainage |
1,165 |
1,253 |
1,369 |
1,360 |
1,494 |
|
Farm buildings, water supplies and milk coolers |
2,441 |
2,417 |
2,605 |
2,887 |
3,025 |
|
Poultry houses and equipment |
89 |
84 |
96 |
87 |
62 |
|
Forage harvesters |
79 |
71 |
91 |
110 |
70 |
|
Improvement of Land Commission estates |
756 |
851 |
90 |
970 |
766 |
|
Other improvement schemes |
528 |
580 |
611 |
738 |
600 |
|
Beef cattle incentive scheme |
— |
— |
— |
1,900 |
2,480 |
|
Calved heifers |
1,999 |
1,233 |
1,070 |
990 |
— |
|
Farrowed sows |
284 |
275 |
190 |
153 |
100 |
|
Mountain sheep |
46 |
175 |
366 |
600 |
550 |
|
Fat cattle (temporary scheme) |
656 |
— |
— |
— |
— |
|
Horticulture |
1 |
160 |
418 |
458 |
418 |
|
Small farm (incentive bonus) scheme |
— |
— |
— |
100 |
300 |
|
Marketing supports and aids: |
|||||
|
Dairy produce |
13,781 |
19,295 |
25,402 |
31,061 |
30,500 |
|
Beef, mutton and lamb |
923 |
5,284 |
1,052 |
1,050 |
1,550 |
|
Bacon and pork |
1,200 |
1,418 |
2,950 |
3,600 |
3,400 |
|
Wheat |
— |
— |
908 |
500 |
— |
|
Oats |
— |
— |
15 |
30 |
25 |
|
Administration of miscellaneous Acts, regulations and schemes |
600 |
760 |
819 |
928 |
890 |
|
Land Annuities: |
|||||
|
Reduction of land annuities |
955 |
989 |
1,022 |
1,072 |
1,130 |
|
Bonus to vendors and other costs |
123 |
124 |
126 |
128 |
310 |
|
Relief of rates: |
|||||
|
Agricultural Grants |
13,333 |
15,625 |
16,977 |
18,926 |
20,740 |
|
Rural electrification |
901 |
1,166 |
801 |
1,560 |
1,560 |
|
Capital for Agricultural Credit Corporation Ltd. |
1,200 |
900 |
1,500 |
1,500 |
800 |
|
TOTAL |
54,777 |
68,680 |
77,194 |
90,451 |
90,923 |
Note:- Figures are net of approprations-in-aid.
