First I should like to say a few words about the question of Parliamentary reform mentioned by Deputy Desmond. There was an omission from the very proper suggestions he made, in that he did not advocate greater use of the Seanad. I, like many other politicians, was sent upstairs for a time. I must say I hated the place. You could get nothing done there. It was like living in a void and I must confess I used and abused it to get back down here.
The Seanad, on average, sits on only 25 days per year. There are many controversial Bills which could be sent to the Seanad first. This has happened once or twice in the past five years. Having been passed by the Seanad, such Bills could be sent here in a form in which they would probably go through in an hour or half an hour, whereas in the ordinary way it would take several days for a Bill to go through the five Stages. The Seanad should be used more.
Deputy Desmond also discussed the question of our remuneration. I think what he said was quite right. The Seanad is properly remunerated. They get £1,500 a year, paying tax on £1,000 of it, and for 25 sittings that seems a good deal of money. There is no reason why that House could not do a little more work and be used rather as a committee. They are a vocational body and there is provision for university representation. The Seanad has taken in people who have subsequently been elected here, people like Deputy Garret FitzGerald, who is a professor of economics in UCD and who was a Senator before being elected to the Dáil. There are other men like Professor Jessop, who was a Senator when I was there, and Senator John Kelly, a professor of law at UCD. Such men are very well fitted to deal with various matters on which we are taking up time when we could be better engaged on other matters.
The idea of committees is also a sound one. There are many circumstances where sub-committees have done very good work. The constitutional committee did excellent work over a period of three or four years and some of its recommendations will now become the subject of a referendum. The select committee on health, of which I myself was a member, did very good work. I agree there was at that time a difference of opinion between the then Minister for Health and the committee, but that select committee justified its establishment, and the Labour Party, I think, were wrong in leaving it. It is my experience over 16 years of political life that, if you are at a meeting and you are disgusted with what is going on, and you throw your papers in the air and walk outside the door, that committee can then do what they like without your contribution.
I agree with Deputy Desmond that there would be nothing wrong with having a videotape from Telefís Éireann here, that there would be nothing wrong with Telefís Éireann coming into this House. It has been done in other Parliaments although not in the British Parliament, except in so far as interviews can be held in a studio as can be done in this House in the studio provided for that purpose.
This year and last year it was not practical for this House to break earlier and come back earlier. However, when I arrived here 16 years ago the reason the House sat on late and then came back late was that the farmers had their problems with the harvest, without combine harvesters. There was a longer harvest and then there was the taking in of the hay and the settlement of other farming affairs. Economically and in other ways there is no reason why we could not break in the middle of June and come back in the middle of September in order to give proper attention to the matters that are of consequence. If you want to be precise about it the break could be on 1st July instead of the last day of July and the resumption could be on 1st October. That would be a more satisfactory situation as far as our work is concerned.
I want to devote most of my contribution to the economic situation. I think the less said about Northern Ireland the better. One of the things that we who have been here for some time do is to study, from our experience here, the way the House is moving. Prior to the election of 1969 there was the utter annihilation of all economic business as far as a proper approach to it by the Government were concerned. One could not get a question answered in the proper way. I have examples of questions here which I shall be referring to later. Even yesterday I could not get questions answered in a proper way. The Government were completely involved in their own difficulties, in the personal relationships between various Ministers of State, which only became evident on 22nd April, Budget day. Before the Budget and before the last election there was this trouble. I would point to two speeches before the last election—one by the Taoiseach, Deputy Jack Lynch, and one by the then Minister for Finance, Deputy Haughey. In the months of April and May they pointed to an economic crisis, a balance of payments difficulty, a credit squeeze situation that might develop and then suddenly when it became apparent that the right thing politically for them was to have a general election this whole thing was jettisoned absolutely and out they came and said that everything in the garden was rosy. Everything in the garden was not rosy. There was an obvious crisis in the Cabinet and there was the failure by them to attend to any economic fluctuation.
We all know that in 1956-57 at the time of the Korean War and the Suez crisis there was precipitated upon this country an economic crisis which could not be dealt with in its first slow, faltering steps as an infant. It was precipitated by those two international events and when it came upon us in a rush the curing of that economic crisis did cause unemployment. The best that could be done was done by the Government of that day. Instead of imposing a 2½ per cent turnover tax as was done here a few months ago to gather in the greatest amount of revenue and hurt everybody across the line in the country there was the selective imposition of levies on luxuries that we could very well do without for six or 12 months without affecting employment within the country, without hitting the people who depended on their week's wages. We had Fianna Fáil at the time attacking the Government. I remember ex-Deputy John A. Costello, then Taoiseach, being interrupted 47 times by ex-Deputy Seán Lemass in the course of a speech. As a young Deputy sitting in the backbenches I listened to that. That economic crisis was inflated and enlarged by the Fianna Fáil Party at the time in order to get a general election and get into power.
I agree with Deputy Desmond's statements tonight in relation to the Tánaiste's very statesmanlike approach to the recent northern crisis. I remember him at one time coming in here one day with two brief cases and ex-Deputy James Dillon asking him to stand up so that he could see him from behind the brief cases. I remember him asking question after question on the fall in cattle prices, a fall in prices precipitated by an international crisis and every time he asked questions they went down another half-crown a hundredweight. I suggest this was utterly unstatesmanlike and improper.
This Government before the last election told us there was a crisis— they blew hot and then blew cold. They got their majority, they had their crisis within the Cabinet and the explosion in that Cabinet of that crisis turned the minds of this Dáil for the last six months to nothing but the crisis in the Cabinet, to nothing but the various things that might happen to Fianna Fáil. They have allowed this State to arrive at an economic juncture where they have waited too long and done nothing and where the remedies they will now have to apply will be extremely severe, where the remedies they will have to apply will put people out of work and will have a very great slowing down effect on the expansion we must have if we are to employ all our people and on the profits that are properly there for people who are in business and must employ the people who depend for their livelihood on a week's work.
I should like to point now to the Central Bank report and to the article by Dr. Whitaker. At page 7 in relation to the inflationary threat Dr. Whitaker says that the reasons are:
inordinate money income increases; too high a rate of increase in public expenditure and borrowing; and at least until the latter part of 1969, excessive credit, particularly for consumer purposes.
I should like to know what the Taoiseach can do about that. What should he do about it? What are the things which, if a magic wand could be waved, should be removed? Certainly inordinate money income increases should be removed because they are only paper increases and if inflation is to continue they will be eroded completely almost before they are received. Certainly public expenditure should be pruned where it can be pruned but we practising politicians who see young couples with three, four and five children without a decent home do not want to see a slow down in housing.
After the 1957 crisis to which I referred, in the years 1958, 1959, 1960 and 1961 the then Fianna Fáil Government, having got into power, reduced the number of houses being built from a figure of 11,000 to a figure in one year of less than 4,000 and on the average less than 5,500. We do not want to see that. Public expenditure must be preserved for the good things, the things that are necessary, the things that should be paid for.
In regard to excessive credit for consumer purposes, of course this must be pruned but it must be for consumer purposes. The farmer, the businessman, the employer, the person who is doing something that is good for the country, the person who is employing labour, the person who is doing his very best in every way and is perhaps getting far less return for his family and himself than he would get in any other country in Europe, that man must not be slowed down. Perhaps in other credit squeeze situations in this country there was too great an enthusiasm on the part of the administrators to cure the ill quickly. I quote again from Dr. Whitaker's very sensible contribution. He says:
a long and sustained effort.
He does not say a severe effort. All the experience we can glean here is that it is not practical to try to cure this in six months or in 12 months. We may have to suffer it until perhaps in two or two and a half years time it has been cured but the remedy might be worse than the disease.
I would point for instance to the situation in Britain. Monsieur de Sreumont at the Council of Europe said that Britain could not prepare herself for the Common Market except that for 12 years she budgeted for a surplus. With her expertise Britain found a way out of that. She used the deposit system in respect of imports. We, as a small nation, could not do that.
There is no doubt that she broke the Anglo-Irish Free Trade Area Agreement unilaterally and never consulted us in so doing. She produced a budget surplus of £2 million which she took from above the line expenditure and applied it below to capital and in this way prepared herself for a stage where she can stand up, on paper at least, and approach entry to the Common Market. I do not know what expertise there is between Dr. Whitaker, the new Minister for Finance, the Taoiseach, the advisers in the Department of Finance and all the other sources of expertise. But if there is any other way in which we can get ourselves ready for Europe and get out of the present crisis, for which the Government are entirely responsible, then we must approach things in that way. We have to approach them on the basis that we must not hurt our people any more than is necessary.
There are fundamental wrongs of which the Government are guilty and which must be mentioned here. In May last I asked a question about a statement by the Taoiseach, before the 12th round wage increase, that in respect of wages only an increase of 7 per cent or 30s per week would be allowed to a producer of goods as an increase in his costs. Producers are paying as much as 25 per cent increase in wages; it ranges from 15 per cent to 25 per cent. The industries which matter most are those which have a large labour content in their costs of production. How can an industry which is paying 25 per cent extra to its workers, in which its labour costs are perhaps 60 per cent, continue if it only gets a price increase that allows 7 per cent increase in the cost of labour?
I do not want to see costs increasing because that leads to inflation, but I do not see how this can be done. Yesterday, I questioned the Minister for Industry and Commerce and he quoted a reply of the 19th of May and said he would disallow for price increase purposes any increases in wages during 1970 in excess of 30s or 7 per cent. He said that he did not propose to alter this position. This was question No. 75 for Tuesday 28th July. That is a position which does not hold water. We must be realistic. If we pay people 25 per cent and that is going into the cost of the goods, it must be counted in the cost of the goods. If this stupid attitude of hiding your head in the sand continues people will be out of employment within the next six months and businesses will go out of production and, as I said, the businesses which are most important are those with a high labour content in their costs of production.
The question of price increases is one that must affect us here. In 1969 we had price increases of the order of 7.4 per cent over 1968 and at the same time in 1969 our gross national product improved by less than 4 per cent, where the previous figure had been 7 per cent. At the same time our labour content in these price increases increased without the output per worker increasing at all. Every figure I have quoted is contained in the Central Bank report. It is not a bible, but nobody has questioned these figures and I accept them.
In that situation how can we be competitive with Europe? How can we be competitive in our tourist trade? I would remind the House that earnings from tourism are estimated at £100 million. We all know that tourism has collapsed, that in the south, the area furthest away from the trouble in the north, there are empty hotels. Yet our price increases are there. The Government do not appear to have been worried over the last six months because of this. The reason is they were worried about other things. A small correction six months ago or a word of warning 12 months ago might have done the trick whereas now everybody admits— the Central Bank report admits, every document emanating from Government sources admits, and the Taoiseach admitted yesterday—that we are heading straight for a difficult time, when our people will have to do with less, when there will be less employment, and because of the trouble in the north we are heading for the time when we will have far less applications from industrialists to come here and avail of our generous grants.
The slowing down is well known both in the Industrial Development Authority and in the Industrial Credit Company. It is well known to the Government and to businessmen. Only three months ago the previous Minister for Industry and Commerce, now the Minister for Finance, admitted that there was a slowing down.
During my time in this House I think it will be agreed that I have been more inclined to look for hopeful things than most Members, but I should like to point to something which we must consider. In the first quarter of 1970 we had a £4 million improvement in our balance of payments. At first sight that might appear satisfactory, but on second sight it is most unsatisfactory. About a month ago I asked what value of housing it was estimated was involved because of the cement strike and the answer, which strangely enough did not hit the headlines, was £18 million. At that time the builders providers stopped importing timber and other goods required for houses. This meant that there were less imports and of course a slowing down in spending by the Government. In recent weeks the dock strike in England further affected the position. It is quite clear, then, that the figures for the first quarter of 1970 are artificial and that the position is far worse than it would appear to be.
Dr. Whitaker, on page 9 of his report, says something with which I do not agree and I do not think many people here would agree with it either. He says that tight fiscal and monetary conditions would discourage a moderate income increase. That, it seems to me, has not been the pattern. Two weeks ago the trade unions rejected a prices and incomes policy. I am all in favour of such a policy, which I think should embrace not only wages and salaries and remuneration of all kinds but also dividends and profits as distributed. This is most necessary and something which we have to face up to. If we can get things like production bonuses operating in industry, it will have a good effect.
A prices and incomes policy does not have to be 100 per cent successful to bring about an improvement. Indeed, three or four years ago, when Britain was in the throes of her troubles, one of the bright spots seemed to be that, while Mrs. Barbara Castle was under severe criticism because of her prices and incomes policy from all the unions and, indeed, from most of the Labour Party, there was an improvement and a constant improvement in the situation because she was succeeding in imposing limits on the monetary incomes that would be given, particularly in State services, and succeeding in holding things if not 100 per cent then at least 50 per cent.
As I said, the trade unions have decided they will not accept a prices and incomes policy and that means that, unless we can get a correction now, get a proper approach, we will have the same situation in the next 12 months as we had in the last nine. With the end of the 12th round there will be a continuance of a demand, whether or not it is there to pay, for a moderate increase in remunerations. The tragedy is that they will be taken away. They are merely paper money. The economist, the businessman and the trade unionist can work out a figure which it is possible to pay without erosion of the national purse. The national purse belongs to us all. That was not the evolution, unfortunately. Those who are in a strong position can succeed in getting what they want whereas the weak have no one to fight for them. We have wages chasing prices and prices chasing wages.
The prices and incomes policy suggested by Deputy Desmond and the Labour Party must be introduced. Voluntary restraint must go. That is the only way in which we will avoid that which must be avoided, severe restrictions which would put firms out of business and cause unemployment. That must not be allowed to happen. The cure will take two to two and a half years. To try to cure the situation in six months will only result in the cure being worse than the disease.
Dr. Whitaker says at page 13 of his illuminating report that the danger is real and menacing and will not go away of its own accord. The wolf is at the door and he warns that this time we must remember the wolf is not a toy dog. I agree. This is where I want to make my plea that there should be no strong measures but, rather, a consistent and constant effort, an effort which will allow all to proceed while, at the same time, being reasonable in their approach. It would be a great mistake if one were to go back to the Manchester School of Economics and say: "There are the figures. The balance of payments is out of equilibrium. We are going to cure it" and then try to cure it with one savage slash. That simply cannot be done today. It was tried before. It must not be tried again.
The attempt in 1967 probably avoided a far worse consequence in that it was a series of levies on specific articles. The worst feature of Government policy in the last six months was the global application of an extra 2½ per cent turnover tax. That hits the man with seven children who wants to buy a loaf of bread or a pint of milk in exactly the same was at it hits the man who wants to buy a bottle of champagne. That sort of thing should not happen. The Budget was really a ready-up Budget with a very bad effect on the economy. This is referred to in the Central Bank report; it is given as one of the reasons for the high rate of increase in prices. I have examined this price increase situation over about 50 commodities and I am quite certain that it was not just 2½ per cent; in some cases it was 3½ per cent and in some 5 to 5½ per cent. The situation will become worse with decimalisation. There is this constant erosion of people's incomes and people go on looking for more when it is not there.
I have referred to the things that must go on. Housing must go on. Our housing situation is pretty bad. That may not be so obvious in some rural areas but it is quite deplorably obvious in the towns. It is not altogether the fault of the Government. It often takes three to five years to get a housing scheme off the ground. Stop/go situations are bad. At the same time, to stop now would be a great mistake. We must ensure housing for our young people. We must improve the situation. In 1969 there was a 7.4 per cent increase in prices. In 1970 there was the extra 2½ per cent turnover tax, which will even out at about 5 per cent, and there will be the price increase brought about by wage increases. The bubble must burst.
In many cases the 7 per cent increase will be 17 per cent, or something like that. I think Deputy Cosgrave's estimate was a 10 per cent increase in prices this year. I regard that as too low. There will be a far bigger increase. This price increase will have a deplorable effect on the social welfare classes. In the last Budget and the Budget which preceded it larger increases were given to these classes in an effort to help them to keep pace with the cost of living. These will be completely wiped out by the huge increase in prices in the current 12 months. The pittances, and they are only pittances, of the social welfare classes will have to be looked at again. We will have to give more from taxation to help keep them abreast of increasing prices, increasing prices as a result of a dereliction of duty, because we did not apply the correctives that should have been applied, because of disagreements, political and otherwise, within the Cabinet.
I referred to a slowing-down in inquiries about new industries. I will produce when the Dáil returns the statement by the Tánaiste's colleague that there is a slowing-up. In fact a slowing-up during 1970 is accepted as inevitable. We must employ our people in industry because more and more are leaving the land. We must give incentives and some of these incentives will not be permissible in the EEC. Therefore we must do the job now. I asked the Tánaiste would an industrialist come here now with the same keenness as he might have come prior to the troubles in the north or prior to members of the Government being removed from the Cabinet for activities which we cannot discuss because they are sub judice. An industrialist must look at every aspect. He must subject the situation to a clinical analysis before he decides. He must weigh the advantages of one country against the disadvantages of another. The Tánaiste unfortunately, can rest assured that the behaviour, Cabinet-wise and otherwise, over the last 12 months, the failure to look after the economic situation because of the political situation, must react against the advancement of industry here and the creation of new employment.
