One effect of these measures is that many Taca men will be caught in the net, particularly in the surtax net. In these measures the wholesale tax on certain commodities is being increased to 25 per cent. Cars are included among these commodities but as many Deputies have said already, a car is not a luxury in many cases. Many workers employed in the building industry come from places as far away as Drogheda and further north as well as from Counties Kildare, Meath and Wicklow each day to work in Dublin. Usually two to four people travel together. These people will be hit hard both by the increase in road tax and by the increase in the cost of cars. The Minister has said that there is no purchase tax on second-hand cars but, of course, the cost of such cars will be increased indirectly. If a new car costs another £50, a second-hand car will go up in value by £30 or £40.
In relation to surtax I presume that the allowance against income tax on the first £2,500 will remain at 7½ per cent. If this tax were increased it would hit small businesses. Above the figure of £2,500 there will be an increase from 50 per cent to 58 per cent or, approximately, 1s 6d in the £. What I do see wrong with this is that Irish companies are now being taxed while those drawing a dividend from English companies are not taxed at all because we have no say in English companies. This can encourage people to take money from Irish companies and invest it in English companies. I am not sure of the figure for English companies but it is about 42 per cent—that would be the total amount—whereas here it is now 58 per cent. This is doing no more than making more money available to the Government. It is merely another way of collecting tax. It is not providing any incentive for people to save and it will not prevent people from overspending.
A person who draws a dividend now can still live well. Why not impose surtax on the actual money he draws out of a company this year even without freezing dividends? If he leaves his money in the company he will be able to get shares at the end of this freeze. Also there are many people working, for instance, in Guinness who invest their money there and who might be earning £400 or £500 per year from their investment. These provisions will mean that many people will pay corporation tax to the extent of 1s 6d in the £ extra on each £1 they earn. A man living on a small amount of money—I think the limit is £500 per annum—is not entitled to social welfare benefits. Such a man cannot get an increased dividend. Those wage earners who have received the 12th round increase can receive an increase of 6 per cent while a person in the category I have been speaking about can get no increase whatsoever. Would it not be better to pay out the money now and then impose a blanket for a number of years if necessary?
There are many architects, solicitors and other professional people who will pay nothing extra under these measures. I have no wish to speak about people in any particular profession but I might say that some of them are getting a lot more than many businessmen, those who export and otherwise. This is particularly true when these professional men are Taca tainted.
I have not been able to understand Fianna Fáil policy for many years. It seems to me that they devise their policy as they go along. When I came to Dáil Éireann in 1963, shortly after the introduction of turnover tax, I saw many Fianna Fáil Minister and Deputies running up and down the corridors of Leinster House offering building jobs and various other jobs so that they might win a vote. They won that time by one vote, but after that the cost of living escalated and the Government, of course, had to find more money to pay public servants and so on. What they did was to have a credit squeeze. This was the first cause of inflation. Three years ago they foresaw inflation as they foresaw it 18 months ago when the then Minister for Finance warned the nation about the dangers of inflation but made no mention of any such danger in the Budget introduced shortly afterwards.
Fianna Fáil were warned by Fine Gael, by Labour, by economists, by businessmen, by trade unions and many others that turnover tax would ruin the country but they said they knew better. I hope it was not the civil servants who advised them. Deputy Tully described the last Budget very aptly when he called it a lazy man's Budget. Deputy Haughey was too busy sharpening knives for the Taoiseach to bother about the Budget, so he took the easy way out and doubled the turnover tax.
An incomes policy will work only if the Government's policy is co-ordinated with it. Generally there are two methods used to balance the Budget. One is to increase indirect taxation which reduces personal spending—it is indirect taxation that we have here— while another method is to declare a credit squeeze which stops investment. That is the package deal that the Minister for Finance has given us. Undoubtedly, increased taxation increases the cost of living. A credit squeeze creates unemployment and an increase in unemployment reduces the demand for goods and services. If there is less demand for any product, that puts up the unit cost of that product, which again starts the race to inflation.
I do not believe that under any circumstances this is a 12 months job. The Minister will keep it in operation for as long as he can, or until the trade unions or others make him change it. When it ends, what will happen? Will we have increases of 20 per cent or 30 per cent in the following year? What good is that? There must be some other solution. The Minister is allowing no increased rate for increased productivity. I believe that where increased productivity can be shown there should be an increase in wages. Lately I heard—and I think this is wrong—that there will be a "go slow" campaign by various unions if they cannot get an increase.
There was some discussion about the building industry and the Minister was questioned about it. The Government should have their priorities right. To me the priorities in building are housing, schools and hospitals, and office blocks should only be built, and this money injected into the economy, at the stage where there is no demand for houses or hospitals or schools. I shall deal with that later.
For years the unions were blamed, employers were blamed, prices were blamed, everything was blamed for inflation. I never heard the Minister say that the Government were to blame or even 1 per cent or one-tenth of 1 per cent to blame. For some years past we have had inflation in this country caused by Fianna Fáil. I will give examples of that later on. During the past number of years we have had nobody governing this country. If we pick up the paper tomorrow morning we will see ten Ministers opening this and opening that. Sometimes they open schools. I do not see the point in that. Surely the key can be turned and the children let in without opening the schools officially and having a wine or a beer party afterwards. Ministers are opening this and that when they should be sitting in their offices doing their jobs instead of going around the country looking for publicity for themselves and for the Fianna Fáil Party. They are looking for votes in the next election and not running their Departments.
During a by-election campaign a Minister took six weeks off before the election. That is the way the country is being run. About 18 months ago Deputy Haughey, then Minister for Finance, told us on television that we were really in trouble and that there was a credit squeeze. They then decided to hold an election and things were all right two months later. If they had allowed that Dáil to run its full course, without holding the election at that time, we would have realised the state the economy was in and we would have been ducking all over the place with guns being fired because they were all involved at that time with both things running at the same time. They held the election a year earlier and they are now in power but they will not stay in power for very long. If they had held the election a year later we would have known about the arms trial and the bank strike.
Taxation which affects the workers must certainly put them in a position in which they will make demands. I cannot see these measures lasting unless the Government set about doing their job properly. We must make sure that all the ESB charges are controlled and that indirect taxation is controlled. If there is any increase in taxation, rates must be controlled and I am not speaking only of the rates on a sizeable house. Rates are paid on corporation houses. Everyone pays rates.
When you buy a pound of butter or a pound of sugar you are paying for the rates on the supermarket or shop. If you buy a drink you are paying for the rates on the shop. It is included in the price. The same applies to the purchase of drapery goods. Wherever you buy anything you are paying for the rates which are built into the price. Rates must be controlled if taxation goes up. Shortly before the Minister introduced this provision he said that after this debate no prices would go up. It is amazing to note the number of firms who jumped in the day before: the FUE, the employers' organisations and others. I would not blame them for that. They were 100 per cent right. Who led them? CIE led them. The day before, they got their increase.
The post office got their increase some three weeks earlier. Over the past 12, 13 or 14 months the post office increased their rate by 50 per cent and then they increased that rate by 50 per cent. To give an example, a very short time ago a telephone call cost 4d. It now costs 6d. and it is going up to 9d. Most business people were told that the wage increase was to be 7 per cent and, depending on the amount of labour employed, it was to be less than that, 2, 3, 4, 5 or 6 per cent. The cost of a telephone call— and this is not taxation in the Budget —went from 4d. to 6d. and is going up to 9d. That is an increase of 125 per cent against the 4 or 5 per cent on average allowed to business people and the 16 to 25 per cent wage increases.
I cannot give the exact figures in relation to bus fares, but the increase is in the region of 40 per cent. The figures vary at different stages. The 1s. fare is now 1s. 5d, an increase of approximately 40 per cent. It can be averaged down to a little less. In my own constituency, because there are not sufficient schools in Bonnybrook and Kilmore, a child has to go to St. Patrick's, Drumcondra, to school and the mother must go with him four times a day. It costs her 10d per trip and 5d for the boy. She has to pay 5s a day because there are not enough schools in that area.
The Government get the money to spend and I do not know where it goes. It must be like the £100,000 which disappeared a short while ago. Fianna Fáil make up their minds as they go along along. I do not believe they have any plan. An ordinary business man or a trade union plans for two, three, four or five years ahead but Fianna Fáil make up their minds as they go along and, if they get stuck, they add on something extra. This is proved by the introduction of two Budgets each year.
The worst thing I have seen done for a number of years was the introduction of retrospective taxation for death duties. In business or in politics the one thing a man has is his word of honour and he should keep it. There is not much of that around nowadays judging by some of the things that have happened. We saw the 12th round agreed on. We saw the Minister cutting across the agreement and refusing to pay the second part of it. He asked local government employees and civil servants to be responsible and to take a 7 per cent increase and he would give them 10 per cent later. Shortly afterwards he told them they would not get the second part of that increase. Now he has changed his mind because there is pressure on him, because there could be a split and Fianna Fáil might have to go to the country, not because of this but for other reasons, and he decides to pay the second part of the agreed increase. Is the Minister implementing the twelfth round in toto or is it just a cash involvement? I do not know the Civil Service grades but a person in, say, the second or third grade, was to get a certain increase plus the 17 per cent. Does this person get the increase for his grade or does he not?
In 1958-59 a house of about 1,100 square feet cost about £1,900. That house would cost £5,500 today. Land at that time was £575 to £600 an acre. It is £10,000 today. This is how prices have increased. Since 1957 there have been depressions and crises and Fianna Fáil always came up with the most fantastic excuses—the Suez crisis, the Chinese war, Vietnam or the Korean war. They have no excuse this time. They have made a mess of the economy and they must take the blame. Do not start blaming trade unions, employers or workers for it. Blame yourselves and your own mishandling of affairs. For as long as I remember, Fianna Fáil have not planned for anything but a stop-go economy.
The phased agreement was one of the finest things introduced into free negotiation between union and employer. The unions kept their side of the agreement. As Deputy Tully said, very often the officials had trouble with the members who wanted the whole increase at once but the officials convinced them that to take a phased increase would be better for them in the long run. How many unions will accept this now? Would anybody here, as a member of a trade union, tomorrow morning accept a £4 increase at the rate of £2 now and £2 in 18 months time? Would Deputy Colley, the Minister for Finance? Not likely.
We have seen the introduction of a group of people known as Taca in this country, a group brought together to supply funds to the Fianna Fáil Party. Members either give an election subscription or an annual subscription and they get in return patronage from a Minister or a Fianna Fáil dominated county council. One has only to look at the list of names at the front of any Government building—the architect, the engineer, everybody concerned —and one sees that 90 per cent of them are Taca people and of the other 10 per cent some of them have been there for years. The builders are Taca people. Again the odd one has been there for years. Go to Collinstown and see who does all the building out there or look at the machines used for road widening around the country and look at the names on them. Shortly before the Wicklow and Cork by-elections on my way from Cork I saw machinery with a certain name on it. I decided to check on who he was. I was out in Greystones and he turned up with a Fianna Fáil sticker on his car. It is known in the building community in this city, of which I am a member, that if one has a problem, if one wants to get land passed and there is a slight doubt about it, there is only one way to do it and that is to get a Fianna Fáil architect. If that is not done it will not be passed. Go to Local Government tomorrow morning and you will see the Fianna Fáil architects walking in. I never pass by without seeing them walking in. I know them. I was at school with some of them. How can the people of Ireland and business people be expected to be honest when they see this in Fianna Fáil? The people have become a little more enlightened lately on account of what has happened in the courts. These things have been kept under the carpet for a long time. For years we cried "Wolf" here and even the newspapers said we were only shouting about it. Now the people understand it.
I cannot see this pay pause lasting but if it does last will the Fianna Fáil Government get down to work and try to get agreement about proper negotiation and fix up trade union matters instead of shouting and doing no work? We should try to get all demands into a two month period. If May and June is the period all payments should be retrospective to the 1st May. We should do away with leap-frogging because leap-frogging does no worker any good and it does a lot of harm to the economy.
I want to ask the Minister what will happen to the person who has not got any moiety of his twelfth round? Will he get a twelfth round? Will the female worker in the Civil Service or semi-State body, where it has been agreed that on a phased basis female workers will move on to the male scale of pay, get her increase? Will this be allowed in the twelfth round, or is it just money with no side benefits? I presume that, if there is a clause in the agreement referring to an increase in the cost of living, that also goes. When Mr. Wilson brought in his controls in England he spelt them out. It was not a panic situation like that here. I presume that, if there is an incremental scale plus the 12 per cent, the man gets it. If there is an apprentice carpenter who is senior he must get senior rates and whatever goes with it?
I want to say something about office blocks. One or two were built on a trial basis and all the space was taken. As a result three or four more blocks were built. Then a couple of companies were formed, and I guarantee none of the people in Fine Gael or Labour were directors of them. As soon as the office space was available the banks, the insurance companies and the Civil Service took it and they paid a price of 25s to 30s per square foot for it. Private enterprise would have paid nothing like that for it. The Civil Service, the banks and the insurance companies should have left those office blocks alone and let demand and supply work out the cost.
What happened? We had the ex-Minister for Finance saying he intended to get a big office block built. The Bank of Ireland and insurance companies wanted them also. They got them but they paid for them. They are now paying from 30s to £2 per square foot for space in those office blocks. During the next 18 months the cost will increase to £3 a square foot. If they left those office blocks to private enterprise at the beginning the cost would have been 18s a square foot and it would then have gone up gradually to 25s and 30s a square foot.
Who is causing inflation? It is the Government who are causing it. They inflate everything they touch because they do not know the value of anything. A businessman would laugh at the way they act. No businessman would employ anybody on the front bench over there because they are not capable of running anything. The Minister for Finance says that he will control house prices. How will he do this? If he controls the land he cannot build. How will he control houses? If he puts a price on them they will cut down on the cost and instead of using a four-inch skirting board they will use the next size.
We should make a law tomorrow morning that, if there is a new house for sale, it should be compulsory for the builder to state the floor area and then the tenant would not be completely in the dark. I do not mind a man buying a bad suit because he will buy many in his lifetime, but very often a man will purchase only one house in his lifetime. Anybody who breaks his word on an agreement is not worth his salt.
The local government employees had an eleventh round where they were allowed a percentage increase on a floor rate but before they negotiated the twelfth round they were told there would be no bar. They could look for grade increase and if they did not get them they could get their 17 per cent. They agreed to accept the 7 per cent first, unlike other workers who looked for the higher percentage first. When the first part of this increase went through, the Minister for Finance said the second part was not being given. He then changed his mind. Will those grade increases which have been agreed on be honoured? Will the grades who had their claims in before April 1st get their settlement in full? As far as I know, the Minister said that those whose claims were in on 2nd April would be settled by having the first half given from the 1st October and the second half on 1st April, 1971. I should like the Minister to clarify those matters.
There is also the case of the Civil Service where a particular grade must go for their increase before another can go for it. If one man gets his increase, although he may be junior to the man above him, he gets more than the man above him unless the Minister lets this go through. The Minister's Department must be very short of money because the draughtsmen in Dublin Corporation are being paid back twelve months to last October. The Mayo County Council and a few other county councils have not been paid.