I propose to deal with a number of miscellaneous matters at first in connection with the Budget and the economic report for last year, because I think they are matters which should be ventilated in the House for the sake of the public interest and in order to counter exaggerated statements. The first thing I want to deal with is the allegation being made in almost hysterical terms that the effect of our indirect taxes has been so considerable upon the cost of living that we are encouraging wage inflation on a very, very heavy scale; in other words, the suggestion that if we had never made use of turnover tax or wholesale tax, perhaps we would never have had inflation.
I want to deal with that point and the best way to deal with it is to be absolutely frank and give the actual facts as recorded in the Economic and Social Research Institute Quarterly Economic Commentary, March, 1971. I want to admit that I was agreeably surprised when I saw the analysis of the effect of indirect tax growth on the cost of living because I honestly thought that it had been higher than it really was. Compared with February, 1958, the general consumer cost of living index went up to 166.8, February, 1958, being 100. If no indirect taxes had been imposed it would have gone up to 151.6. In other words, for all the turnover taxes collected ever since they were imposed on the public, the total effect on the cost of living was 22 per cent over the whole of the ten year period.
Of course, as everybody knows, this turnover tax was used for general purposes. It was used to increase social welfare services. Whenever it was imposed allowance was made for its effect on people with large families and the social welfare allowances were increased. Children's allowances were especially increased on a number of occasions because, although indirect taxation as a tax on expenditure could not really be called regressive taxation, it is accepted that it is not absolutely fair, that it impinges more upon those who are less well-off, those who are in poor circumstances, those who are sick or unemployed and so, therefore, whenever the turnover tax is increased, allowance has to be made for that factor in order that, after the social assistance has been increased, the tax can be regarded as fair and impinging upon the community in relation to the incomes of every individual.
When you examine the details of this you find that in respect of the items that are most important to the community, the turnover tax has not had the effect that has been suggested over the past 11 years. The total effect of the turnover tax during the whole of the period from 1958 was to raise the cost of food by 12 per cent, of clothing by 13.5 per cent, of fuel and light by 14.5 per cent and, in its connection with housing, by 3.5 per cent. There were many other items where the effect of the turnover tax, the wholesale tax and the motor taxes was much heavier. That is why the average effect of the total indirect taxation imposed, which includes, of course, the excise taxes, was 22 per cent. We must be frank about it and say, for example, that the effect on drink and tobacco, which are not essential items though they are very pleasant things to consume unless you think of the dangers of smoking cigarettes, was an increase of price attributable to changes in direct taxation of 64 per cent over the period since February, 1958, up to November, 1970.
In the case of durable household goods there was a very considerable increase in cost due to indirect taxes and largely because of the imposition of the wholesale or luxury tax. The increase in that case over the whole period was 29 per cent. I wanted to mention that because the impact of indirect taxation on the cost of living and its effect in connection with wage claims have been exaggerated. I admit that care has to be taken, particularly in an inflationary situation such as we now have, not to encourage wage inflation by adding to the turnover tax. This we have not done. I mention this in connection with the fact that in the Budget we are now discussing there has been no increase in turnover tax.
There has been a slowing down in the growth of State expenditure which in itself is inflationary, and increased taxes have been imposed upon drink of which there is every evidence that there is a huge consumption. The income tax changes will have a maximum effect of £1 per month extra tax on the community and that can hardly be called inflationary. Let us have any discussion on the effect of indirect taxation on costs conducted in a reasonable way and not by exaggerated statements. It is most interesting that the effect of all indirect taxation on the cost of food since 1958 has been to increase the price of food by 12 per cent. I thought that was a very interesting figure.
Next I want to deal with another matter. We had a great deal of comment coming up to the Budget on how the five years of free trading have worked. I think Deputy FitzGerald is sufficiently objective in his Economic Studies in the Irish Times for me to put on record in this House his own analysis of the position. I am not saying I am sufficiently competent to agree or disagree with it but I noted that there was not much contradiction from any other economist in the Irish Times when he published his report. It seems to me that his report illustrates the need, when we discuss the effect of the Anglo-Irish Free Trade Area Agreement, to be dispassionate and objective in our comments.
The first comment Deputy FitzGerald made in his report in the Irish Times of March 24th, 1971, was on the very great growth in the volume of industrial exports. He even provides us with the figure of the volume of increase of exports. In other words, having discounted the increase in costs through inflation, he gives the increase in the volume of industrial exports as about 53 per cent for the 1960-65 period and over 80 per cent for the 1965-70 period. He said:
The effect of this acceleration of our export drive, combined with an acceleration in the rise of export prices which has more than kept pace with the rise in import prices, has been a growth in industrial exports in the past five years that has been almost twice as great as the increase in imports of competitive goods—the £175m. increase in the value of industrial exports being accompanied by an increase of £93m. in imports of competitive goods.
Then, of course, he refers to the fact that the balance of payments position has deteriorated and he analyses the whole of the imports in a recent period and says:
Indeed for many categories of goods the UK share has fallen in this period. Of 27 groups of imports of manufactures including chemicals 14 show such a decline, and five others show no improvement. Thus in only eight groups has the UK share risen.
He demolishes at one fell swoop the allegation that the balance of payments difficulties we had, or the difficulties we had in relation to certain industries, were entirely caused by the Anglo-Irish Free Trade Area Agreement. I recommend anyone in the House who is interested to get a copy of the Irish Times of 24th March and to read it. It would take me too long to read it in detail.
He then refers to the industries which have been affected by British imports and says that three of these belong to the chemical groups—soaps, perfumes, fertilisers and miscellaneous items like starch and glue. Two others are the basic metal groups, iron and steel and non-ferrous metals, where the freeing of trade has had only a limited application. Another is the furniture and travel goods groups where handbags, brief cases, et cetera, from the United Kingdom seem to have made rapid progress. In the remaining two groups—clothing and footwear—free trade appears to have made an important impact.
He points out that it would appear that the main impact of the freeing of trade in the five years to 1970 seems to have been felt in the clothing and footwear trades. However, it is pointed out that the increase in the exports of clothing has exceeded substantially the rise in imports but this is not the case when footwear is examined. A very interesting table is produced to illustrate the true facts of the situation.
In the clothing and footwear group, exports have gone up from £7.2 million in 1965 to £16 million in 1970. Home production for home consumption went up in the same period from £27.9 million to £35 million and competitive imports increased from £2.5 million to £9 million. The import share is now 20½ per cent of total home consumption, compared with 8½ per cent. He refers to the fact that the clothing industry by being able to promote far greater exports does not appear, at least collectively, to be in danger. Deputy FitzGerald did not refer to the fact that in the clothing industry the basic wages are 25 per cent higher than in Great Britain and were it not for the tax remission on exports the clothing industry undoubtedly would be at least in some difficulty in some sectors.
I do not think there is any need for me to read the tables of the other products where the effect of the free trade treaty has been absolutely apparent because in the case of many, even though the British gained a larger share of the market, exports have increased so considerably as to offset any adverse effects. Perhaps I might mention the metal and engineering groups. Incidentally, Deputy FitzGerald says that his 1970 figures have been provided by him privately and that he cannot guarantee their absolute accuracy. As I have said, I have not often seen Deputy FitzGerald's figures questioned by other serious economists. In the metal and engineering groups exports have bounded from £13.8 million in 1965 to £44 million in 1970. Home production for home consumption increased from £91.6 million to £121 million and imports increased from £21 million to £44 million. The imports share represents 27 per cent as compared with 19 per cent of the apparent total consumption. This is another illustration of the effect of the Anglo-Irish Free Trade Agreement. This effect might appear in the first instance as being serious but it has been compensated for by a very great increase in exports and by the fact that home manufacturers are able to participate in the growing prosperity by increasing the amount of their production which is used for home consumption.
We must be realistic about this. As the House knows, in July there will be negotiations at the half-way mark of the Anglo-Irish Free Trade Area Agreement. Deputy FitzGerald points out that the second part of this period, as we all admit, is going to be more difficult. In fact, it may correspond with our entry into the European Economic Community and he makes all the observations about the necessity for industry re-equipping itself. The necessity is to negotiate on what we can do under the treaty, namely, in respect of 3 per cent of imports from Great Britain and in connection with certain industrial groups we can discuss a slowing down in the rate of deceleration of tariffs so far as the Anglo-Irish Free Trade Area Agreement is concerned. Deputy FitzGerald makes the point that we must pull up our socks and make sure that during the second period our exports can continue to increase and that we prepare ourselves for more free trade.
I do not want to suggest that he is not giving a serious warning. It is quite evident that we have got to make allowances for this in the future, whether we join the EEC or remain joined with the Anglo-Irish Free Trade Area Agreement. I wanted to mention those points because before discussing the allegedly fatal results of the agreement upon our industries, those who speak about it should take Deputy FitzGerald's analysis, amplify it themselves with any figures they can get from the Central Statistics Office and make a reasoned, not hysterical, case. It is important that we should look at these things in an intelligent way.
With regard to progress in the sphere of agriculture, sometimes when progress is halted over a period people look at the fact that the volume of exports has not markedly changed but they do not look at the fundamental facts regarding the tremendous growth of this industry during the past ten years. So far as 1970 is concerned, agricultural exports went up by £16.7 million and we should like to see them increased still more. So far as the condition of agriculture is concerned, at least there are some favourable factors. We have the highest cattle numbers ever—5.8 million. This increase largely includes cattle under three years which will come up for sale at a later period. The decline in the sheep numbers has been slowed up in the last part of 1970 as a result of the farmers' interest in the hillside incentive, land reclamation and fencing schemes, as a result of steps taken by the Department of Agriculture and Fisheries and the instructors, and as a result of the subsidies for mountain sheep which have been increased this year. Pig deliveries last year totalled nearly 2 million, which was virtually a record figure. It is true to say that we give some help to agriculture when we realise that the milk support in 1970 amounted to 5½p a gallon and that the total support for milk cost some £30 million. This is a considerable contribution to price support for agricultural incomes.
I was interested in the statements made by various farming organisations in regard to the need for more credit and more investment by farmers. I dare say it is true that it tends to be the medium-size and larger farmers who borrow money for investment purposes and also for the purchase of land. Nevertheless there has been a transformation of the scene in regard to agricultural credit in the last ten years. In 1958 bank loans to farmers were some £17 million and they are now £62 million. The Agricultural Credit Corporation, as the House knows, has adopted a very much more liberal attitude. I was not able to get the figure for agricultural credit outstanding to farmers in 1958 but I would guess it to be something under £6 million, and in 1970 it had risen to £23 million.
If one wants evidence that farm structure is improving the figures in the report for 1970 published by the Government for the increase in fertiliser consumption are extremely helpful. Farmers do not use fertilisers unless they really believe in the future of farm policy and in one year, 1970, the increase in the use of nitrogenous fertilisers was 11.4 per cent; in the case of phosphorous fertilisers, 6.1 per cent; in the case of potash, 5.4 per cent; and in the case of lime, an increase of 21 per cent.
If one examines that in connection with the enormous number of applications for farm building grants and if one examines the increase in the price of land all one can say is, while we have always admitted that farm income is not comparable with non-farm income, there has been great progress. Examining what has happened in the last ten years one can see that, in spite of all the difficulties and in spite of the difficulties of ensuring that agricultural income would go up equally with nonagricultural incomes, there has been a very big increase in agricultural production.
Agricultural output has gone up by over 25 per cent since 1959 and by 66 per cent in value, and cattle and beef output has risen by 75 per cent in value. The value of milk output has more than doubled in that ten-year period, as indicated by the Department of Agriculture and Fisheries, from 1959 to 1969. The Department do not include the 1970 figures. They will appear with the coming Estimate. Pig numbers have very much increased. In 1970 they were 33 per cent higher than they were in 1959. Total family farm income in 1969 was £172 million, £62 million higher than in 1959. Coupled with the increase of more than a quarter in the volume of output was an increase of 31 per cent in the agricultural price level. Quite evidently the Government are responsible only to a certain degree for the increase in the agricultural price level because part of the increase relates to the increase in the price of cattle in Great Britain. In 1959 agricultural exports were valued at £78 million; in 1970 they were valued at £179 million, a very substantial increase.
Let us consider some other factors in relation to agriculture. It is very interesting to see that, when we established the beef incentive scheme in order to encourage beef production, in the first year of operation over 33,000 received grants. There are something like 210,000 farmers in the country, some of whom are very small and some of whom as well as being farmers have other occupations, and that at least shows that advantage is taken of the beef cattle incentive scheme.
I do not think I need give in very great detail the enormous increase in the supply of milk during a period of some ten years. However, it should be mentioned that the quantity of milk supplied to the creameries in 1969 was 526 million gallons and it was almost double the quantity supplied in 1960. With that there have been increases in the production of butter, of chocolate crumb and cheese. The question of cheese is interesting because it is an export which should prove remunerative when there is no surplus, and I gather the surplus abroad is rapidly disappearing. It is a very valuable form of export; it takes milk out of some of the other less remunerative products. Cheese production in 1969, at almost 27,000 tons, was nearly seven times the quantity produced in 1960.
Twice recently we have increased the price of milk. I do think some people's memories are very short. I myself was quite staggered, because I had forgotten the figure, that the total Exchequer expenditure in support of the dairying industry increased from £2,350,000 in 1960-61 to £30,779,000 in 1969-70. Therefore there has been a very great increase. The average amount paid per supplier for milk increased from £237 in 1960 to £548 in 1969. That is an overall national figure, but in cases where a co-operative society is particularly successful, where it issues credit on a big scale, where it has its own private agricultural instructors which supplement the work of the instructors attached to the agricultural committees there are even better results than that. In the case, for example, of the Lough Egish Co-Operative Society which is one of the best we have—and others could be quoted—the milk cheques were £250,000 in 1960 and in 1970 they were somewhere in the region of £1,250,000 and the number of suppliers increased only marginally, so that that is a genuine figure. This is in a small farm area and it is an illustration of what can be done with a combination of intensified enterprise by farmers, price supports, Government grants for the improvement of the farm structure and the successful and economic operation of a co-operative society working with the farmers.
I think I have said enough about the progress in the last ten years to again repeat that our policy is to give as much support as we possibly can afford to farmers to encourage them to increase their production, to help them secure their markets, and of course we are now in negotiation with the European Economic Community and if we are successful there should be a very considerable accretion of income to the farming community and we will get away from the position of trading with the country where the policy has been very largely that of ensuring the cheapest possible food for its people, namely, Britain. Nevertheless, the figures I have given over a period of ten years show that whatever the difficulties may have been in connection with the Anglo-Irish Free Trade Area Agreement in relation to agriculture they have not prevented very large increases in exports taking place, the vast majority of which went to Great Britain.
It is well for the whole community to recognise these facts and, as I have said, if we can continue every year and sometimes twice a year to increase price supports where we think these are desirable—in the present Budget the Minister has increased a number of the grants for very attractive schemes, for example, the increase in the amount of bonus payable to those who were taking part in the farm incentive scheme. The numbers are still too low but nevertheless some progress is being made. Then, there is the increase this year in the subsidy for sheep. This will be helpful to mountain farmers and particularly helpful to small farmers in areas where there is not a great milk intake. The Government took account of the fact that whereas milk provides an important cash income for farmers, big and small, there are areas where the milk industry has not spread, where the land is poor or where there is hilly country and where it is essential to provide a particular support for those to whom the production of sheep is of very great importance.
I was delighted to see that, according to the Department of Agriculture and Fisheries, decline in sheep numbers was being arrested towards the end of 1970. As everyone knows, when cattle prices are extremely high, there is an incentive to farmers to get out of sheep since cattle make use of highly fertilised land in a more thrifty way than sheep. It is good to see that the decline in sheep production which was a serious matter is being arrested. The Government have done everything possible towards helping sheep breeders and in connection with the marketing of wool which, of course, is subject to marketing conditions over which we have no control. They have also helped in connection with price supports for mountain hoggets and lambs. I mention those matters because they seem to me to be important.
Next, I want to deal with the general economic position as we have seen it during the past year and I want to make some observations on matters of importance to which we must give attention in connection with the future of our economy. As the House is aware, the year 1970 was a difficult and unfavourable one. This was due to the bank strike, the cement strike and the increase in the gross national product fell to a very low level. However, there is no need to look at this decline in a hysterical or a pessimistic way provided we can have a recovery of the same kind that took place in 1967 after the temporary recession in 1965-66. In 1968, the increase in gross national product was 7.9 per cent; in 1969 it was 4 per cent and in 1970 it was 1½ per cent. In the prediction for this year we are told that, provided no untoward circumstances occur, provided there is no serious strike situation, provided there is no sudden collapse of demand abroad for reasons over which we have no control and provided, above all, that the employer-trade union agreement holds together in large measure during the year, it should be possible to have an increase this year of 3 per cent. If that is achieved, the average for the four years, while we would like to see some further increase, will not be wholly unsatisfactory. Of course, in 1971, we must take account of the fact that there are increasing numbers of unemployed in Great Britain; also, in 1970 there was a recession in the United States which affected trade everywhere.
Again, if we look at the balance of payments for 1970 which was very high at £62 million, we must take account of the fact that part of the reasons for this was the inflationary position and that it appears that, in negotiating for higher incomes, no one seems to realise that every £1 of increase in wages means 8s 6d worth of import increase. There is very little we can do about this. We could do something about it if more of us selected and purchased Irish goods in the shops but even if we did take a more patriotic attitude in our purchases, which people should do, we are import prone and we will continue to be so unless, for example, we discover very much larger quantities of ores which would add to our natural resource exports. We hope for greater agricultural exports but, generally speaking, we share import proneness with the British and some other countries.
Therefore, when demands for increased incomes are received, these facts must be borne in mind because if the balance of payments position becomes really serious, the Government are obliged to cut down in one way or another on purchasing power. When people ask for higher wages or salaries they should bear in mind what the result will be in the total volume of imports and what necessary restrictions must be undertaken by the Government if the situation becomes too serious. Luckily for us, although we have this very large increase in imports and a very big deficit in the balance of payments, the external reserves in the banks in February, 1970 were some £290 million as compared with £288 million in December, 1969. That showed that we still maintained what may not have been an entirely adequate external reserve volume but, nevertheless, it indicates that, as we know, there was a very large capital inflow and inflow of capital goods which, while it may have had an inflationary effect, is also the result of investment in industry of one kind or another and can be a possible factor. Indeed, that is reflected in the fact that the total fixed capital formation in 1970 was down on that of 1969 by only a very small marginal figure and that the fixed capital formation was 21 per cent of the total value of production in the country. If that figure is examined and compared with the figures for other European countries, it will be seen to be a fairly respectable percentage. It means that there was a massive investment in industry in 1970 in spite of all the difficulties. We want to encourage productive investment this year and, as a result, the Government made an improvement in the arrangement for tax allowances on new investments by companies and with particular reference to a special allowance for industries starting or existing in the western areas. We hope that in this year we will see the continuation of industrial investment but that depends on many factors. It depends in particular on the confidence that investors will have in the maintenance of the 1971 employers-workers agreement on wages and on the confidence that in 1972 employers will look back and see what has taken place in the way of inflation in the past and see whether they cannot continue to have a reasonable attitude and to obey the rule that as far as possible, with the exception of the lower paid workers, incomes should not increase faster than the rate of growth in the value of production.
In 1970, some 5,000 new jobs were created but, again, this is not sufficient. There was an increase in unemployment. Of course, this is undesirable but it was due to a number of factors which included some recession in Great Britain and particular difficulties occasioned by industries where there has been a change in demand, a change that can take place anywhere. Also, there was the effect of excessive inflation and excessive increases in wages in relation to unit costs of production. That is something that will have to be avoided in 1972 if we are to continue to make progress.
Although Deputy L'Estrange perpetually asks questions every month or so about the total labour force, we know that the total labour force has continued to decline during a period of years whereas employment in industry and in other spheres increased enormously and that the numbers of persons leaving the land were such that the total labour force showed a reduction for a very considerable part of the period when the whole country was advancing in prosperity. It is well to remind the House that very late, indeed, but, nevertheless, in 1967, this process was finally arrested and that the total labour force went up from 1,063,000 in 1967 to 1,073,000 in 1968. This was the beginning, I hope, of a new era in which it would be possible to employ as many new people as possible and sufficient to offset the decline in agricultural employment. The decline in agricultural employment, I should mention, does not compare unfavourably with what is found in European countries. If you take the figures for the decline in the number of farmers, farm workers and employees in the EEC countries you find there has been a most alarming decrease, alarming because nobody likes to see the basic rural structure declining in respect of numbers but, nevertheless, it has taken place and our problem has been that although we were able enormously to expand industry we were not able to get to the point where we could offer as many new jobs in the non-agricultural field to those who needed employment and who were leaving the land. At last we were able to reach that position and we hope that position will continue. I believe it will continue if we have the right financial and economic conditions here.
In 1970, industrial exports increased by 20 per cent. This was not sufficient according to a survey made. The total increase in exports supposed to take place during the Third Programme is not likely to be achieved for reasons I have already given—inflation and certain difficulties in connection with particular exports—but, nevertheless, industrial exports have continued to expand. We hope they will be able to cope with the burdens involved and the grossly excessive inflation that has taken place. We have given exporters tax incentives for re-equipment and equipment grants. We hope with the combination of increased allowances for investment and the present scale of equipment grants and grants for new industries progress will be made in this direction.
One of the most interesting facts in 1970 was that in spite of the very serious cement strike, according to the figures we can get the actual volume of housing carried out in 1970 was roughly the same as in 1969. Certain types of houses were started later and will not show the same result but the total volume of housing was the same. That was a remarkable effort. Many expected a very considerable decrease in the volume of new housing stock in that year and it is very satisfactory that 1970 ended with the same volume of housing as 1969.
In connection with some of the failures of factories that have taken place, there are a number of reasons. In some cases, as I have said, it is due to changes in the pattern of demand from abroad. In some cases it is no doubt due to the fact that certain manufacturers should have undertaken re-equipment and that their productivity increase was not sufficient. Some failures are undoubtedly due to the huge increase in wages. I should like any economist to tell me why it should be that in some 26 industries, trades and services the wage levels here are very much higher than in Britain although we have half the income per head of the British. There may be certain cases when corresponding workers in Britain are badly paid and that, therefore, if our wage is greater that is satisfactory but in a country that inevitably must face free trade conditions, and where there should be some allowances for possible recession among our principal trading partners, care should be taken before wages generally begin exceeding those in Britain in respect of some very important industries and services. It is a fact that were it not for the incentive of exports being free of income tax charges quite a number of industries would be in difficulties because the wage levels they have to pay are higher than those of their competitors.
I hope that in 1972 when the period covered by the present negotiations ends that fact will be taken into account in deciding what the increase to all should be in 1972.
It is not in the interests of the workers or their growing-up families to have a wage structure that jeopardises the possibility of massive new employment and the retention of existing employment, particularly in new industries facing cut-throat competition where because, perhaps, of the small size of the unit here or because the industry is new or workers have to be trained, or there is recession in their particular products, the actual wage cost per unit of output is of very great importance. It seems to me that in the long run workers would be able to get higher standards of living, more real purchasing power, greater happiness for themselves and their families if they looked at these matters very carefully before deciding what their demands should be. I am convinced that if, since the great period of industrial expansion, the rules in regard to productivity and income increases had been faithfully observed the standard of living would be still better in this country, the workers would have benefited more by being able to keep the value of their wages, apart from whatever the effect would be of increases in the price of imported goods and raw materials over which we have no control. I am perfectly certain that when we ask to have these rules observed we are not trying to depress anybody's standard of living. We should like to see the low-paid workers move up closer to the craftsman's class—I mention this in passing—but I think we would have had a better real increase in the standard of living if these rules had been observed.
In 1972—and it will take place before the next Budget—we face the new negotiations. I hope that when economists make statements they will not be by-passed and ignored: they should either be refuted or accepted. Every examination I can make suggests that whatever may be the inducement to people to seek high increases in salaries and wages there is absolutely no evidence that the profits of industry here and the increases therein either in the past ten years or the past five years and, least of all, in 1970 are excessive in relation to those in any other country or could justify the salary or wage earners in saying: "Look at these tremendously high profits. Why should we not get more of the cake?"
I would defy anybody to contradict me; I would defy anybody to take the public accounts of some of our industries which face severe competition abroad to look at the dividends paid to shareholders and the increase in the dividends over the past five or ten years, take allowance for what has been put back by the firm into capital investment, take allowance of what has been paid in income tax to the State and then say that if half the remaining dividend had been paid to workers in the form of increases in wages it would have transformed their position and because it was not paid the workers were justified in seeking inflationary increases in wages. I have studied this and I know I am speaking in a way that cannot be contradicted.
If one studies the level of higher executive salaries and if one reads the analysis made by the Irish Management Institute there is no evidence that top executives are receiving salaries of such an order as to cast doubt on the good faith of the enterprise when the enterprise declares that if wage increases go above a certain amount this will reduce the competitiveness of the firm. As far as I know, the Irish Management Institute is a respectable body and its investigations are fairly conducted. It has issued more than one analysis of executive salary payments compared with those in Great Britain and they are not at an excessive level. Frequently people who naturally look for a higher standard of living take a figure, such as the general manager of an enterprise receiving £7,000 a year but they fail to recognise that if that man is married and does not have any children he is paying £2,468 in income tax and surtax—my figures go back about two years but no significant change has taken place during that time—and a man earning £5,000 who is married but has no children pays something in the region of £1,300 in income tax and surtax. I do not think it is right when people try to start rumours and try to cast envy into the minds of salary and wage earners either on the head of the rates of profits that have been established here by industries taken as a whole or in relation to the rates at which executives are paid. I say this: I have never yet been contradicted and I do not think I could be contradicted.
As I have said in 1972 we shall have to take account of the possibility of a recession in connection with our principal trading partner, Great Britain, and her capacity to buy our goods. We shall have to take account of growing free trade in the world at large which is quite inevitable so far as we are concerned and we shall have to take account of what the experience is during the present year in relation to its exports and in relation to wage costs per unit of output. It seems to me as long as we can face this issue realistically we shall be able to make greater progress next year, this year being a year of difficulty which has been quite frankly admitted by us all.
