In accordance with customary practice, I propose to open my financial statement to-day with a brief assessment of economic trends over the past year and of the prospects for the year ahead.
In 1971, the volume of national production expanded by 3 per cent. This growth rate, while somewhat higher than the rate of 2½ per cent achieved in 1970, cannot be regarded as satisfactory. The underlying growth rate of industrial production was sluggish during the past year, part of the apparent increase being attributable to recovery from the effects of the industrial disputes of 1970. Domestic demand also lacked buoyancy and this contributed to the undynamic performance of industry. In these circumstances, it was not surprising that industrial employment showed little improvement during the year. This factor, together with an increase in the numbers coming on the labour market and a sharp reduction in emigration, caused overall unemployment to rise.
However, 1971 had a number of bright features. Agricultural output expanded rapidly in response to improved demand on foreign markets. Total exports maintained the rate of expansion of 1970. Invisible receipts also increased with the result that there was only a slight deterioration in the balance of payments position and, indeed, a welcome improvement if trade in ships and aircraft is excluded. On the prices front, inflationary pressures, which had been very strong in the first half of 1971, moderated slightly in the second half of the year. This slight improvement has continued into the current year.
The credit guidelines issued by the Central Bank allowed for an increase of up to £118 million in total bank credit in the year to April, 1972, with preference for productive investment. The limit was not, however, reached but the exceptionally large capital inflow ensured that there was no shortage of credit. The reduction in interest rates during 1971, which reflected an international trend, should encourage a fuller use of credit while the system of term loans recently introduced by the banks, in which the rate of interest is related to duration of loan and category of borrower, should result in the more efficient use of credit.
Economic Prospects for 1972
The situation in Northern Ireland is likely to have some adverse effects on the economy throughout 1972, mainly on the tourist industry, and earlier prospects of making a substantial advance on the economic front have disimproved as a result. Nevertheless, we can look forward to some measure of growth this year and, provided moderation is observed on the incomes front, continued progress can be made.
The trend in non-agricultural employee income in 1972 will mainly be determined by settlements under the National Pay Agreement which was negotiated at the end of 1970. The increase in the non-agricultural wage bill this year should be some percentage points less than in 1971, provided moderation prevails in the framing of a new agreement. In the context of freer trading conditions and the need for the restructuring of the industrial base to respond to the challenge of EEC membership, less inflationary wage settlements combined with inprovements in productivity are more necessary than ever if competitiveness is to be maintained. Agricultural incomes and output should expand significantly in 1972 since conditions in external markets continue to be favourable. The longer-term prospects for this sector are, of course, very bright in the context of EEC membership.
Despite the reflationary measures taken by the Government from last October onwards, domestic demand has not yet fully responded and, in the absence of further stimulatory measures, is not expected to increase in volume terms by more than 2 per cent this year. While this is likely to have a dampening effect on investment, there will be countervailing influences from the substantial increase in Government expenditure through the public capital programme and from the expected improvement in demand in the British market. When adjustment is made for investment in aircraft in both years, the estimated trend of capital formation for 1972 is higher than that for 1971.
Industrial exports, aided by more buoyant demand in Britain and the US, should continue to expand steadily. Market conditions in the UK remain favourable for our two main agricultural products and agricultural exports should continue to increase.
Receipts from tourism are expected to show a decline during 1972. The extent of the decline will be influenced by the future trend of events in the North but even a substantial improvement in the situation there might not permit all lost bookings to be recovered. Nevertheless, there are indications that spending by US and continental visitors will show an increase and, if sufficient Irish people decide to switch their holidays to Ireland this year instead of going abroad, the net loss of tourist receipts to the economy should be significantly reduced. Merchandise imports are expected to increase in 1972 at a somewhat slower rate than in 1971, mainly as a result of reduced purchases of aircraft.
Taking account of the expected pattern of merchandise trade and anticipated net invisible earnings, the balance of payments deficit on current account for 1972, estimated at £55 million, should show a noticeable improvement on last year's figure estimated at £68 million. However, if allowance is made for smaller purchases of ships and aircraft, the deficit may not change very significantly between the two years.
Official external reserves have been particularly buoyant over the past year, reflecting the record net capital inflow from abroad of almost £160 million and indicating the continuing confidence of foreign investors in the country's ability to prosper. Between end-1970 and end-1971 these reserves rose by roughly one-third and at March, 1972, they stood at £407 million as compared with £334 million in March, 1971.
Pre-budget indications are that the growth rate of the economy will be between 2 and 2½ per cent. This is appreciably below the long-term potential of the economy and falls a good deal short of our aspirations for the year ahead.
National Pay Agreement
I should like to pay tribute to the considerable efforts that have been made by most trade unions and employers to ensure that the National Pay Agreement is observed and to the way in which they have co-operated in the new institutional arrangements. When introducing last year's budget, I emphasised that, while the agreement could help in moderating the rate of inflation, it would not result in any immediate or spectacular easing of the pressure on prices. What I was hoping for was a slowing down of the rate of increase during 1971 and a further improvement in 1972. My hopes are being realised but more slowly than I would have liked.
The incomes situation, therefore, remains crucial to our whole economic well-being. The considerable economic problems which we already face will be aggravated if existing inflationary pressures are increased. Discussions have already opened in the Employer-Labour Conference with a view to negotiating a new National Agreement. I have no doubt that in these discussions full regard will be had to the needs of the current economic situation, but I would be failing in my responsibilities if I did not spell out the objectives on the incomes front which we should be trying to achieve in present economic circumstances.
The first objective should be to ensure that all improvements in pay and conditions of employment which are still being negotiated under the present National Agreement conform fully with the letter and spirit of that agreement. Secondly, the new National Agreement should aim at doing better than its predecessor in moderating the upward trend in costs and prices.
It is well to remember that the increase provided for in the second phase of the current agreement, including the cost-of-living supplement, is substantial and covers a period of only six months. If it were to be followed at once by another substantial increase, many concerns would find it difficult to remain competitive and employment and growth would suffer. It is essential that the negotiators should give full weight to this factor.
It would be unrealistic too if the negotiations did not take into account the special problems now being faced by the economy and, in particular, the need to create new jobs. With so many unemployed and with so many redundancies threatened, it would be inexcusable if the community as a whole had to divert to seriously inflationary pay rises money which could be used directly for providing new jobs. It would be doubly inexcusable in that such increases, by pushing up costs, would themselves endanger existing jobs. It would mean providing higher living standards for those in employment at the expense of those who are already unemployed or who are facing that threat. Employers and trade unions should therefore realise, when they are negotiating pay increases, that they are in a position significantly to influence the level of employment by their decisions.
It is on these tests that the Government, and the community, will judge the outcome of the current discussions. The Government, for their part, will continue to use every means in their power to moderate the rise of prices. The National Prices Commission has performed valuable work since its establishment last October. In arriving at its recommendations on price increases, the commission tries to ensure that increased costs, whether for labour or non-labour items, will as far as possible be offset by the firms concerned through improvements in productivity and efficiency.
To ensure that non-wage incomes will be subject to the same sort of discipline as wages and salaries, the Government have, as the House is aware, introduced the Prices (Amendment) Bill which will strengthen the existing powers of control and extend the coverage to areas such as professional fees and insurance, hire purchase agreements and the prices of new houses. The Restrictive Practices Bill will widen the area in which investigations of restrictive practices may be carried out to include a large range of services, including professional services.
On the international plane, the OECD indicated in a recent review that it expects an easing of inflationary pressures during 1972. This is of considerable significance for this country since, because of our open economy, we are particularly affected by external price movements.
EEC
This is the last budget before the date set for this country's proposed entry to the European Economic Community. Membership will have significant effects on our economic life and, indeed, on the preparation of future budgets which will involve consultation with our EEC partners on broad budgetary strategy. This will not lead to any diminution of our control over our economic destiny. In fact, the coordination of economic policy that is envisaged in the Community will be of great importance to our economic development. As a small open economy we are vulnerable to economic trends in our major trading partners and to decisions, which may be inimical to our interests, taken by Government in these countries. The experience of the past decade provides many instances of the adverse effects on our development of economic trends and policy measures in Britain, for example.
In many other respects, also, membership of the Community will afford opportunities for rapid economic growth. As I stressed in the debate on the Government's White Paper last month, it will fulfill two basic conditions for growth in Ireland's circumstances. These conditions are, first, satisfactory arrangements for agriculture, and, secondly, favourable terms of access to foreign markets for the goods we must export. Neither of these conditions was fulfilled during the sixties, and no alternative trading arrangement would fulfil both of them for the seventies.
The benefits from EEC membership will not, of course, accrue to us automatically; securing them will call for a vigorous response on the part of all concerned. To assist forward economic planning in the context of EEC membership, the Government recently approved the preparation of a Fourth Programme for Economic and Social Development covering the three year period 1973 to 1975, that is, to the end of the current EEC medium-term programme.
Industrial Development
Entry to the EEC offers the opportunity of larger markets for our products, and the Protocol negotiated with the Community provides for the retention of our export incentives. The outlook for industrial development is, therefore, good in the context of proposed membership of the Community. Action to promote the growth of an export-oriented industrial sector and to strengthen existing industries to meet the challenges of technological change and freer trade has been intensified. This includes the selective application of re-equipment grants and the encouragement of rationalisation and mergers, temporary extension of free depreciation to the entire country and a system of investment allowances in the designated areas.
While employment in manufacturing industry continues to increase, progress in net new job creation has been somewhat obscured by redundancies in traditional industries attributable, in great part, to a combination of a world recession in particular industries— notably textiles—and rapidly changing technology.
Every effort is being made to combat redundancy. The reflationary measures taken by the Government since last October were designed to safeguard and promote employment, and the strategy of today's budget is guided by the Government's continuing determination to do everything possible to prevent redundancy and increase employment. Recently a new State company, Fóir Teoranta, was established to give financial aid to assist firms to overcome temporary difficulties. The Government agencies concerned are continuing their efforts to identify, in good time, firms running into difficulties and to ensure that, where they have a future, everything possible is done to put them on their feet again. The qualifying period for redundancy payments has been reduced and the level of benefits has been improved.
Regional Policy
The Government are now giving further consideration to future regional strategy and are drawing on the results of recent work on regional development proposals. Each of the regional development organisations has submitted to the Minister for Local Government a report dealing with the principal consideration relevant to a development programme in its region. The Industrial Development Authority has also submitted industrial plans for each region to the Government which they will consider in the context of regional policy as a whole. The Minister for Local Government has very recently submitted proposals to the Government on regional strategy, which take account of these reports and plans. The Government hope to announce their decisions shortly.
Development proposals will be prepared for submission to the EEC shortly after we accede, with a view to obtaining Community assistance in their implementation. The economic and social development of the Gaeltacht which is a main aim of Government policy must feature prominently in any regional strategy of ours. The Government's concern for the Gaeltacht is reflected in the increased provision for the improvement schemes operated by Roinn na Gaeltachta and in the additional capital being made available to Gaeltarra Éireann for grants for industrial and other projects. The identity of the Gaeltacht areas will be reinforced by the recent launching of Radio na Gaeltachta and by the proposals which will soon be brought before the Dáil for a new local government structure for the Gaeltacht. A comprehensive report recently prepared by the Gaeltarra/SFADCo working party adds a new dimension to the understanding of the needs of the Gaeltacht areas in present circumstances. I am confident that positive results will flow from consideration of its recommendations as to how the State might assist in furthering cultural and economic progress in these areas.
Aims of the 1971 budget
The overall objectives of the April, 1971, budget were to slow down inflation and to promote balanced growth in the economy. It aimed to achieve these objectives by restraining the growth of Government expenditure and by minimising tax increases. It provided for substantial improvements in the social welfare sphere and for agriculture. It was designed to foster a climate in which the National Pay Agreement could be maintained. Investment was encouraged by the introduction of free depreciation for a two-year period.
Autumn, 1971 and subsequent measures
As the year progressed, it was evident that the rise of inflationary pressures was moderating somewhat and that the National Pay Agreement was being adhered to. External reserves continued to grow and the balance of payments position, while it required to be watched closely, did not call for correction. In these circumstances, and since the economy's capacity for growth was considerably higher, the Government decided last autumn that a further stimulus was required to boost economic activity and to strengthen business confidence. This took the form of an increase of £20 million, or 10 per cent, in the public capital programme, the immediate removal of all existing hire-purchase, credit sales and hiring restrictions, and the granting of company taxation reliefs that will cost the Exchequer £2.7 million in the current year and £7.2 million in a full year. Subsequently, public investment totalling some £6 million in agricultural grants schemes and credit was approved by the Government.
In mid-January, 1972, some months ahead of usual, the Government determined the level of the public capital programme for 1972-73 and Departments and other spending agencies were authorised to draw immediately on this expanded programme. Thus, over the past half-year, the Government took steps, on three occasions, to stimulate demand and improve the employment situation. The measures I have referred to related, as far as possible, to areas where employment could be increased rapidly. There is, however, a time-lag between the provision of capital and the materialisation of the additional new jobs. Consequently, the full effects of these measures will not be felt until later this year.
Current budget 1971-72: outturn
Last April, I budgeted for a balance, at £551 million, between current expenditure and revenue. The outturn for the year was a deficit of £2.2 million or less than one-quarter of 1 per cent of combined revenue and expenditure. Revenue exceeded the budget estimates by about £18½ million, mainly under the headings of income-tax and customs and excise. Part of the increased revenue from income tax is attributable to measures taken during the past year to improve collection, including an increase in the rate of interest on outstanding tax and a reduction in the period of grace; this factor will also increase this year's receipts. Current expenditure rose slightly faster, with the main increases appearing in the provisions for social welfare, health, CIE and defence.
Capital Budget 1971-72
The original level set for the public capital programme in 1971-72 was £193 million. This was designed to achieve steady advance on the social and economic fronts while at the same time helping to ease inflationary pressures. During the year, however, the programme was, as I have already indicated, increased as part of the special measures taken to safeguard and expand employment and to stimulate economic activity generally. Expenditure on the programme amounted to almost £214 million. As regards the financing of the capital budget, the Exchequer's normal resources exceeded the April, 1971, estimate—as did also the non-Exchequer resources of State bodies and local authorities. The residual borrowing needed from banks and abroad was substantially less than estimated. Details are given in the booklet Capital Budget 1972 which was published last week.
Capital Budget 1972-73
The public capital programme for 1972-73 has been settled at the impressive total of £251.3 million. If we exclude the expenditures of the air companies and of Irish Shipping Ltd., the programme shows an increase of almost 15 per cent over the outturn of the expanded 1971-72 programme. As these expenditures are incurred abroad and financed from foreign borrowing, their direct effect on domestic resources and demand is slight.
The public capital programme is in itself a major part of national capital investment and it also helps to induce investment by the private sector. Soundly based growth of employment and prosperity depends largely on an adequate and balanced public capital programme. The size and composition of the 1972-73 programme are designed to give a marked impetus to the economy. Major constituents are housing and ancillary services, £50 million; educational buildings, £15 million; electricity development, £33 million; industrial grants £29 million; industrial credit, £14 million; agricultural schemes, £17 million; agricultural credit, £18 million and telephone development, £14 million.
During the past year there has been an upsurge in the Exchequer's normal capital resources, due mainly to increased sales of Government securities to the public. The rapid increase in sales of these securities during the past few years has been particularly gratifying. Government issues, as well as being a gilt-edged investment, provide a highly attractive rate of return to investors and I have been encouraging the growth of an active secondary market in national loans so as to improve further their marketability. The increasing volume of sales is an obvious indication that more individuals and institutions are investing at home and assisting the progress of our national development.
The improvement in the market has been achieved by the provision of more attractive yields and by the Government support for the market. The consequent growth in turnover of Government securities resulted in a substantial increase in net sales. I believe that part of the capital inflow into the country over the past year was due to the repatriation of funds attracted by the active state of the gilt-edged market here. I have yet to be convinced that this process of repatriation has been completed and I look forward to a continuation of the trend in the coming year. To meet the needs of investors, I have issued new stocks and further tranches of many existing stocks throughout the year.
As regards small savings, the amounts subscribed in 1971-72 to the various small savings schemes substantially exceeded expectations and they continue to be an important source of finance for the capital programme. I have every hope that this trend will continue. There is now a wide range of State savings schemes available and every saver should be able to find one that suits his or her particular circumstances. The number of agreements entered into under the National Instalment-Saving Scheme continues to grow rapidly, confirming its attractiveness both to new savers and to those whose original 12-month saving cycles have expired and who have entered into new agreements to continue saving. I must pay tribute to the work of the National Savings Committee, which has contributed in no small measure to the success of our savings promotions in recent years.
Despite the buoyancy in these capital receipts, the rate of growth of the public capital programme is such that we must continue to rely on residual borrowing. Pre-budget calculations are shown in the Capital Budget booklet which I have already mentioned.
Current budget, 1972
The uncertainty about the general economic climate makes it difficult to estimate the tax revenue for the year ahead. It is, for example, difficult to forecast closely the net reduction that will come about in tourist earnings and its direct and indirect effects on receipts from the main customs and excise duties and from the sales taxes, which together account for about 50 per cent of tax revenue. I have, however, taken due account of the various factors involved in a "middle of the road" approach and I estimate the revenue—both tax and non-tax— for 1972-73 at £629.4 million, an increase of £60 million on last year's outturn.
Current expenditure for 1972-73 is estimated at £638 million or £66.4 million more than expenditure in 1971-72. Because a continuing reflationary stimulus is clearly necessary for the economy this year, the estimates for current services as well as those for the public capital programme were settled by the Government at a level higher than would otherwise have been appropriate. Included in this year's current expenditure figure is a contingency provision of £17 million in respect of liabilities which, on present information, are likely to arise during the year in respect of public service pay.
Public service pay, which covers the Civil Service, Army, Garda Síochána, teachers, health board employees and others, continues to be the biggest single element of expenditure in the current budget and it is not easy to forecast precisely what the full provision should be in any financial year. The great majority of public servants can have recourse to independent arbitration on their pay claims and this factor alone imports an element of uncertainty into the situation.
The 12th round increase for the public service was based on the proposals of the Public Services Committee of the Irish Congress of Trade Unions, and the 13th round increase followed exactly the terms of the National Pay Agreement. One of the provisions of the 12th round agreement allowed Civil Service grades to seek a review of pay on a grade basis, and the 13th round National Agreement admitted claims based on removal of genuine anomalies between different groups of employees whose rates of pay in the past had been related. Most of the public service groups which made such claims have now been reviewed and appropriate adjustments in pay made. Claims from other groups in the public service are still under consideration and are being dealt with under the provisions of the National Agreement, the relevant point being whether it can be established that genuine anomalies within the meaning of the agreement exist.
Provision for the first phase of the 13th round for the public service which has been payable since January last has been made in the recently published Book of Estimates. The Estimates figures do not make provision, however, for the second phase of that round which will operate generally for the public service from January, 1973. This is because of the difficulty of closely estimating the cost which depends, to some extent, on the increase in the consumer price index between November, 1971 and November, 1972.
The best estimate that can be made at this stage of the amount necessary to cover the items I have mentioned is £17 million and this sum has been included as a contingency item in the pre-budget figures.
With Government current expenditure fixed at £638 million for 1972-73 and total revenue estimated to come to £629.4 million at unchanged rates of tax, I am faced with an opening gap of £8.6 million.
Budgetary policy
When introducing the supplementary budget in October, 1970, I indicated that, while over most of the 1960s, a deliberate policy of deficit budgeting would have been contrary to the requirements of our general economic situation, the Government would in future aim at a deficit when economic activity was depressed and at a surplus in conditions of inflation. I have to consider whether on this test I should seek to balance the budget this year or should aim at either a surplus or a deficit. Present and prospective economic circumstances provide no clearcut, unambiguous answer to this question. The rate of price increase is still high and the balance of payments position is weak. Nowhere is inflation more marked than in labour costs. In 1971, the rate of increase in unit labour costs in this country was second highest amongst European countries, and there is little indication that we are losing this unenviable place in the league tables. Whatever our hopes, there is no certainty that the new National Pay Agreement will diminish the pace of cost inflation. These factors would suggest that the budget should be directed at containing inflationary pressures or, at least, not adding to them.
On the other hand, the economy is, for the third year in succession, running at well below capacity. Unemployment is high. We lack the economic buoyancy required to tackle quickly and effectively the adaptation which membership of the EEC will demand. If priority were given to these factors, budgetary policy should be primarily directed at improving the growth performance of the economy. Faced with these competing requirements, the Government have opted for growth rather than stability. The level of Government expenditure this year will, therefore, be determined by reference to our economic requirements and will not be cut back to the estimated yield of revenue. There will not be any increases in taxation, and the resultant deficit in the current budget will be financed mainly by borrowing. It is by reference to these considerations that the budgetary changes, to which I now turn, have been formulated.
Social Welfare
Over the years a special concern of the Government has been the improvement of the position of the less privileged members of our society who depend on social welfare payments. I have given a great deal of thought as to how the moneys available to me this year for social welfare improvements could best be applied, and have decided on the following course.
The personal and adult dependant rates of all classes of social insurance and social assistance benefits, together with the disabled persons and infectious diseases allowances administered by the Department of Health, are being increased. Full details of the increases will be circulated at the conclusion of this statement. Some examples are a 70p rise in the personal rate of contributory old age pension to £6.20 per week and an increase of £1 in the rate for a married couple to a total of £10.35. The widows contributory pension is being increased by 60p to £5.60 while non-contributory widows, deserted wives and old age and blind pensioners get a 50p increase to give a new rate of £5.15 per week. I am especially conscious of the fact that very old persons are often at a disadvantage because of their inability to do things for themselves and shop around for the best value. In recognition of this, all non-contributory old age and blind pensioners aged 80 and over will receive a further increase of 50p per week. The total increase in their cases will, therefore, be £1 per week, bringing the pension to £5.65 per week. Contributory old age pensioners aged 80 or over will also receive an additional 50p bringing their personal rate of pension to £6.70, and that for a married couple to £10.85 per week.
At present, the pension payable at age 65 to insured persons who have retired is at a lower rate than the old age contributory pension which is payable at age 70. In order to make retirement at 65 more attractive, I propose to increase the rate of retirement pension to the same level as the old age contributory pension. This will involve an increase of £1.25 per week for single persons and £1.95 for a married couple.
In addition to the foregoing increases for insurance and assistance beneficiaries I am, this year, giving a further substantial improvement to people in those categories with family responsibilities. The amounts payable for dependent children are being increased by at least 50 per cent in every case. For example, the amount payable for children of contributory widow pensioners will be increased from £1 to £1.50 each per week, and for children of non-contributory widow pensioners and deserted wives from 90p to £1.35 each per week. To avoid misunderstanding I should, perhaps, add that the children's allowances scheme of general application remains unchanged, pending completion of a review of the scheme which has been in progress for some time.
It is often overlooked that, at age 70 or over, social welfare pensions are supplemented by a number of additional non-cash services, especially free travel, electricity and TV licences. Those services have been so widely availed of that their combined cost has now grown to almost £2 million per annum. This year, I am making two further substantial improvements affecting the free electricity and free travel schemes. The free electricity scheme is available to certain categories of pensioners, for example, those living alone. I am increasing the free allowances of electricity in each two-month period from 100 units to 300 units for the period October to March inclusive and to 200 units for the rest of the year. As the free travel scheme is specifically designed to be of assistance to the aged, I have decided to extend it to all persons aged 70 or over, whether they are social welfare pensioners or not. It is intended to give effect to these improvements in the course of the next few months.
Finally, there are some other improvements to which I will refer briefly. The death grant in respect of insured adults is being increased by £10 to £35, and for other correspondingly. The allowance payable to incapacitated old age pensioners in respect of prescribed female relatives who are caring for them will be extended to cover corresponding male relatives. Deserted wives without dependent children will qualify for the allowance at age 40 instead of 50 as at present.
The increases in assistance rates and health allowances will take effect from the beginning of August, while the increases in insurance benefits will, as in recent years, be paid from the beginning of October. The Exchequer provision for social welfare and related services will be increased by £8.3 million in the current year and by £11.6 million in a full year.
Current measures to improve agriculture
Over the past six months the Government have implemented a comprehensive range of measures to improve farmers' incomes and productivity and to prepare the industry generally for EEC conditions. The first major step was to change the system of supporting creamery milk prices in December last to bring it into line with EEC requirements. These measures at the same time resulted in an average increase of about 2p per gallon—worth some £10 million a year to producers.
Secondly, the position of cattle and beef has been improved in a number of ways. The support arrangements for beef were substantially increased by eliminating most of the differential between the export subsidy rate and the United Kingdom subsidy rate. Next, the price at which export subsidy is calculated was increased by 85p per cwt in line with the United Kingdom increase. Finally, a special loan scheme has been put into operation for the carcase beef export industry to help it over a difficult period and to give a breathing space during which the industry may assess its position and take the steps necessary to become more competitive on export markets. The combined net cost of this assistance to the cattle and beef industry is likely to come to £2 million in 1972-73.
The next major step to help agriculture was to increase the amount of capital for development and credit. An additional £4.2 million was made available for grants for land and building, fertiliser improvements and disease eradication, and the amount lent by the Agricultural Credit Corporation was increased from £6.3 million to £13.5 million. The amount of credit for 1972-73 has been increased to £18 million. The small farm incentive bonus scheme was increased from £375 to £500. The price of barley and the acreage of sugar beet have been increased.
These are important measures for the agricultural industry and, rather than wait until budget time, they were introduced as soon as the need for them arose so as to enable farmers to plan ahead effectively.
Prospects for agriculture in 1972
The measures which I have outlined to prepare agriculture for EEC conditions are also going to realise positive benefits in the present year. Our main enterprises of cattle and milk are likely to do exceptionally well this year. There are many indications of substantial investment by farmers in increasing cattle output. Cattle prices are running ahead of last year's high prices. Prices obtainable by farmers for milk are about 2p per gallon up on last year's average, and indications are that output will increase substantially. Prospects in the tillage sector are also promising and the output of barley and sugar beet is expected to increase. I, therefore, direct my attention to other sectors of agriculture which call for additional assistance now, and towards additional measures which will help the whole industry, especially smaller farmers, to prepare for the EEC. The sectors which require additional help now are pigs, sheep and horticulture. I propose to provide additional assistance for these purposes costing £1.8 million this year and £2¼ million in a full year.
Pigs
Pig producers are especially vulnerable to increases in feed and other costs. These costs have increased substantially over the past year and, although pig prices were increased twice in that period, some further improvement is now necessary. The guaranteed prices for pigs will be increased by 60p per cwt with corresponding increases in bacon and pork export prices. The cost of this increase will be £1 million in 1972-73.
Sheep
While there is not yet a unified market support system for sheep in the EEC, the long term prospects for sheep and lamb are good. It is in our interest, therefore, to maintain and expand sheep production especially in mountain areas where sheep are the main enterprise. The need to provide a better market outlet for wether lambs from mountain areas has become apparent and I am increasing the mountain lamb subsidy by an average of £1 per head on fat wether lambs of mountain breeds exported by meat factories, or alive, between next October and March, 1973. This will cost about £250,000.
The basic price on which export subsidy on all lambs is calculated has been increased by 2p per lb. The gross cost of this will come to over £0.45 million which has already been provided for in the Estimates. This will bring the gross total of new assistance for sheep farming up to about £0.7 million.
Horticulture
The horticultural sector is likely to face serious competition under EEC conditions and much remains to be done in regard to production, storage, grading and marketing. I am providing £100,000 to meet the cost of various measures which will be introduced shortly by the Minister for Agriculture and Fisheries.
Implementation of EEC Directives on agricultural reform
The EEC Council of Ministers recently adopted a directive on measures to assist agricultural reform by providing incentives for developing farms and financial assistance to those who wish to retire from farming.
Although a significant proportion of the cost of implementing these directives will be recouped from the European Agricultural Fund a large part will have to be met from the Exchequer. We can meet a considerable part of this cost by adapting many of our present aid schemes for agriculture. As the EEC directives provide for a wider range of aids than generally exist here at present, such as pensions for retiring farmers and reduced interest rates for a wide range of investment, I expect that additional funds will be required and I am providing a sum of £350,000 to enable a start to be made this year. Priority will be given to introducing very soon an interest subsidy scheme for the retention and expansion of livestock numbers especially on smaller farms. Detailed arrangements will be announced later.
Further aid for small farmers
The Minister for Agriculture and Fisheries will announce details of further improvement in aids for small farmers. The bonus instalments payable to participants in the small farm bonus scheme prior to 1st January last will be increased to £100. A new temporary bonus scheme will be introduced for small farmers in western counties to assist them in reaching the production level at which they can qualify for support as development farms. Finally, small farmers who are already above the production level specified in the small farm bonus scheme or who have completed a development plan under that scheme but who are continuing to implement further plans will benefit from the proposed new interest subsidy scheme which I have already mentioned. An additional £425,000 for small farm schemes has been provided for in the Estimates but I am adding another £100,000 now to enable these improvements to be implemented. The total cost of these additional aids for small farmers over the next five years could reach £2 million.
Public service pensions
It has not been possible up to now because of the substantial cost involved, to implement fully the principle of parity for public service pensioners which was accepted by the Government in 1969. Nevertheless, since then three pensions increases have been granted to public service pensioners at an annual cost of £3.9 million bringing their pensions up to a level based on June, 1969, pay rates.
This year, it gives me particular pleasure to announce that I am granting parity to public service pensioners by bringing their pensions up to levels related to pay as on 1st January, 1972, the date of the most recent general revision of public sector pay. The increased pensions will be payable from 1st October next. The cost of the increase will be £1.9 million in the current year and £4.2 million in the following year. It will benefit retired civil servants, gardaí, teachers, members of the Defence Forces, local authority staffs and the widows of these groups. There will be a corresponding increase in military service pensions and other army pensions including special allowances. The percentage increase in individual groups will, of course, vary but the overall average will be around 28 per cent.
Veterans of the War of Independence
To give some additional assistance to the veterans of the war of independence and their widows, I have decided to increase and extend the funeral grants and to allow veterans' widows to benefit from the free travel scheme. At present, a funeral grant of £25 is payable in respect of holders of special allowances. I am doubling this grant to £50 as from 1st April, 1972, and I am extending the concession to military service pensioners.
I have decided also to extend the free travel scheme to the widows of the veterans. This, in effect, means that the widows of military service pensioners, special allowance holders and other service medal holders will, as from 1st October, 1972, be eligible for free travel. The cost of these concessions is £130,000 this year and £200,000 in a full year.
The total cost of the concessions which I have just announced in the fields of social welfare and agriculture and for public service pensioners and veterans of the war of independence will amount to £12.1 million this year and £18.2 million in a full year. I will shortly be announcing concessions in the tax field but, before I do so, I wish to refer to a number of other matters which will be included in this year's Finance Bill.
Imposition of income tax and sur-tax as permanent taxes
When income tax was introduced in this country more than a century ago, it was described as a temporary tax. This polite fiction has been observed ever since, and each Finance Act provides for the renewal of the tax for a further year, with or without a change in the rate of tax. I think that it is now time to give statutory recognition to the accepted fact that income tax and the comparative newcomer, sur-tax, which was introduced some 60 years ago, are as much permanent features of our taxation system as are the other taxes and duties administered by the Revenue Commissioners. As in the case of the other permanent taxes, the change will not in any way preclude modifications of the income tax and sur-tax to meet changing conditions.
Corporation profits tax.
A permanent statutory exemption from corporation profits tax applies to two classes of bodies one being companies established for the advancement of religion or education which are specially registered under the Companies Acts and are precluded from distributing profits to members, and the other being bodies corporate precluded by their constitution from distributing profits. The relief for the latter class was intended to cover certain bodies set up under statute and, as well, companies registered under the Companies Acts which were established for charitable, social or philanthropic purposes and not for the enrichment of private individuals.
Recently, a group of trading companies have sought to take advantage of this exemption by inserting a provision in their articles of association prohibiting the distribution of profits to members and claiming that they were no longer chargeable to corporation profits tax. If this claim were to succeed, the effect would be that the charge to corporation profits tax on the profits of the companies concerned would be avoided so long as the prohibition on distribution of profits was maintained. I propose to tighten the exempting provisions so that they will apply only in the circumstances for which they were intended. The proposal will be effective as from today.
A separate exemption from corporation profits tax which is provided on a temporary basis for certain public utility companies and other concerns, including building societies, expired on 31st December, 1971. Pending completion and consideration of the report of the inter-departmental working group which is examining the position of building societies, I propose to continue the exemption for a further year.
Amendments of death duties legislation
There is an anomaly in the existing death duties legislation which I propose to remove. The estate duty code provides for appeals to the Circuit Court from decisions of the Revenue Commissioners on the value of property, other than land or houses, if the value of the property in dispute does not exceed £50,000. If, however, the value in dispute relates to land or house property, the appeal must be taken, in the first instance, to the property arbitrator appointed under the Property Values (Arbitrations and Appeals) Act, 1960. There is a right of appeal to the Circuit Court from a decision of the property arbitrator provided the value of the property in dispute does not exceed £500. Otherwise, the appeal has to go before the High Court. I propose that this limit of £500 be raised to £50,000 to bring such appeals into line with appeals to the Circuit Court on the value of other types of property.
Also, I have had under consideration the hardships which arise under the death duties code when illegitimate children, who have not been legitimised, inherit property from their mother, and when children adopted under the adoption laws of foreign countries inherit property from their adoptive parents who are domiciled in this country. Such children bear legacy and succession duties at the maximum rate of 10 per cent and the abatements of estate duty provided in respect of legitimate children do not apply. I propose to remedy this situation by providing that, for death duty purposes, illegitimate children will be treated as if they were, in fact, legitimate, and that, where foreign adoption orders have substantially the same effect as orders made under our Adoption Act, the adopted children will be treated as children adopted under our laws.
Representations have been made me that there should be a body, like the income tax Appeal Commissioners, to determine death duty appeals in relation to the valuation of non-quoted company shares so that the costs and delays involved in taking appeals to the courts might be avoided. There is already such an appeal body in existence for the valuation of real and leasehold property. I have decided to extend the jurisdiction of the income tax Appeal Commissioners to cover appeals in the field of valuation of non-quoted company shares. The appropriate provisions will be included in the Finance Bill.
Occupational Pension Schemes
The existing provisions governing the grant of tax relief in respect of occupational pension schemes are contained in three separate codes enacted in 1921, 1922 and 1958. I propose to introduce legislation to provide one comprehensive code which will be simpler and more liberal and will remove many existing anomalies.
The present legislation will continue in force until 5th April, 1980, side by side with the new code. This will provide a long transitional period to enable the trustees of existing pension schemes to acquaint themselves with the new provisions and to make any amendments in the constitutions of these schemes necessary for approval under the new code. Until 1980, existing schemes will have the option to remain within the old code, as will new schemes established prior to 6th April, 1974. On the other hand, existing or newly-established schemes may opt into the new code with effect from 6th April, 1972.
System of company taxation
The final item in this field to which I shall refer is the comprehensive examination of our system of company taxation which is nearing completion. In my financial statement last year, I indicated that I expected to publish, before the end of the year, the results of some aspects of this examination together with my views on the conclusions to be drawn from these results. This work involved a full statistical survey of companies including their capital structure, profits and dividends. This survey has now been completed. I expect to receive the report of the Revenue Commissioners within the next month or so and I hope to issue a White Paper on the subject in the summer. While the need to increase domestic economic growth and savings will be of paramount importance in determining the most appropriate system for the taxation of companies and dividends, I must also bear in mind likely developments in this field within the European Economic Community.
Income tax allowances
I now propose to turn to the taxation reliefs which I am providing in the budget. The Government have, for some time past, been concerned about the increasing burden of income tax, in particular on lower incomes. The incidence of income tax is relatively heavy in this country and in recent years the proportion of the total tax being paid by salary and wage earners has been increasing significantly. Relief for income tax payers has, therefore, figured high on the list of the Government's priorities in the taxation field and they have decided that this year a substantial alleviation of the burden should be provided.
Personal allowances
The main income tax personal allowances were last increased in 1969. As is generally known, a major obstacle in the way of giving significant increases in these allowances is the cost involved, which is very substantial. However, I feel that the time has now come when further relief from the burden of personal taxation must be provided. I, therefore, propose to increase the personal allowances for single persons by £50 to £299, for widowed persons by £50 to £324 and for married persons by £70 to £494. In addition, each of the existing child allowances will be increased by £20. This means that single and widowed persons with earnings below £449 and £474, respectively, will not be liable to tax. A married man will be exempt on earnings below £744. A married man with four children of whom two are under 11 years and two are between 11 and 16 years will be exempt if his earnings do not exceed £1,444.
These increases which, it is estimated, will cost £11 million in the current year and £13 million in a full year will remove about 50,000 taxpayers from the income tax net. As a result of the new allowances a single man will pay £17.50 less in income tax, a married man without children will pay £24.50 less and a married man with four children will pay £52.50 or £1 a week less.
Age relief
The existing minimum allowances for the purposes of age relief for persons aged 65 years are £150 for single and widowed persons and £250 for married persons. As a further measure of relief in such cases, I propose to increase the minimum allowances to £175 and £300, respectively. The effect of this, together with the increases in the personal allowances which I have already announced, will be that the exemption limits for persons entitled to claim age relief will be raised from £399 to £474 in the case of single persons and from £424 to £499 for widowed persons. The exemption limit for married persons will be increased from £674 to £794. The cost of the increased age relief is estimated to be £120,000 in the current year and £140,000 in a full year.
Incapacitated children
I have had under consideration the question of relief for parents of children who are permanently incapacitated by mental or physical infirmity. While it is true that under the Health Services generous assistance is afforded in respect of such children, I have no doubt that in many such cases the parents are faced with substantial additional costs. In recognition of this I propose to increase the child allowance in these cases by £50. This is in addition to the general increase of £20 which I have just mentioned, so that the total increase in these cases is £70.
Health expenses
At present relief for income tax purposes is provided in respect of medical expenses exceeding £50 but not exceeding £500 a year per qualified person. I am satisfied that genuine hardship occurs where heavy medical expenses are incurred in excess of the upper limit, particularly by the aged who may not be able to obtain medical insurance. The number of cases involved is small. I propose, therefore, to abolish entirely the upper limit of £500.
Credit Unions
Because of the important social role of the credit union movement, which is still in the early stages of development, I have, as Deputies are aware, been examining the present position, under tax law, of credit unions. I propose to recognise their unique position by providing, in the Finance Bill, that operating surpluses of credit unions will be exempt from income tax and corporation profits tax. The exemption will apply to existing unions from the date of their registration as credit unions.
The cost of these three reliefs—for incapacitated children, health expenses and credit unions—will be £150,000 this year and £170,000 in a full year.
Rate of Company Taxation
I announced in my statement to the House on the economic situation on 27th October last that the increase in company taxation which was imposed in October, 1970, would be removed in two stages, one-half in 1972-73 and the balance in 1973-74. In view of the urgent need to stimulate economic activity and to assist industry in preparing for EEC membership, I have decided that the restoration of the pre-October 1970 rate of company taxation should be advanced from 1973-74 to this year. The cost of this concession, which reduces the rate of taxation of company profits to 50 per cent, will be £2.7 million this year in addition to the sum of £2.7 million already taken into account in the pre-budget estimates of tax revenue. When the provision for free depreciation is taken into account, the over-all tax position of companies is now, in fact, more favourable than it was before the October, 1970, increase.
Free depreciation
Last year, as a special measure to encourage a concentration of capital investment in the two-year period ending 31st March, 1973. I extended free depreciation to the whole country for that limited period. Representations have been made to me that the concession cannot be claimed in cases where, although expenditure has been incurred, the asset will not be brought into use before the limiting date. I propose to remedy this in the Finance Bill.
Death duties relief
I have had under consideration the threshold at which estate duty becomes payable. The present exemption limit is £5,000, introduced in 1960. I have decided to increase it by 50 per cent to £7,500. Furthermore, a new scale of rates from 1 per cent upwards will operate for estates between £7,500 and £11,000 so that these estates will also have their liability to duty reduced. The exemption limit for legacy and succession duties will also be raised from £5,000 to £7,500.
When comparing the rates of estate duty chargeable in this country with those chargeable elsewhere, it is important that the abatements of estate duty provided here be taken into account. These abatements provide considerable relief from duty where that relief is most needed, that is, in estates which pass to a widow or to a widow with a dependent children. I increased these abatements last year from £1,000 to £1,500 in the case of the widow and from £500 to £750 in the case of each dependent child.
This is an expensive form of relief. In the last financial year, it cost more than £650,000 in estate duty. Nevertheless. I have come to the conclusion that further relief is called for and have decided to increase the widow's abatements from £1,500 to £2,000 and the dependent child's abatement from £750 to £1,000. In the case of a widow with-our dependants, the effect is to raise the exemption limit from £15,300 to £17,750; where there are three dependent children, the new exemption limit will be £30,200 as compared with £25,250 previously.
These concessions will cost £130,000 in the present year and £500,000 in a full year.
Financing the deficit
The tax reliefs which I have announced will cost in all £14.1 million this year. When added to the social welfare and other concessions and taking into account of the opening gap of £8.6 million, they bring the overall deficit in the budget to £34.8 million. To finance part of this deficit I propose to bring into the Exchequer an exceptional non-recurring receipt of £7 million from the Central Bank. Arising from the expansion of the bank's activities and also from the exceptionally high interest rates obtainable on invested funds in recent years, a credit balance of this amount has accumulated in the bank in respect of surplus income. This is additional to the surplus income from 1971-72 which will be payable in the normal course to the Exchequer this year. The £7 million is a once-for-all payment and in future only the surplus of the immediately preceding year will be available for transfer to the Exchequer.
The balance of the deficit—£27.8 million—will be financed by borrowing. To the extent that the budgetary measures give rise to increased economic activity, there will be a consequential increase in revenue which will reduce correspondingly the borrowing requirement.
Equal pay
Before coming to my concluding remarks, there are two important matters to which I wish to refer.
The first of these is equal pay for women, which the Government accept in principle and which they now affirm as a national aim. The second relates to efficiency in the public service.
The Government have been considering the interim report on equal pay submitted by the Commission on the Status of Women. The Employer-Labour Conference have arranged that the working party established to negotiate on pay, with a view to reaching a new National Agreement, will take the recommendations of the commission into account in these negotiations. The Government welcome this decision and hope that agreement will result which will be acceptable to all. Progress on this front depends on the will of the entire community. Whatever general arrangements are accepted by the conference will be applied to the public service. The commission also recommended the enactment of legislation to give effect to their proposals. They suggested that legislation should take into account any phasing arrangements agreed by the conference. The Government will, accordingly, consider what specific action is required in this area in the light of the con-ference's finding. It is also intended to consider the question of the ending of restrictions on the employment of women which, by excluding them from equal work with men, are an automatic barrier to equal pay. It is hoped that the final report of the commission will be available when the legislation is being prepared.
In the meantime, the various restrictions under statute or regulation which comprise the "marriage-bar" in the public service are being examined. It is hoped that all non-statutory restrictions on the employment of married women will be ended as soon as possible and that the necessary legislation for the repeal of any statutory restrictions and for the prohibition of restrictions on the employment of married women generally will be enacted within the period of two years recommended in the interim report.
Efficiency in the public service
Acceptance of the principle of equal pay will increase substantially the cost of pay in the public sector. In view of the size of the bill for public service pay and its budgetary significance, no Minister for Finance could fail to be alive to the need for ensuring maximum efficiency in the public service. This is not simply a matter of economy in administration, important though that is, but it is also a question of the quality of service provided to and on behalf of the community, a consideration which becomes a increasing significance in the context of our proposed entry to the European Economic Community.
Foremost among measures to promote efficiency in the public service I must place the administrative steps, which are continuing, for the reorganisation of the public service. As well as the legislation for the setting up of the Department of the Public Service, which will, I expect, be enacted during the current parliamentary session, two other main developments should be mentioned.
First, the Report of the Public Services Organisation Review Group emphasised the great responsibility of the Government to select the right men for the top posts in the new Department. The Government have recognised this by the exceptional arrangement whereby two of the three posts of Deputy Secretary in the new Department were filled by a competition open to all comers. I am satisfied that, in this way, we have got the best available talent to carry the heavy burden of leading and directing the reform and reorganisation of our public service institutions.
Secondly, the Government have decided to accept, on an experimental basis, the major administrative reform recommended by the review group by initiating, in a number of selected Departments, the separation of policy and execution and by reshaping them into an Aireacht and a number of executive agencies. I hope to deal with this subject in greater detail when introducing the legislation to establish the new Department.
The efforts to achieve greater efficiency and to reduce costs in all branches and at all levels of the public sector are being intensified. Plans are well advanced for the introduction of more computers. Operations research is being developed and strengthened. A special unit in my Department has been set up to promote the application of management by objectives in civil service administration. Useful results continue to be achieved in other fields, for example, those of work survey and organisation and methods. The growth in recent years in training to promote efficiency will be accelerated.
As I informed Deputies last year, programme budgeting is being introduced on a phased basis in Government Departments. There are now eight Departments engaged activity in developing the system and it is the intention that it will be operational in all Departments by 1976.
Effect on economy
I have completed the description of my budgetary measures and turn now to an estimate of their effect on the economy. The additional spending power of almost £35 million released through this budget will raise the national growth rate by about 1¾ per cent between mid-1972 and mid-1973. This is over and above the contribution to growth and employment made by the increase of £30 million in the public capital programme. The increased spending power is likely to cause a substantial increase in imports, and the balance of payments deficit will clearly have to be watched carefully. If, however, during the year ahead our costs become more competitive and price increases are abated, I will have no great worry regarding our external position.
I referred earlier to the competing requirements of economic policy. In opting for growth, as against stability, through a budget deficit I am, indeed, taking a calculated risk—a risk that I may be fuelling the fire of inflation rather than the engine of growth. It is essential, therefore, that there should be a widespread acceptance of the need to redouble our efforts to check price and cost inflation. Unless we do so, much of the effectiveness of this budget will be dissipated. We will fail to take full advantage of the boost which the budget will give to the economy if we allow the additional purchasing power to be eroded through continuing inflation. Nor must we be content with merely a holding operation, with preventing price and cost inflation from getting any worse. We must aim at a worthwhile reduction in the rate of increase in costs and prices. This year, for the first time since 1959, prices will not have to be increased because of changes in taxation. This contribution to price stability must be matched by a positive response from both sides of industry through the new National Pay Agreement. This must take the form of a new agreement, markedly less inflationary than its predecessor, which will supplement and strengthen the budget's contribution towards moderating the pressure on costs and prices and increasing employment and growth. Without the cooperation of employers and employees, these objectives will be frustrated and the external deficit, which in any event is likely to increase substantially, could well be pushed to such a level that corrective measures would be unavoidable.
I am confident, however, that the community will co-operate in ensuring that full advantage is taken of the opportunities which the budget provides for further advances towards increased employment and higher living standards for all.
TABLE EXPLANATORY OF THE CURRENT BUDGET, 1972
|
Revenue |
Expenditure |
||||
|
£m. |
£m. |
||||
|
1. Tax revenue (excluding 2 below) |
522.80 |
1. Debt service and other central fund charges |
107.00 |
||
|
2. Motor vehicle duties |
18.75 |
2. Payments to Road Fund |
14.41 |
||
|
3. Non-tax revenue |
87.88 |
3. Supply services (non-capital) |
516.60 |
||
|
629.43 |
638.01 |
||||
|
4. Deduct:— |
4. Add:— |
£m. |
|||
|
Income tax reliefs— |
£m. |
Social welfare, etc. |
8.30 |
||
|
Personal and child allowances |
11.00 |
Agriculture |
1.80 |
||
|
Companies |
2.70 |
Public service pensions |
1.90 |
||
|
Other reliefs |
0.27 |
Old IRA veterans |
0.13 |
||
|
Death duties |
0.13 |
12.13 |
|||
|
14.10 |
|||||
|
615.33 |
|||||
|
5. Deficit |
34.81 |
||||
|
To be financed |
|||||
|
(a) by receipt of surplus income from Central Bank |
7.00 |
||||
|
(b) by borrowing |
27.81 |
||||
|
34.81 |
|||||
|
650.14 |
650.14 |
DEPARTMENT OF FINANCE,
19 April, 1972
CURRENT BUDGET TABLES
1972
INDEX
TABLE I. Comparison between (i) budget estimates and (ii) actual revenue and expenditure in 1971/72.
TABLE II. Main heads of current government expenditure
TABLE III. Receipts and issues of Road Fund in 1971/72 and 1972/73
TABLE IV. Certain receipts and expenditure of the Exchequer and of local authorities.
TABLE V. State expenditure in relation to agriculture
Tables relating to public capital expenditure will be found in the separate publication entitled “Capital Budget 1972”.
Note—The Tables do not take account of 1972 budgetary adjustments.
TABLE I
COMPARISON BETWEEN (i) BUDGET ESTIMATES AND (ii) ACTUAL REVENUE AND EXPENDITURE IN 1971/72
|
Estimated |
Actual |
Estimated |
Actual |
||
|
£m. |
£m. |
£m. |
£m. |
||
|
1. Tax revenue (excluding 2 below) |
453.20 |
468.92 |
1. Central Fund services (excluding 2 below) |
98.44 |
100.01 |
|
2. Motor vehicle duties |
17.90 |
17.83 |
2. Payments to Road Fund |
13.70 |
13.65 |
|
3. Non-tax revenue— |
3. Supply services (non-capital) |
438.90(a) |
457.94 |
||
|
Post Office |
36.55 |
36.55 |
|||
|
Miscellaneous |
43.39 |
46.10 |
|||
|
4. Deficit |
— |
2.20 |
|||
|
TOTAL |
551.04 |
571.60 |
TOTAL |
551.04 |
571.60 |
(a) The original provision was £429.53m. to which was added £9.37m. in the budget for social welfare, farmers, public service pensions, local improvements schemes and manpower and training.
TABLE II
MAIN HEADS OF CURRENT GOVERNMENT EXPENDITURE
£000
|
1966/67 |
1967/68 |
1968/69 |
1969/70 |
1970/71 |
1971/72 Provisional |
1972/73 Estimate |
|
|
Service of Public Debt |
56,462 |
63,726 |
75,923 |
88,841 |
101,438 |
115,565 |
123,581 |
|
Social Services |
93,095 |
102,928 |
118,748 |
144,271 |
178,734 |
211,478 |
226,017 |
|
Social Welfare |
42,975 |
45,110 |
49,055 |
53,143 |
63,114 |
74,996 |
83,274 |
|
Education |
31,257 |
35,758 |
44,005 |
53,143 |
63,114 |
74,996 |
83,274 |
|
Health |
18,863 |
22,060 |
25,688 |
32,118 |
43,622 |
52,058 |
55,676 |
|
Economic Services |
59,877 |
75,187 |
84,433 |
98,234 |
111,466 |
127,626 |
133,387 |
|
Agriculture |
40,802 |
53,342 |
60,008 |
71,225 |
76,969 |
87,927 |
89,421 |
|
Industry |
4,775(a) |
6,604(a) |
7,458 |
8,980 |
11,134 |
14,267 |
17,625 |
|
Transport |
12,131 |
12,990 |
14,365 |
15,003 |
19,558 |
21,048 |
21,273 |
|
Forestry and Fisheries |
2,169 |
2,251 |
2,602 |
3,026 |
3,805 |
4,384 |
5,068 |
|
General Services |
44,126 |
46,429 |
51,236 |
58,346 |
73,435 |
85,287 |
100,733 |
|
Post Office |
14,866 |
15,348 |
17,206 |
19,942 |
25,379 |
28,663 |
34,015 |
|
Defence |
10,368 |
11,376 |
12,860 |
14,602 |
18,561 |
22,202 |
26,318 |
|
Justice, including Gardaí |
9,274 |
9,383 |
10,238 |
11,810 |
15,009 |
16,782 |
21,229 |
|
Public Service Pensions |
9,618 |
10,322 |
10,932 |
11,992 |
14,486 |
17,640 |
19,171 |
|
Other Expenditure |
17,060 |
18,687 |
20,467 |
22,633 |
26,273 |
31,646 |
37,296 |
|
TOTAL |
270,620 |
306,957 |
350,807 |
412,325 |
491,346 |
571,602 |
621,014(b) |
|
Public service remuneration included in above figures(c) |
80,935 |
84,803 |
93,898 |
108,833 |
133,985 |
161,822 |
180,340(b) |
|
1966 |
1967 |
1968 |
1969 |
1970 |
1971 |
||
|
£m. |
£m. |
£m. |
£m. |
£m. |
£m. |
||
|
Gross National Product |
1,074 |
1,174 |
1,330 |
1,504 |
1,677 |
1,892 |
|
|
Current Government Expenditure as % of GNP |
25.2% |
26.1% |
26.4% |
27.4% |
29.3% |
30.2% |
(a) Excludes temporary assistance to industry of £2.21m. and £0.28m. respectively.
(b) Does not include £17m. reserve for possible public service pay increases.
(c) 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 board employees and vocational teachers.
TABLE III
ROAD FUND
RECEIPTS AND ISSUES
|
Receipts |
Issues |
||||
|
1971/72 |
1972/73 (Estimated) |
1971/72 |
1972/73 (Estimated) |
||
|
£000 |
£000 |
£000 |
£000 |
||
|
1. Opening balance |
— |
— |
1. Road grants (a) |
11,697 |
12,110 |
|
2. Motor taxation, etc. |
13,650 |
14,410 |
2. Administration, etc. |
1,953 |
2,300 |
|
TOTAL |
13,650 |
14,410 |
TOTAL |
13,650 |
14,410 |
(a) Including payments of foot of previous years' allocations.
TABLE IV
CERTAIN RECEIPTS AND EXPENDITURE OF THE EXCHEQUER AND OF LOCAL AUTHORITIES
|
Exchequer |
Local Authorities |
||||
|
Revenue |
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 |
119,595 |
64,728 |
38,294 |
|
1969-70 |
411,012 |
411,550 |
141,790 |
74,177 |
42,953 |
|
1970-71 |
481,506 |
490,429 |
166,686(b) |
87,763(b) |
49,932(b) |
|
1971-72 |
569,402 |
571,602 |
191,320(b) |
101,899(b) |
60,182(b) |
|
1972-73 |
629,428(c) |
638,014(d) |
224,840(c) |
117,650(c) |
72,218(c) |
Note:—(a) The revenue of local authorities comprises rates, State grants and other receipts, e.g., rents, fees, etc.
(b) Approximate.
(c) Estimated.
(d) Estimated; includes £17m. reserve for possible public service pay increases.
TABLE V
STATE EXPENDITURE* IN RELATION TO AGRICULTURE FROM 1968-69
|
1968-69 |
1969-70 |
1970-71 |
1971-72 Provisional |
1972-73 Estimate |
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
|
|
1. Price supports and marketing aids: |
|||||
|
Dairy produce |
25,402 |
30,820 |
28,949 |
31,100 |
24,000 |
|
Beef, mutton and lamb |
1,052 |
1,116 |
2,893 |
1,350 |
2,471 |
|
Bacon and pork |
2,950 |
3,600 |
3,090 |
4,700 |
4,700 |
|
Cereals |
923 |
513 |
283 |
261 |
240 |
|
TOTAL |
30,327 |
36,049 |
35,215 |
37,411 |
31,411 |
|
2. Production incentives paid direct to producers: |
|||||
|
Beef cattle incentive grants |
— |
1,912 |
4,916 |
6,706 |
7,604 |
|
Sheep grants |
366 |
596 |
1,326 |
1,820 |
1,750 |
|
Farrowed sows |
190 |
159 |
95 |
75 |
40 |
|
Small farm incentive bonus |
— |
100 |
275 |
450 |
875 |
|
Calved heifers |
1,070 |
1,039 |
23 |
— |
— |
|
TOTAL |
1,626 |
3,806 |
6,635 |
9,051 |
10,269 |
|
3. Payments to reduce production and overhead costs: |
|||||
|
Lime and fertilisers subsidies |
6,816 |
7,067 |
6,870 |
7,605 |
7,655 |
|
Reduction of land annuities |
1,148 |
1,191 |
1,250 |
1,337 |
1,422 |
|
Relief of rates on agricultural land |
16,977 |
18,920 |
20,696 |
24,400 |
28,280 |
|
TOTAL |
24,941 |
27,184 |
28,826 |
33,342 |
37,357 |
|
4. Long-term development aids (mainly of a capital nature): |
|||||
|
Arterial drainage |
1,369 |
1,347 |
1,601 |
1,362 |
1,373 |
|
Land reclamation |
3,476 |
3,844 |
3,719 |
4,525 |
4,000 |
|
Farm buildings and water supplies |
2,597 |
2,866 |
2,830 |
4,220 |
3,654 |
|
Equipment grants (milk coolers, forage harvesters and poultry) |
195 |
234 |
160 |
195 |
170 |
|
Improvement of livestock |
107 |
201 |
375 |
431 |
416 |
|
Capital for Agricultural Credit Corporation |
1,500 |
1,000 |
— |
— |
— |
|
Rural electrification |
801 |
1,560 |
1,950 |
1,205 |
1,426 |
|
Improvement of Land Commission Estates |
900 |
905 |
770 |
922 |
948 |
|
Other rural improvement schemes |
611 |
748 |
565 |
1,111 |
627 |
|
Horticulture |
418 |
471 |
411 |
520 |
487 |
|
TOTAL |
12,074 |
13,176 |
12,381 |
14,491 |
13,101 |
|
5. Disease eradication: |
|||||
|
Bovine T.B. |
2,366 |
2,494 |
2,949 |
3,337 |
3,200 |
|
Brucellosis |
318 |
326 |
871 |
1,815 |
1,800 |
|
TOTAL |
2,684 |
2,820 |
3,820 |
5,152 |
5,000 |
|
6. Education, research and advisory services: |
|||||
|
Education |
1,331 |
1,544 |
1,621 |
2,506 |
3,025 |
|
Research |
1,935 |
2,336 |
2,726 |
3,064 |
3,539 |
|
Advisory services |
848 |
970 |
1,102 |
1,395 |
1,503 |
|
Technical services |
434 |
478 |
517 |
612 |
655 |
|
Rural organisations |
35 |
41 |
41 |
41 |
61 |
|
Land and buildings for Department of Agriculture |
140 |
181 |
414 |
507 |
500 |
|
TOTAL |
4,723 |
5,550 |
6,421 |
8,125 |
9,283 |
|
7. Administration of Acts, Regulations and Schemes |
819 |
912 |
890 |
1,060 |
1,240 |
|
GRAND TOTAL |
77,194 |
89,497 |
94,188 |
108,632 |
107,661 |
NOTE:—Figures are net of appropriations-in-aid (receipts).
* Includes both capital and non-capital expenditure.
