Dáil Éireann debate -
Thursday, 20 Apr 1972

Vol. 260 No. 5

Committee on Finance. - Financial Resolution No. 3: General (Resumed).

Debate resumed on the following motion:

That it is expedient to amend the law relating to customs and inland revenue (including excise) and to make further provision in connection with finance.

—(Minister for Finance).

Mr. Cosgrave

This budget must be examined in the light of what it should do and what it does to stimulate the economy and provide the necessary reliefs for those sections of the community which have been so severely hit by the rise in prices. This budget is being discussed at a time when, by any standards, we have one of the gravest situations ever to affect the country. On the one hand, we are considering the important question of whether this country should become a member of the EEC and what will be involved in that membership: on the other hand, we are presented with serious problems and challenges politically and economically, politically in the grave effects which recent events in the North of Ireland have caused and are causing both to those directly involved and to many indirectly affected economically and socially. In addition, in facing this situation, we have a very serious unemployment problem with the highest number on the unemployment register for many years and in percentage terms the highest of any member or prospective member of the EEC.

Coupled with this, we have the serious contraction this year in the number of tourists and the difficulty we have had in recent times in attracting new industry to this country and the problems which industry has had to face and which have been the subject of many comments by those directly involved in it. Some of these problems have been with us for some time; others have arisen because of the inability or incapacity of the Government to plan effectively and consistently to adopt and implement the necessary decisions to carry into effect plans set out on paper and programmes laid down in different economic programmes which were announced with such publicity and which have produced such meagre results.

The budget must be examined in particular to see what it does for the weaker sections of the community and, in that regard, my colleagues and I and others in the community have repeatedly outlined the steps we consider essential to compensate the lower income groups in the community, pensioners and others on fixed income, for the substantial rise in the cost of living and in prices. I advocated only last week a substantial increase in children's allowances and in old age pensions and in personal allowances for income tax purposes and I recommended what has been sought for so long by so many State pensioners parity for those who have retired for some time with those who have retired recently.

This budget attempts to provide some of these reliefs: it gives parity in respect of State pensioners, a long overdue measure, applicable from 1st January this year. It also provides certain increases in respect of old age and other pensions. Presented baldly on paper as a percentage increase on existing pensions, these figures show an improvement but they must be taken into account with the actual rise in prices that has occurred.

In the course of a debate here last year I said that the introduction of decimalisation had resulted in a prices explosion. At the time the Taoiseach criticised that description. He said it was inaccurate and that the changes I had quoted applied to certain areas that I had picked specifically and which were disadvantageous to the Government but which did represent a very substantial increase. This week I got a reply from the Taoiseach to a parliamentary question. This reply sets out the changes that have occurred between mid-February, 1971, and mid-February of this year. It requires no embellishment of a verbal character to emphasise the extraordinary increases in prices and, when this information is considered together with an article by the business correspondent of the Irish Independent entitled “Leap in Food Prices after Decimal Coins”, I think the description I gave has been proved accurate.

Some of the increases in pensions that are being granted will take effect from August next and others will apply from October, but I am wondering how these increases will compare with actual rises in prices. The general change in price levels in this country in recent years has averaged an increase of between 8 per cent and 9 per cent. These figures are agreed by the OECD and other bodies and they have been confirmed by our own Central Statistics Office. If we consider the increases that are being granted now to the social welfare categories, we find that they compare almost exactly with the increases in prices up to February last, not taking any account of increases since then.

Increases in food prices affect particularly the social welfare categories. Between February of 1971 and February of this year, bread prices increased by between 17 and 19 per cent and flour prices increased from between 12 per cent and 15 per cent. Most people in the category to which I am referring could not afford to buy meat in large quantities, but let us look at the increases in respect of this commodity. During the period with which I am dealing corned beef increased in price by 3 per cent while there was a 9 per cent increase in respect of steak. In fact, the price of every item of food has increased since last year. There are further increases in respect of brisket corned beef of up to 18 per cent, round steak has increased by 19 per cent, sirloin steak by 20 per cent and mutton by 15 per cent. I am taking these prices from the published table.

Therefore, it will be seen that an effort has been made in the budget to compensate for these increases in prices but no conscious effort has been made to effect an improvement in living standards. There have been substantial increases in prices over a whole area but I shall deal with that later. For many sections of our community the struggle has become much more difficult. That is why I raised last week the question of what decision is to be taken by the Government to compensate these sections in the event of price changes as a result of EEC membership. Effective steps must be taken immediately in this matter. I am in favour of joining the EEC. I believe that, economically and politically, it is the right decision for us; but I accept that there are sections in the community which, particularly in the initial stages of membership, must be compensated for any increases that may occur so that there will not be a deterioration in their standard of living.

This year, as a result of our joining the EEC, there will be a saving in agricultural subsidies of £30 million. The budget is designed to promote economic expansion in that it does not impose extra taxation. As the Minister said, it is proposed to finance that in two ways: to borrow £27 million and to get a once-and-for-all payment from the Central Bank of £7 million. The House is entitled to a more comprehensive explanation than that given by the Minister as to how this £7 million was accumulated. He has told us that, arising from the expansion of the Central Bank's activities and also from the exceptionally high interest rates obtainable on invested funds in recent years, a credit balance of this amount was accumulated in the bank in respect of surplus income. This has happened at a time when every section of the community was finding it increasingly difficult to get money. It happened at a time when it was very difficult to raise the necessary moneys to finance industrial and economic development.

By way of some activities that have not been disclosed the Central Bank has accumulated this surplus. Even allowing for inflation and devaluation, that is a sizeable amount by any standards. It was accumulated at a time when the Confederation of Irish Industries—a body that no one could accuse of being historically antiGovernment—expressed their condemnation of the measures taken by the Government in regard to company tax, a move that we described then as a panic measure on the part of the Government. The Confederation of Irish Industries in press releases and in submissions to the Government voiced their strong objections to that proposal because of how it would affect adversely Irish companies compared with their competitors in Britain and elsewhere. It is well to examine now what has been the effect of that decision. It increased company taxation and made it retrospective to the extent of £6 million.

Within 12 months that decision was reversed as to 50 per cent of the increase. This decision has now been completely reversed in this budget. Industry has found that that decision meant that it was more difficult for them to get the necessary liquid or surplus cash to expand and develop. This is where the failure of the Government to plan effectively on a consistently economically sound basis is noticeable. The Government should not shift with every wind, either internal or external—internal in the Fianna Fáil Party, or external in regard to events here or elsewhere. The confederation stressed in table 2 of page three of its submission prior to the budget that the retentions had dropped by 23.68 per cent. The retentions provide the money available for expansion development or whatever other purpose is required in respect of the company's operation. This figure was compiled from a sample made of companies whose facts and figures were made available or who had discussions with the Confederation of Irish Industry. This is a very dramatic figure which they have published. The figures available from company accounts show an alarming fall in retentions. As I have said, the figure is over 23 per cent. At the same time, these companies were faced with the problem of expanding employment and of finding it more and more difficult to develop and to get industry geared for the situation which would develop either in the event of the EEC membership or in respect of competing with their competitors elsewhere.

It is stressed in the recent OECD publication that major policy decisions will be required in the near future. Having examined the Irish economy for the last year, in its report it is said at paragraph 59:

These problems are not new, and their origins can be traced back to structural as well as conjunctural factors. The high absolute level of unemployment—side by side with bottlenecks in certain localities and skills—reflects the still somewhat traditional industrial structure, and highlights the urgent need for modernising production. But its sharp aggravation in recent months was the result of the low level of demand at home and in the United Kingdom. Irish inflation is also, to a large extent, a reflection of trends abroad. But Ireland has been among those member countries experiencing the most rapid rates of cost and price increases over the past three years. Evidence exists that imports have gained ground in recent years as a result not alone of freer trade but also of some loss of Irish price competitiveness.

That is a comment by an outside body which goes on to say in a later reference at paragraph 69:

The need for a comprehensive long-term strategy is underlined by forthcoming entry into the European Communities and the prospects of moving to a higher sustainable rate of growth.

It also reads:

Long-term questions which might be included in such a programme are:

—Manpower policies, considering both employment and rationalisation needs. This might call for some acceleration of the expansion of industrial training and labour adaptation schemes, particularly so as to give service industries the same encouragement as is provided for manufacturing;

—a more active regional policy—for which there will be a good opportunity when Ireland is inside the European Communities—in order to make an effective assault on long persisting structural unemployment;

Insofar as Government decisions are concerned they have been haphazard and inconclusive. They have been haphazard in that when decisions have been taken they have not been implemented. We have been waiting for months to implement the recommendations of the Devlin Committee on certain changes within the Government. The legislation is before the House and so far has not been proceeded with.

There has been legitimate pressure in regard to the VAT because of the real fears of industry and trade. When we ask to have a decision postponed, we find that the tax being introduced in Britain is entirely simpler in its operation than what is proposed here. The decision to introduce VAT should be further examined before any proposals are introduced later this year to add additional burdens to the community. In the recent report of The National Prices Commission there is a certain amount of special pleading about this. At paragraph 24 the report reads:

Our general conclusion, from the discussion in paragraphs 14-23 above, is that the replacement of the wholesale and turnover taxes by VAT should have a small effect on the general level of prices and that its effects on relative prices should not be significant. If prices do not rise appreciably, the reason will be an unjustified reaction to the introduction of VAT by manufacturers and distributors or cost increases arising for reasons other than VAT. We propose to monitor the prices of a wide range of products during the two months preceding and the two months following the introduction of VAT. The results will be published in a monthly report following the completion of the study.

I do not know what advantage there is in publishing reports of increases after they have occurred. We must take into account the phenomenal rise in prices which occurred following decimalisation. These are facts contained in reports of the Central Statistics Office and in the actual variation in the price index. We must examine how prices have been examined and what function, if any, the prices section of the Department of Industry and Commerce have in this regard. I have never held the view that price control of itself is largely ineffective, but there is nothing worse than the illusion that there is a section or a body investigating prices and that, to quote the leading article of The Irish Press of the 18th February, 1972—

Eighty per cent of the complaints regarding over-charging of goods to the public were found to be justified last year. This is a very frightening statistic. It calls in question the basis of the price control structure and it indicates that respect for the law in this vital area is at a low ebb.

Does one expect from a Government which have such a low regard for law enforcement that other sections of the community should respect them? The article further states:

Make no mistake about it the trader who offends in this way has no right to point a finger at law breakers in other matters.

It goes on to quote from what the Minister had said, but it is even more severe when it says, and I quote:

Surely if ever there were a case that justice should not only be done but be seen to be done it is in the field of price fixing for goods so that this crucial factor in the relationship between incomes and prices can be properly assessed.

We must consider the weaker sections of the community, pensioners and other social welfare recipients, but outside those categories there are many people in the community whose situation is worsened. I look particularly at the extraordinary increase in respect of two aspects that have been included in the consumer price index, one in respect of rates, which increased in the past 12 months by over 20 per cent. A song and dance was made by the Minister for Health and some of his colleagues because, due to the recent decision the Government took, the increase in health charges would not be as great as it otherwise would be. No matter what was done they could not be much higher than they have been. It is true that this year the State has assumed part of the liability for the substantially increased charges that would apply, because of the widespread outcry, because of the violent reaction not only in this party and in the Labour Party and elsewhere but among Fianna Fáil councillors throughout the country at the astronomic rise in rates due to the health charges.

Let us go further and examine the increase in hospital charges. I do not think Deputies are aware that hospital charges increased by over 20 per cent. There has also been a great deal of talk about the free education scheme, but education costs increased by 9.81 per cent. Here are two major decisions which the Government had to make— and nobody else could make them for them—and on which they dithered not for months but for years, one in respect of the health services and the other in respect of education.

We have consistently pointed out that one way to finance the health services on an equitable basis—and we do not suggest and do not believe they can be entirely financed in this way— is through a contributory scheme, which would make a substantial contribution to meeting the increase in charges. A decision must be taken to examine critically the efficiency of the large regional health boards which would seem to be providing only a moderate service at a very high cost in respect of those sections of the community for whom these health services are provided.

This decision to establish a prices commission was heralded with a certain amount of publicity. I wish to quote again from the article in The Irish Press. I have quoted from many other articles as well but the suggestion might be made that they were less objective. The heading in the Irish Independent was: “Soaring Prices” and the article stated that in the past three years prices in this country had risen by over 25 per cent, and that since then the up-to-date figures showed that they have gone up by between 28 and 29 per cent. This was published on the 29th November last. The Irish Press in its article quotes the Minister for Industry and Commerce:

Mr. Lalor did say that what was allowed was usually well below what was applied for. If this is as common as he suggested then there must be a great lack of honesty in many of the applications. The public shudders when a trade union puts in a claim for a 20 or 25 per cent rise in wages but at least it can be said that the issue is at once apparent to everyone. In an enlightened age of public opinion the practice of kite-flying as high as possible in order to get somewhere above the norm is a stupid procedure whether applied to wages or the price of goods. It should not be tolerated.

No doubt it will be said that this would destroy the market for free enterprise and the logic that prices will find their true level. Some of these implications may be valid, but on the other hand if a system permits of unjustifiable leapfrogging in either prices or wages it is a bad system and already in disrepute.

At an earlier stage the article said:

By the time price increases are officially announced they have often already been in operation for a long time and the public may not know whether the announcement is an endorsement of our existing situation or the threat of a new increase.

That is undoubtedly true. I do not believe that any description of the price system that has operated here is more apt than that comment, apt because of the way in which is has reflected public opinion of the manner in which prices have operated. That is a situation that has affected not only pensioners but every section of the community. We have got to see what this budget does to stimulate production, to provide the incentives that it was designed to provide. In the past 18 months there has been a substantial increase in company taxation at a time when our competitiveness vis-àvis other countries in the OECD not to mention the EEC countries has worsened. Again, this has been examined carefully in the recent OECD publication which says:

It is difficult to see how equitable rates of expansion of output and employment can be achieved unless the deterioration of Ireland's competitive position is halted.

It also says:

In its Winter 1971Quarterly Bulletin the Central Bank estimated that with a 4 per cent real growth rate in 1972 and a 5 per cent rise in import prices, wage and salary increases of more than 8 per cent would give imports a further price advantage on the domestic market. As the 4 per cent growth rate would imply increased industrial employment (at higher average wage rates) the increase in wage and salary rates would have to be less than 8 per cent.

It concluded:

... as the Central Bank said, "the margin for error is evidently very slight".

We see, therefore, that the decisions taken in this budget are decisions taken after events, decisions to compensate pensioners for the increase in prices and decisions to alleviate the position of income tax payers. In regard to the latter it is, I think, pertinent to reflect on the submission of the Confederation of Irish Industry, a submission which was confirmed here yesterday by the Minister's own comments, that the personal allowances have remained unchanged from 1954-55 to date, apart from the modest increase of £15 in respect of single persons and widows and £30 in respect of married men granted in 1968-69. The submission goes on to point out that the moderate increase in the tax allowances for children has been effectively reduced in its impact by making the allowances granted by the Department of Social Welfare liable to tax. Earned income allowance for income tax purposes was last increased in 1960-61.

Now what has happened here is that we have been shamed into doing something by the widespread comments from affected sections of the community and by the example shown recently by the British Chancellor of the Exchequer in respect of income tax. This, again, is merely compensation. There has been an improvement in the position where death duties are concerned. The amount has been increased from £5,000 to £7,500. When one takes into consideration the change in the value of money, this is not such an alleviation as might be supposed. There will be a reduction in the rate of estate duty on estates between £7,500 and £11,000. Again, the increase here has not kept pace with the fall in the value of money. This is introduced now years after the original change was made and it does not compensate though I recognise, as the Minister pointed out, that this particular change is a costly one.

What is essential here, and this has been reinforced and re-echoed time and time again by interested bodies, is a decision to take and to implement long-term plans in respect of a number of matters. There was, I think, a cynical smile from many people when we heard a fourth programme being mentioned. There is not even a displaced sod, never mind a tombstone, to mark where the first three programmes have been buried. Now we are going to have a fourth programme. What is important is the reform of our taxation system. As the Minister remarked, the present system has been in operation for over 100 years where income tax is concerned and for 60 years where surtax is concerned. There has been no conscious decision to carry into effect, with the exception of this programme budgeting, the recommendations of the Devlin Report. No real effort has been made to reorganise our taxation system. There was one slight change made—a substantial change from the point of view of its impact—by the introduction of PAYE. No decision has been taken to implement the recommendations of the Commission on Taxation. There has been no fundamental re-appraisal of our health and social welfare services. There has been an absolute failure, and this affects every area, to reach decisions in respect of education. It is an extraordinary thing that, no matter what district one visits, no matter what constituency, no matter what town, every single project for a school is either held up or deferred or discussions are taking place because of the inability of the Government and the Department to come to grips with the situation. This is the situation particularly in Dublin city and county, in my own constituency of Dún Laoghaire/Rathdown and in other fringe areas. The Government and the Department have failed to come to grips with the situation for two reasons. The idea has been propounded that the larger the school the more efficient it is economically. There is some validity in part of that argument, but there is no validity in the illusory notion that only schools of 1,500 or 1,600 are economic.

Deputies

Hear, hear.

Mr. Cosgrave

Brothers, nuns and, in some cases, vocational committees cannot proceed with their plans because the Department has not approved decisions to proceed in a great number of cases. Having notified the religious orders of the vocational committees that sanction will be granted, proposals had been approved and grants notified, a decision is suddenly taken to establish either a comprehensive or a community school and, because of this decision, which is liable to change at any moment, no steps are taken, except one: if the position is really bad, the Department will provide a mobile prefab unit. This is bad economics and it is bad education. This is the situation that has developed and there is no use denying it. This shilly-shallying applies over a whole range of matters that should be the subject of major decisions; because of local politics or national politics the Government dither and make no decisions in respect of health services, social welfare, education.

Over and above all that, we must now look at what this budget will do to provide for an expansion in employment. There are criticisms by people who, in the past at any rate, were not unfriendly to the Government. They have repeatedly said that the problem of retaining adequate funds in companies to expand employment and to develop has been made quite acute. If there is one thing worse than bad economic circumstances it is uncertainty. This is recognised by academic economists, by professional economists, by Deputies and by people running their own businesses. If people are facing a bad situation, they can plan for it. If they are facing prosperity, it is easy to deal with it. The one thing business finds it impossible to deal with is uncertainty, uncertainty on the part of the Government.

There are factors over which there is no control. Some are external. But the fact is that in recent times import prices have been not unfavourable and the two problems that have affected industry and trade have been internal price rises and the indecisiveness of the Government in relation to company taxation and economic and financial policy. A decision was taken 18 months ago to increase company taxation. Within a year that decision was reversed. When the decision was taken companies had closed their accounts. They had to re-open them. Now they are told they will get back almost the full amount of the deduction then made.

The Minister announced relief in respect of free depreciation. I do not think this relief goes far enough. I am aware of one large industrial development, with a capital commitment running into millions of pounds, providing worthwhile employment and using in the main native raw materials; this concern is involved in large-scale planning of a most detailed character, which takes time to work out and will subsequently take time to put into effect. In discussion with the representatives of the Confederation of Irish Industry concern has been expressed about a number of projects brought to their notice in which this free depreciation will apply. It is important, I think, that the extension of this allowance should be so operated that none of the major decisions that are in the pipeline will be affected. Obviously, in a matter of this sort some date must be fixed but where people are led to believe that a relief of this character will be available, then it should be notified adequately in advance so that people can plan and carry their plans into effect and know that the relief necessary and the assistance required will be forthcoming when their plans reach fruition and the proposed enterprise goes into production.

This year we had the highest rate of unemployment for many years. It has been running at a monthly average of 8,000 to 9,000 more at the end of 1971 than in 1970. Part of this was, of course, caused by the recession in Britain and part has been caused by events here. Deputies in this House and the public at large are aware that all during last summer and well into the tourist season the Minister for Transport and Power was insisting, with all the flair he can display for chancing his arm in respect of replies here, that there was no risk to the tourist trade, that the figures were not bad, that, in fact, the tourists were still coming.

Mr. L'Estrange

No problem, no crisis.

Mr. Cosgrave

There was no problem, as the Deputy reminds me, no crisis. Everybody conected with the tourist trade was aware of the situation, everybody who had any contact with travel agents. Now it is obvous to everyone, including the Minister for Transport and Power. He was the last to recognise the facts. The Government were the last to admit the fact that the situation had reached such a degree that a conscious and deliberate national campaign would have to be undertaken to convince people that it was in the national interest and a patriotic duty to spend holidays at home. Bord Fáilte apparently were not aware of the situation or, if they were, the Minister for Transport and Power and the Government did not accept their advice. That has affected the tourist industry; it has affected Aer Lingus. I believe it is important now to take decisions, to recognise the acute problems that hoteliers have had to face and, instead of spending money on trying to attract tourists from areas from which it will not now be possible to get them to come here, we should concentrate on providing assistance to enable hoteliers and guesthouse owners who had undertaken substantial commitments to pay off their loans. This is an urgent and acute problem for many of them and there is an obligation on the Government because of the encouragement that was given, because of the almost reckless manner in which hotels were built. Nobody would now suggest building any kind of extra accommodation. Here one must question the manner in which some of the decisions taken by State companies were taken.

I always felt and expressed the view that a proposal by CIE to build an extra hotel in Dún Laoghaire was not warranted. According to the figures published and on the information given to me by Bord Fáilte I knew that, at the peak period, with one brief exception, less than 50 per cent of the bed nights were taken up by the hotels and guesthouses in Dún Laoghaire. That was at the peak period. At the same time, a State company proposed to go into competition with private enterprise where the people were already taxed to their capacity to keep going. The management of the largest hotel in Dún Laoghaire recently said not to be talking in respect of a 50 or a 20 or a 30 per cent drop, that he believed that the drop this year would be as high as 70 per cent. He knows the number of conferences that have been cancelled in respect of Dún Laoghaire and the effect on the economy. On the other hand, there was the decision of Aer Lingus to expend public money at a time when it was obvious it would not be possible to keep the number of services operating in a manner that would show a return.

These are major decisions for which only the Government are responsible. Remember no Opposition party, no matter how well equipped, can have available all the information or all the facts. We can only express opinions on the information given to us, sometimes extracted through Parliamentary questions, sometimes gleaned from comments made in these reports.

All the evidence shows that there has been no overall plan to expand the economy, no overall plan to provide employment because of the shifting and changing in Government decisions. Eighteen months ago company taxation was raised by £6 million. Within 12 months that decision was reversed as to 50 per cent and now six months later the whole decision has been reversed. That is not caused by external factors. That is not caused by outside influences. That is caused by deliberate Government decision either based on lack of appreciation or lack of knowledge of the facts or lack of a capacity to understand the problems of industry or the problems of trade. That decision was taken with all the knowledge, with all the facts, with all the information at a time when the Central Bank was accumulating, for money invested, a sum of £7 million. I believe there is an urgent need not for judicial inquiry, not for inquiries that are predetermined before they are established either here or elsewhere, but for an investigation by a committee that we have recommended for years analogous to the Committee of Public Accounts which will turn the searchlight on the activities of every State company, of every State body——

Deputies

Hear, hear.

Mr. Cosgrave

——and when that is done, will turn its investigation to how Ministers of the Government are operating in the discharge of public duties.

Mr. L'Estrange

Hear, hear.

Mr. Cosgrave

These are the questions to which answers must be provided. These are decisions that must be made if this country is to make progress. We have been getting examples here of the stop-go policy. The use of the accelerator on the one hand and the brake on the other has been so rapid that sometimes people do not know whether they are stopping or going. They do not know what is operating. The situation has developed in which the various sections directly concerned with providing employment do not know where they are. We all recognise the problems that business has. This investigation into VAT or the recommendations of the Prices Commission is carefully worded and the strongest criticism that has been made of the way the price control mechanism operates was strangely enough in an article in The Irish Press. This report says in one of its comments that it will mean that certain traders will have to provide more staff. I quote:

All the companies covered by the small sample survey will need to undertake additional work to analyse the VAT content in suppliers' invoices and to show the VAT content in their own invoices. Some other companies, for example, Cash and Carry Wholesale Merchants, will be required to produce invoices for the first time.

This system, added to the wholesale tax, added to the turnover tax and now proposed in replacement of both of them, will add still further to the burdens, the problems, the bureaucratically-imposed system of returning accounts by traders and business. In addition, they have no guarantee that the Government will not change their mind or be driven off course by some internal or other question.

What is urgently needed has been emphasised in the independent reports furnished by the OECD and by the Irish Banking Review Quarterly of March, 1972, in which it is stated:

The static employment level was accompanied by an unusually heavy rise in the unemployment total in the latter months of the year, and in the early part of the present year. The number registered as unemployed according to the latest statistics is over 78,000 which, although somewhat lower than the end-year figure, represents a rise of over 8,000 in the course of the past year.

The article in the review concludes with the following statement:

Inflation and unemployment will be the crucial economic problems to be tackled in the course of the present year, and unless a serious effort is made to contain the current rate of cost increases, it is impossible to be optimistic about the future course of the economy in 1972.

This comment and the other comment that I have quoted were made in the light of the facts as presented. The price rises that have been confirmed, the changes in the consumer price index indicate clearly the way in which prices have gone in the last year. If prices are to be adversely affected by the introduction later this year of VAT, then it is essential that there should be a clear indication from the Government as to what major decisions are required to stimulate the economy and to promote employment and to assist those who are endeavouring to suplement their incomes.

In this respect there is one glaring omission from the budget. There is no relief for married women who have to go out to work. The relief given merely meets the rise in prices that has occurred this year. There has been no real improvement in the standard of living. We must face the challenge of EEC membership. In social welfare payments, in standard of living and income per head of the population we are at or near the bottom of the table. Many families are finding it difficult to meet the rise in prices and because of economic circumstances wives are obliged to go out to work. The budget has given no relief in respect of married women who are liable to income tax.

I do not understand the commitment to equal pay. There is a verbal commitment in the financial statement and there has been a published statement by the Government that they are committed to equal pay for men and women in the light of the general policy adopted in the EEC. This would, surely, have been an opportunity to implement, on a gradual basis, a system of relief that would indicate to married women appreciation of their contribution to the economy the work they do in looking after their families and in supplementing the family income. That appreciation could have been shown by giving them some relief of income tax.

What is really important is the taking of decisions and carrying them into effect, decisions of a major character in respect of the economy, taxation, health services, planning and education.

The Devlin Plan was based on a very substantial investigation. It is proposed to implement it only in part. It is obvious that in the case of the Devlin Plan, as with other plans, no conscious effort has been made to implement it. A promise was made, again with a great deal of publicity, to move sections of Government Departments to the west. What has happened in the case of that promise? There is no chance of that promise being implemented. It may be resurrected, like the question of the Shannon drainage, for the purposes of the next election. The only action ever taken in respect of the Shannon was the rapid investigation by highly qualified technicians who were brought here and which resulted in the Rydell Report. That was 15 or 16 years ago. No action has since been taken except during the Roscommon by-election when one read in the Sunday newspaper that the Shannon would be drained.

In the present situation and in this year progress will depend on order, on a recognition of the rights and the needs of the weak, on our capacity to see that their position is safeguarded, on our determination—here we come back to the fundamental problem that affects this country — to prove to ourselves and to outsiders that democracy will be preserved in this country against the forces of disruption, often alien, many of them disguised in patriotic garb, some infiltrating genuine organisations and bodies composed of simple people in order to exploit political and other problems. We must convince ourselves that the resources of our civilisation are not exhausted. We must assert and defend the rights of every section of the community. We must be prepared to take the necessary measures, no matter what the cost, to see that their rights are vindicated and assured. In this regard — and this goes to the root of the matter — nobody can have any confidence in either the Fianna Fáil Government or the Fianna Fáil Party.

Many years ago the late P.S. Ó hÉigeartaigh described Fianna Fáil or whichever name they were masquerading under then, as the "Sea Green Incorruptibles". Not even the new computers that they have promised could find a sea green incorruptible in Fianna Fáil now. I believe the time has come for us to assert what decent people in this country want to assert, irrespective of which party they support — to assert the beliefs we have in our own capacity to govern ourselves, the confidence we have in our own ability to live together and to work together, the confidence we have to weld into one Irish society every sectition of the community, North or South, Catholic, Protestant or dissenter. The time has come to refute — this is a solemn obligation — the criticism voiced a long time ago of the Irish people by Dean Swift when he said: "We have just enough religion to make us hate but not enough to make us love one another." If we could in this year refute that criticism, we would go a long way towards economic, social, political and national progress.

Mr. Tully

This budget has been described in numerous ways by numerous people during the past 12 hours some people thought it a reasonable budget but others said they were terribly disappointed. Does the Minister for Finance think he could have given anything less than he gave and get away with it?

We are not talking about normal times, about budgeting when the country's economy is running smoothly. We are dealing with a situation in which the country is at its worst, financially and otherwise. Indeed, the Minister for Finance in introducing this budget suggested that he was budgeting for a deficit, and on the figures that would appear to be so. To me, however, and to many others, it appears that the deficit is more imaginary than real. The Minister must know that what used to be termed the buoyancy of the revenue is likely in the coming year to do what it did last year — to produce very much more than his experts thought it would, mainly because the State now has reached a stage when, as far as income tax is concerned, the Exchequer collects roughly one-third of every wage or salary increase granted to the majority of the workers. The State blithely lifts it out of the wage packet every week and at the same time tells each of us trade union officials that we should not be looking for higher wages for the workers.

If we go to employers looking for an agreement, whether it be of a national nature or otherwise, and prove to them that because of mismanagement by the Government and for other causes the cost of living has rocketed since the last wage increase was awarded, and we ask for an increase of £2 a week and we eventually get that increase, the Minister must know that if the State takes one-third of that, people we represent are not getting what they require and what they fought for to maintain their standard of living, not to talk of improving it.

Therefore, the whole set-up in this country needs to be changed around and the whole taxation system has got to be examined. We have got to deal with these matters in a way much different from that in which the Minister dealt with it yesterday. He spoke about the wonderful thing he was doing giving back £11 million to the income tax payers. In fact, what he did was to give the same amount of tax remission to the man with £10,000 as to the man with £20 or less a week. Indeed, he did worse than that. The man with the £20 a week or less will get his remission at the rate of 5s. 3d. in the £ and the man with the £10,000 a year will get it at 7s. in the £. Therefore, the more you have the more you get back and the result is that the Minister's suggestion is not fair even on the basis which he gave.

I should like to remind the Minister, in addition, that when he speaks about giving an extra £50 by way of personal allowance, this will represent roughly £17 a year less the taxpayer will have to pay in normal circumstances. He spoke about increasing the personal allowance by £70 for a married couple and this represents £24 less. When he spoke about £20 for each dependent child, this represents roughly £6 a year less. We can then go back to what we like to call "Charlie's Budget" a few years ago. He allowed the first £100 of taxable income to be charged at 4s. 8d. in the £. Last year, if we like to continue with Christian names, we come to George. George, of course, having last year taken away £11 of the relief Charlie had given to us, gave this year about £6 to the single man and roughly £13 to the married couple plus, perhaps, roughly £6 a year for each child.

What on earth does the Minister for Finance think the ordinary people in this country are? Does he believe this will buy over people to his side? Does he not understand the economics of the working man's home? What the Minister has given this year by way of rebate is about 12p per week to the single person and about 25p per week to the married couple. Does he not remember that last year the Minister for Health imposed an extra 15p on what the working man has to pay when he added that amount to the insurance stamps to pay for health charges? I know many people who have never been sick, who are praying that they never will be sick but who are paying this 15p a week. How, in the name of goodness, can the Minister for Finance say he is doing a wonderful thing when he is giving back 12p a week to the single man and 25p to the married man? He calls this a great budget. I wish he would grow up. The person who has to go into the grocer each Saturday to pay for his groceries for the week will have no joy.

I believe the Minister's budget was prepared in the background of the coming referendum. He had to introduce a political budget. I do not object to the Minister doing that because he would be a bad politician if he did not bear that in mind. What he attempted to do was to spread a little over a long way, to try to give a little bit to everybody. I do not regard that as being the function of a Minister for Finance. The Minister had two main tasks. The first, of course, was to try to set the economy back on the right road. That is the main function of a budget. Secondly, he should have tried to give some relief to the people who are finding it very difficult to live from their wage and salary incomes. In this budget the Minister has not succeeded in doing either.

Another thing was the way he treated the agricultural community. He gave them £1.8 million. This will be very thinly spread and only a small percentage of farmers will succeed in getting anything at all. I listened to farmers yesterday evening and heard a very interesting programme last night. Most of the speakers, who seemed to be pro-Government, found it very difficult to make a case for the budget. The thought that struck me was that in the EEC referendum coming along the Minister for Finance and the Government felt they had the farming community behind them, their votes were safe, so they did not need to give them anything more than this pittance.

The Minister then proceeded to spend whatever money he had in other directions. It was not even an intelligent budget because if it was he would have attempted to give a lot more to those who really needed it. The man who has £4,000, £5,000, £6,000 or £10,000 a year would not look behind him if he heard 25p falling. He would not bother picking it up but the unfortunate man who has only £20 a week would be very careful to pick it up. This man has to pay for insurance stamps, and two or three pounds income tax, £3 a week on petrol, probably £5 for a car which he hires to bring him to work and £4 for the new house which he built when he got married. This leaves him with only about £4 a week. He finds when he goes to buy groceries or a pint that the State collects taxes off that.

We have reached a stage in this country where the working people are carrying too big a burden and must be the quietest people in the world to accept what they have been handed out for so long. We are told that we have only to wait until we get into the EEC and everything will be grand. The people will not accept that now because they are beginning to read into all the publicity the State have been handling out to them. Some of the documents handed out may not be completely accurate but they have been very well got up. We should all admire them because we are paying for them. It is not Fianna Fáil who are paying for them.

A question was asked yesterday about the cost of the referendum. We were told that it will cost £140,000 but that did not include the cost of all the material which is being turned out. I would like to know how much of that £140,000 has been spent on this sort of thing which could very usefully be given to those who badly needed it in the budget.

Deputy Cosgrave referred to rates. While, I, living in a rural constituency, have a great deal of sympathy with the farming community, nevertheless, where rates are concerned I feel that the people who are really getting plastered are those living in houses with no land, people living in villages and towns and small business people. They get no remission of any kind and every time there is an increase in rates they have to pay this. We have reached the stage where rates cannot go very much higher. The reduction which the Minister for Health has effected by his 35p off the health charges is very little use to people who find they have to pay far more than they can afford for the luxury of living in a very substandard house or people trying to run a business which is barely making enough to keep the owner and his family going.

Has the Minister given any thought to what is likely to happen with regard to rates if we go into the Common Market? When he replies he might give a little assistance to those of us who are worrying about this. If rate charges are to be borne by the people I have referred to and if the prices people will have to pay in the Common Market are as high as we know they will be we will no longer be talking about a county striking a rate of £6, £7 or £8. We will be talking of at least double that. Then we will really have something to complain about. I hope that never arises but, certainly, the onus is on the Minister for Finance to ensure that everybody knows what is likely to happen. If remedial measures have to be taken, they should be taken in time.

Many of us dislike some of the things Britain does but yet we have the habit of following the line she takes in many things. However, we have a peculiar knack of not following Britain in something which is really of benefit to the ordinary people of the country. In the British budget the people were told that food was being exempted from the value-added tax but it is not being exempted here. If the State were really interested, they could have helped those who are poor and those who find it difficult to make ends meet by exempting food completely from the value-added tax. If the Government made a provision for that, perhaps, the measure would get a less stormy passage through the House. The Minister looked into the crystal ball, which he and his predecessors have been looking at for a number of years, and he has now come up with this three stage tax. The Government are really in trouble if the Minister attempts to put that tax into operation as is suggested.

No matter what is said in the Minister's speech about this budget not increasing prices as soon as the value-added tax is introduced prices will increase substantially. We got assurances when decimal currency was being introduced that it would not increase prices. We know the disastrous effect that had on prices. I predict if value-added tax is introduced, as it is proposed now, it will have an equally disastrous effect on prices. The Government cannot evade their responsibility by saying that they did not deliberately increase prices by putting on tax because if they put on the value-added tax as it is proposed it will certainly increase prices.

Some survey should be done on the take home wage or salary of the ordinary people of the country. Members of the House, officials of the House, civil servants and every wage or salary earner throughout the country must know that the amount of money written opposite a person's name as being the wage or salary of that person bears very little relation to what that person finishes up with when he goes into his home. Something has got to be done about this. After deductions for this, that and the other are taken out of a worker's wages he has a much smaller sum than he is supposed to be getting. He is taxed on his gross wages with certain small exemptions such as superannuation and social welfare payments. The unfortunate tax collectors do not know whether they are coming or going. Over the past 12 months they have blamed the computer. If we have a situation where income tax is altered immediately after the beginning of the tax year, which means sending out a second set of tax notices, and later in the year a third one has to be sent out to try to cover increases in social welfare stamps, it is absolutely ludicrous to put all this extra work on to the income tax people.

Last year when Charlie's £100 allowance was taken away many taxpayers, particularly those employed by the State and local authorities as well as many other people, did not make the necessary provision. When they got their holiday pay in August £6 or £7 was taken from their pay because the income tax authorities had not got to the stage where they could notify people of the change in taxation. The taxpayers, through no fault of their own, had allowed an income tax liability to accrue and the amount due was taken from them.

We need not talk about holidays for the lower-paid workers because very few of them ever have enough to go further than the local pub. What they get in wages barely pays for outgoings, but yet this extra impost has been made. The State should treat these people in the same way that it acts itself with regard to social welfare benefits. If the State said that the tax increases would not operate until 1st October there was a chance that the people would be able to have their tax-free certificates in time before the tax deduction was made. That does not work when income tax is concerned but when it comes to the payment of social welfare benefits the Department say that they are not able to get the documents ready in time and will not pay until the 1st August and 1st October. That is what happens when the State is paying benefits but when it is taking something it operates from April.

The workers will be very disappointed by this budget. If the Minister decided he could give away £11 million the workers do not see why the wealthy people should get more than they got. I have been making a comparison with the figures in the British budget. As Deputy Cosgrave pointed out, the earned income allowance for a wife in Britain has been increased to £460, an increase of £145. In Ireland the working wife only gets approximately £145 for her allowance.

Apparently we have not any idea why a wife goes out to work. In the main she goes to work because her husband is not earning enough to keep the family in frugal comfort, or the family want something extra and she decides to work for it. In Britain the marriage allowance has been increased from £465 to £600, the corresponding unified allowances being from £595 to £775. These allowances have been given in Britain; here we talk about giving an extra £50 or £70 and expect cheers for it.

There is also the question of people who do particular jobs. I do not know if the Minister has had an opportunity of studying industry as some of us have done but I can tell him that there is a marked reluctance by some people to do overtime. They need the money but if the State is going to collect one-third of the increase it is not worth their while doing the work. I would mention one particular category — the part-time firemen. These people volunteer to do this work and they risk their lives. They go out at inconvenient times in order to try to save lives and property when a fire occurs. If they are workers earning a wage the money they receive for fire-fighting duties is subject to income tax. Although these people have made every effort possible to try to clear up this matter they have not been successful.

I would suggest to the Minister for Finance to have a look at this matter. His predecessor made a special case for certain other people some years ago but the present Minister does not appear to be able to do the same thing for these part-time firemen. Perhaps he would get the Minister for Local Government to recommend to local authorities that these people should be compensated and should have an element of compensation for income tax deductions made in the amount they pay to the Government. This is a reasonable suggestion which everyone will accept because if these people do not do their part-time duties the fire bill will be much higher.

The Minister has said that he has increased the remission in respect of death duties by approximately 50 per cent. The Minister does not appear to realise that the value of property has increased enormously because of inflation. The valuation and price of a comparatively small house and property has increased to such an extent that when people of modest means are caught for death duties the burden is quite severe. Much more could have been done for people at the bottom of the ladder. A sum of £1,000 to a man who has £100,000 is far less important than £100 to someone who owns property valued at £6,000 or £7,000. The Minister for Finance does not seem to understand this.

I am very disappointed at the manner in which social welfare benefits have been dealt with by the Minister. He gave pittances and expected a lot of thanks for it. We have listened to people speaking in this House and outside about the necessity of encouraging our brethren in the North to come in with us. I do not believe we will succeed in persuading them because the Northerners are practical, hard-headed people. No matter how patriotic they may be, no matter whether they are Protestants or Catholics, Unionists or Nationalists, they will think twice before they come into the Republic where the standard of living, the social welfare benefits, the cost of hospitalisation and health are so different from those in the North. I know the Northern Government are subsidised by Great Britain but it is idle to speak about unity unless we make some attempt to bring our benefits up to the levels obtaining in the North.

This was a golden opportunity. Do not say we cannot afford it because we could afford to spend much money in other ways during the years. The Minister did not take that opportunity and I am surprised at this. He is a man who has spoken much about national unity but he fell down on this matter. I am surprised at the Minister for Labour and Social Welfare — himself a Northerner — for not realising that here was an opportunity that should have been grasped with both hands and a big effort made to bring the social welfare benefits here closer to those paid in the North. Last night on radio the Minister said that of course we are giving benefits not being paid in the North, that the North are giving benefits we are not giving and that it is unwise to try to compare both cases. That is not the problem. There are certain benefits which are common to both, there are benefits which must be paid to those who are sick, who are unemployed, and to the old. If the Minister is serious he must make an effort soon, although he has failed to do it in this budget.

It is rather significant that there is no increase in children's allowances. It is very significant, indeed, in view of the fact that more than once there is a reference to the EEC in the budget speech. I wonder would the view of the President of the EEC, Dr. Mansholt, have anything to do with it. He is the man who said that children's allowances should be decreased rather than increased according to the size of the family. He felt that big families should be discouraged by giving them a smaller allowances than small families. When you find that there is no increase in children's allowances in this budget, you wonder whether the thinking of Dr. Mansholt has not seeped through to the powers that be in this country.

It is said that people who talk about contraceptive devices are anti-national and anti-religious. One wonders whether this is an effort to achieve the same objective in a different way. I suggest that the Minister will have to answer to many people on this score. I welcome the Minister's decision to give free travel to the wives of those who are already entitled to it.

Mr. Geoghegan

I was waiting to see if the Deputy would thank the Minister for anything.

Mr. Tully

We have been asking the Minister to do that for long enough. If the Minister for Social Welfare steals some of our clothes we will not object, provided that he wears them properly. I think we can say that he has put the coat on where the coat should go, and I say: "Thank you very much." I am glad he did it and I hope he will go much further.

There are a number of other matters which we have been pressing him about from the Opposition benches for quite some time. In view of the success of this campaign we should put down a series of questions reminding him of a number of things which we know he should do. He cannot keep too much in his head. Obviously, he forgot the other things. I note that he does not propose to strave the people on the dole in the country districts this year. He is allowing them to keep their few shillings.

The experiment last year, apart from doing a good deed for the party by getting rid of some of the people in this House whom they did not like, lost them a lot of support. They realise that it was terribly unfair. I met many unfortunate people who were on the dole through no fault of their own. I do not like to call it the dole. Unemployment assistance is the correct term but people call it the dole. They pointed out to me that if you lived in one county and had a valuation of under £20, and were doing very nicely as a farmer, you could draw the dole while, if you lived in another county and you had not got your breakfast or your dinner, you could not draw it.

This is the type of discrimination which I should like to see decided in the High Court. I do not think that our Constitution allows this type of thing to be done. It is blatant discrimination. I believe the Minister saw the writing on the wall and decided that in this instance he would not cut off the dole as he did last year. Therefore, he does not have to hide on a golf course or anywhere else for two or three days. He can go about his business normally. At least these poor people will be able to stagger along on the few shillings they are getting, although they will not have very much comfort.

There are a number of other things which the Minister might have given but did not give. I am sure Members of this House are sick listening to me saying that people who are drawing unemployment assistance and who are described by the Minister as unemployables, people who are not likely to get work again and who, through no fault of their own have to draw unemployment assistance, should be put in a special category. There should be some type of disability allowance for them. If, as the Minister for Social Welfare seems to believe, these people are really unable to work due to debility, or age, or what have you, they should be put in a special category.

We should not go through the farce of asking them to line up outside a labour exchange with young able-bodied men and women and sign for work when, not only is there no work for them, but if work were available they would not be able to do it, according to the Minister. I propose to keep needling the Minister until he makes a special effort. He did a good many of the things we asked him to do over the years. Some years ago I was laughed at for suggesting in this House that old age pensioners should be entitled to children's allowance if they had children. I was told that just did not happen, but it does happen. In his wisdom the Minister eventually introduced a system for paying this allowance. Many other things we suggested have been introduced.

For the fifth year in succession I want to repeat the suggestion that an effort should be made to put those people in a special category. I give the idea to the Minister for nothing. It would be another way of reducing the number on the unemployment register and would be a far more honest way than cutting them off on the grounds that there was work for them to do which they were not prepared to do.

I am quite sure that those who are in receipt of social welfare benefit are very disappointed for two reasons. One is that they will not get anything until the autumn and the second is the amount of the increase which they will get. I and the members of my party have here referred to the stupidity of the Government's approach to increases in social welfare benefits. We have often heard from the Government benches — and we will hear it again this week I am sure — that not only are these people getting compensation for the increase in the cost of living but also, on percentage, they are getting a little more. By this I assume the Minister is saying that they are getting almost the same percentage as an unemployed person.

It does not take a very high rate of intelligence to understand that, if a man with £20 a week gets a 10 per cent increase, he finishes up with a wage increase of £2 which he requires to buy what he needs to live. If a man with a pension of £5 a week gets an increase of 10 per cent, all he gets to buy the same type of food, to pay for the same type of house, to buy the same type of clothes, and to meet the same living expenses, is 50p. How often must this be repeated before it seeps through to the people responsible for paying these allowances? The working man and the man who is ill or unemployed go to the same shop, buy the same food, and pay the same price. This is a logical argument which should be remembered.

The Minister for Social Welfare and the Minister for Finance have dealt terribly unfairly with a certain section of the community. I am referring to those people who were persuaded to accept what was known as a retirement pension. When a retirement pension a 65 years of age was first introduced, I hailed it as a great step forward. I thought the Department were at last coming around to the view that it was a good idea to get people who could retire to retire, instead of going to the labour exchange and going through the motions of signing as unemployed until they were 70 years of age.

I was amazed to find that the Department of Finance decided that this pension was subject to income tax. If somebody had a small pension from his job which, added to the retirement pension, brought his income over the tax free allowance, he had to pay tax on the difference. What made it more ludicrous was the fact that, if the person on the retirement pension, instead of drawing a pension book and getting his pension on that book, thereby causing very little inconvenience to anyone, particularly the State, went every day or every week, according to where he lived, and signed as unemployed, and submitted forms which had to be handled by civil servants again and again, and drew unemployment benefit instead of retirement pension until he was 70 years of age, he did not have to pay any income tax.

In this case the State were terribly shortsighted and terribly mean. This matter should be reviewed as quickly as possible. The advice I am giving to anybody I have any contacts with who is doing that, is to go back to the unemployment exchange and sign on as unemployed. This will cost the State more and it will be more inconvenient for the people concerned but at least there will be the difference in their pockets of an amount which the State is at present taking from them.

I objected to the system of taxing old age pensions but I could see a certain amount of merit in this, if somebody had a big income and the State possibly would feel he should not have a tax free allowance and a pension also. But there should be a special rate for people over 70 years of age; they should have a special tax-free allowance. This small extra allowance they are given is just chicken feed. This is entirely wrong. In the case of a citizen who had worked and paid insurance all his life, when he reaches 70, the State instead of helping him to live the last few years of his life in some comfort takes money out of his pension. This is very unfair and the State should, and must do something about it.

I welcome the extra allowance for people over 80. God knows anybody who reaches that age at present, particularly if living on social welfare benefit and dependent solely on it, is due much more recognition than the Government have given them. But it is a very good idea.

Something which rather amused me yesterday was that when the Minister mentioned he would not tax credit unions the Fianna Fáil backbenchers clapped. Who spoke about taxing credit unions? Nobody except the Minister who threatened to do it some months ago and because there was such uproar not alone from the Opposition but even from members of his own Government and his own backbenchers about it he found it was not politically possible to do it. Now he says he will not do it and his own backbenchers clap. This was almost the only thing they found to clap about in the Budget. It is a bit much when we find that sort of play-acting going on. Or, perhaps, they did not understand.

The fourth programme has been mentioned. Anybody on the Fianna Fáil benches talking about a fourth programme of expansion needs a pretty hard neck. The first programme was not bad; it did reasonably well. The second programme disappeared; the third became a bad word within six months; nobody wanted to mention it and everybody was satisfied that it was a lot of nonsense. One thing that has worried me about all this is that I fear that the people who made the predictions about employment in regard to the second, third and fourth programmes are the same people who are making predictions about what will happen when we go into the EEC and about the extra employment we shall have there. If they were as inaccurate or, should I say, as stupid in that as in regard to the programmes for economic expansion, God help us if we enter the EEC. I do not have to spell out for anybody who bothers about our economic affairs what happened the First and particularly the Second and Third Programmes of Economic Expansion. Blandly to throw out the suggestion that we shall have a Fourth Programme for Economic Expansion and suggest that everybody should cheer is just too much.

I am highly amused at the idea; I did not think anybody would have the nerve to suggest it but it was suggested. We shall just sit around and wait and see what comes. We already know what the result will be. I am a great believer in planning but I strongly object to the idea that simply setting down figures in a booklet and issuing them to the public and sitting back to see what will happen, is planning. I do not agree with that; it is nonsense.

I happened to be on a radio programme last night and I found that the industrialists seem to believe they will do well out of this budget. The change in company taxation has our support. The Minister will remember that the removal of that taxation had our support when it came before the House. We were laughed at by the bright boys of a Fianna Fáil who said: "Look at the socialist party voting against imposing company taxation." We then warned that that company taxation would create widespread unemployment, that it would break companies which were giving a good deal of employment and we were right. I do not hear anybody saying: "The Government made a mistake and the Labour Party were right in opposing what we were doing." Perhaps that is too much to expect. I do not like saying: "I told you so" but in this case I should like to put on record that the jeers of the Fianna Fáil backbenchers at that time have turned back on themselves because the company taxation then imposed was a bad idea.

I knew of one company giving big employment which got a grant of £250,000 from the State in order to build a factory. When it was almost completed the State, by introducing this company taxation retrospectively, were taking away £385,000 from the company. That is the taxation now being removed. That imposition was just stupidity which had a bad effect on industry and I am glad it is being abolished. It was bad socially to do it. I believe in giving every assistance possible to any private enterprise or public enterprise which will provide employment. What we want is to create employment.

One of the things I was surprised at in last night's programme was that we still have people in this country who feel we should sit back and wait and that the Japanese, the Germans and the Americans will come here and build factories and employ our people. We should have learned that does not work out. We had some wonderful exceptions and some who did, in fact, give employment but we have very often had our fingers burned. If we go into the EEC, will somebody give me a good reason why foreigners should come in here and start up factories here with the idea of exporting to the EEC countries when, in fact, they can gain much more by starting up within the EEC and being nearer the central markets they require?

If we want to develop industry and achieve full employment the only thing the State can do is prepare to participate fully in starting industry here so as to give that employment. If the State do not face up to the task we need not expect foreigners to come here just because they like us: that is just nonsense. The suggestion made by a Minister a couple of years ago that we would provide cheap labour no longer holds because if we are unfortunate enough to go into the EEC, wage rates will have to be comparable and the cheap labour idea will be gone. I would oppose it at any time.

I believe also that we are not making sufficient use of an Act passed quite recently which had the very simple title of Fóir Teoranta which somebody translated as Rescue, Limited. In the case of industries which appear to be collapsing for want of short-term capital Fóir Teoranta should make an all-out effort to provide that capital to ensure those industries continue. An existing industry which is keeping people in employment is a far greater asset than one of the 42 industries which the Minister for Finance, coming back from America on the eve of the last general election, had in his bag and which did not materialise.

We must keep our factories in operation. I thought we made arrangements in this House to do so but this does not seem to be happening in practice. Only the other day a group of men approached me and told me that they had read in a newspaper that the factory in which they were employed was going into liquidation. They could not understand why this should happen. They are still employed there. The products are being sold and they believe there are very large orders in the pipeline. They understand that the factory is making a profit, but for some extraordinary reason that seemed to suit the owner — who, incidentally, has a number of other factories — he has decided to go into liquidation. I have been told that when the IDA offered to help keep the factory going, he turned down their offer and said he was not intersted. The State should be interested in such cases and should step in and either support somebody else and keep such industries going or they should take over the industry and put in charge those people who have been running it successfully.

We must not allow private individuals to feather their own nests and then decide to get out and throw their works people, as they call them, out of work. Unless we are prepared to do something in this respect, this country has a very poor chance of survival either inside or outside the EEC.

I am surprised and disappointed that tourism is not being dealt with seriously. This morning I heard Deputy Cosgrave say that this year will be a bad one for tourism. Many others are saying that, too. There are many things running against the industry, but there are many things running for it also. It appears that in various parts of the country the position is fairly good. In some areas, it is even better than last year. However, so long as we treat tourism as the poor relation of industry and so long as we invest in that industry which, last year, was supposed to generate £120 million — the experts tell us this year that the figure will be about £20 million — only £4 million or £5 million, we cannot expect the results that we should be getting. The Government have a duty to double or even treble the amount of money that it is proposed to invest in tourism. Other countries are putting large amounts of money into tourism. When tourism here has been built up and when it has got back to its previous level, it may be able to survive on its own, but until that time we must be prepared to invest money in it.

In respect of tourists, there are many things happening which do not help the industry. For instance it was brought to my notice recently that a group of Americans landed at Shannon although they were booked into a hotel in Dublin. They were provided with a bus to transport them from Shannon to Dublin. The journey took four hours and I understand that some of the ladies were so tired on reaching their hotel that they had to go to bed immediately. This exhaustion did not result from the plane journey but from the bus trip. Nobody seemed to be concerned that these people were inconvenienced in this way and the general impression got from the group was that they would never come here again. This is a scandalous situation. Every effort should be made to ensure that tourists are welcomed to the country and we should be in a position to facilitate them in every way possible.

The money that the Government has allocated for tourism is not adequate. It has been said here that there is no necessity for the building of extra hotels, but I know of a number of hotel and guesthouse owners who have spent the money they borrowed last year and the year before but who are unable to recover from Bord Fáilte the amount spent although they had been promised refunds. Provisions should be made to allow Bord Fáilte meet their commitments. There is no point in having a highly-trained staff in various parts of the world if, because of the penny pinching in the industry here, we cannot use these people to their full potential. There is no point in creating the impression that something is being done when this is not the case.

I am surprised, also, that the moneys being made available under the various headings in the budget do not seem to bear any relationship to increased costs. This is noticeable particularly in regard to the moneys allocated to the various local authorities and even to some State Departments. In some cases there have been reductions. It appears that the amount for arterial drainage, for instance, is being reduced. The amount for construction work is being reduced from £973,000 in 1971-72 to £878,000 in 1972-73 and the amount for surveys is being reduced from £33,000 to £30,000. The Government seem to have the peculiar idea that the amount of money allowed 15 years ago to do a job is sufficient today in spite of the fact that the costs of material and, particularly, of labour have increased substantially. Towards the fall of the season people are laid off and told that further money is not available. On a number of occassions I have raised here the problem of people who are granted a wage increase but with the result that the amount of money available for the particular job that they are doing is reduced and, consequently, they find themselves out of work. In the past I have found that these people were getting almost as much in unemployment benefit as they had been getting for a 42½ hours working week.

It amuses me to find that any State could be so blind as not to make an effort to have the problem dealt with in another way. Local authorities complain continually that the road grants they get are not adequate. In some cases the amount may be the same as in the previous year. In my own local authority there was a substantial reduction. Because of increases in wages and in the cost of machinery the result is that a lesser volume of work can be done by local authorities than was done in the previous year. There is no much brain power required to understand that, The State should give an increase that is in proportion to increases that have occurred. Another sphere in which the Government have been fiddling around is in relation to the Estimates for the Departments of Defence and Justice. At this point of time there should have been a big increase in the amount of money for both of these Departments. If war were to be declared, regardless of who might declare it, what happened here during the last war would happen again: overnight money would be found for the Defence Forces. Why can we not provide the money now in a scaled way and begin to build up our Defence Force? We have a good little Army but the emphasis is on "little". If some of the "Johnnies" who are masquerading throughout this country as soldiers attempted to take over, would they be able to do so? This is something we should think about because we are not meeting our commitments in respect of defence. During the last emergency many people, myself included, realised that men were needed in the Defence Force and we had no objection to leaving our jobs and joining the force. I believe this same thing can be done again. The Government are not prepared to face up to their commitments. They should do so quickly.

Mr. Geoghegan

Has the Minister for Defence not got a recruiting drive under way for the past few months?

Mr. Tully

The unfortunate thing about that is that one will find, on checking on it, that the number of people leaving the Army has exceeded the number of those who have joined.

Mr. Geoghegan

I do not agree at all.

Mr. Tully

The net increase in Army personnel over the past few years is practically nil. I do not wish to cut short the Parliamentary Secretary, but this is something about which I know a little.

Mr. Geoghegan

I know all about it.

Mr. Tully

That was not obvious from what the Parliamentary Secretary said. The situation with regard to the Garda Síochána appears to be disimproving. There is no point in the Minister for Justice telling us that there is a recruiting drive and that he proposes to recruit X gardaí. We must note the number of gardaí leaving on retirement over a period of years. We have not been meeting our requirements in regard to the administration of justice in this country in recent years. I have great sympathy with the unfortunate Garda Síochána. There was a report which promised them several improvements which they have not yet received. We disbanded the Garda Band a few years ago. It was one of the greatest musical combinations in the country. The band was disbanded for the purpose of putting its personnel on point duty.

An Ceann Comhairle

I am sure the Deputy will agree that this matter could be dealt with when discussing the Estimate for the Department of Justice.

Mr. Tully

I would agree fully, except for the fact that I am trying to make a case for additional money being allocated to the Department of Justice and if I cannot give a reason it would appear that I am inept.

Mr. Geoghegan

I am sorry for the Deputy, who appears to have got out on the wrong side of the bed.

Mr. Tully

At least I was in bed last night, while it would appear that others were not. It would appear from the budget speech that the Minister attempted to spread a little bit of money far and wide. It appears that the attempts he made were, perhaps, extraordinary for a representative of a very conservative Government. People could not understand how a Fianna Fáil Government had done this. There give, there are two or three basic reare people who, because of their political affiliations, feel that the budget is a good one. I have talked to people who did not seem to be prepared to rave with delight because of what they got in this budget, and some of these people were supporters of Fianna Fáil, some of Fine Gael and some of my own supporters. Most of them felt that, after all the talk, very little had been given. Children in the streets, even, were predicting for the past month that an effort would be made to have a deficit budget this year. Therefore, it is no surprise that the Minister for Finance introduced this particular type of budget. The Minister proposes to borrow this money or some of it. Like Deputy Cosgrave, I would be interested to know how the £7 million accrues. The phraseology used is interesting. When the Minister was introducing the budget he could have gone further into "the red" and really give some decent increases to the social welfare recipients, and given back to the lower-income groups more of their own money by giving them tax-free allowances and letting those who have plenty of money pay more.

The Minister should have notified his intention of excluding foodstuffs from the VAT when it is introduced. The Minister has not helped the man who has to travel to work at his own expense and who has to use a motor vehicle for such journeys. A man may travel 30-40 miles to his job per day. Such a man is entitled to more than he has got. The man who is building a house or paying high rent for a house should get some allowance. The man building his house should get a few shillings off his interest. A man paying a high rent should have it taken into account when income tax is being considered. A man's gross earnings may be £10 per week greater than his net earnings. To tax a man on his gross earnings is immoral and should not be allowed.

Mr. Geoghegan

Will the Deputy not thank the Minister for anything?

Mr. Tully

I will leave that to Deputy P.J. Burke.

Mr. Moore

It is usual for Members on this side of the House to compliment the Minister on the provisions of the budget. Each year since the Fianna Fáil Government have come into power, we have had something on which to compliment the Minister. This year I will compliment him only formally. The Opposition parties have complimented him in the most definite way by not finding anything in the budget on which they had to vote. By the brevity of the speeches yesterday, I feel that they recognise the excellence of the budget which the Minister has introduced on this occasion. It would be a useless exercise for me to compare this budget with those of the 1950s. No comparison is possible. This budget gives relief to every section of the people receiving social welfare payments. It gives something to almost everybody, and has the redeeming feature that there is no increases taxation.

The budget is aimed at bringing further buoyancy into the economy so that we can provide jobs for those who have not got them. It is also aimed at providing houses for those who have not got them. It is aimed at improving the tenor of life generally in the country. Deputy Tully mentioned about this Government being a conservative one. This was said because he had not any real criticism of the Minister or the Government. Indeed, the word "conservative" has lost any meaning it had in the context of being critical of the Government, because Deputy Tully also referred to and praised the British budget brought in by the Conservative Party there. The Minister has shown the way by bringing in very strong measures in order to increase the buoyancy of the economy. However, the people must play their part to ensure that the budget will reach its objectives, that the ambition of the Minister and the Government will be realised and thus enable a further expansionist budget to be introduced next year. In the meantime, we shall have been able to provide many more jobs and houses for people.

Apart from the incentives to industry and any other aid the State can quirements this year if we are to have the type of society we seek to create here. First of all, industrial peace is needed. Last year showed a big improvement over the preceding year in the number of man-days lost because of strikes. The Review of 1971 and Outlook for 1972 issued by the Stationery Office says on page 51:

In 1971 there was a marked improvement in Ireland's strike record. The total number of man-days lost owing to disputes during this year was approximately 220,000 in comparison with 1,008,000 in 1970. Part of this improvement is attributable to the general acceptance of the National Pay Agreement.

I think everyone accepts that the improvement in the industrial scene is partly due to the National Pay Agreement. Let me pay tribute where it is due, that is, to the Irish Congress of Trade Unions and to the trade unions generally who accepted that there would have to be some kind of order in free negotiations if the people who create the wealth were to receive an adequate return for their labours and if we were to avoid industrial anarchy where the weaker sections of the workers would suffer most and where everyone would suffer to some extent.

Therefore, in the coming year I think we can look forward again to a big drop in the number of days lost through strikes and, I hope, a big increase in the number of jobs. It is not easy for the Irish Congress of Trade Unions to join with the establishment and ask the workers to accept limits on pay increases, but they have done this and they have earned the respect of all; indeed, in the trade union movement the stock of congress has gone up very much indeed. I hope that in the coming year there will be an extension of the National Pay Agreement, not just to have peace but because most of us believe that it is only by such an agreement that the lower paid workers and the weaker sections can be given protection from an all-out scramble for higher salaries and wages and, I suppose higher dividends. Congratulations are due to the trade unions but principally to the Irish Congress of Trade Unions who had to face a great deal of criticism in the beginning from their own members and from people outside the trade union movement who would use any stick at all to try to cause trouble in this movement.

We are on the right road now to having a well ordered industrial relations system, and the one league we do not wish to go into any more is the OECD league for the number of days lost through strikes. I will defend anyone's right to strike — I have often done it myself — but we must realise that every strike brings suffering to someone. In the case of a monopoly where production of a commodity is stopped by industrial unrest, not alone does that affect the workers making that commodity but it can affect hundreds of thousands of other workers who have no say whatever in trying to reach an agreement at the source of the trouble. Therefore, it is imperative that we perfect our industrial relations; otherwise, no matter what budget is brought in here, no matter how high our aspirations are for bettering the economy, we will not be able to do it.

I am against Government interference in free negotiations on wages. The Government can help certainly, but it is healthier that there should be free negotiations in a free enterprise society. The Government should only step in in regard to general guidelines and should leave it to the intelligence and expertise of the unions to work out a good system.

It is amazing that the Minister has been able to bring in such a budget when it is realised that only 70 miles away there is a situation of almost civil war. I shall refer to that in detail later, but the point I would make here is that since, according to the Minister, we must face a big drop in tourist receipts this year, we should support the efforts of Bord Fáilte, CIE and other national concerns to encourage people to spend their holidays at home this year and thereby reduce that £20 million deficit. It would also help considerably if people — and I would appeal particularly to the women here —would insist on buying home-made goods rather than imported articles.

Every penny going out of the country, whether it is for services or for goods, means less employment here. Let us show our concern for the man who is without a job or for the emigrant who wants to return by buying the products of our own country. Even in EEC conditions we should give first preference to the home-made article.

Again in regard to industrial relations, we have been promised legislation which will help to give the worker in the factory and on the farm a new charter whereby he will have, let us say, a contract with his employer which will eliminate summary dismissal of any man. I hope the redundancy payments system will also be reviewed in the light of the changed situation since redundancy payments were first introduced. It is not that I anticipate increased redundancies, but the fact that the State and the employer ensure that a worker will not be left without the means of having at least a frugal existence is the kind of thing that gives men and women greater confidence and a greater incentive to work.

As a rule Deputy Cosgrave makes a common-sense speech. He is an honest type of man but when he suggests that one would not find a man or woman on these benches who was uncorrupt he does no good to his own image or to the image of his party. He certainly does no good for democracy. In other countries the initial step towards destroying democracy is to allege that democracy is not only inefficient but also corrupt. If people can be convinced of that, then it is very easy to destroy democracy. I would advise Deputy Cosgrave to stop listening to the hatchet men in his party, the men who have a tendency towards throwing little vicious remarks. He spoiled an otherwise good speech by this statement. These snide remarks should not be made in this House.

I listened to both Deputy Cosgrave and Deputy Tully. Both referred to practically everything except the budget. They skirted around it and contented themselves with criticising the economic set-up in general. They made no reference to parity in public service pensions. Indeed Deputy Tully said there was no increase in children's allowances. That is not true; there have been increases under the social welfare code for children and there have been tax reliefs in certain cases. The Minister mentioned that the whole system of children's allowances is under review and we must naturally wait for the completion of that review.

The Minister surprised many with the excellence of his budget. Because of the situation in the North we had to meet a good deal of extra expenditure. The tourist industry is not buoyant. Yet the Minister comes in with a unique budget, with increased benefits and with no increased taxation. At a time when we are poised for entry into Europe this is a good omen. One can only deplore the attempt made to compare the social services in the North with our social services. In one or two cases we are actually ahead of the North. They have better social services but that is because of the subsidies they receive but, if one examines the figures, one finds that a recipient down here gets a better return for his money than does his counterpart in the North. I do not begrudge the people in the North their social services. They need something to compensate for their sufferings over the last few years. The ruling classes there are determined to hold on to their wealth and any attempt at redistribution will be met by paratroopers.

It is heartening to know that our economy is so sound as to enable the Minister to bring in an imaginative budget and a budget designed to help the weaker sections of our community. It certainly looks as if we are on the march to the solution of such problems as unemployment and housing. We have a long road to travel. Practically every country in the world today has an unemployment problem. The problem is very big in Britain. A recession in any part of the world is bound to have repercussions on us. We should use all our available resources to build up our industrial and agricultural arms. At all times we must make the best use of our resources.

Nobody can deride this budget on the ground that it is not good for the aged and handicapped. Perhaps the real test of a budget is how it looks after those sections. If we have not got an economy which can afford to give concessions to the pensioners, to the handicapped and the unemployed, we cannot hope to get money from outside for this. It must be done by our own efforts. No Government in the history of the State have ever produced a budget like this in which there is no increased taxation but much greater social welfare payments and greater income tax allowances.

We should have no fears about entering Europe because despite our difficulties at present we have one great attribute and that is confidence in our own ability to enter Europe when the people have voted on it. Somebody said this morning that the Government are promising that when we enter Europe everything will be rosy, that it will be a land flowing with milk and honey. This, of course, is not true. You get nothing for nothing anywhere in this world but the great prospect of the EEC is that in this community of 250 million people we will be able to sell our goods to a much wider market. We will have free entry to that market without any inhibitions and without being at the mercy of our neighbour with her cheap food policy.

This is the last budget before the people vote on the EEC and the Minister has made it a memorable occasion. We will not get everything easy in Europe. It will take long and hard work to fit ourselves for the new Europe but the reward is great. I do not think the idea of staying out is seriously accepted by anybody now. Speeches may be made against entry but very often they are just political speeches which people feel must be made at the moment.

Whoever stands here this time next year to speak on the budget will have the advantage of some experience of Europe. Whether it will affect the basic ideas of our budgets here does not matter. It will change certain ways of budgeting but the basic idea of the distribution of wealth as fairly as possible will remain. We will find that the Europeans have the same idea. People accuse pro-marketeers of promising all kinds of good things in the Common Market. The only thing any sensible man would promise would be a tremendous prospect in that market for any nation that wants to go ahead and take its place in Europe always remembering that the basic idea of the EEC is economics. Because of difficulties in Europe those six countries came together and formed this unit in order to overcome their economic difficulties. It is quite logical that we should join them in order to help us to overcome ours. We must realise though that we will get nothing for nothing there. We must show that we are prepared to accept the outlook of economic expansion and to work for it.

It is also said that £30 million will be saved on agriculture. I am no expert on agriculture and would not attempt to dissect that but I do see a great case for regional development in Europe and I can see it as being a factor contributing towards unity in the country. We can visualise regional development which would be cross-Border. Here there would be a great opportunity of developing the country north and south with the help of the EEC funds. Apart from being a unifying factor, this would also improve both the Six and the Twenty-six Counties and this is something to be desired even before unity comes. This injection of money from the EEC will help not alone to increase the prosperity of our people but it will be a unifying factor.

Yesterday when the Minister spoke there were cries from the Opposition of "Not enough". I am sure the Minister or anybody on this side of the House would never put a limit on the amount the State should give to any person in need of help but it is an empty call to shout "Not enough". The new social welfare code is being prepared. I do not know what is in it but I think when it comes it will give us a new concept of social welfare. It is in keeping with the tradition of this party that we should distribute the wealth of the nation to those who need it most.

There are so many benefits in this budget that one cannot enumerate them offhand. Years ago there would be, perhaps, 6d to the old age pensioner. In this budget practically every sector of the community benefits in some way without increasing taxation. Through this budget we have the means to inject more capital into the economy and we will not have increased taxation. The Minister said he did not know whether he might be fuelling the fire of inflation rather than the engine of growth.

Unless we ensure that there will not be further inflation, the efforts made in the budget will be nullified. Those who suffer most from inflation are recipients of social welfare benefits and the unemployed. It is not an easy matter to curb inflation. Giant nations like the United States of America are battling with this ogre. We may find it somewhat easier to cope with inflation here because we are a much smaller nation without extremes of wealth or poverty. There may be some rich people in this country but the proportion would be small in a population of three million. On the other hand, there is some poverty in the country and the Minister has tried to cope with that problem by giving reliefs where they are most needed.

It may be suggested that any Government would do this. Most Governments would provided they had their priorities right. The Minister has not sought to balance the budget. Ten or 15 years ago it would have been regarded as heresy not to balance the budget. In planning for a deficit the Minister took a certain risk but he need not fear that this will not pay off in the coming years. By his action the Minister has involved the people in the Government. He has shown that the Government are aware of those sectors which need relief and he has given them that.

There are children who have never been legitimatised. The number is very small. A recent case demonstrated how cruel the law could be towards such a person. Such a person had inherited property and the State came in with a clawing operation and penalised that person. I am glad that the Minister has amended the law in this respect. The Minister has shown that, even though it is a small sector that suffers, the anomaly must be removed.

Parity in the case of public service pensions will be welcomed by every Member of the House. In future there should be an arrangement that pensions will be tied to any increase in the cost of living and will be automatically adjusted. That may not be easy to accomplish but it would be better than allowing time to elapse before parity is given. The introduction of parity at this stage provides an opportunity of studying how circumstances of pensioners may alter between this year and next year because of inflation or increased prosperity. The pensioner must be assured of a share in any enlargement of the economy or increased prosperity. During his service the pensioner contributed to the building up of the nation. If economic growth enables the Minister to increase benefits the pensioner should be assured that he will not be overlooked.

There must be rationalisation of the system of pensions. In the case of public servants they have paid for their pension to a great degree. A man should not be penalised because he happened to reach retiring age in a particular year. He must be assured of an adequate pension. Provision must be made for this and we would all be happy to make provision for the fact that people are living longer.

The provisions for free electricity, free travel and free television licence for old persons has been enlarged in this budget. Perhaps we can look forward to the day when, because of other developments, bus services can be free for everybody. At the moment there is no need for that. It was a good thing to have it recognised that old people should have free travel. That recognition has been continued from budget to budget and the provision is increased in this budget.

Of course, this costs money and involves taxation. It is money well spent. Even the most severe critic of the Government must admit that the concessions to pensioners are worth while. It is a recognition of the fact that pensioners are not generally in the affluent sector. The Minister has shown that the State recognises the needs of the older members of our community. The fact that people receive benefits by way of free television licence, an electricity ration and free travel gives them a sense of belonging to the community and of being cared for.

The fact that the Minister could introduce a budget like this at a time when we have not got a peaceful country shows us what we can do and how much better we can do in future years when peace returns. Apart from the loss of life which we regret so earnestly and sincerely, I wonder what losses the trouble in the North has caused to this part of the country. When the final day of reckoning comes we will appreciate just how much it has cost. We do not begrudge the little help we have been able to give them in the North but I hope that peace will return soon so that we can begin to build up an economy that will afford every person at least a frugal living.

The budget introduced yesterday gives help not only to the social welfare classes but to every worker in the country who is rearing a family. It is a progressive budget which will lead to future development. It is probably the last budget that will be introduced here in the background of our existing circumstances. By next year, we hope, we will have joined Europe, and in this budget the Minister displayed wide and comprehensive thought towards what our needs will be when we enter Europe. He has given the people confidence in the competence of this Government in preparing our way into Europe.

Mr. Kavanagh

I must congratulate the Deputy on being so honest about our prospects in regard to the EEC.

Mr. Moore

In Fianna Fáil we are all honest about it.

Mr. Andrews

I am sure Deputy Kavanagh does not genuinely feel the way he says he does.

Mr. Ryan

I do not share the feeling of euphoria voiced by some people concerning this budget or the immediate prospects for the social and economic future of the country. The Government are more responsible than any other group for the present state of affairs and if it has now become necessary to produce a budget substantially to increase public spending still further, it arises because of the Government's general inability to lead the economy in the right direction.

We are proposing today, or talking about a proposal, to increase Government expenditure in the next 12 months by about 10 per cent on last year, and at a time when the Government are proposing to spend another 10 percent the Minister for Finance again makes the appeal to everybody else not to make demands for more money. But the Government themselves are doing it, admittedly not this year in the form of extra taxation, of extracting extra taxation unwillingly from the people, but by a process of postponing payment to a later date irrespective of any assessment as to whether it will be possible to make the payment then. It seems to me that the Government are relying to an unsound degree on membership of the EEC and are prepared to take a gamble which I do not think is entirely justified in our present particular travail.

A budget brings the country down to earth, or it should. In the last few years we have had a form of distraction, one we could have well done without, and we still have that distraction, that violence, the pain and the anguish in the north-eastern corner of Ireland and we still have the traumatic international tension it has caused between ourselves and our neighbours.

Although the budget will have a direct impact on life in our own State in the next 12 months, today one notes that again the difficulties in the North of Ireland receive at least equal and in many cases even more attention. It is a reflection of the general attitude that the attendance in the Dáil today is similarly small. I think it indicates a pattern of inadequate concern about the material welfare of our own society, and, perhaps, this has injected a certain feeling of unreality about the kind of problems that should be preoccupying us here, problems affecting incomes, welfare standards and the prospect of expanding our economy to provide a decent living for our own children in this island. There is a real danger that unless the Government and the people of the country come to grips with our problems we may slide from the present emergency which afflicts us into something a great deal worse.

The size of the budget and the Government's proposal to increase last year's figures by 10 per cent show the Government to be the most reckless and spendthrift entity in the country. It clearly indicates that the Government believe they can get away with this type of hypocritical policy, a policy of they themselves spending more than they can afford while calling on everyone else to do the opposite.

If there is another disappointment in this budget it is that it has failed, like so many other budgets, to provide the kind of stimulation necessary to get the best out of our own people. It is no accident that the rate of new inventions from Ireland is the lowest per head of the population of any country which keeps records of new inventions. Some years ago we adopted a proposal in this House to give tax exemption to artists in a very limited field, the literary one. This benefit was conferred not merely on artists of Irish birth but on any who came to live here. This may have been of immense cultural value, and I do not belittle the contribution it made to the arts, but I doubt whether it made any significant difference or worthwhile contribution to the standard of living of the masses of the Irish people.

A further indication of our failure to realise the importance of developing research and of encouraging scientific and technological development is that our Patents Office is about the most inefficient of all the patent offices associated with the international convention governing patents. It takes longer to extract a patent in Ireland in respect of an Irish invention than it takes to get a patent from any other country in the world to which an Irish resident might apply. You can apply to the British Patent Office and get your patent while you might still be waiting for an acknowledgment from the Irish Patent Office in respect of your original letter of application. Is it any wonder that we have a situation in which Irish scientists and technologists are going abroad? In this community they see an indifference on the part of the Government and of Ireland in relation to the skills and contributions which they could make to the economy.

Our future wealth will depend to a greater degree on science and technology. We have had some improvement in this sphere in recent times but it has been less attributable to our own initiative than to the fact that we have had transferred to Ireland from abroad the scientific and technological developments which have been processed elsewhere. One drawback in that type of development is that your own research workers become discouraged when they are not given the facilities for research which they ought to be given in this country. I hope perhaps in the Finance Bill or certainly in the not too distant future that tax exemption will be given to Irish inventors whose work is not only creative but also could add to the prosperity of this country and indeed to its balance of payments.

In a small country like Denmark, which in population and in natural resources is not very different from ours, as much as £12 million annually is earned from the sale abroad of Danish patents. The amount earned by this country by way of the sale of the skill of Irish scientists and technologists is insignificant. Just as giving tax exemption in respect of exports was the mainspring in our industrial expansion over the last 12 years there is reasonable ground for asserting that tax exemption in respect of inventions would also provide considerable income by way of the sale of Irish patents abroad. It would also provide the vitally necessary stimulus to Irish research workers, scientists and technologists. They have not got it at the moment and unless they get it soon the brain drain from Ireland, which has been considerable, will continue.

We, on a merely monetary calculation, educate our young people beyond the capacity of this country to absorb. We consider it morally and socially essential that we should give our young people the best education available in the world because it is only by so doing that you can confer on the next generation whatever benefits our society can give to them. It is only by so doing that we can make them the full and worthwhile persons which they need to be in order to get the best out of this world.

Let us also, as we are prepared to make that contribution towards the education of our youth, realise that we are not getting back an adequate return in social and material welfare as long as these people are obliged, because of the inability of our society to use their talents, to go elsewhere. By this we lose a considerable amount of the return which our society ought to get because of the sacrifices which it makes to educate our young people. We have not properly evaluated the investment in education and the return from it. We certainly, as we are properly increasing the expenditure on education, should ensure that we get a greater and greater return in the future. We can only get it by using the talents we have and by encouraging industry to provide the opportunities for the use of these very essential talents.

This debate, I know, is not the occasion to recommend changes in the practices and legislation affecting patents. It is something I propose to return to in this House in the near future when we get an opportunity of speaking to the Minister for Industry and Commerce. As we know a budget is an occasion for an overall consideration of general national policy. The importance of science and technology should have received a little more attention than it has. By far the most grievous economic mistake in the last five years has been the manner in which the cost of living has been permitted to rise. Twenty years ago, when I first came to the use of political reason, the cost of living was regarded as one of the most fertile issues in a political discussion. Various suggestions were offered by competing parties as to how the cost of living should be controlled. When we reflect we discover we were then dealing with a cost of living increase rate of about one-third of that to which we have become accustomed and to some extent indifferent in the last five years.

The worldwide organisation for economic development, the OECD, has trembled at the rate of increase in the cost of living experienced in some of its member countries in the last three years. There have now been three conferences to try and find from the wisdom of the world a solution to the rapid spiral in living costs. This state of fright in OECD has been caused by an increased rate in the cost of living of 3 per cent to 5 per cent. We have gone along with an increase in living costs of 7.9 per cent, 8.5 per cent and 9 per cent in different years. The only sign of governmental concern in the matter has been an utterly worthless section in the Department of Industry and Commerce dealing with price control.

The budget offers no evidence that the Government have any new proposals to make in the field of price control. We have the annual exhortation but we have no new machinery or no reasonable hope that the Government are at long last going to tackle the problem. It does not suffice for the Government to pillory traders, as they appear all too ready to do and as the Minister did yesterday, for increases in prices when in most cases those increases have been attributable to circumstances outside the traders' control.

The OECD have pointed out for a decade that the most significant factor in price increases in Ireland is taxation. Yesterday the Minister said that for the first time since 1959 taxation would not be increased this year and therefore it would not be a factor in the cost-of-living rise which might take place in the next year or so. Of course, that is not so. The deliberate policy of successive Fianna Fáil Governments of increasing taxation, particularly turnover tax, has built into our whole economic and social fabric an expectation of inflation. It will take a great deal more than one year of non-increasing Government taxation to eradicate this. The cost-of-living spiral developed its own momentum under the encouragement it received in Fianna Fáil Government policy for the past 14 years. I cannot foresee that this budget will make any worthwhile impact on the negotiations that will take place in relation to demands for wage increases.

The most significant rise in costs in the past decade has been in relation to building costs. The increase in living costs in the last ten years has been 67 per cent but the increase in the prices of new dwelling houses has been in the region of 125 per cent to 130 per cent. Shelter, one of the essentials of life, has increased in cost at a rate double that applicable to any other commodity or service in our community.

Why do the Government tolerate this? Why do the Government not do something radical to stop this? The increase in house prices appears totally unwarranted having regard to world prices for building materials. It does not reflect the increases earned by building workers which, admittedly, may be somewhat higher than that enjoyed by other sectors. It seems fair to assume that the vast increase in building costs and house prices is attributable to the profits of speculators. Have the Government any social conscience in this matter? Will they take the courageous steps necessary to stamp out the inflation in housing costs and stop the profit without effort which is enjoyed by people who have available massive financial resources to make fantastic profits in the property sector?

The fact that the Government have not done anything with regard to this matter in the budget means we are maintaining one of the most inflationary factors in wage costs. Any father of a young family who has to pay amounts ranging from £6 to £12 per week for the home in which he lives has a moral obligation to seek a substantial increase in his wage. The fact that he is to be given a tax concession of £15, £30 or £40 per annum will not relieve his anxiety or account for much when he is instructing his trade union representative regarding the kind of wage increases which will be necessary to meet the essential costs in providing a home for his family.

This massive increase in public expenditure is applicable not only to direct Government expenditure but also to local authority expenditure, itself another aspect of public expenditure. The rates now account for up to 50 per cent expenditure over which the local authorities have no control. It is expenditure imposed on the local authorities by the central authority. This has been a most significant factor in the increase of rates because the central authority demand contributions in respect of health and other services. Therefore, there has been a double imposition on the home-owner of facing the intolerable cost of providing a home because of the failure of the Government to eradicate speculation in building costs, and he has to pay a penal tax for being thrifty enough in purchasing his home by having to pay an exorbitant amount in rates.

It is because of this need to anticipate further inflation that people seeking increases in wages or prices invariably add on an amount sufficient to cover the inevitable rate of inflation. There is not sufficient in this budget to convince the people that inflation is not inevitable or unavoidable. In the next year there will be two factors arising that will probably inject further cause for expectation in relation to inflation. One is membership of the EEC and the other is the Government's proposals in relation to VAT.

The Government have denied that the introduction of decimalisation had any significant effect on the rise in living costs but in the period from February, 1971, to February, 1972, the rise in food costs was 11 per cent. When one adds to this the rise in rents and house costs one has some idea of the impact already there. That impact is immense and there is little in this budget to apply the brake. The Government's contribution in this area, so far as the budget is concerned, is negligible.

Yesterday the Minister said that he hoped the budget would restore price stability. I wonder when we ever had price stability. I hope the budget will restore price stability but I do not pretend to know all the remedies. I have been following the conferences of the OECD with considerable interest to find out if someone had the magic touch to control living costs. All I can say is that other countries do it more successfully than we do and that it is high time we sought the assistance and advice of other countries and organisations to help in this matter. If we do not do so we shall be in serious difficulties.

Many of our difficulties today regarding exports are not attributable to the Anglo-Irish Free Trade Area Agreement, they are not attributable to changes in world demand, they are not attributable to our pending membership of the EEC. They are directly attributable to the fact that we have increased our own costs. As the OECD has pointed out, these costs have been due substantially to governmental policy. The Government are changing their policy but it will take more than 12 months or even five years before the harm caused by Government policy is eradicated.

In the meantime, what do we do? What happens to our export industry? Does it close down? Does it come to a standstill? The Government are mending their hand in relation to the penalties they imposed upon industry two years ago with their corporation profits tax. It will take two years or more before industry can overcome the disadvantage at which it was put by the Government's folly. The two year ahead will be the most critical years for Irish industry since the 1930s. The Government's action in penalising industry two years ago and trying to undo the harm at this stage will not be sufficient to put the record right.

The Anglo-Irish Free Trade Agreement, which is now in its most damaging period of development as far as the Irish economy is concerned, was an agreement about which I personally was never enthusiastic. I expressed reservations about it here and elsewhere because I felt that, while it was certainly necessary to free trade between Ireland and Britain in anticipation of membership of the EEC, the agreement did not have built into it the essential brakes and the essential safeguards to protect our highly vulnerable economy.

I was persuaded to withdraw my opposition to it by certain verbal provisions in the agreement which entitled the Irish Government, if they were concerned about damage being done to any particular sector of industry, to impose restrictions on imports from Britain. These restrictions in any year could be up to as much as 3 per cent in value of total imports from Britain in the previous year. We have the right to impose restrictions on the quantity of goods imported from Britain. The only limitation was that we could not impose a restriction which would have meant in respect of any commodity importing less than we did from Britain in the previous year.

We were also in a position to impose duties and special tariffs on goods from Britain if we felt that our industry was being affected by their previous removal. It is lamentable that we did not use these powers which were certainly available to us. Because of our failure to use the powers available to us, we got into some of the difficulties in which we now are. I do not for one moment attribute them all to free trade. Many of them are attributable to world conditions rather than to the Anglo-Irish Free Trade Agreement, but some of the difficulties could have been minimised, at least, if only the Government had had the courage and the wit to use the powers available to us under this international agreement.

I assume that when the Government negotiated the agreement they did not get a present of these provisions, and that they had to be negotiated, because the country which would get benefit from them would be Ireland and not Britain. It seems extraordinary to me that, haveing negotiated these safeguards, the Governments did not use them. Within the past month I asked the Minister for Industry and Commerce to what extent we had availed of the right to have a review of the agreement and its impact last year, and to what extent any modifications had been made. What was the Minister's naive reply? It was that the effect of the Anglo-Irish Free Trade Area Agreement was taken into account in negotiating the terms of entry to the EEC in Brussels.

To my mind that indicates that the Government decided to let the agreement run its full course irrespective of any harm it might do, and hoping that, by the time it had run its course, we would have got the additional incentives, the encouragement, the facilities and the expansion flowing from membership of the EEC. Let us recall that, when the agreement was under discussion in this House, it was anticipated that we would be a member of the EEC within three years. We have had to wait a great deal longer. We have not had the expansion which we expected to flow from membership of the EEC.

We hope to get it now, but it may be up to two years before it comes to us. Now we have the additional difficulty that, even though membership of the EEC will certainly bring about an expansion in our economy, and greater investment in industry and agriculture and so forth, at least some of the potential additional investment will be discouraged because of the terrible political and social problems which exist in the North of Ireland. Therefore we are not at all in a healthy position. It is all the more surprising that the Government did not avail of the rights they had under the Anglo-Irish Free Trade Agreement to safeguard the economy against what was threatening it.

This morning Deputy Cosgrave very properly pointed out a serious defect in this year's budget. At a time when the Government were prepared to make some concessions in personal tax allowances, it is lamentable that they did not introduce one concession which is socially justifiable and which would be of considerable economic benefit. The Government must know—and I am sure the Parliamentary Secretary is aware—that in urban areas many industries are not working at full capacity because of a shortage of female labour. Quite frequently married women who have had factory experience will tell you that it is not worth their while working because of the inadequacy of the married women's tax allowance. It would suit many married women to work two, three or four hours a day. They could still attend to their domestic duties and be at home when the children came home from school. Because of the disincentive of the married women's tax allowance such women have given up working.

It is unfair to women who are willing to work and who have the opportunity to work and who could work without harm to their families or neglecting their obligations, that they should be penalised in respect of their own efforts, simply because they are married. This year the Government had an opportunity, when they felt that there was an economic need to give tax allowances, to give this concession to married women. It is deplorable that they did not and I hope that the married women of Ireland will vent their justifiable anger on the Government that failed to do so. If they did, the Government might get the shaking which they deserve.

Public service pensioners are to get parity of pensions up to 1st January, 1972. This brings us so close to present salary and wage rates in the public service that it is a pity the Minister did not go the whole hog this year and write into our law, once and for all, a right for all retired civil servants automatically to get pensions related to those paid to people currently retiring from the service. While I appreciate that people who retired prior to 1972 are grateful for the improvement, and for the fact that the three year gap is now being closed, I am sure that they will all be disappointed that the Government did not go all the way.

What would this involve? It would involve no more than this. In future our community could never decide what wage and salary increases should be given, what income agreements there should be, without also taking into account at the time of negotiations the total cost, including the cost of the payment of pensions at parity to people who had retired from the labour force. This is in fact in practice in most progressive countries. It is in practice in various forms, as far as I know, with some variations in EEC member nations and it is the kind of obligation which, if not mandatory, will certainly be imposed on us in years to come.

Why did the Government not go all the way? I do not know. It is very disappointing. However the Minister will have time to correct this between now and the Finance Bill and I urge him to go the whole way. The cost in this year would not be very great because there have not been very many increases since 1st January, 1972. I know the Government expect to get demands for and to have to pay further increases in respect of current income this year but if we do not build in the automatic right to parity of pension it means that while we are trying to correct the position today it will go out of step in the very near future. I have no which to anticipate what this year's increases in incomes may be but I think it will be quite substantial and if those increases take place they will increase living costs and set the pensioners back and whatever advantage is now promised to them from next October, which is a long time away, will be thoroughly eroded by increases in incomes which may be given to others with the inevitable spiral of inflation which will follow.

Personal allowances are still totally inadequate. Certainly, many people are discouraged when their very small incomes are subjected to tax. It was once believed that Ireland in relation to Britain or Northern Ireland was not so badly off because the British rate of taxation was higher, but it is interesting to realise now that a person earning £14 a week in Britain today would have a tax deduction of £33 while such a person here would have a tax deduction of £97. There is a three times higher rate of taxation here. Also many commodities sold retail are sold at higher prices here than in Britain and the worker here must pay for many services which are available free in Britain. There is a need to give a more worthwhile increase in personal allowances and I believe the real cost of doing so would not be considerable because the State is already spending an immense amount in relation to tax deductions from very small incomes.

I agree entirely with what Deputy Tully said about the unnecessary duplication and multiplication of calculations in Government Departments. We bring in a budget after the commencement of the tax year. The Revenue Commissioners in respect of each worker assess his tax liability and allowances in triplicate, I think, and send the worker and employer these calculations keeping, I suppose, a copy themselves. All these calculations have to be fed into the pay systems of employers, into computers, put into book-keepers' ledgers, wage books and so on. Then the Legislature steps in and after the multitudinous calculations have been made it varies the amount so that the whole exercise has to be repeated, sometimes within a matter of weeks. Should we not devise something to avoid this so that the Revenue Commissioners possess the necessary knowledge before 5th April and so that they can do just one calculation and have the one issue of documents? This is a reasonable reform and I believe it should substantially reduce the cost to the Exchequer on the administrative side and I know it would be very welcome to employers and employees to have only one calculation notified to them in good time. It would avoid a great deal of confusion.

I should like to see another reform in regard to tax relief for elderly people. There is a tax relief for such people at present on unearned income, that is to say the person who has some nest egg, some reserve, perhaps inherited which give him an income without working for it, gets tax relief but an elderly person who continues to work—and we still have quite a large number in our society who are obliged to work because they have no pensions—do not get any such relief. That relief is not given on income for which one must work. If relief is to be given to elderly people there is a greater moral justification for giving it in respect of income one earns when over 70 years of age than for income unearned at that age. I do not for a moment suggest that unearned income of elderly people should be deprived of the tax relief they get at present; I believe it is right they should have it, but I am arguing that this relief should be given to elderly people who are still capable of working. It is desirable to keep our people working as long as they are capable of doing it.

The Minister for Lands, who was a most conscientious Minister for Health, realised the immense folly, apart from the inhumanity, of not caring properly for elderly people. When he was Minister for Health he gave every encouragement to schemes of health authorities which kept elderly people functioning as useful members of society rather than invalids who retired to their rooms or to institutions. He acknowledged that apart from the human need it was economically daft to have such people maintained at the expense of the State in institutions. Let us keep them out of institutions: let us keep elderly people working if they want to work. I do not believe in compelling them to work. There are many who could still do a useful day's work or a half day's work and would do it if they were not subjected to the unfair treatment now meted out to them if they dare to work because they do not get the tax concession they would get if they quit working altogether.

In our society, which is enjoying higher standards of living than once existed, many little tasks and services are undertaken by elderly people which the young people are not interested in getting—providing domestic help, babysitting and a multitude of other personal services of that kind. Elderly people should be encouraged, for their own benefit and the benefit of society, to continue in those activities.

We were very disappointed that in his speech the Minister contributed nothing more than 2½ pages of waffle towards the principle of equal pay for equal work. The Government are a substantial employer and they should take courage in their hands. When they consider that there is a moral need for a new employment and wage policy they ought to take the steps necessary to put that new policy into effect. The Government accept in principle the findings on equal pay of the Commission on the Status of Women but they are waiting for the outcome of other deliberations before taking any action. This is not good and is causing a great deal of disappointment in many circles. I would urge the Government to begin thinking seriously of introducing the necessary legislation.

The Minister said that he proposes, in so far as he can, to put the Civil Service house in order so that the disadvantages that apply now to women in the public service would be removed and so that the disqualification against the employment of married women would be removed also.

I hope that, as a matter of extreme urgency, this reform will be introduced, too, in respect of the nursing service. The Minister for Lands will recall that during his term of office as Minister for Health there was a serious national problem because of the diminution in the number of nurses available. This problem could have been relieved considerably and can be removed if married nurses did not have the disadvantage of impermanency and other disadvantages applied to them.

In our desire to do what is just in respect of nurses we should bring in this reform. It is a reform that is necessary also for the sake of the sick and invalided who need the care and attention of qualified nurses in hospitals. I believe there are many hundreds of married nurses who are prepared to return to the nursing service, if not as whole-time employees, certainly as part-time employees, and the way to get them back is to implement without further delay the recommendations on the status and pay of women that are contained in the report.

The Third Programme for Economic Expansion proposed that by the year 1981 the number of unemployed in the country would be 28,000. This was to be achieved by an annual increase in new jobs of 9,000. We fell short of the target by providing only 3,000 new jobs annually. Therefore, we are in a very serious situation and there is a real danger that unless the Government do something worth while in relation to employment, by the year 1981 the number of unemployed can be as high as 128,000. That will be the inevitable outcome of present policy. We would hope that membership of the EEC would help to rectify some of the factors that have contributed to our high rate of unemployment. Indeed, so far as Fine Gael are concerned part of our hope is that the EEC will help to correct many of the economic follies of the Fianna Fáil Government because the EEC would not tolerate the laissez faire attitude of Fianna Fáil in the sphere of employment and of industrial and agricultural welfare.

However, it is not desirable entirely that one should rely on international organisations in determining one's economic policy. One should have one's own positive goals and, matching those goals, the determination and the will to achieve them. Why have the Second and Third Programmes for Economic Expansion gone so far wrong? Primarily this has happened because different Government Departments were promoting different aims. We had the Department of Finance imposing new and crushing penal taxes on industry at the very time that the Minister for Industry and Commerce was getting money from the Minister for Finance for the purpose of making available grants and incentives to rationalise industry, to change the pattern of production and to carry out research. We need to have some degree of unity in Government policy. There must be an end to the lunacy which, unfortunately, has prevailed in Government Departments whereby they were pursuing simultaneously conflicting aims.

Perhaps it is an admission of their wrong that the Minister in this year's budget is correcting the tax penalties that were imposed on industry in October, 1970, but two years have been lost that need not have been lost. Two years of harm have been done to industry at a time of greatest need and because of that we have a situation now in which a great deal of our unemployed are unemployed because of the inability of industry to pay the Government's penal tax and to provide jobs and re-adapt at the same time.

Credit has been given, and I do not wish to belittle it in any way, for the new travel concessions to people of more than 70 years of age but let us look at the other side of the coin. In what does this involve the Government? CIE and public transport generally are in serious financial difficulties so that the Government must give CIE a substantially increased subsidy. What better man than the Minister for Transport and Power is there to suggest to the Minister for Finance that he give CIE more money but that in doing so he might as well get some credit. He could say to the Minister for Finance: "Let everybody over 70 travel during the valley periods when they would not travel anyway and then we can give CIE and public transport generally a subsidy for carrying them and we will have to work out with CIE the financial contribution for carrying those people." What seems to be a novel and generous contribution from the Minister is nothing more than a transfer of responsibility for payment of a subsidy from one Department to another. It will enable the Minister for Social Welfare to produce figures that will show there is now a higher percentage of GNP being contributed to social welfare classes than there was formerly. If it was left as a direct subsidy to CIE, the Minister for Social Welfare would not get the credit but people would complain loudly about the inefficiency of a State body. I am not suggesting that such criticism would be warranted but there would be criticism. Therefore, that is one aspect of the new travel concessions that it is not an indication of increased generosity but is merely a clever ploy by the Government to camouflage the nature of the subsidy that will be given to CIE.

At present quite an amount of administrative time and money is wasted in determining the eligibility of applicants for the travel allowance. That time will be wasted no longer because in order to avail of it no more will be required than the production of a birth certificate. This is right and I am glad that the concessions has been introduced. It is something that I have been pressing for for a long time as have many Deputies on all sides of the House, it will bring much hapiness to many elderly people.

Progress reported; Committee to sit again.