Committee on Finance. - Financial Resolution No. 3: General (Resumed). – Dáil Éireann (19th Dáil) – Tuesday, 2 May 1972

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. Desmond

There are three further matters that I wish to speak on concerning the financial statement. I expect to conclude by 4.45 p.m. Those three matters are taxation on imported books; the financial needs of blind persons in the Republic; the housing needs and Government policy with particular reference to speculation.

I have received a number of representations in regard to taxation on imported books. I am sure many other Deputies have received similar representations. There is an anomaly in the current position. We submit to the Government that it is unfair in the case of many books that there should be an import duty on them. For example, author's copies that are presented free of charge to persons in this country are subject to tax. In our submission these at least could be exempt from the tax imposed on their arrival in this country. We submit that there should be no tax in the case of review copies sent here, especially when they are published in Britain.

The practice is growing of the free exchange of books of a technical and academic nature. The tax on such books represents a heavy liability on universities, research institutions, learned societies. We submit that there should not be a tax in the case of the free exchange of printed literature.

It has been put to the Labour Party that it is ludicrous that when valuable literature, particularly where it has antiquarian interest, is purchased abroad from booksellers it should be subject to tax when it is brought into this country. We consider that it is wrong to impose tax in such circumstances.

We would ask the Minister to have a further review of this matter. The liability to tax in such cases as I have mentioned represents a heavy burden on students, research workers, teachers, universities and research organisations. For example, a constituent of mine, who is a sixth form teacher, told me that a continental friend had sent him three very small books, one of prose and two of poems, in French. In order to receive them he had to pay 22p in collection charges. The books in question are not normally sold in this country. They did not even have a price mark; they were merely, in the case of the poems, two poems in French. This is a rather antediluvian type of tax on knowledge. The law in this respect should be amended. Also, in regard to the decision of the Government to introduce a value-added tax, I submit that a zero rate of levy should be imposed on such literature as I have mentioned. This would remove the anomaly which exists at present. I would ask the Minister to comment on this matter.

Now I come to the second point— the need for more extensive and more effective budgetary relief for blind persons. Successive Governments have been all too complacent, all too smug and have been stingy in regard to the provision of financial and other help for blind persons to enable them to have a fuller and more effective life. The budget is an obvious means of making suitable provision. At least there is now a recognition of the position of blind persons in that an extra £100 personal allowance has been given to blind persons under the income tax code and there is another £100 concession for their wives. In my view that does not go far enough. The cost of living for a blind person is much higher than in the case of a person with eyesight and, indeed, in the case of persons suffering from other types of handicap. It is now generally accepted in Northern Ireland, in Britain and on the Continent, that a greater range of general benefits should be provided for blind persons over and above the handicap allowance. In this country there is a blind pension. Whoever devised that type of allowance did not show humanity or sensitivity. There should not be a pension for being blind. A blind person should get a handicap allowance. Further provision should be made having regard to the peculiar expenses incurred in the case of blind persons.

The public assume that a blind person is automatically in receipt of a blind pension. It may come as a surprise to people that there is a means test in relation to the blind pension. It is not granted automatically. I was shocked to find out that in the past three years 26 blind people have been disallowed the blind pension. The irony is that it has cost £12,000 to adjudicate the means test in relation to the blind pension. In the past three years we have spent approximately £30,000 to administer the means scheme with the result that 26 people have been disallowed. This is a ridiculous situation and we should do something to change it.

I do not think members of the public appreciate that blind people will receive the magnificent amount of £5.50 per week. I know blind people in my constituency who will have to live on 74p per day as from next August. The current level of pensions, particularly for blind people, is utterly inadequate. Blind people face special problems. Their expenditure on shoe leather is considerably more than that of other citizens; because of their disability they may brush against wet paint, they may sit on dirty seats, and in consequence their clothes must be cleaned frequently. Blind people may be obliged to have special electrical equipment installed in their houses and frequently the cost of repairs in their houses is more expensive. We should bear in mind the extra expenditure the blind must bear each week, not the least of which is the additional cost facing a blind housewife who, inevitably, has a restricted choice when she shops.

I submit that concessions other than the £100 tax concession should have been given to the blind people. The blind must pay for many services which other members of the community can do for themselves; they must pay for house repairs and for gardening costs. Frequently they are obliged to pay the cost of a reader service because this is not always borne by the voluntary organisations; they may need special typewriters, Braille writing machines and many such items. They may have to pay for a guide dog. These are some additional items of expenditure which the blind must pay although we know that their earnings are limited and their capacity to earn additional money is restricted.

I would point out to the Minister that most of the western European countries have introduced special allowances, free of means test, for blind people. For example, these allowances are available in Sweden, Denmark, the Federal Republic of Germany, France, Australia and New Zealand, to name but a few countries. These allowances are given in addition to the income tax allowances. The Minister should remember that in many countries a blind person is exempt totally from income tax and this is a concession that should be granted here. In 1962 the British Chancellor of the Exchequer introduced income tax concessions for the blind; yet it took us until 1971 to do this.

We may claim to be especially sensitive to the care of the disadvantaged in our community. This is a Christian concept which we profess but when it comes to putting our hands into our pockets we tend to adopt a different attitude. The so-called concessions I have mentioned should be dealt with by the Minister. I do not think that it would cost a tremendous amount to give those additional helps.

For example, the net cost of increasing the blind pension to £7 maximum, with a corresponding increase in the other rates, would cost approximately £750,000 per year. This is not too expensive when one considers total budgetary expenditure. The Minister should consider the provision of free travel for blind people—it would not cost very much. Many able-bodied and active pensioners can travel around the country but how much more would it mean to a blind person to be able to travel on public transport where he would have valuable human contact. In addition, we should provide free radio and TV licences. We provided free radio and TV licences and I think the matter is now being reviewed. I am not sure of the present position but I hope that the blind may be provided with a combined licence and that they might also get free electricity.

We have been appallingly complacent with regard to housing. The Government or the community do not appear to have put a great deal of effort into this important matter. It is the old story of Fianna Fáil—doing a little and doing it far too late. Deputy FitzGerald made a pertinent comment on this matter in his article on the budget in The Irish Times of 25th April. When commenting on the public capital programme he said:

It seems fair to say that the proportion allocated to housing is now very low—only 16½ per cent as compared with 23 per cent six years ago. This relative erosion of the housing programme is a feature of our capital programme which is difficult to understand in the light of the growing backlog of housing in Dublin.

Deputy FitzGerald pinpointed the fact that while our budget has grown very considerably, like Alice in Wonderland, we are running fast but staying in the same place. In the urban areas the situation is growing more critical and I wish to comment on a number of factors with regard to the housing position. I do not propose to comment on rates reform, differential rent schemes or on tenant purchase schemes as I do not wish to delay the House unduly.

In this country we state adamantly in our various housing programmes that the family is the basis of society. We neglect fundamental areas of family life such as making reasonable provision for houses for all families in the community and putting houses within the normal reach of these families. For many families at present this is a rather pious aspiration, a piece of political theory, because there are many thousands of families who have no prospects of a home. There are at least 4,000 families in my constituency who have no prospect of a home until the mid-1970s at the earliest.

We cannot be unduly critical of the situation which we now see emerging in the Irish urban areas in particular, and more particularly in certain parts of Dublin, patterns of crime, delinquency, juvenile alcoholism and patterns of family desertion which I have found in my short experience of public life can be in many respects traceable to and can be and are derived from lack of adequate housing for the families involved. Where families are forced to live in less than adequate conditions for human beings inevitably the defects I have mentioned come to the surface. The appalling thing is that those who have houses, generally speaking, do not give a damn about those in most not. Very frequently those who have need of houses when they get a house are not very preoccupied about the remaining persons in the community who have no homes. In this respect our community conscience deserves to be severely criticised.

One must say without being unduly critical of the Government—Governments come and go, as political parties and politicians come and go— that in the Irish community in the Republic the existing situation is a glaring scandal. The never-ending rise in the cost of houses and in particular in the cost of developed sites is equally scandalous. I suggest very strongly to the Government and to the Minister for Health, who is present now, that the past policy of the Government of doing far too little far too late and of keeping serviced building land in relatively short supply and at relatively exorbitant prices has ensured that in the mid-1970s relatively artificial, inflated prices are being paid for building sites. The result is grossly exorbitant and scandalous profit for land speculators over the mid-sixties and now in the seventies.

It is illuminating to point out—we had a little of this last week—the number of Deputies who cash in on it. It is very interesting to go through the past occupations of a number of Deputies and see the number who, since their election, have become auctioneers, a very interesting indication of where the profits and the motives lie. There is money to be made out of property and nobody knows this better than many Members of the Dáil and they have made, and are making their money out of it. The exorbitant profits being made out of land at present and the exceptionally high mortgage rates being paid by struggling young couples and the profits being pocketed by private speculators constitute a scandal which must be thoroughly and repeatedly exposed. A house is not a luxury like a racing stable or a yacht or an expensive motor car; it is an elementary necessity of life for a wife and family and young children. It is extraordinary in our community, which professes to be overwhelmingly Christian, that we should tolerate such exploitation of human needs because that is what is happening in the current land situation particularly in the greater Dublin area. Pious political platitudes from various Government Ministers on this question will not remedy the position. Young couples, at a time when they can least afford it, are being financially crippled because of the growth of speculation in land prices and the exceptionally high rates of interest on mortgages. We used talk of the rack rents charged by British landlords but there are quite a few native Irish speculators in land at present who are getting far more profit from the rack rents they are charging for the land they are retaining.

The situation has become more critical because about 20,000 new marriages take place annually at present. This is a record figure for the past 100 years. This is all to the good for the future development of the country. But it means that about 40,000 persons begin family life and want houses. Many of them must find a house but the prospects are growing dimmer each day in the 1970s in the urban areas in respect of costs and repayments.

The Government's decision last year to increase interest rates on loans to local authorities to 9½ per cent meant that at that time many persons buying their own homes found they had to pay 10 per cent on their loans. Many of them could not meet the cost of these mortgages. There is no dearth of information available to the Government right on from the publication in 1964 of the first White Paper, Housing Progress and Prospects, to 1969 when we had another White Paper published by the Government, Housing in the Seventies, as it was then called. There was no shortage of statistics to forewarn the Government and indicate the crisis now facing us in many urban areas.

We could not allow a budget debate to pass without pointing out that much of the land speculation which is taking place in the urban areas and much of the profit accumulated by the speculators in those areas has produced a great deal of marital stress through gross overcrowding in housing. It has resulted in the psychiatric health of the community suffering because there is nothing worse than an overcrowded family in a sub-tenancy living on top of another overcrowded family. The effect on the health, the education and the development of young children can be quite dramatic. A great many of their deficiencies can be traced back to the lack of adequate housing.

I shall give an instance that has recently come to light from An Foras Forbartha of the escalation of land prices and the Government's failure to come to grips with it. In 1960, it has been authoritatively estimated in a study made by An Foras Forbartha, the cost of an acre of potential building land was £301 and an acre of developed land cost £1,000. In 1971 the same land cost £2,500 and £7,000 per acre respectively. One can safely say that the cost of developing the land did not increase from £800 to £4,500 per acre since 1960. Therefore, the profit is roughly £3,000. That is straight profit for developed land in urban areas. That is a rate of profit which must be almost unique in Western Europe.

In the early 1960s the price of land was relatively unimportant to the house price. At that time one had eight or ten houses to an acre and the cost of developed land was £1,100 per acre. At present the same number of houses must be squeezed into an acre of land costing about £7,000. Therefore, the cost of land per house is now very substantial and making the price of houses for many young people completely exorbitant.

This, I would strongly submit to An Tánaiste, has been an area of price inflation in which, with all the NIEC Reports and all the work of the Prices Commission, effective Government control could and should have been introduced a half decade ago. We have had comprehensive information available to us. Three years ago the NIEC, in Report No. 26, recommended to the Government that they should make an effort to assemble the facts about increased site values so as to identify what precisely was occurring in terms of land exploitation. Again nothing very much was done.

The magnitude of price increases can be measured on a simple basis. Retail prices have gone up by about three-fourths since 1950 but site values have been multiplied by eight over the same period. The lesson was strikingly obvious to anybody. The neglect of the Government and their failure to come to grips with land speculation, particularly in the Dublin area, is something which will not rebound to their credit in the years ahead. The situation is scandalous.

We in the Labour Party have raised this question time and again in this House. We raised the intrinsic inequity of the situation right through the 1960s and pointed out the moral injustice of allowing escalation in land values to take place. The Government permitted that escalation to take place, thus permitting a blatant exploitation of pressing community needs. This has been one of the greatest factors in the increased cost of housing in Dublin and other urban areas. Anybody looking for a site for a house will pay at least £1,000 for it and the person who bought that land perhaps in 1960 will make at least £700 or £800 clear profit.

The irony of it is that this is a tax-free profit. Not only have the Government allowed exploitation to take place but they have allowed it at the expense of taxpayers' money pumped into these particular sectors of land to develop them for the community. The speculator got the benefit of roads, of a water supply, of ESB cables, the whole infrastructure provided in the peripheral areas of our towns, and overnight capitalised on that investment in those areas of land. At the same time he gets special, privileged tax treatment. The situation would be beyond belief in any normal democracy. The tax treatment of capital gains made out of land transactions is a great social problem. It is true that since 1969 income tax is levied on profits arising from the sale of land but only in the case of persons engaged in the buying and selling of land as an actual business and how many people formally register them-buying and selling of land? Any auctioneer will tell you—friends of mine are auctioneers and they do not make any bones about telling me—what to do if you want to make money out of land. The current practice is, with entry to the EEC allegedly imminent, to buy up as much rural land surrounding the urban areas as possible. It can be bought relatively cheaply and one will cash in on this in the mid-1970s——

Mr. Desmond

I undertook to conclude at 4.45 p.m. I agree that the remedy in the Republic is a difficult one. The Government will have to move in and even if constitutional amendment is necessary, we are in the position here that we have a written Constitution. It has been pointed out in successive Government White Papers that there might be constitutional difficulties in respect of legislative amendments but it has been pointed out——

An Leas-Cheann Comhairle

This is scarcely the time for that type of debate.

Mr. Desmond

I have three minutes to go. I suggest that the Government ensure that the necessary constitutional amendments be made so that they can have capital gains legislation. We are different from Britain in this matter and I strongly suggest that the Government come to grips with it. Otherwise, inevitably, there will be widespread public reaction to the situation in which such practices are allowed by the Government to be continued without any effort being made to remedy the position which has now gone on since the late 1950s. From 1959 until 1971 we have seen an appallingly unjust and unfair system of land gains, of capital gains speculation in land, throughout the Republic and we have seen the Government point blank refusing to take any action. I suppose it is difficult for them because I remember a Deputy elected in a by-election and within a matter of a few years he was a prosperous auctioneer and estate agent. I am sure that there is not a great deal to encourage a backbencher in Fianna Fáil not to press the Government to take action, particularly if he is on a good thing. However, this is not good for the country, it is not good for democracy, it is not good for the taxpayers and certainly it is not good for young married couples who are paying from £10 to £14 per week out of an income of £28 or £30 to own their own houses, living on sausages and mash simply because Fianna Fáil will not take action that is long overdue.

Mr. P. J. Burke

Deputy Desmond has been speaking for four hours, 25 minutes. This is not democracy in action.

Mr. Desmond

Not four hours, 25 minutes. That is not correct.

Mr. P. J. Burke

The Deputy has not shown charity towards his fellow Deputies. Like an egotistical demagogue, he made up his mind that nobody was to be heard only himself. If every Deputy decided to speak for four hours, 25 minutes, the voices of only a couple of constituencies would be heard. I never transgress the laws of procedure as far as speaking is concerned.

Mr. Desmond

May I remind Deputy Burke that we had three hours, 40 minutes of unadulterated rubbish from Deputy Dowling?

Mr. P.J. Burke

Most of the stuff I have been listening to from Deputy Desmond could not be described in any other way. He is entitled to his opinion but we have democratic procedure in this House and he transgressed it. As a member of the Committee on Procedure and Privileges I should not like to interfere with the rights of any Deputy to speak for as long as he likes but neither would I protect from criticism any Deputy who did so. The Deputy stayed there and kept everybody else out. From the way he spoke about the price of land one would think he is the only saviour in the country.

I would remind him that in 1955 and 1956 you could not give away land. There were 500 houses in this city with the crows nesting in them because people were not able to put roofs on them. Land could be bought for £50 an acre. Now, because of better times and a buoyant economy there is keen demand for land and for new houses. It is a sign of the times. We do not want the communist type procedure whereby if Paddy Burke or John Murphy has a house to sell he will have to wait to be dictated to by the Government. That is what Deputy Desmond has been advocating. He wants Government control so that houses will be sold at less than value. If we are to say that a person must sell land at the agricultural rates, at no more than £200 an acre, how many people would speak out against Government interference? The gentleman who has just spoken speaks about the right of the individual only when it suits him. However, I will move on to more important matters.

The members of the Labour Party and the Trade Union Congress and the ITGWU, as far as I am concerned, will go down in history as sabotaging the welfare of this nation. They are entitled to take that stand, but is there anybody who can tell us that we can cut ourselves away from every other country in the world and still be as we are? Those people tell us that if we go into the Common Market we will lose our independence, that we will have unemployment. Do they realise that almost every factory in this country is in the export market? Where will they export their goods to if England and Northern Ireland go into the Common Market and we remain outside? Will we have to ask them if they will take some of our goods from us? Do we want our standard of living to be half what it is today?

I have travelled to most of the European countries who are members of the Six and I did not see them losing their nationality or economic freedom. They were as independent as ever they were. The egotistical demi-gods of the Labour Party and the trade union movement tell us that we are not to go into the Common Market, that we are to build a wall around ourselves. I knew of people who built hedges around their homes but the day came when they were delighted to have a neighbour when they were in trouble, when their house was on fire or something else happened. Those egotistical demi-gods criticise the parties in this House and the people of the country who see that, when other countries who are trading with us go into the Common Market, we must do the same.

The organisations which are against our entry into the Common Market are writing "EEC, No" on public buildings, bus shelters and pillar boxes in this city and throughout the country. Some of those people could not get into this House and now they are trying to tell us what we should do. Some of them take down posters which the Fianna Fáil Party and the Fine Gael Party put up urging the people to go into the Common Market. I do not know what they want. I think they want an associate membership.

Mr. Crowley

Mr. Crowley

Have you abandoned associate membership?

Mr. P. Belton

Is this relevant to the budget?

Mr. P.J. Burke

I am dealing now with the EEC and with what is contained in page 7 of this document.

Mr. P. Belton

Is there a reference on page 7 to the League of Nations?

Mr. P.J. Burke

I am talking about countries that wanted to stand alone. Those who succeeded President Wilson followed the isolationist policy but when Pearl Harbour was attacked, the Americans were glad of the help of other nations in beating the Japanese. If the United States, of which one State alone, New York, is as big as England, Ireland and Scotland together, were not able to stand alone, what chance have we of standing in isolation? I ask our people to consider this question of the EEC from a national and economic viewpoint.

As a member of the Council of Europe in the past I visited countries which are members of the Common Market and from my observations I can say that the peoples of these countries were as national as were their hills. They would not have remained members of the Community if there were not benefits to be gained from membership. The Six have been able to reach agreement on various differences. On one occasion when there was a meeting of the Six in Strasbourg we were invited to go along and listen and we found that none of those present had surrendered any thread of their nationality or of their language. There is much cod regarding the future of the Irish language in the context of the EEC. The French, the Germans and the Italians have retained their respective native languages and none of these people has lost one iota of their nationality or of their economic freedom. Agreement was reached among the Six on what was best economically for each member.

Mr. P. Belton

This is a big change in Fianna Fáil policy by comparison with their policy of 1932.

Mr. P.J. Burke

Deputy Belton is being very helpful. Let me tell him that it was only in 1960 we applied for membership of the Common Market.

Dr. O'Donovan

The application was not acknowledged for six months.

Mr. Crowley

What acknowledgment did he applicants for associate membership receive?

I have been in all these countries and have seen the conditions in every one of them.

Mr. P.J. Burke

Dr. O'Donovan

Not the agricultural workers.

Mr. P.J. Burke

Mr. P.J. Burke

I never thought I would live to see the day that I would hear so many anti-national statements made in this House by intelligent men, statements to the effect that we can live alone without contact with any other country. The men who make these statements may have some contact with the fairies in the forts. There may be a magic wand which will enable them to solve our problems.

According to Deputy O'Donovan, the widows and all those whose allowances have been increased are not workers. The blind pension has been increased; there has been an increase in the widows' non-contributory pensions and in the deserted wives' allowance. The Government are anxious to improve the lot of the less well-off in our community. The unemployment assistance has been increased——

Dr. O'Donovan

The Government tried to get rid of many of them last year.

Mr. P.J. Burke

The orphans' non-contributory pension has been increased. The disabled persons' maintenance allowance and the infectious diseases maintenance allowance have been increased. There has also been an increase for child dependants.

Many other social welfare concessions have been made. This has been a wonderful budget and I hope the Minister will continue with his good work which benefits the weaker section of our people. I was glad to see that old IRA and public service pensions have been increased and that veterans of the War of Independence have been given concessions. The farmers have also benefited.

There are other matters that I should like to deal with but I have been speaking for one hour, ten minutes and I will leave those matters until another time. I criticised a Deputy who spoke for four hours, 25 minutes and, therefore, I shall wait until another occasion when I will deal with housing and other matters. I wish to compliment the Minister for Finance for this budget and to thank him for his effort in helping the weaker section.

Mr. Malone

I should like to endorse wholeheartedly the remark of Deputy Burke in connection with the way public and private property has been defaced by a group who are trying to do their utmost to keep us out of the EEC. I am quite certain the Labour Party had nothing to do with it, but there is a group which is using this means. The paint they are using will be there long after we enter the EEC.

Dr. O'Donovan

It appeared before our campaign started.

Mr. Malone

I agree with the Deputy. I am not accusing the Labour Party. However, some group is doing it and it is to be deplored by every right-thinking person.

Parliamentary Secretary to the Minister for Social Welfare (Mr. Geoghegan)

The Labour Party are covering posters with their own posters.

Dr. O'Donovan

I do not know where that is happening.

Mr. Geoghegan

It is happening in Deputy Malone's constituency, in Maynooth.

Mr. Malone

Posters can be taken down but paint remains. The budget is notable more for what it omits than what it contains. We listened with interest to the remarks about the EEC and the benefits that will come from membership but it is deplorable that at a time when we are on the threshold of Europe the Minister could find only £1.8 million for agriculture. With time running out, when we should be pouring money into agriculture, this is all we could find for the industry.

I know that fairly generous incentives are given towards increasing the cattle population and keeping up stocks and I am sure the Minister for Agriculture and Fisheries and the Minister for Finance are worried about cattle losses as a result of brucellosis. Another sector which could bring great benefits to our economy are the sheep producers. The Chair will recall that this is one of my favourite hobby-horses; I have mentioned it previously on the Estimates for Defence and Agriculture.

Although an increase of £1 per head has been granted to mountain sheep breeders for wether lambs delivered to factories or exported between October and March, the sheep producers on the lowlands get nothing. The lambs which are slaughtered or exported live will be fattened on the lowlands. The benefit given in the budget is a benefit to the producers; it is not an incentive to increase the stock.

A place where a tremendous advance could be made is in my own constituency, on the plains of Kildare at the Curragh. The Sheep Grazers' Association some time ago requested a deputation to be received by the Minister for Agriculture and Fisheries but he refused to meet them because he stated it was a matter for Defence. Of course, Defence will pass the buck back to the Department of Finance or somebody else and one is caught in a vicious circle.

The Sheep Grazers' Association at the Curragh were not looking for this lamb subsidy for themselves; they were prepared to pool the subsidy and use it towards improving the Curragh and making it capable—as we know it is—of a greater stock-carrying capacity. In March, or thereabouts, when lamb exports may be getting into French markets, we should be giving more to the farmers to encourage them to keep sheep because while they are certainly more trouble than cattle there is also a much lower capital outlay and greater numbers can be carried on improved farms.

While the amount granted in the budget to agriculture is so small as to be quite unnoticeable, I certainly welcome the increases granted to Public Service pensioners but there is one section omitted. Certain widows of State servants are not included in any pension scheme. There are widows of State solicitors who do not appear to qualify. Widows of soldiers are often in a very bad way. Some qualify for pensions because of a special allowance or a military service pension or some other reason but a large number of them are left in very poor circumstances. There is no mention of their plight which is a sad one, very often, when the husband has died after having given his life in the service of the State. I am most disappointed that nothing has been done to remedy that situation.

The Minister was certainly not giving anything away in regard to death duties. We welcome the increase from £5,000 to £7,500 but the Minister must be living on the moon if he thinks this is any great relief there because with the value of property increasing every day the amount of death duties which people must pay is frightening. I found one man last year who had to pay as much as £40,000 on a farm. No later than yesterday I met a man, a smallholder with, I think, 25 acres, who wanted to buy five acres of land for sale near him so as to increase his holding. The price asked for this five acres was £3,500. One would not take long to reach the £7,500 at that rate. While the Minister tried to undo some of the harm he did last year the result is still very far from being realistic.

Efforts have been made in the past, through legislation and otherwise, to avoid fragmentation of holdings but unfortunately the death duty code, especially as amended last year and only slightly relieved this year, will, I think, increase fragmentation rather than relieve it. I hope the Minister will see his way to improve the position.

Some years ago the then Minister for Finance took a swipe at the Road Fund. Road tax went up by 25 per cent in what was considered at the time to be a temporary expedient but which has become a sort of permanent feature of budgetary policy since. The time is long past when this money should be restored to the Road Fund because the amount required for road making and road improvements far exceeds what is available to the Minister for Local Government. Every bank holiday weekend the Minister for Local Government rightly appeals for care on the roads but road deaths are going up daily. Each month we find the new figures higher. The increase, I think, is not all due to bad or careless driving or to drink but is very largely due to the deplorable state of many of our roads due to the huge volume of traffic they now carry and which is growing daily. Unless the Minister is given money to improve the situation, deaths on the road will continue to increase. I hope the Minister for Finance will take another look at that situation and see if he could improve it.

Finally, nothing has been done in the budget to help the housewife.

Dr. O'Donovan

Hear, hear.

Mr. Malone

Food continues to be taxed. I do not know what it would cost to relieve food of taxation; I am sure the cost would be considerable but I am equally sure that smokers, pint-drinkers, workers or motorists would willingly contribute to whatever would be the cost of relieving food of taxation. In a matter of months value added tax will be introduced and the Minister will have a tremendous opportunity to announce then that he will set a common figure rather than have a three-tier tax which seems to be the pattern now. He should make a bold stroke and do as they are doing in England and have a 10 per cent tax with food exempt. I think this would be the greatest thing since the sliced pan. While a sizeable sum, I am sure, would have to be collected to meet the cost of relieving food from taxation it is deplorable to think that in this day and age the food we eat is taxed and there is a great opportunity to end that situation with the introduction of value added tax. I hope the Minister when he is replying or when he is introducing the Finance Bill will keep these points in mind and meet them as best he can.

Dr. O'Donovan

I shall not attempt to rival Deputy P. J. Burke. I shall finish by 7 o'clock at the latest. I should like to see Deputy Crowley get-thing in. He has been very patient.

If one examines this budget seriously the real thing in it is the message of inflation. It is written high, wide and handsome right through it. The Minister talked about inflation, though he has created more inflation than any Minister ever did in this country. The Taoiseach, with his kindly, nice face, appeared on television on Friday night and had the cheek to devote his speech to inflation. How he had the cheek to do that I do not know, having regard to what has happened. Last year, the Minister by comparing one set of figures with another set with which they were not comparable, was able to pretend that he had made a cut in expenditure. Of course, as has every year been the case, we ended the year spending 20 per cent more than we had spent the year before. That was true even with the supplementary estimates. I thought the supplementary estimates would be much the same as the year before but they were up from £40 million to £50 million, that is 25 per cent. This year's budget is king of them all. It is a budget for £800 million. We will be told at the end of the year—when we have borrowed money at home, printed money, borrowed money in Germany, got part of the profits of the Central Bank, got by the manner in which this Government have allowed the commercial banks to charge the kind of interest rates that have been allowed—that the GNP is up by 5 per cent. Of course it will be up by 5 per cent. All this expenditure is part of the GNP. Of course GNP is neither gross, national nor product. It is wrong all the way, and I have said so frequently.

There are three things about the budget about which I want to talk. The first is the point at which income tax is levied. The second is the fact that there was no increase in children's allowances for the workers. These are the people in whom I am interested, the people who work and get very poor remuneration, like the agricultural workers. The third is turnover tax on food. The last speaker made the point very succinctly that the British have announced that when they bring in added value tax next year they will not have a tax on food. Of course they are perfectly right. One must be either a savage conservative or a super hypocrite to put a tax on food.

There is one matter that seems to occupy the minds of most politicians. The first time I came across it was about a year ago when I went to the annual general meeting of the professional and service organisation. It was a very long time since I had been there and I was delighted to be there. There was a Fine Gael backbencher and a Fianna Fáil backbencher there. When they stood up what did they speak about? The EEC, When it came to my turn I said: "I must be the greatest damn fool politician ever because it never occurred to me that anybody would talk about the EEC tonight." Of course there is such a thing in these matters as overskill. You can so thoroughly sicken the people with the subject that they do not pay the slightest attention to what is said, especially since so many errors and blunders were made. Let me mention the major blunder. Whenever one mentions this it is suppressed in the national newspapers. In the first White Paper, which was produced by the Department of Foreign Affairs, it was expressly stated that we would not be accepted for association with the Common Market. That was either a lie or it arose from ignorance. Either way that sort of thing did not happen in White Papers. No White Paper I ever heard of made that kind of blunder. Personally I believe it was due to ignorance, but if this was so these people should not have been preparing the White Paper —competent people should have been put in charge of its preparation. I shall come back to the EEC. Everybody talks about the EEC. Deputy Dowling spoke about it for hours. Deputy Desmond made several references to it. Deputy P. J. Burke spoke for about a half hour about it. He talked about various other things too, most of which had very little to do with the actual budget.

I want now to talk about income tax. A former leader of Fianna Fáil, our President, some time in the early fifties said: "We will be back again where we were in 1939 and things will be much better." I was very amused by that because I did not think that things were so hot in 1939. However, at the moment the rate of tax is up 50 per cent compared with 1939 and it is levied in real terms at a point which is only half way to the level at which it was levied in 1939. In 1939 a single man did not pay income tax until he had an earned income of £150 a year and on the first £100 after that he only paid half the rate. Until he had £250 a year a single man paid only about £10. Today the equivalent of £250 would be £1,250 and the exemption level, even with the £50 added allowance, is £290. Admittedly tax is not paid on about £7.5 a week because a large part of the social welfare stamp is taken off. That would be between £350 and £400 a year.

Dr. O'Donovan

Deputy Belton is quite right. Last year and the year before I produced figures of what it would cost if we doubled the allowance in respect of every child of three years of age and over in every family. The whole cost would be only a flea bite in this budget. The £2 million mentioned by the Minister for Social Welfare would cover the lot and would give an allowance of £2 in respect of each child per month. That might be of some use to big families. I call the present situation disgraceful because children's allowances were not increased during the whole of the Government's last period in office until the election was looming in 1969. Then they were doubled.

How do the Government expect parents whose children are underfed to rear those children to be citizens who can make a proper contribution to the success of the community? These children are left stunted in mind and body and with a grievance against society. I hope that in ten or 15 years time they will not get together and blow up the whole thing. It is what the Government deserve. Fianna Fáil say they are interested in the lower classes. They are not interested in those who work for their living. They may be interested in the unemployed and in the widows and orphans barely sufficiently to compensate them for increases in the cost of living.

I wish to mention a few details of the budget. One item in the estimate of receipts is a sum of £3.5 million which has been included for "sinking funds surrendered". That word "surrendered" intrigued me. If the word used had been "confiscated" it would have been apt. Surrendered by whom to whom?

I will answer it myself—surrendered by the accountant in the Department of Finance to the treasury, the super part of the Department of Finance. Who owned those sinking funds under the terms of the various loans? The owners were the owners of the stock whose money was confiscated. If they had even put in "sinking funds money sequestered". If somebody surrenders something you say "OK". Were the owners of these stocks ever consulted about this? I am absolutely certain they were not. It was a grab and the purpose of it was to enable the accounts to be balanced. In a budget of £300 million a sum of £3½ million does not matter very much but the Department of Finance should use the English language properly. I would agree with a phrase such as "sinking fund moneys taken over by the Minister for Finance".

The surplus income of the Central Bank as calculated was put into this Estimate of Receipts and Expenditure for the coming year at £8 million as compared with receipts last year from a surplus income of £9½ million. I do not know what was the purpose of this trick. I suggest it was to mislead the commentators on the budget. When we get the ultimate figures of the table of expansion of the budget there is £9 million extra from the Central Bank, profits which they made in the last year. Their rates of interest were related to those of the commercial banks and the Minister takes this in to help him balance up his budget.

The Minister can give me any explanation he likes but the correct figure to have put in for surplus income on the Central Bank would have been £17 million instead of £8 million but that would have given the kind of situation the Minister did not want. He made a provision of £17 million for additions to salaries of staff whereas in other years no such provision was made. Last year when the Budget came before the House the Minister was concentrating his mind on inflation. Although increases were agreed, provision was not made for them; but this year, when increases were not agreed, there is an item in the White Paper of £17 million. The purpose of this was to show that instead of there being a surplus there would be a deficit. When the budget was read out there was a stunned silence in the House in regard to the figures published beforehand.

The Fine Gael Party were always accused of raiding the Road Fund. When Deputy Malone spoke a few moments ago he quite rightly said that this game of increasing the road tax and then using it for ordinary expenditure not relating to roads should stop. This year the Minister is grabbing £4¼ million from the Road Fund. There used to be a great row here before the war if the Minister for Finance was looking for half a million pounds and he raided the Road Fund. This year he is raiding £4¼ million from the Road Fund.

Mr. Crowley

What percentage of the Road Fund was a half a million pounds?

Dr. O'Donovan

The Deputy will have to work that out for himself. I can tell him what percentage £4¼ million is on the total revenue of the Road Fund this year. It is one-fourth of it.

I now want to speak about something which has been touched on by many other Deputies who spoke, although strictly speaking I doubt if it relates to the budget. I refer to the question which comes up for decision next week. I was never as much a believer in self-sufficiency as Fianna Fáil but I believe in tariffs for the protection of small industries. There is no known example in history of the industries of any country being built up under free trade with the sole exception of Britain which was in first, but there was no competition. The United States and Germany when building up their industries in the last century did so under protection.

What is proposed in the suggestion that we become members of the EEC? It is that we depart from the system of protecting our industries and throw them to the wind of competition from all the countries of western Europe. In view of the example we had when we were a member of the finest economic community in the world at the time of the United Kingdom of Great Britain and Ireland from 1800 to 1920 what chance have our industries got? A very good summary of what was done was written by Professor George O'Brien as an introduction to Mr. E. J. Riordan's Modern Irish Trade and Industry. I am afraid that Mr. E. J. Riordan's book would appear to be very ancient stuff to some of the people I hear talking. Professor George O'Brien wrote about 40 pages on what happened to our industries in this country between 1800 and 1850. He summed up the situation very well.

Mr. Crowley

A lot more happened than industrial trade during that time.

Dr. O'Donovan

The late James Connolly said:

For me Ireland without its people is nothing. That combination of chemical and physical substances known as Ireland is of no significance to me without its people. The people are the only thing that counts.

The Irish song the Spailpín Fánach deals with this extremely well. "Ag seasamh ar mo shláinte", depending on my health, that is, he would die of starvation if he lost his health. Are we going into Europe for the purpose of creating another race of spailpíní fánacha? Is that what we are at? We had Deputy Paddy Burke speaking earlier tonight.

I do not believe that Deputy P. Burke believes one word of what he was saying. I am assuming that he was a genuine member of Fianna Fáil when they were in favour of self-sufficiency. Where did all this come from? There is a French phrase for it "la traison du clercs"—the treason of the clerks. That is what is happening in this country at the present time—the treason of the clerks and the intellectuals. It is no harm to know a few words of French.

Mr. Crowley

Obviously getting ready for the Common Market.

Dr. O'Donovan

I am glad to think that I will not have much to do with the Common Market. I hope that I will have very little to do with it, despite the fact that vast sums of our money have been spent on little pamphlets. Money has been spent on various documents issued by the Department of Foreign Affairs. These are the so-called White Papers, although they are not White Papers. A White Paper is one that is supposed to examine something impartially in a fair and above-board fashion. Not one of these pamphlets does that. Is this through deliberate intent or ignorance? It has been said that the EEC is not a political party matter at all. It should not be a political party matter.

I have noticed a decided change in emphasis on the part of some of the colleagues of Deputy P. Belton and of the Parliamentary Secretary. Deputy FitzGerald and Deputy Childers have both been accusing us of falsifying figures. Who has falsified figures? Look at the document which was produced about industry by the Department of Foreign Affairs, where the nitwit who wrote it within two pages argued that we are going to have a vast market open to our industries and then that our industries are not going to suffer at all from the competition with industries in the Common Market.

I would be baying to the winds in regard to our fragile industries except for one reason. We have had the Anglo-Irish Free Trade Area Agreement. The Labour Party opposed it and voted against it. We have been vindicated to the hilt. I said before that the Government sold out the long-term interests of this country for short-term advantage. Conditions in the cattle trade improved for a couple of years, but that was a short-term advantage. In the last couple of years Britain gained more and more from us. The tariffs are only down halfway. We have massive redundancies. The members of the Government tell us that this is due to the decay in world trade and to the fact that certain textiles have gone out of fashion.

Mr. Crowley

That is true.

Dr. O'Donovan

They would never dream of saying that the Anglo-Irish Free Trade Area Agreement had anything to do with it. This proves that they are avoiding reference to it. They know my statement is true.

The great defect in our position when we became a free country in this part of the island was that we had no trained economists or economic thinkers among the politicians. One man wrote a book which was called, I think, Politicians by Accident. None of the politicians in the early days of this country knew anything about administration or economics. Some of them may have been interested in poetry or mathematics but none of them had an interest in economic matters. This was one of the difficulties. There is a trend nowadays to thinking that economics is arithmetic.

I will finish on this note. I will not break my word that I would speak for a relatively short time on this budget. The logically indefensible position of those who favour entry into the Common Market is this. How can you tell the farmers that there will be a bonanza and they will make plenty of money, and also tell the housewife in the cities and towns that the price of food will not go up? You cannot do that. You cannot get away with it. That is the difficulty facing the people in favour of going into the Common Market, and that is why the newspapers today and for the past few days were saying that the message has not got across and the people are befuddled. They are not befuddled. Any farmer spends a great deal of money on food. I would say that the average farmer has departed from self-sufficiency. I take it that even in that great home of self-sufficiency, west Cork, where I used spend my holidays, they are not nearly as self-sufficient as they used be. We used have brown and white cakes baked in the bastible pot, but that is gone by the board.

Mr. Crowley

Not quite.

Dr. O'Donovan

The brown cake and the white cake are not baked every day now by the woman of the house. If she wants to entertain her friends or relatives she will bake a cream cake, but that is a different matter. The price of the loaf is now a serious matter. It is 3s compared with 9d when Fianna Fáil got back into office. We do not hear about that. The price of the loaf is now four times as much as it was then.

It would have been a worthwhile action on the part of the Minister, if his mind and his eyes were not on other things, if he had taken the turnover tax off food. The Government may have all kinds of economists in various institutions telling them various things, but I know of no economist who would defend a tax on food. If the Government can produce one I would like to meet him. That tax is still with us. The difference between a value-added tax, a wholesale tax and a turnover tax is marginal. The logic of the whole thing was set out by the Revenue Commissioners. It carried conviction on paper but when I examined it afterwards, in the cold light of day, it did not carry nearly as much conviction. The argument was that a value-added tax is not a cumulative tax.

These are the major defects in the budget and nobody will persuade me that they are not major defects. The worst defect in the budget is that children's allowances were not increased for large families so that the less well remunerated workers could feed their families properly. With the present price of clothing I do not believe they will be able to clothe them properly, but at least if they could feed them properly that would be something. Ever since the PAYE system came into being in 1959 the Fianna Fáil Party have given no concessions whatever. They have increased the burden of income tax. The figures speak for themselves: £160 million from income tax alone this year. I suppose the only thing that can be said in favour of the Revenue Commissioners is that they exercise economy. Their rate of expenditure is as low as that of the St. Vincent de Paul Society. Most of the work for the St. Vincent de Paul Society is done free of charge so all they have is a small expenditure on letters and so on.

It has been our fault to a certain degree that the industrial worker has not been made aware, to the same degree of the advantages of membership, but it can equally be said that he also will reap the benefits of our joining the EEC. For instance, in Bantry, in my constituency, there is a huge industry awaiting the result of the referendum on 10th May. Their decision will be made as a result of the decision taken by the people on that date. The workers in my constituency are alive to the advantages that will accrue to them. After all, where is the obvious place for anyone of the other nine member countries to establish a heavy industry but Ireland where we have a surplus male labour force with tremendous adaptability and some of them highly technically trained. The reason why we have people who are so adaptable and who have this bent towards technical positions is that we are basically a rural community. What young fellow off a farm or even a neighbour to a farm has not been fixing a tractor or plough or doing something mechanical as long as he can remember? Unlike the members of the Labour Party, I have complete confidence in the ability of the ordinary Irishman to rise to the occasion and produce a product that is as good as, if not better than, any produced in Europe and, at the same time, to lift his standard of living to the level in, say, Germany or France.

It is also very important that we be not misled emotionally by people talking about selling out our sovereignty, about selling out on the Six Counties, about selling out on the people who gave their lives to make it possible for us to congregate here today. This is a complete distortion of all the facts that are available to us, and I would go so far as to say that it is a deliberate distortion. There is no legitimate, honest argument for non-entry. Any argument that would be made for non-entry, in order to be effective, must inevitably be based on distortions. Maybe those of us now in favour of entry have been remiss in not going sooner to the meeting places and convincing the people of the rightness and the profitability of entry into Europe. The late Seán Lemass summed up free trade well when he said it did not automatically give you a profit but it gave you the opportunity of profit. The Irish people have this opportunity of profit on the 10th May.

It is disconcerting that there are people in this country who are claiming to be Irishmen and claiming to be, in some cases, more Irish than the greatest Irishman, who go round to political meetings and try to break them up lest views with which they do not agree be put forward. I had that experience last Sunday when some of these ultra-nationalistic organisations, which they claim to be, did not seem to like the arguments I was presenting in favour of entry. They decided that this was one way of silencing me, by constant heckling and bullying tactics. The people have never been cowed by these tactics and the perpetrators came very much the worst out of it, because, as they had to stoop to these tactics, the people saw they had no legitimate arguments to put up; if they had they would have put them up.

The only danger to our entry is complacency, but I do not think that danger is very great any longer, because people are becoming much more interested in the issues. As I said, maybe we were wrong in not informing them as soon as possible of all the issues that were involved, but we are getting around to doing it now, and I believe the people will recognise the validity of the arguments for entry.

There is one slight criticism I would make. It has to do with the Old IRA veterans. I recently had a question down to the Minister for Finance and the Minister for Defence about the possibility of exempting IRA veterans from income tax. Unfortunately my representations were not successful, but the Minister did give some concession to them. I would appeal to him, if at all possible, to ensure that these great men are exempted from paying income tax. Surely if we can do it for actors and artists we can do it for the people who fought to give us our freedom. It is a very small concession to give them at the end of their lives. I hope the Minister will pay some attention to my request on their behalf. I know he is concerned about them. He probably sees many difficulties in the way of implementing such a policy, but there is already a precedent in the exemption of artistes, writers and others.

In the budget the Minister faced up to his responsibilities and went for medium-term and long-term growth in the economy. He did this by putting additional spending power into the hands of those who spend it most quickly—pensioners and the less well-off members of the community. He gave men and women in employment an opportunity to safeguard their jobs. He gave the whole community the incentive that was needed to create more jobs and to increase the national income. He provided some very attractive incentives for industry and outlined the way to industrial expansion. Above all, he showed his complete confidence in the ability and character of our people. That attitude will be reflected in the future in the tangible assets of increased wealth, increased production and increased prosperity for all. The Minister took steps to ensure that this prosperity would be shared by all, including the poorer classes.

Of course, Deputy O'Donovan said that we would blame all sorts of depressions, the fall in the textile industry and various other factors in order to show that the Anglo-Irish Free Trade Area Agreement was not the cause of any failure. I do not think that that agreement was the cause of any depression in the economy. There was a depression which hit the United Kingdom, for instance, which is our principal customer. The depression in the United States also had a minor effect on our economy. We suffered little through any fault of our own. Perhaps we can say that there were more strikes than there should have been although, quite honestly, I say last year was the year that showed the maturity of the Irish working people. The unions came of age in the ESB strike. Generally there is a very sound basis for optimism for the future as a result of what we have seen in the past 12 months. I am convinced that any depression that there was in the economy was due to the external factors I have mentioned.

If I were to try to describe the budget in one word I would say that it is an adventurous budget. Not alone is it adventurous but it is imaginative. It will have the effect of creating confidence in the minds of management and it will provide the necessary incentive to industrialists to expand, thus automatically increasing employment.

This budget will provide a healthy economic climate for us. Of course, the critics are less vociferous now than they were on former occasions. This is the greatest compliment that can be paid to the Minister. If the budget were not as good as it is Deputies would be coming in here to deride it. I am particularly pleased, as I am sure every Deputy is, that the poor have not been forgotten, that those who are unorganised, who do not represent a pressure group, who have nobody to speak for them except their public representatives as such, have not been forgotten and have been given fairly reasonable increases. I am also pleased that thousands have been removed from the income tax net. That is a source of satisfaction to all concerned with the welfare of the less well-off section of the community.

I only hope that we will be able to achieve a national wage agreement that will give the type of consolidation that is required on entry to Europe. The prospects of having a national wage agreement are very bright. I do not want to say any more on that subject for fear that anything I might say would affect the outcome. The prospect of negotiating a really worthwhile wage agreement is on the cards and I hope such an agreement will be forthcoming.

As I said at the outset, this budget is a challenge to us all. It is a challenge to prepare ourselves for membership of the European Economic Community. It is a challenge to grasp the opportunities now being presented to us and to show the self-control and dedication that will be necessary in order that we may be successful within the Community.

The Minister mentioned the prospect of a White Paper being issued in the summer in regard to a new type of company taxation, a corporation tax of some description. I assume that this will correspond roughly with the British tax with some modifications to suit Irish conditions. It is time that companies were assessed and charged on a different basis from that applicable in the case of ordinary individuals. Nevertheless I cannot help feeling that the whole system of taxation, which was devised to serve a great industrial and commercial nation, the UK, is unduly ponderous and complicated for a small nation such as ours. I would ask the Minister why cannot we have a system that would be more suitable for a small country and which would be comprehensible to the man-in-the-street. If companies and individuals are to be segregated—I agree with this type of segregation and I consider it is long overdue—is this not an opportunity to revise the tax code in relation to individuals? Perhaps the Minister has this in mind; if not, I would urge him to give careful consideration to the matter.

It is not too much to ask that tax legislation should be relatively easy to understand. There is no justification for making it so difficult and abstruse that the ordinary taxpayer has not a clear idea of the implications. Ignorance breeds fear. Rightly or wrongly taxpayers think that the system is geared to soak them and this fear should be allayed. Those people who can afford it can hire the services of a taxation expert and frequently the fees paid to these experts are returned a hundredfold in the form of reduced liability. However, the poor and the not so rich have to bear the full brunt of taxation and this breeds resentment. One should not have to rely on the services of experts; alternatively, the services of experts should be available to all. The lack of accumulated wealth should not militate against any taxpayer.

It is common knowledge that in the last five or ten years there has been a phenomenal growth in the formation of private investment companies. They have as their aim the avoidance of surtax and estate duty. I hope that corporation tax legislation will be so framed as to discourage such abuses and will ensure that those who enjoy large incomes will bear their proportionate share of taxation. Neither should it be permitted that those who earn large profits here should be able to escape payment of taxation because they channel their profits into foreign companies which are registered in such notorious havens as the Bahamas and Jersey.

In conjunction with the reform of company taxation, the Minister might consider, in consultation with the Minister for Industry and Commerce, reform of the Companies Act, 1963. I refer in particular to the abuse of the provision in relation to the now permitted issue of redeemable preference shares. This permission has been of little or no value to the commercial and industrial interests and I urge that it be withdrawn. Nowadays one rarely sees the issue of such preference shares to the public. For practical and financial reasons they have gone out of fashion and this is even more justification for not allowing redeemable shares to be used for the avoidance of taxation. It was gratifying to find that the Minister took many people out of the income tax net. This is a welcome return to the position which obtained previously.

I listened to Deputy O'Donovan and Deputy Desmond speaking about the prices of houses and land and property generally and of the number of people who are seeking to buy their own homes. Nobody denies that the price of land and property has increased considerably. I agree that there should be some system of control whereby more building land could be put on the market by county councils or corporations. This is being done at the moment by local authorities but it should be done on a larger scale. If the colossal cost of a site were taken out of the price of the house it would make it much easier for married couples to buy their own houses. However, it is not an easy problem to solve. So long as we are committed to the free enterprise system of buying and selling it will be difficult to introduce any legislation that will not affect that system. In addition, there would be constitutional difficulties in this kind of operation.

It was gratifying that many social welfare benefits were given in the budget. In the retirement pension at the age of 65 the personal rate was increased by £1.25 bringing it to £6.20. For a person with an adult dependant the increase was £1.95 bringing it to a total of £10.35. It is only right that we should keep pace with the cost of living in our social welfare benefits. The old age contributory pension for those aged between 70 and 80 years was an innovation; the personal rate will be £6.20 and for a person with an adult dependant the amount will be £10.35. Disability and unemployment benefits have increased; the personal rate will be £5.55 and for a person with an adult dependant the amount will be £9.30. The widow's contributory pension and many other pensions have been increased. These increases were all welcomed by the recipients. In the preparation of our budgets we must remember that the less well-off section are the least vocal and they deserve all the help we can give them. I would be inclined to cut down on other groups who are much more vocal, more powerful and more vehement in their demands and to give to social welfare recipients.

I agree completely with the extension of the free travel scheme and the increased allowances of free electricity. I also agree, of course, with the new provisions for widows of War of Independence veterans. We had an anomaly there since the scheme was introduced. It was very hard to explain why a widow could not travel on her husband's card. That is rectified now and we hope there will be even further concessions to veterans of the War of Independence.

Deputy Malone expressed disappointment at the fact that only £1.8 million, as he said, was allocated to agriculture. He carefully ignored what had been allocated in the past 12 months which included over £10 million by way of increases in creamery milk prices, increases in export subsidies for beef and lamb and the special loans scheme for the meat industry. The gross cost of that was £2.65 million. Capital grants for farm improvement and disease eradication were increased by £4 million and— very important—the amount of credit was increased by £7 million last year and by a further £4.5 million this year. The small farm bonus scheme was increased from £375 to £500. Anybody being fair and objective in regard to the agricultural industry could not decry the amount of money put into agriculture and say it was minimal. It was a considerable amount of money, especially in view of the other forms of assistance provided in regard to the price of pigs and the mountain lamb subsidy and so on.

All in all, we can say it is a budget of which the Minister can be proud that he did a good job, that he looked after those who most needed to be looked after, and that he did all this without any extra taxation. He utilised the buoyancy of the economy. This must have been a source of grave dissatisfaction to the Labour Party who have been saying for so long that we are bankrupt and that we are gone forever financially and cannot recover but suddenly when we have decided to go into Europe they say we are such a great little country that we should stay on our own. It would be funny if it were not so serious. This budget is the farmers' incentive to prepare for the Common Market to ensure that they gear themselves to avail of the opportunities provided by membership. If they do this the benefits for them will be enormous.

In conclusion. I wish to emphasise to the Minister my request that he should take the Old IRA veterans out of the income tax net. I know he will give that suggestion his most sympathetic consideration.

Mr. Finn

I do not intend to delay the House very long but there are a few points I should make on this budget. I certainly welcome the Minister's decision to give those benefits to the lower income groups, particularly social welfare recipients, old age pensioners and so on. With the implementation of decimal currency taxation rose considerably without the people realising it. The increases that had been given have already been accounted for in increased prices and the people need whatever extra benefit is being allowed and far more in order to have any decent living. Across the Border we can see that social welfare benefits are vastly increased. How can we expect that our people there will join us and take our social welfare benefits?

I do not believe this is an election budget; I believe it is a budget for entry into the EEC. I welcome the increases but they will mean little or nothing at this stage to the people who are getting them because the little items they must buy to sustain life have increased in price by far more than can be met by the increased allowance.

I am sorry that there were some omissions among the social welfare recipients, particularly female relatives. There are hundreds of female relatives in the west of Ireland who must look after a father or mother. For instance, a young farmer's wife may have to take her mother-in-law out of bed ten or 12 times a day but, because her husband is out working, perhaps temporarily if the farm is a small one and he is trying to make a living there, this woman is denied an allowance because she is supposed to be maintained by her husband. There are hundreds of old people in institutions or hospitals when they should really be at home where they would be happy and where a daughter-in-law would love to have them and look after them if she could afford to do so, if an allowance were provided. If a small farmer in the west of Ireland goes out to work for ten or 15 weeks of the year and if he does not have 78 stamps in three years and the social welfare officer decides that he earns more than 10s. a day, he is automatically debarred from unemployment benefit. I think this is a very dishonest regulation which deprives a man living with his wife and family who earns more than 10s. a day of unemployment benefit. Surely there is something serious wrong if that type of regulation is not amended. I am delighted that the Parliamentary Secretary to the Minister for Social Welfare is here. With the help of God he may increase this to at least £1 a day.

Much has been said of the great benefits the farmer has got. I, as a farmer from the West of Ireland, am fully aware of the reasons why the price of cattle has gone up and why our balance of payments has improved this year. The price of cattle has gone up because farmers are banking on entry to the EEC. If the people of this country say "No" on the 10th May I can tell the farmers they will be taking £25 a head less for their stock before the end of this year.

Mr. Geoghegan

And perhaps, double that.

Mr. Finn

No, this is what I say. There is a surplus amount of money because of the increased price of stock on the export market and an increased price of agricultural produce this year. The Government know perfectly well that if we do not enter Europe this country is doomed, regardless of what the Labour Party may think. The Labour Party were directed by the Irish Congress of Trade Unions and it is impossible for any Labour Deputy to stand up here and support entry when the Irish Congress of Trade Unions have decided to vote against entry.

The Minister is supposed to have given an increased price for pigs but pigs are going for far more than that on the open market. This is never availed of but it has been raised. I welcome the increased price for mountain sheep but I think this should have been extended to lowland sheep.

That would have been an incentive to produce. The people in my part of County Mayo and in County Galway are deprived of that increase. People wonder why the mountain sheep breeders have been given this subsidy. Early last year it was almost impossible to sell lambs. Wool was sold at 2s a pound and if there was any chemical which would burn the wool off the sheep it would pay a farmer much better than shearing sheep and trying to sell the wool. I do not know what has gone wrong with wool prices. Ten or 15 years ago wool was 5s, 6s and 7s a pound. Last year it was sold for 2s a pound.

There was no provision made for one section of the community who are trying to survive on very meagre means. These are people with small businesses in small towns and villages, particularly in County Mayo where we have the highest rates in Ireland, £8.30 in the £. I am sorry the Minister has made no provision for them. In my county we pay £3.60 in the £ for health alone. We are at a serious disadvantage in that we have no specialised services within our county and all our patients must be transported at the expense, to a certain degree, of the ratepayers to Dublin hospitals or to extern institutions in Galway. This is a great drain on the rates. Unless some Minister of some government makes this a national charge I cannot see how poor people who live in small towns and villages with small businesses can survive.

I hope the referendum succeeds. My party have always believed in the advancement of this country. The Government of today had not a hope in hell of ever winning this referendum without the support of Fine Gael. We always believed in the betterment of this country. I lived, as a young boy, through an economic war. This economic war is never mentioned by anybody on the Government benches because they were the people who created it. I lived through that and I hope that I, or any member of my family, will never have to live through another and this is what it will mean if we do not enter the EEC. We will be isolated and Britain will become an agent to sell our produce and buy it at her own price. As well as that, we will be creating a permanent Border within our country if the people reject entry. There will be no use for that Border, no need for it to be there in five years if we go in. I can see that Border disappearing, economically anyway, easily within five years. Thank God it will stop a lot of this unnecessary trouble and murder across the Border.

I can understand why every subversive element in the country is completely opposed to EEC entry. Speaking as a Deputy from the north-west, I am convinced that it is not Northern Ireland but Southern Ireland they want to take over. Therefore, my advice to the people and to my constituents in particular will be to support our application for entry. It will be for the betterment of themselves, the betterment of our country and it will mean that as a nation we will have a better chance of survival. There is no solution for us without EEC membership, no matter what the proposed alternatives are.

A certain amount of money will be saved on subsidies to the farming community. It will be in the region of £30 million to £40 million. I hope that when that money becomes available to the Exchequer it will be spent wisely. I am not satisfied with the amount of money the Government have been putting into agriculture throughout the years. Agriculture has been our mainstay. In the next four years production can be increased by 100 per cent and the person who has land will be given the opportunity to make a decent living.

I do not like the proposal of the Government to introduce value added tax before Britain and I do not understand why they contemplated its introduction during the present year. Britain will not introduce it before next year and the same goes for the other applicant countries. Of course, it is a stratagem to collect extra revenue but it is dishonest to the people to implement it before Britain and ourselves are members, which will not be until March next.

I welcome certain provisions of the budget, particularly those which benefit the lower income groups and the social welfare beneficiaries. They are entitled to the little extra they get because we all know how prices are outpacing incomes. Something will have to be done about rates and particularly about the system of financing our health services. At the moment there are too many people who cannot afford even the necessaries of life and I, as a Deputy from Mayo, unfortunately know this only too well.

Mr. Meaney

Anyone travelling in the countryside after a budget will hear reaction to it one way or the other. Sometimes there is violent reaction because somebody thinks he has been overtaxed and someone else thinks that the social welfare categories have not been treated properly. This is one budget which has been welcomed by all sections. It does not impose extra taxes and at the same time it provides relief for many people who are paying heavy taxes. There has also been a general handout to social welfare beneficiaries.

The budget makes us appreciate that the economy is very sound. Opposition speakers have said the country is going burst, that the country is on the rocks, that we are running up huge debts here, there and everywhere. However, when they size the budget up they must admit that the economy is sound. From time to time our balance of payments has run into difficulties but we have always been able to bring it back to a tolerable level because of action by the Government, unpopular, perhaps, but necessary for the betterment of the country. The people have appreciated this. Now, because of the campaign for entry to Europe, the whole world realises that the economy here is very sound.

The budget gave a special concession to the over 80s. This was only right because those old people spent their lives working hard and they deserve this special concession. They are not getting too much. It is very hard to give a person even enough when he depends solely on a non-contributory old age pension.

Every year we have been given more in social welfare benefits. I hope that in the near future there will be an added benefit, a comprehensive scheme to provide home care for the aged and invalided. Our aim is to keep our aged invalided people out of hospitals. At the moment hospital costs are rising and in most cases aged people would prefer to stay at home. I know such a scheme would be difficult to initiate because if the payments were made to the aged person the relative responsible for looking after him might complain and if the payments were made to the relative it might be said that the old person was not receiving adequate attention. It will be difficult to work out a scheme but it should be remembered that there are public health nurses and social workers who are only too willing to call to each home. I urge the Minister to consider introducing such a scheme in his next budget. It may cost a lot of money but it is costing a lot at the moment to maintain those people in hospitals.

This year the Minister for Finance gave other concessions in the budget. All of them were necessary because the people concerned could never be given too much, particularly with prices rising all over Europe. Deserted wives have been given an increase. They deserve everything we can do for them. Those people do not know whether they are here or there. A widow knows her husband is dead and she can plan for the future but in this case the woman never knows whether the man she married will show up again and she cannot plan for the future. The Minister should be more lenient with that category of people.

Deputy Crowley said he was not satisfied with the amount of money which went to help the veterans of the War of Independence. I agree with what he said. We are much too strict in our regulations in granting special allowances to the survivors of the War of Independence who are the holders of service medals. Those men were idealists and they fought for the love of their country. They are getting fewer every year and we should give them as much as we possibly can. When those people retire from business and live on a small farm with a son the investigation officer comes out to investigate their case and he has to put down whether it is a hardship on the son or daughter to look after them. If he puts down that it is well within the financial resources of the son or daughter to maintain the father and mother a very small allowance is given. The regulation in this case is much too stiff. I hope in a future budget the Minister will ensure that every person with a service medal is granted at least £1 a week.

In a previous budget the Minister granted an allowance of £1 a week or half her husband's pension at the time of his death to the widows of War of Independence veterans. I should like to see that extended to the holders of service medals. This will not make those people rich but it will show them some appreciation from us. I am sure all parties in this House would be behind that.

The Minister has increased the burial allowance of £25 to £50. This means that the person burying one of those War of Independence veterans can obtain £50 towards the cost of burial. This has now been extended to military service pensioners. I am glad there is no difference shown between the holders of military service pensions and the holders of service medals.

Many of us had urged the Minister to extend the free travel allowance to wives of the War of Independence veterans. However, I am a bit confused about one matter in connection with this. Will the wife of the veteran of the War of Independence get free travel when her husband is in hospital? As far as I know she must be accompanied by her husband. That man could be in hospital for quite a long time and his wife might wish to visit him.

Although I criticise the Government in regard to this matter I must point out that it is only the Fianna Fáil Government who have done anything for those people. The Opposition got their chance but they did very little for them. It was the Fianna Fáil Party who in the forties first gave help to those people.

Many people criticise the budget because enough was not given in it to agriculture. Farmers should get special allowances on 1st January or 1st February so that they can make their plans for the year ahead. The Minister is converted to this idea now. He has said that will be his policy in the future. A lot of money has been poured into agriculture over the years. It is the backbone of our nation and of our export market. When we go into the EEC we will have to do away with all the subsidies. We will then be able to give further help to the social welfare recipients.

We allocate large sums of money each year to the eradication of disease. That has been increased to £4 million this year. We are not strict enough in regard to eradication of disease in pigs, sheep and cattle. I should like to see better grants given. We see cattle in trucks being brought into marts every day. Some of those may have suffered from disease. In the evening we see cattle, which are free of disease, being brought away in those same trucks. The work on eradication is set at nought if healthy animals are carried home in the same trucks as diseased animals were brought in early in the day. They cannot mix. We will have to have a careful look at this.

The small farm bonus scheme was increased from £375 to £500 for new participants. That is a good idea. It is beneficial to the younger men. It should always be our aim to give incentives because they are vital for the survival of the small farmer who has a difficult life, because he has not enough land. Most of our young farmers do their best and make a good living.

The mountain lamb subsidy is to be increased by an average of £1 per head on fat wether lambs of mountain breeds. This is a welcome innovation. The hill sheep farmer has not been forgotten. Such farmers work very hard to eke out a living. It is not easy to mind the sheep, even though grants for fencing are paid. The Department have been strict in enforcing regulations concerning the breeds of sheep who qualify for the mountain lamb subsidy. They are not inclined to allow any crossing at all in breeding. The Minister should sanction the crossing of some of the mountain lambs with inland sheep. Scotch ewes and Suffolk rams should be crossed. This is worth a trial for one year. The lambs would probably be better.

Everyone thinks that those engaged in agriculture are millionaires. They think that there is no fear for the farmers if we do not join the EEC. I cannot understand the mentality of anyone, even remotely connected with agriculture, opposing entry to the EEC. Agriculture will suffer badly if we do not join.

The Minister referred to credit unions and the exemption from tax on their operating surpluses. There was a fear that they were to be subject to high taxation. These unions are doing a good job. They are operated by an excellent group of people and really try to help people who cannot get money elsewhere. Much money has been invested in the credit unions. People have small savings there and can get loans. In cities they help people who might otherwise go to moneylenders who would charge exorbitant rates of interest. These credit unions are a help in discouraging the use of moneylenders.

The general exemption limit of £5,000 for death duty purposes will be increased to £7,500 and there will be a reduction in the rates of estate duty on certain estates. That is only proper. The value of property and of land is rising each year. It seems to rise daily. Death duties should be kept in line with that. They are a heavy imposition on the families who have to pay them.

Money must be got somewhere. The Minister has acted wisely. I congratulate him also on the arrangement regarding death duty as it affects illegitimate children. It is proposed to provide that, for death duty purposes, illegitimate children inheriting property from their mother will be treated as if they were legitimate and that, where foreign adoption orders have substantially the same effect as orders made under our Adoption Act, children adopted under such orders will be treated as children adopted under our law. This is a change in the right direction and should have been brought in long ago. There is new thinking in this country in regard to these matters. It is only right that such children should be treated in a proper manner.

People are inclined to discuss entry to the EEC. It is the greatest decision this country has ever been asked to make. On the 10th May the people will be asked to decide whether they will join with the developed countries of Europe or stay out on our own on the periphery of Europe. I am not asking anyone to join a Europe where there is easy living or lazing around. That is not the idea of the EEC. The EEC is a community where people work hard and have a rationalised system under which they are paid well for their work and have guaranteed market for their products. Our people should think about this. In the past our farmers were often asked to produce certain goods and, having produced them, they found that Britain had her own financial difficulties affecting her balance of payments and that tariff barriers were imposed on our exports. That is how Britain got out of difficulties at times. The tariffs might be 10 or 15 per cent and they could be imposed overnight. We could do nothing about it. On the agricultural front we could find, when we produced milk or beef, that when we came to sell them in England the markets there were flooded. The export of meat from this country has been affected by price slumps following frozen meat importations from the Argentine and South America. There was no definite price for our produce. If we join the EEC there will be a stabilised market and a levelling off of prices. Each category of people will know what they are going to get for their produce. Many people are saying that we can have an associate membership, during the past week, with the EEC, and trade agreements. People must have read in the papers that countries which sought association with the EEC countries have been denied such association. We must become full members.

We should be at the negotiating table. We should be at the table where the decisions are made. We should have our representatives there to make our case as strongly as possible. We should not be in a position in which other people in the EEC having made their decisions would say to us if we sought associate membership: "Here are our conditions. You can like them or lump them." That is what is being said to the nations who are seeking associate membership at the moment.

There is a lot of murky thinking by some people. Many of those who are campaigning are throwing mud and hope that some of it will stick. They are telling us that we can have trade agreements with many other countries, and that we can have trade agreements with the eastern bloc. The eastern bloc countries will not be able to take our produce overnight. Surely the Irish people should not be told that Portugal and Spain will be able to purchase our agricultural or industrial goods. They have not got the purchasing power. I often feel like asking the people who say that, do they mean what they are saying. I think they are out to cod the people for their own gain.

Surely they are not asking us to sell our goods to the countries bordering on the Mediterranean. The African countries have no purchasing power either. An old man said to me the other day: "There are people talking about selling goods to Africa but if we only send out a missioner we must send out a ball of money after him to keep him alive." That is a sound remark because those countries are not in an economic position to purchase goods from us at reasonable prices. Therefore it is vital that the people should consider this question very seriously.

The object of the campaign at the moment seems to be to say to the housewife: "Look at what it will cost you in the EEC." We all know that what is important is not what something costs you but what you have in your pocket. I heard another person say: "I remember when a pint of porter cost 6d and I was not able to buy it because I had not got the money. Now it costs over 3s and all the lads are able to buy it because they have the money."

On radio and television and in pamphlets we are told what goods will cost in the EEC and what they are costing in Ireland today. Many of these figures are inaccurate. We are told that the price of sugar will go from 5d or 5½d to 10d per lb. The price of beet here is approximately the same at the moment as it is in European countries. The cost of processing it is about the same as well. The price of that commodity will be about the same. The price of bread will not increase very much.

It may go up from 7d to 7½d if we join the EEC. In those pamphlets it is stated that it will go up to 10d. They say that potatoes which cost 1½p at the moment will cost 5p if we join the EEC. That is completely untrue because it just cannot happen. They will cost about the same as they cost at the moment.

A subject which they are all talking about now is the price of steak. At chapel gates I hear people talking about sirloin steak and fillet steak. If you were a foreigner you would think that we throw the rest of the animal away and that there is no such thing as boiling beef and roasting beef. Sirloin steak and fillet steak are not the basic cuts we eat, or the basic cuts eaten by the people who are talking about them. We only have them now and again. Let us face up to the facts. They are saying we will not be able to have them every day because they will cost a ridiculous sum. They are saying they will cost 130p per lb. It is easy to go to any country and make out a price list. You could probably make out a price list in Dublin today higher than the price list they made out for the EEC countries.

I was in a hotel the other night and I saw fillet steak at 130p for 12 ounces. There was 5 per cent turnover tax and 12½ per cent service charge to be added to that. I could go to another country and say that is the price of meat in Ireland, but it would not be factual. Other hotels may not be as posh or may be catering for a different type of customer, and they would quote a different price. It is very dishonest of those people to say we should not join Europe and quote prices which are completely unrealistic.

In the budget each year provision is made for agricultural subsidies. Some of those subsidies should really come under industry. People are inclined to say—and many people are inclined to swallow it—that if we enter the EEC it will be to the advantage of agriculture alone. What does agriculture really mean? The dairy farmer is the man who works seven days a week and almost 24 hours a day. He is paid for the milk when he delivers it to the creamery. It then goes on to the processing plants and the industrial worker gains from it. Hundreds of industrial workers are engaged in the processing plants every year, and make a good living. Money is provided in the budget for farm improvements, for building farmhouses, lean-to's, milking parlours, and so on. The materials, the corrugated iron, the gravel, the sand, the cement, the masons and the carpenters should come under an industrial heading. When people say that the farmer is the only one who will gain by entering the EEC we should remember that, if he does not gain, other categories will be poorer and many of them will be unemployed.

Hear, hear.

Dr. FitzGerald

We are prepared to believe that.

Mr. Meaney

We must join the EEC if we are to survive economically. So far as the South of Ireland is concerned there is much to be gained from membership. It is known that Dunlops of Cork are to have a £5 million extension if we join the Community. In the event of our not joining, that extension will go to England. This would result in a big loss for Irish Industry and for Irish workers. There is a £20 million plant for Cork Harbour but that will never materialise if we do not join the Community for the simple reason that Cork Harbour would not be used should we remain outside the EEC. I could mention firm after firm that will benefit from membership. Any man or woman who considers our position will have no option but to vote "yes" in the referendum.

We are allowed discuss many matters during this budget debate. Several speakers have referred to the question of rates. We all know that the rate struck by each county council is very high. I suppose the Health Act is responsible for that to a large extent but hospitalisation for patients and increased remuneration for hospital staffs and for the officials of county councils and of the health boards must be provided for. Those of us who are members of local authorities must be prepared to stand up and say that it was we, acting for the people, who were responsible for striking these high rates. If we were to provide accommodation for all those seeking it and to provide everything that is requested, the rates would be much higher. Requests are made from time to time that health charges be covered entirely from central funds. That would act against the lower and middle income groups because it would mean that they would be bearing the entire cost by way of taxation whereas under the present system people are assessed for rates on buildings and property, and usually those in the lower and middle income group do not own large amounts of property.

At the beginning of my speech I referred to the increases being given to social welfare recipients. I might mention too, that those people are entitled also to certain reliefs regarding the payment of rates. It was left to each county council as to what they should do in this regard. Cork County Council did not adopt the system because they thought it would not include the many hardship cases that would arise. That was the right approach because there will always be people who get into difficulties and who will be unable to pay their rates. Such people cannot be turned out on the road.

The £800 might be given for legal purposes but the owner of the land would have received much more. Instead of trying to control prices in this way it would be better to allow for free negotiation regarding the sale of private lands. One way of solving the problem would be to extend the areas in which planning permission is given. We all know that the demand for water and sewerage schemes is not keeping up with the demand for houses. The various county development plans limit the amount of land that can be developed in each county but if they were to double the amount, we would be going a long way towards solving our housing problems.

Dr. O'Donovan

Hear, hear.

Mr. Meaney

That is the only method of dealing with the matter. The availability of much more land would result in the prices of sites being reduced and it is the price of land that is a major contributing factor to the overall cost of housing building.

Dr. O'Donovan

That has been the case in recent years under this Government.

Dr. FitzGerald

Why have they not stopped it?

There was generous provision in the budget for education. There is much talk nowadays of schools and I can say that in my constituency everybody seems to be seeking a community school. Deputations have been made to the Minister in this regard. The Minister has sanctioned most of the money that is required and we are grateful for that. Our education system is changing very much but perhaps detailed discussion of the subject would not be appropriate in this debate.

The economy of this country is sound. There is no use anybody saying otherwise. We all look forward to a solid wage agreement. Deputy Crowley said that the unions have come of age. The ICTU are to be congratulated on their handling of the recent power crisis. Congress should be backed in their dealings with breakaway unions or any such groups. We must have a national pay agreement. Once it is processed we want the various groups to adhere to it. The Irish Congress of Trade Unions should get every possible support. They have shown themselves to be a responsible body. It is vital to this country that we have good, strong unions under strong leadership.

There has been little or no criticism of this budget throughout the country. There are people who will never be satisfied but, generally speaking, it was well received. Our next goal is entry into the EEC. It is everyone's duty to vote on Referendum Day, and the only sane way to vote, if we are to survive as a nation, is to vote "Yes" on 10th May.

Parliamentary Secretary to the Taoiseach (Mr. Andrews)

Of course he has.

The Deputy is one of the exceptions. I believe it is a national issue and that the economic future and hope for Ireland as outlined in the White Paper shows that it is a national issue, economically and socially. I believe that Deputy Corish's fear of Europe is obsessional. He not only refuses to go into Europe but refused to go to Europe when the Treaty was being signed.

Yes.

Dr. FitzGerald

Tell us more.

An Ceann Comhairle

Will Deputy O'Donovan cease interrupting and allow the Parliamentary Secretary to continue?

Dr. O'Donovan

I certainly will. I have already promised him twice that I will but the dish is so tempting that I cannot help eating out of it.

Mr. Andrews

I have been saying, Sir, that full participation in the work of the Community does not imply a wholesale abandonment or, indeed, any abandonment of our national sovereignty any more than it does in the case of small member countries or any more than it will in the case of Denmark or Norway. Such limitations as may be placed on our sovereignty through our membership of the Community must be related to the reality of our present position as a small country with Britain close by, an independent state but one with a very limited capacity to influence significantly external developments which can affect us in the more important aspects of our daily lives.

I also believe that in the enlarged EEC, which will include Britain, it is certain that policies will be pursued and decisions taken which will vitally affect our national interests. If we were to remain outside this enlarged Community we would find it extremely difficult, indeed impossible, to safeguard our interests when decisions having a bearing on those interests were being taken by the Community. This is borne out by our experience of relations with the Community over the past ten years in so far as our agricultural trade with the member states was concerned. In the situation of isolationism in which we would find ourselves if we remained outside the enlarged EEC our sovereignty would suffer and our nationalism might well turn inward upon itself and become increasingly insular.

In this particular context I can see a truncated, isolated Twenty-Six Counties sitting on the outskirts of western Europe, with no future, nowhere to go. That is the reality of the position if we do not get into the Common Market. As I see it, within the EEC Irish economic relations with other member states, including Britain, will be conducted within a framework of common rules and indeed many of these rules, as Deputies know, are there at the insistence—at the insistence—of smaller member nations. Is it any wonder that the smaller member countries are the most enthusiastic about membership and most conscious of the benefits it has brought them? I suggest this is because they recognise that in pooling part of their sovereignty they have achieved greater use of it overall. It is clear that membership of the Community will increase rather than diminish our real sovereignty. Membership will present significantly greater possibilities than at present for action in our own interests.

We shall participate in the formulation of proposals for the Community as a whole and influence decisions on matters affecting this country and all the member states. Sovereignty is closely allied to the concept of nationality. Some nationally-minded people seem to assume that by joining the EEC we will be accepting Partition. There is no question of our being required to acquiesce in the division of our country at the price of membership. Can anyone seriously contend that staying out of the EEC while the North joins the Community with Britain would help the reunification of our country? When Britain joins the EEC the North will develop as part of the Community, but if we stay out there will be a situation in which the economic and social differences between the two areas will be intensified. Trade in all products, especially in agricultural items, would be upset by trade barriers.

On the other hand, the most obvious impact of EEC membership on the Border would be the removal of tariffs and other restrictions. By 1978 all Irish farmers, North and South, will be working under the same conditions. It must be obvious that membership of the EEC will mean the gradual abolition of obstacles to unity.

I hope that social welfare services will be brought into line on the basis of common European standards. Freedom for people in both parts to seek employment anywhere throughout the country will be established in full by 1978 and regional policy will be one of the major questions for the enlarged Community. Both parts of Ireland will have a common interest in the development of this policy.

It would be wrong to assume that membership of the EEC without further effort on our part will solve all our regional problems. The higher prices for farmers, the increased rural prosperity and the new factories, undoubtedly will be of tremendous value but the Government must, and fully intend to, continue and intensify their efforts for the development of the West. Their ability to do so will be increased by membership of this common Community, this Common Market.

Here I would appeal to the membership of trade unions in this country and to outline very briefly—and speakers who follow me will have an obligation to do so—the role of Irish trade unions and the role they will play in the EEC. I can foresee a tremendous outlet for Irish trade unionists in association with their brethren in Europe. I can see a wonderful opportunity for the rank and file of Irish trade unions within the enlarged Community. Here I appeal to trade union leaders—as I have appealed to management—to ask their union members to take the view that it is in their interests, in the interests of their families, and in the interests of future generations, to say "Yes" on 10th May. I do no more than urge and ask them to do this. In a democratic society it is my entitlement to do this; indeed, if one believes in it it is an obligation on one to make this appeal.

Membership of the EEC will not affect the present role of Irish trade unions in industrial relations and this may be one of the great fears of the trade unions at the moment. The principle of free collective bargaining will remain undisturbed——

Dr. O'Donovan

I do not think so.

Mr. Andrews

The Deputy does not think so; I think so. The two truths.

Take, for instance, 1 lb of fillet steak of which the present Irish price is 60 new pence. The price alleged by the Common Market Defence Campaign leaflet is 130 new pence. The correct Irish price when we are in the EEC will show an increase. It will increase from 60 new pence to 85 new pence. There is the difference between 85 new pence which it will be and the figure of 130 new pence which is being projected by the people who are asking the country to vote "No" on May 10th. The present Irish price of 1 lb of plain cheese is 20 new pence. According to the Common Market Defence Campaign leaflet it will be 45 new pence. The correct Irish price in the EEC will be 28p. The present Irish price of one pint of milk is 4½p and the alleged EEC price 8p. The correct Irish price in the EEC will be 5½p.

Another outrageous price, so scandalous in its concept that possibly I should not mention it, is the price of 1 lb of cod fillet. The present Irish price is 18 new pence and the alleged EEC price, á la Common Market Defence Campaign leaflet is 56p. The actual price in the EEC will be a mere increase of 4p as against an alleged increase of 22p. This is the type of any-old-figure-will-do campaign being conducted in regard to the projection of alleged prices on our entry into the Common Market. This kind of campaign could make people who might not be in a position to weigh and judge the situation in the years ahead get a false picture. The type of prices suggested are calculated, as I see it, to cause panic and fear in people.

I began by appealing particularly to those in receipt of social benefits to realise that whatever government— I hope and, indeed, I know it will be a Fianna Fáil Government—will be in power here if we go into the EEC, these people will certainly not be let down by voting "Yes" on May 10th. Quite a number of social security recipients have an immediate fear in regard to prices. That is understandable but it is wrong that they should be stampeded into voting "No" because of this false campaign which is being conducted in regard to price increases when we accede to full membership of the Common Market.

It is a wrong campaign, it is a mean campaign and it is a dangerous campaign because the consequences of a defeat for this country on May 10th are too horrible to contemplate. The social security classes will be one of the most gravely hit sections by our non-entry to the Common Market. I say this purely on the basis of reality, the reality being that here we have a Twenty-Six County Ireland, truncated, on the periphery of Europe, isolated, introverted, call it what you will, and we are asked to make the best of our lot with the tariff barriers, cultural barriers, social barriers and all the other barriers placed against us. How can we hope to survive on our own in that context? It is too horrible to contemplate. It is these people, the people I personally would be most concerned about, the social security classes, the handicapped, the less well-off sections of our community, who will be most damaged by this campaign against entry to the EEC if it is successful. I would ask them to take the view that whatever Government is in power—and it will never be a Labour Government in the foreseeable future —but whatever Government is in power, they will not be let down by that Government when we do get into the Common Market but they will be let down by those opponents of our entry to the Common Market. Let there be no doubt about that. They have been let down in the past by them and they will be let down in the future.

This is a small open economy, in the nature of things, by comparison with the great powers of the world. It is vulnerable to economic trends. One can imagine our vulnerability if we do not get into the Common Market. Quite a number of our difficulties are brought about by world trade and world trends but here we are erecting this massive tariff wall, if we do not get in, against the very community which will die and wither, namely the farming community. Quite a lot of this nation depends on farming. Farming does not just begin and end with a man ploughing a field or with a man owning a farm. The whole hinterland of any part of the Irish countryside—shopkeepers, hauliers, suppliers of grain, merchants of all descriptions, depend on the economic welfare of our farming community. One can imagine the tariffs being put against this country, one can imagine the economic stress being created for this country, if we do not accede to membership, and the damage done to our farming community and all the areas which rely on the survival of our farming community.

This decision had not been taken lightly. It is a decision which has been contemplated since the formation of the Common Market itself but has been particularly pursued since 1960-61 when Seán Lemass, one of the great leaders of the Fianna Fáil Party, decided, having set us on the right road to industrial revolution, in the right sense of the word "revolution," to set us on the road to Europe. It was he who applied in the first instance for membership. Mr. Seán Lemass, former Taoiseach, said it was good for Ireland to expose herself to the Common Market. He said it was good for Ireland to lift her tariffs against outside competition and brought about—I know it has certain defects and so on—a fair state of economic well-being arising out of his industrial outlook. If he said the exposure of industry to outside influence was good enough for Ireland, surely when he said that entry to the Common Market was "on" for Ireland we should accept that as one of the great leads? We can accept it in all the sincerity which that man had available to him. He had the good of this country at heart as was shown. He did not talk about it. He did something about it.

This tradition is now being carried out by the present leadership of the Fianna Fáil Party under our Taoiseach, Mr. Lynch. It has been traditional Fianna Fáil policy in no way, as some people, one might describe them as the emotion mongers suggest, to sell out on our republicanism or our republican ideals. They use the good names of Pearse and Connolly to bolster up their false case. Pearse was no isolationist. Connolly was no isolationist. These were men who thought about Ireland, fought for Ireland and died for Ireland and they did not want Ireland to be an outpost on the coast of the main island of Europe. These men were part of the European ideal because, after all, republicanism did come from Europe and we are rededicating ourselves in that sense to the European ideal of overall republicanism, if one can describe it as such. People who say that we are selling out are misrepresenting the facts. It is a most unfair form of debate to use names that can bring up very serious and deep emotions in the Irish people, to use these great names, these good names, these honourable names, to bolster and strengthen a weakened case. Let us get down to the real issues and discuss them on a rational basis rather than on an emotional headlining basis. A newspaper headline lasts as long as that newspaper is read and the day that it is printed—24 hours at the most—and if a person sees his or her remarks in headlines it is only a piece of self-gratification indulged in against the best interests of this nation.

May I come back to the budget and deal specifically with some of the more important items therein? I would say the budget has been seen by most Members of the House as one which does a lot for all, not least the group of people I have been speaking about, the social security recipients. They have been the concern of this Government for many years and evidence of the Government's sincerity has been proved by the amounts they have received during the years in consecutive budgets. This is not to say we are always satisfied with the amounts we have been able to give to the social security recipients under the various schemes.

For instance, we would like to see old age pensioners getting £10 to £15 per week which should bring them into the comfort in which we should like to see them. However, our priorities and the Exchequer rely on the output of our people and the Exchequer has a lot of demands on it. Therefore, we may not be giving them as much as we should like to see them getting and I should like to assure them they are the first priority of this Government from the point of view of the availability of money. That is only right and proper. The Minister has dealt with them fairly as successive Fianna Fáil Ministers have done in the past. He has given them free travel, free electricity and television licences, an innovation by a Fianna Fáil Government and there have been extensions of the schemes this year.

For instance, the Minister has stated he is increasing the free electricity from 200 units to 300 units per two-month period from October to March and to 200 units from March to October, the off-light period. He has extended the scheme to persons over 80, whether they are social welfare beneficiaries or not. He is to be congratulated on this.

Another matter the Fianna Fáil Government must take credit for is the introduction of parity for public service pensioners. The history of this has been long and I am sure the people concerned were wondering whether they would ever be taken into account. They have been now and it is another indication that the Minister was aware of the hardship consequent of their not having been taken into account.

In this respect Fianna Fáil have a number of committees dealing with matters of this nature. These committees present the Minister with their case. Members of the committees met the State pensioners in their respective constituencies and they are to be congratulated for the work they did on behalf of those pensioners. The Fianna Fáil Party as a whole were very strong on this issue. We dealt with it by way of resolutions and motions at party meetings and it is as a result of this demand, this pressure, that we have now brought about a fair and equitable solution in regard to Civil Service pensioners.

Once more the Minister has dealt fairly with the veterans of the War of Independence. He has decided to increase and to extend funeral grants and to allow veterans' widows to benefit by the free travel scheme. They were people who in the dark days maintained our freedom fighters and comforted them and there is no reason why they should not now benefit. It is only right that the State should not forget them because they were the power behind a number of good men. A large number of those women in their own right were members of Cumann na mBan but those who were not were married to members of the Old IRA and when the going was hard and the times difficult they supported them and gave them comfort. The State is now realising its debt to them. The funeral grant has been doubled in respect of the holders of special allowances by £50 from 1st April, 1972.

One other item I should like to mention is the position in regard to credit unions in our society. The Minister has seen fit to give them a considerable benefit, realising the very important part they play in our social structure. In the constituency which I represent there are a number of excellent credit unions. There are the Dún Laoghaire union, the Glasthule union and the Sallynoggin union. They are doing excellent work on behalf of the community by ensuring that people among whom they work do not fall foul of others who would make a profit from their hardship. That is one of the great benefits of credit unions. Many of them are in their early stages of development and the Minister has been examining the position. He has recognised their economic state by providing that operating surpluses will be exempt from income tax and corporation profits tax. The exemption will apply to existing unions from the date of their registration as credit unions. Here again the Minister is to be congratulated.

This is all part of the social thinking of Fianna Fáil which a lot of people who do not support the party do not take into account when they sneer at us. We have a very strong and independent sense of social justice. This is evidence by the fact that within the party—I have mentioned this already—we have many committees dealing comprehensively and in a dedicated way with the works of the various Government Departments. We have committees on social welfare, health, foreign affairs, justice, education and others. The committees are manned and complemented by members of the parliamentary party. They do a magnificent job by bringing from their constituencies various points of view to be discussed at committee meetings. In that way they are brought to the attention of the Ministers concerned and there are full discussions at parliamentary level.

In the nature of things, I would say the credit union provision in this year's budget is a perfect example of that flow and ebb within the party—ebb in the sense that something was not accepted and flow in the sense that it was finally accepted. This is the great merit of a democratic party like the Fianna Fáil Party, despite as I say, what some pundits would write about it. It is what is there and we as members of the Parliamentary Party, know to be there and the people of Ireland know to be there. That is what matters in the final analysis. This is the structure which I have described, which is there, is existing, is viable and is full of good health, I am sure our opponents will be sorry to hear that. These committees meet on a once a week basis if there is an issue which concerns any or all of the Deputies who are members of the various committees I have described.

Equal pay for work of equal value to the women in our society is another matter which concerns the Fianna Fáil Party as it does the whole apparatus of the Fianna Fáil Party throughout the length and breadth of the country. There have been quite a number of forums within the structure of the Fianna Fáil Party relating to this question of equal pay. I believe the principle has been accepted. I would see the cost as being a factor in the actual implementation of equal pay for work of equal value. However, this again is part of the democratic process which takes place within the structure of one of the great political organisations in this country or, indeed, in Europe.

It does not remain for me to hold up Deputy FitzGerald much longer. I wish to thank him for bearing with me in my short contribution, as it is short by comparison to other Deputies contributions. I am not that particularly concerned about who contributes the greatest number of lines in the Dáil. I am sure Deputy FitzGerald will add to his rating in that particular respect by his contribution. I concede that the Deputy has been consistent on our entry into the EEC and I hope he will develop at some considerable length his views on the catastrophe which will fall on this country if the vote is "No" on Wednesday week and this country does not accede to membership of the Community.

Dr. FitzGerald

I shall, in fact, be dealing with aspects of the EEC, as they seem appropriate to this debate, at a later stage. It seems to me that first I ought to discuss the budget itself in the context of the economic situation and of the economic policies that seem appropriate at this time. The economic situation that faces us is unsatisfactory. It is best described in the OECD Report published just before the budget. In that report there is reference to the disappointing nature of recent performances. The report goes on to say that the 3 per cent average annual growth rate of GNP compares unfavourably with the Third Programme projection of 4 per cent and even more so with the medium term trend rate of 4½ per cent to 5 per cent suggested as a possible target in last year's OECD Review, or indeed the 5 per cent growth rate needed to achieve full employment in the eighties as suggested in the full employment report of the NIEC Report of 1967.

The OECD goes on to say that the slower growth rate has retarded employment growth. It comments that while there has been slippage in performance, as they call it—the fact that we have fallen behind targets, growth has been slow and disappointing—it has not entirely been the result of domestic causes, because of disturbances in Northern Ireland and the consequent political strains which inhibit tourism and so on. Nevertheless, they say when all this is considered, when the whole question of external problems is considered, there is still little doubt that domestic forces stemming from the common cause, rising inflationary pressures, contribute significantly to the deceleration and slowing down of growth.

It is important to stress this because although undoubtedly the situation in Northern Ireland has had an impact on tourism and to some degree on exports, and perhaps also on foreign investment, while these things are already having an effect on our economic growth the effects lie really in the future more than in the past. There has been, of course, some impact on tourism in the past three years. Some estimates have suggested that our national growth rates has been slowed down by as much as a half per cent per annum by the slower growth of tourism, in fact to what has been in real terms a decline in tourism.

This has been, perhaps, the upper limit of the probable effects and it does not therefore account for the fact that the performance of our economy in the past two years has been as poor as it has been. You have to look beyond the effect of the northern situation on tourism in the past to explain why growth has been so slow. The OECD Report is correct here and it is important to stress this because there is a remarkable tendency on the Government benches persistently to seek an alibi in external causes for any failures at home.

Of course, with an open economy like ours we are vulnerable to external factors but this vulnerability is a two way vulnerability. At times rapid economic growth in Britain particularly, and perhaps in other countries, can help us to achieve faster growth but at other times we suffer. As an explanation of the generally poor performance of the Irish economy it is inadequate and it is right that the OECD should draw attention to this and should not allow the claim, sometimes made by the Government, that it is all the fault of other factors outside, to go uncontradicted.

The impact of the slower growth over the last three years on unemployment has been one of the things which has concerned people most of all. It has been a considerable impact but it is not, of course, the only factor contributing to higher unemployment. On this the OECD Report has some interesting things to say. It refers to the redundancy problem which hit us last year and looks like being the same problem this year. It says of this redundancy:

By and large, the shake-out was a forced response to competitive pressures and a sluggish market.

It goes on to say that productivity increases in 1969 and 1970 were extremely poor while employment had increased. The result was the creation of redundant labour which is now being released in the face of rapidly rising wages and salaries. It is important to be clear on this. There have, of course, been redundancies attributable directly to the freeing of trade. It is possible to make some assessment of these. I have no wish to diminish their importance although I have warned over the past year or two against exaggerating the importance of redundancies in this period lest this should in some way minimise the problems that lie ahead. If people believe that all the redundancies that occurred in 1970 and in 1971 were due to the freeing of trade then given the scale of these redundancies they might be misled into thinking that the problem of redundancies caused by freer trade was behind us.

In fact, as the OECD Report points out the factors which have contributed to redundancies are, first of all, the stagnation of the economy, itself the product of the deflationary measures required by the inflation of the previous years, and also the fact that employers faced with surplus labour, faced with an increase in their labour force, which was very sharply increased in 1969—I do not recall any year in which labour force increased so rapidly by 6 per cent in industry —over-expanded in the expectation of a continual growth and with a sluggish growth since then this surplus labour situation has created a problem which has been severely aggravated by the increase in wages and salaries.

I have not seen this point so well made before. It is not simply a question of slower growth and deflation due in turn to inflation. There is also the fact that employers who might have carried additional labour in other circumstances have been unable to do so in view of the very sharp increase in wages and salaries which has simply made it uneconomic to carry labour through a period of stagnation.

There is a double effect here of inflation, making deflation necessary and leading to prolonged stagnation and shaking-out of labour. This fact, and the expensiveness of labour, make it necessary for firms facing costs they cannot carry to reduce their labour force. There is a persistent tendency in this country to fail to grasp the relationship between excessive rises in income and unemployment. I do not think one can overstate this. It may appear to be a simplification to put it as I am about to put it, but it is not an oversimplification. In this country we have as a nation made the choice, in recent years in particular, to pay ourselves, those of us who have jobs, higher incomes, thereby making ourselves less competitive, slowing down the growth of employment and condemning our children to emigration on a scale that would not otherwise be indicated.

The resources of this country can be spread among the existing population or, should we wish it, a larger population. We could, through measures of restraint in the growth of income and redistributive measures, providing adequate social benefits that would not mean a sharp drop in income for people temporarily unemployed and keep a much larger population in this country if we were willing to make the sacrifice. But we are not. We have the practice of sharing out the loot among those who have jobs and expanding our incomes at such a rate that, in fact, we make emigration inevitable. This is, perhaps, an unpopular thing to say. It is not the job of a politician always to be popular. It is the job of a politician to stay sufficiently popular to be able to say unpopular things. It is sometimes necessary to pose the issue in unpopular terms. In the last couple of years this has been more acute than before.

Our selfishness as a people in paying ourselves in jobs the whole of what is available and thereby squeezing out people leaving the land or leaving school and forcing them to emigrate has mainly taken the form of preventing people from getting jobs. In the last couple of years this policy has actually shaken people out, to use the rather unattractive phrase of the OECD report. By increasing our incomes so rapidly we have disemployed people. This is a serious responsibility on all of us. It is primarily the responsibility of the trade union movement, but not solely. It will not help to put the blame on them. The trade union movement in their attitude reflect the attitude of the community. They give absolute priority to incomes rather than employment and to raising incomes, even at the cost of emigration. It does so because it reflects the attitude of the people. There is an easy tolerance of unemployment and emigration. There is a particular attitude of mind here which is relatively unusual. In other countries there is not quite the same pressure for incomes or tolerance of emigration as there is here. This is a feature which has become more acute in the last three years. People are actually being put out of work by the excessive increases in income. That is what the OECD report says in plain language.

It is right that the attention of the House should be drawn to these harsh remarks, which are salutary. This all goes back to the initial failure of the present Government to cope with the problems of growth. They came to power at a time when the Irish people were rejecting policies of the past which had led to stagnation in the 1950s. These were policies closely connected with Fianna Fáil. There was the policy of absolute protection and the rejection of any movement towards freer trade. There was a policy of emphasising tillage rather than grass land. The rejection of these policies was the main feature of the First Programme for Economic Expansion. The Fianna Fáil Party at that time were faced with the disastrous consequences of the policies they had pursued to such a degree. The policy of protection may have been necessary, but I have many criticisms of the way Fianna Fáil produced and administered it. The policy of protection was good in itself. The persistence of this policy beyond the 1950s and beyond the point where every industry has been established, and the failure to reorientate industry towards exports—which was eventually initiated by the inter-Party Government by the establishment of the IDA and the introduction of the tax relief in the late 1950s—and the reluctance to switch policies when the policies had achieved all they could have achieved, all contributed to the terrible stagnation, depression and massive emigration of those years.

Faced with the disastrous consequences of those policies in 1957 Fianna Fáil accepted the advice given to them to abandon these policies or to reverse them. They did so with courage at the time and did not claim all credit for reversing those policies. This spread the load a little. They published the advice given to them and made it clear that the new policy was one which did not come from the ranks of the party but from Dr. Whitaker. That change of policy, although it achieved economic growth because it provided a much more favourable basis for such growth, did not do everything. The Government in power at the time, although well attuned to the initiation of economic growth, failed to grasp the scale of the problem which economic growth created and the kind of inflationary situation which could be created if they drifted along and did not reorganise the whole structure of society to meet the situation. The absolute absence of planning for economic growth has been the outstanding feature of Ireland in the 1960s. The time-scale for adjusting to the problems of economic growth has been incredibly long. There is not a country in Europe in which the lack of adaptability to changing circumstances has been as great as here. Regional policy proposals were first initiated in January, 1963. In April, 1972, we are still waiting for the regional policy.

There are rumours that the Government are about to produce a regional policy within the next few days. I do not want to condemn it in advance but I am sceptical as to whether that regional policy will match the need of the situation and face up to the scale and magnitude of what is required in this country to bring us into line with the other countries of Europe within a reasonable time. I doubt if the regional policy will match the opportunities for regional policies in the EEC. Will it be adequate to command from the EEC the kind of resources which an adequate regional policy could command? We will have to wait and see. If a regional policy is published within a few days, it is nine years too late. It took nine years to move from the point where an outline for regional policy was put forward in the report unanimously adopted by civil servants, the trade unions and management. Nine years later we are told that we will have a regional policy adopted by the Government. This time-scale applies to everything.

While preparing notes for this speech I was looking at the Devlin Report. My eye was caught by the date on the top of the report. It is over two and a half years since the Devlin Report was produced. In this House we have still to bring in the Bill setting up the new Public Services Department, which is the first step towards the reform suggested in that report.

No country whose pace of adaptation to change at Government level is so desperately slow can hope to succeed in a modern competitive society. There is no doubt that the public service with its great merits has no concept of the pace of modern events, no concept of the speed which is necessary to adjust to events in the modern world. There is no doubt whatever that the Government have failed totally to give an impulse of dynamism to the public service, to give a lead, or even to grasp the scale of the problems and the need for action. Indeed, the Government's role has been a dilatory one: putting off decisions year after year lest they be politically unpopular.

It is almost as if the Government, at times, have been patiently waiting to be put out of office so that the next Government can do the unpopular things. They have been slightly surprised and a bit upset to find they are still there and have to kick to touch for another two, three or four years while the country waits for action in these spheres. This is the kind of situation we have been facing in the sixties.

That slow pace of change, that failure to adapt, that lack of leadership on the part of the Government, and the incredibly slow pace of administrative adjustment in the public service, have contributed to many of our problems. Above all, in the sixties these failures have contributed to the growth of an inflationary situation which has few parallels in Europe. Few countries in Europe were as well placed as we were in the early sixties, moving out of a period of stagnation and into a period of growth.

Had we had the imagination and the vigour to adapt to these problems, had we seen the kind of changes that were needed, had we seen that if economic growth were to be sustained there would be a massive rise in land values in the cities, if the Government had enough wit and imagination to see that, we would have taken steps to deal with this problem and to acquire the land when it was cheap, when it could be bought for a fraction of its present price, and enormous savings could have been secured. Savings at the expense of whom? At the expense of speculators who have made such massive killings of millions and millions of pounds at the expense of house owners through the dilatory failure of this Government to face the facts that their own policies, if they were to succeed, must inevitably create a vast accretion in land values. That is just one example of how we failed to adapt. Indeed, there is no difficulty in finding examples.

In particular the Government failed to grasp the fact that economic growth in a country with our experience of stagnation was likely to lead to inflationary problems in the incomes sphere. Here we had the growth of the pressure of the rise of incomes in 1964 and the crisis in 1965 which came upon the Government so unawares that they had to come into this House in July and rush through a series of measures, some very ill-conceived and quite unrelated to the problems facing us, others making some impact on the situation. We had the deflation of 1965, the prolonged deflation which, like almost every other deflation that any Government introduced in this country, was allowed to go on too long and then the slow recovery which suddenly took wings and led to the excessively rapid growth in the economy. Then, at the end of the sixties, we had a further bout of inflation because of the failure again to tackle the problems of an incomes policy, the maintenance workers strike and the consequent rapid inflation of incomes, the new deflation, again prolonged for two full years and, over two years later, we are still in a state of relative stagnation, not total stagnation but far too slow growth.

By their failure to command the situation, their failure of imagination in not understanding what they were achieving in the sphere of economic growth, and in not understanding the problems this would create, the Government have got us into a stop-go cycle which is not only as bad as but worse than the British stop-go cycle. Britain shows some signs of emerging from her problems. We show signs of getting more deeply stuck into ours. As a result the growth in our economy is perceptibly slow.

If in a five year interval you allow a situation to develop in which the Government have to take deflationary action, and if that deflationary action halves the growth rate for a period of two years, you lose roughly one year's growth in the five. That is what we have been doing. It means something. The loss of one year's growth in five means that after a decade all our people are something like 8 per cent less well off than they would have been. That makes quite a difference.

I know the figures do not very easily convey the realities. A figure like 8 per cent does not mean very much on the surface, perhaps, but it can mean quite a lot in living standards because that 8 per cent need not have been distributed equally amongst everybody. Had we had that extra growth and had we then applied it—as this Government, perhaps, would never have done—to those in need, the living standards of the poor could have been raised very much above their present level.

The poor are a minority and, as a minority, the application of the additional growth we could have had but lost because of defective Government policies, could have raised their living standards very much higher. If the poor are judged to be one-third of the community they could have been one-quarter better off if that money had been applied to their benefit. If they are judged to be one-quarter they could have been one-third better off. It is a matter of simple arithmetic to make that calculation.

It is a matter of much more than arithmetic for the people concerned living, as so many of them are today, in conditions of great poverty and distress, contributed to by the failure of the Government to avoid the stop-go cycle which was avoidable. I do not want to detain the House by going back over a full account of the disastrous failure of the Government to grapple with an incomes policy at any stage. I have been over that before. The Government cannot shake off the blame for this. It is not good enough to say that it is all the fault of the unions or all the fault of management.

The fact is that at several points the Government had a suitable opportunity to give a lead and did not do so. The reaction of the Government to an incomes policy in the years after 1965, after the headline was set by the NIEC Report, No. 11, and the attitude of the public service—I do not exempt them; the fiction is, of course, that the public service are merely the servants of the Minister but with this Government it has been more or less the other way around—was to avoid taking the responsibility of trying to give a lead. The contribution of the Government and the public service to an incomes policy in those years was negative. It was so negative that it proved to be a discouragement to labour and to management which needed to be given a bit of a push along the road. They found themselves encouraged to stop short and do nothing by the negative attitude displayed by the Government and the public service.

This is a sad background. Where has it left us? It has left us in a position where in the year ahead our growth prospects before this budget were miserable. The variety of opinion expressed by different bodies on what that growth would be is, I find, a little entertaining and a little inexplicable. None of them offered a very cheerful picture. I am a bit puzzled by the fact that they vary so much. The Economic and Social Research Institute, in a report written very much in the aftermath of Derry and, perhaps, over-reacting to the effect of the Derry killings and the situation that seemed to exist in the immediate aftermath—the massive reaction in Britain against Ireland—forecast a growth rate of 1½ per cent. That was on the low side. They somewhat over-estimated the effects on tourism. We can say that now in the light of hindsight. They were excessively pessimistic with regard to the effects on industry and investment. That was their figure at the time.

The Central Bank, in their bulletin published just after the budget but written before it and representing their views before the budget was introduced, as I understand it, mentioned a figure of 2 per cent. The Department of Finance, in their report published before the budget, mentioned a figure of 2 to 2½ per cent. The OECD mentioned a figure of 3 per cent. So you take your pick. The OECD figure is puzzling and I should like the Minister to enlighten me on this. In their report they referred to the growth in the economy in 1970 as having been between 1 and 2 per cent. The official figure is, and has been for some time past in the various publications, 3 per cent. I wonder why the OECD got this very low figure for 1970? Is it because of this error, if that is the word, and that they have compensated by giving a very high figure for 1972? Usually the OECD figures reflect very much the thinking of the public authorities here at a point in time. Naturally, they take the advice and the views of the public authorities and on matters such as the likely growth rate they are inclined to accept those views. Certainly they are not likely to put in their own figures for economic growth in the year past at variance with national accounts statisticians in the Central Statistics Office. I find it puzzling that they should have such a different figure for 1970 and I wonder whether there is any connection between that and the fact that their forecast, too, for 1970 was as high as 3 per cent.

However, one can play around with figures and leaving aside the OECD figure which does seem a little odd— there may be some explanation for it —the expectation for this economy's growth in 1972 was more or less half that which in a normal year one would expect. That, for the third year in succession, was a rather disastrous situation and one that calls for action. In a situation like that an Opposition party have to decide the line they will take. Facing that situation it was open to this party to hold their fire, to let the Government go ahead with a deficit budget and then to come back and attack them for having, for the first time in the history of the country, budgeted openly for a deficit.

No doubt that would have been a good political tactic. I suppose some people would have gone along with us on it and said that the Government were being irresponsible. However, that is not the line we have pursued. What we did was to make a statement before the budget stating that in our view the situation warranted a deficit budget. In a sense we protected the Government's flank. We made it possible for them to budget in this way without endangering their flank and without risking an attack from us on the basis that this deficit budget was in some way a dangerous thing. That was a responsible act on our part. We made it easier for the Government to do the right thing and, frankly, we have found during the years that, unless it is made easy for this Government to do the right thing, they are very slow to do it. They are not a Government who have the courage of their convictions. They need a push in the right direction On this occasion it was appropriate to give them this push and I am glad that they responded.

Of course a deficit budget is always one to be watched with care. There are dangers associated with it. However, in advocating it we believed we were justified not only by virtue of the fact that in the absence of action to reflate the economy we faced a growth of only half what this country is capable of but also because that particular situation owed something to special factors of an unusual character and, one would hope, of a non-recurrent type. We accept that had it not been for the situation that has arisen in Northern Ireland the growth of the economy would have been faster, that it would have been back on a 4 per cent to 4½ per cent growth path. Recognising, therefore, that to some degree the inadequate growth of the economy in 1972, as it seems likely to take place, was attributable in some degree to the situation in Northern Ireland, that this was of its nature a special situation, the kind of situation for which one builds up reserves, it was our opinion that the Government would be justified in these circumstances in introducing, for the first time, a deficit budget with an openly stated deficit, taking the risk of an increase in the external deficit above its present level of £70 million which, a few years ago, all of us would have thought to have been a very high figure. We recognise that the kind of budget which, under our prodding, the Government have introduced is one which could lead to an external deficit of £100 million or perhaps more. That is not something we would welcome. It is a matter which the Government must watch very closely; but it is a risk worth taking in the light of the special circumstances in which we find ourselves, in the light of the high level of the official external reserves and, above all, in the light of the high level of the unemployment figures. Given the high level of unemployment in this country today for which there are many reasons, the first priority of any Government must be to try to get as many as possible of these people back to work. If that involves taking a calculated risk within reasonable limits it is right to take that risk. We were right in encouraging the Government to do so and they were right to have taken advantage of our encouragement.

Of course the deficit poses some dangers. My concern regarding it is that the stimulation given to the economy by increased expenditure in this budget, unaccompanied by increased taxation, is starting from a very bad point. I would have been much happier if the Government had had in hand a reasonable surplus to start with and that, therefore, if they got into that position, then, in deciding to spend more money and not to raise taxes, they would not have been left with the kind of deficit which seems likely to occur. I shall come back to the question of how big will be the deficit. I do not think it will be as big as the Government say. If this Government can be faulted, they must be faulted for having mismanaged our affairs so badly in the 1960s that at the end of that decade we were not in a position of having an adequate surplus in the current budget to give us a good point from which to start to reflate the economy. I shall have a certain amount to say about this because I think not enough thought has been given to this question in this country. It is true that in 1962-63 the Government in their publication, Capital Budget, adverted to the need to do something about this, the need to finance more of our capital budget out of Government savings, but they never did this. What the Government should have done, given that they got themselves into a situation of having to deflate the economy twice in the 1960s, was to have used fiscal measures to a greater degree than they did in those deflations, substituting them in part for other measures. They should have sought to meet the situation by increasing taxation and achieving a budget surplus thereby getting into a better position from which to reflate the economy thereafter. Their failure to do so inhibited the reflation of the economy after both of these periods of deflation.

There are a number of figures in this connection which are worth referring to but first I must make one technical point. There is a difficulty in talking about budget surpluses and deficits and that is that the figures that are shown in the finance account bear no relationship to those in the national accounts. I know that I am liable to confuse the issue if I talk in national accounting terms but from an economic point of view one has to consider the budget in national accounting terms. Unfortunately our finance accounts are an extraordinary medley of the results of past actions. The actual deficit or surplus shown in the finance accounts has no particular significance. This is due to an odd treatment of items—for example, redemption of the national debt and road improvements are items which are treated as being current although, of course, they are capital items. There is also the treatment of national debt interest paid by the Government to themselves in respect of which a similar situation arises. As against this, items which are not genuinely capital—for instance, the TB and brucellosis eradication schemes—are treated as capital although they are current. All of this was done by the Government at different times in the past for different reasons but it produces a very muddled picture and the actual deficit that results from treating some capital items as current and some as capital bears very little relationship to any rational classification of items between these two categories.

In national accounting terms we have a surplus in our budget. Our method of accounting in the finance accounts makes our position seem usually to be about £25 million worse than what it is; but, even in national accounting terms and comparing with other countries, the surplus we have been able to secure has been quite inadequate. In 1970-71 only £15 million was available in national accounting terms to finance net investment by the central Government.

Progress reported; Committee to sit again.

The Dáil adjourned at 10.30 p.m. until 3 p.m. on Wednesday, 3rd May, 1972.

Dáil Éireann debate - Tuesday, 2 May 1972

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

Dáil Éireann debate -
Tuesday, 2 May 1972