It is 16 years since I have spoken from these benches, and I feel like a neophyte. However, I am comforted by the fact that this is also the first budget in 16 years introduced by a Fine Gael Minister for Finance. I hope that my remarks will not add unduly to the repetition which you and the Ceann Comhairle have had to endure over the past three weeks but that instead I shall add a little anyway to the gravamen of the debate.
I think it right to point out, first of all, the general background against which the Government took office a few months ago. Their reputations were burnished, first, by the mutual admiration of the members of the two component parties for each other in their new-found coalition; secondly, by the undisguised euphoria of the vast majority of the editors of the newspapers throughout the country, daily and weekly, who support the coalition parties. Then there is the goodwill of the members of the retiring Government, the goodwill articulated by the Leader of the Opposition and also articulated by me in an interview to RTE on the day of the formation of the new Government in March.
I said then, and I repeat now, that it is not our desire that this Government should fail to continue the social and economic progress of recent years; nor is it our desire that this Government should emulate the failure of the previous Coalition Government from 1954 to 1957. I continue to hope that this Government will maintain the progress at every level which had characterised, in particular, the more recent years under Fianna Fáil Government ending a few months ago.
It is against this background that one must consider the provisions of the budget introduced by the Minister for Finance a few weeks ago and ask whether and to what extent the legitimate expectations of the people have been realised by what the new Government have done as exemplified in their budgetary provisions. From some points of view the Minister deserves congratulation, and I would be the last to refuse to offer that congratulation to him in respect of those aspects of his budget which ought to be praised. I welcome the social welfare provisions and within those the new provisions for deserted wives, unmarried mothers, and so on, which add a new dimension to the aids being given by this House to the underprivileged members of our community.
Some disappointment has been expressed by leading members of Fianna Fáil, that, having regard to inflation and, in particular, to the amount of money at the Minister's disposal, the social welfare increases were less generous than might have been justified or expected. I think this is at least partially justified and that it is clear that, if the statements made by Deputy Haughey in his contribution a couple of weeks ago are correct, namely, that the Minister had £189 million additional taxation on which to draw, the additional provision under social welfare represents too small a proportion of this increase. Having regard to the other factors, particularly the level of increased taxation imposed in the budget, there is, indeed, some justification for the viewpoint that the social welfare increases might have been increased considerably more.
Another aspect which rather puzzled me was, and continues to be, the situation in regard to death duties, and I propose to go somewhat further than any of the other speakers whose contributions I have read in regard to this matter, because I am convinced that it was the vital issue and in the province of Leinster swung the election in favour of the Coalition and against Fianna Fáil. When the previous speaker passes over the question of estate duties and the Coalition's undertaking in regard to them, it is just a bit too facile, because the issue itself is far too vital. I take it in this regard that everyone will agree that a party in Government does not like to be put out except on a justifiable basis. I propose to show in what I say that we as a Government were put out on the estate duty issue and that we were unjustly and harshly treated in the process, and I shall not confine that unjust and harsh treatment to the members or spokesmen of the National Coalition.
For many months prior to the election spokesmen on behalf of the Irish Farmers' Association had toured the country attacking the Fianna Fáil Government on this matter of estate duties. I listened to Mr. T.J. Maher and others on the radio one evening shortly before the news mounting a savage attack on us on this very issue. I was and I continue to be satisfied that this was basically an unjust attack. It unjustifiably built into the minds of the farming community a fear of a continuation of Fianna Fáil rule because of the possible impact of estate duty on them. For the moment, therefore, I will deal with that duty and the attitude of Mr. Maher and the Irish Farmers' Association to that issue.
This attitude was vital to the decision thousands of people in the Midland counties made in the general election. Fianna Fáil either lost seats or failed to gain where they might have been expected to do so in these counties. The record proves that consistently over recent years Fianna Fáil Ministers for Finance progressively eased the burden of estate duty. Practising solicitors, like the Minister for Finance know that it is not so many years ago when the total value of an estate liable for estate duty was only a couple of thousand pounds. When Deputy Haughey was Minister for Finance he, and I, had discussions about the advisability, or otherwise, of removing estate duties altogether. We did not decide in principle to do so but we did decide—I do not mean Deputy Haughey and myself but the Government of which we were members—to make very substantial changes in favour of the farming community on this issue.
We continued over the years to ameliorate the provisions in regard to estate duty. Because of our entry into the EEC and the success of our policies the value of land began to increase at a rate which nobody had anticipated. We were, therefore, in the position that, because of the success of our policy and the success of our advice to the Irish people to join the EEC, the value of land had increased to a completely unprecedented level. We were, in effect, being attacked because of that and because, by reason of that increase, the estate duty net was beginning to gather in thousands of people who would have otherwise escaped.
It was against this background that the then Taoiseach asked Mr. Maher, and representatives of the IFA, to meet him and discuss this very important matter. We pointed out that, even within the farming community, there was not agreement on the basic issue. We pointed out that there was strong feeling within Macra na Feirme that the continuance of estate duty in some forms represented an incentive to the older farmers to release their farms at a reasonable age and thus enable the younger farmers who are members of that splendid organisation to get ahead with constructive planning of their farming activities and their farming future.
We pointed out that we had never been averse to the idea of ameliorating the burden of death duties and that, as a gatherer of tax, we did not regard estate duties as essential to our plans. We gave an unqualified undertaking that we would re-examine all aspects of estate duties with a view to removing all possible grievances and, if it was thought right and proper to do so, to remove estate duty altogether.
Again, I should like to refer to what Deputy Haughey said in his contribution, namely that the Government have done the right thing now. This is a very complex matter and it is one in which the public, and those of us in politics and otherwise interested, are entitled to, and do have, very conflicting views. So far as the political aspect is concerned the Coalition spokesmen carried out a campaign which was described by the Leader of the Opposition as immoral. Deputy Lynch does not use words lightly and when he used the word "immoral" about the Coalition campaign he meant to use it. I repeat it. The Coalition found themselves on the horns of a most awful dilemma. They would either have to go back on a discreditable promise they should never have made or do the right thing by keeping their word.
It was a terrible dilemma and it would, in my opinion, have been better if in some of the other dilemmas in which they found themselves they had taken the same course. Mr. Maher wrote in The Sunday Press of May 27th concerning this matter and I quote:
Commitments solemnly given by the Coalition Parties before the last general election clearly influenced the outcome of the election. Firstly, I would draw your attention to the promise of the then proposed Coalition Government, if elected, to abolish estate duty. There is dismay among the farming community that this promise has so far not been honoured and while we have been promised a White Paper on taxation, there is no indication as to when it will be published or when estate duty will be removed. These commitments solemnly given by the Coalition Parties before the election clearly influenced the outcome of same. Many farm family holdings will be at risk should the present owners happen to die in the interim period. The alterations in legislation proposed by the Minister for Finance in his budget speech will do little to alleviate the burden of estate duty on family farm buildings. Furthermore, it is difficult to reconcile recent decisions of your Government, like the removal of subsidies on potassic fertilisers et cetera.
I accept that what Mr. Maher has said is honestly stated but I think that he played a creditable part in the election campaign itself because, instead of refusing to make estate duties, their abolition or otherwise, an election issue as yet untaken to the then Taoiseach, he continued to frighten the farming community. He frightened enough of them to change the Government from Fianna Fáil to the National Coalition. Therefore, I do not think on this issue that either the Government's spokesmen or the spokesman of the IFA have anything to be proud of, even though Mr. Maher now realises that his confidence in the Coalition promises was misplaced.
I am glad the Minister for Finance has not honoured that silly promise because this issue is not amenable to immediate decision and action. Therefore, by definition, it should not have been the subject of the type of propaganda that emanated from Coalition spokesmen prior to 28th February. My own view remains that estate duty should be abolished completely. In my view the argument of Macra na Feirme and other representatives who say the presence of estate duty is an incentive to older people is not well founded although I admit in this area I am entitled only to my own view. It is my belief that the people of the generation who are now passing away, those of 70 years and upwards, are too near to the struggle for the land to be willing to part with it on account of the threat of estate duty or any other threat. Directives from the EEC or changes in the tax structure will not change them; it will take the passage of time and a greater appreciation of the utility of the land as against the possession of land for the necessary change of heart in the farming community.
This is not something on which one can be dogmatic. The wisest course for the Minister for Finance is to get together intelligent, competent people, publish a White Paper and, having publicly discussed the matter, finally come to a mature decision. I can assure the Minister he will get every help from our side of the House in coming to the right decision on this matter. In the meantime, it seems incomprehensible that he should double the legacy and succession duties although I will not go into this matter in detail. It seems to reflect a very odd attitude by the Government and, although I cannot know for certain, I suspect the Minister for Finance does not agree with it.
Apart from being an election promise, the imposition of VAT on food was opposed by the then Opposition when the matter was first mentioned and I do not accuse the Minister or anyone on the benches behind him of being inconsistent in this matter. From the beginning, members of the present Government parties argued that VAT should be removed from food items although we strongly disagreed with that and continue to do so. I regret we are now in the situation of re-fighting a battle that was fought and won and fought again 20 years ago.
Older Members of the House will recall the removal by Fianna Fáil of food subsidies and the consequent bitter battle that took place. The public, as well as Members of the House, will remember that ultimately the removal of food subsidies led to the rejection of Fianna Fáil by the electorate in 1954 and the formation of the second Coalition Government. The subsequent three years were to give the public the opportunity of realising that Seán Lemass was right and that there was no basic justification for food subsidies as against other items. The public realised it led to unexplainable imbalances in the administration of the country as well as of the household. When the public realised that Seán Lemass and Fianna Fáil were right, they returned us to office in 1957.
I am not suggesting that the public will reject the Government on this issue. I am only saying the Government are wrong to implement their promise to the electorate to remove VAT from food. There is no sense or logic in it; it will lead to all kinds of complications for the purchaser, the retailer and for the wholesaler, not to mention all the other people Who will be involved in the consequential changes that will be necessary. Everyone realises that by the time VAT is removed from food the housewife will not benefit, but this is a surface argument and is not really just because between now and September the Minister can only influence the trend of food prices to a limited extent. We must be fair about such matters.
The principle of removing VAT from food was fought by the electorate on two occasions 20 years ago and it is sad that we are back at the same situation in 1973. There is no justification whoever for meddling about with VAT in this fashion. I would horrify the House if I were to paint the picture of the unfortunate retailer having to cope with another set of forms, distinguishing between one item and another, when after a great struggle he has just mastered the old set of forms which at least had the merit of having the same amount of tax across the board. That is a slight over-simplification but the House will get the point I am making. How is the retailer to work out his tax return? What kind of form will be devised to enable him to do so? How many civil servants will be employed in drafting the form? How many people will go into a state of semi-dementia trying to decipher the forms? How many inspectors will have to be employed to go around to see that people retailing food are not selling things in tins marked "food" when they turn out to be nails or something?
The whole thing is ludicrous from any aspect at which one looks at it. From an administrative point of view it has caused shock to retailers and wholesalers. It has resulted in the Minister being able, while keeping his promise to remove VAT from food, to extract a couple of million pounds more from VAT on other items. Deputy Brugha detailed exactly how this will be done and it is not necessary for me to repeat what he said. However, I commend what he said because he articulated clearly what the Minister for Finance had done in this Budget by extracting more money from the public in VAT.
If I do not misinterpret what Deputy Brugha said, the burden of it is that the unfortunate housewife at the end of her week's shopping, not through any increases in prices that have taken place but through the effects of this budget, will be worse off, not better off, by the time she has paid for the shoes for one of her children, or for the piece of kitchen equipment she has to buy to replace worn out equipment. She has not just to feed her children but to keep the household going at the same time.
That is the truth of it. It is as simple as that. It shows just how irrelevant to budgetary policy was the implementation of the promise in regard to VAT on food. I appreciate that, having found himself on the horns of a dilemma, the Minister, or the Government, could not dishonour all the promises even though to do so might very well have been the right thing to do.
So much has been said about the allegation of the Minister for Finance in regard to the £29 million that I hesitate to repeat it, but it was mentioned again this afternoon by another Fine Gael Deputy, Fergus O'Brien. There is one thing I can say for sure, and I speak from personal knowledge of the Minister for Finance in various capacities. It is that he is entitled to be regarded at this stage of his career as a man of integrity and ability. He has proved that as a politician and as a lawyer. I take it, therefore, that when he comes into the House he cannot say something which is demonstrably wrong. A man of ability would not say something about us which we could quite clearly demonstrate to have no foundation. It would be silly of him to do so.
It has been abundantly proved by spokesmen on this side of the House in the course of the past few weeks that there is no foundation whatever for the allegation that the Fianna Fáil Government ran away with £29 million and I look forward to the Minister for Finance being able to clarify his words when he is replying to the debate.
What I will say about it is that the 1972-73 budget turned out only 1 per cent off target. That is as near as anybody can get in budgetary matters. Therefore, there is demonstrably no substance in the allegation that the Fianna Fáil Government ran away with or misused any moneys of any kind under any heading, whether it be the £29 million EEC fund or any other fund. On the contrary, we handed over to the present Government as a result of the success of the 1972-73 and other budgets an economy in which there had been a satisfactory if not an excellent rate of growth, in which as a result of this growth 6,000 fewer people were unemployed, in which there is no real balance of payments problem, in which the general outlook for further development was excellent, a situation that is admitted by all neutral observers and by all fairminded people, on this side of the House or on the other. Therefore, we do not take seriously the suggestion that the Minister for Finance meant to say we ran away with funds.
There are only one or two other matters with which I should like to deal. One of them is a continuation of a point made by Deputy Desmond in the course of his speech last week in regard to the extraordinary decision of the Government on the pay of Members of the Oireachtas. At column 2290, Volume 265, Deputy Desmond is reported:
I have not received any justifiable reason for the setting aside of the clear-cut recommendations of the Devlin Review Body and for the setting aside of the recommendations of the National Employer Labour Conference.
On 3rd February, 1971, the Fianna Fáil Party referred the pay levels of certain civil servants, local authority members, members of health boards, the Judiciary, the Government and Deputies to the Devlin Review Body. This had to be done because all the groups referred to are outside the scope of the national conciliation and arbitration.
He then mentioned the evidence he had given on behalf of the Labour Party before that body and he continued:
Following the publication of the report in September, 1972, the Fianna Fáil Party decided to refer the whole lot again to the National Employer Labour Conference.
Deputy Colley's decision was wise. One could have taken the bull by the horns and implemented the Devlin report, but I think the Deputy was correct in sending the recommendations off to the National Employer/ Labour Conference. I saw the wisdom in this, because that body is composed of an equal number of employers and trade union representatives.
I support Deputy Desmond in what he said. Being a political supporter of the Minister for Finance, it may have been difficult for him to raise the question at all. He was right to do so. Later on in the course of his remarks he said:
Technically one could argue that from January, 1972—but certainly from July, 1972—one was entitled to a proportion of the increase.
That is the increase suggested by the two bodies. He went on:
It is quite indefensible that July, 1973, should have been decided upon. I say this with due respect to my colleagues in Government. I know there is an element of chagrin in the Fianna Fáil party. It is difficult to work up any sympathy with Deputy Colley who shilly-shallied about it and got a terrible kick up the transom——
——not that again——
——finding himself out of office having failed to bring about the increase in time.
I merely wish to add that the suggestion that Deputy Colley shilly-shallied about this matter is not justified. In that connection may I quote from what Deputy Colley said, as reported at Volume 265, column 1317 of the Official Report, in the course of his remarks following the Minister's Financial Statement on Budget Day? The Minister said:
Because it was your bill and you refused to pay for it. We are not going to pay for the money you are now saying you should have paid.
Deputy Colley said:
It simply is not good enough for the Minister for Finance of all people to say that. One of the new Deputies behind him said something like it recently. I do not blame him. The Minister for Finance knows the circumstances. Just for the record, I am going to give them to him. The report of the special committee arrived on my desk a few days before Christmas and was issued publicly. Legislation is necessary to implement it. The Dáil did not meet from that date until after the election, when the Minister was over there. So, would the Minister please acknowledge that it was not possible for me or my colleagues to implement these findings while we were in Government?
What Deputy Colley said in this regard is conclusive and does not admit of any debate. The findings of the National Employer/Labour Conference arrived on his desk, as it arrived on the desks of members of the Government, a few days before Christmas, after the Dáil had risen— a Dáil which was never again to meet.
I think it is agreed now—and we had agreed on it in Government— that in future changes in the emoluments of Members of the Oireachtas should be effected by means of regulation, thereby obviating the necessity for introducing a fresh Bill and having it passed through both Houses of the Oireachtas each time any alteration is made in the salaries of Members of the Houses. I understand that the Minister for Finance and his colleagues accept that this is a more desirable procedure. We certainly had made a decision along those lines before leaving office.
Had that situation obtained, of course, we could have implemented the findings, and could then have been accused of shilly-shallying had we not done so. In the light of the fact that legislation continues to be required, it is not fair that that accusation should be made by Deputy Ryan, of all people, and reiterated by Deputy Desmond three weeks afterwards. There simply was no shilly-shallying by the then Minister or his colleagues in regard to this matter. We were powerless to do anything except, perhaps, to persuade the Taoiseach not to call the general election. That is his prerogative and not ours. It would add a new dimension in silliness if I were to suggest that. In any event, I hope the situation will never arise again.
In the meantime, I hope the wishes expressed by Deputy Desmond from the Government benches, and reiterated by many other Members of the House—not necessarily in the House, but certainly in the corridors of the House—will be noted by the Minister and his colleagues. As Deputy Desmond rightly said, the decision was unfair and unjustifiable; unfair not merely to present Members of the House but to former colleagues of ours who retired or were defeated at the last general election and, in the case of those who retired, who did so in the belief that at least their pensions would be geared to a retrospectively increased salary.
It appears that differentiation is being made between the Judiciary and the higher civil servants, on the one hand, and Members of this House on the other. Glory be to shades of Deputy James Dillon, who argued so forcefully here many years ago that, of course, there should be a distinction between Members of this House and any other group of people. There was justification for his point of view but there is certainly no justification for the point of view that now the Judiciary, higher civil servants, Members of this House, members of the Government, are all in one general category and are put for public examination before the Devlin Committee and the Employer Labour Conference. That the Minister for Finance should downgrade the Members of this House visà-vis higher civil servants and members of the Judiciary, is quite indefensible.
If he has done so he must forthwith proceed to remove that stigma from the Members of this House—a stigma which should never have been placed on us by any Minister in this or any other Government. Since, in fact, judges and higher civil servants are getting an increase from an earlier date than 1st July, 1973, the Minister for Finance should do the decent thing, the only justifiable thing, that is, to regard his colleagues in the House at least as on a par with any other members of the community. If, like modem soccer, it is work rate that is the important consideration, Members of this House are entitled to regard themselves as at least the equal of any of the other grades mentioned.
I have spoken a great deal longer than I intended. In conclusion, I hope the Government and, in particular, the Minister for Finance, will use the time between now and the introduction of his next budget to better social and economic purpose than the Government as a whole used the few months they had prior to the introduction of this year's budget. It has disappointed most sections of the community. It has disappointed industry. It has grievously hurt the middle income group and, on reflection, it has disappointed at least some social welfare groups while, at the same time, it has, perhaps, been overkind to some people within that category. One does not expect the Minister or the Government to develop a clearcut philosophy in such a short time but it is my hope that in the next budget this Government will have worked out a clearcut social, political and economic philosophy as distinct from putting together a mixture of ad hoc decisions rather like a child trying to put a picture together out of a pot of paste and bits of variegated or coloured paper.
