I move:
That Dáil Éireann takes note of the Financial Statement made by the Minister for Finance on 3rd April, 1974
Financial Statement, 1974: Motion.
Deputies on this side of the House have not had copies of the Minister's budget speech.
Copies were left outside the door.
I came through that door yesterday and there were no copies there.
That was because it was such a popular document.
On a point of order, every Deputy on this side of the House is entitled to a copy of the Minister's speech.
From some of the comments those who got their copies did not understand them.
I am looking to the Chair for protection. We are entitled to a copy of the Minister's speech and we did not get one. Where can we get one now?
That question should be put to the Government benches.
Can the Minister oblige?
I understand that the usual number of copies were supplied but, having regard to popular demand I will see that extra copies are made available.
It is usual that the copies be delivered to us in the House.
(Interruptions.)
I am glad that that is the only complaint the Deputy has to make on the budget.
The yellow explanatory document which was circulated was given only to the Members of the House who were present at the time the ushers were distributing them. I was absent for about two minutes and when I went to the general office for a copy I was informed that none was available. Obviously some skimping was going on. Will the Minister ensure that every Deputy is provided with copies of the documents because, after all, the meat is between the lines?
(Interruptions.)
This trick-of-the-loop document needs study.
When people have fully read and begun to understand this budget, they will wonder why we wisnessed the euphoria from the Government benches yesterday. It was obvious that the euphoria was one-sided. Many of the Labour Party backbenchers stood and applauded the Minister. That effort succeeded in bringing only two of the Fine Gael backbenchers to a similar stance. One wonders to what extent there are already misgivings among the Fine Gael Party in relation to this budget.
We adjourned last night at 6.30. The previous night we witnessed the effect of the guillotine on the Constituencies Bill and not only the manner in which the guillotine was imposed but the fact that the Minister for Local Government deliberately shut out any comments from this side on the Final Stages of the Bill. One can contrast that with the four or five wasted hours yesterday when the Government had to adjourn because they had no business to bring before the House——
(Cavan): We adjourned at the request of the Opposition.
When my preliminary remarks draw interruptions at this stage——
(Cavan): I am being accurate.
The pattern has been a reasonable one: following the speech of the main Opposition spokesman on Finance and when the Resolutions which have to be passed are taken, the budget debate is adjourned until the next day. The Government must have known——
(Cavan): We adjourned at the request of the Opposition.
If I may interrupt the Leader of the Opposition for a moment please? I understood the adjournment to be at the request of the Opposition. We were perfectly willing to continue the budget debate at 6 o'clock last evening. That was not acceptable to the Opposition for reasons which I can understand. It was at their request that the House adjourned.
This situation arose almost immediately after the Minister finished his budget speech. The expectation of the Opposition was that that pattern would be followed and the main debate would open the next day. I am making the point that we had a hiatus of available time having witnessed the night before the guillotine motion being ruthlessly imposed on another debate which could easily have been carried over.
(Interruptions.)
I do not want to interrupt Deputy Lynch more than necessary but I must make this point——
(Interruptions.)
The Parliamentary Secretary is always making points.
To have ordered substantial business yesterday evening immediately following the unusual situation which existed would have been as good as disclosing in advance what the budget contained. If we had seriously intended to continue substantial business yesterday evening in such a way that it might have been gathered that business would have been over by 6 o'clock, that would have been as good as telling the people in advance that there would be no Financial Resolutions.
It would have been very easy in such an instance for the Government to have said to the Opposition: "in case the budget resolutions do not take as long as usual, will we order other business?" Then we would have been in a position to assess the situation. That is only an aside.
It is a very important aside and I cannot let it pass.
(Interruptions.)
The main purpose and function of the budget, especially in the circumstances of this year, ought to be to chart the course for economic expansion not just for the year immediately ahead but for the reasonably foreseeable future. To do this, the strategy of the budget should deal with the factors which in any way tend to inhibit that economic expansion. As everybody knows, the main factor in present circumstances is inflation and its main ingredient is rising prices at an inordinate rate. This budget fails miserably in trying to attain these two fundamental objectives for curbing the price rise. It deliberately—and I might almost say callously—adds to the inflation spiral.
The annual report of the EEC, commenting on Ireland's position as a member of that organisation, predicted that in this country costs and prices will probably climb rapidly. The report went on to advise that the main task of the Irish authorities in 1974 would be to reduce inflationary pressures. In particular they advised that the net borrowing requirement for the 1974-75 financial year should be held at the level at that expected for 1973-74. For this to be achieved it would be necessary to curb the rise in public expenditure and to consider an increase in taxation—I am not making any comment on that—especially by taxing certain types of income which have been exempt from tax. The report advised that the very large proportion of the budgetary deficit which is financed by monetary means should be reduced.
This is the type of advice we have been given by an independent organisation interested in our welfare and in our economic and financial performance especially in the year ahead. What has happened? If we add to the increased borrowing for capital purposes the £66 million deficit which this budget has deliberately and negligently provided for, we find that Government borrowing for the year will amount to a colossal sum of £320 million, an increase of about 40 per cent over that of last year.
That is the first big problem which this budget creates. We all know that borrowing has to be paid for out of current income. We all know that if anybody borrows money ultimately he will have to make it up in the following year or years. At the rate, the Minister is now borrowing, a huge deficit is being built up and it will come to be met out of current taxation. The Minister made no effort to provide for that borrowing this year and hopes, like Micawber, that something will turn up for him in the years ahead.
The question arises of what this borrowing is for. For the year 1973-74 current spending rose by 20 per cent over that of the previous year. For the coming year it is expected that current expenditure will rise by no less than 25 per cent. With capital spending the percentages are more or less reversed this year. For 1973-74 spending was about 27 per cent higher, whereas for the coming year a 20 per cent rise is projected. The relevance of this is that when it is necessary to boost the growth of the economy it is capital spending which adds to productive capacity. Capital spending should be stimulated.
This was the policy which we in Fianna Fáil as a Government pursued for many years. We pursued it successfully. The Minister seems to be preaching a new doctrine, that is, more current spending rather than more capital spending, which will achieve the required boost in output. It would be interesting to know how this view came about and how it can be sustained. I am sure it is not likely that prudent consideration of what would be the best for the economy decided this particular policy. It is much more probable that what happened was that the Minister being faced with many expensive demands for more money and at the same time being urged not to increase taxes because of the forthcoming local elections, simply had to continue on a course well known to us from earlier Coalition Governments of spending now and paying the bills later.
In short, this is a political budget designed for election purposes. These purposes cannot claim under any circumstances to meet the needs of the economy. We know that this budget will have disastrous results on the inflationary trend and will quickly erode the social welfare increases and the income tax allowances which the Minister has given—welcome as they are. They will quickly erode the benefits and tax allowance increases. We can say that they are not adequate to take account of the ordinary inflationary trend that might be expected without the added inflation spiral that this budget will create.
The Minister already knows that he will not get credit very easily. The warnings to the private sector contained in the Minister's speech apply only to that sector but not to the Minister himself. The warnings to use capital only for productive purposes make interesting reading in relation to what the Minister himself now proposes. The Minister is going to apply this new doctrine to his own advantage. The Minister has one doctrine for himself and one for the private sector. The Minister will apply it for the benefit of his own affairs. The Minister will increase borrowing by about 40 per cent this year and he has not dared to suggest that all of this extra credit will be used for productive purposes. We know the difficulty that arose in borrowing last year. We know the disastrous results of the national loan. In the course of the year the Minister, as he boasted yesterday, raised the rate of interest on savings by 3 per cent. The interest on the ordinary account in the Post Office was raised from 4 per cent to 7 per cent. The Minister would have to increase these rates to about 15 per cent and even more; otherwise he will be giving back less to these ordinary citizens who lent money to him than he has taken from them. This is all because of inflation which has been given impetus by this budget.
I should like to ask what changes have occurred to make more foreign borrowing desirable. Foreign borrowing this year compared with last year is going to increase to a considerable extent, as we can see from page 7 of the Capital Budget 1974.
Apart from the fact that we know he is desperate for money, the Minister knows too that he cannot find it here at home. He tries to justify this inflationary deficit budget by the unsustainable claim that last year's deficit budgeting created expansion at the rate of 7 per cent. I want to repeat this and hammer it home. What last year's budget did was to wipe out the economic growth that had already taken place before the budget effects could be seen. Instead, it created stagnation.
I should like to remind the Government again that in their latest quarterly bulletin the Economic and Social Research Institute stated that growth took place in 1973 in the first half of the year. Most of that had passed before the 1973 budget could possibly have had any effect. Therefore, in the second half we had this virtual stagnation to which I have referred. It would be no consolation to the Government to plead the oil shortage as an excuse for this, because we know that the oil shortage and the price increase began to bite only in the first quarter of this year. To use the Minister's words in his budget statement, I might add that the welcome rise of 6,000 in employment last year took place in the first half of 1973, again a rise for which the Minister's Government or his last year's budget cannot possibly claim any credit.
I have stated that the increases in social welfare payments and income tax allowances are welcome. Of course the Minister had no alternative to making these increases unless he was to drive the beneficiaries into the ground altogether. He knew that because of the increases given in the British budget he had to stretch the limit to increase the social welfare payments. He knew as well that, because of the successful negotiation of the recent national wage agreement, substantial tax allowances had to be given. He has failed miserably to match up his performance with his promise.
In a speech last Monday to the Dublin Chamber of Commerce I referred to the type of increases that ought to be made available. I said that because of the overall increase in our growth of 6 per cent caused by our entry into the EEC, on that basis alone without taking any account of inflation, the income of the lower groups, and particularly the social welfare groups, should be increased by 8 to 10 per cent. When I add to that inflation, which I estimated at that time to be 13½ per cent—the Minister said 14 per cent yesterday and I think we are entitled to anticipate without any exaggeration that it could be 15 per cent—the Minister should have raised social welfare benefits not by 18 per cent but by 25 per cent. Well before this year has passed the social welfare beneficiaries will find that the increases the Minister has given are only paper increases and notional increases because of the deliberately increased impetus he has given to inflation.
Similarly in the matter of income tax allowances the Minister has failed to match up the rate of income tax allowances provided for in the 1972 budget. I might mention that at that time we gave an increase of £1.25 in the old age pension to take one example. That was a 25 per cent rise and inflation was then much lower than it is now, running at some 8 per cent or perhaps a half percentage point more. So, where are the real improvements in the social welfare payments? We know too that the improvements in the income tax allowances, even without new factors emerging, are too little by half.
The Minister's own table under the heading "Income Tax Payable under Old and New Systems on Earnings of a Married Couple with Three Children" illustrates that point. Taking a man with three children earning £2,000 a year, his tax savings will be £41.40. I submit they should have been well over £100, even up to £125. Add to this the fact that these people must pay up to £150 a year extra—this is a factor which must be taken into account—for the new pay-related health scheme. Where is the tremendous benefit the Minister has given to the ordinary wage earner and the ordinary salary earner in this budget? I say it is completely inadequate. I might well say it is almost an insult to those he purports to benefit.
Coming to another aspect of the Minister's speech, I should like to know what has become of the Fourth Programme for Economic and Social Expansion. Where are the great advocates of economic planning? Where have all the great advocates gone whom we used to hear from in the Fine Gael and Labour Parties when they were in Opposition? In his speech the Minister expressed the usual clichés about giving credit and paying tribute to members of the National Economic and Social Council but he completely ignored their advice in connection with the formulation of a national economic and social programme.
The Minister said that because of the uncertainties in the international situation—I am paraphrasing what he said—it would be unreasonable and futile to attempt to formulate such a programme in current circumstances. That completely misses the point. It is in conditions and times of economic uncertainty that the Government should take the lead in formulating economic programmes. When things are going well, when the future is reasonably predictable, the ordinary units of production, businesses, industries, farmers, know well how to take care of that situation. They react to progress. They react to conditions of certainty to their own advantage and to the advantage of the economy generally. It is only when there is uncertainty, it is only when the people are not sure of what the trend is, that the Minister and the Government should formulate their economic plans and programmes so as to inform the public what course to follow in different and changing circumstances.
The Government have failed completely to take account of this need and here again is another example of how the Government are creating doubt and uncertainty in the minds of those on whom we rely most to improve the economy and increase our prosperity. One of the great defects of this Government is the absence of any coherent economic policy. This has lead, as we all know, to much doubt and uncertainty and has created this kind of doubtful climate which could very quickly destroy confidence in our continuing social and economic expansion. This doubt and this uncertainty is evident in very many areas of economic management at this time. For example, we have the continued uncertainty about new legislation for mortgages and takeovers. This was promised for last summer, then for the autumn, then for before the end of the year and then for early in the new year. Now I believe we will be lucky if we see anything in relation to mergers legislation before the summer. At long last —I will give the Government credit for this though not much credit— we have seen the new mining tax legislation.
But what about the question of building societies and housing finance? After all the initial huffing and puffing of the Minister for Local Government and of the Government in this sphere, it was followed up by stopgap subsidies only for the building societies. We still do not have any clear picture of what new arrangements are to be made—indeed, if any —in relation to helping young people seeking homes for the first time. Certainly, there is no indication in the budget. No attempt has been made to deal with the problems of these people in any way. The combination of higher house prices and interest rates puts house purchase out of the reach of many, not only newly married couples but married couples who have been saving for many years to buy their own homes. For example, repayments at the present time, on a very modest house, have risen by about 50 per cent, from £40 to £60 over the past few years. To deal with this certainly there should be a large increase in the size of the grants. As well as that, I believe there should be a large increase in the size of mortgages. Given that building societies may not be expected to advance the full amount of these mortgages, the Government should have a mortgage guarantee system—and they had a year in which to do this—available for those unfortunate people who now find house purchase beyond their capacity.
The second area of uncertainty affecting building and other development is the likely form of any legislation arising from the report of the Kenny Committee on building land. If the whole of the building industry is not to grind to a halt—and we have evidence of this already—it is essential that this legislation be introduced and passed very quickly. As the House is aware, the Kenny Committee, in its report, said that not only should this legislation be prepared quickly but it should be referred by the President to the Supreme Court in order to remove any doubts that might exist as to the constitutionality of such a measure. In the first instance, the Government took a year to consider the Kenny Report. I believe they should have had their legislation ready for the publication of that report and their statement on it. However, the public announcement, again, was a suggestion of mañana—perhaps we will do something about it in the future—thereby creating and adding to that uncertainty and lack of confidence that have permeated our whole economy in the past year. Now we do not know when, if ever, this Bill will appear.
The same kind of uncertainty about the form of legislation and its method of operation applies even more so to the Government's proposed tax changes in the fields of capital and wealth. Again, having taken more than a year to prepare their White Paper, the public are presented, not with any detailed, carefully worked out set of proposals but with a vague half-baked document, grossly deficient both in terms of the information it provides and the rationale put forward in favour of the changes. The Minister's statement yesterday was equally vague. It gave us no further information on how this new capital wealth and acquisition tax will operate. We are told nothing about the numbers who will be liable or the amounts they will pay. We can contend that the wealth tax, in particular, would have many unfavourable consequences since it will operate at much lower levels than the inheritance tax, more at levels of well-being. Therefore, it purports to affect the moderately well off people to the advantage of those better off. I can give examples of that. The Minister gave an example in the White Paper himself. He seeks to exclude completely transfers of £150,000 within a family, no matter how many transfers take place. At the same time, he intends to include wealth holdings of £40,000 and over. We all know there are many small family businesses and farms this wealth tax will hit. On that point —and when I am speaking about farms—now that the decision has been taken to put income taxation on farmers, apparently the principle has been established. It is not unreasonable to appreciate the apprehension of farmers as expressed by one of their representatives. Now that the Minister has his toe in the door he will push it more and more. Obviously, they anticipate and fear that the £100 norm of land valuation —according to a completely outdated criterion, incidentally, the Griffith valuation some 100 years old now —will be reduced according as the Minister feels it necessary and, of course, as the Revenue Commissioners advise.
It is estimated by the Minister that 9,000 farmers only will be caught in the first instance. An estimate was given, I think, in one of the comments last night that each of these would pay an average of £500, making up an income of £4½ million. The Minister said yesterday he was unable to make any assessment of it and he ignored this completely for the purpose of his budget. I think it is not unreasonable that this £4½ million— if it is an accurate figure and I have no reason to doubt it—would rise quickly to, say, £20 million or £30 million in a year. Let us look at that and see what is fair and just. The farmers have said continuously that they are not adverse to paying a reasonable share of taxation.
In making that point, they indicate that rates are already a heavy imposition on many of them, especially the progressive ones. Therefore, there would be now a much stronger case to extend the Fianna Fáil policy of relieving homes, to relieving agricultural land from rates, if the incidence of income tax is going to bear more heavily on farmers as time goes on. It has been pointed out—and I think the point has been well taken—that farmers are the only producers whose means of production would be subject to income taxation. Another point which I think has been well taken is that about 50 per cent of their output, 50 per cent of their product, goes for export, whereas those in industrial production enjoy complete freedom of taxation from profits deriving from those industrial exports. This is a point the Minister will have to take into account—obviously he has not done so at this stage—in order to ensure that fair taxation will be applied across the board.
It seems to me the middle group will, in part, be paying for the concessions that will be given to the wealthy under the Minister's capital taxation proposals. Even more than this, is the total absence of any indication regarding the impact of these new taxes on investment in Ireland, whether by Irish people or by overseas investors. It is well established that already millions of pounds have poured out of this country following the introduction of the wealth tax——
There is no such evidence.
There is evidence and the Minister will have plenty of it.
It must be Fianna Fáil money that was hidden.
It was not Fianna Fáil money. If the Minister keeps his eyes open and takes account of the advice given to him by his advisers he will find that what I say is true.
It is not.
(Dublin Central): The Minister should ask a few bank managers about it.
Given the suggested basis on which the new wealth tax would work, many farms and firms, as Fianna Fáil said in their comment on the White Paper, would become vulnerable to take-over by multinational firms. They are not just industrial firms; they are on the market for farms also. We know the combined effects of profits tax, income tax and wealth tax would make it virtually impossible for any of these people in ordinary productive businesses—the Irish firm or farm—to provide an adequate net income for themselves and to retain any funds for the development of their enterprises. That is why there is a grave danger that the wealth tax, affecting as it does more the ordinary middle income group, will have a counterproductive effect on any attempt to advance our economy. In short, the wealth tax will squeeze the category of enterprise it has always been our policy to assist. It has been Fianna Fáil policy to assist the Irish-owned and Irish-financed farm or firm; it has been the backbone of our efforts to provide increased and improved living standards for our people.
In these few points I have tried to highlight the main defects in the budget. When the euphoria has worn off, when the small print has been read, the full effects of this inflationary budget will begin to bite those the Minister has purported to help—the social welfare classes and the wage and salary earners. It will bite very quickly. I have indicated that the benefits and allowances given are not adequate to meet ordinary inflation, much less the extra inflation the budget will impose. When this happens the people will know that instead of being a budget to acclaim it is a thoroughly bad budget.
As I have said many times before, someone will have to pick up the pieces. The Coalition habit of spending now and paying later has proved disastrous not only for the year of the budget or the year following the leaving from office of a Coalition Government; it continues for two, three, or more years. I am sure that whoever will be there to pick up the pieces—most likely it will be Fianna Fáil—the unpopular decisions that will have to be taken in the interests of expanding the economy will be taken by the only Government who apparently can face up to such unpopular decisions.
It is no use not increasing taxation or borrowing for current activities when we know that sooner or later it will have to be paid for in taxation. The important thing is that no attempt has been made to cut down Government expenditure. As I have indicated, current expenditure has been considerably increased as against a decrease in capital expenditure. Whether it is current expenditure or payment of interest on the borrowing necessary for capital expenditure, it will have to be paid for sooner or later. When the time comes the people will know that it is they, not the Coalition, who will have to bear the brunt.
If they cannot run the economy they want to wreck it. That is the only possible interpretation one can put on the attack of the Opposition on the budget introduced yesterday. It was an attack made last night by Deputy Colley, Opposition spokesman on Finance, in language that was excessive, intemperate and at times hysterical. It was an attack made this morning by Deputy Lynch, Leader of the Opposition, in language that was more bland, as is his habit, but with exactly the same content.
I should like to gather in small compass for the record the sort of terms used by both speakers and to compare them very briefly with the reactions of the media, particularly the newspapers, to the budget. The opening words of Deputy Colley last night were: "fraudulent and grossly irresponsible diatribe". His last words were: "fraudulent and grossly irresponsible". That ran through the text of his entire speech. He also said that the Government were scrambling around madly, that we were running the economy close to bankruptcy. This kind of language was used throughout his speech. It will be interesting when the Official Report appears to count the number of times Deputy Lynch used the words "disastrous" or "disastrously". He spoke about "the disastrous results of the inflationary trend" and the "disastrous results on the national economy"; he said there was "much doubt and uncertainty about the economy as a whole"; he spoke about "the doubtful climate which could very quickly destroy confidence, creating and adding to the uncertainty that has permeated the whole economy". He said: "We know that the continued effect of profits tax, income tax and wealth tax will make it impossible to have both an adequate income for themselves and money to invest". He was referring to the small and middle investors.
The only way to interpret that deliberate and conscious policy of the Opposition, now reiterated twice by their two most important spokesmen, is that having lost power in Government they are now using all of their influence as the largest party in the country to damage confidence, to undermine industrial growth and the health of the economy at the most difficult time in the economy of this country, and indeed of many other countries, since the last war. That is the objective effort they are undertaking. I thought it was accidential hysteria last night when the shadow Minister on Finance spoke.
Now I find in a different manner exactly the same content from an ex-Taoiseach this morning. That is just for the record because, when we come to look at the debate on this budget, as we all have the habit of looking at past budget debates, we will have the Dáil record then; we do not have the newspapers. Let us contrast this attitude of these two main spokesmen with what some of the newspapers are saying this morning. Of the four major national dailies I am going to quote two; I am leaving out one that is hostile to us and one, I understand, that is not particularly favourable to us. Leaving out The Irish Press and The Cork Examiner, I shall quote from The Irish Times and The Irish Independent of this morning.
(Dublin Central): The Minister picked two right ones.
Which is hostile?
: The Irish Press is hostile. I was referring to the attitude to the budget. The Irish Times this morning says:
The man-in-the-street will certainly have to scratch around hard for the annual grouse. The general effect is bland in the extreme.
"Bland in the extreme", The Irish Times leader says. “Fraudulent and grossly irresponsible,” says Deputy Colley. The Irish Times leader goes on to say:
The sceptic will wonder if a soft Budget is a good Budget, and will find some consolation in the ritual abuse which Mr. George Colley, as Opposition Shadow Minister, had to brew up at short notice.
I think "ritual abuse" is a good phrase, but I do not think it was, in fact, only that. One could forgive him if it were only that, but he is someone with vast experience as a previous Minister for Finance and he is someone who does not have the licence that a very new and inexperienced person might claim in Opposition. It is not just "ritual abuse"; it is the deliberate damaging of the economy by very irresponsible comment.
The Irish Times leader says elsewhere:
The Coalition can feel well pleased at the reception the Budget has had.
And, in outlining the three main aims of economic growth, social reform and equity in taxation, it says, and this is something we can all agree with, that it is difficult to be certain about economic growth but, as to the second and third—that is social justice and equity—"Mr. Ryan has certainly achieved success. The less fortunate in the community have been well looked after." Finally, The Irish Times leader has this to say in the last line about this “fraudulent and grossly irresponsible” budget:
...no banker sitting in Dublin today has any reason to be fretful about Mr. Ryan's handiwork.
I could go on to the other newspapers. I could go on to mention that the Confederation of Irish Industry are pleased with this budget. I could go on to mention that the Irish Exporters' Association generally welcome the budget, and so on. I do not propose to read more into the record, but I cannot let pass, in this brief dealing before I go on to what I really have to say, Deputy Colley's speech without one comment. It is a comment which relates to an exchange between Deputy Colley and myself when I interjected. I think the record shows I interjected reasonably and courteously. I am quoting from the unedited typescript of Deputy Colley's speech last evening and I cannot, therefore, give a column and volume reference, but this can be checked when the Official Report appears:
A long time ago the Government made an announcement on mining taxation. This announcement was followed by a thunderous silence.
First, after the announcement was made, after a reasonable period the Minister for Finance and I met the mining interests and had a useful exchange and, on that occasion, the Minister for Finance solicited their opinions and views and continuous and detailed lengthy exchanges in a sort of free consultation went on and the results were incorporated in the legislation which has now appeared. At that time, in October, it was said that the legislation would appear at the time of the budget. To say, therefore, that there was a thunderous silence is factually untrue. That is the first thing. Secondly, the date given for the legislation was the date kept. It was mischievous then of Deputy Colley to proceed as he did. Then he said:
There have been serious consequences in the industrial development field following directly from that announced decision. The Government have tried to cover up those serious consequences in the industrial development field.
I emphasise the word "industrial" there. I am quoted as saying:
Tell us about them, please.
Deputy Colley immediately goes on to change the subject totally and talk about a date for a tariff, totally refusing to mention the "serious consequences"—I am quoting his own words—"in the industrial development field". He creates damage and uncertainty and confusion and, when challenged here, where he is privileged in putting it on the record, he skates away from it. That is irresponsible and I called that yesterday, and I put it on the record again, a shyster's technique. That is what it was.
In this world economy, of which we are becoming more and more a part, there are a number of crises. We have had a crisis in energy, which is the obvious one. We have had a crisis in world monetary relationships, which is recognised by fair people who are concerned with these things, a crisis which has produced a devaluation of the currency of which we are a part, sterling, ranging up to 18 per cent, now down to about 16½ per cent on the old Smithsonian parity, which has produced the highest rate of interest historically since the war, worldwide and not just here, which has produced the greatest slump in the stock market since the war, the great bear market just off the bottom of the defence commitment. We have had a monetary crisis in the world. We had a number of political crises. We have had a huge speculation in commodities, worldwide, and we have a roaring inflation crisis, worldwide, not just here, and all of this makes an economic storm of a major kind which serious people, who want to make valid criticism and also want to contribute to the weal of their own economy, have to take notice of; and the pretence of the Opposition in all these instances is that not the monetary crisis, not the inflationary crisis, not the commodity crisis, not the energy crisis but the incompetence of this Government is the sole cause of our current economic difficulties and these things, which are recognised to be profound crises in every other country in the world by every economic journal one can read, somehow do not operate here and are not, therefore, a relevant part of any discussion.
That is the background of irresponsibility the Opposition have brought in, not just to this budget but to the whole of their reaction to these multiple crises, now indeed compounded by a very difficult situation in the European Community. That is the reaction they have brought—not to say fairly it is a very difficult time and we do not think we are doing well, but to say rather that it is a perfectly reasonable time and, if there are difficulties, it is because we are messing. That is neither honest nor fair and it does not contribute to any sane or reasonable discussion.
Let us look at this dreadful problem of crisis. First of all, let us nail the pretence that real incomes are going down. Certainly prices are rising in an extremely damaging way. Certainly they are. I was listening to a BBC commentator talking from Brussels a few weeks ago, as the British election results came in, and someone in London asked him, "How will Brussels react to this cliff-hanging result of the general election?" The correspondent replied that they had to remember in London that there were only three countries of the Nine that now had stable Governments, Holland, Luxembourg and Ireland. This immense world economic crisis has produced vast instability elsewhere; not instability and not difficulties of an insuperable kind here but we have the continuing effort of the Opposition to fish in those troubled waters to produce all the damage they can at a difficult moment.
Last year prices rose in a very difficult and damaging way for any Government but real consumer expenditure adjusted for inflation, rose by 6¼ per cent. That is a very substantial rise and much larger than the average of the last quarter of a century, much larger than the average of the period of Fianna Fáil Government which ended last February. Not to recognise that rapid real growth because it is overlain by very serious inflation is neither fair nor honest. Let us talk about consumer prices last year because we have a consumer price index, and the end of the period for the first quarter of 1973 very nearly coincided with the end of the period of power of the Fianna Fáil administration.
According to the figures of the Central Statistics Office the increase in the quarter from November, 1972, to February, 1973, was 4 per cent. In the next quarter the increase was 3 per cent, still much too high because it was an annual rate not of 16 per cent per year but of 12 per cent. It was still much too high but it was slowing. In the next quarter it was 2.3 per cent or an annual rate of under 10 per cent and this was down from an annual rate of 16 per cent per year in the first quarter which was Fianna Fáil's final period.
(Dublin Central): Does this index include mortgage rates?
The details of what the index includes and does not include, something which is rather complex, is set out from time to time in the returns of the Central Statistics Office.
It includes housing costs.
One can always make an argument that an index includes or does not include certain things, but the point is that the index is drawn up on exactly the same basis from one quarter to the next. The basis has not changed and, therefore, comparison from one quarter to another is relevant.
In the third quarter, which was the second quarter of this Government's period in office, it was 2.3 per cent and then, with the onset of two things simultaneously, the energy crisis and this immense and very scandalous world speculation in commodities, it started to rise again. Bluntly we have been knocked off course, we have seriously been knocked off course to our great embarrassment and, as far as I can say personally, I feel the most intense sense of concern and responsibility. However, to say that our efforts at controlling retail price increases were having no effect is wrong, dishonest and unfair. To say that the huge result both of commodity speculation and of the oil price rise had no effect from outside is unfair and it prostitutes the level of serious economic debate.
I want to compare, therefore, in regard to the imports of inflation, the price rises in the 15 months up to April, 1973, with the nine months up to January, 1974. In the 15 months up to April, 1973, the average of a whole range of things rose by 47.8 per cent but in the following nine months, up to January, 1974, they rose by 73.9 per cent. That means that the commodities being brought into this country in the latter period were rising twice as fast in the nine months between the time we came to power and the end of January, 1974, as in the previous 15 months.
To try to brush them away and say that this is not relevant is again prostituting the level of serious economic debate. I want to expand on what is being done in regard to income tax because we, perhaps, have a simplistic situation where one side says it is something very serious and very good and the other side says it is nothing at all. I should like to refer to what Deputy Colley stated yesterday and my accusation that he was making a destructive and wrecking speech. Deputy Colley said, in my belief in an effort to wreck the national pay agreement, that the budget was fraudulent because workers were induced by this Government to enter the national pay agreement under false pretences.
If one enters something under false pretences the sequel in thought is that one is free to get out of it again. Deputy Colley's speech, by suggesting that what was done in income tax was insufficient, was an effort to wreck the national pay agreement. I accused Deputy Colley, and his colleagues in Opposition, of trying to wreck it when it was half-way signed and now that it has been signed— I believe the Government and the Opposition have expressed pleasure at its passing—he is trying to wreck it. As the Opposition spokesman on Finance he is acting in a way which I believe is contributing to wrecking it. He is taking the lead in wrecking it.
Let us now take the number of people caught by income tax. In 1957 there were 185,000 taxpayers and by 1973 there were more than 700,000. This is an enormous expansion in income tax, catching people that it was never intended or expected to catch because there was the total refusal to reform income tax not just in one year. I should like to state here that it is very flattering for a Government to hear an Opposition expect us to do everything in a period of 13 months; it is very flattering to do more in 13 months than the Opposition did during the 16 years they were in office. It perhaps indicates their subconscious assessment of the relative abilities of the two parties forming the Government. There was no reform of income tax and no facing up to this injustice until we came to power. This budget has removed 60,000 people from the tax net. I must say bluntly that this is not enough but we are laying the basis for raising tax in other ways, from sectors of the economy that ought not to be fleeced but ought to make a contribution. That is the basis for getting a proper balance between income tax and other forms of taxation. The release of 60,000 people from the tax net is a very significant reform in income tax.
(Dublin Central): The first phase of the national pay agreement is being paid out on Friday and that will bring back 30,000 people into the tax net.
The Deputy will have his opportunity of contributing to this debate. I should now like to talk about some of the changes in taxation and I am going to take for a single man a lower example in earnings than for a married man with no children and I am going to take higher examples still for a married man with three children. For the young single man earning £700 per year, and that is a small income, his tax saving is more than one-third of what he pays in tax. It may be said that is not enough and I agree it is not enough but it is a very significant and major reduction.
It is well worth doing and it is a serious contribution to lightening the income tax burden on that man. It is a particularly serious contribution taken in the context both of the social welfare benefits in this budget and in the context of no tax on the so-called old reliables on which the hypothetical single man, whether it is on drink or petrol, might spend a significant part of his income. In the case of a married man without children and earning £1,250 per year the reduction in income tax is almost one-quarter. It may be said from the benches opposite that this is not enough. Is it not a significant and worthwhile reduction? When I say "almost one quarter" I am not bending the figure because the exact figure is 24.62 per cent. The people opposite may say: "more, please".
That is what the Minister's party said when they were over here.
If bad arguments were made in the past from the Opposition benches, there are still bad arguments coming from there, regardless of who is in Opposition. In the case of a married man with three children and earning £1,750 the saving in income tax is more than 30 per cent. Is that significant? Is it worth doing? Again we may be told that it is not enough but is it not a move in the right direction? Is it not a move big enough to be regarded as a significant contribution to lightening the income tax burden on the lower-paid sections of the community? There is also the significant factor of the releasing from the income tax net of 60,000 people. This is a very significant income tax reform apart from the other reforms in taxation. It is a wholehearted honouring of what was said in regard to the reduction of income tax in respect of the lower-paid sectors. If anyone refers to the tables that have been made available he will realise that this release is a sharply graduated one. To take it in its most extreme form, the reduction in income tax in respect of a single person earning £600 a year is 50 per cent. This is a serious effort towards the redistribution of wealth. The same sharp graduation is evident in all the other aspects of the budget.
It is not evident on page 12 of the statement.
The changes are a significant contribution to real income tax reforms and are a wholehearted carrying out of commitments made by the Coalition. If the Opposition wish to wreck the national wage agreement, let them go ahead. This is a difficult time for the economy for very many reasons that are admitted by any neutral observer. If you want to denigrate this budget and to call it "fraudulent" that is your right as an Opposition but the people will judge you for it in the long run.
Let us turn now to something which, because it was not a feature of the budget, was not mentioned by the Minister for Finance. I refer to no new taxation being put on the old reliables, as they are called. The people were expecting increased taxation in this field but the Minister's decision is an important avoidance of indirect taxation and this plays a significant part in curbing inflation. Also, it opens a very important gap between our costs for these old reliables and what they cost in Britain because the British have had a huge imposition of tax in this regard.
Deputy Colley said that everything possible should be done to stimulate exports. This was the only creative sentence in his speech. Does the Deputy recognise tourism as an export service. Is tourism important in his opinion? The Deputy is knowledgeable enough and articulate enough economically to recognise that tourism is important and that it is an export service. The avoidance of increased taxation on the pint and on cigarettes is an important contribution, not only in sparing people from these increases, but in aiding Irish tourism. It is precisely the sort of action that the Deputy sought but he cannot give credit for it. There were many silly and hysterical utterances in Deputy Colley's speech but if one concentrates on the economics of his speech, one finds a huge fundamental contradiction that invalidates the economic seriousness of his whole attack. He wanted more relief from income tax and greater social welfare benefits. He wanted also less capital tax and a smaller deficit. The Deputy has been a Minister for Finance yet he wants all of these provisions simultaneously. Therefore, what in effect he is saying is that he wants more indirect taxation. There is no mistaking that. Let us say it again. He wants more tax reliefs. Therefore, it follows that the revenue required will not be obtained from income tax. He wants more for social welfare so there will have to be more revenue to meet those increases. He wants a smaller deficit and less capital taxation so the revenue required cannot be raised in this way. Deputy Colley's party tried to use the machinery of the European Parliament to override this sovereign Parliament by trying to ram indirect taxation on to foodstuffs. At a time when we are taxed with being indifferent to inflation the Deputy is advocating inflationary measures. What Deputy Colley wanted was increased taxation on cigarettes, on the pint and on petrol. That would be directly inflationary and damaging to tourism. That is the logic—or is it the illogic?—of economic ignorance. Deputy Colley cannot be said to have the ignorance of a new backbencher. He has the responsibility of being spokesman on Finance for his party yet he is so illiterate economically as not to be aware of a basic contradiction in his whole attack and he dares to use a word such a "fraudulent".
Let us consider now the question of children's allowances. This is something that ought to be read into the record of the House. For how many decades have each party in this House wanted unity in this country but how often have we heard the argument that the standard of social welfare benefits in the North was higher than here? This was a very serious fundamental economic argument. As a result of this budget, which comes after the British budget, children's allowances for all families with from one child to eight children are now bigger in the Republic than they are in the North or in any part of the U.K.
Hear, hear.
Do the people opposite think that is good? I might add that for one-child families in the North there is no children's allowance paid whereas here the amount paid will be £2.30 and that for families in the North of eight children the figure is exactly the same as it is here. I might refer in this context to the relevance of the Minister for Justice's Bill in another area and point out that in the North for families of nine and ten children the figure is 28p and 57p higher, respectively, than what it is here.
I want to deal now with matter relating to the general management of the economy, because here the Opposition have tried to mount a fundamental challenge, in my view of a wrecking, mischievous and economically ignorant kind. But they have a good deal of support in the country and must be accorded the respect of a party which have governed this country and played a very important role in our national life. They cannot escape that responsibility lightly, much as the habit of irresponsible opposition has totally invaded their minds in an extraordinarily short time. They still must be treated as being responsible.
Any one looking at the Irish economy and trying to manage it and optimise its performance knows that as a small, peripheral economy— specially in the European context, but at all times for the last half century —we do not have the strength of the United States or France. We are a small, delicate economy continuously walking a tightrope. One may err on one side or the other from the optimum path with growing peril depending on how far one is from optimum position; but that optimum position and that balance is always delicate and there is always a fairly subtle mix of conflicting tendencies that must be balanced to optimise growth. It will never be easy to manage an economy of this size as long as it remains a separate economy on the edge of a Europe which is large and dynamic.
But last night we got a presentation from Deputy Colley—I am trying to find the quotation so that we can get to some sort of basic debate. I cannot have a column reference because these are just typed sheets. I cannot find the exact quotation I want and I may have to paraphrase, which I shall try to do accurately and fairly. The point I am making relates to his characterisation of the Irish economy as a free enterprise one. He suggested there was a conflict between the Labour Party and Fine Gael, that we were trying to have it both ways and that the Labour Party wanted a socialistic economy which was in conflict with our partners in Coalition. This is not a new debate and so I want to refer back to two years ago and I want to quote my predecessor in the Department of Industry and Commerce and Deputy Dr. FitzGerald who was then in the Opposition benches. On 19th April, 1972, at column 619 of the Official Report the Minister for Industry and Commerce then said:
The Irish nation has opted on the whole for a private enterprise economy.
At column 653 Deputy Dr. FitzGerald said:
The Irish nation has opted very definitely for a mixed economy, a philosophy that I was behind. Our whole approach to industrialisation is that both public authorities and the private sector need to complement each other if the maximum social benefit is to be attained.
It is not a choice between free enterprise—which is a figment of the imagination, something which may have existed at some time in the last century, perhaps in the mind of Adam Smith, perhaps in economic text books but certainly never in this country— and a socialist economy. The question is: do you recognise that you exist in a mixed economy and do you try to reconcile the different interests and balance them to the major benefit of the different sectors? That is how we would formulate the question.
Deputy Colley became very cross last night about whether Fianna Fáil had moved to the Right or not. This question of Right and Left came up. I think there is ample evidence from their attitude to capital taxation, to mining taxation and to natural resources to suggest that they have so moved. If they would indicate an attitude on contraceptives it would be interesting to have it. There is also their attitude to consultants and the question of health services.
There is a great deal of evidence both in the social and economic sectors to suggest that Fianna Fáil have moved massively to the right and are now not the party of a mixed economy which was their pride and the core of their economic policy in the thirties and forties. One could produce quotations from Fianna Fáil Ministers, not only that but one can produce their actions which are memorials to Fianna Fáil and, I believe, admirable ones. I believe they are memorials which could be defended. If you talk about free enterprise or a private enterprise economy where is the place for Aer Lingus? It breaks the rules. Where is the place for the ESB, for Bord na Móna, for NET, the Irish Sugar Company? Are you pleased that these exist in important sectors of the economy where free enterprise was not working or do you want to dismantle them?
Deputy Colley did not imply that.
Very well, but let us face the debate. I understood that he did imply it. Let us argue this. I am not being abusive but trying to argue rationally. I think these are memorials to the creative character of Fianna Fáil and I am very much for them and I want to defend them.
The Sugar Company is a memorial to the previous Government.
Yes, but there was bi-partisanship in the sense that we wanted a mixed economy. We still want an economy which gives the possibility of profits and growth to the private sector and which indicates that in the matter of social welfare and the human aspect of the economic life there is a place for the public sector and that these can be reconciled to their mutual benefit. I always understood that was the Fianna Fáil position and that I admired in Fianna Fáil. I think it was a correct economic attitude for them in the 1940s and 1950s and that policy served the nation well.
I feel with alarm—and not simply I—that they are sliding away from that, that because they were so enmeshed in the growth of industry that they took on the attitude of industry completely. It took them 20 to 30 years to do it but now I hear the authentic voice of big industry which is not even indigenous industry but the authentic voice of big foreign industry in their attitude to our income tax reforms, which are very fundamental. Please tell me I am wrong and I shall be happy to hear it, because I thought we had consensus about this: that we had a good deal of agreement that the task was to reconcile public and private enterprise in a mixed economy of the sort that is emerging all over the world, the sort Galbraith discusses lucidly and very convincingly in many of his books going back over 15 years and he was a Harvard Professor and Democratic Ambassador to India, not a socialist or a radical.
You will be quoting Dr. Spock soon.
We must listen to the argument because it is a serious one. This is crucial to how we develop our economy. We have to offer circumstances in which this is an attractive place for private investors, indigenous Irish investment and foreign investment. We welcome that sort of investment. Personally, I have travelled large sections of the globe in 13 months indicating to foreign investors that they will be welcome in Ireland, that we have an environment in which they can make profits and that we shall be happy to have them do so and that we give very generous advances.
(Dublin Central): Did the Minister show them the White Paper on Capital Taxation?
Yes. The Deputy knows the dates and he knows that that is a frivolous interjection. Our task is a serious one. It is to reconcile those national and public interests with private interests. It is to be clear about the evolution of a mixed economy where both sectors have an important recognised and creative role to play, to make that clear and give that assurance, and therefore to have the basis of economic growth. That is the tightrope between the public and private sector on which I thought there was some consensus until Fianna Fáil went into Opposition and started lurching to what I consider on many issues the attitudes of the extreme Right wing. I will not try to stop them because that way lies their political destruction. If that is what they want, so be it. I will point out that change in their policy.
Let us come to the question of what one does in regard to the balance between growth and social justice. That is the same tightrope situation expressing itself in another way. If one goes for growth at all costs that is all right. You can say: "We cannot have any mining profits." If you do that you will not get growth. One can have growth in mining which does no good to Ireland. It just makes a big hole in the ground and when the mine is finished people go away. That is growth but it is growth without any social conformity.
On the other hand we can say we must have more for health, social welfare and education and we must have it now. One can then load on a tax burden which will sink the whole economy. One can go too far too quickly in that respect. The task is to balance those two things. In that context of the need to create an economic environment of dynamic growth on the one hand and producing a human environment in regard to health, social welfare and education on the other hand, there is a crucial balance.
May I say in parentheses that as regards social welfare there were small things—let us admit that they were not expensive—which showed an extraordinary and admirable humanity? For the unmarried women over 58 in poor circumstances help was very important. This is very human. It shows an awareness of a problem. Help for those families where the husband goes to jail was not expensive. It was not a big thing. I am not making a song and dance about this. That reform was needed. The social welfare code was looked at with a heart. It was easy to do. It was very important as it indicated the coming of kindness and humanity into the social welfare code. That is an aside.
Let us come back to the business of balancing the private and public sectors, of balancing the need to get growth in the economy very attractive to investment and the need to satisfy the growing demands for health, social welfare and education. There has to be a delicate balance, and one can err on one side or the other. If one is discussing this balance then one's attitude to a tax on farmers and on wealth is crucial. It is agreed that industry is taxed enough. I remember the previous Minister for Finance loading more taxation on industry with, I think, damaging effects. From the Labour Opposition benches I was then happy to join with the CII and others in asking him to bring it down to the present level. I think that was a correct decision.
In my view the levels of income tax are too high. We are doing our best. The Minister for Finance is doing his best. These problems cannot be solved suddenly. This is a very useful reform. Indirect taxation is heavy enough. I am glad more was not put on. I am pleased it is not on food. Where will we get money? Is it permissible to tax wealth? That is the basic question. Consultation can be lengthy and this can be messy. There is a period of uncertainty, which one could get over by producing a document and saying: "There it is." That would be tidier but it would be less democratic. Democracy is always a little messy.
We are having a debate on wealth tax. We will not be such idiots either from considerations of equity, or the economy, or our own political future, that we will produce the effect which Deputy Lynch said he knew would be produced: that the combined effect of profits tax, income tax and wealth tax would make it impossible to have a good income with enough for investment.
Backtracking.
This seems to me to be a prostitution of debate, one word analysis. Because one opens a discussion, listens, recognises that interested groups have a far more delicate understanding of their particular problems—and have the right to express them—than could be had either by politicians or civil servants, this sort of democratic process is said to be backtracking.
It is the Minister who is backtracking.
(Interruptions.)
My point is this. There is a great deal of looking at levels, at thresholds and at conditions. I want to see all taxation, whether on wealth or farmers, as taxation which is designed to produce investment, designed to produce growth and the more intensive use of capital. Is it wrong to tax wealth? One may criticise the method. Does one criticise the principle? Face that and answer that. Is it wrong to tax farmers with a valuation of more than £100? On 27th January, 1974, in an interview with The Sunday Press Deputy Lynch said that there is a case for wealthy farmers paying income tax. I agree with him because I feel the same. But what wealthy farmers? Doctor Seamus Sheehy of UCD, who is a distinguished agricultural economist with whom I have crossed swords on a number of issues—so I cannot be accused of quoting someone with my own point of view—said last night that the range of farmers brought under the code could hardly be narrower. On the one hand we have the Leader of the Opposition saying that there is a case for wealthy farmers paying income tax and, on the other, it is being said that what was introduced could hardly be narrower. Do you think it is too much? Are you against that? Answer. Do not try to skate out of it. Let us have a serious debate about this balance between the public and private sector, not with hysteria, or scare words, not with the litany of hysteria which I quoted onto the record from Deputy Colley's last speech, but with an effort towards a meeting of minds. Let us debate it. Do you think that farmers who have large incomes should not pay income tax when their farm workers do? If you concede the principle, then is the practice as embodied too narrow or too wide? Doctor Sheehy said it could hardly be narrower. They are questions which deserve answers. I do not think that the people of Ireland realise how enormous the economic storm in the rest of the world is because things are so calm here.
The Arabs will be blamed for that?
They do not know how big the difficulties are because the economy is running calmly and because there is trust between the different sectors of the economy. Mischievous people try to wreck things. I recommend to people to count the number of times the words "disaster" or "disastrous" occurred in Deputy J. Lynch's speech this morning. It is from the Opposition that the damage and the undermining are coming. If they cannot run the economy they are determined to wreck it. It is a dog-in-the-manager attitude.
We think that the balance of growth and taxation reform, bringing greater equity and social justice through the social welfare code, is the right mix. If one goes too far on the side of creating the private enterprise economy, which is very attractive to investment, one will get growth but also social turmoil. Whole sections of the population will be alienated. If one goes too fast in raising the standard of improvement under the headings of health, social welfare and education one would create an environment where capital cannot flourish and the economy would be depressed. The task is to balance.
The Opposition should tell us where they think that balance is wrong. If I go back to the basic contradiction of Deputy Colley last night, which has been reiterated today less precisely by Deputy J. Lynch, I should like them to tell us where the balance is wrong. If more tax reforms and more social welfare benefits are required, less deficit and less capital tax, how can these be reconciled? Is more indirect taxation wanted? Are more of all the outgoings wanted and less of all the incomings? We are entitled to ask what the Opposition want at a time like this. We do not mind how resolute the opposition is, but let it be serious. Do not let the Opposition be as hysterical as what we had last night. It has been aptly described as "ritual" in the leading article in The Irish Times.
Let us face this question of a deficit about which everyone is waxing so indignant. If we think back a little to Deputy Colley's last budget we will remember that he budgeted for a deficit of nearly £28 million in 1972. The run-out, in fact, was only £5.5 million. The world economic situation was much easier then. The arguments for a deficit budget were much less, but Deputy Colley budgeted for a deficit. It was a perfectly reasonable thing to do. We have not economics of the 1920s now. Keynes has happened. The Keynesian revolution came 40 years ago.
There is nothing sacred about balancing a budget. It is a sort of idiot thing to do if the economic imperatives are for deficit budgeting in a particular circumstances. It is not impermissible to have a deficit. There is no vulgarity or obscenity about a deficit. Deputy Colley had one. The run-out in Deputy Colley's time was one-fifth of what he budgeted for. Last year we had a budget deficit of over £39 million. The run-out was £10 million or about one-quarter. The budget deficit this year is £66 million. This may be, in the words of Deputy Colley, fraudulent or grossly irresponsible. If we are being grossly irresponsible we are being so with advice from many advisers who apparently are grossly irresponsible also. A lot of our advisers are very important people who are very serious economists. Deputy Colley doubted last night whether any reputable economist would make such suggestions.
We have had advice from the OECD. They say that policy action to stimulate demand and output would seem desirable. The aim of budgetary and monetary policy in 1974, according to them, should be to add about 1 per cent to growth in output. That is 1 per cent more than a neutral budget would have added. Last year they advised us to go for a deficit. In dismissing the simplistic approach to a budget balance they say that the current budget position is among the least sophisticated and the least appropriate. While running a deficit in the current budget the Government can, in fact, inject extra spending power into the economy.
Deputy Colley asked for more exports. I agree with him on this point. I should like more invisible exports also. By keeping the economy at a high level when there are downturns in the world, unit costs are kept right. Prices are kept right. The competitive position is kept right. This is the most important single contribution one can make towards securing exports. There is one other thing that can be done to increase industrial exports and that is to have selective devaluation. Is Deputy Colley suggesting that we enter the game of the 1930s of competing devaluation? Does he want that? Does he want to go away from sterling? If Deputy Colley makes statements using the words "stimulating exports" he has to say how, if he is serious. We are entitled to expect seriousness from Deputy Colley, if not from all the Opposition.
In the context of the current world economic situation we are advised from profoundly reputable sources inside and outside the country—the CII inside and the OECD outside—to go for growth in order to try to add 1 per cent to the growth that we would get from a neutral budget. This implies a deficit. In the past we have had deficits both from the present Opposition and from this Government. It is a normal, reasonable and responsible budgetary measure which is correct in the circumstances. In a time of world economic difficulty to describe as grossly irresponsible the proposals that have been made is grossly irresponsible. There has been gross irresponsibility in this budget debate coming from the Opposition and not from the Minister for Finance or the Government.
We have hit, in our first year in office, the greatest economic storm that has happened since the war. The Opposition may wish to decry it or to suggest, as Deputy Colley did last night, that we were hiding behind the skirts or the burnouses of the Arabs.
Any objective economic commentator in the world would agree that this is the greatest economic storm since the war. It came on a new Government. We are just about plumb in the middle of it. There are some signs that we are past the very centre of the storm and have started moving out now, having moved in over recent months. We are entitled to compliment both the management and the worker sectors of the economy. We are entitled to compliment the organisations and financial institutions on their calm and discipline, and on how well they have behaved during this period. I think I might say, since I am not the person responsible for the budget, that we can compliment the Minister for Finance and his staff on their calm, discipline and their effectiveness.
The Government are coming through this vast test—which any fair, objective observer admits is a vast test—tempered, more experienced, more united, more consolidated and more resolute. In these circumstances, we, and—more important— the people of Ireland are entitled to look for responsible opposition.
We are entitled, and the people are entitled, to be profoundly disappointed at the irresponsibility and the wrecking of the Opposition, and profoundly disappointed at the attitude that if they cannot continue to run the economy they want to wreck it and pull it down. That is shameful opposition at a time when, more than ever for the past quarter of a century, we need serious opposition. If we had to have this challenge, which we did not will, and which came from outside economic forces beyond our control —let us use the cliché "economic forces beyond our control"—I am profoundly happy for this Government that it came when it did. It has unified us; it has tempered us; it has strengthened us.
I believe that with the people, sustained by the confidence of the people, and helped by the discipline of the people, we will surmount this economic storm through the actions of the Minister for Finance in last year's budget and in this one better than very many comparable countries, and that we will avoid the pitfalls into which other countries have already fallen. I believe we will do that. I believe this will be the objective judgement in three or four years' time. I am very pleased to be a member of an Administration which faced this challenge and are in the course of surmounting it very well. I am profoundly pleased to be a colleague of the Minister for Finance who has introduced for the second time a budget which gets the right balance between growth, the demands of equity and the demands of social justice. This budget balances those three things in the correct proportions and that is why it is the correct budget in our present circumstances.
I suppose one could entitle the greater part of the speech made by the Minister for Industry and Commerce as Deputy Keating's apologia. The Minister feels he must apologise to the Irish people for his failure—I could call it his abysmal failure but he might regard the word "abysmal" as emotional—to do anything about price control and particularly to do anything about the promise made by the Coalition before they came into office to stabilise prices.
When I noted that the Minister for Industry and Commerce was likely to speak after the Leader of the Opposition I had no doubt in my mind as to what line he was likely to pursue. We have listened to the Minister on many occasions in this House and it was clear to me that the first thing he would do would be to underline the problems and then make the "hit me now with a child in my arms" plea, and that he would also make an attack on the integrity of this party.
What was that?
He claimed that the speeches made by speakers on this side of the House were deliberately designed to wreck the economy. Nobody knows better than he does that this is not so. It is a similar charge to the charge he made when the first attempt at a national wage agreement failed—that this party had done their utmost to destroy any prospect of arriving at a national wage agreement. This has been proved to be patently untrue. I can tell the Minister that I voted in favour of the national wage agreement, not necessarily for the particular agreement but for the principle, because I recognise how necessary such an agreement was for the benefit of the country just as my party have always recognised it.
The Minister went on to describe the problems facing the country and attributed most of them to outside influences. It is remarkable, as I see it, how Coalitions appear to generate crises. They blamed the break-up of the first Coalition partly on the Korean War. The second Coalition broke up, if we are to believe the people who were involved in it, because of the Suez crisis. Now they have the oil crisis. One would imagine that during our time of office there was never a crisis.
There was and it put you out.
We overcame the crises without making all the noise the Coalition appear to find necessary. I have no doubt that the euphoric acclaim which greeted the budget from the Government benches yesterday evening will have somewhat cooled by this morning particularly when Deputies on the other side of the House begin to realise the damaging effects this budget will have on our economy. Whatever the ultimate attitude of Deputies opposite may be to the budget, I have no doubt about what the people will feel about it when its full implications become known and when its effects on the economy are seen.
This is clearly a severely inflationary budget. The Minister stated that he is budgeting for the enormous deficit of well over £70 million in the remaining nine months of this year, or well over £66 million in a full year. The Minister knows full well the threat inflation holds for the economy generally. He need never again refer to worldwide inflation as the only source of our ills when he himself is deliberately adding fuel to the inflationary flames and thereby threatening the standard of living of our people.
Because of its effect on the living standards of all our people we must be very concerned with the inflationary content of this budget. Because inflation hits hardest those who are on fixed incomes, we must be most concerned of all about the situation in which those of our people who are on low level fixed incomes find themselves as do all of our people who are dependent on social welfare because, quite obviously, they are worst hit of all. The level of social welfare payments made available to our people is important but even more important is the preservation of the buying power of the money they receive. Therefore speaking only of the actual amount they receive can be very misleading if we do not relate it to the general circumstances in which it is received and if we do not relate it to the cost of living pertaining at the time. It should be obvious to everybody that the value of any sum of money is related to what that sum of money can purchase.
Since the inception of the Fianna Fáil Party we have been very concerned about the needs of those who, for one reason or another, are unable to help themselves. The foundation laid and built upon by Fianna Fáil is sound. It provides for this and succeeding Governments a sound base for the further development of our social services. It has always been a top priority with us not only to increase payments each year but to extend and develop the social welfare code to include more and more people who are in need of help and to improve the quality of their lives, with the ultimate objective of providing a comprehensive insurance scheme involving all workers including the self-employed.
Let us say here and now that we on this side of the House are not at all satisfied with the increases granted to the various categories of people entitled to benefit under our social welfare code. It may be the accepted thing for Opposition parties to complain that sufficient money is not being made available for social welfare purposes because of the particular circumstances prevailing at the time of the budget or at the time when the Social Welfare Bill is introduced which affect detrimentally the standard of living of those people dependent on social welfare payments. Sometimes the arguments put forward about the meagreness are without foundation, but who can deny the shocking plight in which those who are unable to help themselves find themselves today?
The cost of living has rocketed at an unprecedented rate since this Government took office. The Government, who were elected on a promise to stabilise prices, have done nothing effective about it and hardly a week passes without more and more price increases being announced. By their inflationary budgetary policy of last year the Government, because of increases in VAT, on clothing, fuel and so on, helped this upward surge in prices.
There is no need for me to stress again that the people on fixed incomes are those hit hardest by soaring prices and, more particularly, those people on low level fixed incomes such as those receiving social welfare payments of various kinds. There is no way in which they can cushion themselves against rapidly rising prices and, added to their financial worries, there are anxieties, stresses and strains.
The Coalition Government came to office with the greatest opportunity in the history of this country to develop our social welfare services. They inherited from Fianna Fáil a buoyant economy, which is the basic foundation on which to build a worthwhile social security system. On top of that they had available to them the £30 million saved in agricultural subsidies as a result of our entry into the Common Market. Incidentally I might point out that the Labour Party, of which the Minister and the Parliamentary Secretary to the Minister for Social Welfare are members, vigorously opposed our entry into the EEC. Had that party succeeded in keeping Ireland out of the EEC, I tremble to think what money would have been available for social welfare purposes. If the previous Coalition contributions are any guide, then the amount would have been very poor indeed. It is ironic that the Coalition now claim credit for improvements in social welfare which were made possible by the work of the Fianna Fáil Party in ensuring our entry into the EEC.
Does the Deputy give Fine Gael no credit for that at all?
Very, very little.
The most vocal and effective speaker in relation to our entry into the EEC was the Minister for Foreign Affairs. He was doing it before anybody else in the country had even heard of the EEC.
I do not want to digress but I think it would be worth while for the Parliamentary Secretary to go around the various constituencies and find out what help was given by the Fine Gael Party on the day of the referendum. The simple answer to that was none.
I can speak only for my own constituency but we worked flat out.
If they worked flat out, it was the only constituency in Ireland where they did anything.
That is not so. The entire Dublin organisations worked flat out. I cannot speak for Louth or Cork.
Last year the Government made available £39 million in the budget for increases in social welfare. As I have already explained the bulk of this was made up of EEC money. They dispensed this money in such a way that the very poorest of those in need got only a £1 a week increase in assistance from the State.
In his budget speech, the Minister said, in the section dealing with social welfare, that social welfare insurance benefits, social assistance payments and children's allowances granted last year far exceeded what would have been needed to cover the increase in the cost of living. I wonder where the Minister has been living over the past year. Surely he made that statement with his tongue in his cheek? In fact the increases granted last year have been eroded long ago in a rampant ocean of inflation; not only that, but the original pension was eaten into to such an extent that pensioners and others in 1973 were worse off than they had been in 1972 despite the monetary increase they received in the 1973 budget.
Deputy Seán Flanagan described the measures last year as too kind.
Too much stress can be laid on the monetary increases which in inflationary circumstances can be very deceptive especially to the old, who remember the days when money had a very different value from that of today.
I would suggest to the Minister that he ask those who are in receipt of social welfare payments how much they feel the standard of living has improved over the past year. He would find that none of them would agree with the statement made in his budget speech. As I have said already, the increase in social welfare last year was £39 million which included the £30 million saved on agricultural subsidies. Since then, we have gone through a year of rampant inflation in which the true value of the benefits and allowances has been very severely eroded. One would have felt that the Government's objective would have been to make available this year sufficient money to make up for the reduced value of the pensions and benefits and to add further money to ensure some improvement in the standard of living of people dependent on social welfare. The least we could have expected was an allocation of money for increases in social welfare considerably in excess of last year's allocation. In fact, what is the position?
The position is that the amount made available this year, despite the £66 million deficit, despite the assistance from the EEC, despite the escalating cost of living, is £25 million. This includes money for improvement of public service pensions. As I do not know the cost of the latter I cannot give the exact figure for social welfare increases, but it must be considerably lower than the £25 million quoted by the Minister in his statement. This year when the cost of living is infinitely worse than last year, we have less than £25 million made available for increases and we are asking people dependent on social welfare to be pleased with this.
We are told by the Minister that the cost of living is likely to rise by 14 per cent to 15 per cent in the coming year. If after the inflationary budget of yesterday we were to request a forecast from experts what percentage increase there would be in the cost of living in the coming year, I wonder what that forecast would be. I feel that forecast would be increased quite considerably.
In his statement the Minister points out that he is increasing social welfare benefits by 18 per cent, or at least he is increasing some of them by 18 per cent—social insurance and assistance payments. He states this will ensure that all beneficiaries will have a significant rise in their real standard of living. When one takes into account the fact that last year's pension has been seriously eroded, that the items forming the main purchases of those people dependent on social welfare—food, clothing and fuel—went up last year by a very high percentage increase, how can he for one moment suggest that the increases in his budget for social welfare will maintain the standard of living of the people dependent on it, never mind increasing that standard? This is a ridiculous statement by the Minister It is most unfair because it affects the people about whom he is supposed to be concerned.
In his budget statement the Minister relied on percentages, which mean very little unless we relate them to figures. In this instance the figures are low enough. The Minister extracted some examples from a rather bad situation to enable him to quote the best figures. However he did not refer in any part of his speech to the single man or woman drawing unemployment assistance. Here the increase offered is the princely sum of £1.15. Last year this category were given an increase of £1 per week. Does anyone suggest their circumstances have not deteriorated in the meantime? Does anyone suggest it is not much more difficult to live now than last year?
We have only to consider the increases in fuel, food and clothing. Yet the Minister seems to be satisfied that a little more than £1 increase to a total of £7.30 per week is sufficient for people in those circumstances, not to mention raising their standard of living. A widow on a non-contributory widow's pension gets an increase of £1.15 per week and each child gets an increase of 40p. Does the Minister consider that this increase compensates for the erosion of her pension in the past year? Does he think it ensures she can meet the increases in prices and in the cost of living which he has forecast for the coming year and at the same time have her standard of living raised? It appears to me that neither the Minister nor the Government have seriously considered this problem. They have relied on the fact that the mention of £1 may confuse those people who remember the time when a £ was worth a £ and they may think that they are receiving a worthwhile increase.
The vast bulk of the money in the social insurance fund is paid by the employers and employees and the Exchequer contribution is being steadily reduced. For example, the Exchequer percentage contribution was 33.16 per cent in 1972-73 and it was down to 31.10 per cent in 1973-74. It is little better now. The increases for single people are little better than on the assistance side. They get £1.30 per week as opposed to £1.15, making a total of £8.50.
I am relating this to the statement made by the Minister for Industry and Commerce with regard to children's allowances. The personal rate in Britain is £10 per week. We are still struggling to reach parity with Britain but we are falling behind. The Minister for Industry and Commerce made much of the increase in the children's allowances and he pointed out that it meant these benefits were better here than in the Six Counties. The Minister was selective in the case he made but he did not refer to the fact that with regard to social security we were pretty far behind. I take no pleasure from this. I should much prefer to have a situation where we could say we were on a par with the North of Ireland in relation to all social security payments.
The increases for child dependants on the contributory side is 40p but in some cases it is as low as 30p per week. However the most derisory increase is that of 30p per month per child in the children's allowances— that is about 7p per week. The Minister does not seem to have any idea of what it costs to feed and clothe a child nowadays. One would get a very poor pair of shoes with the allowance for two months. If I were a betting man I would be willing to bet that before July the 30p per month will be absorbed in the sea of inflation which is so considerably assisted by Government policy.
In his statement the Minister has said that the changes brought about in last year's budget not only granted increases in rates of existing benefits but extended to the introduction of new schemes to give assistance to under-privileged groups, such as unmarried mothers and handicapped children. I do not know why the Minister used the words "such as" because I do not know of any other schemes introduced last year. This was dressing up a sentence to give a wrong impression.
It could be implied from that statement and from a statement made by the Minister for Industry and Commerce when he spoke about the new schemes that were to be introduced this year that nobody ever thought of giving assistance to such under-privileged groups until the Coalition came to office. I would remind the House that by introducing the schemes last year and extending them this year the Coalition are simply extending a system developed during the years by Fianna Fáil. We should not forget the introduction by Fianna Fáil of schemes giving free travel, free electricity and free television licences to pensioners; the scheme for the care of incapacitated pensioners; the deserted wife's allowance; the old age care allowance and the Pay-Related (Benefit) Act. As the Minister for Industry and Commerce stated, these schemes also put a human look on the social welfare code. While I welcome the new proposals in the budget in relation to this matter, I wish to make it clear they are simply a continuation of a policy adopted by Fianna Fáil many years ago.
I welcome the proposals to grant the wife of a person in receipt of unemployment assistance £3.10p per week and the scheme to help the wives of long term prisoners and unmarried women over 58 years of age in poor circumstances. I would, however, again remind the House that down through the years Fianna Fáil have always sought out those who were in need and made provision for them. Any plan or scheme which helps those in need will always have our full support on this side of the House.
I referred earlier to the free electricity scheme. Recently I asked the Parliamentary Secretary to the Minister for Social Welfare if he would extend the free fuel scheme to people in rural areas in the same social assistance categories as those who receive free fuel in the cities and some of the larger towns. The Parliamentary Secretary was not prepared to do this. He expressed the view that the scheme was not a very satisfactory one and he said he was reviewing the position. I suggest now to the Minister that he should remove the limit on the amount of electricity used by those presently entitled to it and extend the scheme where possible. This would be of exceptional help to those who are obviously unable to purchase fuel or pay for light as these are now very high in price.
The Parliamentary Secretary went into the history of the free fuel scheme and he pointed out that it was introduced when it was almost impossible to procure fuel. There are two ways in which it can be almost impossible to procure fuel; one is when it is not available and the other is when one cannot pay for it. In those circumstances the Minister should consider sympathetically my suggestion.
The Minister for Finance referred to the abolition of the remuneration limit for social insurance and to the scheme for pay-related benefits which is being introduced. He said these were further desirable developments in a just society. In case the phrase "just society" might lead anybody to think that the Pay-Related Benefits Act was a Fine Gael innovation, let me hasten to assure the House that this was a Fianna Fáil measure, a very worthwhile measure piloted through this House by Deputy Joe Brennan, the former Minister for Social Welfare. All the preliminary work in relation to the abolition of the remuneration limit was done by Fianna Fáil and that preliminary work was quite extensive.
With regard to our senior citizens, quite obviously the pensions are still too low, particularly so on the non-contributory side. In a survey I made I found that after paying for food and a few miscellaneous items nothing is left for clothing and other articles regarded in present circumstances as necessities. When I researched this matter I found that the sharp increases which have taken place in electricity and heating were only then beginning and so I did not include them. Even at that time, when an item of clothing was needed, it usually entailed cutting down on food. We all recognise that food is a particular need of old people and we must do everything to ensure that their income will supply this need.
On the assistance side, the means test limit has been increased, but only by £1, to a total of £5 per week if a person is to be entitled to the full pension. On previous occasions, when the pension was increased, the means test limit was also increased. The limit of £5 per week today for full pension is low, particularly when we take into consideration present money values. I agree that, until we have a comprehensive insurance scheme, we will always have problems but, if we are to move rapidly in the right direction, we must take cognisance of the inflationary situation in which we live and make proper provision for those on social assistance. Because all the money for social assistance comes from the Exchequer and from local taxation, our expenditure in this particular respect will be a pointer to the level of our commitment. We have, therefore, to ask ourselves what kind of employment would be available to bring in less than £5 a week and so ensure entitlement to a full pension. The Minister said a person could earn as much as £11.50 a week and still qualify for a reduced pension. Would he like to state publicly what the amount of this pension would be?
I am particularly concerned with the plight of the widow and the deserted wife on social assistance. If they are able to take up employment they are not as a rule entitled to assistance because the amounts they earn would be more than the means test permits. If they cannot take up employment because of family commitments, the position is even more difficult. We should be more concerned. When the whole week's pension will scarcely buy a pair of shoes, it is time to have a thorough investigation into the matter.
Statistics available to us in the consumer price index give some indication of the colossal increase in the cost of living over the year. With regard to pensioners and others on social welfare benefit and assistance, they do not tell the whole story. Apart from the fact that the greatest increases occurred in those commodities most used by people on social welfare, such as food, clothing and fuel, it is also true that in general these people buy their commodities in small amounts and that invariably means they pay a higher price. In assessing the cost-of-living increase, this should be remembered. The budget has not taken cognisance of this. A very serious situation faces employed people with families, widows and deserted wives with families, in trying to meet increasing costs from very meagre resources; their situation is, indeed, lamentable and the whole approach in this particular sphere must be revised.
In the realm of social welfare, in these days of very high inflation we have much to learn from the national wage agreement. These agreements are negotiated on behalf of the workers by organisations whose purpose it is to defend the living standards of their members and, in that defence, are trying to ensure that these standards are maintained, and rightly so. In the recent national pay agreement the lowest paid workers got the highest percentage increase which was 27.5 per cent over the full year with a minimum first phase increase of £2.40 on incomes up to the level of £18 per week. The second phase increase, guaranteed for later in the year, would give the lowest paid workers listed a total of £4.13 with a cost-of-living increase based on a 10 per cent increase in the consumer price index over a stated period. By any standards our social welfare increases are poor by comparison.
The further reduction in the age limit for old age pensions is welcome. I should recall here that Fianna Fáil introduced retirement pensions for those within the social security system at 65 years of age some years ago. If we had a comprehensive social security scheme covering all workers this would apply to all workers. It is worth remembering that a Minister, in the presence of another Minister, in the course of a broadcast prior to the last general election promised to reduce the age limit for all pensioners to 65 years and to abolish the means test immediately if they were returned to power. This, quite obviously, had an effect on the election results but, like many other Coalition promises made prior to the election, this one was shelved immediately the Coalition was returned to office. Reducing the age limit to 68 with the continuing means test is a poor substitute for that particular promise.
I do not recall anything about a promise to reduce the age limit to 65 at one stroke.
That was what was said and it was the impression that was given.
The Deputy could have fooled me because I was not under that impression.
Thirty years ago Fianna Fáil promised to bring the age limit down to 65 but nothing happened.
We all tend to suppress the things we do not wish to remember.
I freely admit wherever we have fallen down but I do not recall the statement made by Deputy Faulkner and I do not think it is correct.
The Minister is making available £100,000 to allow pilot schemes on poverty research to come into operation. I am in agreement with this provision because any investigation which will bring to light new areas which should be catered for in our social welfare code is to be welcomed. I should like to impress on the Minister that such investigations should not be used to cover up the fact that not nearly enough is being done to remove poverty which is well known to exist and which should be immediately catered for.
The rampant inflationary situation for which Government policy must take part of the blame with rapidly escalating prices is itself creating among many of those in receipt of social welfare payments a vast poverty area for which this budget does not do a great deal. Last year's increases have long since been eroded and it looks as if the increases this year will also be fairly quickly eroded.
I am glad to see that the Minister has now decided to get rid of the clawback as related to children's allowances, something which he introduced last year. We have been pressing him ever since he introduced this to remove it. Fianna Fáil is very proud of the children's allowances scheme. At the time it was introduced by us it was one of the first, if not the first, such schemes to be introduced in any country. I have always been convinced that in any children's allowance scheme it should be obvious to anyone that children must be the main consideration. The change made last year by the Minister took no cognisance of children at all. An arbitrary figure of £2,500 was laid down above which the clawback operated but there was no reference at all to the size of the family.
There could be no legitimate argument in this particular area for excluding the consideration of the size of the family. Under the Minister's scheme, a family of ten children was treated the same as a family with one child. Where we had a family of ten children the father of which earned a net income of £2,500 the clawback operated just the same as it would in the case of a family with one child with an income of £2,500. This was unjust and unfair and everybody thought so including the trade unions. The Minister has now recognised the fact that it was unjust and he is now morally bound to repay all the people whose children's allowance was affected detrimentally by the clawback. The money should be paid back to these people and I have no doubt that the Minister will give favourable consideration to that suggestion.
People who are depending on social welfare payments are entitled not only to maintain their standard of living but to have it considerably improved. Taking the whole inflationary situation of last year and this year and the acknowledged increase in the cost of living for next year. I am certain that this budget will not even maintain the position of those who are depending on social welfare payments.
The tax situation as outlined in the budget seems to me to be a confidence trick, one which was brought into operation to ensure the acceptance of the national pay agreement. The Minister for Industry and Commerce thinks that every time we criticise any particular action by the Government our only motive is to destroy confidence in the economy and try to upset the national pay agreement. I voted for the national pay agreement and, therefore, that charge is ridiculous.
I think we are entitled, where we find it necessary, to criticise. In my view the amount of the reduction made available by the Minister for Finance in income tax is less than was expected and this has been underlined by statements made by a representative of congress. It was not very clever on the part of the Minister to make this promise and not to carry it out in the manner in which it was expected he would carry it out. There will always be another day and new negotiations for another agreement and if workers are dissatisfied with what the Minister has given them in this budget they will find it difficult to trust the Minister again.
As in the case of his social welfare proposals, the Minister dressed up his income tax presentation so that even his own backbenchers were deceived. On page 29 of his statement the Minister states that:
The main personal allowances under the new structure will be £500 for a single person, £299 at present, £550 for a widowed person, £324 at present, and £800 for a married person, £494 at present.
The Minister was acclaimed by his backbenchers for that statement but, of course, the backbenchers did not realise that the Minister was abolishing earned income relief. They must have been amazed later on discovering that the figures should have read, as they appear in the document that was presented to us sometime after the Minister had concluded his speech, £500 for a single person, £499 at present; £550 for a widowed person, £474 at present; £800 for a married person, £744 at present. As has been pointed out by speakers on this side of the House, to restore the 1972 position in relation to income tax would have necessitated increasing the allowances by 25 per cent.
This budget is highly inflationary The people who, in the ultimate, will be most severely and detrimentally affected by it will be the poor and those who are dependent on social welfare payments. The increases being granted to those dependent on social welfare will be whittled away in a relatively short time because of the inflationary policy which has been adopted for the second time by the Coalition Government.
I shall begin by recalling a remark made at the end of his speech by the Minister for Industry and Commerce when he said that the economic difficulties which the Government encountered shortly after their formation had solidified, united further and encouraged them as a whole, that they had come out of the experience tempered and with a better sense of unity of purpose than before. The only apprehension I had on listening to the Minister say that was that it might lead someone to think that before these economic difficulties arose there was any lack of purpose or anything less than 100 per cent unity and solidarity in the Government in which I serve. I base this statement not only on my observations of the Government from close quarters but because I observe also the quarters from which the criticism comes that one party or the other in the Coalition have surrendered to their partner. When, on the one hand, we have Senator Browne saying that the Labour Party have sold out entirely to Fine Gael while the President of the NFA says that Fine Gael have sold out completely to Labour, I am convinced that the Coalition, as a team, are on the right road, that they are in the middle of the road and that they are holding well together.
The most controversial aspect of the Minister's budget has been the drawing into the income tax net of a small proportion of Irish farmers. I could not help but derive a certain wry satisfaction from seeing the expression on the faces of two or three Dublin Deputies in Fianna Fáil when the Minister announced his proposals in this regard. Those of us who, like Deputies Moore and Tunney are Dublin Deputies, know that the kind of voter who puts us into office finds it difficult to understand a taxation system which deprives him of enough of his wage packet to make a serious difference to his housekeeping problems but allows a man who is comparably more prosperous to get away without making any contribution. This measure will be welcomed by city dwellers not because of any vindictive attitude towards people making a living from the land, people who may be their cousins, but because of a genuine belief that no individual ought have to carry more than his fair share of any burden. Even the most pronounced "jackeen" would recognise that farmers have problems which do not affect to the same extent people in the industrial world.
Farmers are at the mercy of wind and weather, of disease and of fluctuating markets. We know that in many ways they deserve special consideration and that is something which this Government will always give them. Urban dwellers comprise a very large and growing proportion of the Irish population. The reasons for this are not reasons of policy on the part of this Government. The same trend prevails throughout the world. The number of people on the land tends to decrease while the population of urban areas tends to increase. Whether that is a good or a bad trend is a question that I need not go into here.
Last week I spoke at a Fine Gael meeting in Navan. The meeting was attended largely by a Fine Gael audience and, so far as I could ascertain, an audience which consisted to a large extent of people who were either engaged in farming or who had close links with the farming community. I had gone to the town to deliver a speech on the contraception Bill but, apart from listening to me politely, the audience showed no interest in that subject. If one disregards the pressure groups on both sides in this issue, it is my opinion that the subject is of much less public interest and excitement than one might be led to suppose. However, what was of interest to the people at that meeting was the whole question of taxation. Having heard what a lady present had to say, I was very proud to be a member of the same party as that to which she belonged or, even, to be of the same nation as her. She was a farmer's wife but she said to me: "Do not go back with any idea in your mind that the farmers do not wish to pay their fair share. Farmers are people who have pride. They have no wish to be beggars or to be carried on the backs of anyone and they are perfectly willing to make a fair contribution towards the burden which the nation has to carry, whichever Government may be in office". That lady was concerned merely that the special problems of the farmers be understood and that the degree to which they would be drawn into the tax net would be realistic and not something that would destroy them.
My opinion on this matter may not be worth much but it seems to me that when allowance is made for reduction of rates and so on, the Minister in his proposals has not gone anywhere near a situation that would justify panic or even serious criticism among the farming community. I hope that in the words of the lady to whom I have referred the farmers will receive these proposals with fair-mindedness and with pride in themselves. In the weeks leading up to the budget I did not like the noises that were being made in the name of the farmers by a prominent representative who warned the Government that if tax provisions were applied to farmers the Fine Gael vote would drop.
That amounted to a threat to the Government that they should not draw farmers into the tax net, whether right or wrong in case we would lose votes. If the Government had been led and said by that kind of talk it would not deserve to be here; no Government could submit to that sort of talk. The idea that we might lose a few votes through doing the right thing—even if it were correct and I do not believe it is—is something which I hope will never frighten this Government from doing what it has decided to do.
I think it was the Leader of the Opposition, Deputy Lynch, who said he thought that the situation regarding building societies and mortgage interest rates had been overlooked in the budget and this, he thought, would concern many people. He is perfectly right in thinking that mortgage interest rates and, indeed, all interest rates are of serious concern but it is only right to point out that, as he must know, the State is already underpinning the mortgage interest payers to the extent of £2 million, something I think that was never done before. I am open to correction but I think this is the case. If the State were not putting this very large sum of money into building societies, enabling them to pay an extra 1 per cent in interest to their investors the building societies would be obliged to charge a further 1¼ per cent and their rates would be up by 1¼ per cent. The Government are already providing that much relief. All interest rates have gone through the ceiling and 1¼ per cent seemed a bigger sum measured against the interest rates prevailing two or three or five or six years ago than when measured against today's interest rates but it is only fair to the Government to remind the Opposition and the community that the Government are already helping to the best of their ability by this device and if that Government aid did not exist mortgage interest payers would be paying a further 1¼ per cent more than they are already paying. That does not mean that the Government are happy about the situation. The whole operation of the building societies is under review and they are being encouraged to economise on expenses particularly on competitive advertising and try to keep costs down and in that way become less obliged to charge high interest rates. The Government are fully aware of the problem and need no warning from the Opposition in that regard.
The White Paper on proposals for wealth tax, capital gains tax and inheritance tax has been mentioned in conjunction with this budget and while I shall not discuss—it would not be relevant here—the merits of the proposals in the White Paper, I want to take up a point made in the shape of an interruption by, I think, Deputy Meaney, and which I had heard before. The White Paper says clearly in its foreword that representations in regard to what will ultimately be legislation are not only acceptable but are invited from the public, any individual or organisation with any interest in the matter. I have had a number of such representations which I have passed on to the Minister. Probably every Government Deputy has had them and many Opposition Deputies.
Every argument or criticism or point made in regard to these proposals will be given maximum attention. I could not believe this Government would behave in any other way towards a major revolutionary change in our taxation system, but I cannot submit to the charge that the Government are in any way backtracking by saying and continuing to say that they have an open mind on this matter. They have published outline proposals. Something has to be put in black and white before a discussion can be started and when all the views have been heard I hope legislation will result. To keep on saying, as we have to keep on saying, that the proposal is not in its final form is not backtracking. To issue a White Paper on a subject like this is the right way to go about it and the wrong reaction from the Opposition is to cry panic and try to frighten people.
In fact, that happened. In fairness to the Opposition spokesman on Finance, I do not think he came into this yet but this paper was not two days published when Deputy Haughey, who was a former Finance Minister and whose views on such matters, therefore, enjoy some regard, was in the newspaper with the cry that it was the end of private property. That was not a responsible attitude. He may not have intended it that way but to me it seemed very much like a deliberate attempt to create panic. If the Government had produced a Bill and pushed it through the House with closure motions and so on without listening to anybody or receiving any representations, without heeding any advice and if the net result of that Bill was to destroy private property, it would be fair enough for the Opposition to shout that private property was at an end. That is not what happened. A Government paper has been produced containing proposals and the Government expressly made it clear in their introduction to that White Paper that they wanted views and reactions. If the Government had made up their mind that those proposals should go through in the exact form proposed in the White Paper there would be no need for a White Paper or to invite representations. If the Government had their mind made up to that extent they would have produced the Bill and had it passed.
I realise that Deputy Faulkner, who spoke earlier, resented the implication that the Opposition were irresponsible and trying to wreck the economy. I quite accept—I have never known him to do anything dishonourable—that he had no such intention but panic has certainly been created in some quarters and I am inclined to lay the blame for that on the Fianna Fáil Deputy who, although no longer a spokesman, is because of his history, listened to with some attention when he speaks on financial matters. He will have some explaining to do when the Bill on foot of this White Paper eventually reaches the Dáil.
The wrong way of going about a proposal of this kind which is revolutionary, is to produce the Bill and see what happens, something which in my recollection Fianna Fáil did on two occasions, perhaps oftener but at least on two occasions, which nobody here will have forgotten. One was the Succession Bill which they produced in 1963. That Bill was an academic exercise thought up in the Department of Justice. Some people there thought it might not be a bad idea if we had an inheritance and succession system here such as they have in some continental countries.
The Minister for Justice, who comically enough was Deputy Haughey at the time, was induced to come in here and present this Succession Bill which I honestly believe he had not read seriously. It took a while for the details of the Bill to sink in because the whole question of succession is a complex legal one. When they did sink in, the public reaction was one of absolute amazement and confusion. It was an appalled reaction. The Government at the time held on to this Bill and when everyone had shouted at them they climbed down and altered its provisions very substantially. The Succession Act, 1965, is a very pale version of the Bill which was introduced in 1963. Without going into details the Bill of 1963 made a very serious inroad into what has always been taken as a right, which is mentioned in the Constitution, of a person to decide what he will do with his own property on his death.
It is comical that the man who is now shouting about an end to private property should have been the person who sponsored this attack on private property which was the most serious ever presented in this House in Bill form. The right way to go about a reform of the succession laws is to do what this Government have done in regard to taxation. If the then Minister for Justice had been paying attention to his job he would have put out a White Paper on succession and listened to what peole had to say. He then would have had enough time to make up his mind which part of the proposals to go ahead with and which to water down. He did not do that. The Bill came here without a White Paper. It was revolutionary to a degree which is now perhaps forgotten. In the end the then Government had to climb down because the people were shouting at them.
The second instance came also from the Department of Justice but during the incumbency of Mr. Ó Moráin and that was in regard to the Criminal Justice Bill which was introduced in 1967. That Bill contained a large number of proposals in regard to criminal law, some of them very far-reaching. Some were good. It contained a series of sections prohibiting the carrying of flick-knives. But it contained other proposals which made very heavy inroads into what were taken, up to then, to be the rights of the accused person. For example, the unanimous jury verdict which we have always had was changed to a majority verdict in criminal cases so that somebody could be convicted on the vote of ten or 12 jurors. That never would have been proposed if the English had not made the same change. The Republican Party at the time did not see anything unrepublican in slavishly following the English in almost everything they did, down to the seven-cornered 50p piece. That Bill caused an outcry. Everybody who knew anything about law could see that this was the thin end of the wedge—and not all that thin but a very formidable wedge—designed to make it easy for the State not just to catch criminals but to convict accused persons. That is a different thing.
The Parliamentary Secretary should discuss Labour's policy at the 1969 election on nationalising firms.
The right way to go about proposals of that revolutionary kind in the criminal law is to issue a White Paper but, of course, none was forthcoming. In the end, that Bill died the death. The Dáil was dissolved in 1969 and that Bill was never revived. It has never been seen here since.
Some of its provisions, the less objectionable ones, may become law in the future but the Bill as a whole has gone. That is an example of backtracking. That is real running away. I hope this Government will not be accused of this sort of thing. The reason why I have inflicted on the House this excursus into the history of these two Bills is to draw attention to the conduct of the then Government who never had their match for arrogance, walking over people and never listening to what was being said to them. That was their way of doing things. This Government have inherited from Fianna Fáil a number of problems which they had not the guts to deal with. It is approaching this one by means of a paper which explicitly invites representations. When these are in, the Government will make up their minds what to do and not before, I hope that is enough on the subject of the White Paper at the moment.
The proposals in it obviously have to be put down in black and white. One cannot start a discussion in a vacuum. One must say roughly the lines along which one is thinking. One may even have to be specific about the lines one was thinking along. Until that is done, no discussion can take place. That is a different thing from making up one's mind without discussion, without consultation, without taking advice, and bringing it in in the form of a Bill. That would be real back-tracking. If the Government had done that and if Deputy Meaney had uttered the same criticisms of it I would not raise any objections.
This Government were left with an inheritance by the last Government. Deputy Faulkner spoke about us inheriting a sound and buoyant economy and a social welfare system, the main lines of which had been laid down by his party and which we were only building on. Nobody wants to take from Fianna Fáil the good things they did. Deputy Faulkner's defensive tone made me suspect that he thought we were trying to deny that Fianna Fáil in their time had made advances on the social front. It would be very strange if they had not. They have been in power for nearly all my life. They can scarcely expect to be thanked for having made some advances on the social front in a world where everything is moving that way in the space of a generation. I am willing to give them that credit.
But they left behind an inheritance not only of a certain system of social welfare, which is by no means as perfect as Deputy Faulkner thinks, but they left behind an inheritance of nettles too which they had not grasped. That was a phrase brought into Irish politics by the Leader of the Opposition, Deputy Lynch, when he said that we would have to grasp nettles in regard to the North of Ireland. I do not wish to mock him because I believe that in his heart he meant the best for the North. He detested the violence there as much as we did and would have done whatever he could to stop it. I do not question his sincerity about that. He spoke about doing things which might be hurtful to our pride and described them as nettles which we would have to grasp. Time moved on and Deputy Lynch left Government with his reputation unimpaired as a man who sincerely desired peace in the North of Ireland, but without a single nettle being grasped. There is now a rank nettle bed in this country of undealt-with problems from which the previous Government ran away and which this Government will have to tackle, and in part have tackled, one by one.
Deputy Lynch never faced up to the question of the status of the North. I know it is possible to go through his speeches and analyse them and say that it amounts to this, it amounts to that and it amounts to the other. Is this not as good as saying this, that or the other? But he never went ahead and said that. It was left to this Taoiseach to say what the people in the North had been waiting for some Taoiseach to say for years——
It was the late Deputy Seán Lemass who started on that road.
I will give the late Deputy Lemass every credit for his realism. That is not relevant to what I am saying now. The speech made here by Deputy J. Lynch in response to the Taoiseach a couple of weeks ago was a fine speech. I admired him for making it. The fact remains that that particular nettle was never grasped, to use the words which the Taoiseach used on that occasion. The reason it was not grasped, I know, was the political necessity which Deputy J. Lynch experienced of holding together a party of shades varying from comfortable, golf-playing, middle-class Dublin professional men at one extreme to a penumbra of gun-hawkers. That is the only way to put it. It is not easy to lead a party like that. We saw the thanks Deputy J. Lynch got for his fine speech here three weeks ago. One of his own backbench Deputies, a man carrying a name revered in his party, stood up and dissociated himself from what his leader had said.
The whole question of taxation is another such nettle. Everyone in the country knows that the income tax code we have inherited has been creaking along and is badly in need of reform. This reform was talked about by the previous Government but nothing was done. The whole question of the relationship between local and central taxation was talked about, but nothing was done. It was left to this Government to do something effective about the rates and now about the taxation structure.
The Contraception Bill is another example. I was in the Seanad and had the experience of seeing the then Senator Mullins, figuratively speaking, trample Senator Robinson underfoot, week in and week out, when she tried to have her Bill discussed. The reason given was that the Government of the day had the Bill under consideration and were going to come up with their own Bill. They never did that. I say that the reason they did not do it was that they had not got the guts to do it. This Government will have to grasp nettles by the bushel and they will be stung by them.
Will there be a free vote on it?
I will deal with that. I will have that subject uncovered when the time comes. I will see that topic dealt with when the time comes.
The discussion is on the Financial Statement.
The taxation proposals of the White Paper are only one part of the field which this Government have been left to clear. They are certain to make mistakes and to be bruised here and there. We are ploughing into ground which was left rank and covered with nettles by the outgoing Administration. The taxation proposals may be surprising because the people had got used to nothing being done in this field.
A warning has been sounded by the Opposition that money will run out of the country if the White Paper goes through in any shape or form. Anyone who is foolish enough to take his money out of the country in response to the panic statement of the Opposition will lose a lot of money. The object of the wealth tax here is to fulfil the Coalition promise to do away with death duties. Whatever shape the wealth tax has, its object is to do away with death duties so that a man can pay them in instalments over his life. The proper mechanism for doing that is what is under discussion at present. We were being taunted here six weeks ago about not having abolished death duties. I do not hear so much about them now at all. There has not been so much taunting about them in recent weeks.
You played that before the last election.
Anyone who takes his money out of the country because of the panic warning from the Front Bench and the backbenchers of the Opposition is running the risk of paying estate duty in the country to which his money has gone, plus wealth tax and income tax in Ireland because the loopholes here are being closed.
They are not yet closed.
You played that game the last time. What you are saying now is correct. I agree with that, but why play that gimmick in the last election?
The Parliamentary Secretary, without interruption, please.
We are putting into effect what was promised.
The last part of my speech goes away from the budget proposals. With your permission, Sir, I claim the Deputy's privilege of discussing matters which are not immediately evident as arising in the budget debate. They are relevant to this extent, that they involve the use of public money which has to be raised by the budget. If the House will give me a few more minutes I wish to say something about the way in which this House works. I will make this relevant by mentioning the cost of running the Houses of the Oireachtas.
The Deputy must refer to the financial policy.
The financial policy contained in the Financial Statement is one which necessarily must envisage the expenditure of public funds. When public funds are spent on anything, including the Houses of the Oireachtas, I would hope that the topic is not too far from the Financial Statement to be admissible. Naturally I will not argue with the Chair, but I would have liked to have been allowed to say some things which I was not able to say on account of not being given an opportunity to reply to the closure motion here the other night and to add some uncontentious remarks about the conduct of business.
Much more business could be done by this House more expeditiously and by agreement. The Opposition Whip has a tougher job than I have and he does it, so far as I am concerned, with great courtesy and humanity, aided by his assistant, Deputy Browne. The Opposition Whip, with the approval of our respective sides, could come to some form of agreement about the time that would be allotted to Government work, Private Members' work, the number of speeches that would be made and the length of those speeches. The disagreeable operation which we had here recently could be avoided——
I am sure the Parliamentary Secretary will agree that this is something which could be left for the discussion on the Vote for the Oireachtas.
I would have to wait a long time before that is before the House. The topic is now fairly warm. It was raised this morning under the umbrella of this debate by the Leader of the Opposition who began his speech on the Financial Statement by another criticism of the way work is done here and how it is ordered by the Government. I came into the House when I heard the Deputy on the loudspeaker. Deputy J. Lynch raised the matter first and I would have hoped, since the matter is relevant, that I might have been allowed a little scope to say a few fairly specific things.
If the Parliamentary Secretary is replying to the observations of the Leader of the Opposition this morning I will allow him to say something, but I will confine him to that.
I will deal with it in that sense. I cannot promise, while I am grateful for that direction, that what I have to say will be all that specific. This morning the Leader of the Opposition related the early rising of the Dáil yesterday to the closure motion on Tuesday. I may have missed some of his remarks while I was coming from my room into the Chamber, but I understood him to ask what was all the hurry about the Constituencies Bill when we had five hours to kill yesterday evening. So far as the ordering of the business yesterday was concerned I answered him adequately I believe but, so far as the deeper significance of what he had to say goes, what would have been the point in allocating—even if it had occurred to me which, in fact, it did not—an extra couple of hours to the debate on the Constituencies Bill? We would just have had another couple of hours of fool-acting, acting the fool. That is the plain language for it. We would have had another couple of hours of acting the fool and it would have ended in exactly the same way.
Again this morning the Leader of the Opposition criticised the application of that closure motion and implied once more that the Government were doing something outrageous. I was reminded of all the remarks made here on Tuesday by Deputy O'Malley and Deputy Molloy and others about how sparing we ought to be in using this mechanism, and how sparing Fianna Fáil had been in using it. I think it was Deputy O'Malley who said that on one occasion under the previous Government Deputy Cruise-O'Brien came in here with a pile of dictionaries and kept the House for over six hours on the meaning of one word. The Minister for Posts and Telegraphs is a big enough man, I hope, not to take it ill from me if I say that, if he held up the House for six hours with dictionaries on a single word, he should have been closured. That is what the Government doing their job properly ought to have done. I hope he will not be angry with me when——
Notice taken that 20 Members were not present; House counted and 20 Members being present,
As I was saying, the Leader of the Opposition had another "go" this morning at the application of the closure motion on Tuesday. Its relevance, as he put it, was to the hours left vacant yesterday. This really could have been avoided. I disliked having to move that closure motion. It could have been avoided had there been a convention in existence in this House, of the kind I should like Deputy Lalor and myself to develop, whereby time would be agreed for any measure. When that Bill was first introduced, if Deputy Lalor had said that they expected 50 hours, or 60 hours, or 70 hours on the Bill, I am certain he would have been accommodated. I am not making light of the Bill. I perfectly realise that it is a matter of serious concern to the Opposition and that they should have a fair chance to debate it. The way they debated it ensured that it could not be discussed except in a disorderly way. If the Leader of the Opposition were to be left with no ground for the complaint which he produced again this morning, the only way that could be done would be by agreement between the two sides that so many hours would be allocated to Second Stage, so many to Committee Stage, so many to Report Stage, and so on.
If the Opposition—and I do not mean this aggressively—can bring themselves to do business with us, and if Deputy Lalor can bring himself to do business with me along these lines, they will not find us ungenerous in regard to the allocation of time. We will allocate all the time in the world he wants to anything, but let us get it clear what we are doing. Let us be businesslike and get through the business in an orderly way and not have the kind of zoo we had here last Tuesday, which brings no credit to anybody. The Government had absolutely no option but to curtail that debate, in spite of what the Leader of the Opposition said. At the rate of going, as I said last Tuesday, we might have been here until July with no other business done at all. This morning another Bill arrived on the Order Paper, and I think another one will be in tomorrow or very soon.
It is not the pill Bill?
Is the Deputy in a hurry for it?
Some of your Deputies are.
There is another Bill which must be dealt with before the local elections. There are ten Bills on the Order Paper. So much, incidentally, for the shortage of Bills. This House is being asked to deal with ten Bills before the recess.
What was the hurry about the Constituencies Bill?
This business cannot be done unless we use some system of civilised debate.
Dictatorship.
If Deputy Lalor could be authorised to do business with me, we might achieve a major revolution in the manners and methods of this House. I am afraid that the reason why this revolution has not come about is that the English have not done it. I am sick and tired of complaining here and elsewhere about how we always wait for the English to do something before we do it. Why cannot we move ahead of them for once? What is so wrong, so foolish, or so impossible, about Government and Opposition, like sensible people, coming to some arrangement in regard to the allocation of time which would avoid the disagreeable scenes we had here last Tuesday, and avoid all the hours of stupid codacting which proceeded them? The Minister had to sit and listen to deliberate, wanton rubbish coming from the far side of the House.
He was a good hand at it himself.
He is well able for you, certainly. I will admit that. I said jocosely before Christmas to Deputy Dowling that he was costing the country £1,000 a minute by continuing his speech. I intended that as a jocose observation. In fact, if you break down what this House costs in terms of hours and minutes it works out, so far as I can calculate it at something nearer £2,000 an hour than £1,000 an hour. That item alone ought to give us, on both sides, reason to try to arrange our affairs in some more civilised and reasonable way. I believe the public would thank and respect us for it and we would have no more reason then for the kind of complaint the Opposition felt obliged to voice— though not, I think, with much sincerity—here on Tuesday and at which the Leader of the Opposition had another bite here this morning. I know I am not the most peaceable Member of the House myself. I am frequently out of order and all the rest but, if the Opposition will do business with us, or with me, in regard to ordering the House's business effectively, efficiently, they will get all the scope they want. Certainly there is no intention or wish on the side of anyone in Government, or supporting the Government, to reduce freedom of speech or to closure anybody.
I feel the Parliamentary Secretary has had an opportunity of replying to the remarks.
That is true, Sir. I feel I have. Thank you for your indulgence. But I hope both Front Bench Members opposite will listen with an open mind to what I am saying and pass on those remarks.
I have listened to the Parliamentary Secretary with great interest. No people are more anxious than ourselves to carry on the business of this House in a constructive way and to get Bills through quickly. But the Parliamentary Secretary will have to realise that we lost time last night—let there be no doubt about it —through the failure of the Government in ordering business. We lost almost five hours during which time we could have been debating something. This was for the simple reason that the Government did not put down their Motions Nos. 5, 6, 7 or 8. Had the motions been agreed to or put, we would then have discussed them.
Private Members' motions.
I do not mind what motion it might have been. The point is that the time was lost. It is no laughing matter. The Parliamentary Secretary tried to be very serious when dealing with what the House is costing. But let that be in the past and let it not happen again. Let us have a full House at all times. In the last fortnight as well we had the experience of the House winding up one night, I think, at 8.30 p.m. and there was an adjournment in the middle of another day for a couple of hours through lack of business ordered.
A Deputy
Did you want the budget yesterday morning?
No, that is not the point. The Parliamentary Secretary made an explanation a while ago on different lines from what the Deputy is saying now.
I did explain to the Deputy's Leader this morning that it was at the Opposition's request that we adjourned last night. It was your side.
No, because the business was not ordered.
We were prepared to continue with the debate and I had umpteen speakers behind me.
The Chair cannot allow a discussion any further on the business. The Financial Statement, please.
Anyway, I suppose the Parliamentary Secretary is doing his best. He is probably a better educated man than a lot of us but the point is that all men are equal here. When the Parliamentary Secretary learns that, he will realise that one cannot dictate to parties in this Dáil. All men are equal and business has to be conducted on a general agreement between the parties. I shall not say any more about the matter.
We had a contribution from the Parliamentary Secretary and from the Minister for Industry and Commerce on this budget. I should like first to go back to what the Minister for Industry and Commerce said. One thing struck me very forcibly and that was that he quoted from newspapers. Fair enough, that is the general procedure in the House. But then he started to sort out the newspapers, as between hostile ones and friendly ones. That is a very bad line of discussion to take and something which should not happen. He started to quote from this paper and that paper all matters that were favourable to the Government on the budget they introduced. It is the right of the papers to praise or to criticise the budget as they think fit. They have whole-time men employed on financial matters; they have whole-time correspondents in the Dáil every day. It ill behoves any Minister to stand up and describe any paper as hostile or friendly. There is freedom of speech in the newspapers in this country. The Parliamentary Secretary said some time ago how freedom of speech should operate. I resented what he said, as I resented what the Minister for Industry and Commerce said here today.
Was he talking about the papers or the people who wrote the articles?
He mentioned the papers that were hostile and the papers that were friendly.
He was probably attacking the journalists as well.
He made, in my opinion, the nastiest remark that any Minister——
(Interruptions.)
Deputy Meaney to continue.
Deputies can go back and check what he said. But I merely want to answer what he had to say lest anybody reading the newspapers later would think it was all one way traffic. The papers praised and criticised the budget as they saw fit. He has included in the Official Report all the praise for the budget. I, on behalf of the Opposition, am going to include some of the criticism of the budget for the Official Report.
There was one in The Irish Times, on page one, where there is a heading: “Boost to Inflation rather than growth?” That is criticism. There is said, on page 16:
On the other hand the fact that Mr. Ryan has done nothing that will help lower interest rates in general or improve the position of building societies in particular will not help private housebuilders,....
That, to me, is criticism as well. On page 9 there is further discussion of the budget and, at the end of the discussion, there are tables of the various allowances for single people, married couples and so on. Two people writing in that paper actually come to the conclusion that the tax system still discriminates against marriage.
Likewise I shall quote a few from The Irish Independent. The first one appears on page one where it is referred to as “a gambler's budget”. There is mention of “Gamble No. 1” and “Gamble No. 2”. Then we shall go to the back page and see the heading: “Accountants say it's a false picture”. Lower down on that page there is a heading: “No move on rising food prices”. Also on the same page one can see the heading: “ICTU: Reserved approval” and a further one reading: “Furious farmers say: `It's unfair!' ” That is criticism of the budget. I want a balanced report in the Official Report against what the Minister for Industry and Commerce said.
As far as I could see the Minister made a personal attack on Deputy Colley because Deputy Colley seemed to drive home some very sore points to the Minister last night. When he mentioned many matters the Minister seemed to have a very thin skin. The Minister is trying to say that Fianna Fáil are against taxation of any kind. He is trying to say that Fianna Fáil want the rich to get away with everything. We do not, and we want to make that quite clear. He asked us where we stood. We all know that taxation has to be imposed. We all know that taxation, which many of us dislike, will probably fall on us. But we as a party have always said, and I hope the House will agree, that when a person or company is taxed their ability to pay should be taken into consideration. There were matters being raised here by the Government, likely to become law, and to which we objected on the grounds that there was no reference whatsoever to the ability of people to pay. One has to impose taxation but, at all times one has to consider the ability of people to pay it and what benefits may accrue to them.
This budget brought in by the Coalition Government is a very strange one, if you like, and apparently it can be considered, as one paper said, as a gambler's budget. Let there be no doubt about that. The Minister has gone for a huge deficit. He is hoping that things will sort themselves out all right by the end of the year. He is hoping that late 1974 and the first quarter of 1975 will yield excellent financial returns to him. We do not know whether or not that will happen.
Everybody was hoping that this budget would help to revitalise the economic growth of the country which has come to a complete standstill. Everybody was hoping and particularly the recipients of social welfare, that they would get allowances comparable to the rate of inflation with which they have had to cope since this Government took office and which will strike at them very hard again during the next 12 months.
This was a budget which was introduced by a Government knowing that they had not to provide subsidies for agricultural produce, no more than they had last year. Fianna Fáil believed in our entry to the EEC; so did Fine Gael, but Labour opposed it completely. There is no mention whatsoever of the sparing of those subsidies. If provision had to be made this year, out of central funds, for the subsidisation of agricultural produce, at the present time it would take at least £40 million or £50 million, or perhaps, £70 million. When we entered the EEC, not alone was there money coming in from the EEC fund itself, even though we had to pay money into that fund, but also there was this money on hand. There is no good anybody trying to say that this money disappeared because that is not the way it works. This money was on hand. That is why the Government should have been able to give more to the recipients of social welfare. This budget was part also of the national wage agreement. This did not happen in the past. The workers rejected the first proposal for a national wage agreement—this was their democratic right—but they accepted the second proposal. However it was in their minds that there would be liberal increases in the personal income tax allowances. That did not happen, as I shall show when I am dealing with the various matters in the budget.
The workers have been let down. The fact that the budget was part of the national wage agreement made it a rather peculiar budget. The increases in the tax allowances were forced on the Government because the workers made it plain that they would not accept a package deal. Fianna Fáil believe we should have wage agreements, that there should be orderly wage development. At the conclusion of the last wage agreement the workers were looking forward to getting fairly large tax-free allowances; in fact, many people wanted a reform of the income tax system. We have had a partial reform but it has completely militated against the man in the lower income bracket.
The budget was introduced in a situation where our trading deficit is much larger than 12 months ago. In addition, the national loan was not fully subscribed. This money will not be obtained easily because the world monetary market is unsettled. The Minister is taking a very big risk in budgeting for such a large deficit. Where will he get the money? He has told us he is depending on several factors but it is doubtful that he will succeed. However only time will tell. But as the growth rate will be reduced considerably it is difficult to see how he can obtain the money in the country. The question arises whether it is a budget for the local elections. Is it trying to put across to people in big black print that they are getting everything but will have to pay nothing? It is all right to read the big headings but when they read the small print they will see they are not much better off and that in a short time inflation will swallow up any benefits given in the budget.
The Minister for Finance is beginning to learn a little. The Parliamentary Secretary to the Taoiseach said a short time ago that they would not backtrack in any way. I would dispute that statement. Since the last budget we have put forward our views on many matters to the Minister for Finance. He has now abolished the famous clawback of the children's allowances and we welcome the change. He should never have introduced such a proposal. He has realised his mistake, although he would not admit it during the year.
In the last budget the Minister tried to punish the small investors. He wanted to include for income tax purposes any money made from lodgments in savings banks. The provision regarding the first £70 being free of income tax was to be abolished in the last budget but public opinion was so strongly against it the Minister was forced to change his mind within two or three months. We pointed out this fact to the Minister but he would not listen to what we said. We shall be bringing many matters to his attention and we hope he will listen to them. It is in the interest of the country that we have a properly balanced budget, that the growth of the economy is continued and that we have more employment. It is our job as an Opposition to criticise where we think it necessary. It is important that the right thing be done and be seen to be done.
The Parliamentary Secretary to the Taoiseach referred to the White Paper on capital gains and wealth taxes. Whether he likes it or not, the fact is that money has flowed from the country at an unprecedented rate. We do not want to see this happen. We need our money here, not to have it reinvested abroad. This has happened and nothing the Minister says will convince people otherwise.
The document issued should not have been called a White Paper; it would be better described as a discussion paper. A White Paper means something very definite, where one is on the verge of introducing legislation. The White Paper was issued as a result of the establishment of a Government subcommittee. It was a foolish move to label the document a White Paper; the proposals should have been regarded as the work of a discussion group. No matter what is said, millions of pounds have gone from this country and they are not likely to return in the near future.
Our balance of payments situation is causing concern and it is deteriorating each year. The Minister for Industry and Commerce will make everybody here fed up if he starts groaning again about the energy crisis and the Arabs. Everything is blamed on them. We realise there are problems in this area but the energy crisis cannot be blamed for everything. There is much more involved. We must put our own house in order and it is the duty of the Government to take the necessary steps even though they may be unpopular.
It is difficult to do that after 16 years of Fianna Fáil.
After 16 years of Fianna Fáil the Government were left with a buoyant economy. The country had a great economic growth but in the last six months it has been at nil. There will be a very small growth in the coming 12 months. I do not say that with any sense of satisfaction.
The Deputy should read the figures.
I have read them often enough. What I have stated is the opinion of many economists in the country. The Government are willing to let the situation roll on, hoping it will rectify itself. They hope nothing will happen before the local elections in June. They do not care what happens as long as they get as many members as possible elected next June. That is bad government. It may be good politically for their parties but it will cost the country dearly and we will lose much of our credibility abroad.
Since the last budget the national loan was launched but it was not completely filled. In the past we have regarded the national loan as a gauge of what the people think of the Government of the day. The last loan was a dismal failure, less than one-third of the money Fianna Fáil could have got was invested by the public. This showed a lack of confidence by the people, most of whom were small investors. The result was that there was a shortfall of money. Is the Minister going to float a national loan this year and, if so, on what terms? On the last occasion the Minister extended the closing date for subscriptions. He said this was because of disruption on the world monetary market. That was fair enough but he tried to give better terms. It is the duty of the Government to see that they get sufficient money but they did not persuade the Irish people to subscribe to the loan. There was a great difference when Fianna Fáil were in office. At all times and in all circumstances the national loan was oversubscribed. Probably the Minister does not want to hear about this. It is something that he omitted, as far as I can see, in his budget speech.
Debate adjourned.