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Dáil Éireann debate -
Wednesday, 1 May 1974

Vol. 272 No. 4

Financial Statement, 1974: Motion (Resumed).

Debate resumed on the following motion:
That Dáil Éireann takes note of the Financial Statement made by the Minister for Finance on 3rd April, 1974.
—(Minister for Finance.)

When speaking last night, I referred to the capital budget as opposed to the current budget, the capital budget being at least as important but not one which gets any great attention as a rule. It contains considerable economic significance within itself. The most significant fact in relation to the budget estimate for 1973-74 was that the balance of the capital budget would be financed by what are described as residual borrowings of £37.7 million, but the provisional out-turn for 1973-74 so far as residual borrowings were concerned came to £99.8 million, which was approaching three times as much as had been estimated.

There is no particular area in which any Government can borrow that is more dangerous or damaging to the national economy in the long run than this residual borrowing which for the most part is either foreign borrowing or is brought about by the inflationary use of moneys which were designed to be held by the Central Bank or by Departmental funds. We have the rather frightening situation that as well as borrowing £44 million odd abroad—all of which has to be repaid over various periods and for the most part out of current taxation —we have the situation whereby the Central Bank contributed £20 million towards the capital budget in an effort to balance it for the purchase of Government stocks. We are not sure, because we are not told, where this £20 million came from but it is a fair guess, as has been suggested by Deputy Colley—and he has not been contradicted by anybody—that that money came from deposits held by the Central Bank from the commercial banks, deposits that were taken out of circulation deliberately by the Central Bank in an effort to deflate certain aspects of the economy here which they considered, and rightly so, needed deflating. Therefore, to use £20 million of that money for something that is inflationary is, I suggest, doubly inflationary because it was taken out originally to prevent inflation and is being used in the opposite way to what was the original intention of the Central Bank.

In addition to that, we have something that has never happened before on anything like the scale we are now witnessing. I refer to a balance of £35.6 million to make up the residual borrowing which was got by what to some people is little more than a bookkeeping exercise but, nonetheless, one which is both inflationary and dangerous for other reasons, that was, the reduction in liquidity of departmental funds to the extent of £35.6 million. These funds which, among other things, go towards social welfare, are normally well in credit. It is necessary that this is the situation so that beneficiaries and potential beneficiaries can benefit from the funds. They are funds that usually are invested from a fairly longterm point of view. We find that these funds have been used to pay for the capital budget at a time when it was totally inappropriate to use them in that fashion. The proof that this was inappropriate is contained in page 7 of the publication, Capital Budget 1974. I quote from paragraph 13:

The amount provided by the Exchequer from its normal resources was £149.6 million, some £40 million less than expected... Receipts from sales of securities to the non-bank public, at £35 million, were below expectations, largely because the unsettled state of capital markets prompted many potential investors to remain liquid. Receipts from small savings were also below the budget estimate even though improvements were made in the terms of Savings Certificates, Investment Bonds, National Instalment-Saving Scheme and the interest paid by the Savings Banks.

That paragraph is very significant because it tells us that one of the reasons for the fall in receipts by the Exchequer through its normal resources for financing the capital budget was the fact that the unsettled state of capital markets prompted many potential investors to remain liquid. At the same time £35.6 million was taken out of the balances in departmental funds. Table 1 in this capital budget summary contains many interesting figures. One of these is that in the normal Exchequer resources the estimate of sales of securities to the public for 1973-74 was £55 million whereas the actual receipts were £35 million.

We are living in a time of rampant inflation and one might say that, as a matter of course, any estimate made on a particular date nowadays will, as a general rule, be considerably higher 12 months later because by then money will have inflated at the rate of 10, 11 or 12 per cent. The rate of inflation during the 12 months between the preparation of the budget estimates for 1973-74 and the end of that financial year was 10½ per cent but, notwithstanding that fierce inflation, the total amount obtained from the public by way of sales of securities was £20 million less than estimated. The banks, also, took in £10 million less than was estimated and small savings, which form an important part of the Exchequer's normal resources for the capital budget, dropped disastrously by £10 million to £18 million despite, as the publication points out, improvements in the terms of saving certificates, investment bonds, the national instalment-saving scheme and interest paid by the savings banks, including the Post Office savings bank. Therefore, during the past 12 months we have had an extraordinary situation whereby, although inflation was higher than ever before in the history of this State, less money was available to the normal resources and more money had to be borrowed from abroad at increasingly higher interest rates. When this money is being paid abroad to those from whom it was borrowed, it is paid free of tax and the interest paid abroad is in many ways at least one-third higher than it appears to be by virtue of the fact that the tax is not being recovered on it as would be the case if it were being repaid to residents of this country.

The capital budget is very significant as an indication of the general economic well-being or otherwise of the country in any given year. The figures published in this summary and the reason given for the decrease in the figures indicate clearly that a serious situation exists. If we must resort continually to foreign borrowing on a scale comparable with last year's, the national debt will increase at a colossal rate and we will be faced with a situation in which the cost of servicing that loan means that tens of millions of pounds more each year must be obtained from the ordinary taxpayer.

When discussing matters arising from the capital budget it is no harm to refer to the unemployment figures which were issued within the past two or three days. These figures related to the second week in April of this year and they show, rather significantly, an increase of 600 unemployed on the previous week's figure and indicate that the total number of unemployed was 261 fewer than for the corresponding week last year.

This is in spite of the fact that a lot of people who would have been classified as unemployed last year are no longer so classified because they are in receipt of old age or retirement pensions to which they would not have been entitled at the same age last year. Therefore, the figures are not strictly comparable because several thousand people would have come off the unemployment register in any event. Notwithstanding the fact that they did, we discover that the number returned as unemployed is only 261 less than last year. I suggest, therefore, that on the basis of a true comparison the number of unemployed has actually risen in the last 12 months. If you combine that situatiton with the fact that we are in an inflationary period and that our domestic Exchequer resources for capital formation are in serious difficulties, it seems very doubtful, unfortunately, that the underlying basis of our economy at the moment from this point of view is a sound one.

The matter which dominates all economic problems and thinking here is, of course, inflation. This above all else affects everybody whether he is poor or rich. Of course, it affects the poor to a greater extent than it does the well-off. It is the greatest single problem which needs to be tackled and overcome. The manner in which the economy has been run in the past 12 months leads us to believe that this Government have a vested interest in the continuation of inflation. I should like to give an example. At column 30, Volume 272, of the Official Report, Deputy Brennan asked the Minister for Finance the estimated increase in revenue in the current financial year from the latest price increases in (a) beer and spirits and (b) petrol and fuel products generally. The Minister replied:

The estimated increases in revenue in respect of the items mentioned in the Deputy's question are £400,000 and £450,000, respectively, for the current financial period April to December, 1974. These figures do not take into account the possibility of a consequential diversion of expenditure from other consumer items, which if it took place would tend to keep the overall yield from VAT at the figure forecast for budgetary purposes.

These increases were not increases in excise duty but simply price increases. As a result of the increases of 1p on the pint, 1p on spirits and ½p on petrol, the Exchequer got, according to the Minister for Finance last week, £850,000 extra, practically £1 million.

The March report of the Prices Commission came out ten days ago. It contained 121 price increases over a huge variety of products and items. Generally speaking, the increases were considerably greater, in percentages and money terms, than those I have mentioned. I should like to know, and I have put down a Parliamentary Question to this effect, what will be the increase to the Exchequer from VAT as a result of the 121 price increases. That covers only one month. Each month for the last year has not been substantially different from last month. My point is that every time there is an increase in price, the Exchequer benefits enormously. More and more tax is collected. That in itself helps to put up prices and retain the inflationary situation which is liable to strangle us all if a stop is not put to it soon. More and more money is pouring into the Exchequer as a result of these constant price increases, not just every month as they used to, but almost every week now. We have a situation in which the Government would not be able to continue in power if these tremendous price increases, which are the consequences of inflation, were not constantly taking place.

That is why I feel I am justified in saying that this Government have a vested interest in inflation. Inflation enables the Government to get along from month to month and from the beginning of the financial year to the end, limping along and keeping their heads above water, because these vast extra sums are coming into the Exchequer which would not be coming in if prices did not rise.

I look forward with interest to discovering next week, if I can, what the additional revenue to the Exchequer from VAT will be on the 121 items which were increased in price this month. This is an appropriate time to discover whether there are any items of any description which have not increased in price since February, 1973. That question was asked six months ago. At that time there were about ten items which had not increased in price, some of them a little unusual and not used very frequently. They included exotic things such as neck mutton. I could never discover, unfortunately, just how many commodities there are on the consumer price index. Presumably it could run into several thousand commodities if some of the single items we speak about are regarded as separate items for that purpose. It is very interesting to compare the grandiose promises which were made in February, 1973, with the situation which exists at present. I want to refer now to some of the Minister for Finance's proposals which he mentioned in his budget statement, particularly in relation to taxation on farmers. As we are aware it is proposed at first—I emphasise the words "at first" because these were the words used by the Minister in his speech—to impose income taxation on farmers with a valuation of——

They are also the words used by Deputy Lynch.

——£100 or more. One thing which is more important than that and likely to have long term social and economic significance, is the Minister's proposal, which has got little or no publicity up to now, to disallow half of the personal allowances of a taxpayer in respect of his non-farming income if he owns a small farm and would not, of course, be liable for income tax on that farm.

The budget does not spell out how large or how small a holding has to be. We can only presume that it applies to the average man in the situation envisaged by the Minister in his speech, a small farmer whose farm is too small to enable him to support himself and his family without taking up outside employment. It is no harm to point out that there are a great many such farmers in this country. One estimate I have been given is that there are at least 60,000 farmers in that situation, that their farms are too small to be economically viable from the point of view of supporting themselves, their wives and children and they have to go out to work in a factory or some other place. They have always, and this was only fair, been allowed their full allowances against their non-farming income. In other words, they were in exactly the same position as a person who had no small farm or piece of land at all. Therefore, they paid the same income tax as the man who did not have any land and they were treated in exactly the same way as he was.

It was stated in the budget, although those people were not informed of this fact to any great extent by the propaganda service of the Government which put across the good parts of the budget very eloquently indeed, that they are facing a situation in which half of their allowances for income tax will be disallowed on their non-farming income. If a man is at the moment paying £3 in income tax on a weekly wage of £30 he, if he owns some land, will lose half his allowances and will pay approximately £6 per week in income tax for this current year on the same salary but the man working beside him in the factory or shop who does not have any land has, of course, his full allowances allowed to him against his employment and will pay the same or slightly less tax in most cases than he did last year.

I do not think this situation is realised yet by the 60,000 or more small farmers who are forced by economic circumstances to seek employment outside their farms. I think there was general agreement in this House and outside it with proposals some years ago of the then Minister for Lands, Deputy Seán Flanagan, regarding the desirability of encouraging part-time employment for farmers to enable and to encourage them to stay on the land. Great efforts have been made over the past ten years to encourage industry in places like the west, south west and north west of Ireland in particular, where there are a great many farmers of this kind, to provide off farm employment for them. If they are now to be treated as is apparent from the budget speech, in a way which is totally unfair to them, if they are going to pay approximately twice as much income tax as the man who has no land, I cannot see many of them wishing to remain in their off farm employment. I can see many of those jobs being given up because of the crippling blow which this double income tax will be on them.

The tragedy of it all is that when those jobs have to be given up those men cannot just go back to the farms because the farms are unable to support them. The reason why they took up this off farm employment in the first instance was that the farms could not support them. Therefore, it is out of the question to go back there and expect to support oneself and ones family out of a farm one already had to leave. The only alternative is to go elsewhere and, unfortunately, elsewhere, in the context of the west of Ireland, means Britain. We may well be back if this proposal goes through to a situation that we felt we had seen the end of in the last few years. We had net immigration into this country in the last few years instead of net emigration, a thing I am sure many of us thought we would never see. A trend which had started as far back as the 1840s stopped and, in fact, was reversed in the years 1971 and 1972. There were more people coming back into the country than were leaving it.

There is a provision also, of course, that where a farmer's wife is employed in non-farming employment she would get only half the allowance. I must say I concur with that proposal. I think it is only fair that that should be so in relation to a wife because there was a considerable inequity in the situation that existed up to now where in many cases farmers wives who were quite well paid as teachers or as nurses or anything else, often perhaps with salaries of up to £2,000 a year or so, were free or almost free of income tax when other women, whose husbands were not farmers, were taxed very heavily, indeed, because all the family allowances, as between the two of them were usually used up on the husband's income. I have no objection whatever to halving the allowance in respect of the farmer's wife in these circumstances but I have the most serious objection to the halving of the allowance of a small farmer because it is going to drive these men out of the employment they got, not just back to the farm because there is no future there without off farm employment, but into the emigrant ship.

However, it would not at all surprise me if this proposal in relation to the income taxation of farmers did not go through because we had a not dissimilar situation in last year's budget where the Minister for Finance blithely announced that he proposed to abolish the £70 interest that was allowed free of tax on deposits with the commercial banks and the savings in post office banks. A number of us, including myself, pointed out that this was lunacy, that it had already resulted in the movement of a certain amount of capital out of this country since the announcement was made. When the Minister replied to us he pooh-poohed the whole thing and told us we were wrong and stupid and ignorant but a couple of weeks later when the Finance Bill appeared there was no provision in it removing the £70 exemption because good sense had at long last prevailed with the Minister for Finance and he had accepted what was told to him from this side of the House not when we were telling him but when other people told him, presumably officials of his own Department and persons connected with the banks, who confirmed to him that what we were saying about an outflow of capital was correct. Lo and behold, without any apology this provision did not appear in the Finance Bill.

I am making the forecast now that, because of certain things that appear to me to have been said by the Minister for Finance in his budget speech this year off the top of his head without considering the consequences of them, some of those provisions will not appear in the Finance Bill either. I certainly hope for the good of this country, and particularly for the good of the less well-off people in the poorer areas with small quantities of bad land, that this infamous proposal to have the personal income tax allowance of a small farmer in respect of his non-farming income taken into account will not appear in the Finance Bill this year.

That is only the Deputy's imagination.

Would the Parliamentary Secretary like me to read out what the Minister said?

I did not mark the part of the budget speech which contained the statement I am talking about because I did not anticipate it would be challenged that such things were said. I will get it for the Parliamentary Secretary if he bears with me and I will read out the precise words of the Minister for Finance from his budget speech. I am quoting from Volume 271, column 1454, of the Official Report. I will read out the entire paragraph so that there will be no question of my misquoting the Minister. He stated:

Finally, I should refer to one of the incidental—and unjustifiable effects of the exemption of farmer's profits which has attracted adverse criticism from many quarters. It arises from the fact that, because farming profits are exempt, a married farmer, for example, may set the full personal allowances appropriate to a non-farming married couple, both of whom are at work, against any income his wife earns. Thus, not only is the farmer himself free of income tax but in such situations his wife may pay little if any tax on her earnings. The same issue arises where the farmer, whether married or single, has non-farming income of his own. To deal with such cases, it is proposed that, in the case of farmers not now being brought within the scope of income taxation, only one-half of the appropriate personal allowances will be set off against non-farming income, whether of the farmer or of his wife. This restriction will apply as from 6th April, 1974.

The word "small" is not there. Deputy O'Malley has used the adjective "small". Is there any reference in what the Deputy has read out to "small farmer"?

The reference is to farmers whom it is not proposed to bring within the income taxation net, in other words, all farmers with a poor law valuation of less than £100.

The Deputy should wait and see the Finance Bill. There is no mention of the term "small farmer" in what the Deputy read out.

That is precisely the point I made, that we should wait and see the Finance Bill. I made a forecast that we would not see this provision in it. The Parliamentary Secretary has walked into it good and proper. There is no bottom limit on the farmers to whom this applies. It can apply to a man with a valuation as low as £1 or a man with a valuation as high as £99. Does the Parliamentary Secretary now say that the Minister for Finance never said what I read out to him?

He never used the term "small farmer".

No, he did not. In fact he included medium and fairly big farmers, those with valuations of £99.

I think we will be waiting for a lot of things.

The Deputy has a difficult task despite his professional qualifications.

The Parliamentary Secretary has a difficult task to get out of that one. If he did not interrupt me he would not get into the kind of trouble he is in now.

I am not in trouble. The Deputy is talking about small farmers but the term was never used.

That is one of the things I believe we will not see in the Finance Bill. I am glad to see that Deputy Murphy agrees with me that it will not be in the Finance Bill, although he now has to agree with me it was in the budget speech, which is a pity. I am sure there are a lot of farmers with £5 or £10 valuation in South-West Cork doing the best they can and lucky enough to have jobs in some of the many factories we built down there over the last ten years.

This budget will help them.

Wait until one of them, a man with £5 valuation, gets his first pay packet after the Finance Act is passed and discovers that whereas he was paying £3 tax he will now pay £6 while the man working beside him at the same bench in the factory who has not a small farm with £5 valuation is paying the same as he paid last year. There is only £3 taken from him.

What would the Deputy wager on that, that the small farmer with £5 valuation will pay twice as much in tax as the person with no valuation?

It is down in black and white in the budget speech.

Mr. Mr. P. Murphy

The Deputy is becoming very interested in the small farmers now.

Deputy O'Malley, please, without interruption.

The changes of mind on the part of the Minister for Finance almost amount to a saga in themselves. I recall last year on the Finance Bill that Deputy Tunney and I pointed out what we regarded as the gross inequity of what was described then as the "claw-back". We heard about that in 1973 but we are not hearing anything about it this year. The claw-back was a kind of disguised inequity of increasing the income tax of certain people so far as children's allowances were concerned or, to put it the other way, of on paper giving them increases in children's allowances but taking the whole lot back by increasing their income tax. I do not know who thought of the name "claw-back" first but it had a lot of notoriety last year.

Deputy Tunney and myself, among others, remonstrated with the Minister for Finance about the inequity of it, the fact that it was done in a concealed and surreptitious fashion and that it could possibly be as long as six months or more before a lot of people who were affected by it realised the way they were being treated. The Minister was quite scathing in his reply to Deputy Tunney and myself. He told us that the claw-back was entirely justifiable, that he was not going to change it in spite of the suggestions made by us and that he was never going to change it. Deputy Tunney quoted what he said in volume 272, column 223. The Minister last year said:

Does he not know that the whole science of competent, progressive Government is to transfer the burden from those who canot afford to bear it to those who can? That is what we have done and we make no apology for it. We will do it again next year and we will get the support of the people.

What did he do this year? Very quietly and I would say almost surreptitiously, without ever referring to the words that were so beloved by him last year, he did away with the claw-back. He said he was saving £2 million last year by having the claw-back, that it was taken from the rich to give to the poor, that it was inequitable to a large variety of people and the number of children a man had was not taken into account at all. There was a saving of £2 million which could be given out as a result and anyone who suggested there was anything wrong with the clawback was only interested in the rich and all the rest of it.

This year in the budget the claw-back is gone and we have an increase of 30p per month, or 7p per week, in children's allowances given to everybody. All the elaborate paraphernalia introduced in the claw-back last year on different income tax allowances for different children, depending on the income of the father, is all gone and there is a flash allowance this year of £200 and everyone gets the £200 for every qualified child irrespective of income and irrespective of the age of the child.

The net result of this had been, and this has not been commented on at all, that while the less well off, those under £2,500 per annum, get this wonderful increase of 7 pence per week—one of our Deputies described it yesterday as just about enough nowadays to buy a bag of crisps and an ice pop—those over £2,500 per annum have this year got an increase of £1.80p per month because they get last year's £1.50p, which they did not get last year because of the claw-back, which has now gone and they get the 30p as well. They are doing very well. I do not grudge it to them. I do not say it is a wrong thing to do. All I do is comment very wryly indeed, on the fact that the Minister for Finance saw fit to jeer and sneer at Deputy Tunney and others on this side of the House when they suggested the arrangement was inequitable. They were told it was not inequitable and the Government would do it again this year and continue to do it. It is interesting to note now what they have, in fact, done.

This is another one of the changes of mind the Minister for Finance has had. He has these when he calms down now and again, when he has one of his more lucid intervals which, fortunately, he does have from time to time. It will be interesting to see whether the provision which Deputy Murphy, the Parliamentary Secretary to the Minister for Agriculture and Fisheries, did not seem to know about until I told him about it this evening—something he will no doubt get on his bicycle about and endeavour to keep out of the Finance Bill—will appear in the Finance Bill because, as the Parliamentary Secretary now seems to think, I do not think it will appear.

On the question of income tax generally, and the way in which it has been dealt with this year, a great many people have been misled by a comparison of the personal allowances as they were and the personal allowances now proposed in this budget. The figures quoted were correct. There was this considerable increase in personal allowances but what was never got across to the public was the fact that earned income relief, one of the most valuable reliefs for the ordinary working man, has, in fact, been abolished. The public were not told that at all. The net result is that, when you take into account the fact that this has been abolished, the saving in income tax for the average man is very slight indeed. It is as little as £30 in the year for the average wage earner, about 60p per week or thereabouts.

A number of things come to light as one examines the budget, things one could not clearly see because of their being hidden in the budget. There are some interesting facts. As a result of the abolition of earned income relief and the proposal for a lower first rate of income tax, and the abolition of the standard rate as such, and the lowering of the first rate for the first £1,550 of taxable income from 35p in the £ to 26 point something pence in the £, you have the situation that those who are getting relief at the moment on things like life assurance premiums, mortgage interest repayments, voluntary health insurance premiums and bank interest generally will now be faced with a situation in which, having saved 35p in the £ in taxation last year, they will save only 26 point something pence in the £ this year if they are within that particular income bracket; in other words, to that extent they are worse off.

They are the people paying the lowest rate of tax but, as a result of the abolition of surtax and the introduction of one single system, which is something I agree with in principle, those who are at the highest level of taxation, which in this budget is 80 pence in the £, will find themselves in the situation in which on things like life insurance premiums they will get relief from the Revenue to the extent of 80 pence in every £ they spend. The obvious thing for them to do is to borrow as much as they can up to the new limit of £2,000 interest, take out as much life insurance as they can up to the limit of one-sixth of their income, owe as much on their houses as they can and have as high health insurance as they can because they will get value for these. In effect, they will only pay 20 pence in the £ even though they are actually shelling out 100 pence in each £ because the other 80 pence would go to the Revenue Commissioners anyway and it is just as well to get value for it and let them have some return. More power to them if they do this and this is what they will do.

What I object to is the giving of this rate incentive to those at the top level of incomes, those paying at the highest rates on the highest incomes. The contrary is the case with those paying at the lowest rate because, instead of saving at the standard rate of 35 per cent, as they did last year, they are now getting relief at the new low rate of 26 point something per cent, which is the rate applicable to the first £1,550 of taxable income.

Were these consequences, I wonder, foreseen by the Minister when he introduced his budget? Now that they have been seen, are we going to see anomalies and inequities of this kind introduced in the Finance Bill? I sincerely hope we will not. I think we will have a repeat of last year. Lots of things in the budget will not appear in the Finance Bill; it will not be just the one or two things that we had last year.

Another consequence of the abolition of earned income relief is that the man who lives on investments becomes better off vis-à-vis the man who works for his living.

Who is the man who lives on investments? Is it the man who took the advice of the Government now in Opposition down through the years and invested his money in national loans? We know how the capital value of those have declined.

In the last 12 months very few of those who live on investments have all their investments, or even a high proportion of them, in anything like national loans. So far as the national loan is concerned, since the Parliamentary Secretary brought it up, it is no harm to give the House a few figures in regard to the 1973 National Loan. This was the loan originally advertised as an 11 per cent loan at 94. It opened for subscription on a Monday morning. On Tuesday morning there were frantic telephone calls to the Department of Finance to say nothing had come in on Monday. As a result of frantic consultations and decisions in the Department on the Tuesday, it was announced that as and from Wednesday the 11 per cent loan would be on issue at £92 instead of £94. It went on sale at £92 and they got from the public, notwithstanding the extraordinarily attractive terms, less than half the amount obtained in the national loan in the previous year.

Those unfortunate people who were foolish enough to buy the 11 per cent national loan at £92 last autumn— only nine months ago—now find that the loan for which they paid £92 is today being dealt in on the Dublin Stock Exchange at £76.

And the Deputy disagrees with the tax concession they got.

The Parliamentary Secretary should write it down and give it to the Minister. He can see what he will make of it.

The Deputy has a very difficult brief.

The Parliamentary Secretary should not interrupt. It was better when he was reading his book. There has been a loss of £16 on £92 in less than nine months. According to my calculations, that would be about a 17 per cent capital loss in less than nine months. That is the achievement of the National Coalition Government in trying to raise money from the people. Those who were unfortunate enough to lose 17 per cent of their capital because they invested in the last national loan might well be given a chance in the budget—they deserved a break.

One of the other interesting aspects of the budgetary and taxation policy of the Government is the fact that not alone does the Minister for Finance frequently change his mind but he never seems to be of the same mind as other members of the Cabinet and of his own party. There have been numerous examples of this in recent weeks. In this connection I shall quote a short item in today's Irish Independent. It was in a corner on an inside page and readers of the paper might well have missed it. If so, they would have missed a gem. Under the heading “Capital Taxation” there was the following item:

The Government's White Paper on capital taxation was considered at a special meeting of the Cork Branch of the I.F.A. A number of Dáil Deputies were in attendance and one Fine Gael T.D. was quoted as saying that he saw no place for himself in the party if the legislation concerning wealth tax went through. He described it as doctrinaire socialism and he might have no option but to vote against it in the final analysis.

Will there be a free vote on it?

I notice the Parliamentary Secretary is smiling.

I do not think it was Deputy John L. O'Sullivan. My Cork friends tell me——

The Minister for Defence has one recruit.

That was an interesting item and it would be dreadful to have missed it.

If it was a truthful item it might be of some interest.

I cut it out of the paper myself. Is the Parliamentary Secretary suggesting the Irish Independent printed an untruthful statement?

I am suggesting it is not a truthful account.

That is one of the first reports of the private or semiprivate meetings that have been going on throughout the country in the last month. My information is that similar sentiments were expressed by other Deputies of the same party at meetings in various parts of the country. To the best of my knowledge they were not reported in the papers and I cannot quote them. However, I have no reason to believe that what I heard about the other meetings is less inaccurate than what happened in relation to the meeting of the Cork branch of the IFA. Happily, or unhappily as the case may be for the Parliamentary Secretary, my information is that the Deputy who made that statement was not his distinguished colleague in south-west Cork, Deputy O'Sullivan. I do not know if the Parliamentary Secretary would prefer if it was Deputy O'Sullivan but that appears to be the situation.

While that is very interesting and topical, we have a statement from an even more distinguished member of Fine Gael than the Fine Gael TD who made the comment I referred to. I am speaking about the Minister for Defence, the man who personally directs the security of the country and is on hand at all times to see that things are as they should be. He made a speech on this motion and there are a few short quotations to which I should like to refer as I wish to comment on them generally. What the Minister for Defence said was not a slip of the tongue in the course of a long speech. The sentiment was repeated approximately seven times throughout the speech. At column 195 of the Official Report dated 25th April he said:

The Minister for Finance has indicated the position. His speech was considered by the Government and it is the policy of the Government. I shall not take interruptions from people who do not seem to know very much about economics.

Later in the same column the Minister stated:

The Deputies opposite, in a mischievous way, are trying to mislead the people about a fair and open proposal from the Civil Service regarding a substitute for death duties.

At column 197 he stated:

Any proposals in the White Paper are wide open for change.

Later in the column he said:

I am not defending one line of the White Paper. It is not mine, neither is it the Cabinet's.

At this point he waved but that does not appear in the Official Report. He continued:

The proposals in the White Paper were produced by civil servants to replace death duties. There are more ways of killing the cat than by choking it with butter. There are enough brains in the Cabinet to find the right way to handle the matter. Fianna Fáil and Deputy Haughey in particular, in a despicable political act, want to pin the White Paper on us but it is not ours. If Fianna Fáil wish, they can make representations and they will be seriously considered after 30th June. If a 100-page representation comes in after 30th June that will be carefully considered before anything is done with regard to the White Paper. In the meantime, if representations prove there is a glaring omission or mistake in the White Paper, it is open to the Government to decide tomorrow to change it. It is political trickery for anyone to try to pin the White Paper on the Government and it will not be tolerated.

At column 198 the Minister for Defence said:

If they hear anyone in a pub saying the White Paper is ours, let them check if he is in a Fianna Fáil cumann before they make their decision.

When he was concluding he said at column 199:

Let nobody think that matters that are not of the Government's making can be pinned on the Government.

We have a situation that a White Paper issued by the Government is disowned by a member of the Government in the most public place in the country, in this House, someone we are told by the papers from time to time who is a senior and respected member of the Cabinet, a confidante, we do believe, of the Taoiseach, who advises him apparently on what he might or might not do in certain situations.

One of the few on December 10th, 1972.

That was it.

Do you remember?

I remember.

Deputy Gibbons has a great memory for dates.

The night of the bombs when your party were ready to forsake your leader and were going to run out on him.

You have a great memory for dates.

It was a memorable night.

We had this senior member of the Cabinet coming into this House to disown the White Paper, and I have read the seven places where he disowned it. Not alone does he disown it as his or his Government's and say they had nothing to do with it, but obviously by the tone of his speech right through he thoroughly disapproves of the White Paper and says: "It was got up by the civil servants and they are to blame."

Because of the local elections.

I wonder would it be out of order if I were to make the suggestion here that this public washing of his hands by the Minister for Defence is reminiscent of an historic figure called Pontius Pilate? I am happy to find that it is not out of order to make that suggestion because I think it is an apt one and a fair one. I particularly abhor the fact that, when the Minister for Defence comes to dislike this White Paper so intensely, this White Paper which he and his colleagues got out and approved of, he should seek to throw the blame for it on to civil servants. That is precisely what the Minister for Justice was doing the day Deputy Molloy so properly took him to task for trying to wash his hands of his responsibility in relation to the escapes from Mountjoy prison.

I thought there was only one Pontius Pilate.

Is it in order for a Deputy to suggest that a Deputy of this House bears a resemblance to Pontius Pilate. Deputy O'Malley should be asked to withdraw that remark.

I understand that the Ceann Comhairle has ruled that this is out of order.

I made a comparison. I did not describe the Minister for Defence as Pontius Pilate.

You endeavoured to make a suggestion that he resembled him. I think he should be asked to withdraw the remark. A Deputy on the Opposition benches was suspended from the House for a number of days for making a very similar remark and Deputy O'Malley is in flagrant violation of the rules of the House in endeavouring to carry on the same kind of conduct which was grossly disorderly in Deputy Molloy.

Your party spent two years trying to brand me in this House.

Acting Chairman

The Chair ruled the phrase out of order. It should not be used.

Your party spent two years trying to brand me.

This is a direct insult to the Minister for Defence. I believe Deputy O'Malley should be asked to withdraw it formally.

We have these expressions of opinion——

Deputy O'Malley should withdraw that remark.

——or view by the Minister for Defence and by this unnamed Fine Gael TD on the White Paper.

You have not withdrawn the remark.

Some weeks ago the Government's resolve began to weaken in relation to the White Paper when they got what is called the feedback which was 100 per cent hostile, from every section of the community. The first sign we saw of the white flag very tentatively beginning to go up was when the Parliamentary Secretary to the Taoiseach made a speech one night saying that these were proposals in general terms and that, of course, the details of them could be looked at again, or thought about again, and the Government were not totally committed to them all.

As I recall it, he made that speech on a Friday night. He was followed on the following night, the Saturday night, by the Minister for Labour who dealt with exactly the same question but took a totally and radically different view from that of the Parliamentary Secretary. He told his listeners at some Labour Party meeting in Dublin that night that this was a White Paper and, because it was a White Paper, the Government were totally committed to the principles in it, and that the principles in it would not and could not be changed because it was a Government decision to adopt the White Paper and that, while some minor details could be changed in the legislation as it was going through the House without infringing the principles and that might well be done, no principle involved in that White Paper could or would be changed.

That was in direct contradiction to what the Parliamentary Secretary had said the night before. The reason the Minister for Labour felt compelled to come out so quickly to make this speech was that he was afraid of his life that Fine Gael, who realised they had made a grievous error, would try to backtrack out of it and he wanted to block them. He made what was in my view a factual and correct statement of the situation in relation to the publication of the White Paper by the Government.

A White Paper is not a discussion document. It is not for discussion so far as the principles in it are concerned. They are Government policy and the Government in publishing it commit themselves finally and irrevocably to those principles. They may not commit themselves to all the details but they irrevocably commit themselves to the principles. If they wanted to issue a discussion document, where there was no commitment on their part or anyone else's part to what was contained in the document but they simply wanted to give an indication of their thinking without committing themselves to enacting those principles afterwards, they could have issued what is called a Green Paper. We were supposed to get one on education some months ago but it has not come yet.

That is being withdrawn. We are getting a White Paper now.

In any event, there is a recognised traditional parliamentary procedure for getting the views of people on a discussion document and that is to issue a Green Paper and make it perfectly clear that it is only a discussion document and that there is no commitment to the principles enunciated in it. The Government could have done that but they chose not to. They chose to bring out a White Paper in which they committed themselves irrevocably to the principles enunciated. The Minister for Labour was perfectly correct in the speech he made stating these matters. Notwithstanding the fact that he was perfectly correct, all the rumours have it now that there will be a radical change in the principles enunciated in the White Paper and that, whatever about capital gains tax and whatever about gift and inheriance tax, we will not see wealth tax.

I will be very happy not to see wealth tax because wealth tax has been recognised by us in this party, and recognised by pretty well everyone throughout the country who has not got a kind of doctrinaire socialist attitude to economic matters, as totally unsuited—certainly in the form in which it is proposed in this White Paper—to the situation which exists in this country, a country that is still developing, that is undercapitalised and that is in dire need of as much investment as it can get in order to create productivity and employment.

Obviously the Deputy has not read the Kenny Report.

He read the Donegan speech.

I do not propose to go in detail into the pros and cons of the proposals in the White Paper because the debate is on the budget as such and these capital taxation proposals are ancillary to it. There is not really any great need to enunciate at length the overwhelming arguments against the introduction of this proposed wealth tax in the form in which it is proposed in the White Paper. Practically every organisation of any description which met over the past month or so and considered the terms of this White Paper has unanimously condemned it as being potentially a disaster.

This is one of the tragedies of the whole situation. The damage will not be simply done if and when the proposals in the White Paper on wealth tax are ever enacted. A great deal of damage has already been done. The very fact that this is proposed by the Government in a White Paper has caused an amount of panic. Whether the people on the Government side like it or not, the fact of the matter is that there has been a substantial outflow of capital in the past six weeks which this country cannot afford.

I listened for the best part of two hours last night to Deputy Belton who devoted the greater part of his speech to the White Paper on capital taxation. He did not find great fault with the capital gains tax or with the inheritance and gift taxes; he had some minor reservations about some of them, but he spent a very long time spelling out in some detail his reservations and doubts about the wealth tax. He told the House from his experience of business, which is apparently considerable, how various proposals in the White Paper on wealth tax would have disastrous effects. He made a fairly genuine effort, I suppose, from his point of view, to rally around the flag at the end when he said that he was in favour of 90 per cent of the White Paper but he was singularly unenthusiastic and unimpressive as the advocate of what it contains. He set out in some interesting detail—I look forward to reading it when the Official Report of last night's debate appears—the reasons why he thought the wealth tax was all wrong. I heard his reasons and I agree with them. In addition to the various reasons he gave, there are various other equally valid reasons why even the proposal of this tax in a White Paper, let alone its enactment, has already damaged the economy.

One of the things to which Deputy Belton referred last night with horror —it is one that I know has affected quite a number of people—is that some wealthy foreigner who happens to have a residence here, even though his assets here may not be very great in comparison with his total wealth, may find himself, if he is living here, charged wealth tax on his entire assets.

Fianna Fáil are now defending wealthy foreigners in Ireland—a strange turnabout.

This country is a better place for many of the people who have come in here in the past five or ten years. I am very glad they are here and I hope that in spite of what is now proposed they will stay because this country, from every point of view, has benefited by the fact that they have been here.

And they will pay their share here.

They will willingly pay their share but they will not pay more than their share. Why should they?

And Denis Healey will make sure that they will pay their share in Britain.

As Deputy Belton pointed out at some length last night, we have a situation where the continued residence of quite a number of people here is being put in doubt, a situation—and I was not going to spell this out but if Deputy Desmond wants it he will get it—in which funds have left this country in recent weeks in substantial amounts.

I challenge the Deputy to give the amounts.

I know that from one place alone £8 million——

Name the person.

I will not name the person, most certainly not.

Acting Chairman

Deputy O'Malley is in possession.


There have been a few interesting and amusing incidents in the Channel Islands in the last few weeks because there were people turning up there in March and April. They did not think they would meet anyone from home. There are stories going around of people walking around a corner of a street and meeting someone who did not want to be seen by anybody else from home either. It will be almost necessary, it appears, to appoint an Irish ambassador to the Channel Islands soon if the number of people taking early spring holidays there for their health's sake continues to grow at the rate it has been growing this spring.

Former friends of Fianna Fáil?

Acting Chairman

Will Deputy Desmond please cease interrupting? Deputy O'Malley is in possession.

We tried while in Government over ten or 15 years to encourage investment but at the same time to share such wealth as was available as equitably as possible among as many as possible without providing a disincentive to those who created that wealth. That has always been the basic problem facing any Government here; it is still a basic problem for this Government and it will face their successors. I suggest what this Government have done in relation to capital taxation even if what is proposed is never enacted, has made people wary of investing in this country. They have frittered away the goodwill and confidence slowly and laboriously built up over many years by organisations such as the IDA. At one fell swoop that confidence so difficult to build was lost.

It is strange that investment inquiries have increased in recent months.

If this proposal were never enacted enormous damage has been done. It is difficult to quantify it because one cannot sum up mathematically what one never had. The real problem is: how much is not coming here now that would have come if this foolish document which is so properly and openly berated by the Minister for Defence, among others, had never appeared? What a pity that the Minister for Defence and those who think like him were outvoted at the Cabinet meeting which produced it and how despicable it is that he should now seek to wash his hands and those of his colleagues of a document that they know has got them politically and the country financially into a great deal of trouble. How low can a Government go who say that something that has proved very much a hot potato was never thought up by them or approved by them but was something got out by the civil servants without reference to the Government? It is contemptible that such a suggestion should be made. The honesty of the Minister for Defence in saying what he thought of the White Paper—how unsuitable, unsatisfactory and improper it was— is diminished very considerably by his amateurish and childish dishonesty in attempting to fob the whole thing off on the civil servants.

No Government ever produced a White Paper that they did not stand behind. To say that this one was not produced by them and that they knew nothing about it and that the Fianna Fáil people who described it as a Government White Paper were misleading the people shows how keenly he is aware of the wrong steps which have been taken in relation to the proposed taxation of capital. If he is so aware of it that he is prepared to come into this House and repeat seven times in the course of the debate on the budget that he does not stand over one line of it; that none of it is his and that it all belongs to the civil servants then how clearly does he, as a member of a Government with collective responsibility, realise how foolish, how stupid and how damaging this wretched document is? I hope we never see this document so far as the wealth tax element of it is concerned, in any Finance Bill before this House either this year or at any time in the future.

On the 5th April, 1975.

To be a little boastful I should like to state that I regard myself as being a fairly broadminded person. I have a great deal of sympathy for Deputies, such as Deputy O'Malley, trying to make some kind of case out of a very bad brief. Deputy O'Malley has endeavoured to do just that but his endeavours have been in vain because the budget speaks for itself. The budgetary statement was unique in many respects. Its simple language can be conveyed without difficulty to anyone who takes the trouble to read it and it is pleasing to note that so many people, knowing that there were such good things contained in it, did take the trouble to read it. In contributing to this debate I feel there is very little to convey to the people because most of them have already digested the budget.

I bet they have digested it.

If Deputy Gibbons wishes me to do so I shall repeat what has already been stated by previous speakers from this side.

By the Minister for Defence?

A difficulty confronting me is to know where to start because there are so many good things in this budget and so many benefits for the people. It is a very constructive budget.


It is a constructive budget and a unique one. The Deputy should go to a hearing aid specialist.

Acting Chairman

The Parliamentary Secretary is in possession and Deputies should not interrupt him.

One could not do justice to this document unless one was to speak for a considerable period. What do I see in the budget?

The Deputy sees the Government running for cover already.

Deputy Gibbons is not in a strong position to talk about that.

The Government are as firm as a rock, united and as firm as the Rock of Cashel. Deputy Gibbons should not remind me of what happened in his time because I do not wish to open up old sores. There is no Gestapo surveillance and no 'phone tapping in this Government; they are united in all respects.

And we all will pay our wealth tax.

That is a comforting thought.

Something reminds me of the long-night debates we had here.

When the efforts made to destroy people's characters failed.

On a point of information, is this relevant to the budget debate?

Acting Chairman

If the Parliamentary Secretary was permitted to make his contribution he would relate to the budget but he has been constantly interrupted.

My statement related to a query by Deputy Gibbons. That Deputy doubted the stability of the Government but there is no need for him to be in any doubt because the Government are firm and doing a good job.

The Parliamentary Secretary should remember that there is a large tombstone on top of the Rock of Cashel.

Could I have the Parliamentary Secretary speaking through the Chair and other Members not interrupting?

Deputy Gibbons asked me what I saw outstanding about this budget.

Personalities should not be introduced so as to offset further interruptions. We cannot have orderly debate with this kind of heckling going on.

I was delighted to see aid being given to the people who are near retirement; people who have given lifetime service to this country. Those benefiting include the self-employed, shopkeepers and farmers who are not in the favoured jobs or in the insurance groups. Last year the Minister for Finance broke the barrier for old age pensions which was set down by the British Government in 1908. In that year the British Government set 70 years as the qualifying age for an old age pension.

During my membership of the Dáil I appealed, repeatedly, to Fianna Fáil Ministers to bring about a change in that position. In 1972 I remarked that almost everything had changed in the previous ten or 15 years except the qualifying age for old age pensions. The National Coalition undertook to do something about this. We got the sledgehammer to this and brought down the qualifying age. Last year this was done and we did something more for our old people. We stated that it was unfair for a man and a woman of 69 years of age to be penalised and to have 50p taken from them because they stipulated that they must have the right of residence in their own home until their death.

Then what happened? These are facts that are interesting to our people at the retirement stage. Fianna Fáil said to a single man: "If you have more than £25 in your pocket, irrespective of whether you have a house or not, you are not entitled to the full pension." To a married couple they said: "If you have more than £50 in your pocket you are not entitled to the full pension; we are going to take 50p a week from you." What did we do last year?

You doubled the price of domestic goods.

What did we do in this important field? We said to the man and his wife, to the businessman, to the farmer, to the selfemployed person: "If you have savings, you can retain approximately £4,500, retain the right to live in your own home, keep your maintenance as well, and you will get the full pension from us." That was last year. This year Mr. Ryan had something to say on the 3rd of April.

The Minister, Deputy Ryan, had his hammer out again. He smashed that 69, and 68 went up on the board in keeping with his promise.

Sixty-five was the promise.

Deputy Fahey should keep his mouth shut. Fianna Fáil had 16 years in office and they did nothing about that. Even though many people studied the paper quite well, there was an exceptional innovation that some of them were rather doubtful about, but it was something that was in keeping with the policy of the Government when they settled down in office. It was the introduction of an allowance for the pensioner's wife irrespective of her age. The net result is that on the first Friday of July a man who attains the age of 68, who has, say a wife aged 55, 60 or 65, £5,000 in his pocket, by virtue of the easement of the means test, will get, not £4.90 as was there when Fianna Fáil were in office, but two £5 notes and 95p for himself and his wife, just 5p short of £11.

Out of £30 million.

I want to emphasise that in this House tonight, because I have been listening to the drivel of Deputy O'Malley who spoke in terms of 7p per week children's allowances. Repetition is no harm in this field. This is the outstanding item I see in the Government's proposals. Many thousands of people throughout the country are therefore thanking their stars that Deputy Ryan is Minister for Finance and not Deputy George Colley. In this budget we are mainly dealing with unorganised groups of people, the people who are not in sheltered employment, people who are not in insurable employment; we are dealing with the small farmers about whom we heard so much from Deputy O'Malley and their liability for tax. These are the type of people who will get £10.95p on the first Friday of the month. I believe that is a great breakthrough on the part of the Government. It is the first time that a non-contributory old age pensioner has got an allowance for his wife. Taking all the circumstances into account, particularly the fact that so many other reliefs and benefits are embodied in this Yellow Paper, and the fact that the Minister was able to do this without imposing any crippling taxation, we owe a deep debt of gratitude to the Government, and I am sure that debt will be acknowledged when the people have an opportunity of expressing their voice through the ballot box.

I am very anxious to hear about the small farmer in West Cork and the taxation on him.

I am afraid the Deputy will.

Deputy Gene Fitzgerald has already spoken and I am sure he defended the small farmer in that regard. The Parliamentary Secretary without interruption, please.

This to my mind was the outstanding feature of this budget, and I think it deserved the extra few minutes which it took me to repeat what I am sure other Deputies have said on this question already. There is an obligation on public funds to certain people, and we must have priorities. Last year and this year this Government set down their priorities clearly. They are spelled out in this Yellow Paper. Our old people are first. I dealt with non-contributory applicants. So far as contributory pensioners are concerned, everybody knows that the increases are pro rata. There is no need to impose on the time of the Chair and of the House in reading out the significant advances made in the rates payable as and from 1st July next.

What do we find when we come to page 3 of the Yellow Paper? We come to the widows' contributory pensions in which there is a sizeable increase. We come next to the deserted wives' allowance.


This is no laughing matter. I do not understand what my colleagues on the benches opposite are laughing about. Unfortunately the position is that in this country, as in other countries, a number of women have been deserted by their husbands. This is an unfortunate fact of life. Such women find themselves in difficult circumstances. Do we close the door on them? Do we close our eyes or wear black glasses pretending that they do not exist? This is not the way this Government do business. We know they exist. The action we are taking on their behalf is outlined on page 3 of the Yellow Paper. I am sure that the deserted wives throughout the country appreciate the thoughtfulness of the Minister and the Government.

Other aids are available to these social welfare beneficiaries. The Government are mindful of their obligations to all our citizens. They try to effect reconciliation if at all possible between deserted wives and their husbands. Many officers are employed by the State to help such people. I need only refer briefly to the disability and unemployment benefits. The picture here is as bright as that in other sections. There is an increase also in the maternity allowance. There is also a significant improvement in the orphans' contributory allowance. I remember these people being given 5s. per week by the people who are now in Opposition. The allowance now is £5.70 per week. The widows and deserted wives will get considerable increases.

I would love to help the Parliamentary Secretary, but I am not allowed to interrupt.

The children's allowances have been increased. If the Deputies opposite dreamt about these increases before the budget or on 1st April they would think of themselves as April fools.

What does a single person get as an old age pension?

After the first Friday in November such a person will receive £8.50, an increase of £1.30. The increase in the case of non-contributory pensioners is £1.15.

Tell us about the children's allowances.

What did the old age pensioners get when Deputy Fahey's party were in office? I remember a poor old woman in County Cork who had no home of her own. She had £40 in a little purse. The purse was tied around her neck with twine. When the pension officer came to investigate her pension, being a truthful woman, she told him she had £40 to bury herself because she did not want to be a charge on public funds. This is absolutely true. The pensions officer took away 5s. per week. The poor old woman lost 5s. per week. She is in heaven now praying for us all.


Deputy C. Murphy must stop interrupting.

Many misleading statements have been made. I would be imposing on the patience of the Ceann Comhairle if I were to deal with them all. The means test in relation to the non-contributory pension has been eased again. We all agree that that should be done. We used to forget about unmarried mothers and treat them as deserted wives were treated—by forgetting about them. They are a group of people and they require special consideration because of their difficulties and trials. We all know about the advice in the gospel telling us not to throw the first stone. This Government do not throw any stones. They would not dare to. As well as advice and guidance we will give these women £9.70 a week as from the 1st July next. We come now to the prescribed relatives allowance. It is £4.15 per week. Unemployment assistance has also been increased. I am still only on page 2.

The increases are not worth talking about because they are so poor.

The rates paid to people with infectious diseases have been increased.

Tell us about the children's allowances. Are they increased by 1p. per day?

There is £2.30 for the first child, £3.30 for the second child and £4.05 for the third child.

There is an increase of 1p per day.

The Deputy will not have to cope with the claw-back. The Minister removed it. Any man who was as well-off as a Dáil Deputy had to suffer the claw-back last year. Deputy O'Malley did not like that situation.

We are glad that the error has been rectified this year.

Perhaps we could claw our way back to the budget.

The provisions to which I have referred are very welcome to the people who will benefit from them; those who are retiring and also widows, orphans, unmarried mothers, deserted wives and people who are suffering from infectious diseases or who are disabled. Special attention was paid to all of these categories when the budget was being prepared. There is the question, too, of the tax structure.

What about income tax?

I had almost forgotten about that, but then there is so much in this budget that it is difficult to think of everything. There is also being introduced a scheme for the purpose of helping the wives of prisoners who are serving sentences of six months or more.

Helping in escapes?

Deputies opposite need not smile. Any one of us could be put in for a while. A sum of £100,000 is being allocated for the purpose of a pilot scheme of poverty research.

We do not need any scheme to tell us where the poverty is to be found.

Another outstanding innovation this year is the scheme of social assistance for unmarried women who have reached the age of 58 years but who have little or no means of support. These people are to be paid a weekly amount of £6.35.

I did not think it was possible to find anything new in this budget.

Women in this category may have lost the opportunity of marrying by virtue of caring for incapacitated parents or by having had to care for younger members of the family when parents had died.

Some of them may have remained unmarried from choice.

Yes. However, very often these women are dependent entirely on relatives and up to now, to use a West Cork phrase, they have been thrown on the world. They were not in a position to make their voices heard as are other sections of the community; but the thoughtfulness of this Government means that they will no longer have to depend on a sister or on a nephew or niece for even a little pocket money. As and from 1st July, any such woman will receive £6.35 per week.

Not very much.

If Deputy Fahey wishes to intervene in the debate, the Chair will assist him to do so.

Regarding income tax, Deputy O'Malley had much fault to find on this score; but I suppose he was only following what was said by the Leader of his party, who referred to the budget as a disaster. Deputy Colley used the word "fraudulent" in his description of it. Perhaps in the eyes of Fianna Fáil it is fraudulent to grant an allowance to unmarried women of 58 years of age or to grant the various other allowances that are mentioned in the budget. I see nothing fraudulent in this budget. It is not often that I quote during my contributions here but I shall do so on this occasion because the publication I have here is very well put together.

Was it prepared by civil servants? Which White Paper has the Parliamentary Secretary got there?

We put this together.

May we have a reference, please?

On a point of information, what is the document that the Parliamentary Secretary is referring to?

The Chair has asked the Parliamentary Secretary to give a reference.

I beg the indulgence of the Chair because I am not ready to quote for a little while yet. When we were in Opposition there were times when I begged the then Government to simplify our taxation code and to put it into a language that the people could understand, so that at least they would know what they were paying. It was impossible for many people, apart from those who were well-qualified, to understand the taxation code that existed up to now. In this context I shall quote from page 23 of the Budget 1974. This is reported also at column 1446 of Volume 271 of the Official Report for 3rd April, 1974:

In the interest of simplification the existing complex scheme of 18 different income tax child allowances, which is now virtually incomprehensible to most taxpayers, will be abolished——

It is a pity that Deputy O'Malley was not in the House to hear this because he told so many lies about it.

—— and replaced by a uniform child tax allowance of £200 per child.

The Minister outlined the simplification of the system and put it in reasonable language on page 22 of "The Budget 1974" which is also reported in the Official Report, column 1444, Volume 271, of 3rd April, 1974:

I now come to tax relief. Last year, in my financial statement, I adverted to the need to examine critically our present structure of personal income taxation. The aim of this was to devise a reformed structure which would be simple enough for taxpayers to understand and to produce a reasonably stable system which could develop, but whose basic structure need not be fundamentally revised for a considerable period. There are two major causes of confusion——

and these were real causes for confusion——

On the Government front bench?

The Deputy should listen to what the Minister says:

—and misunderstanding regarding the present system. In the first place, it is not generally appreciated that the standard rate of income tax, at present 35 per cent, is effectively not more than 26.25 per cent for those with earnings up to £2,000 which qualify for earned income relief. Secondly, our progressive rates of income taxation are based on two forms of taxation, income tax and surtax, with somewhat similar, but not identical, charging rules and reliefs. Simplification which dealt with these and other difficulties could be approached in a number of ways yielding different results.

The Minister sets out in the simplest of language that even a child in senior infants could understand a simplification of the tax system. One would need to be well qualified to understand the old system.

Most of the people have since found out just what they will get out of the budget. They will be paying more tax.

A person should know exactly what he is going to get. That is set down in simple language. I have been arguing for that for years. The 18 different systems applicable to children's allowances were set down in the Minister's budgetary statement under one heading.

What about the smallholder going back to work?

I have a small flutter now and again. It may not be permissible in this House but I bet Deputy Fahey that the smallholder going out to work will not have to pay tax on the income from his holding. Deputy O'Malley tried to paint that false picture here——

The smallholders' tax allowance will be halved.

Deputies must allow the Parliamentary Secretary to continue without interruption.

I am open for offers——

If the Parliamentary Secretary would speak through the Chair we might have less interruptions.

Everyone dislikes paying tax but people who are fortunate enough to earn reasonably large incomes must pay tax in order that the people in the less well-off sections may enjoy the benefits to which they are entitled and are getting under this Government. The Minister could not please everybody. One must remember that the old reliables, the pint, cigarettes and tobacco, were not interfered with so far as additional taxation is concerned. Therefore, I think the Minister has made a reasonable start. The main personal allowances under the new structure will be £500 per single person, £550 for a widowed person, £800 for a married person, a child allowance of £200, working wife's allowance of £200, housekeeper's allowance of £140, blind person's allowance of £140 and dependent relative's allowance of £80. All these allowances were increased but I can appreciate that people would like them to be higher. Those of us who enjoy incomes above the average must recognise that we have to make a contribution towards public funds.

I was worried because Deputy O'Malley did not like the idea of some people getting the benefit of this claw-back. He said that he did not think that people in the £2,500 income bracket should get the benefit of the full £200 in respect of children's allowances. I will not elaborate further on that score.

We were told that this was a rich man's budget. If one reads the Minister's budget statement one will realise that that is not so. The tax impositions are set down clearly. For those in the higher income bracket the tax imposition at 80 per cent is rather steep. There is nothing of a give-away about that.

Another pleasing feature of the Minister's proposals was the tables he gave setting out in the simplest language, so far as income tax is concerned, a person's liabilities, rights and entitlements. I will not delay the House by spelling them out.

People who will benefit from the budget are those who have, down through the years, invested their money in national loans. I was surprised to hear Deputy O'Malley refer to them in such a sarcastic tone of voice. Who are these people? They are the people who were admonished by all parties to put their money in the national loans, to give it to the Government to develop the country and help employment and industry. If you have any saving what better place to invest it than in the nation? All three parties recited that litany here each November. Perhaps the people giving the advice did not act on it but many people, including people in the lower income groups, with small savings, accepted the advice.

They did not accept it on the last occasion because they had no confidence in the Government.

The inflationary trend and the problems involved are not confined to Ireland or to England or Wales, France, Belgium or any other country. We are not isolated any more. We are in a community.

They only arrived with the National Coalition.

They did not arrive with the National Coalition. Do not be so foolish. The Murphys are supposed to be reasonably sensible people and I do not like to hear a man of the name making remarks that are a little out of place. The budgetary proposals will make some compensation to such people for the sacrifices they have made in contributing their money to the development of this nation. Instead of a man and his wife with an income of £494 having to pay tax at the rate of 35p in the £ they will have up to £800 free and then when they have to pay tax for the first £1,550 it will be only at the rate of 26p in the £. We all welcome that.

Not the person with a mortgage of £7,000, newly-wed and with no family. He does not.

You cannot have your loaf and eat it. Things are very good.

If the other Deputy Murphy wants to speak on the budget motion, we will be glad to facilitate him. In the meantime would he please restrain himself?

Deputy O'Malley had a lot to say about wealth tax.

And Deputy Donegan.

Deputy Donegan, the Minister for Defence, is capable of answering for himself. I am sure he will be here on this seat tomorrow and on subsequent days if the Deputy has any questions to address to him.

Has he been carpeted yet?

I am prepared to lay a bet that he will be able to deal with the Deputy.

Is the Parliamentary Secretary sure he was only answering for himself?

Deputy Donegan is well able to express himself. He has great fluency.

Yes, he expressed himself very lucidly.

The Parliamentary Secretary without interruption.

Has he been demoted?

Have the civil servants been exonerated?

Deputy Murphy, there are times when I feel that you either do not listen to the Chair or you ignore the Chair. If I get the latter impression, I shall have to invoke Standing Orders.

He has been sitting over there for 14 months. Deputy Fahey should be getting used to the Opposition benches.

Could we avoid personalities, Parliamentary Secretary, and thereby avoid unnecessary interruption?

Wealth tax came in for a hammering. We were told the Government would drive all the foreigners out of the country, that they would go and take their money with them. Some person with £8 million has it transported already. We do not know who had that figure. A Mr. X may have it. We did not get any name.

Some stud farmer.

I take it he was non-existent.

Do you approve of the White Paper?

I am interested in the wealth tax, too, and I am not a wealthy man but I represent the Irish people here and I have represented them for a number of years. Fianna Fáil were in office for 16 years. There were widows weeping and wailing around the country when their husbands died, often suddenly, and they found the bills the Fianna Fáil Government sent along for death duties.

Death duties are still there.

They will be there for a matter of months but on a much reduced scale.

I did not hear of their being abolished.

What happened? A man died. His farm had to be valued, if he was a farmer. The house had to be valued, the cows, the calves, the pigs, the harrow, the rake. Did they confine their attention to what was outside the house? No. The spoons had to be valued, also the cups, the saucers, the plates.

Was it done in 1954?

The scale in 1954 was very different from the scale in 1972.

Thanks to Fianna Fáil.

It was a serious position. Even a widow with a large family had to sell her shop or farm in order to pay death duties. Everybody knows the scale—from 2 per cent to 55 per cent. That is what you did to people.

They will still have to pay accession duties.

I travelled around some of Deputy Crinion's area in the not too distant past with good results.

Are you going to pay the trainee fishermen a bit more?

The trainee fishermen are all right now. I was told down there of the concern of people, of the sword that was hanging over them, of the State coming in and taking away their property. Unless you paid within a relatively short period you had to pay interest.


Order please, Deputies.

You cannot have your loaf and eat it.


I have just made an appeal to Deputies. The Parliamentary Secretary without interruption.

Inheritance tax and the other taxes set down by the Government are fair and reasonable. Those taxes are paid when you are alive and working, when you are able to earn the money, when you are able to supervise your holding and manage it. They are not to be paid, as they were under Fianna Fáil, when you went into the coffin and your wife and family had to bear the burden after you. It was about time to wipe out this system. I always said it was unfair to have death duties, punishing a man so much in death. The Minister for Finance had a great deal of foresight in drawing up the regulations in the White Paper. How dare Deputy O'Malley or any other Deputy criticise him for doing so. Fianna Fáil had 16 years from 1957 to 1973 to do this job but they did not do it. We know the Fianna Fáil dodging. The election race of 1973 was almost over, we had reached the last week, when the Fianna Fáil Party brought out this rates waiver proposal. That is the type of thinking they have.

Is the Parliamentary Secretary referring to rates on private houses?

The Parliamentary Secretary without interruption, please.

The general election was on the 28th February. The Fianna Fáil proposal was born about the 20th February. Its birth was subsequent to the election advertisement that the shadow Minister for Agriculture, Deputy Collins, had already sent along to the Limerick paper asking for support for Deputy Noonan and himself. It was not born at the time his election address was written. I understand that was compiled about 16th February so I would put the date of the birth of this rates relief proposal as the 18th or 19th February, nine days prior to the 1973 General Election. The going was bad for the Fianna Fáil Party then, the ground was yielding under them and for the first time it dawned on Fianna Fáil they would move to the Opposition benches.

It was a good job Fianna Fáil moved to the Opposition benches. I say that in all sincerity because now we have a fair Government. We have a Government who are thinking about the people and we have a Government whose personnel have all the qualifications to govern. They have the administrative capacity and they know what the people want. They also have the ability to draw up proposals, such as those contained in the budget statement of the 3rd April. That is an indication that this country is moving forward. As I said here last night, in reply to Deputy Murphy, we are going through trying times so far as our pig industry in particular is concerned. We do not hide the problems. We are outspoken. If the position is not good we say so. Somebody referred a while ago to preferential treatment. We are moving away from that now. That existed under the Fianna Fáil Party.

Look at the number of PCs.

Could I bring the Parliamentary Secretary back to the financial statement?

The number of PCs?

This is not relevant.

I have nothing at all to do with it except as an ordinary Deputy. I will comment on the question of PCs. The Minister in a recent statement to the Dáil said that since he came into office 12 months ago he appointed for the entire state 453 PCs from Malin Head in Donegal to Cape Clear Point in County Cork where I live. All the PCs under the previous Government were appointed through the nomination of the Fianna Fáil Cumainn. Do Fianna Fáil think they should have the appointment of the PCs or do they think that the Minister for Justice should still write to the Fianna Fáil Cumainn, as used to happen, to know who they would recommend for peace commissioners? There is nothing wrong in that figure.

A reference perhaps but we want to get back to the budget. This is not relevant at all.

It is an indication of the Government's policy and that they have nothing to hide.

It is an indication of Government patronage. They have appointed 13 in Wicklow.

I have ruled the matter out of order.

I do not think it would be right for me to resume my seat without saying something about our main industry and the Government's efforts generally so far as our agriculturalists are concerned. We have groans and moans about the farming community at present. I would like to see incomes in some fields of agriculture much better than they are. The pig industry in particular is not doing so well. We do not shy away from this. We face up to our commitments and the farmers are very fortunate to have this Government in power. They are capable of getting the best deal possible for them from the EEC.

Is the Parliamentary Secretary announcing new subsidies after the 2nd July?

Deputy Murphy must not interrupt in such an unruly fashion. If the Deputy persists further, I shall have to ask him to leave the House. That is final.

It is not for me to throw bouquets but, as his Parliamentary Secretary, I think the Minister for Agriculture and Fisheries deserves well from the Irish farmers for the magnificent efforts he has made for them in Europe today. He is endeavouring to get the best standards that can be obtained for our farmers. I say here, as I said at the chapel gates in West Cork on Sunday, that they are very lucky to have this Government in power and to have as Minister for Agriculture and Fisheries a man of the capacity of Deputy Mark Clinton.

Did they believe the Parliamentary Secretary?

Deputy Fahey, please. The Chair is seeking to maintain good order.

It is only right that the Government should pay special attention to our primary industry. We know there is great variation in farming. We have big farmers such as those in the midlands, Tipperary, Carlow and other counties and we have the small farmers such as those in my constituency. We have then the statement by Deputy Fahey and also by Deputy O'Malley that the small farmer if he is working will pay income tax on his farm.

That is not what I said.

That is what Deputy O'Malley said.

Let us not argue about the matter.

The Parliamentary Secretary should not try to fool the people.

The Deputy will be afforded an opportunity of speaking later.

Everybody knows the Minister for Finance well enough to realise that he has the capacity to make correct proposals. A budget is so wide ranging that you can speak on almost any subject. I would not like to resume my seat without mentioning fisheries. The Government are trying to expand this industry to get more money particularly for capital investment. Things are moving very well so far as we are concerned and we are very pleased with the results. We are trying to get the goodwill and the co-operation of our fishermen. The outlook is very good today. The Department of Fisheries want to work in close co-operation with the fishermen.

We want to work as a team, with the fishermen of all grades, the crews, the skippers and others, the BIM and the Department and, under these budgetary provisions, I have no doubt that the capital will be available to continue the expansion of this industry. I believe any proposal designed to expand this most important industry should meet with the approval of the House.

I said at the outset that it was very difficult to make a contribution to this budget debate and, now that I have spoken, I realise my forecast was reasonably correct because one does not really know where to begin and one finds it difficult to conclude so good are the proposals contained in the budget; it contains so much that is so good, that we were looking for for so long, that one could go on talking on the budget and the Yellow Paper for half the day and still fail to do justice to it. Think of the tax reliefs, the allowances, the various innovations, the reduction in the qualifying age for pension purposes, the allowance for the first time for a wife irrespective of the age of the non-contributory pensioner.

Deputy O'Malley had much to say about the farmers being taxed. He was almost trembling so excited was he about their welfare. But it was not just farmers he was concerned about; he had a qualification to make—poor farmers. I have here a summary of a statement from a newspaper about a meeting Deputy Lynch had down in Waterford; he went along there to settle some internal dispute, something the Fianna Fáil Party suffered from in that constituency. I do not know whether or not it has been resolved but when he mentioned agreement with the general principle enunciated by our Minister for Finance so far as taxation of the bigger farmers was concerned, according to Press reports, the farmers walked out from that meeting in Waterford. Did they go back in again? Is he worried in case the Minister for Finance is losing the support of the bigger farmers? Why not look into his own heart now? Was he worried when the farmers walked out of that meeting in Waterford?

That did not happen.

On a point of information, may we have the reference?

I said it was a summary of a Press report.

It never happened.

Let Deputy Lynch come in here and deny it.

I can deny it because I was present at the function.

The Parliamentary Secretary did not quote.

I said I made a summary. I referred earlier to the growing confidence of people generally as a result of this budget. Instead of money being sent out of the country— that £8 million Mr. X exported according to Deputy O'Malley—money is coming into the country because there is confidence. It is very pleasant, indeed, to note so much industrial development here, there and everywhere. That is the result of what this Government are doing. They have the confidence of the people. I had the very pleasant task again recently of turning the key to open yet another little factory to help a small group of people. Despite many difficulties this Government have got confidence from the people; they know the Government will treat them equitably and fairly. The people can make their own assessment. They have already made an assessment and the result of that assessment will be that this Government will be in office for a long, long time to come.

Do not frighten the people.

I want now to express my thanks to and my appreciation of the Government and the thanks and appreciation of those who support me for the many beneficial measures embodied in this budget under discussion here. The Minister and the Government deserve well of the people. They are planning along the right lines. They have their priorities right. First are the social welfare classes and the retired; then we move to the industrial arm, helping industry to develop and expand, thereby creating employment opportunities. Of course, there are difficulties. There are things beyond Government control.

The Government are out of control.

We have no control over the sheiks. But the difficulties have been and are being overcome. I hate to be uncharitable—

The Parliamentary Secretary never lost it.

We were taught in school not to be uncharitable about our neighbours. I have a certain sympathy with the Fianna Fáil Party trying to oppose a budget like this, a budget they were incapable of producing and would be incapable of producing even if they were in office for another 16 years. I am slow to make charges, but I think they have been unfair and, indeed, deliberately untruthful in their assessment of these budgetary proposals. There is no need to dwell on Deputy Lynch's description of the budget. Deputy Colley amply indicated the kind of thinking there is in the Fianna Fáil Party. Fianna Fáil are vexed. They are jealous. They are envious. They should try to be a little broadminded. We all work for the good of the country. We are all desirous of seeing our people prosper. We are all anxious that our people should find work at home. We all want to ensure that the aged are cared for and looked after. That is something that is being done by this Government. Let us pat the Government on the back now, wish them well and wish them many years of fruitful government.

I was rather surprised, listening to the Parliamentary Secretary's very entertaining—I think that is the adjective that best describes it— speech.

It was a factual appraisal.

Not one member of Fine Gael or Labour was here to listen to the Parliamentary Secretary's speech. It was a pantomime. I listened closely, particularly when he was speaking about agriculture. I come from an agricultural constituency in Carlow-Kilkenny and I should like to tell him there is complete chaos in the industry at the moment. Farmers do not know what to do, whether they should go into beef, cereals or beet. The Minister returned from Brussels this morning but he could not tell them what will happen to the beef that is in storage. Apparently the Italians are imposing some duties but he could not explain that. The Parliamentary Secretary would want to go further than Meath to find out what the farmers are thinking.

If farmers with a valuation of more than £100 are being taxed, why are stud farmers excluded? I drive from here to Carlow and on the way I pass by some of the finest estates in the country; they have magnificent houses, tarmacadam roads, and a considerable amount of timber fencing to prevent the beautiful horses damaging themselves on bushes and scrub. Probably these stud farmers have horses similar to Tulyar where the fee could well be about £10,000. We all know the old story: no foal, no fee. However, many large fees have been collected by these farmers and are put into the back pocket. This is happening while an ordinary worker on the farm, if he is single, has a take-home wage of £17.50 per week when deductions are made. He will be obliged to pay income tax. Why did the Minister for Finance not give us an explanation why these stud farmers are excluded from income tax liability? Did the Taoiseach have a word with him? Did he tell the Minister that these people are friends of his, that he meets them at Punchestown, the Curragh, Leopardstown or Fairyhouse? We know the Taoiseach is a powerful man in the Government, but is it fair that a farm labourer whose take-home pay is £17.50 per week is taxed?

The people would like to know why the stud farmers have been excluded from tax liability. I am sure that some of the farmers in the Parliamentary Secretary's constituency in west Cork would like to know the answer. Most of the Parliamentary Secretary's speech dealt with social welfare. In every budget since the last Coalition Government in the mid-1950s benefits have been given to social welfare recipients. Many of the schemes now in operation, the widows' contributory pension scheme, the children's allowance scheme and the health benefit scheme, were introduced by Fianna Fáil, as was the retirement pension scheme at 65 years. I am not going to waste the time of this House in giving kudos for these things.

The money distributed for social welfare was very little. Last year the figure was £52 million but this year the figure is £16.97 million, a reduction of about one-third. The reason is that we will have another budget in December. In his speech the Minister stated:

The relief in income tax will cost the State £17.65 million. The increases in social welfare for the nine-month period will cost £16.97 million, making a total of £34.62 million.

When the Minister prepared his budget he was £21 million short. In concluding his statement the Minister said:

These factors bring the deficit to £71 million for the year or £81.15 million for the nine-month period.

Where will the Minister get this money? It works out at £9 million per month. We know there will be a certain buoyancy in the revenue, that because workers have got an increase in wages they will be paying 26p out of every extra £ they earn. The people are entitled to ask where the £81 million will come from and the Minister will have to give some explanation. I realise that there is always the case of confidence tricks, that on 18th June we will have local elections. It may be that the people will accept extra taxation, an increase in value-added tax, and perhaps an increase in income tax next December.

The Parliamentary Secretary mentioned development in the capital budget. It is not something that people talk about generally but the capital budget is a most important document. Recently a farmer came to me and told me he had been seeking a loan from the ACC in order to build a house. The following day a small farmer told me he wanted to borrow a few thousand pounds to buy ten acres of land adjoining his farm. Both were told by the ACC there was no money and I am putting that fact on the record of the House. If a person owes a few pounds he cannot go to the ACC for money. That is the order from the Minister for Finance. These are the facts and the Parliamentary Secretary cannot get away from them.

I doubt that. The Deputy is living in a land of fantasy.

I am putting it on the record of the House and next week I shall ask the Minister for Finance a question. I repeat that there is no money available from the ACC for a farmer who wants to build a private house, who wants to buy an extra ten acres to extend his holding or who owes a few pounds to a merchant or a bank. The Parliamentary Secretary is living in cloud cuckoo-land; probably he spent too much time in Meath.

I do not regret that journey to Meath. It was very fruitful.

The national wage agreement failed because the workers were not getting enough. They had to pay too much income tax. There were discussions with the Minister for Labour, with the Government and the ICTU. The Taoiseach said to the Minister for Labour: "Leave this to me. You are a Labour man. I will go in and tell them that we are giving relief on income tax. I will make it big because I am the Taoiseach." What happened? The Parliamentary Secretary referred to a yellow paper. This is the Minister's document and it has a yellow cover.

I have read it.

The wonderful relief in income tax for a single man earning £1,000 a year is 27.85 pence per year, just ten shillings in old money. For the person earning £1,500 a year it is £29.10. I can assure the Parliamentary Secretary that the people expected a lot more in the budget by way of relief in income tax. We were told that the 58 year old women were getting a few shillings. Let us see what women got in the budget.

I have the Minister's statement too. Under the old system a single man earning £1,000 a year paid £157.85 and under the new system he will pay £130, so how does the Deputy get the figure of 27 pence in the £?

I am quoting income tax payable under old and new system on earnings of a single person in 1974-75. Earnings £1,000, old system, tax £157.85p, new system £130, tax saving £27.85p.

The Deputy said 27 pence.

It is a pity I have not got a civil servant to advise me. That is one of the unfortunate things about being in Opposition. The widow's personal allowance is £550. The deserted wife is not mentioned.

We will look after the deserted wife.

The single person's allowance is £500 and the widow's personal allowance is £550. The widow is probably paying for a house and she has only £50 more tax free allowance than a single person possibly living at home and giving £5 or £6 a week to the mother or father. Is it justice to give only £50 more to a widow? We know the liability she has when her husband dies. She has to adjust because, no matter how good she is, she probably will not earn the same wages as her husband earned. She goes out to work and all she has by way of income tax allowance is £50 more than a single person, and we talk about social justice. To me that is not social justice. The least the Minister could do is to give that little £50 extra tax free allowance to the deserted wife.

In the budget debate in 1971 Fianna Fáil were criticised for not giving a higher tax free allowance but in our 1972 budget we gave an increase of £1 a week across the board in tax free allowances. We heard talk about the wonderful increases the Minister for Finance was giving. Before the Parliamentary Secretary left the House he did not believe me when I quoted some figures. Actually the person saves nothing. In the 1973 budget no tax relief was given. Since then even the lowest paid worker has got an increase of approximately £5. He is paying 26p in the £. Five times 26p is 130p. He is saving about 70p. In the two-year period he is paying about 60p per week more than he paid prior to this budget. These are the simple facts.

There has been a lot of talk about the rates being reduced. In my county the rate in the £ which was £6 last year is down to £5 but it is for nine months. People on differential rents who were paying their rates weekly to the council got a letter the other day saying: "Your rates have gone up 14p per week." They told me they thought their rates had gone down and I said: "Whoever told you that told you a lie." In the case of a person who was paying £36 rates last year for the 12-month period the rates have gone down by £1 in the £ from £6 to £5 this year but he has to pay his £30 within nine months. Divide nine into £30 and you discover that it is about £3.33 per month. Divide £36 rates by 12 and you discover that while he paid £3 per month last year over the 12-month period this year he is paying £3.33. That is why a person who is paying his rates weekly has now suddenly discovered that the rates have gone up. These are facts. Many of the things I have mentioned are connected with the local elections on 18th June. Deputy O'Malley quoted the Minister for Defence speaking in the House the other day and the Parliamentary Secretary to the Minister for Agriculture and Fisheries tried to defend him. In Deputy O'Malley's quotation he said: "Come back on 30th June and we shall explain this to you." Why 30th June? Because it is 11 days after the count for the local elections. Then you may talk about wealth tax and all these things.

I shall not go into any more detail. We shall have the Finance Bill and the Social Welfare Bill on which we can discuss all these matters as they arise. Every housewife is in the position that she does not know tomorrow morning what prices will be. Every day there is an increase; it is sausages today, butter tomorrow, margarine the next day and jam the day after. This is the Government which in its 12 point plan was going to control or freeze prices. Now, to make matters worse, the Minister for Industry and Commerce says he will not publish increases in prices because they have become an embarrassment to him and the Government.

That is not the reason.

I suggest the Parliamentary Secretary should put this to the Minister for Industry and Commerce. I am aware that if a shopkeeper does not display the correct price list showing maximum prices he can be prosecuted and many of them have been brought to court because they have not displayed the correct prices. How will shopkeepers know the correct prices now when the Government have decided not to publish a correct maximum prices list?

As far as I know the practice of publishing at public expense the list of price increases is only about 15 months old and prices were zooming up long before then.

I give the ex-Minister every credit of being for the innovation of publishing those price increases. That is to his credit, but until that time came—and it was very soon before the change of Government— there were no such publications.

Thank you very much for that but this is very important from a legal point of view. No price lists will now be published and no Government public notice will be issued showing in local or national papers the maximum price for any article. The inspectors of the Department of Industry and Commerce will go down the country and say to shopkeepers: "You are overcharging for that article". It may have happened that the wholesaler went into that shop that morning and said: "The price of X commodity is gone up 2p retail". The shopkeeper may say: "How is that?" and he will be told: "The Prices Commission have agreed to it". The shopkeeper may say that he did not see it in the paper. How will this go? That should be explained.

the situation which will now be resumed is the situation which existed for a very long time up to about two months before the change of Government at a time when prices were all the time going up.

My interpretation of it is that the Government do not want the embarrassment of publishing all these price increases day after day. When the people realise next December when the next budget comes that not only will they have to pay the increases for next year but that they will have to provide this £81 million mentioned in the Minister's own statement as the amount that will be in deficit at the end of the year, then the cat will be among the pigeons.

The Parliamentary Secretary to the Minister for Agriculture and Fisheries certainly put up a great show in trying to defend the Government on this budget, but no matter what he does I do not think he will succeed in hoodwinking the people into thinking that this budget is something that it is not. This is a sleight of hand budget and its full implications are not yet known to the people. We have an obligation to make known the shortcomings of the budget as soon as possible. The Government would not wish those shortcomings to be made known until after the local elections but with the intelligent electorate we have—I believe the Government are underrating this—the people will become aware that this is an effort to hoodwink them into voting for the Government candidates in the June elections. On the day the budget was introduced some of the Government backbenchers were there to applaud the Minister when he concluded his speech. He was not applauded by all of them. Those who did not applaud were wiser than those who did. They had already seen the shortcomings.

They all applauded; every one of them.

Not all applauded, no.

You are mixing up applause with standing up to applaud.

It is evident here that we have had a lack of interest by the backbenchers in particular in the budget debate. For most of this afternoon we had deserted benches on the Government side and this was very obvious.

The Parliamentary Secretary made great play of the increases in social welfare benefits. We welcome any increase in those benefits and we are glad to see our policy in this regard being continued because we granted increases in budget after budget since 1957 onwards, since we took over from the last Coalition Government. The increases were greater in some years than in others but if we had the opportunity that the National Coalition Government have had in regard to increasing social welfare benefits I assure you the amount we would give would be far greater because, first, they had this windfall which we had committed ourselves to use for social welfare benefits had we continued in office. I refer to the saving of £30 million on our agricultural exports. They had that saving again in the present year. This sum had not to be provided and therefore it was available. We had committed ourselves to using it to bring relief to the less well-off sections of the community.

With the huge increases we have had in prices in the past 12 months and with the rampant inflation that we have, we regard the social welfare increases as being only about half what they should be. Because of the price increases that are still taking place the increases that have been given to the social welfare classes will be eroded before they get them on July 1st. Therefore, I say with confidence that the Government have nothing to boast about. The increase in children's allowances, which amounts to no more than 1p per day, is nothing to boast about when one considers the cost of food and clothing for children today. Any housewife or head of a household could tell the Minister how these costs have soared.

When Fianna Fáil were in Government they gave numerous fringe benefits in their budget, such as free travel and free electricity but this budget does not give any such benefit to the less well off sections in our community. The fringe benefits introduced by Fianna Fáil brought great relief to the hard pressed social welfare recipients. When dealing with the question of free electricity, I should like to make a plea to the Minister to increase the number of units given free to such people. The number given free at present is too low especially in the case of old age pensioners who live alone. It is often the case that such people are not in good health because they have not sufficient heat. I believe some extra concession should be given to such people.

Pensioners living in areas about to be supplied with electricity should be given some assistance by the Government because the cost of connecting, particularly in remote areas, is enormous and, in many cases, means that such people are not in a position to benefit from the service. There is an exorbitant demand on people anxious to be connected to the electricity supply system and pensioners, and others in receipt of social assistance, cannot meet such demands. I have many cases of old age pensioners in a particular area about to be developed by the ESB who cannot have the electricity installed because of the high connecting fee they are asked to pay.

I should like to know what has become of the promise made by the National Coalition to have the non-contributory old age pension paid at 65. I welcome the fact that the qualifying age has been reduced to 68 but this is a long way from what was promised. A specific promise was given that non-contributory old age pensions would be paid at 65 and the National Coalition has gone back on that. Those who accused Fianna Fáil this evening of not reducing the qualifying age should remember that Fianna Fáil gave a clear indication that it was their policy to do so. Fianna Fáil introduced the retirement pensions at 65 years of age and, therefore, it can be taken from that that it was their policy to reduce the qualifying age for old age pensions to that level.

Mention has been made of the increases granted to the old age pensioners but I cannot see that one has anything to boast about in the amount the non-contributory old age pensioner receives, a miserable sum of £7.30. That is not sufficient for a person of that age to survive on. The greatest hardship is on those people who live alone and there are many such cases. Such people who lead a very lonely life are being affected by the high cost of living we have today. Anybody who says that £7.30 is sufficient for such people to live on is living in cloud-cuckooland.

While we have people living in such poverty there is no need for anyone to spend £100,000 or any other sum of money, to carry out research in order to ascertain where poverty exists because we know it exists with our social welfare recipients. Under Fianna Fáil the gap had been narrowed between those in receipt of social welfare payments and those in receipt of such payments in Great Britain and Northern Ireland but with the increases granted there, especially in social security, the gap has once more started to widen. This is to be regretted.

Something should be done to encourage people to look after the aged in our community. There should be some concession for relatives who have to leave work and stay at home to care for such people. This is something which should be encouraged and money provided for this would be money well spent. If such old people were to go into a home or institution it would cost approximately £50 per week to care for them. It would be much more desirable that such old people should be cared for in their own homes. The Minister should give every encouragement to people anxious to look after the elderly in the evening of their lives.

The Government have nothing whatever to boast about in regard to income tax allowances. When these allowances are gone into in detail, and when the people see their demands, they will realise that many of them are losing money because of the changes that have taken place. Instead of gaining, many of them will be losing under this budget. Taking into account the fall in the value of money and the rampant inflation income tax allowances should have been increased considerably.

My greatest sympathy today is with people in rural Ireland who have to travel long journeys to work and who have to meet the cost of the upkeep of a motorcar to do this. Many of them travel 40, 50 and 60 miles and get no allowance whatever in their income tax for this. These people cannot get to their employment without a car and some concession should be given to them.

As the Minister for Finance is here perhaps, when replying, he would clarify the position in regard to small-holders. A smallholder or anyone else with a land valuation who is forced out to work will have his income tax allowance reduced by 50 per cent. There are many small land owners who cannot make a living on their land but who are fortunate enough to have employment in some local industry in the village or in the neighbouring town. It is far better that they would have this employment here at home rather than have to emigrate. If they are going to be victimised now, I would ask the Minister to alter the situation.

The small man will not be affected by that provision. We shall have a provision in the Finance Bill to exclude the small man.

I am glad of that because otherwise such people would be victimised. However I would mention again the person in rural Ireland who has to travel to work by motorcar. A car is no longer a luxury in rural Ireland; it is a necessity, and because of the high cost of petrol and oil I had hoped that the Minister for Finance would reduce the tax on petrol, in particular, in order to bring some relief to those people.

At the outset I described this budget as a sleight-of-hand budget, but it is also a frightening budget when you think of the huge deficit for which we are budgeting. With inflation at the high rate it is at now I hate to think of the deficit we shall have at the end of this year. It must be remembered that we are facing another budget in December, because this is a budget for only nine months. This budget is a clear indication of the type of Government we have, a Government who are not facing up to their responsibilities, a Government who are borrowing at home and abroad. I refer particularly to the borrowing of £20 million from the Central Bank in order to keep the economy ticking over. This is bad for the economy and severely affects the private sector who are now finding it impossible to get finance.

The Agricultural Credit Corporation had been doing an excellent job in lending money to farmers for investment and development over the years, but money is no longer available. From dealings we have had with the ACC we find that the money is not there for the farmer who wants to erect a new house or to add a few acres to his small holding.

Many industries are also affected because of a lack of finance. In my own constituency there are industries in severe difficulties, and some of them have actually closed down. When Fianna Fáil were in office, if one industry closed down it made the headlines. Now there are industries closing down and I have not seen any publicity given to them.

Of course this money that the Government borrowed will have to be paid back, and some future Government will have to undertake this task. Money borrowed abroad puts a severe strain on the economy, because interest on that money will be going to some foreign country for circulation there and will not be in circulation here at home.

One of the Government Deputies mentioned the efforts being made by all parties to get the public to invest in National Loans. I said by way of interruption that our efforts on the last occasion were not successful in getting people to invest in the National Loan because investors, both big and small, had no confidence in the Government. The last time that a National Loan was a failure was when we had a Coalition Government——

That is completely wrong.

That is a clear indication that investors have no confidence in the Government. Is it any wonder therefore that we had the Parliamentary Secretary to the Minister for Agriculture and Fisheries trying to pull the wool over the people's eyes as to what was happening? He was boasting about the miserable increases to the social welfare classes.

The Deputy must be joking.

Miserable increases, as I said already, from a Government that had such a huge saving on the subsidies on our agricultural exports. It is extraordinary that these remarks should come from Deputy Murphy, since, if his party had been in office at the time, we would not have had the benefit of this £30 million.

Progress reported; Committee to sit again.