Financial Resolutions, 1975. - Financial Statement. Budget, 1975.

Coming up to budget time a Finance Minister is seldom short of advice. Anxieties and uncertainties generated by the current global economic unrest have this year multiplied the plethora of available suggestions. If the ideas offered converged my task would be an easy one but unfortunately contradictions predominate.

King Solomon might never have achieved fame had he not had to make a difficult decision upon irreconcilable claims. The duty I have of holding a balance between conflicting pressures is no less daunting than Solomon's dilemma but unfortunately I have no pretensions to either his wisdom or wealth. This statement therefore will be a straightforward account of the Government's view as to how best to use the nation's resources in the coming year and how those resources can be supplemented by fair taxation and prudent borrowing.

The intensity, duration and unprecedented nature of the unfavourable economic forces operating across the world since late 1973 add immensely to the difficulty of preparing the national budget of any one country. While there is a natural tendency to look upon the budget as the principal national corrective measure, the truth today is that a budget is but one of several economic influences, and on its own it can have but limited effect. It may help to ease problems for some by spreading the burden of doing so over those who can most afford it. Until such time, however, as the world, through agreed international action, finds a way out of the traumatic economic disarray caused by the oil crisis, governments will be seriously hampered in efforts to improve significantly national environments through the instrumentality of national budgets.

I am emphasising this at the commencement of my budget statement because of the necessity to dispel any illusions as to the effectiveness of mere budgetary proposals in the present world economic upheaval. Today, as we are not dealing with traditional problems we cannot rely solely on traditional ways of handling them.

This is the first year that the calendar and financial years for both Exchequer and local authority purposes coincide. The 1974 budget related only to the nine months ended 31st December last. For the first time in the history of the State, the current and capital budgets, the Estimates for the Public Services and the Finance accounts will relate to the full calendar year. The transition to the calendar year as fiscal year will be completed when the income tax year is also brought into line. Because of the need to give priority to the restructuring of the taxation code—a task which imposes a heavy burden of work on the Revenue Commissioners—it will, however, be a number of years yet before the income tax year and the financial year coincide.

It is not necessary for me to describe the economic situation in the customary detail this year since the Government's White Paper A National Partnership, which was presented to both Houses of the Oireachtas in November last, contains a comprehensive review of the economic scene both on the national and on the international plane. Significant developments since then are that, while the overall economic picture on the international level has deteriorated still further, there have been the welcome German and US decisions to expand their economies and a continued easing of prices on the world commodity markets. At home, significant shifts in the scene in the interval have been a further increase in the number unemployed and a continuing slackening of domestic demand which is likely to have brought the growth rate nearer to 2 per cent than 3 per cent. Because of the many imponderables and uncertainties in the international situation and the present paucity of information relating to 1974, it would be pointless to publish another document on the economy so soon after November's White Paper. Publication, therefore, of the annual economic Review and Outlook, which normally appears prior to the budget, will be deferred until Easter by which time more information relating to 1974 should be available.

When I introduced my budget last April the economy was in a healthy state but, as I indicated at that time, it was threatened by the dangers following in the wake of the oil crisis which were menacing our economy and the economies of the rest of the world. I foresaw a slower growth in economic activity in 1974. Unfortunately, the world economy and, with it, our own small and open economy have been even more severely affected than anyone at that time expected. Our rate of economic growth may now be not much more than 2 per cent in 1974. This growth, though disappointingly small in normal times, compares more than favourably with that of other countries some of which suffered negative growth in 1974. In common with other oil importing countries our balance of payments deficit for the year and our rate of inflation are at unprecedently high levels.

A National Partnership

In the White Paper published in November these effects were described in detail. The White Paper also set out the Government's approach to the problems presented by the difficult global economic situation and made it clear that in solving these problems priority is to be given to the maintenance of employment and the preservation of the living standards of our community. The basic message of the paper is that a spirit of national partnership is now needed from the country as a whole and that the most serious consequences could result if the various groups in the community fail to co-operate in overcoming our present difficulties. The national partnership envisaged by the Government is designed to maintain during this critical period the momentum towards social reform and to ensure fair sharing. The Government will have discussions, within the next few weeks, with all interested parties as to how best to achieve these objectives. Today's budget contains the measures in the fiscal field and in the field of social policy which the Government believe should serve as a basis for the necessary co-operation.

Central economic strategy 1975

As I have said, priority is being given in the Government's approach to present economic problems to maintaining employment and preserving living standards. This will be the central economic strategy in 1975. Therefore, while fully aware of the need to reduce inflation, the Government have decided against measures that would result in any significant disimprovement in internal demand because of the effect which such measures would have on employment. As pointed out in the White Paper, failure to pursue the objectives of maintaining employment and preserving living standards would be likely to lead to further inflationary pressures since groups in the community whose living standards would be hit would feel impelled to seek higher money incomes and since the necessity to support an ever growing number of unemployed and their dependants would raise sharply the amount to be levied in taxation.

A decision of major importance to the economy in 1975 concerns the action to be taken in regard to the balance of payments deficit of the order of £300 million in 1974 which has reached, at 10 per cent of our GNP, a very high figure by international standards. It represents 60 per cent of our external reserves. While a deficit of this order would normally call for immediate corrective measures, the Government have decided, in line with the central economic strategy for the year, that the deficit should, instead, be brought into line in a phased manner over several years. They are satisfied that, apart from the damaging effect which precipitate action would have on domestic demand, this course is justified because the deficit is in part due to exceptional factors such as the abnormal increase in oil and other import prices and the lower prices for cattle and beef exports. Steps to reduce the deficit will have to be started this year and continued for several years to come. Any domestic action that would cause it to rise must of course be avoided. In short we will have to be content with less at home so that we can pay for what we must import from abroad. Unless we start now the corrective process will be more abrupt and more painful.

Incomes

The extent to which incomes increase is of critical importance to the Irish economy in 1975. Even if there were no further round of pay increases this year the total carryover effect of the present national pay agreement, including the threshold payment, will mean that the level of non-agricultural wages and salaries in 1975 will be almost 25 per cent higher than in 1974. Thus, even without further increases, domestic incomes alone will generate greater upward pressure on consumer prices this year than last year—and, since we have no control over that large part of our inflation which is imported, it is all the more necessary for us to reduce the inflation originating at home. Since the maintenance of our economic growth depends to such a large extent on an expansion of exports, our costs must now more than ever before remain competitive even if Irish goods are to maintain their share of the home market.

The parties to the National Pay Agreement who are due to enter into negotiations shortly on a new agreement will no doubt be as concerned as the Government are to ensure that the objectives I have indicated will be met. Moderation in income increases in 1975 is therefore imperative if we are to halt the serious deterioration in employment. Disproportionate increases for any one group can be achieved only at the expense of weaker sections and increased unemployment and will damage the overall interest of the community. The Government have indicated that they will examine in consultation with the interests concerned how best to arrange that earnings under any future pay agreement may be protected, through adjustments in line with the cost of living, against erosion from price increases. They have also undertaken to introduce, if necessary, legislation to ensure that those whose incomes do not come from wages or salaries will observe the same restraints as are being sought from the wage and salary sector. Furthermore, the Government will seek to ensure that any redistribution of income through the tax system in favour of the deprived sections of the community will not be nullified by the action of better placed groups. It must be accepted that living standards are not going to rise for some time and that we must moderate our income demands to avoid increased unemployment and permanent damage to the economy. If we do so, we will be well placed to move forward again when the international economic situation permits.

Public service pay

The total provision for public service pay in the 1975 Estimates volume is £381.2 million which is about one third of Government current expenditure. Of course, this figure does not include a provision of £37 million for public service pensions which rise annually in line with pay increases. The provision for public service pensions in 1975 is in fact £6½ million greater than the corresponding provision for 1974-75.

The public service pay figure of £381.2 million represents the pay cost of the Civil Service, national and secondary teachers, the Defence Forces and Garda, together with the Exchequer contribution to the pay of nurses, doctors and other health board employees and vocational teachers. It shows an increase of about £67 million or 21.3 per cent over the estimated cost in 1974-75. While the provision covers the bulk of the cost of the escalator clause in the 1974 National Pay Agreement which will come into effect for most of these staffs on 1st March, 1975, it does not include, for example, the cost of a new agreement in 1975.

Of the increased cost of £67 million, some £40 million is referable to the 1974 National Pay Agreement, that is, to the carryover effect into 1975 of the two phases of that agreement, which operated for only part of 1974-75, and to the escalator clause.

I think that it is still not generally realised how costly were the terms of the last National Pay Agreement to the public sector as well as to the private sector. In my budget statement of April last I pointed out that its terms would add to, rather than alleviate, the pressures on costs and prices. Under the agreement the average wage and salary earner will receive in one year increases totalling about 30 per cent of his original pay. In the public service alone the cost of implementing the standard increases in that agreement will amount to the immense figure of about £90 million on an annual basis.

Growth of the public service

About £8.3 million of the increased cost of the public service in 1975 is attributable to the extra cost in that year of necessary additional numbers recruited in the course of 1974. At 1st January, 1974, the total number in the public service, that is, teachers, the Garda, Defence Forces, the Civil Service, nurses, doctors and other health board employees whose pay falls to be met by the Exchequer either in whole or in part came to 131,000 and had increased by 20,000, that is by 18 per cent, over the preceding period of three years. The rate of increase varied from sector to sector.

In the case of the Defence Forces, the increase in numbers was 26 per cent, and for the Garda, notwithstanding considerable extra overtime, it came to 20 per cent. The reason for the growth of the security services has been the disruption and insecurity caused here by evil-doers connected with disturbances in Northern Ireland. This extra security pay and non-pay is costing our taxpayers about £22 million annually. The Government will not stint necessary expenditure to protect lives, liberties and property against violent men, but it is worth reflecting how much better such money could be expended in providing permanent productive jobs, more houses and other necessary improvements.

Other significant increases in numbers of public servants are due to expanding services which were responsible for a growth of 20 per cent in numbers employed by health boards. The number of teachers grew by 19 per cent, the principal causes being the increase in the number of pupils and improvements in the pupil-teacher ratios.

In the Civil Service itself, including industrial staff, the expansion was 13 per cent and, in general, is attributable to the provision of new, improved or extended services to meet public demand. A large proportion of the extra staff was assigned for telephone development to the Department of Posts and Telegraphs, to the Department of Social Welfare to cope with improved services and to the Revenue Commissioners for revenue collection. In a number of Departments our membership of the EEC has added significantly to the pressures for additional staff.

Because of the high cost of the public service, steps have already been taken to ensure that there is strict control over expansion consistent with the provision of adequate services. As Minister for the Public Service, I have to be particularly vigilant in keeping down the growth in staff numbers in the Civil Service. It is equally important that expansion in other areas of the public service should be controlled and the Ministers concerned have been investigating how growth might be contained. During 1975 a special effort will be made to improve efficiency throughout the public service and to reduce, through redeployment, the need for additional staff.

As well as expansion a number of other factors have contributed to the greatly increased cost to the National Exchequer of the public service in 1975. The transfer to the Exchequer from the rates of a further instalment of the health boards' pay bill will account for another £4.7 million this year—a total of nearly £20 million this year in respect of health services including increases in costs since the transfer began in 1973. Provision for meeting the 1974 National Agreement obligation in relation to equal pay will cost £4 million this year. Equal pay will in the period from June, 1973, when the first step was taken, to the end of 1975 have cost the Exchequer directly about £11 million. The remaining £10 million of the increased cost in 1975 is accounted for by a variety of miscellaneous items such as overtime, allowances in the nature of pay, increases in social welfare contributions and salary increments.

To sum up, therefore, even before I come to consider what may happen when the 1974 National Pay Agreement expires—and without providing for any "anomaly" or other special increases as yet unsettled—I have to provide this additional £67 million for public sector pay. The sheer size of this increase which, as I have mentioned, is not the full extent of the extra cost, will, I hope, bring home to everyone the crippling restrictions on advances in other fields which could be imposed if, in addition to this sum, the Exchequer—the pool of the community's resources—had to bear an excessive burden in 1975 under a new National Pay Agreement. In deciding what amounts must be added to the Estimates Volume provision to cover any general pay movements after the current agreement expires—a matter which I deal with later—I am proceeding on the basis that all concerned with the negotiation and settlement of income increases in 1975 will appreciate the gravity of the crisis facing us and will show the moderation that is essential if we are to protect as far as possible employment and living standards.

No one should be in any doubt, however, regarding the impossible burden which would be placed on the community as a whole if this moderation does not materialise. Clearly, with a total public service pay bill of the order of £400 million a year, any further significant increases could leave the State no option but to cut back on desirable expenditure in other areas of vital economic and social concern. A heavy responsibility rests, therefore, on those involved in pay negotiations to have due regard to the economy generally and to the welfare of the less well-off sections of our community.

Anomaly increases

The Government have been increasingly concerned at the extent to which, in the economy at large, "anomaly" and other special increases have come on top of the already inflationary standard increases of the 1974 National Agreement. Apart from any general round of pay increases for the public service that might follow the current agreement, the pay bill would also be significantly affected if there were to be expensive "anomaly" increases in the months ahead. Because of the closely integrated structure of the public service there is always the danger of pressure to extend anomaly awards for key grades not only to the directly related grades but also from one part of the public service to another. Given that the annual pay bill is now of the order of £400 million, the cost of potential repercussions of anomaly increases could be alarmingly high. All the parties to the 1974 Agreement went on record as saying that, in view of the provisions of the earlier agreements, anomaly claims under the 1974 Agreement should, to quote the document "arise only in a limited number of cases". It is vital that this understanding should be fully honoured by all sections of the community and that all anomaly and special claims under the National Agreement be subject to the most critical scrutiny. In deciding on the size of the budgetary provision to be made to cover increases in the public sector resulting from these claims, I am, however, counting on the readiness of all sections of the community to accept the need for exercising the utmost moderation.

I would emphasise the phrase "all sections of the community" because, to a large extent, what happens outside determines what I have to provide for the public service. It is inherent in the terms of the National Agreement —and, indeed, in any approach based on fair comparisons—that adjustments in the pay and conditions of some public service groups may be necessary, from time to time, if they are not to fall unjustifiably behind their counterparts outside. Of course, if general moderation does not prevail, more money will have to be found from the taxpayer or consumer, or highly desirable expenditure in other areas will have to be cut. This can only lead to further increases in unemployment.

Public service arbitration machinery

The Government are perturbed at the extent to which the existence of a large number of separate arbitration schemes in the public sector may be contributing to expensive "leapfrogging" claims, not so much between the public and private sectors as within the public service and state-sponsored body area itself. Such self-perpetuating claims could not only put intolerable burdens on the community but could, in due course, disturb a reasonable balance between public and private pay rates.

The major public service groups— Civil Service, teachers, Garda and local authority and health board employees—all have their separate conciliation and arbitration schemes and the findings of the individual arbitration boards are not always mutually consistent. Furthermore, certain State-sponsored bodies have their own internal machinery as well as having access to the Labour Court. It is essential in these circumstances to review the operation of the existing machinery with a view to eliminating the purely "leap-frogging" aspects while ensuring that the rights of the public servants to equal treatment with other groups are adequately safeguarded. This matter has already been taken up by the Minister for Labour and myself in consultation with the Irish Congress of Trade Unions and we intend to pursue it with them as a matter of priority.

Departmental expenditure allocations 1975

The Government decided that the 1975 departmental expenditure allocations, both capital and non-capital, should be fixed in the context of the twin national objectives to which I have already referred of maintaining employment and preserving living standards. In the allocation of available resources, priority was given to the creation of new and the preservation of existing employment by means of grants and loans for industry, grants for training workers and grants for the promotion of exports. Expenditure on building and construction, because of its high employment content, both direct and indirect, and because it is largely concerned with the provision of the social infrastructure necessary for future industrial development, was also given a high rating. In the agricultural sector, the provisions for grants and loans to farmers have been significantly increased.

Non-capital supply services 1975

The 1975 Estimates volume, published last month, provides for non-capital expenditure totalling £960 million in 1975. This represents an increase of £180 million, that is 23 per cent, over the corresponding 1974/75 original estimates or about £138 million, that is 17 per cent, when account is taken of Supplementary Estimates. This increase reflects the persistent tendency of public expenditure to grow at a fast rate. Many factors have contributed to this rapid growth. For example, increased expenditure on the infrastructural development necessary for economic growth; greater State participation in the operation and stimulation of the economy; additional expenditure on social welfare, medical care, education and housing.

The major items making up the increase of £180 million in non-capital expenditure in 1975 are Health, an increase of £46.4 million; Education, an increase of £38.7 million; Social Welfare, at existing welfare rates, an increase of £28.4 million; Posts and Telegraphs, an increase of £21.3 million; Justice group, an increase of £13.1 million; Agriculture, an increase of £12.2 million; and Defence, an increase of £10.9 million.

The 1975 non-capital expenditure Estimates include a number of significant provisions to which I wish to refer.

In my 1973 budget statement I explained how the Government's decision to transfer health charges and housing subsidies from the rates to the Exchequer would be implemented in four stages. Taking account of the increased costs of these services in the meantime, as well as the phased reduction of expenditure from the rates from its 1972-73 level, the accumulated additional charge on the Exchequer in 1975 is estimated at about £50 million. This estimate includes the amount of the third stage transfer of some £18 million. The amount of these charges remaining with the local authorities is now only 25 per cent of their actual expenditure on these services in 1972-73. If this transfer had not taken place, the average poundage of local authority rates would be about £4 more than the estimated average of £6.60 in the current year.

The Education Estimates include £3.2 million for the new national school capitation grants scheme of £6 per pupil recently announced by the Minister for Education.

The Agriculture Estimate includes £6 million in respect of the new EEC scheme of cash payments to livestock farmers in hilly and other disadvantaged areas planned to come into operation early this year.

Total provision for the security services—£99 million in 1975 as compared with £75 million for 1974-75— is greatly increased and reflects, as I mentioned earlier, the continuing concern of the Government with the security situation. In 1975 the Garda and the Army will be maintained at a high strength and allocations for communications, equipment, transport and stores have been substantially increased.

On top of the expenditure provided for in the Estimates volume further expenditure will arise in 1975 in respect of the following items, in addition of course to public service pay, which I have already referred to, and social welfare, with which I shall deal separately later.

AnCO (Manpower Training)

The Estimate for the Department of Labour provides for a greatly increased grant of £4 million for AnCO. In view of the present unemployment situation I have decided to make available an additional £1 million, that is on top of the £4 million in the Estimates volume, to enable AnCO to increase repidly the number of adult workers taken into training in 1975. This total provision of £5 million, excluding capital expenditure, represents an increase of £3 million on the amount provided in the nine months' period ended 31st December last. Since much of the expenditure will be supplemented by matching grants from the European Social Fund, AnCO should have available, when these grants are taken into account, a total of about £9 million for current expenditure in 1975. This provision will enable an extra 2,000 adults to be brought into full-scale training in 1975 and will bring the total number of adults in such training to 5,000. About 1,000 apprentices will also be trained by AnCO this year.

Oil subsidy for horticulture

The Government have decided to continue to give an oil subsidy for horticulture up to 30th June, 1975. The purpose of the subsidy, which was introduced in July, 1974, is to help growers to adjust to higher costs for heating oil. The rate of subsidy for the period 1st January to 30th June, 1975, will be 2p per gallon and the cost to the Exchequer is estimated at £0.27 million.

Sea fisheries development

Having reviewed the position of our sea fishing industry which has been expanding rapidly in recent years and having regard to the steeply rising costs of boats and equipment, I have decided to provide an additional sum of £1.4 million in the present year for the capital development requirements of An Bord Iascaigh Mhara. This additional provision together with the existing capital budget allocation of £4.2 million will be sufficient to meet the full requirements of the board in 1975 and is in fact 41 per cent greater than the corresponding allocation for 1974-75.

Local improvements scheme

The 1975 Estimates volume includes £500,000 for the local improvements scheme administered by the Department of Local Government. Under the scheme grants are given towards the cost of constructing or improving accommodation roads, bog roads, drains, and so on, for the joint benefit of groups of farmers. I have reviewed the provision for the scheme in the light of the current and prospective unemployment situation and I have decided to increase the allocation to £1,000,000. I am, therefore, providing an additional £500,000.

General situation of the cattle and beef industry

As has happened in other countries, the Irish cattle industry has had serious problems over the last year. Because of increased production and a reduction in demand, a surplus of beef emerged in the EEC and prices throughout the Community have fallen well below the guide level set by the common agricultural policy.

The Government have been very concerned about the problems of the cattle industry and have taken all possible steps open to them to deal with the situation. I must emphasise that the Government can act only within the framework of the common agricultural policy and our obligations under the EEC Treaties. Indeed, Ireland's best interests require that the EEC rules be adhered to by all.

A whole series of EEC measures to assist the industry has been implemented by the Government including the green £, the cattle slaughter premium, the variable premium and, above all, the operation of the intervention system on a scale unprecedented anywhere else in the Community.

There are a number of facts about the operation of the intervention system which are not generally realised. The Department of Agriculture and Fisheries purchased in 1974 about 120,000 tons of beef at a cost of over £75 million. This is almost 50 per cent of the entire output of the meat industry for the year and, indeed, in recent months the proportion has been closer to 60 per cent. An enormous effort has gone into organising the purchase, cold storage, ultimate disposal and financing of this huge quantity of beef. The purpose in doing this was to provide the Irish cattle and beef industry with an alternative outlet at attractive guaranteed prices, well above those of previous years, rather than have to sell at whatever prices could be got on an over-supplied meat market. As a result of these large intervention purchases, the amount of beef sold on the open market this year is well below that of previous years.

The action of the Government in funding this enormous operation has been to ensure, at a cost of over £75 million, that factories and farmers were paid for cattle which could not otherwise have been sold except at very poor prices. This is by far the largest rescue operation ever undertaken by the Government.

Despite these assistance measures the prices of all cattle and particularly young cattle are well below what could be expected from a normal equitable division of the fruits of intervention. There are charges and counter-charges of profiteering and exploitation. This situation has come about, not through the absence of finance for the industry or poor prices at intervention but because of the general oversupply of cattle; buyers have been in a strong position and have taken advantage of this fact.

Subsidised loan interest scheme

Until conditions of effective competition are restored, the Government consider that certain further measures should be taken to alleviate the position of those who are hardest hit especially the small farmers who depend primarily on producing young store cattle and who are concentrated mainly in the west. In November last, the Government introduced a subsidised loan interest scheme to enable such farmers to purchase winter feed and retain young stock which would otherwise have to be sold. The Government propose to extend the scheme to 31st October next and are in consultation with the EEC Commission about this.

Cattle feed vouchers

In October last the meat industry agreed to contribute to a fund to subsidise the cost of cattle feed to small farmers. This was a very welcome gesture and the Government wish to congratulate the industry which to date has contributed about £1.0 million for feed vouchers. It is the Government's wish that the scheme should be continued to meet approved demands which, it is estimated, could require over £2.0 million more than has already been contributed and that the cost should be met in full by the cattle and beef industry.

To meet immediate requirements it will be necessary for the Exchequer to advance about £2.2 million. This will be advanced by the Exchequer and will be recovered by adjusting the VAT regulations to withdraw temporarily the tax credit at present available to meat factories and other registered purchasers of cattle. I feel that this proposal will be generally acceptable as it will enable extra funds to be channelled to small farmers to alleviate their feed problems. Indeed, the Minister for Agriculture and Fisheries, who is on duty today in Luxembourg, is consulting with the EEC about this matter.

The change in the VAT regulations will come into operation on 1st March, 1975, and it is expected that the Exchequer advance will be recovered over a period of 12-14 months. The sum to be recovered in this fashion in 1975 is £1.2 million.

Public Capital Programme 1975

Estimated expenditure on the public capital programme in 1975 is £458.9 million, that is 19.4 per cent more than the corresponding estimate for the 12-month period 1974-75. This includes the additional allocation of £1.4 million for An Bord Iascaigh Mhara to which I referred earlier. It is particularly important in present circumstances that credit should be available to assist the survival of sound industrial firms in order to preserve employment and protect the base for future industrial expansion. In creating new employment the work of the Industrial Development Authority is of critical importance and must be intensified. Accordingly, for capital investment in, and loans to, industry, the 1975 public capital programme provides a total sum of £90 million representing a major increase—£26 million, or 41 per cent—on the 1974-75 estimate.

Investment in housing, at £100 million, is almost 30 per cent above the corresponding 1974-75 estimate and 122 per cent above the level of three years ago. The Government are conscious of the importance of the construction industry for its high employment content and for the attainment of the Government's social policy goals in the housing field. This is why investment in housing has been a priority item in the public capital programmes of recent years and why other exceptional measures have been taken including subsidisation of building society rates.

Current budget outturn 1974

For the nine months ended 31st December, 1974, the deficit envisaged at budget time was £76.1 million. Were it not for the abnormal economic circumstances of 1974 the expansionary effect of the budgetary measures on the economy would have generated additional tax revenue and reduced the deficit. This has not, in fact, happened. On this occasion the economy here, as in comparable countries, did not respond in this way —mainly because of the deflationary effect of the increase in oil and other import prices. In addition the fall in agricultural incomes in Ireland proved more severe than earlier expected. A reduction in overtime earnings and increasing unemployment during the last quarter of the year also contributed to a falling-off in tax receipts. As a result the revenue outturn of £651.4 million represented a short-fall of £6.7 million in tax revenue as compared with the budget estimate but this was largely offset by an increase of £6 million in non-tax revenue. As well, there was also an unavoidable net increase in expenditure of £15.5 million over the budget estimate so that the deficit on the current budget for the nine months period ending 31st December last amounted to £92.3 million, that is £16.2 million more than estimated at budget time.

Exchequer capital resources and foreign borrowing

A table which is being circulated with the other budget documents today shows the amount of borrowing necessary to finance the capital budget, that is the public capital programme, certain non-programme capital expenditure and the deficit on the current budget. The most striking feature of the table is the foreign borrowing requirement of the Exchequer. In the nine months to December, 1974, this amounted to £147 million. In addition, State bodies borrowed some £35 million abroad during the same period to enable them to finance their share of the programme.

Present indications are that the Exchequer will have to borrow possibly some £100 million abroad to finance 1975 capital expenditure; the corrsponding figure for State bodies is £50 million. This estimate assumes that the Exchequer's normal resources will continue to be on target. However, it must be emphasised that some of these are by no means assured. In particular, sales of securities to the non-bank public are especially difficult to predict. As well, sales of securities to the banks depend on the growth of bank resources during 1975 and therefore will be affected by any change in the general economic situation. Moreover, it is clear that foreign borrowing of this magnitude will pose considerable problems. Indeed, foreign borrowing is becoming increasingly costly and, while the nominal rate of interest may on occasion appear to be lower than on equivalent domestic securities, the possibility of extra costs arising because of unfavourable exchange rate movements must not be overlooked.

While the Government have decided for the reasons I have already given, to continue in 1975 a high level of public expenditure—and the high level of foreign borrowing which this necessarily involves—it is obvious that this country cannot continue to borrow large sums abroad indefinitely. If we were to do so, our present excellent creditworthiness abroad—as evidenced by the willingness of foreign lenders to invest with the Government and State bodies and by the substantial inflow of private capital—might be affected. Further, the refinancing of foreign loans when they mature will become a major problem in the next few years. Since, in recent times, long-dated securities have lost their attractiveness for investors as a result of unsettled world economic and monetary conditions, much of our recent foreign borrowing is necessarily short to medium-term and this pattern seems unlikely to change significantly in the immediate future. This situation underlines the need to look to domestic sources for as much of the Exchequer's borrowing as is practicable. The rates of return on State small savings schemes are under constant review and, while I am satisfied that in general present rates and conditions compare favourably with those available elsewhere, I propose to make two changes which are designed to improve further their attractiveness.

The first of these relates to the prize bonds scheme. I propose increasing the rate of interest on which the prize fund is based to 6.25 per cent net, equivalent to an interest rate of approximately 10 per cent before tax. This will enable the prize fund to be increased by £600,000 annually which will permit me to give a new top monthly prize of £50,000 in addition to the present prizes the top prize of which is £25,000. The price of bonds will remain the same. The other change relates to the National Instalment-Saving Scheme which was introduced in 1970 and amended in 1973. Under it a person agrees to save a fixed monthly instalment for 12 consecutive months and to leave the proceeds with the Exchequer for a period of up to a further five years. The present maximum monthly instalment allowable is £20 and I now propose to increase this figure to £40 a month.

Medium and long-term economic policies

In my statement last year, I said that the Government had decided against publication of an economic and social programme for a medium-term period ahead because it could not be meaningful in the context of the unsettled world economic situation. As the situation and its impact on the domestic economy has worsened, the obstacles to the presentation of a comprehensive programme are greater than they were a year ago. Of all the tasks which could engage my attention, the least realistic would be the publication of a medium or long-term economic plan based upon irrelevancies in the past, hunches as to the present and clairvoyance as to the future.

The main bread and butter objectives to which our efforts must be urgently directed are self-evident in terms of employment, investment, income distribution and price stability. The most significant likely development in the medium and long-term is an increase in population and the need to provide employment for a growing labour force with steadily improving living standards. In order to meet the challenges which the attainment of these objectives implies, forward economic thrust, greater than has been achieved heretofore, will be necessary. The absence of a published programme at this stage does not denote any discontinuity of the Government planning process. Close attention is being given to the continuous updating of medium-term and long-term policies and public expenditure programmes for a number of years ahead are being prepared. As soon as a realistic and well-based plan, with reasonable prospects of achievement, can be stood over it will be published.

Current budget expenditure 1975

The total of the non-capital supply services in the Estimates volume for 1975 is £960 million. When the cost of the Central Fund services, £200 million, and the provision for payments to the Road Fund, £19.1 million, are added, the expenditure total for the year amounts to £1,179.1 million. This is the figure that appears in the White Paper on the Receipts and Expenditure for 1975 presented to the Dáil on Friday last. I have already today added £3.97 million in total to this figure because of the extra provision I am making for manpower training, the local improvements scheme, cattle feed vouchers and the horticultural oil subsidy. To it must now be added a further provision of £40 million for public service pay, giving a total of £1,223.1 million.

A substantial part of this £40 million is already committed since it covers the 1975 cost, including arrears, of arbitration awards recently approved and related adjustments which were not taken into account in the Estimates volume and also the extra amount that has to be provided for the threshold payments of the 1974 National Agreement now that we know the actual consumer price index figure for November, 1974. The balance of the £40 million is intended to meet the effect on public service pay and pensions of whatever general arrangements follow on the expiry of the 1974 National Agreement and any other increases under that agreement that may have to be met in the meantime. There are obvious difficulties in estimating the cost of these last two items since it depends on the outcome of negotiations still to come but, in view of their importance, it would be imprudent not to include them in any global provision I am now making. In deciding how much to put into the global provision for these as yet uncertain elements, I have proceeded on the basis that when it comes to negotiating arrangements to follow the 1974 agreement and when unions may be contemplating special claims there will be a satisfactory response to the Government's request for restraint in the interests of all and, in particular, the interests of the weaker sections of the community. If the Government's appeal for moderation is not heeded the consequences in costs and taxation would be even less palatable.

Social Welfare

In 1972-73 Exchequer expenditure on social welfare was £92 million. Each of the two budgets since then provided for unprecedented increases in social welfare spending so that the 1975 Estimate, on a prebudget basis, stands at £177 million—almost double its 1972-73 level. We have also advanced by several months in some cases the dates on which improvements in payments have been made. As a result we now have a far more comprehensive, efficient and humanitarian social welfare service covering many groups whose needs formerly went unrecognised, at rates of payment which reflect a more realistic assessment of requirements than previously was the case. The Government are resolved that economic pressures will not be allowed to erode the very substantial social welfare progress of the last two years.

The Government recognise that pensioners and other social welfare recipients remain far more vulnerable to the ravages of inflation than are other sections of the community. In the White Paper A National Partnership it was made clear that special steps were being taken in this budget to cushion those who are dependent on social welfare payments against price rises and that such payments would be revised during the course of the year. In fulfilment of this commitment I am happy to announce that all rates of social welfare payments will be increased from the beginning of April rather than from July, so that only nine months will have elapsed since last July's increase, compared with the full year which normally elapses. Moreover, a further increase in weekly payments will come into effect from the beginning of October next, which will be designed to maintain the real value of the level of payments established in April. The April increase in the personal, adult dependant and child dependant rates of payment for all social insurance and assistance schemes as well as for related schemes administered by the health boards will on average range between 21 per cent and 23 per cent. This, for instance, will mean an increase in the contributory old age pension for a married couple from £15 per week to £18.40 where both are over pension age. Unemployment benefit for a married person with three dependent children will rise from at least £19.00 per week to £23.00 per week, and more on the pay-related scale. In addition to compensating for the rise in the cost of living since last July this increase will provide for a substantial improvement in real terms in the value of the pensions and other benefits which will in turn be preserved against erosion over the course of the year by the further October adjustment. Thereby social welfare recipients will be assured of the maintenance of the purchasing power of their payments.

Children's allowances for the second child and for subsequent children in families are also being increased by 30p per child. The allowance for the second child will now be £3.60 per month and for the third and subsequent children £4.35 per month.

In each of the past two budgets provision has been made for a one-year reduction in the qualifying age for old age contributory and non-contributory pensions and, consequently, for the free travel, electricity allowance and television licence schemes. This year again, in keeping with the Government's commitment to a progressive reduction of the qualifying age, I am happy to say that a further one-year reduction is being made, so that it will now stand at 67 years. This will enable a large additional number of persons to qualify for pensions and the associated fringe benefits.

I am also providing for a further easement of the means test, by increasing the amount of assessed means which will be disregarded from £5 to £6 per week of current income. The liberal provisions as to capital means will be as heretofore.

I might best illustrate the dramatic effect which the relaxations of the means tests in recent years have had by saying that, taking into account this latest relaxation and the reduction in the qualifying age, a non-contributory pensioner couple, both of whom are over 67, will be able to have joint income up to £12 per week and still receive a full pension at the new rate of £8.85 per week each—a combined weekly income of £29.70.

I now turn to the question of financing these reliefs. The Exchequer share of income maintenance expenditure here is over 60 per cent, which is abnormally high by western European standards. One of the main explanations for this is that employers and employees together contribute a far lower proportion than is normal elsewhere of the cost of the social insurance element in this expenditure. The Government have therefore decided in principle to transfer the Exchequer contribution towards the cost of social insurance to the other contributors to the social insurance fund over a period of six years or so. This will have the effect of bringing the Exchequer's overall share of income maintenance expenditure more into line with practice in other EEC countries and of making the social insurance Fund more self-financing.

The total cost of all the social welfare improvements I have announced is estimated at £51.25 million in 1975 and £80.76 million in a full year of which the Exchequer will bear £27.53 million and £49.14 million, respectively.

In view of the likely trends in employment in 1975, the Government have also decided that it would be prudent to make available an extra £15 million against additional benefit and assistance claims above the level provided for in the published Estimate for social welfare. The Exchequer will be providing £7.1 million of this sum and the balance will be raised by way of a special increase in the social insurance contributions.

A more detailed statement of the improvements will be found in the summary of the principal features of the budget which will be circulated when I conclude this statement.

The extra provision of £34.6 million for social welfare brings my expenditure total to £1,257.7 million.

Finance Bill 1975

I now turn to some of the more important provisions which will be included in the Finance Bill some of which will have important implications for the receipts side of the budget.

Capital allowances for industry

The provision for free depreciation in respect of new plant and machinery, outside the designated areas, and its equivalent in the form of 100 per cent initial allowance, was renewed in 1973 for a second period of two years and is due to expire on 31st March, 1975. In considering the question of further renewal of these allowances the Government have been influenced mainly by the need to stimulate investment at this time and by the advantage of assisting Irish industry to equip itself for the highly competitive years which lie ahead. They have, therefore, decided that the existing rates of allowance should continue for a further two years. As a corollary, the present suspension of the shipping investment allowance will be continued for a similar period.

The special 20 per cent investment allowance in respect of new plant and machinery for use in the designated areas is due to expire at the end of March and I propose that it also should be retained up to 31st March, 1977.

The present position in relation to capital allowances for industrial buildings—in any part of the country— is that an initial allowance of 20 per cent and an annual allowance of 2 per cent are available. This initial allowance is a temporary one and is due to expire on 31st March next. In order to give additional and early help to the nation's industrial and building sectors the Government have decided to increase substantially the existing rates of allowance. I therefore propose that new rates of 50 per cent initial allowance and 4 per cent annual allowance will apply in respect of industrial buildings from 1st April next. The new rates will continue for two years as in the case of the other capital allowances to which I have referred.

The cost of these increases is estimated at £0.5 million in a full year but in 1975 no cost will arise. I would like to emphasise that these allowances are temporary and it would be unwise for anybody to assume that they may be renewed from time to time. The Government's reason for extending and improving the allowances this year is to give an immediate boost and encouragement to industry, including the construction industry. Firms interested in availing of these allowances will need to act quickly to get advantage of the incentives before they are withdrawn.

Anti-avoidance measures

As I have indicated on a number of occasions, it is my policy to take firm and timely action against tax avoidance and evasion in order to ensure that people who can afford to pay tax pay their fair share.

Income tax and corporation profits tax

In 1973 and again in 1974 I introduced a number of anti-avoidance measures. Further action is necessary this year. A device recently brought to my notice involves the creation of a lease between a parent company and a subsidiary company with special terms which secure that in the accounts of one company a large premium becomes immediately deductible for tax purposes while the same premium in the hands of the other company is chargeable to tax, not at once, but over a long period of years, often as long as 40 years. It is necessary, in view of the possible loss to the Exchequer, to take immediate action and I propose, accordingly, to move a Financial Resolution today with immediate effect designed to counter this device.

Value-added tax

I now come to three anti-avoidance measures in relation to value-added tax. Because of the possible loss of revenue, it is desirable to take action at once and accordingly I shall be asking the House today to approve the necessary Financial Resolutions relating to these proposals, which will have immediate effect.

The first two VAT avoidance devices relate to the working of the top VAT rate of 36.75 per cent. This is on a two-tier basis and applies to a limited range of goods comprising private cars and motor cycles, radio and television sets, gramophones and records.

Of the 36.75 per cent rate applicable at the manufacturing level 30 per cent is not subject to the normal VAT recoupment arrangements but is trapped in the price passed on to the next stage of distribution.

It follows, therefore, that if the manufacturer's price is fixed at an artificially low level the loss of tax can be appreciable. It has come to my notice that some manufacturers are selling at artificially low prices to their own subsidiary wholesaling companies so as to avoid much of the tax. In order to put an end to this device which is unfair to competitors and deprives the Exchequer of necessary revenue I propose to provide that in such cases the value on which tax is chargeable at the manufacturer's level must be the open market price.

The second avoidance device to be countered arises out of the cessation of manufacturing or assembly. As the VAT legislation stands, there is a doubt as to whether, if manufacturing ceases, stocks which are on hands are subject to the higher tier of the top VAT rate. As in the case of the other VAT avoidance device this practice is objectionable as, apart from the loss of revenue, it gives the people involved an altogether unjustified advantage over competitors.

The third VAT matter on which it is proposed to take action concerns a doubt which has arisen about the application of a provision in existing VAT legislation. The relevant section of the Value-Added Tax Act, 1972, was intended to ensure, in a case where materials are supplied for the manufacture of goods and where the tax rate for the finished goods exceeds the rate for the materials, that the Exchequer would receive in total the amount of VAT appropriate to the finished goods. The doubt I referred to is whether the existing legislative provision applies in cases of importation of materials where no tax would be payable at that stage by a person registered for VAT. I estimate that these three measures to combat avoidance of VAT will yield £0.5 million in 1975.

Interest on overdue tax

Existing legislation provides for the charging of interest in respect of overdue payments of tax. The purpose is to discourage delay in tax payments and also to recoup the Exchequer in respect of the interest on the borrowing by the State necessitated by delay on the part of taxpayers in paying tax.

At present, interest at the rate of 1 per cent per month is chargeable in respect of overdue PAYE tax deducted by an employer from his employees and in respect of tax deducted from payments by a contractor to a sub-contractor. The same rate of 1 per cent a month applies in respect of value-added tax not paid by traders to the revenue authorities by the due date. As regards a taxpayer's own income tax or corporation profits tax, the rate of interest chargeable on overdue tax is ¾ per cent per month. Present interest rates on overdue tax were fixed when interest rates generally were some percentage points below—indeed, well below—current rates.

In view of the current high cost of borrowing generally, these rates are now clearly inadequate. I propose to increase the rate of interest for all overdue tax of the kinds mentioned to a uniform 1½ per cent a month, the change to take effect from 6th April, 1975.

At present, where an employer neglects to make a return of PAYE tax or makes a return in respect of an amount of tax regarded as inadequate and the revenue authorities assess him by way of an estimate of the tax, there is no power to charge interest on the overdue tax for any period prior to the month in which the estimate is made. It is proposed to rectify this matter by providing that interest may be charged as from the end of the year of assessment to the time of payment. I will move an appropriate Financial Resolution today.

Corporation profits tax exemption

As announced some weeks ago, the new system of company taxation which was to have come into operation on 6th April, 1975, has been deferred in order to allow ample time for arrangements consequential on the passage of the necessary legislation, which will be of a complicated nature. As a result of the deferment I propose to include in the Finance Bill provisions to extend, for a further period, the existing corporation profits tax exemption for certain public utility societies and other bodies, including building societies.

Taxation of farming profits

I would now like to refer to a number of matters in relation to the taxation of farm income for which I shall be providing in the Finance Bill. The first of these relates to the option provided for farmers of electing for assessment in the present income tax year on a notional basis. The intention is that this concession will be available to farmers, as an alternative to assessment on an actual profits basis, for a transitional period and accordingly I propose that it will continue to be available for the income tax year 1975-76 on the same basis as in the current income tax year.

When a new capital allowance is introduced the normal practice is that the new allowance relates only to expenditure incurred from a current date. In the case of the farm buildings allowance which was introduced in the Finance Act, 1974, the operative date is 6th April, 1974. Many farmers invested a substantial amount of borrowed capital on farm buildings in the years immediately prior to 1974 in wise anticipation of the opportunities presented by Common Market membership. This investment was originally undertaken and loans raised when the repayment of these loans could be met out of tax-free profits. Since this is not the case as far as those farmers now liable to tax are concerned, the Government, having regard also to the difficult year experienced by farmers generally, have decided exceptionally to make the existing annual farm buildings allowance retrospective. Instead of applying from 6th April 1974, the allowance will now apply from 6th April, 1971.

In addition to this concession, the Government have also decided to introduce an initial allowance of 20 per cent in the case of farm buildings, with effect from April, 1974. This allowance will enable capital expenditure to be written off more quickly and should provide a valuable incentive to farmers. So as to ensure that market gardens will not now be at a comparative disadvantage in this regard, it has also been decided to increase to the same level and from the same date their initial building allowance which at present is at the rate of 10 per cent. The costs to the Exchequer of these changes will be £100,000 in 1975 and about £150,000 in a full year.

The next matter relates to land taken for grazing, which, under existing law, is not included in determining land occupied for the purpose of the taxation of farming profits. On the other hand, grazing profits have always been chargeable to tax. I propose to remove the anomalies by treating land taken for grazing as occupied by the person taking it and by treating a grazier as carrying on farming. The change will have effect as from 6th April, 1975.

The final provision is designed to remove a doubt relating to the application of sections 15 and 16 of the Finance Act, 1974. It has been contended that farmers with land of rateable valuation of £100 or more who are also carrying on another trade or profession are not within the scope of section 16 and are, therefore, entitled to marginal relief and to the option of being assessed on the notional basis. This was not intended, and I propose making a suitable amendment, effective from 6th April, 1974, in the Finance Bill.

Disabled drivers

At present repayment of duty at the rate of 20 pence per gallon, subject to a maximum of 350 gallons per person per year, is made in respect of petrol used in road motor vehicles driven by disabled persons. This sum approximated to the duty payable on a gallon of petrol prior to the increase in the duty effective from 5th December last. I have decided to authorise the Revenue Commissioners to increase the rate of repayment to 34.05p per gallon, equivalent to the present amount of customs and excise duty. This increase for disabled drivers will apply to petrol purchased on or after 5th December last.

Irish thalidomide children

As announced by An Tánaiste last week the Government have decided to supplement the capital and monthly awards which are already payable to Irish thalidomide children by a trust set up in the Federal Republic of Germany. It has also been decided that the monthly payments to be made by the Exchequer will be exempted from income taxation in the same way as the monthly payments from the West German trust were exempted by the Finance Act, 1973. The Finance Bill will make provision accordingly.

Business liquidity, credit policy and taxation

Representations have been made to me in recent months regarding the liquidity problems of the business sector. These problems, it is stated, result from the operation of credit policy, price control policy and tax policy.

The indications are that bank lending in 1974 was some what less than it could have been. The slowdown was marked in the second part of the year when it was associated with the slackening in economic activity arising from, among other causes, sluggish external and internal demand, adjustment to a more competitive environment, and the effects of inflation on cash flow and profitability. There are indications that some firms are unwilling, because of cost and uncertainty, to increase their borrowing at present, while the banks, for their part, although they have the necessary resources to assist firms to overcome their short-term problems, are having difficulty in assessing the degree of risk involved in lending in some cases.

The Government are concerned that problems arising from the present difficult economic situation should not be aggravated by difficulties in regard to credit. Priority must be, and is being given in the use of available credit resources to meet the requirements of the productive sectors of the economy which must be preserved and strengthened. Discussions are being held with the interests mainly involved on the question of providing special medium-term facilities to finance investment needs. These discussions will now take into account an assessment of the position in the light of the reliefs which are being provided in this budget. The substantial provision available directly through the Industrial Credit Company, Fóir Teoranta and the IDA is indicative of the Government's determination to ensure that industry will be provided with the necessary finance to surmount present problems and to secure its future progress.

The White Paper on A National Partnership accepted that continued industrial expansion would require additional facilities for export credit. It is intended in co-operation with and with the assistance of the banks, to provide credit on such preferential terms as will meet the future export credit financing requirements of Irish exporters of capital goods. Details of the revised scheme will shortly be announced.

It has been argued from some quarters that problems have been caused for industry and commerce by the operation of present price controls, mainly in connection with the maintenance of cash flow and the financing of investment programmes. Obviously it would be harmful for the welfare of the community if price control were operated in such a fashion as to cause unemployment or to prevent productive investment. This fact has always been recognised and has, indeed, been referred to in reports of the National Prices Commission. These matters and the implications for price control of changes I am about to announce in the system of assessing profits for taxation will be considered by my colleague the Minister for Industry and Commerce in consultation with the National Prices Commission. My colleague will deal further with these points when he speaks during this debate.

As regards taxation it is claimed that because of inflation the system of taxing company profits is causing severe liquidity problems for some businesses. In particular, it has been claimed that, because of the inflated replacement prices of trading stock, a certain amount of profits which would otherwise have been free for general reinvestment or for distribution as dividends is immediately required for the purchase of more costly trading stock, and should not be the subject of taxation.

It might be as well, Sir, to be clear on one point. The treatment of trading stock for tax purposes is in accord with the accepted valuation conventions of the accountancy profession. It must also be borne in mind that, generally speaking, Irish companies pay tax on the basis of their profits in the preceding year and on average do not pay tax on the profits from a particular transaction until, about 18 months later. In this respect— and viewed in conjunction with our schemes of export tax relief and free depreciation—Irish companies are at a considerable advantage compared with their foreign competitors; most of the other EEC countries require much earlier payments of company tax, whether by way of "advance corporation tax" or substantial payments on account, during the course of the accounting period. The deferral of payment in this country constitutes a substantial aid to business liquidity, especially in a period of heavy inflation.

The first White Paper on Company Taxation published in 1972 proposed that the dates of payment of company tax be advanced. However, following representations in the matter, this Government announced in the second White Paper published last March that companies would be permitted to continue with their present patterns of payment so as not to cause serious cash flow problems for them. Since then, there has been a substantial increase in the prices of commodities and raw materials generally. The Government have, therefore, been considering whether further alleviation is required, bearing in mind that the problems of business liquidity vary as between one firm and another, depending on factors such as the type of business, profit margins, frequency of stock turnover and the increase in the costs of raw materials. They have decided that the most appropriate way of giving relief through the taxation system is by deferring the payment of income tax and corporation profits tax on profits tied up in increased costs of trading stock.

Accordingly, I propose that in respect of corporation profits tax on profits of accounting periods which ended in the tax year 1973-74, and in respect of income tax for 1974-75— which would normally be based on the same profits—certain classes of trading companies may be allowed a deduction, in the computation of taxable profits, of the amount by which the increase in the value of trading stock and work-in-progress exceeds 20 per cent of trading profits in the accounting period. The concession will apply to companies engaged wholly or mainly in manufacturing, construction or farming or in the sale of plant, machinery or material to those sectors.

The relief will continue for a second year covering accounting periods which end in the tax year 1974-75. For practical reasons it is not possible to bring unincorporated traders in the sectors concerned within the concession this year but it is intended that the relief will be extended to them next year, with retrospective effect, so that over a two year period they will be placed in the same position as qualifying companies. The knowledge that they will enjoy this concession should be of immediate help in reducing the provision which would otherwise have to be made to meet tax liabilities.

The relief will have immediate effect so that income tax and corporation profits tax liabilities at present due for payment will be reduced accordingly; if payment has already been made relief will be given by way of a refund. The appropriate arrangements will be announced by the Revenue Commissioners shortly and the detailed legislative provisions will be contained in the Finance Bill. The cost of the relief to the Exchequer will be £12 million in 1975.

This form of relief is both ad hoc and temporary, dictated by the need to give immediate assistance with a view to maintaining employment and stimulating investment. I am not taking a line at this stage on whether there should be any permanent adjustment of the system of taxing company profits. Any future changes in this respect will depend on such factors as the rate of price increases, developments in regard to accounting conventions for the measurement of profits in an inflationary situation and the implication of such developments for taxation.

Estimation of revenue

I now come to my estimate of total revenue receipts for 1975, that is, from tax revenue, including motor vehicle duties, and non-tax revenue. This is shown at £1,115 million in the White Paper on Receipts and Expenditure. This figure, of course, includes the £27.5 million estimated to accrue in 1975 from the additional tax on petrol introduced last month. It does not however include any amount in respect of the proposed new capital taxes which are being introduced instead of death duties. As already explained, the yield from these new taxes is not likely to be large in the initial years. I am allowing for only £3 million from this source in 1975. The estimated yield from death duties is, of course, lower than it would have otherwise been if these duties were not being abolished from April next. When the £3 million is included the estimate of total revenue for 1975 becomes £1,118 million.

The estimation of tax revenue, while always a problem in conditions of inflation, is particularly difficult in times of international economic uncertainty such as the present. There is a tendency to think that Ministers for Finance are excessively cautious when it comes to forecasting revenue. The experience in 1974, when tax revenue —for the reasons I have already explained—fell short of the estimated figure by £6.7 million should correct this view. Indeed, a continuation of the trends experienced in the economy in recent months would make for a depressed estimate of revenue in 1975.

I am confident, however, that these trends will not continue and, as an earnest of my belief in the basic strength of the economy and its capacity to ride out the present unsettled conditions, I am estimating receipts on a fairly optimistic basis in 1975 in the expectation that the economy —aided by the beneficial effects of today's budget—will revive in the coming year.

Indeed, there are hopeful signs of such a revival already: I refer to the continuing rise in industrial exports and the boost to agricultural exports that will be provided by higher EEC prices. I must, however, sound a note of caution. If, contrary to my reasonable expectations at this stage, the economy should not respond adequately during the year there may be a fairly serious shortfall in revenue and appropriate corrective action may have to be taken later. The position will be kept under careful review as the year evolves.

Income tax relief

The Government are committed to a policy of reviewing the personal income tax allowances at regular intervals and, as an earnest of this policy, allowances were substantially increased in my last budget. This year all personal allowances are being increased by 15 per cent, some of them indeed by more. This compares with the increase of 8.6 per cent in the consumer price index between May, 1974, and November, 1974. The following are illustrations of the improved allowances. The single allowance will be increased from £500 to £575, the widowed allowance from £550 to £635 and the married allowance from £800 to £920. The increase in the child allowance will be from £200 to £230. Thus for a married couple with three children the combined allowances will rise from £1,400 to £1,610. Commensurate increases will be made in the other personal allowances.

An increase of £30 in the working wife's allowance will ensure that the personal allowance of a married couple at work will equal the corresponding allowances given to two single persons. Details of the increased allowances, and resulting savings in tax to taxpayers with different level of income, are contained in the "Principal Features of the Budget" which will be circulated separately to Deputies at the end of my speech.

I have long felt that the tax code does not give sufficient recognition to the position of our senior citizens who, during their working lives, contributed to the revenue of the State. I propose to increase significantly the special "age allowance" for persons aged 65 or over—which can, of course, be obtained in addition to the ordinary personal allowances to which such persons are entitled. The "age allowance" will be increased by 80 per cent to £45 in the case of single and widowed persons and by 190 per cent to £145 in the case of married persons. The combined "age" allowance and personal allowance of a single person, widowed person and married person aged 65 or over will be £620, £680 and £1,065, respectively—which ensures, for example, that if such a person's sole income is a social welfare pension, no liability to income tax should arise. The cost of the increases in personal income tax allowances is £15.3 million in 1975 and £28.1 million in a full year.

So as to mitigate possible hardship from the imposition of both income tax and wealth tax, particularly if the combined taxes exceeded income, I announced last May, that, contemporaneously with the introduction of the wealth tax, the top rate of income tax would be reduced from 80 per cent to 70 per cent and that, in addition, there would be substituted for the existing two bands of taxable income of £2,000 chargeable at 50 per cent and 65 per cent, three bands of £2,000 each chargeable at rates of 45 per cent, 55 per cent and 65 per cent. As wealth tax is due to come into effect on 6th April, the beginning of the next income tax year, I am now making the necessary provisions to give effect to these income tax adjustments. The cost to the Exchequer in 1975 is £0.4 million and £1.75 million in a full year.

Life assurance premium relief

Under the new simplified income tax structure introduced last year relief in respect of life assurance premiums is available to income taxpayers whatever their marginal rate of tax. In the case of taxpayers liable at rates exceeding 35 per cent this resulted in a widening of the absolute or cash differential of rebate as between Irish and non-Irish assurance companies. In response to representations on this point I announced in this House during the passage of last year's Finance Bill my intention to introduce amending legislation in 1975. I have now decided that the pre-1974 cash level of differential should be restored by allowing relief on the ? or ½ basis, as appropriate, for tax rates up to 35 per cent and to afford relief at ? of the premium for the excess of higher tax rates irrespective of whether the policy is with an Irish or non-Irish office. The revised arrangement will be provided for in the Finance Bill and will be made retrospective to the beginning of the tax year 1974-75.

Budget deficit

The opening deficit shown in the White Paper on Receipts and Expenditure was £64.15 million, to which I have now added a total of £78.6 million in respect of public service pay, social welfare and the other new expenditure items I mentioned. My opening figure of receipts will be augmented by £4.7 million in total from capital taxes, VAT anti-avoidance measures and the temporary suspension of the VAT credit available to registered purchasers of cattle. From the receipts side a total of £27.8 million falls to be deducted for the tax reliefs I have described. This means that the total deficit is now £165.85 million. From this figure I propose to deduct £6 million in respect of unspent balances of Exchequer issues in the hands of Departments at the end of 1974. This reduces the deficit to just under £160 million.

I am now faced with the major problem of financing a deficit of this order. Clearly, the raising of new taxation of the size necessary to meet this deficit—even if it were otherwise acceptable—has to be ruled out in present economic circumstances because of the contractionary effect it would have on demand at a time when what the economy needs is the maximum sustainable expansionary action. Indeed, looking backwards, it is clear that were it not for the expansionary policy pursued in my two previous budgets the growth rate of the economy in those years would have been much lower.

(Interruptions.)

I am grateful for the applause of the begrudgers. Notwithstanding the stimulus of the last budget demand remained slack in 1974 mainly for reasons I have already indicated. An improvement in demand was expected towards the end of the year as the effect of the budgetary income tax concessions and increases in social welfare benefits began to be felt, but it did not materialise because of the underlying sluggishness in the world economy which had its inevitable repercussions on this country. This deceleration in the economy is reflected in the increase in the number unemployed over the corresponding figure last year.

Thus it is clear that, if a budgetary stimulus is not maintained in 1975, demand and employment will be even more seriously affected than at present. Despite the link between expansion and inflation, the Government have opted for stimulating the economy, as the alternative of contraction, because its attendant unemployment and drop in production, is unacceptable. It must, however, be emphasised that if such a stimulus to the economy through the budget is not matched by a corresponding response in the form of restraint in income demands the effect will be entirely nullified.

While the Government have, as I have said, ruled out raising new taxation to cover the whole deficit the financing of the entire amount by borrowing must, on the other hand, be ruled out since the public capital programme alone will involve substantial foreign borrowing. In these circumstances the Government have decided that the most appropriate course is to raise extra taxation only to the extent necessary to reduce the deficit to a size which, having regard to the deficit in 1974, would represent a moderate stimulus for the economy. The Government have, accordingly, decided that new extra taxation amounting to £34.5 million should be raised. This will reduce the deficit to £125.35 million.

Plus the £30 million before Christmas.

New taxation

The Government have decided that, of the new taxation amounting to £34.5 million, £32 million will be raised on spirits, beer, tobacco, wine and table waters. The remaining £2.5 million will come from an increase in the duties on betting and gaming and also in stamp duties on larger property transactions. The proposed increases will come into effect tomorrow except as I shall otherwise indicate. When circumstances require that some personal sacrifices be made in the interest of the community as a whole, and the less well-off in particular, the Government are satisfied that extra revenue should be raised mainly from customs and excise duties on the less essential "old reliables" where the duty, being a fixed sum based on quantity, does not keep pace with inflation. The duty on spirits, beer and tobacco was last increased in 1973. On wine it was last increased in 1969 and on table waters in 1966.

The increases proposed are detailed as follows:

Spirits

The increase in the tax element in the retail price of a glass of spirits will be 5p and will bring in extra revenue of £6.2 million in 1975 and £7.0 million in a full year. The total quantity of duty-paid spirits consumed in the country has increased by over 68 per cent in the five-year period up to the end of last March.

Beer

The increase in the tax element in the retail price of the pint of beer will be 3p and will bring in £15.0 million extra revenue in 1975 and £17.00 million in a full year. The total quantity of duty-paid beer consumed in the country has increased by almost 41 per cent in the five-year period up to the end of last March.

Tobacco

An increase of 6p is proposed in the tax element in the retail price of the standard packet of 20 cigarettes with pro rata increases in cigars and pipe tobacco. Consumption of duty-paid tobacco has increased by 13.5 per cent in the five year period up to the end of March last. The measures are estimated to bring in extra revenue of £9.5 million in 1975 and £10.8 million in a full year.

Wine

The increase proposed is 10p on a bottle of wine and will bring in £0.8 million in 1975 and £0.9 million in a full year. Since the duty on wine was last raised in 1969, consumption has grown by 53 per cent up to the end of last March.

Table waters

An increase from 7.43p to 10p per gallon of table waters is proposed and will result in extra revenue of £0.5 million in 1975 and virtually the same in a full year. Since the duty was last increased in 1966, consumption has grown by 136 per cent.

Betting duty

An increase in off-course betting duty from 15 per cent to 20 per cent is proposed and will bring in extra revenue of £1.3 million in 1975 and virtually the same in a full year. This increase will be effective from next Monday. It is also proposed to increase later, from 5 per cent to 10 per cent, the levy on on-course bets with bookmakers which is paid to the Racing Board. The raising of the levy, which will involve an amendment to the Racing Board Act, 1945, will make it possible to increase the board's contribution to stakes.

Stamp duties

There will be an increase from 3 per cent to 4 per cent in the rate on property transactions exceeding £20,000 and up to £50,000 and from 5 per cent to 6 per cent on property transactions of over £50,000. The yield is estimated at £1.1 million in 1975 and £1.3 million in a full year. The increases will be effected by way of an Order under the Imposition of Duties Act, 1957 and will affect instruments executed on or after 1st March next.

Gaming

At present, premises licensed for gaming under the Gaming and Lotteries Act, 1956, are subject to an excise duty of £40 per annum and lesser amounts for shorter periods. It is proposed to increase this annual duty to £100 with pro rata increases in the other rates. In addition a new excise duty, at the rate of £50 per machine, will be imposed on slot machines in use on the licensed premises involved. This new duty will not come into effect until 1st May next when it is expected that the legislative and administrative arrangements necessary to give effect to the measure will have been made. The yield from these measures is estimated at £100,000 this year.

Purpose of new taxation

The imposition of new taxation can normally evoke colourful epithets and violent hyperbole from the unthinking or the selfish. I suppose this budget will receive a similar response from the same quarters. It would be well, therefore, to reflect that the new taxation in this budget is designed to transfer funds from the satisfaction of less essential tastes to the education of the young, to maintain and create productive employment in industry and agriculture, to the maintenance of the living standards of the needy, to the provision of essential health services for the sick and housing for the homeless and to the host of other services regarded in any decent society as demanding priority treatment.

Conclusion

The tax adjustments and the allocation of increased funds to stimulate employment, production and demand, qualify this budget for the description "carefully expansionary".

As pointed out in the recent OECD report on the Economic Outlook for 1975, governments everywhere are today faced with policy dilemmas which will severely test their ability to obtain domestic and international agreement on the priorities to be observed. The report identified the basic challenge to economic policy presented by current conditions as being one of finding ways of slowing down inflation and resuming economic growth at the same time. It underlined the need for expansionary action to be cautious.

Today's budget sets out to implement, through measures in the fiscal field, the two basic aims of Government economic strategy in 1975 to which I have referred a number of times in the course of my remarks today. These are the maintenance of employment and the preservation of living standards. The budget aims to achieve these objectives through increased public expenditure, current and capital, and through the running of a high budget deficit. In conjunction with the amount required to finance the public capital programme this could involve Exchequer foreign borrowing close to £225 million. Sizeable increases in social welfare benefits, the provision of income tax reliefs and the measures designed to benefit industry and agriculture will confer a twofold benefit. Firstly, they will provide a moderate increase in domestic consumer demand without stimulating inflation and, secondly, they will underpin the basis for the national partnership which is essential to the welfare of everybody in the community. In these difficult times the budget does not purport to improve living standards generally. Such an improvement must be deferred for the present because now it is unobtainable. Restraint at this stage however will enable further advances to be realised sooner rather than later. Self-seeking sectional action at this stage will not only not profit those concerned but will jeopardise the future prosperity of the entire community. In particular it is of vital importance that the rise in the consumer price index resulting from today's tax measures on non-essentials should not be used as a basis for demands for further income increases.

The country's basic economic objectives in 1975 must be to improve the growth rate so as to ensure that the country will be able to resume, when international conditions permit, the vigorous growth performance of recent years which was interrupted by outside events. The Government, for their part, through the measures in today's budget aim to ensure that in the testing time ahead the basic strength of the economy is maintained and encouragement is given to investment for future expansion.

While the economic prospects for 1975 are not immediately encouraging, if the co-operation of all sections of the community is forthcoming the difficulties can be overcome. While these drawbacks must not be underrated, we must not be intimidated by them. Confidence is warranted and desirable, together with a firm—and well-justified—belief in our own ability to weather the storm. The OECD Report I mentioned earlier referred to the global danger in the present situation of a deterioration of confidence internationally. As confidence in this country's economic future is not lacking abroad, there is no reason why we should be found wanting. There is no room for pessimism. Defeatist attitudes that breed on themselves are uncalled for and dangerous. Today's budget is designed to foster the spirit of partnership and co-operation the country now acutely needs and to build the confidence to set this nation once again on the path of growing national prosperity.

I will conclude by an apposite quotation from a great Irish economist and parliamentarian, Thomas M. Kettle, who would, I believe, consider it appropriate in these difficult times to remind us all irrespective of our political loyalties or stations in life "that politics is not as it seems in clouded moments, a mere gabble and squabble of selfish interests, but that it is the State in action. And the State is the name by which we call the great human conspiracy against hunger and cold, against loneliness and ignorance; the State is the foster-mother and warden of the arts, of love, of comradeship, of all that redeems from despair that strange adventure which we call human life".

With that approach we can overcome all adversity and together ensure a better tomorrow.

TABLE EXPLANATORY OF THE CURRENT BUDGET, 1975.

REVENUE

£ million

EXPENDITURE

1. Tax revenue (excluding 2 below)

931.50

1. Debt service and other Central Fund charges

200.00

2. Motor vehicle duties

28.70

2. Payments to Road Fund

19.10

3. Non-tax revenue

154.75

3. Supply services (non-capital)

960.00

1,114.95

1,179.10

4. Add:

4. Add:

Capital taxes

3.00

Public service pay contingencies provision

40.00

VAT recovery (cattle feed vouchers)

1.20

VAT anti-avoidance measures

0.50

Social welfare

34.63

Beer(15.0)

32.00

Cattle feed vouchers scheme

2.20

Tobacco ( 9.5)

AnCo (Manpower training)

1.00

Spirits ( 6.2)

Local improvements scheme

0.50

Wine( 0.8)

Oil subsidy for horticulture

0.27

78.60

Table waters ( 0.5)

Betting

1.30

Stamp duties

1.10

Gaming

0.10

39.20

5. Deduct:

5. Deduct:

Personal income tax relief

15.70

Estimated departmental balances

6.00

72.60

Company tax relief

12.00

Farm buildings tax allowances

0.10

27.80

11.40

1,126.35

6. Deficit

125.35

1,251.70

1,251.70

DEPARTMENT OB FINANCE,

15January 1975.

Summary of Capital Budget (including current budget deficit) April-December, 1974 Outturn and 1975 Estimate

£ million

April-December 1974

1975

Budget Estimate

Provisional Outturn

Estimate

1 Public Capital Programme

281.6

290.6

458.9

of which: (a) Voted Capital Services

80.3

79.3

134.4

(b) State Bodies, etc.

129.1

130.3

204.7

(c) Local Authorities

72.2

81.0

119.8

2 Non-Programme Outlays

90.0

178.9

190.1

of which: (a) Exchequer-financed

(i) Current budget deficit

76.2

92.3

125.4

(ii) Net advances to EECIntervention Agency

54.0

(iii) Debt redemption

5.7

22.3

40.0

(iv) Miscellaneous

4.3

6.4

21.4

(b) Non-Exchequer financed

3.8

3.9

3.3

3 Total Requirements

371.6

469.5

649.0

Resources

4 Non-Exchequer Resources of State Bodies and Local Authorities

94.8

95.8

148.0

of which: (a) State Bodies

87.6

89.7

140.5

(b) Local Authorities

7.2

6.1

7.5

5 Exchequer Normal Resources

134.0

184.0

243.0

of which: (a) Loan Repayments

12.0

12.9

15.0

(b) Sales of securities

(i) to the public

30.0

50.0

80.0

(ii) to commercial banks

47.0

74.0

85.0

(c) Small savings

16.0

18.2

24.0

(d) Sinking funds

26.0

28.0

36.0

(e) Miscellaneous borrowings

3.0

0.9

3.0

6 Residual Resources including foreign borrowing

142.8

189.7

258.0

of which: (a) European Investment Bank and World Bank

142.8

10.8

258.0

(b) Other foreign borrowing

135.9

(c) Reduction in liquidity of departmental funds

28.8

(d) Bank advances

14.2

(e) Net repayment of advances to EEC Intervention Agency

7 Total Resources

371.6

469.5

649.0

Notes

(1) Item 1—includes £1.4 million additional provision for An Bord lascaigh Mhara. Details of the balance have already been published in the booklet Public Capital Programme 1975.

(2) Items 2 (a) (ii) and 6 (e)— Moneys advanced to the EEC Intervention Agency are refunded to the Exchequer as the Agency sells its stocks. There will be a net repayment in 1975 the amount of which cannot be determined at present but which is provisionally estimated at £25 million; this is included in the figure of £258.0 million at item 6.

(3) Items 2 (iii), 5 (b) and 5 (b) (ii) are inter-related. Because of the unsettled state of capital markets, holders of maturing Government loans preferred in many cases to take cash and reinvest in other Government securities rather than accept the conversion options offered for their original holdings. Taking the three items together, the net intake from sales of securities in 1975 (12 months) is estimated at £125 million compared with £101.7 million (9 months) in 1974 and the 1974 budget estimate of £71.3 million. Also, some £20 million of the increase between the budget estimate and outturn for 1974 (9 months) for item 5 (b) (ii)—sales of securities to commercial banks—arose because of the decision by the Central Bank to extend to industrial and certain other banks the requirement (already in force for the majority of Banks) that they maintain a proportion of their resources in the form of investments in Government securities.

(4) Items 2 (a) (iv) and 6 (d)—Provision is made in the £21.4 million at item 2 (a) (iv) for repayment in 1975 of Bank advances of £14.2 million at item 6 (d).

CURRENT BUDGET TABLES

1975

INDEX

TABLE1. Comparison between (i) budget estimates and (ii) actual revenue and expenditure in the period 1 April— 31 December, 1974

TABLE2. Main heads of current government expenditure

TABLE3. Receipts and issues of Road Fund

TABLE4. Certain receipts and expenditure of the Exchequer and of local authorities

TABLE5. State expenditure in relation to agriculture

Tables relating to public capital expenditure will be found in the separate publication entitled “Public Capital Programme 1975”.

Note—The Tables do not take account of 1975 budgetary adjustments.

TABLE 1

COMPARISON BETWEEN (i) BUDGET ESTIMATES AND (ii) ACTUAL REVENUE AND EXPENDITURE 1 APRIL—31 DECEMBER, 1974

Estimated

Actual

Estimated

Actual

£m.

£m.

£m.

£m.

1. Tax revenue (excluding 2 below)

531.25

523.15

1. Central Fund services (excluding 2 below)

120.00

118.90

2. Motor vehicle duties

17.70

19.11

2. Payments to Road Fund

11.80

12.79

3. Non-tax revenue—

3. Supply services (non-capital) (a)

596.44(b)

612.02

Post Office (c)

40.80

42.50

Miscellaneous

62.34

66.65

4. Deficit

76.15

92.30

TOTAL

728.24

743.71

TOTAL

728.24

743.71

(a) Includes Exchequer grants to the Road Fund of £6.62 million and £5.62 million, respectively.

(b) The original provision was £584.48 million to which was added £16.96 million in the budget for social welfare and public se rvice pensions; a deduction of £5 million was made for estimated Departmental balances.

(c) Postal and telegraph charges were increased with effect from 1 October, 1974.

TABLE 2

MAIN HEADS OF CURRENT GOVERNMENT EXPENDITURE

(£000)

1969/70

1970/71

1971/72

1972/73

1973/74

Apr.-Dec. 1974 Provisional

1975 Estimate

Service of Public Debt

88,832

101,352

114,850

127,295

147,794

141,000

224,136

Central Fund Services:

Interest

50,316

58,939

64,641

74,172

91,398

84,295

144,300

Sinking Fund, etc.

26,153

28,808

34,892

35,117

34,456

29,382

42,000

Supply Services:

Interest

8,642

9,668

10,830

13,062

17,510

22,715

31,387

Sinking Fund, etc.

3,721

3,937

4,487

4,944

4,430

4,608

6,449

Social Services

144,271

178,595

211,128

247,189

336,318

319,464

507,972

Social Welfare

59,010

71,776

83,938

92,382

129,964

119,026

177,264

Education

53,143

63,196

75,155

91,385

109,993

98,048

159,386

Health

32,118

43,623

52,035

63,422

96,361

102,390

171,322

Economic Services

98,234

111,662

126,871

142,082

129,835

110,569

164,228

Agriculture

71,225

76,923

87,415

91,157

68,180

54,882

81,825

Industry

8,980

11,376

14,048

17,941

21,789

17,058

30,055

Transport

15,003

19,558

21,393

28,286

34,918

34,483

45,119

Forestry and Fisheries

3,026

3,805

4,015

4,698

4,948

4,146

7,229

General Services

58,346

73,351

85,651

108,788

129,742

119,664

190,113

Post Office

19,942

25,377

29,291

34,643

40,268

37,034

59,846

Defence

14,602

18,561

22,181

29,584

32,974

31,192

48,946

Justice, including Gardaí

11,810

15,007

17,530

23,537

30,265

29,423

44,500

Public service pensions

11,992

14,406

16,649

21,024

26,235

22,015

36,821

Payments under arrangements relating to own resources of EEC

1,172

5,972

4,216

12,300

Other Expenditure

22,642

26,385

32,574

36,938

50,040

48,799

80,351

TOTAL

412,325

491,345

571,074

663,464

799,701

743,712

1,179,100

Public service remuneration included in above figures (a)

108,833

133,985

162,700

200,154

253,129

237,450

381,181

1969

1970

1971

1972

1973

1974

£m.

£m.

£m.

£m.

£m.

£m.

Gross National Product

1,491

1,665

1,889

2,232

2,674

2,950(b)

Current Government Expenditure as % of GNP

27.7%

29.5%

30.2%

29.7%

29.9%

25.2%(c)

(a) Comprises the pay of civil servants (including industrial employees), national and secondary teachers, the Defence Forces, Gardaí, and the Exchequer contribution to the pay of health board employees and vocational teachers.

(b) The GNP figure is a preliminary estimate.

(c) Represents only nine months' expenditure (April-December, 1974) as a % of GNP.

TABLE 3

ROAD FUND

ESTIMATES OF RECEIPTS AND ISSUES

RECEIPTS

ISSUES

April-Dec. 1974

1975

April-Dec. 1974

1975

£000

£000

£000

£000

1. Opening balance

1. Road grants (a)

15,950

20,918

2. Motor taxation, etc.

12,790

19,100

2. Administration, etc.

2,455

3,538

3. Exchequer grant

5,615

5,356

TOTAL

18,405

24,456

TOTAL

18,405

24,456

(a) Including payments on foot of previous years' allocations.

TABLE 4

CERTAIN RECEIPTS AND EXPENDITURE OF THE EXCHEQUER AND OF LOCAL AUTHORITIES

Exchequer

Local Authorities (a)

Revenue

Non-capital issues

Expenditure from revenue (b)

State grants received

Rates collected

£000

£000

£000

£000

£000

1959-60

129,856

128,682

55,104

24,480

21,412

1960-61

138,839

139,565

57,885

26,476

22,058

1961-62

151,686

152,393

64,165

28,792

23,203

1962-63

163,478

168,335

67,379

32,725

22,776

1963-64

184,419

186,638

71,323

34,871

24,466

1964-65

219,045

222,011

82,973

41,210

26,061

1965-66

240,761

248,542

90,588

46,465

29,761

1966-67

272,843

272,051

98,959

50,676

31,534

1967-68

305,409

305,621

107,430

57,472

34,702

1968-69

345,480

353,849

119,595

64,728

38,294

1969-70

411,012

411,550

141,790

74,177

42,953

1970-71

481,506

490,429

166,686

87,763

49,932

1971-72

569,402

571,602

203,391

108,648

60,160

1972-73

659,070

664,541

227,693

129,040

70,250

1973-74

792,913

803,339

277,740 (c)

167,860 (c)

71,230 (c)

April-Dec. 1974

651,407

743,712

269,351 (d)

173,941 (d)

61,460 (d)

1975

1,114,950 (d)

1,179,100 (d)

390,005 (d)

265,114 (d)

79,900 (d)

NOTE:—(a) Local Authorities comprise County Councils, County Borough Corporations, Borough Corporations, Urban District Councils, Town Commissioners, Regional Health Boards, Vocational Education Committees and County Committees of Agriculture.

(b) The revenue of local authorities comprises rates, State grants and other receipts, e.g., rents, fees, etc.

(c) Approximate.

(d) Estimated.

TABLE 5

STATE EXPENDITURE (a) IN RELATION TO AGRICULTURE

FROM 1971-72

1971-72 £000

1972-73 £000

1973-74 £000

April-Dec. 1974 Provisional £000

1975 Estimate £000

1. Price supports and marketing aids:

Dairy produce

29,818

26,952

Beef, mutton and lamb

1,210

1,452

490

366

500

Bacon and pork

4,875

4,065

100

Cereals

307

427

4

TOTAL(b)

36,210

32,896

494

466

500

2. Production incentives paid direct to producers (c):

Beef cattle incentive grants

6,745

7,935

9,644

9,650

9,150

Sheep grants

1,793

1,835

2,567

2,450

2,610

Farrowed sows

41

4

Small farm incentive bonus

421

799

940

825

900

9,000

10,573

13,151

12,925

12,660

3. Payments to reduce production and overhead costs:

Lime and fertilisers subsidies

7,637

7,880

7,902

4,700

6,345

Reduction of land annuities

1,323

1,389

1,650

1,028

2,262

Relief of rates on agricultural land

24,405

27,914

27,467

23,287

30,220

TOTAL

33,365

37,183

37,019

29,015

38,827

4. Long-term development aids mainly of a capital nature (c):

Arterial drainage

1,411

1,144

1,623

1,446

1,817

Land reclamation

4,447

4,130

4,394

3,850

4,430

Farm buildings and water supplies

4,213

4,706

4,644

2,968

1,624

Equipment grants (milk coolers, forage harvesters and poultry)

170

192

358

237

204

Improvement of cattle, horses and sheep

371

427

679

663

1,209

Loans at reduced interest rates for breeding livestock

5

93

135

125

Rural electrification

1,245

1,420

1,546

834

1,804

Improvement of Land Commission Estates

904

836

831

757

953

Other rural improvement schemes

1,219

1,098

1,141

857

574

Horticulture

369

248

244

341

666

TOTAL

14,349

14,206

15,553

12,088

13,406

5. Disease eradication:

Bovine T.B.

3,459

4,649

5,500

4,300

5,500

Brucellosis

1,649

2,521

4,540

4,475

5,600

TOTAL

5,108

7,170

10,040

8,775

11,100

6. Education, research and advisory services (c):

Education

2,465

2,567

3,319

2,602

4,964

Research

3,064

3,670

4,228

3,891

5,962

Farm advisory services

1,378

1,663

1,859

1,574

2,750

Technical services

620

882

920

815

1,408

Rural organisations

41

90

60

61

81

Land and buildings for Department of Agriculture

434

533

696

518

1,247

TOTAL

8,002

9,405

11,082

9,461

16,412

7. Schemes operated under EEC Regulations and Directives:

Farm modernisation

200

5,750

Farmers' retirement (purchase premiums and life annuities)

10

490

Aids to farmers in certain less favoured areas

6,000

Dairy herds conversion

400

200

Socio-economic information and vocational training for farmers

124

Market intervention

—1,500(d)

700(e)

Cattle slaughter premiums

1,100

712

Loans at reduced interest rates for retention of young cattle

240

TOTAL

210

14,216

8. Administration of Acts, Regulations and Schemes

1,060

1,467

1,633

1,443

2,905

GRAND TOTAL

107,094

112,900

88,972

74,383

110,026

(a) The figures include both capital and non-capital expenditure, and are net of appropriations-in-aid (receipts).

(b) The reduction since 1972/73 arises mainly from the ending of Exchequer liability for export losses on the coming into operation of the E.E.C. Common Agricultural Policy.

(c) Further aids of this type are given under E.E.C. schemes—see section 7.

(d) Gross expenditure of £12.0m less receipts of £13.5m.

(e) Gross expenditure of £14.0m less receipts of £13.3m.

Mr. Gay Byrne must have been prescient about this budget. I understand, although I did not have the pleasure of listening to him, that in a programme this morning on radio in referring to the budget he appealed to politicians in general, and to Fianna Fáil politicians in particular, not to use the phrase in connection with the budget that it was too little and too late. I understand his objection was not because he thought that would be inaccurate but because he merely felt the phrase was hackneyed. Therefore, in deference to Mr. Gay Byrne, I will not describe the budget as being too little and too late; rather shall I describe it as being not enough and not soon enough.

(Interruptions.)

What does this budget do, for instance, to reduce inflation? We have been listening to the Minister for Finance and his colleagues telling us at great length of the enormous problems of inflation we are facing. What does the budget do to reduce it? On top of the £35 million to £40 million additional taxation which was imposed shortly before Christmas— for example, the 15p a gallon on petrol and the increased health charges—we have today further taxation of £34,500,000 imposed on the "old reliables" and some other things to which the Minister referred. In addition we have imposed a further £8 million taxation in the form of higher contributions under the social welfare scheme and the Minister's indication that he intends to phase out the State's contribution to social welfare altogether over a number of years.

Therefore all of these additional items of taxation added together amount to a very substantial sum of money. All of them are going to increase the cost of living. That could be justifiable in certain circumstances. But, in the circumstances with which we are faced today, having heard the Minister my view is that they are totally unjustifiable because the Minister has done nothing whatever in this budget to try to break the inflationary spiral. He has added to it. But what has he done to break it, except in so far as it could be said that the proposed alterations in the income tax allowances would go some of the way towards doing this? But when one looks at what the Minister did about income tax allowances, one finds that he is not even compensating for inflation.

This, of course, is a gross breach of the undertaking given by the Minister in this House when he rejected an amendment to the last Finance Bill, put down by this party, which wanted to build into the Finance Act an automatic adjustment of income tax allowances in line with the cost of living. The Minister rejected it and he said that he and his colleagues would review the situation. Certainly he gave everybody to understand that what was intended was that each year, when preparing the budget, the Government would look at the situation and make the necessary adjustments in the income tax allowances in the light of the cost of living situation. The Government looked at the situation all right but they did not adjust the income tax allowances. The Minister's own version is 15 per cent.

Then we get one of these extraordinary things meted out to us by this Minister for Finance, when, in trying to justify this, he quoted the increase in the cost of living between May, 1974, and November, 1974. What relevance has that to a man who is paying income tax from April to April for 12 months, unless the Minister wants to suggest to us that the indications are that between now and April the cost of living is going to go very much down. Is not the truth of the matter that the very least that should have been done was to adjust income tax to the extent of 20 per cent? That was the minimum. The Minister is shaking his head. Therefore, I assume that what he is telling us is that between April last and April next the increase in the cost of living will be less than 20 per cent. I hope he is right but he would not find many people to believe him.

Furthermore I would suggest to the Minister that, as we pointed out on the occasion of the last budget, what he did then did not even restore the position as it was under Fianna Fáil, a position which the Minister said was disgraceful. He did not even restore that. Now, under this budget, the tax-payer's position is being eroded even further. I think that when the Minister's colleagues get to examine in detail what he said about income tax, they will not be as happy as they appeared to be when he was speaking.

There are a few other matters to which the Minister referred and to which I should like to advert briefly, just as they struck me going through his script. First, I was pleased to note that, at long last, the Minister has woken up to the necessity of doing something about savings and, in particular, about prize bonds. He will remember that I was urging this on him over a year ago. He is certainly a slow reactor but I suppose if one can wait long enough he does get around to it. He illustrates this later on, too. But at least it is welcome, if belated, that something is being done about savings.

The measures the Minister announced in regard to industries, such as extending the free depreciation for two more years; the 20 per cent investment allowance being extended and the other reliefs that he mentioned are, of course, welcome as far as I am concerned. But does the Minister really think that they go far enough? After all, what is he doing? He tells us that the cost involved to the Exchequer this year is £12 million. That is not being given to industry; it is simply being deferred. Surely the Minister must know that the minimum amount required is £25 million, double that, and that the question of payment—if that is how it works out ultimately—is not really going to solve the acute problem with which it is purported to be dealing.

The Minister announced a number of proposed changes in regard to taxation of farming profits. Members of this House, I am sure, will recall that this party put down numerous amendments to those sections of the last Finance Bill imposing taxation on farming and that those amendments were rejected by the Minister with contumely. They will note from what he said today that quite a number of them are now being accepted and being inserted in the Finance Bill.

Deputies

Hear, hear.

If the Minister would listen a little more carefully to what is said to him from this side of the House in regard to these matters he might save himself a great deal of embarrassment although I am not sure whether he suffers from embarrassment in any circumstances. However, if he does he should be suffering acutely in relation to what he has had to do in regard to these amendments. We explained how sensible and necessary were the amendments but he rejected them out of hand. The Minister is slow to see his way to deal with such matters but I am not sure that the country has the time to afford the luxury of a Minister for Finance who takes so long to see the light.

The Minister made some references, admittedly mute, to a wealth tax. In all seriousness I ask if anyone can think of anything that could be more irrelevant in our present economic circumstances than a wealth tax? Is the Minister serious? Is he aware of what the situation is in regard to the economy? Wealth is not the problem. In regard to the £12 million which the Minister proposes to defer by way of tax from industry, he is not making as big a gesture as one might think. He must know that a lot of that amount is irrecoverable at present. These companies do not have the money to pay. To talk of a wealth tax in these circumstances seems to be about as far from the realities of life today as one can go.

I hope, too, that when there is a full scale debate on this budget the Minister will clarify the situation in regard to the £40 million to be provided in respect of public service pay and the great bulk of which, the Minister said, was committed already. From this I assume that the Minister and his colleagues were aware of this situation when they prepared their Estimates. Why was this amount not included in the Estimate? Why was it brought in today? One notes that the sum involved goes very close to the amount of additional taxation being imposed in the budget. It is of some importance to know why this is being done in this apparently sloppy way.

One notes, too, that the Minister is not listening and has not been listening for some time.

This is not a new experience in so far as the Minister is concerned.

Tá mé ag éisteacht.

Agus ag caint ag an am céanna.

Tá méag obair, freisin.

The general structure of the budget is as disappointing as it could possibly be having regard to the problems we are facing. Of course social justice required that at the minimum, social welfare payments and income tax allowances be kept in line with inflation. This is not being done in the case of the income tax allowances. Apart from that we might ask what were the four main economic problems facing the Minister in drafting his budget? The first was unemployment which is now at least at the 100,000 level. The second was inflation which at the last count had rocketed to 20 per cent but which is probably more now. The third is the acute danger of widespread bankruptcies because of the shortage of cash flow in business. The fourth was the balance of payments problem in respect of which there was not a very illuminating comment from the Minister.

In considering a budget it is necessary, obviously, to consider the problems facing the Minister and then to consider in what way he tried to tackle those problems. In order to attack the problems of unemployment and inflation it was necessary for the Minister to put more money into the hands of the public but to do it in such a way that he would be lowering prices rather than increasing them. The Minister has not done this. One way in which he could have tackled the problems was to reconsider the VAT rates. At a later date I shall outline how he might have reduced VAT by 4 per cent which measure would have the result of reducing prices so that people would be able to buy more and this call for greater output would result in more people going back to work.

We know that in the past when VAT was removed from foodstuffs, the amount involved did not find its way into the pockets of the consumer. Therefore, we would have to be wary in that regard in future. At the time that VAT was removed from foodstuffs the rate was increased to a greater extent on every other commodity. Apparently, the Minister has not learned by his experience in the past. On a number of occasions we have pointed out to him that the business of managing our economy cannot be left to be dealt with at the conventional budget times particularly in present day circumstances. It is necessary to monitor all the time, to be willing to act quickly if necessary and not to be bound up by these conventional budget times.

If we consider what happened during the course of last year we find that if the Minister had taken the steps we were advocating in the autumn— to bring in either temporary food subsidies or certain other kinds of subsidies, to reduce VAT and to take other measures in respect of certain categories of people—people would have been able to buy more. They would have kept up demand because they would get more for their money thereby sparing many workers a Coalition Christmas on the dole. This would have meant, too, that the cost of living payment due in March under the escalator clause would have been only six and not 10 per cent and that firms now facing enormous liquidity problems would have had a less severe demand for extra cash with the inevitable increases in consumer prices that follow the situation. Last autumn the Minister was blinded by the economic blizzard he had created for himself. He had no idea of what course he ought to have steered the economy on. It seems to me that he has no such idea yet.

I have adverted to the question of the acute danger of widespread bankruptcies in various businesses. If the Minister had attempted to cut the VAT rate there would have been the effects I have described.

Another problem facing business and about which the Minister has said very little is the impact of tax law on companies in the light of the current very high rate of inflation. In so far as depreciation and stock valuation are concerned the effect is to have businesses taxed on imaginary profits. There is a clear necessity to deal with this problem. This is not enough and would not achieve any results quickly. Does the Minister understand how acute and serious is this problem? There is an emergency facing business which requires immediate action. What the Minister did today is a step in the right direction, but it does not go nearly far enough. I ask the Minister to think again about that and to do something worthwhile for business. Otherwise, he might well find that many of the Estimates on which he based his budget will turn out again to be totally wrong because the businesses and the employees from whom he is hoping to collect taxes and other duties will not be in a position to pay because businesses will have closed down.

Of course, the Minister could have given specific help to certain industries. For example, for the expenditure of a few million pounds he could have restored the situation of the house building industry with an enormous impact on our economy. But not a word on that. He could have announced the steps which should have been taken long ago to give some degree of protection to the textile and footwear industries. But we did not hear anything about that either.

The extent of the deficit in this budget as presented by the Minister is approximately £125 million. In the previous nine-month period he budgeted for a deficit of £76 million and ended up with a deficit of £92 million. I was reminded of that calculation when the Minister spoke about the stimulation he was giving to the economy and the effect it would have. When introducing his budget on the 3rd April, 1974, at column 1460 of the Official Report, the Minister said:

Increased economic growth will, as it did last year, generate additional revenue and reduce the deficit.

We know what happened. I described that budget as fraudulent and irresponsible. If one looks at what has happened since, I wonder was I wrong. I ask that the Minister learn from his experience of the last nine months. He should stand back and have a look at what he is doing. What has he done to stimulate the economy? How much of this deficit of £125 million will stimulate the economy? How much of it is geared and directed to that purpose? I suggest that a very small portion will be channelled in that direction. It is very serious to have such an enormous deficit unless one is satisfied that it will be channelled in that direction.

I would like to say a word on deficits. I have a certain entitlement to do so having been the first Minister for Finance in the history of this State deliberately to budget for a deficit, and to do so successfully. It was sufficiently successful to wipe out the deficit and stimulate the economy. There is a great deal of nonsense being talked about deficit budgets propagated by members of the Government. Indeed, some political commentators have been foolish enough to fall for this. The simplistic suggestion is that a deficit budget is expansionary. Of course it is not, unless the deficit is channelled productively.

As I said, we had a deficit on the nine months budget ending 31st December of £92 million. If a deficit is expansionary, would it not follow that if that deficit had been ten times greater, £920 million, we would have had ten times the growth in our economy? Everybody knows that the net effect of that deficit would have been absolute raging inflation and national bankruptcy. Therefore, it should be clear that a deficit of itself is not necessarily expansionary. In fact, to the extent that it is not channelled into productive purposes, it is directly inflationary. The nine months deficit was mostly inflationary.

Today's deficit of £125 million unfortunately will be mostly inflationary. There were a number of ways in which the Minister could have tackled this problem if he wanted to in order to get real value from that deficit, value that would increase employment and reduce unemployment and would not, at the same time, increase inflation. This was open to him. Very much to my disappointment he did not avail himself of that opportunity. In my view that is a very serious matter. I do not know how many people realise that this £125 million deficit— which may turn out to be bigger—will have to be paid for by borrowing and the taxpayer will have to repay it at very high interest rates. Therefore, there is an onus on the Minister to see that that deficit is channelled to the right purpose.

Given the right circumstances, channelling the money the right way, I personally would go for a bigger deficit in the circumstances in which we find ourselves this year. I will not waste time talking about what brought us to these circumstances. The fact is we are in a very serious economic situation. This budget is doing very little to get us of that serious situation. Of course, there is a danger with a weak Government that they will use a deficit as an excuse for their inability to agree on the pruning of Government expenditure, the imposition of taxation, or both. This happened in the last budget and that is why it was a failure. The result of that failure was that prices have raced ahead, unemployment has shot up to 100,000, consumption has dropped and, at the same time, the deficit rose from £76 million to £92 million.

To be effective the deficit in a budget must be determined by economic factors and not by political weakness. When a deficit is determined by political weakness we use up our credit, our ability to borrow abroad. I accuse the Minister for Finance of having done that on two occasions. I am seriously concerned about our ability to continue to borrow very substantially as we have to do now, as we should do now, because the Minister in the past did not use deficits as they should be used, for economic purposes. He did not direct them for economic purposes. He used them because he found a gap between income and expenditure when he had done his damndest—and I will give him credit for having done so—to get agreement with his colleagues on how the expenditure and revenue side should be dealt with. That is no way to arrive at a deficit. If one does that it will inevitably lead to the consequences we had in the last 12 months.

My fear is that the deficit announced today may well go the same way, with the same serious consequences. Time is running out for us. We do not have the time for the Minister for Finance to discover a long time afterwards, as he did in the other areas I have mentioned, that we were right. We just do not have that time. There is an opportunity this year I believe to take our economy by the scruff of the neck and get it moving again but the Minister did not do that in this budget and we will all have to suffer the consequences.

The Minister made reference to price control. Indeed we have heard references from the Minister for Industry and Commerce to this and it would seem from what has been said that the Government propose to relax price control. I have appealed to the Minister for Industry and Commerce before not to do this and I would appeal again to members of the Government who are here not to do this. In my view it is the gravest mistake to do so. If you relax price control the object of the exercise is to enable the firms concerned to get enough money in to continue on in business, but what is really going to happen? It means they are going to put up their prices and for many of them putting up their prices is going to put them out of business. They just cannot compete at higher prices, some of them on the export market, some of them even on the home market.

The method to be used in this matter is to reduce costs by taxation or otherwise, and this is where borrowing for a deficit comes in. This is where it would be justified. In our special circumstances at the moment the important thing is to break the spiral of inflation. To do that you do not allow prices to go up faster by relaxing price control; you reduce costs for the firms concerned by taxation, and there are other ways of attacking it. Whatever you do, you do not allow prices to go up. If you do the sums alone, I believe, you will find that the relaxation of price control by showing up prices and thereby provoking wage claims, under an escalator clause or otherwise, is likely to cancel out any short-term advantage to the businesses concerned. At the same time the effect is to price Irish goods out of the markets in which they are selling at the moment and to make life intolerable for those who are on fixed incomes and in receipt of social welfare.

I believe this approach of talking about relaxing price control is another manifestation of what I referred to earlier, that is the Government's surrender in the battle against inflation. They either have given up the battle completely or else they have not grasped the importance of fighting every inch of the way on every item of increase in price. Of course they have to allow quite a number but they certainly do not give me the impression that they are fighting every inch of the way. There is no way any Government will do any good at all with inflation except to fight every inch of the way on it. They have not done that and this proposals to relax price control is another manifestation of that mental attitude.

We have had talk continually from this Government about the difficult situation abroad as the explanation for what has gone wrong in our economy. Indeed within the past week the Tánaiste was reported as speaking in Wexford and saying in effect to his supporters in relation to this budget that all they had to do was to refer to the difficulties around the world to explain away the difficulties arising in this country. That simply is not true. It is one thing for it to be used as a political ploy but the matter is becoming much too serious for that now.

Let us have a little look at what the facts of the situation are. As far as inflation is concerned, if you take it over a year you will find that half approximately of our inflation is due to circumstances abroad. That means that half of it is due to home circumstances. In other words, 10 per cent of inflation is caused by factors here at home.

How has the world situation affected our exports? The collapse of agriculture of course early last year did affect our exports, not as badly as one might have expected but it certainly affected them, and the future prospects for agricultural exports are certainly improving. What is the position about industrial exports? As the Minister said, they have been extremely buoyant. In fact they increased last year by about 40 per cent. So what is the picture that emerges in this? Is it not true that the picture that emerges is not one of an economy which is totally at the mercy of what is going on in the world around it and totally unable to control what is happening inside its own borders? I believe this effort by the Government to hide behind world conditions has gone too far. I am not speaking in party political terms now, I am speaking in economic and psychological terms. It is very important that the people of the country should understand that their Government, whatever party is in power, is not merely a cork bobbing on the sea of world trading conditions, and it should not be, but this Government are more and more giving the impression in this area also that they have surrendered, that they have given up.

There are areas which the Government can control. We have referred to them numerous times and we have urged them to take action in the areas they can control. The greater the difficulties abroad the more the obligation on the Government to take that action. They have not done it. For instance, we urged them to take action on a number of items which either they have not taken or they have taken too late.

We urged them to take action on the green £ and for at least six months nothing effective was done. When the green £ was about to be implemented eventually, we urged that they take some action, which would have been relatively cheap, to offset the effect of the green £ on our cost of living. They did not do anything about it with the consequence that the cost to the State and to business in general under the escalator clause in the National Pay Agreement exceeded by at least 100 times what it would have cost the Exchequer to take the action we were urging. We urged relief for the textile and footwear industry for many many months. We are told something is being done but we have not got any details yet and we do not know if anything effective has been done. We have been urging and urging the Government to take action in regard to private house-building and we told them how to go about it and they have not done it. Now there are thousands of people out of employment either directly from the building industry or indirectly as a consequence, simply because the Government did not take the action that they could have taken. They were not affected by world conditions. They failed to take that action. We asked them to give real help to small farmers, especially those in the west, and they have not done it. This idea that the Government are in a position where they can do nothing, that all the difficulties are due to what is going on in the world around us, is an idea that has got to be scotched. It is not true and it is dangerous.

There is one other matter I want to advert to and that is the public capital programme, because I will confess that I am quite mystified about something. The Minister produced the public capital programme for 1975 towards the end of December, 1974. For the first time, to my knowledge, it did not contain any reference to the resources side. In other words, it did not disclose where the money that had to be obtained to finance the public capital programme, mostly borrowing, for 1974 came from, nor did it disclose the Minister's proposals as to where it would come from in 1975. I made some inquiries about this at the time. In fact I inquired from some gentlemen of the Press who had had the benefit of a briefing from the Department of Finance in this regard. Two of them told me their impression but went off and checked. They came back very kindly and told me that they had confirmed that the position was that this information would be issued three days before the Budget. It was not issued. Yesterday afternoon I inquired on the telephone in the Department of Finance about this matter and after some inquiries were made I was informed that this would be distributed today after questions. Admittedy, one gets a lot of documentation and the Minister's statement is rather lengthy but I do not think anyone can say we got that information in what we were given today. The country is entitled——

We got a document in very general terms.

I know about the document that was issued but that is not what I was looking for and it is not what was issued in other years. The Minister referred to further borrowing and he gave certain figures but that is not the whole story. If the Minister and, indeed, the Civil Service, are to give any proper accounting we are entitled to have on record precisely the amount spent on the public capital programme and precisely where it came from. We are also entitled to know, as has always been the case in the past, the Minister's proposal for 1975 as to the sources of capital but all we have got, as indicated by Deputy Haughey, is a general statement unless the information is in the document that was handed around as I rose to speak. It may be in that. I want to know why we did not get it before now and I hope the Minister will enlighten us on the matter. I also want to get the full details that were always given in the past. We may have another word to say to the Minister when we get them.

The net effect of what we have heard today is increased taxation, not only what was presented by the Minister as taxation but the other matters I mentioned. There will be the consequent increase in the cost of living, a very limited amount of assistance to stimulate the economy and the bulk of a major deficit being used to pay ordinary, current expenditure some of which should have been included in the Estimates. That does not add up to the kind of budget our economy requires at this time.

We would certainly have gone along with the Minister on what some people might term a very radical approach to the economy as we find it at the moment but we did not get that approach. We got a lot of high-sounding phrases but when one analyses what the Minister has done it is as timid, conservative and ineffective as one might have expected from the combination of parties and individuals now in Government. It is my very sincere belief, not I hope entirely governed by my party political views, that the sooner the seats of Government are vacated by those parties and individuals the sooner there is a hope of getting this country moving again.

We now come to deal with the Financial Resolutions. Financial Resolution No. 1.

I wish to put a question in relation to the social welfare increases where the amount for the year will be £51 million, £27 million being made available from the Exchequer. Will the Minister indicate the increase per stamp for social welfare?

That matter will be dealt with in the Social Welfare Bill in due course.

Has the Minister any idea of the cost?

How much will the gap be? How much will be required to be raised by direct contribution?

The figure is the difference between what the Exchequer gives and the total cost. These figures will be included in the Social Welfare Bill.

We must proceed to deal with the Financial Resolutions.

Surely we are entitled to this information. We want to know to what extent the social welfare stamp will be increased.

(Dublin Central): We will get this information during the Easter recess.

It is a matter for Social Welfare.

It is part of the Minister's budget speech. The Minister does not have to move a resolution on that one.

I suppose it will be termed "inquisitive" when we ask for this information.

It is the petrol increase all over again.

Even if the Minister has not the precise figure he must have an estimate of the amount. Will the stamp cost £5 per week or £4.50 per week? We are entitled to this information.

We must proceed with the Financial Resolutions.