asked the Minister for Finance the expected percentage increase in the cost of living in 1975.
Ceisteanna—Questions. Oral Answers. - Cost of Living.
2.
Cost of living increases have two sources, one the level of inflation abroad, the other domestically-generated inflation. In 1974 higher import prices accounted for 59 per cent of the price increases recorded in that year. In 1975 we should benefit from more favourable trends in import prices. Whether this improvement will be reflected in a slower rise in consumer prices will however be dependent on cost developments in the home market. The size of income increases will be the most important element in this regard. As was pointed out in the recent Government White Paper, A National Partnership, even if no further increases in incomes are granted, the upward pressure on consumer prices from domestic incomes will be greater in 1975 than in 1974.
Until it is clear by how much incomes are likely to rise in 1975, it will not be possible to forecast accurately what the percentage increase in the cost of living in 1975 will be.
Would the Parliamentary Secretary not be in a position to state to what extent Government policy will be effective in easing the pressure of prices during the current year?
Mr. Kenny
The Government will generate a policy that will benefit the people of the country to the best possible extent.
That is waffle. That is saying nothing.
Mr. Kenny
It is answering the Deputy's question about policy. Government policy will be generated to the best possible benefit of the people of this country.
I have asked the Minister to state what is the expected increase in the cost of living in the coming year. Surely it is necessary for the Minister for Finance to have this information, as near to an accurate estimate as is possible, if he is to do anything effective later today?
Mr. Kenny
I said two factors governed increases in prices—one was inflation from abroad and the other was increases in costs at home. How can anybody predict what inflation abroad will be? How can anybody say, in the coming year, what costs will be, especially increases in incomes. To elaborate still further for the Deputy, there are certain factors that govern increases in prices: (1) import prices; (2) employees' incomes; (3) agricultural profits; (4) nonagricultural profits, and (5) indirect taxes.
Hear, hear.
Mr. Kenny
These are the factors that govern percentage increases in prices. We have anticipated percentage increases in prices for the three years 1973, 1974 and 1975 but one cannot accurately predict the future. The Deputy must understand that the Minister for Finance and his experts are not financial necromancers or clairvoyants; they cannot accurately predict the future.
What I was asking for was an estimate, not an accurate figure. Is the Parliamentary Secretary aware that what he has trotted out to me now are just the elementary factors which contribute to price costs and that they are the same factors which contributed to price costing in February, 1973, when his party undertook to stabilise and reduce the cost of living? I would ask the Minister what information was available to them then that is not available to them now? Furthermore, may I take it from the Parliamentary Secretary's reply that prices will rise more this year than they did last year? He has pointed out how much higher import prices contributed—58 per cent or whatever was the percentage he stated.
Mr. Kenny
59 per cent.
He admitted that these are falling. Then, since he admits that prices will be higher this year, there must be little action being contemplated by the Government to effectively control domestic inflation. Is that not the correct statement?
Mr. Kenny
If the Deputy read the White Paper called A National Partnership, he could glean that information from that document.
I hope it was a limited company.
Mr. Kenny
Even if no further pay increases are granted next year the carry-over effect of the present National Pay Agreement, including the effects of the escalator clause, and increases under the anomalies clause, would mean that the total of nonagricultural wages and salaries in 1975 would be almost 25 per cent higher than in 1974. That is in the White Paper.
Would the Parliamentary Secretary——
We must pass on to the next question.
——be prepared to admit that the effect which wages will have on prices may be eased considerably by the extent to which the Minister will increase the tax-free allowances for workers in the budget today? The financial policy of the Government should deal with this situation. Is it not correct to say that the Government have made no examination whatever of what the future holds in regard to the most important aspect of the present economic disaster, the rising cost of living? There is no attempt to give any estimate. It is a free-for-all situation.
Next question, please.
Is there no reply?
There are no expectations.
Mr. Kenny
It is impossible to predict the future.