It has being most interesting listening to Members on the Government side of the House praising this budget when most people know that it will do nothing whatever to expand the economy. The Minister was not able to balance the books for the current financial year and we now have another large deficit. The capital programme will be financed by going to the Arabs for £100 million, if they will advance the money, and something in the region of £158 million will have to be borrowed from any financial house in this country that will lend it.
No money is made available to the private industrialist because it has all been gobbled up by the Government to keep the services of the nation in operation and to keep the wheels of the Department of Finance moving. The money that is borrowed is costing something in the region of £200 million to service at the moment. What will it cost us to service the money which the Minister intends to borrow now? We must remember that if you go to the Sheik of Araby or some other Sheik you have to pay a very high interest rate for the money you borrow. Some of those people might do what they did with the English Chancellor of the Exchequer.
There is nothing in this budget for expansion in industry or nothing for expansion in housing. When inflation is taken into account there is a great increase in the price of houses. House building is a very large industry but no capital is being given to the private sector, which is almost at a standstill. In Offaly if a man wants to buy a new house he finds it very difficult to get a loan from the banks. The banks are also very slow in giving bridging loans because they find the money is not paid back very quickly. They are also afraid that, when they give a loan of, say, £4,500 it will not be sufficient to build the house and more money will be required.
I was amazed to see nothing in the budget in relation to an increase in the income limit and the amount of house loans which borrowers could receive from local authorities. The amount of money given at the moment is completely unrealistic when inflation is taken into consideration. The average cost of a house of 1,000 sq. ft. is about £7,000 and you have to add on £1,000 for the cost of the site. When the person building the house gets the grant from the local authority he has to make up the difference of about £2,900. How can any young man afford to pay that before he even puts a stick of furniture into his house? This is what has brought about a standstill in the private sector of housebuilding.
It is very difficult to get money from building societies. I cannot understand why the Minister did not give some concessions to building societies which would be a big incentive to depositors and Irish people abroad to come back and invest their money here. People will not invest here if they find they would be taxed to the hilt. It may be said they will do it for love of the country. It is love of the pocket now. Therefore, it is a grave mistake on the part of the Government and the Minister not to give tax relief on amounts up to £10,000 to the building societies and other financial concerns. They badly need a boost. It would make more money available for the building of houses, for industrial expansion and for agriculture. Maybe the Minister would be afraid of the criticisms which might come down on his head if he decided to do that. But it must be remembered that we have only 50 years of self-government behind us. You might say we are a developing economy and a developing nation also. I do not see all the wealth some organisations are talking abount, such as NITRO. There may be a small section of the community here who are wealthy but there is no great wealth amongst the business and farming sectors, especially now. Therefore, there would not have been much of an argument against the Minister if he had given this tax relief. An inflow of capital is badly needed.
The Minister for Foreign Affairs said earlier that our reserves had stood up well, but if the rate of inflation is considered, they have not stood up that well. If you take the inflow of capital, you will have to admit that up to 90 per cent of that was borrowed money and that only 10 per cent of it was finance that was invested back in here.
I was amazed that the Minister did not afford some protection for the textile and footwear industries. I understand—and I want to be constructive on this—that we have obligations in the EEC and certain undertakings must be given. Nevertheless, if the present trend continues, a grave situation will exist. I come from a constituency in which the major employers are in textiles and footwear. If competition from outside continues, even outside EEC countries to the extent of cheap garments and footwear being dumped here, it will have an adverse effect on these industries. According to the report from the task force that came to examine the footwear industry, there is nothing they can do for us, and we are back to square one. However, as far as I know, it is open to us to renegotiate any of the terms on which we entered the EEC. Last year the Minister for Industry and Commerce should have brought to the notice of the people in Brussels that a serious situation was developing. I do not want to say anything that would damage any of these industries, but if nothing is done in this regard the inevitable will happen, more redundancy and great difficulty in keeping the doors open.
Before Christmas the Minister also increased the tax on petrol by 15p. His explanation for that was that it would lower imports of oil. People in the country depend on their cars to take them to work. Most of them in my area travel up to 20 miles per day. Many firms are depending on petrol to supply supermarkets, stores and so on. What is happening now? All the firms that are caught by these higher costs are applying for increases in their products, and those increases will be passed on to the people.
If revenue is required it must be obtained on something that is daily and hourly in demand. It is no use putting it on clothes and so on, because we can wear those for a good while. Petrol is in demand daily and the Minister went for that because it brings him in about £35 million, money he badly needed for the Exchequer. However, the big petrol dealers have informed me that there is a reduction of something like 25 per cent in sales. That means that the collection of revenue to the Minister will be less. There will also be a reduction in VAT, and it seems that the Minister is relying on the same turnover for VAT as last year. With sales falling I simply cannot see VAT holding its own and I have no doubt that later in the year the Minister will be bringing in yet another budget to try to rectify the position. That will be a sad blow to the people because the Minister will have to opt for direct taxation and that will hit everybody.
I do not know what the Minister's idea was in bringing in a wealth tax. Presumably he did this under pressure from the Labour Party. The introduction of that tax resulted in the withdrawal of something in the region of £300 million from the country last year. People lost confidence in the country. The Minister realised what was happening and he toned down the Bill later; he saw the reaction to it on the part of the public and on the part of the farming community.
Talking about farmers, farmers are not afraid of paying income tax. However, in the last two years the income of the small farmer in particular has decreased by something in the region of 60 per cent while his costs have spiralled by as much as 100 per cent in some cases. Diesel oil which cost him 9p at one time is now costing him 23p a gallon. Cattle prices are falling. I could not understand the Minister for Agriculture and Fisheries allowing the meat factories to clean up at the expense of the farmers. It was the factory who decided what cattle they would take, when they would take them, what they would pay and to whom they would pay it. Inspectors should have been placed in the factories and the marts to examine the cattle and decide what cattle should get the slaughter premium. I know farmers who were lucky to get their cattle into the factories but, when I asked them how much they would get, they were not able to tell me. They were hoping for the best. Who got this money? Certainly the farmers did not get it. Had they got it it would have meant an extra £33 on average to the farmer and that would have been a great help to him. Sending inspectors might have caused staffing problems but the problem was not an insurmountable one. The farmer was at the mercy of the people running the factories and they were quite ruthless.
Postal charges have increased enormously. The Minister for Posts and Telegraphs seems more interested in the international situation than he is in the domestic situation. The telephone system is appalling.
Where industry is concerned many small firms will be in serious difficulty. One industry badly hit is the coach-building industry. They are faced with competition from imports. Imports are affecting them very adversely and redundancies are actually taking place. Small firms are finding it hard to get overdraft accommodation. If one is doing well the banks will help but, if one is on one's knees, the banks will do nothing to help. I suppose they have to ensure that every £ they lend will be well spent. Three banks had a clear profit of £18 million but, even with that profit, they will not help those who need help. The time the farmer, the industrialist or the businessman needs help most is when he hits a bad patch, when he is going through a bad time through no fault of his own. The banks have not given as much assistance as they could. Overdraft accommodation and new loans are almost impossible to negotiate and where a person is not able to repay bridging loans within the required time he may be required to pay an interest rate of 20 per cent. I know of cases where borrowers had to repay the banks an extremely high interest rate.
The Government have handled the mining industry very badly. I am told that certain people went to the Minister when he would not give them a lease and said they would do the job if he gave them the money but he refused to do this. Mining is a highly technical industry and I admit we have not as many experts as we would like but the Government should have negotiated. I do not mean they should have sold out but certainly they should have tried to negotiate in order to maintain people in employment. Some of my constituents were involved in the mining industry; they got loans and built houses but now they are in a dreadful plight. Some of them have had to leave the country but the people who remained have had to pay as much as £10 per week in loan repayments.
With regard to drink prices, it may have been all right to increase the price of whiskey and brandy but the taxation on the pint, the drink of the ordinary man, was too much. There has been a reduction in drink consumption and some publicans have said that there has been a fall in revenue of 25 per cent. It appears the Minister will not get the return he expected from this source.
The increases in social welfare are welcome but by the time they come into operation on 1st April their value will have been eroded. At the moment there are many applications for price increases on essential items before the National Prices Commission who will be recommending them to the Minister. If firms are not allowed the increases there will be further redundancies and the closure of businesses. Employers are faced with the prospect of finding an extra 10 per cent increase and this amounts on average to £3.50 per week for each employee. When some employers were pressed by the unions and workers to give this additional money they agreed to pay it but they let go a certain number of their employees.
The increase in social welfare will cost approximately £28 million but the Minister has not told us the cost of the stamp. More than likely the employees will have to pay the major portion. I am told the stamp may cost as much as £5 per week. If that happens the Minister will collect £42 million, thus giving the Exchequer an extra £14 million. Anyone who is working will have to pay the cost of the stamp. The increase in the tax allowance will be of little value because in the long run the taxpayer will have to pay more to the Exchequer.
The Minister increased the health contributions significantly. We are in the situation that each month measures have been introduced which entail an increase in taxation. The Government are in trouble with chemists, doctors and many others but they cannot bulldoze these people into agreements. There will have to be negotiations and the sooner that is done the better.
I do not see any hope of economic growth this year. Each week there are further redundancies and the inflationary rate increases. There will be a serious situation when equal pay is introduced. This applies particularly to the textile industry, a concern that is going through a rough period. I can see those who employ a large number of females reducing the number of their staff because they will be faced with a huge wage bill.
I am not saying that females are not entitled to equal pay for equal work. That is all right provided companies are able to pay the wage bill. In this regard also I hope the State will be able to pay the bill when equal pay comes into operation in the Civil Service. It will cost the State an enormous amount of money. I can see the Minister going on the borrowing market anywhere and everywhere. There are more avenues open to him now than before. He can go to the European Bank and the Arabs but they will dictate the terms, the length of time he will have to pay the loan back and the interest he will have to pay.
There has been no increase whatsoever in the amount for road grants. In my constituency when one takes into consideration the rising cost of material and increased wages the total amount left for road works will be 37 per cent of the amount allocated. Administration costs alone will account for 63 per cent of the amount allocated. In Offaly and Laois all the county councils are able to do is patch because they do not have money for anything else. I should like to ask the Minister how it is that in Offaly where they collect in the region of £300,000 in Road Fund tax they only receive a grant of something like two-thirds of that sum. Because a lot of the roads in that county go through bogs they are more difficult to maintain and, consequently, necessitate more repair work than roads in other counties.
We have only a limited amount of primary roads that qualify for a 100 per cent State grant. In my view all the Offaly and Laois county councils will be able to do is to keep the wheels turning as they did last year. They must cut back on some of the major proposals brought before the councillors in view of the fact that the Government grant will not amount to very much. On the question of local improvement schemes I should like to remind the Minister that we have not received any allocation so far. We would need something in the region or £80,000 to clear the backlog alone. I do not know what the position will be but I can see further deterioration of the roads in the midlands because we have received no extra money. We need at least 20 per cent more of an allocation to keep up with the rising costs of materials and increases in wages. It should be remembered that just over a year ago a gallon of tar cost 9p while now it costs 22p.
For the financial year ending 31st December last we had a deficit of £92 million. Allowances to the public service have now created a further major deficit. Is it now the intention of the Minister to keep borrowing and borrowing until we cannot go anywhere else? This is something we will have to face up to. It may be easy for the Minister to borrow now because he is doing so on the credibility of Fianna Fáil who were always creditworthy at home and abroad. When Fianna Fáil floated a national loan it was over-subscribed. The last loan floated before we left office, in November, 1972, was for £25 million but we got £35 million. We got it because the people had confidence in us to do a good job. They had also confidence in us to spend the money wisely and properly.
At present the Minister goes for small amounts, in the region of £12 million or £15 million. If one looks at the subscription list one will see that most of that is given from the Minister's own resources and not from the public. None of the loans floated by this Government even at an interest rate of 12 per cent, have been oversubscribed. Why they have not been, at such an interest rate, is something I cannot understand and something that baffles me. Those who invest in such loans here are liable to income tax while foreigners do not have to pay tax. That is not fair. An Irish person investing in a national loan is lucky if he gets a return of 8 per cent and that is not very encouraging. The Minister should do something about that. Perhaps there is a reason for it that I know nothing about but I should like to have it explained. It should be looked into. The Minister would receive much more finance if the depositor here was not taxed. He will not invest here if he is to be taxed at 35 per cent. Taking it all in all, that is not a very happy position for the investor to find himself in.
The Minister for Foreign Affairs said he hoped that we on this side of the House would be constructive in matters concerning the good of the nation. Nobody can say that we have not been constructive on this side of the House. We always spoke out on anything we thought was worthwhile and would be of benefit to the nation. I hope that a new national wage agreement will be negotiated. It would be a disaster if the talks broke down and we ended up with a free for all. I hope common sense will prevail and that the agreement between employers and employees will be honoured.
I like to be constructive and responsible. I do not like to lambaste anybody or to browbeat anybody. I admit that the employers felt the squeeze because at the time of the negotiations before the last agreement they did not realise they would be caught for this extra 10 per cent. The agreement was negotiated and it had to be honoured. Employers may be more wary about the new agreement but I hope the negotiations will be brought to a fruitful conclusion.
We have pay-related benefits for the unemployed but, when the first six months have passed and there are no pay-related benefits, we will have the squeeze. Then we will see the position, and then the trouble will start. At the moment some people are not inclined to work because with pay-related benefit and sick benefit they can make more money by staying at home. Between the insurance stamp, PAYE, and other stoppages, they would lose something like £2 to £3 a week.
Unemployment benefit is costing something in the region of £2½ million a week. This is an enormous sum. I can see no early reduction in the number unemployed. I believe the figure will move up because the Government have done nothing to boost building and other industrial concerns. Nothing has been done for the building industry in which we have had most of the unemployment. Some of the biggest builders have decided to pull out with their machinery and go to England, Scotland, or somewhere else. That was a severe blow to the country and a severe blow to the workers in the building industry, some of whom have been with the builders for 18 to 20 years. When a person has been in the building industry for a long time it is not easy for him to turn to any other trade. Thanks to Fianna Fáil we have redundancy payments but they are of little help to the workers because they will only tide them over for a few months.
Having regard to the financial programme which the Minister laid before the House I can see no expansion in the economy. I see more unemployment in the building industry and many schemes being held up because of lack of finance. Many of the schemes the Minister may have in mind will depend on his ability to borrow. The Minister will have to rob the subsidiary banks and the merchant banks to keep the affairs of the nation in operation. Last June the Central Bank made about £20 million available to the public. When I made inquiries I was told that that money had been gobbled up by the Government to keep the services in operation.
How can the private sector of the community expect to get finance if the Government are eating up all the money available? If the Minister takes all the money there is nothing left to enable the builder, the industrialist and the farmer to expand. When the banks are cornered they say: "It is the Central Bank. They sent us a directive." When the Central Bank are cornered they say: "The Government have the squeeze on us." In some of their statements the Central Bank have not been too sympathetically disposed towards the Government. They said that many of the proposals would run us into inflation and into serious problems.
