Last night I said that in the present depressed state of the economy and, more particularly, because of inflation and rising consumer prices, it was both necessary and equitable to give the increases in social welfare that this Bill provides. If, as the Parliamentary Secretary claims, he is doing better than just meeting the increases in the cost of living for those concerned, then more power to him and he is to be complimented on doing that. However, it is the recipients who will be in the best position to judge the real extent of the benefits conferred by this Bill against the outgoings they will have to meet in the present inflationary situation. I hope these benefits will be advantageous for them but they will be in the best position to judge the advantage. I hope the Parliamentary Secretary is right in his claim and, if he is, I compliment him. Apart from that, there is very little else that can be said on that aspect of the Bill.
As I pointed out last night, the full import of the Bill cannot be assessed without taking it in the context of current financial legislation of which it is a part. Last night I had to recall the main consequences of various financial provisions for the current year and place the Bill in this context in order to assess its true value. To summarise the points that put this Bill in its proper perspective, it is part of the series of transactions that started before Christmas with a resolution imposing taxation by increasing the price of petrol, postal charges and health contributions. One could regard those as the first part of the budget. In January we had the budget proper. It increased taxation and it also gave reliefs. It was a budget operated in more or less the traditional way and that particular part of the budget now is being implemented by the Finance Bill which gives effect to the taxation already imposed and to the reliefs contemplated.
Next in sequence was the Capital Gains Tax Bill which will mean more taxation and then there was the Wealth Tax Bill. This morning we gave leave to introduce the Capital Acquisitions Tax Bill and, presumably, that will impose more taxation. In fact, some of the pessimists maintain that it will nullify the granting of reliefs with regard to death duties. Lastly, there is the Bill we are discussing now which provides for increased contributions. Some of these measures are imposing taxation, such as the provision before Christmas, the Wealth Tax Bill and the Capital Gains Tax Bill while other measures provide reliefs. It is difficult to balance the accounting but one must consider what the taxpayer is being asked to pay and what reliefs he is getting.
It is important to remember that every salary or wage earner is contributing to taxation but the number of people covered by this Bill is very small. They are most deserving but it must be stressed that numerically they are very small. The majority of the citizens are called on to pay the bill and it is as well to realise that all the benefits given by the State ultimately come out of the pockets of the taxpayers, either directly from the individual or through the taxation of corporations and businesses.
The reliefs given under the Bill will cost the wage and salary earners more in their contributions in stamps. It is true that these people have got tax reliefs from the Minister for Finance but now they will have to pay more in their social welfare contributions and one is cancelling out the other. It may not be a precise cancellation but while there may be some little relief given in PAYE there will be an increased charge in the social welfare stamps. It must be asked whether the wage and salary earners have gained anything. Are the reliefs given a reality or does it mean the State is taking more and not giving a net relief? That question will be answered by every wage and salary earner in the country and there is no use our belabouring it now in the House. However, it is a point that must be considered.
Last night I referred to the reliefs given to industry. Taxation reliefs are most welcome to businesses at the moment because they will help them to survive economically. They are socially necessary so that employment may be maintained but here we have a situation very much like the case of the wage earner. The Minister for Finance granted reliefs in the January budget but in this Bill the Minister for Social Welfare has increased the contributions. When it comes to the accounting of the individual company or employer, will there be a net gain or a loss? We can be certain that the reliefs given will not mean there will be a net gain. I am not going to say the contributions are in themselves a complete loss but it is necessary to subtract the increased outgoings from the increased reliefs in order to consider the net situation. That question can only be answered individually because it will depend on employment content and other factors, but we must query what is the net practical result. Will it be a gain or a loss for industry? I fear in particular for the industries we most want to help, those with the high employment content, because I think the net result will be a loss. I hope I am wrong in this. There are calculations I could advance to support the argument that it could be a net loss and that the gesture of the Minister for Finance with regard to reliefs is nothing more than a gesture. The increased contributions required under section 13 to meet the current employment situation will constitute a very heavy item of taxation. There is no sense in fooling ourselves because certainly we are not fooling anybody else. Irrespective of whether we call it a contribution or taxation, we are taking money from the wage and salary earners.
Of course, I admit the Minister has to find the money. I do not want to play the easy game, to say that we should give the contributions and then to crib at paying them. I am not doing that. I am taking this in the whole context of the financial legislation. The Minister must do what he is doing and therefore the money has to be found. Taken in the whole context of financial policy at the moment I think there is a lot of illusion here and the Government's financial policy is not realistic and is not helping the economy. I hope that is a model statement from this side of the House which an Opposition Member is entitled to make.
Is there any real benefit? The wage earner, the company and business people will judge for themselves. We took in taxation about £50 million from increased petrol and postal charges before Christmas. The list of charges in this Bill does not include health and redundancy charges on the stamp. The cost of the stamp, or whatever way the contribution is taken, is a very sizeable proportion of the wage packet the wage earner gets and the employer will also have to make a sizeable contribution. It is not a question of taking a few pence, like you take in a collection box outside a church door. We are now taking substantial sums every week from both employee and employer.
In relation to the pre-Christmas budget an increase was put on health contributions. Petrol and postal charges were levied on all economic activities, which are shared by both employer and employee. We have discussed the budget in which there are reliefs and taxation. As far as I can sort out my figures something between £45-50 million is taken in taxation. The Parliamentary Secretary said:
On the social insurance side, the gross increase in expenditure from the social insurance fund is estimated at £26.6 million to the end of December, 1975, of which £23.7 millions will be met by increased contribution income leaving £2.9 million to be borne by the Exchequer in that period. The total cost to the Exchequer for the period April to December, 1975, will therefore be £25.3 million. As I have already indicated, the Exchequer will, in addition, provide £7.1 million towards the cost of additional unemployment benefit and unemployment assistance claims. The special contribution increase of 31p is intended to provide a further £7.9 million towards the cost of these additional unemployment claims.
It is extremely hard to do accurate accounts. The Parliamentary Secretary can correct me if I am wrong but it seems to me, taking those figures, that he will take £23.7 million more in contributions and in addition he will take the best part of £8 million for the special levy to meet additional unemployment claims. I am at a loss to know if the £7.1 million which he mentions has to be provided or if it is accounted for already in what is taken in the budget. On top of the £50 million taken in the pre-Christmas budget and the second £50 million taken in the January budget we have the £30-40 million taken now. It seems in all this operation the taxpayer is being called on to pay a substantial amount this year.
I now want to say a few words on the economic basis of the Bill, to which I already referred. If I understood Deputy Hogan O'Higgins correctly she stated that there was a disincentive to a man being employed. The impression I got from what she said was that an incentive was being built in for people not to work. I just want to recall that point and I will not labour the disincentive for people to work. The whole approach of this is to tend to depress employment rather than increase it. This is at a time when we are told a special levy has to be put on to cater for the increased claims because of the current high unemployment level, which, according to the last figure I saw, is 103,000. Everybody in employment has now to be levied. This is all right socially but it means that there is less money available to pay people in productive work. Employers have to tighten their belts, have to resist expansion and are tempted to lay off people.
The whole tendency in such an approach is to restrict opportunities for employment not increase them. It is intimidating enough to find that the unemployment figure has grown to the stage where we have to make such a special provision to finance unemployment benefits but it is more frightening when we realise that the logical consequences of that are that the opportunities for re-employing those people are being restricted by that very measure and that the reliefs which we were told were designed to help industry, to promote employment, are being taken away by the provisions of this Bill, necessary and all as they are. The net effect is to discourage expansion in employment.
This is a matter of grave concern for the House, too serious to indulge in political argument as to who is at fault. We, both Opposition and Government, have to face it as a fact. I want the Parliamentary Secretary to take my remarks in that spirit. He may ask: "What is to be done about it?" Having made my point that reliefs have been cancelled by increased taxation, the net result in the present unemployment situation of the financial policy of the Government, as I have attempted to summarise it in the short time available, is to depress employment and to aggravate the current economic depression which I have freely said on this and other Bills has been largely contributed to by factors which no Irish Government can control locally.
That is all the more reason why we should do all we can to promote economic activity and expansion for employment. My argument is simply, on a broad national scale, that the entire financial approach of the Government, in the budget and otherwise, has been depressive and not expansionist. I pointed out at some length that the Labour Party in the past co-operated with Fianna Fáil's progressive proposals and that substantial headway was made. I pointed to the first section of this Bill and I did not do so to get kudos but to try to draw a lesson from history.
The measures I spoke about were effective because they were subsidiary and ancillary to a positive progressive policy of development and expansion. I do not intend to go into the distant past but I will go back to the collapse of the last Coalition Government in 1956. They had got into the same kind of economic difficulties. It was not entirely their fault—there were the environmental factors that I mentioned. They got into difficulties and Fianna Fáil came into office. What had we to do?
First of all, there had to be a positive programme for recovery, followed by two programmes for economic development and expansion, the Lemass programmes of the sixties. They brought this country into the modern era and developed us to the stage that placed us in a position to join the European Community and to be in the position that we were in yesterday, a proud day for all of us. I am glad we on this side were able to congratulate the Taoiseach and his Government for the events of this week. Although not taking credit for them, I have to say they were the culmination of a gradual historical process.
What I am coming to is that the success of social welfare legislation in the past depended entirely on the programmes for development and expansion, what I call the Lemass programmes, because I think all sides of the House will acknowledge his contribution to the economic development of this country in the fifties and sixties. It was that which made social progress possible, because social progress is always based on economic progress —if the economic basis is not there, purely social action will not result in real benefit or a real increase in wealth or a real raising of levels.
That is the lesson I want to bring home here at the highest level. What we lack at the moment, and what must be got, is a progressive policy such as we had after the recession of 1956— first the recovery and then the expansion on a planned basis such as the late Deputy Seán Lemass implemented, with the able support of his administration and the then secretary of the Department of Finance, Dr. Whitaker.