Dáil Éireann debate -
Wednesday, 3 Dec 1975

Vol. 286 No. 5

Private Members' Business. - Postal and Telephone Charges: Motion.

Debate resumed on the following motion:

That Dáil Éireann deplores the decision of the Government to increase postal and telephone charges by up to 40 per cent, because of its serious adverse effects on inflation, on employment and on commercial and industrial activities and calls on the Government to rescind the decision pending a full examination and recommendation by the National Prices Commission.

—(Deputy T.J. Fitzpatrick,Dublin Central.)

Mr. Brennan

Last night I was challenged by two Ministers to state what they should do now that they find themselves in a position of their own making because of their lack of effort in the past in order to avoid increasing postal charges now. The Minister for Finance threatened, as did his colleague, the Minister for Posts and Telegraphs, that the alternative was to lay off workers or reduce the services, services which are already chaotic. I assert that neither of these is necessary. Had the Minister made the necessary provision in the last two-and-a-half years the Department could now be working excellently without any increases in postal charges.

We were told that these increases were due to increased pay. I saw a letter in The Irish Times this morning signed by the secretary of a trade union which accused the Minister of wrongfully putting them in the position of being the cause for the increases and pointing out that these increases will be of no benefit to them. That letter was signed by a secretary of a trade union in the Post Office service.

Dr. Cruise-O'Brien

An unrecognised trade union, as the Deputy ought to know.

Mr. Brennan

That may be so. The letter is signed: "Secretary, Dublin Telephone Branch Postal Officials' Association".

Mr. Nolan

Unrecognised workers.

Dr. Cruise-O'Brien

An unrecognised trade union. Deputy Brennan will understand what I mean.

Mr. Brennan

If it is the union I have in mind, and I am not sure, it was not recognised by me in my time, but the fact remains it is some body representing workers.

Dr. Cruise-O'Brien

The Deputy should not quote it if he did not recognise it.

Mr. Brennan

This desperate device of increasing charges will not improve the position. The Minister is in breach of his own undertaking to do something to unwind the inflationary spiral and his own action now in complete contradiction of what he has been preaching in recent times in regard to the necessity to call a halt to increases which will in any way aggravate the situation, is eroding the competitiveness of people engaged in production. It is also in breach of the statement by the NESC who say there must be no further loads added to what industry is already carrying. The latest newsletter from the Confederation of Irish Industry makes it quite clear they have gone as far as they can in the load that has been put on industry, a load which has resulted in the laying off of workers, in liquidations, in eroding competitiveness and putting industries in the position in which they are unable to continue exporting. This is a negation of what is regarded as essential in aiming at some form of recovery or holding the serious situation in which the onward march is towards 130,000 unemployed. It is difficult to understand the Government deliberately taking part in this kind of action at a time when they are calling on everyone else to do just the opposite. The Minister asked what we would do. If we were in power, the situation would not occur. The Minister accused Fianna Fáil of not borrowing sufficient in their time. If I remember correctly, the Minister last year announced a huge loan for the development of the telephone service. I think it was £60 million. This year a further £7 million is required.

Dr. Cruise-O'Brien

Is the Deputy talking about telephone capital development?

Mr. Brennan

Money for developing the telephone service. If I remember correctly, the accounting in the Department is in three sections: the telegraphic service loses heavily; the postal service about pays its way and the telephone service makes a profit. It is the best money spinner of the Department. It carries the other services on its back. Huge amounts have been borrowed and there is no sign of any rapid development. Surely the Minister should be in a position now to carry out the proper development of this service. He has the nucleus of a trained staff in installers and technicians and the remainder of the staff required are unskilled workers. He has 107,000 people from whom to select in order to develop the telephone service to the point where profitability can be increased tenfold. There would be many more applicants for the service if the price were kept at a reasonable figure and people could be assured of a satisfactory service. If the Minister uses the money available to him to develop the most profitable wing of his Department, surely he need not be afraid to allow the Department to run at a deficit for a year. The Department is supposed to pay its way one year with another. There were years in which it did not do that. There were years in which it showed a deficit. But there were also years in which it showed a substantial credit. The Minister is in a position now because of the huge borrowing to develop rapidly one of the most profitable services in the whole economy. He can do that because he has the staff available and he can use unemployed and the school leavers seeking jobs. There should be no delay. He has the money and the personnel. The present employment in the Post Office could be doubled thereby taking people off the dole queue and increasing the potential income of the Department. He would then be in a position in which he need not add one penny to any of the services. That is the simple answer to the question he asked as to what we would do if we were handling the service.

We are not living in normal times. The country is undergoing the most serious recession it has experienced for a long time. We have discovered that most of the trouble stems from within our own economy because lack of action by the Government in relation to the inflationary spiral has brought about all of this. Belatedly, we discovered that domestic inflation is the cause which, according to the Minister for Finance, if kept in check and with the proper constraints applied, could be reduced by half. That is the Minister for Finance's own statement. I suggest that the Government are the first people who should show this example. By this action they have once again set in motion another rise in the inflationary spiral which could be the beginning of a very serious situation indeed.

I ask the Minister not to take this motion as the Minister for Finance described it, as a piece of political manoeuvring but rather take it seriously and adopt the advice his Government have been giving to the people, industrialists and others in this country, seeking to keep exports going. By so doing, he could make a substantial contribution to the effort the Government have asked people to undertake. He could give great example by saying these increases will not now take place; that the potential for profitability in the Department can be doubled, trebled, by using the borrowed money available to them to carry out a huge scheme of development thereby obviating the need for any increase in the service.

I expect that the Minister, in his wisdom, will announce that he is not now taking the action he proposed and of which our people, industry and workers, will be the victims in the final analysis.

Minister for Posts and Telegraphs (Dr. Cruise-O'Brien)

I will at least say this for Deputy Brennan that he has been as good as his word. When I challenged him yesterday evening in the Dáil to produce an alternative to increasing charges, he has produced one, that is, to run a £24.6 million deficit in the coming year. His proposal is that we do that.

I hope we will have clarification from Deputy Tom Fitzpatrick, the spokesman for Fianna Fáil in this area, when he comes to close this debate because, as I understood him in his opening remarks here, he agreed that a deficit of this magnitude could not be tolerated. That was his position and now, Deputy Joe Brennan, an exMinister for Posts and Telegraphs, who ought, if I may say so, know better, proposes a deficit of this scale.

Mr. T.J. Fitzpatrick

(Dublin Central): I think Deputy Brennan——

Dr. Cruise-O'Brien

Deputy Fitzpatrick will have an opportunity of winding up this debate. Therefore, he, perhaps, less than anyone else, needs to interrupt me as I speak. In any case, the interval will give him time for reflection on what he said himself, what his colleague sitting next to him said and on the absence of communication between them.

Mr. Ray Burke

An expert on the aspect of communication——

Dr. Cruise-O'Brien

I hope that time taken by interruptions will be taken out of the Opposition side of this debate rather than this side.

Mr. Ray Burke

The Minister can always hope.

Dr. Cruise-O'Brien

There is one fundamental fact that many people who have spoken on this subject have failed to face. That fact is the nature of the real alternative to increasing Post Office charges. The real alternatives to that are just two. One must either reduce the services and dismiss postal workers or heavily subsidise the postal services and pass the cost on to the general taxpayers. Deputy Brennan appears to produce another alternative—one borrows the money to bridge that large deficit on these services which should pay for themselves during the year to come.

The first alternative has been urged in some business circles, though not in all. It is true that a reduction in postal services, especially in rural areas, could be made to yield savings but the consequences have to be clearly faced. If a reduction in services is to produce savings in the here and now, it must be accompanied by a laying-off of staff on a massive scale, especially in rural areas. This would mean a serious worsening of standards for everybody, not just for those in the rural areas. Pay constitutes 80 per cent of the cost of the postal services. There is no way of reducing these costs except by large-scale dismissals and/or pay reductions. People who talk about large-scale reductions to be achieved immediately by unspecified productivity measures should consider a little seriously the actual nature of the postman's work and the intractable amount of leg work it usually entails.

The other alternative means deliberately passing on to the taxpayer a large part of the cost of services of which he or she may, in fact, make very little use. In its extreme form it would make taxpayers who have no telephone and who seldom use them pay a disproportionate share of the cost of running an expensive service from which others benefit substantially. The Government oppose these alternatives and adhere to the principle always upheld heretofore by which the cost of Post Office services should be paid for by the users of those services. That general principle—there are time lags occasionally—has been upheld by all successive Ministers for Posts and Telegraphs. I do not think any Minister for Posts and Telegraphs has made the kind of proposal we have heard this evening from Deputy Brennan now in opposition.

We still have to look forward to clarification from the Opposition— which we shall have, I hope, from Deputy Tom Fitzpatrick when he winds up the debate—as to what they are really at, whether they are proposing that this become a recognised deficit of £24.6 million for the coming year or whether they mean that, when they speak of a deficit in the Post Office this should be bridged by a subsidy from the Government or by general borrowing to finance a service which it has always been admitted in the past ought to pay for itself. Unless the Opposition can resolve the dichotomy opened up by the quite different approaches of Deputy Fitzpatrick and Deputy Brennan, a heavy charge of simple opportunism rests upon it here.

Mr. Ray Burke

I would suggest to the Minister not to pass it back to this side of the House. It is the Minister who proposes the increase, not this side of the House.

Dr. Cruise-O'Brien

I do not think we need further instruction from those benches. What we need is clarification of the instruction they are offering us already.

Mr. Ray Burke

The Government have the job of governing; they should govern.

Dr. Cruise-O'Brien

I expressed the hope already that time for these interruptions will come out of the side opposite because I have a limited time.

As is noted in our amendment to Deputy Fitzpatrick's motion, the principle has been accepted by successive Governments, without exception, that Post Office services should pay their way and should not place a burden on the taxpayer. This principle has not been absolutely strictly followed every year, as a glance at the accounts for post office services will show. But it has been recognised that, in the long run, taking one year with another, the principle should be maintained. In the period from 1922-1923 to 1965-1966 deficits were incurred in 22 years while surpluses were made in the other 22. During that period also, with the exception of the first year—which was entirely exceptional—none of the deficits exceeded £1 million. Since 1966-67 deficits have been incurred each year, apart from 1969-70, but the first deficit in excess of £1 million was incurred in 1970-71. It is in the last few years only that such deficits have occurred to a substantial extent. This has happened because the extra revenue from increases in charges introduced in 1970, and on two occasions since then, has not been sufficient to cover the extra cost arising from the exceptionally high rate of inflation in recent years. This gives rise to a time lag on which, in the Government's belief, we have to catch up. As a result, the following overall deficits were incurred: 1970-71, £1.707 million; 1971-72, £1.422 million; 1972-73, £3.556 million and 1973-74 £6.548 million. The overall deficit for the nine months ended 31st December, 1974 was about £7 million.

I am indicating the reasons why in applying the principle, taking one year with another, the charges have to go up now, unless the principle is to be abandoned that postal services should support themselves. The deficit for the current year is estimated at £13.8 million and this would rise to £24.6 million in 1976, if corrective measures were not taken now. The forecast deficit of £24.6 million for 1976 is made up of £8.1 million on postal services, £3.0 million on the telegraph service and £13.5 million on the telephone service. The idea that the telephone service is automatically highly remunerative even if you keep the charges down, with which Deputy Brennan toyed is of course unfounded and it is also true that large amounts of money have to be borrowed under the telegraph development programme and high interest rates have now to be paid on those loans. If money had been borrowed on an adequate scale, if investment on an adequate scale had been undertaken earlier when interest rates were lower, we would not have to do these things now.

I can assure Deputy Fitzpatrick that the 1976 figures allow only for the basic increases in pay applicable under the 16th round national pay agreement. No provision is made for any increases which may accrue after the termination of the current agreement or for any special increases additional to the basic increases provided for under the 16th round. I should like to make that quite clear. The same sort of position applied at the time of the last increases when it was made clear that the charges then announced would not fully offset the prospective deficits on the services. Subsequent increases in pay and other costs are responsible for the deficit now expected in 1975. It will, I think, be abundantly clear from these figures that the Post Office was facing a serious financial position and that urgent measures were called for. To postpone taking remedial action would have meant charging rates which were hopelessly uneconomic, thus distorting demand for the Department's services and would have made it that much more difficult to put these services on a proper financial footing in future.

Why are we facing the serious financial position I have described? The answer is quite simple: the Post Office is no more immune from the effects of inflation on its costs than any other business is. Some newspapers have described the recently announced increases as huge, massive, cavalier, monstrous and so on. The increases which are designed to yield extra revenue sufficient to cover the estimated deficit of £24.6 million in 1976 will average 30 per cent for postal and 35 per cent for telecommunications services. Admittedly, some charges will go up by 40 per cent, as mentioned in the Fianna Fáil motion. It is worth remembering, however, that a Fianna Fáil Government increased the basic inland letter rate by 50 per cent, from 6p to 9p, from 1st October, 1970. People who criticise the size of Post Office increases usually overlook the fact that there is normally an interval of a year or more between revisions of these charges. For example, 15 months will have elapsed from the date of the last increase in postal charges until the new charges are introduced. The average increases of 30 per cent for such charges therefore represents an increase of 24 per cent for 12 months which is not seriously out of line with cost rises since the present postal charges were introduced. Pay rates have increased by over 30 per cent in the past 12 months and as staff costs account for about 80 per cent of postal expenditure an increase in such charges of more than 30 per cent might reasonably be expected 15 months after the last increases under these conditions.

In the past, Irish postal charges have been compared unfavourably with British rates. In recent years, British rates were fixed at an uneconomic level by deliberate choice. For example, when our present basic inland letter rate of 7p was fixed the corresponding British rate was only 4½p. However, in accordance with the decision of the British Government that there should be a phased return to economic prices by the nationalised industries in Britain, a decision quite contrary to the policy urged by Deputy Brennan, British post office charges have been raised twice this year by very substantial amounts.

Mr. Brennan

Still lower than ours.

Dr. Cruise-O'Brien

In some respects they are and in some respects they are not. The basic letter rate in Britain is now 8½p, an increase of almost 90 per cent in a period of 12 months and only a half penny less than the rate which will apply here from 1st January next. Other Irish postal charges from 1st January will be generally lower, some significantly so, than the British rates. Our new telegram and telex charges will be considerably below current British charges. The telephone charge structures in the two countries differ but generally the new charges here are below the British level. I do not wish to labour the comparison with British charges because conditions in the two countries are not the same. I feel, however, that the particulars which I have given will help Deputies to judge whether our new rates have been fixed at an unreasonably high level.

It has been asked why the deficits being experienced cannot be offset by improved efficiency and productivity. The Department are fully conscious of the need for extra productivity and of ensuring that the services they provide are operated with the maximum economy. There is a constant effort to improve performance by way of organisation and methods and the extension of data processing, in both of which fields the Department were pioneers in this country, and most recently by setting up a Post Office Users' Council and by accepting the survey of the National Prices Commission, the Department are introducing methods of inquiry into their work which are unusual in relation to the public service generally. On the postal side, mail distribution and delivery arrangements are constantly being revised with a view to economy. Rural delivery services are being motorised as quickly as staff vacancies permit and uneconomic marginal services are continuously being looked at critically. In telecommunications, advantage is taken of technological developments and improved working methods. Costs swings from year to year resulting from these efforts are substantial, but in comparison with pay increases and other cost increases arising from inflation, are very small indeed.

This experience is not peculiar to this Department or to this country. I have already referred to the position in Britain. All posts and telecommunications administrations in Europe have faced for some years, and are at present facing, serious financial difficulties arising from the effects of rising costs. Inflation on the scale of recent years simply cannot be offset to any significant extent by higher productivity. Through our membership of international organisations such as the Universal Postal Union and the International Telecommunications Union, the Department have access to the results of continuing expert studies into many aspects of postal and telecommunications services and these are available for our use.

Let me repeat: the prospective financial situation facing the Department in 1976 could be dealt with only in one or more of three ways—by a reduction in the range and/or the quality of existing services, by subsidisation or by charging economic tariffs. I have referred to these matters briefly already and I propose to discuss now the question of restricting services. I assume that it is generally accepted that there should be no question of holding back unnecessarily on telephone and telex development or of deliberately worsening the standard of these services. So far as I am concerned, the emphasis here must be very much one of significantly improving present standards rather than the reverse. The Department are not providing telephones nearly as quickly as I or the Government would like or as the public are demanding. The standard of telephone service to existing subscribers is deficient in a number of respects as it has been for many years, and the pressure from users is for the remedying of deficiency.

The telephone and telex services form an important part of the national economic infrastructure, particularly from the point of view of industrial development and the promotion of trade with other countries. I am satisfied that the question of restricting these services does not merit serious consideration, nor is it being urged on us here. There may be more in the case for restricting postal services, but again that case has not been made here and I do not propose therefore to linger on it as I am restricted in time.

I am certainly not aware of any demand from users for severe restrictions in the standard of the postal services. None of what I have said should be taken to mean that individual postal services should not be critically reviewed on a continuing basis, in the light of the financial position and of changing consumer attitudes. That will continue to be done but so far as the prospective deficits facing us in 1976 are concerned there are no conceivable reductions in standards, even if they were to be implemented with complete disregard for the staff affected and for the attendant social consequences which would have obviated the need for the increase in charges which have been decided on.

The telegram service has run at a deficit since it began and for social reasons that continues. The other policy alternative to charging economic prices in a situation of financial deficit is subsidisation. I do not know if I understood Deputy Brennan rightly in suggesting that and, as I say, I do not understand the position over there in this area. If charges are not to be raised to an economic level, the resulting deficit in the accounts must be borne by the taxpayers. It seems more equitable that the cost of the services should be met by the users rather than the taxpayers because the public use the services in widely differing degrees.

Deputy Tom Fitzpatrick waxed indignant about the fact that the Department, unlike private industry, are not required to submit proposed increases in charges to the National Prices Commission. This indignation would be better founded if it were not for the fact that it was the Fianna Fáil Administration which incorporated in the Prices Act, 1958, the exclusion from price control legislation of charges in respect of activities carried on by or on behalf of a Minister for State. In October, 1971, the then Minister for Industry and Commerce, Deputy P.J. Lalor, established by order the National Prices Commission whose powers did not extend to examination of charges for such services as the Post Office carried on by a Minister of State. The Press release concerning the establishment of the National Prices Commission stated that under administrative arrangements increases in prices or charges for trading services provided by the State, as well as some others, were already "subject to the closest scrutiny and require Government and Ministerial sanction before they are implemented".

Subsequently, the Prices (Amendment) Act, 1972, brought certain charges previously excluded for activities of semi-State bodies, except shipping and air transport, under the price control legislation but the continued exclusion of Post Office charges, as well as charges for some other services, from control legislation was a fully deliberate decision. Speaking in the Dáil on 11th July, 1972, the then Minister for Industry and Commerce, Deputy P.J. Lalor, said that he considered it would be inappropriate that the activities of the various Departments of State, local organisations, vocational education committees and harbour authorities should come within the scope of the Prices Act as that would lead to unacceptable confusion as to the functions and responsibilities of various Ministers. He confirmed this view on 18th July, 1972, in the course of a Seanad debate on the Bill when the question of control of postal charges was raised there.

A case can certainly be made for the exclusion of charges made for services provided by the State from legislative control in the knowledge that proposals for increases in such charges will be dealt with responsibly by the Government, and a case can be made for bringing these charges under review by the National Prices Commission, but you cannot have it both ways. It is a bit much to have Deputy Tom Fitzpatrick complaining bitterly of the exclusion of such charges, which were so excluded deliberately and after full consideration, from legislative control by the Fianna Fáil Administration such a very short time ago.

Mr. Ray Burke

It is over three years ago.

Dr. Cruise-O'Brien

This is another example of this strange collective amnesia which seems to have afflicted that party in so many areas since they went into Opposition——

Mr. Ray Burke

The Minister is an expert on amnesia.

Dr. Cruise-O'Brien

——when they forgot what they said, what they did, what they refrained from saying and what they refrained from doing.

Mr. Ray Burke

There is no greater expert on amnesia than the Minister.

Dr. Cruise-O'Brien

As I said before, I hope there will be some allowance for the frequent and unchecked interruptions in relation to the limited time in which I have to contribute to this debate. Notwithstanding the statutory position and the fact that the proceeds from charges for Post Office services form an integral part of the flow of funds into the Exchequer, the Government decided that the National Prices Commission should be given an opportunity of expressing their views on the proposal for increases contrary to the position adopted by Fianna Fáil, though you might think differently when you read this motion and amendment.

As was made clear, the commission intimated that the urgency of the proposals and the very limited time available precluded a detailed examination by them of the proposals. They recommended that the commission should have a consultancy study carried out in relation to the operations of the Post Office in order to provide background information for the examination of future proposals for increases in these charges. I intend to ask the commission to undertake such a study. The chairman of the Post Office Users Council has informed me that in his belief the council will be prepared to co-operate with the National Prices Commission in having this review carried out.

I am not able at the moment to complete in as much detail as I would like my review of this matter because I am pressed by time, but there are one or two points which should be made. The duty of the Department, which they are doing their best to fulfil, is to put themselves in a position as soon as possible to cater not merely for present unmet demand but also for future needs. for historical reasons, the service is at present relatively underdeveloped and there is no doubt in anybody's mind that it needs to extend at a faster rate than ever before to meet the demands of commerce, industry and agriculture over the coming years.

I would like to quote from The Irish Times of 27th November the chairman of the Dublin Chamber of Commerce, who has been critical of some aspects of these increases but who, in relation to telephones says this, which I consider is basic. Mr. Bambrick said:

The extra cost for telephones seems unavoidable if the necessary capital equipment is to be provided so that our creaking system——

I agree with him.

——can be brought up to modern standards. The financial load would now be less if adequate expenditure on modernisation had been made over the past decades.

That is so. In brief, it would be retrograde and in the long run financially unwise to cut back on telephone development. I would say this also. If in raising capital for telephone development one of the most important things to show is that the Government are determined that the telephone service and the postal services shall be made to pay their way. The proposal just now made by Deputy Brennan, "Oh, do not mind about a deficit of £24.6 million next year, just carry it", would mean that it would be harder to borrow money, harder to develop the telephone services and harder to provide this basic structure.

In conclusion, I would like to quote two paragraphs from a letter I have just received from Aleck C. Crichton, the chairman of the Post Office Users Council announcing to me the coming of the Post Office Users Council's report which I hope to receive before the end of the year. He makes two points which I would like to put on record, and I do so by agreement with him. One point is this:

The public must be told and must appreciate that the development of a national telephone system is analogous to forestry in its long-term nature. One cannot get in and out of the business of telecommunications as a farmer can do in the business of say turkey-rearing or pigbreeding. Our present position results from lack of determination years ago to develop a telephone system comparable let us say to the ESB which gives its service virtually to every hamlet.

At another point he says:

It is probably impossible for the public to value now the telecommunications service which they should get in ten years time, because it is a feat of imagination. But I think the Council expects you and the Department to persuade the Government and the public that a telecommunications service comparable to that of our neighbours is a pre-requisite to maintaining a reasonable standard of living; and that expenditure on telecommunications is an insurance against the effects of rapidly rising costs in the postal sector, by providing an alternative means of communication.

He adds then that he hopes the council may be able to play some part with the prices commission in furthering the interests of the public. We recognise that this increase in charges bears heavily on sections of business and on the public though the extent of that should not be exaggerated. We are talking, after all, of an increase in the CPI of 0.24 per cent which we may regret but at least the figure should put into perspective some of the strongest language that has been used. The fact is that this increase in charges is necessary, unfortunately, in conditions of inflation, in particular wage inflation, for the sound development of the postal service and particularly the further development of the telephone service, part of the infrastructure of our whole future economic development.

Mr. Nolan

I was very interested in the way the Minister read a little bit from one page of his script and then a little bit from another.

Dr. Cruise-O'Brien

I had to because I was pressed for time.

Mr. Ray Burke

Do not interrupt.

Dr. Cruise-O'Brien

You have a nerve.

Mr. Nolan

I was very worried to hear the Minister say that the Government could have found a solution to this by a reduction in the services in rural areas. About three times in his speech he mentioned this.

Dr. Cruise-O'Brien

I was rejecting it. I was rejecting what had been urged from outside.

Mr. Nolan

Therefore, it was being considered by the Minister and his Department.

Dr. Cruise-O'Brien

It was urged on us from outside and we rejected it.

Mr. Nolan

That would be in keeping with the thinking of a Dublinbased Government. Practically every Minister is from Dublin. Amenity grants have been wiped out.

Dr. Cruise-O'Brien

We refused to reduce the services.

Mr. Nolan

I am entitled to make my contribution to this debate. I do not mind the Minister interrupting on a point of order or explanation. During his contribution I did not once interrupt him.

Dr. Cruise-O'Brien

That is right but a gentleman up there interrupted. I apologise.

Mr. Nolan

I am very worried about the closing of sub-post offices in rural Ireland, doing away with the postal services, the delivery of letters, the very bad telephone service we have. There has been a reduction in the bus services for children going to primary, secondary and vocational schools. There are no amenity grants this year. The Minister said that we on this side had no solution to the problem with which he is faced of a deficit of £24 million. We have a solution to it. Our spokesman, Deputy T. J. Fitzpatrick (Dublin Central), is a businessman. Because he is now a politician he has had to hand over his business to a manager and staff. He knows how to run a business. He would not run a business by subsidising it all the time and by increasing prices. There are people waiting for telephones in this city, in every town and every part of rural Ireland. Why does the Minister not supply them? In that way he would get in more revenue. Why does he not borrow money for capital? I am not suggesting that he should borrow money for the current account. Already the Government have borrowed £650 million and are running into a deficit of about £300 million this year but that is being paid out in social welfare benefits and so on and there is no income back from it. The Government can go to the European Bank again and borrow money to give the people the services they require and the people will pay their rental charges. I was a businessman before I became a politician. This is the one Department that could be run as a business. Here is an area in which people are asking for a service and cannot get it. Why not borrow money to give the people their telephones and then there will be a revenue from that?

The Minister glibly asked us to compare our postal and telephone charges with those in Britain. He admitted that they are higher here. I think it is 8½p in Britain at present and it will be 9p here in January. I will probably table a question on this subject in January. The Minister also said that we in 1970 increased the price of the stamp by one penny. Nobody worries about one old penny.

Dr. Cruise-O'Brien

Sixpence to nine pence, 50 per cent.

Mr. Nolan

The Taoiseach, before the Labour Party conference, made a statement to the effect that we must not increase prices, we must not ask for more wages and so on. Of course, the Taoiseach was undermining the Labour conference at that time. It is a good political ploy by the leader of one political party to undermine the conference being organised by the other party and on the newspapers, radio and television the next day he got more coverage than the Labour Party conference. At the same time, the Tánaiste, the Leader of the Labour Party, also called for restraint. Then we have the one business in government increasing postal charges by 30 per cent and telephone charges by 35 per cent. How can the Taoiseach ask for restraint while at the same time the Government go mad with a 30 and a 35 per cent increase? The Minister said this should not affect the cost of living. I know, as a businessman, that a medium sized firm sends out, say, 100 invoices. A week or two later they send out 100 statements and may be after that they send out reminders. They may have to use the telephone frequently. The cost of the business is increased by 30 per cent in respect of postage and 35 per cent in respect of telephone charges. How can the Minister suggest that this will not affect the cost of living? These costs will affect the baker, the supplier of tea, butter or sugar. Profits are so small that the increased postal and telephone charges will have to be reflected in the cost of the goods they sell. The Minister may say what he likes but these increased charges will have to be paid for by the public. He might as well put one penny on VAT or 2p on the packet of cigarettes or on the pint or a penny on a half glass of whiskey. It is the public who will pay the increased charges. A man said to me that he was not very worried about the increased charges as he writes only one letter a month. He does not realise that these increased charges will be reflected in the cost of his bread and butter and so on.

I come to a very important point as far as persons in public life are concerned. It is a matter that Members of the Oireachtas should consider. I am thinking of county councillors, urban councillors, town commissioners, members of corporations who are voluntary public servants elected by the people. People may not realise that these people have to pay for their postage and telephone calls, that they do not get one penny in respect of these expenses although some people think that they do. Before I was elected to Dáil Éireann I was a member of a county council and a member of a town commission. Members of county councils know the problems they have had in the past and will have in the future when asked by a constituent to help in some particular problem. This involves using a telephone or writing letters. It may cost the councillor about 25p for one little bit of voluntary work, for which he gets very little thanks. I do not think Members of the Oireachtas have the facilities that they should have but at least they can send 30-40 letters a week in official envelopes and possibly make local telephone calls. I do not think the public realise that when I make a long-distance call to a constituent in Carlow or to the county council I have to make it from a coin box in this House and have to insert the necessary number of shillings. In this House, in 1975, Deputies have to do this.

The people I am talking about are members of county councils. Nobody knows better than the Acting Chairman, Deputy Pattison, and myself how difficult it would be for these people to continue to give the excellent service they give to the people in their electoral areas and outside them in face of these massive increases in postal and telephone charges. The day will come when they will say that they should be entitled to free postage and telephone service. These people should get some recognition now because of the great cost involved.

Acting Chairman (Mr. Pattison)

This matter would be primarily a matter for the Minister for Local Government—the provision of free postal facilities to members of county councils and local authorities.

Mr. Nolan

I do not query your decision. I accept it. I thought the situation was that if the Minister for Posts and Telegraphs said that he would give free postage to county councillors the Minister for Local Government would not object. It may be that the Ceann Comhairle would decide differently. There is one point to which the Minister did not refer. May I ask why the Minister did not borrow money in order to provide telephones for all the people who have applied for them at a time when there are 107,000 unemployed?

Dr. Cruise-O'Brien

I borrowed more than any Minister has ever borrowed.

Mr. Nolan

Would you please borrow more?

An Ceann Comhairle

The Deputy must direct his remarks to the Chair.

Mr. Nolan

I hope the Minister will borrow more money in order to provide this service. I do not want him to borrow money in order to give free postage or anything like that. I want him to borrow it for capital purposes, in other words for the erection of telephone poles and everything else that is necessary in order to provide people with telephones. In this way employment would be created and the number on the unemployed register would be reduced and, in addition, a service would be provided for which people will pay. In my constituency there are hundreds of people who have applied for telephones and who will give the Minister not only this year's rent but five or six years' rent. That would be the ideal solution to the problem the Minister has. If the Minister did that there would be no necessity to come back to the House at the end of 1976 and glibly state that he requires a 30 per cent increase in postal charges and a 35 per cent increase in telephone charges. On 1st January the increased charges will apply. I hope that during 1976 the Minister will think of borrowing and borrowing. I do not want the Minister to quote me somewhere as saying that we should borrow more money. I want the Government to borrow money for capital investment as we did in the past, and get a return from it. The money should be invested in housing, in providing a telephone service, and so on. I do not want the Government to borrow money in order to pay Deputies or civil servants or anything like that because that is current account expenditure. Where would we get that money next year? I want to be on the record as saying that the Government should borrow for capital expenditure by this Department. That would solve all the Minister's problems at the end of next year.

Dr. Cruise-O'Brien

We borrowed many times more than our predecessors did for telephone capital development—many, many times more.

Mr. T.J. Fitzpatrick

(Dublin Central): This motion was not put down for political advantage. The terms of the motion have already been read out in this House. We said we deplored the increase and asked the Minister to submit his proposed increases to the National Prices Commission. That was the reason I put down this motion when the Minister announced the decision a week ago.

Last night I listened to the Minister for the Public Service and this evening I listened with interest to the Minister for Posts and Telegraphs justifying the increases. I was rather disappointed that the Minister for the Public Service could offer no hope for curbing public expenditure which is part and parcel of the increases the Minister mentioned for his Department. The only solution the Minister for the Public Service could offer was that there would have to be massive redundancies within the Department of Posts and Telegraphs. I reject that policy in Government circles as I would reject it in the private sector, because that is the last resort.

In today's inflationary age, people's livelihood is of vital importance. We should be able to guarantee them a decent standard of living. The primary purpose of any Government is to create employment and to protect those already employed. I reject the attitude of the Minister for the Public Service to this. I would like to think that this debate would help streamline a course for the future.

There is a huge capital investment about to take place in the telecommunications world. I welcome this development. Over the next five years the Minister will have available to him £175 million to develop our telephone system. This is an enormous capital investment and, as it is an investment of a capital nature, it will be the duty of the Minister to ensure that it will at least pay its way and that interest can be paid on it.

Dr. Cruise-O'Brien

Then the Deputy does not agree with Deputy Brennan.

Mr. T.J. Fitzpatrick

(Dublin Central): I will come back to that in a minute. I am sure if the Minister had listened attentively he would have put the same interpretation as I did on what Deputy Brennan said. He spoke of increased productivity, increased business and curtailing costs. What he implied was the balancing of the deficit of one year with the gain of another, but he did not imply that the Department of Posts and Telegraphs should carry a deficit of £25 million next year much less——

Dr. Cruise-O'Brien

That is what he said.

Mr. T.J. Fitzpatrick

(Dublin Central): He followed it up by saying increased productivity and lower costs. This is what I understood him to say and I have no doubt that when I check with him later I will find out that that is what he meant.

Dr. Cruise-O'Brien

It will be tomorrow.

Mr. T.J. Fitzpatrick

(Dublin Central): This is a fact of life and I am sure I speak for my party when I say that we would not expect the Minister for Finance, much less the Minister for Posts and Telegraphs, to negotiate a capital loan in the region of £175 million and at the same time subsidise a service which can be made a paying proposition. I agree that in the early years of capital borrowing interest charges can be very heavy. It must be remembered that this is a gradual investment. The capital borrowed for last year, this year and probably next year, will be repaid by the Minister. I do not think that that system operates for loans. The first repayment would probably fall due in five or six years' time. Therefore, the charges for the repayment of capital at this time would have no bearing on the capital invested by the Minister last year and to be invested this year. Of course, this capital will have to be serviced. Interest rates on borrowings today are very substantial but this loan was negotiated by the Minister at a very reasonable rate two years ago. If this rate can be held over the next five years, that will be a very satisfactory arrangement.

I said before in this House that I believe if we had borrowed more on the capital budget ten or fifteen years ago we could have built houses, hospitals and so on, at a faster rate. We should take up this loan as soon as possible and deploy it for the purposes for which it was negotiated. This is simple economics. If the Minister has the personnel at hand—and this is a big factor—if he can succeed in charting a proper course of development within his Department and if he can get as many phones installed within the next two or three years as possible, he will find he has effected considerable sayings having regard to wage rates in five years time.

There is very little likelihood that inflation will be brought under control soon. Wages alone will erode that £175 million if it is spread over eight or nine years. We would get out of that loan, if it is fully utilised within the next two or three years, 25 per cent or even 40 per cent more than if it were invested in seven years' time. We will find that the normal type of equipment, cabling and technical machinery, necessary for this development will be increased by 40 per cent in that period.

The Minister has an opportunity now which other Departments have not got. He has two things going for him at this time. First, he has this huge waiting list in the region of 40,000, of people who want phones installed and are prepared to pay for them. Also, he could make a valuable contribution to our unemployment situation because if this project were expanded far beyond what it is today we would be able to reduce unemployment irrespective of whether it is manual labour or technical work. I do not know what provision is made in the Department for recruitment of technical staff. Must they be all trained within the Department as installers or technicians? May they be recruited from the private sector? I was told by an electrician five or six months ago that there are many electricians unemployed who could be usefully employed in the Department. Other qualified people are also unemployed and the Department could absorb a certain number of them. I do not say the Minister would cure the unemployment problem completely but he could alleviate it if he embarked on this capital project. Nobody would criticise him if he came back here in 12 months and said he had taken up 40 per cent or 70 per cent of the capital loan now allocated to him. He would be congratulated on every side because he would have contributed to our economic development. He would create the cash flow which is vitally important today right through the economy.

The Minister could utilise this situation fully if he develops the project along the right lines. I accept, as the Minister said some time ago, that we may not get the full effects of telephone capital development in a short period. It is a slow undertaking and you do not take decisions overnight and cancel those decisions 12 months later. It is an on-going situation and must be developed on progressive lines which must also be business lines. The telephone section of the Department especially will have to be so structured as to pay its way. When people are prepared to instal telephones—and that is how the pattern is developing—they must want them. Seeing that the Minister has the money available and that it is desirable for economic purposes I think such development by the Minister has great potential in the next year or so to help out on the economic front. Industry is facing very great difficulties because it has no customers and has high unit costs and low purchasing power. Naturally, there is a contraction. That cannot be said of the Department which is expanding. Looking through the figures supplied by the Department you find that business in the postal and telephone sectors has increased enormously.

Dr. Cruise-O'Brien

Hear, hear.

Mr. T.J. Fitzpatrick

(Dublin Central): Because of that we argue that at least some of the increases the Minister is now seeking should have been absorbed by buoyancy. The prices commission, no matter what applications are submitted, will always consider buoyancy. If you submit accounts for this year seeking increases for 1976 the commission will take into account what buoyancy will exist in the following year and you find that of the applications submitted, the percentage sought and the percentage conceded are never the same. That is a principle that has been expounded by various Ministers, that part of the increase sought should be met by buoyancy and economy. We concede that there is buoyancy in every business. That has to be so with inflation and increased GNP. Increased GNP would probably be reflected more in the business sector than in the Department but it would still show in the Department. It has shown up there. While I have not figures for previous years, it is noted that the Department in the year ending 31st December, 1974, spent about £54 million. I have no doubt that was a big increase on previous years. That is what is meant by expanding a business.

The Minister's Department is the only one I know that has this cash flow and it must be looked on as a business venture. Down through the years, taking one year with another, it has succeeded in paying its way. Certainly, the telephone section has always had a surplus except in the past few years. If the Minister thinks that we might criticise borrowing for that purpose he would be wrong; we would welcome capital development. We have always welcomed it. When we were in Government we went ahead with capital development of roads, schools and various other projects.

If the present trend continues and a good hard look is not taken at the efficiency of the Department the Minister can work out what exactly the development of the telephone service will be like in the next three or four years. Will we return in two or three years' time, after the Government have borrowed and spent something in the region of £175 million on the development of the telephone service, to find there is no improvement in the situation? That would be simply intolerable. If the trend for more telephones continues then the Minister will have to increase proportionately the cost of postal services to the public to meet the deficit that will result. Increasing the cost of services is a bad thing. I would like to encourage people to use the telephone. It will be a bad day for the Post Office if the time comes when the householder will only use the telephone in times of emergency instead of using it as a means of communication with relatives and friends. That could very easily be the evolution if the cost of the service goes on increasing. I should like to see the telephone develop along the lines where there would be no hesitation in using it eight or nine times in the day. That would bring a greater return and the telephone would be an important asset in every household. It is along these lines the Minister should be directing his attention.

The Minister referred to the current deficit and forecast that the deficit for next year would be £24 million odd. That does not take into consideration any crisis that might occur in 1976. It was not a matter of breaking even. The impression I got was that this increase would bring in £24 million, the money necessary to meet the deficit next year. If I were reading that balance sheet I would interpret it as meaning that this time 12 months the Department would break even.

Dr. Cruise-O'Brien

I said unless there are further pay increases.

Mr. T.J. Fitzpatrick

(Dublin Central): But not in the statement.

Dr. Cruise-O'Brien

I said it in my speech.

Mr. T.J. Fitzpatrick

(Dublin Central): I am not accusing the Minister alone. I accuse the Minister for the Public Service more.

Dr. Cruise-O'Brien

We have collective responsibility.

Mr. T.J. Fitzpatrick

(Dublin Central): In my view the Book of Estimates means absolutely nothing. Does the Minister not realise we are in an inflationary spiral with costs going up 24 or 25 per cent? The figures in the Book of Estimates are utter rubbish. I will not predict how wages will rise next year. That is for the Government to decide. With the way the cost of living is going I can see the Minister back here in 12 months' time showing another deficit if the present policy continues and the Minister fails to exercise some restraint in his own Department. His colleagues in Government will also have to exercise restraint. If restraint is not exercised the effect in the private and commercial sectors will be adverse. The Minister said the figure was .204. I should like him to check that out with the Confederation of Irish Industry.

Dr. Cruise-O'Brien

0.24.

Mr. T.J. Fitzpatrick

(Dublin Central): My reading of the Confederation's figure was exactly onehalf per cent. I cannot work out the mechanics of it but there will certainly be a rise in the cost of living.

Communication is all important in rural areas and I do not have to tell the Minister the difficulties the business sector has been experiencing over the past two or three years, that sector of our economy struggling for markets and operating on a very tight margin. Their problems will now be increased and the Minister knows they may take more severe measures than we are advocating here with regard to employment and production. I doubt if the Minister would like that evolution. What the Minister is doing will create more unemployment.

In a recent newspaper report our telephone service was reckoned to be one of the worst in Europe. With the capital now available to the Minister may we hope in the not-too-distant future for an improved service? A proper telephone service is of vital importance to the proper development of our economy, particularly since we became members of the European Community and people here are now communicating with Brussels and other European capitals every day of the week.

I should like now to thank the Minister for the copy of his speech to the Chamber of Commerce which he so kindly sent me. I found it informative. We tabled this motion in what we considered to be the best interests of the country and the State. We ask the Minister to submit his proposals, to stand the test which the majority of businessmen have to do. Indeed, I believe it would be good for his Department. I am not saying that some increases would not be recommended. In this day and age we are sufficiently mature to recognise that fact—that the National Prices Commission would have recommended increases, when the Minister could have come into this House better armed than he is now but it is a bad practice, and a bad practice for business people generally.

Dr. Cruise-O'Brien

The Fianna Fáil Government decided to exclude this from the National Prices Commission in 1972.

Mr. T.J. Fitzpatrick

(Dublin Central): If this highly inflationary attitude is continued, of increasing prices in the public sector which are, in turn, reflected in the private sector, it would not be in line with the exhortations issued by Ministers over the past week to try to reduce the inflationary spiral at present destroying our economy. If we do not succeed in getting it under control, to some extent, before mid-1976, I would not like to predict what will be our unemployment position towards the end of that year.

The Government know perfectly well it is of vital importance that inflation be controlled in an effort to get the economy moving again. This type of action is not conducive to expansion of the economy.

Question put: "That Ministerial amendment No. 1 be made."

The Dáil divided: Tá, 69; Níl, 65.

Tá

• Barry, Peter.
• Barry, Richard.
• Belton, Luke.
• Belton, Paddy.
• Bermingham, Joseph.
• Bruton, John.
• Burke, Dick.
• Burke, Joan T.
• Burke, Liam.
• Byrne, Hugh.
• Clinton, Mark A.
• Collins, Edward.
• Conlan, John F.
• Coogan, Fintan.
• Cooney, Patrick M.
• Corish, Brendan.
• Cosgrave, Liam.
• Costello, Declan.
• Coughlan, Stephen.
• Creed, Donal.
• Crotty, Kieran.
• Cruise-O'Brien, Conor.
• Desmond, Barry.
• Desmond, Eileen.
• Dockrell, Henry P.
• Dockrell, Maurice.
• Murphy, Michael P.
• O'Brien, Fergus.
• O'Connell, John.
• O'Donnell, Tom.
• O'Sullivan, John L.
• Pattison, Seamus.
• Reynolds, Patrick J.
• Ryan, John J.
• Ryan, Richie.
• Donegan, Patrick S.
• Donnellan, John.
• Enright, Thomas.
• Esmonde, John G.
• Finn, Martin.
• FitzGerald, Garret.
• Fitzpatrick, Tom (Cavan).
• Flanagan, Oliver J.
• Gilhawley, Eugene.
• Governey, Desmond.
• Griffin, Brendan.
• Harte, Patrick D.
• Hegarty, Patrick.
• Hogan O'Higgins, Brigid.
• Jones, Denis F.
• Kavanagh, Liam.
• Keating, Justin.
• Kelly, John.
• Kenny, Enda.
• Kyne, Thomas A.
• L'Estrange, Gerald.
• Lynch, Gerard.
• McDonald, Charles B.
• McLaughlin, Joseph.
• McMahon, Larry.
• Malone, Patrick.
• Spring, Dan.
• Staunton, Myles.
• Taylor, Frank.
• Thornley, David.
• Timmins, Godfrey.
• Toal, Brendan.
• Tully, James.
• White, James.

Níl

• Andrews, David.
• Barrett, Sylvester.
• Blaney, Neil T.
• Brady, Philip A.
• Brennan, Joseph.
• Breslin, Cormac.
• Briscoe, Ben.
• Brosnan, Seán.
• Browne, Seán.
• Brugha, Ruairí.
• Burke, Raphael P.
• Callanan, John.
• Calleary, Seán.
• Colley, George.
• Collins, Gerard.
• Connolly, Gerard.
• Cronin, Jerry.
• Crowley, Flor.
• Cunningham, Liam.
• Daly, Brendan.
• Davern, Noel.
• de Valera, Vivion.
• Dowling, Joe.
• Fahey, Jackie.
• Farrell, Joseph.
• Faulkner, Pádraig.
• Fitzgerald, Gene.
• Fitzpatrick, Tom (Dublin Central).
• Flanagan, Seán.
• Gallagher, Denis.
• Geoghegan-Quinn, Máire.
• Gibbons, Hugh.
• Gibbons, James.
• Gogan, Richard P.
• Haughey, Charles.
• Healy, Augustine A.
• Herbert, Michael.
• Hussey, Thomas.
• Kenneally, William.
• Kitt, Michael P.
• Lalor, Patrick J.
• Lemass, Noel T.
• Leonard, James.
• Looughnane, William.
• Lynch, Celia.
• Lynch, Jack.
• McEllistrim, Thomas.
• MacSharry, Ray.
• Meaney, Tom.
• Molloy, Robert.
• Moore, Seán.
• Murphy, Ciarán.
• Nolan, Thomas.
• Noonan, Michael.
• O'Connor, Timothy.
• O'Kennedy, Michael.
• O'Leary, John.
• O'Malley, Desmond.
• Power, Patrick.
• Smith, Patrick.
• Timmons, Eugene.
• Tunney, Jim.
• Walsh, Seán.
• Wilson, John P.
• Wyse, Pearse.

Tellers: Tá, Deputies Kelly and B. Desmond; Níl, Deputies Lalor and Browne.

Question declared carried.

Motion, as amended, agreed to.