This debate has been protracted over quite a long period. It has been broken up and so there is really no continuity. It is rather a headache because a considerable time has passed since the budget was introduced. Much of the criticism levelled at the budget on its introduction has in the interval proved to be well founded. The bad effects forecast by speakers critical of the budget are now plain to be seen. Perhaps the Minister will give us some indication when he comes to reply as to what, if anything, he proposes to do to relieve some of the difficulties his new taxation has thrown up. Bad though the taxes are, ill-calculated as they are in effect, in that respect the budget is less faulty than in another aspect, mainly, in the huge borrowing that is proposed in it. The first question one may well ask is whether we are creditworthy to the degree that we will be able to raise the £300 million required in addition to the outturn of the new taxation plus what was already there. Secondly, if we are able to raise this sum, what about the £350 million already borrowed by this Government since coming into office in 1973? Are this Government going to continue in Government and face up to what must be chickens coming home to roost when the next budget comes in January? My belief is this Government will never introduce another annual budget. Of course, there are mini budgets every other day. I cannot see this Government facing up to the situation with a grand total of £650 million of borrowed money, all of which is housekeeping money. There might be some excuse if this borrowing were for capital and productive purposes. That is not the position. All this borrowing is being used to meet day-to-day expenditure. We are spending over and above what we are earning by way of taxation.
Consider that £650 million borrowed money at very inflated interest rates in conjunction with the decline in the value of the £, which must have been foreseen by our financial advisers. This has placed the country in a very, very serious financial position, so serious that I am quite certain this Government will never face the prospect of bringing in an annual budget next January. Neither are they likely to take the obvious, decent, honest course and go for an election on the basis of the budget introduced last January, but rather are they likely to hang on as long as they can during this financial year and then scuttle to the country towards the end of the year, say, between mid-October and mid-November. No matter which way they go they will be on a winner. If, by any stretch of the imagination, they get a mandate at such an election, then they will have the opportunity given by a new term of office sufficiently long, they may feel, to apply the remedies that are obviously needed if we are not to sink the country financially in the immediate future.
On the other hand, they are on a winner if they lose the election, because they can say: "What about it? Let the people who follow after us try and straighten out the country." They would hope that as a result of the painful remedies that would have to be applied to rectify their reckless and wanton destruction of the economy the then Government would meet with the displeasure of the people at the following general election, so that this Government could come back for another spree for a number of years, regardless of the best interests of the country.
The decline even in the last couple of days in the value of the pound, to which we are tied, has meant, according to some published calculations, that we have lost another £30 million, which is, strangely enough, the additional amount which it is hoped to raise from VAT on alcohol. It appears that £30 million has gone down the drain on the exchange ratings between sterling and the dollar and other hard currencies over the last few days. I have no doubt that that reckoning is true and only highlights all the more the disastrous financial situation into which the country has been brought by the Government.
How, I would ask the Minister to indicate in his reply, does he hope to offset this loss of up to £30 million, this additional burden that is being placed on our resources and our creditworthiness? If there is a further decline in the value of sterling how do they hope to make up the difference that has already been created and any further differences that may arise and are likely to arise?
Our deficit this year on day-to-day expenditure is £300 million, which we propose to borrow. Even in the short experience since 28th January it is clear that the increase will be greater than the £300 million indicated in the budget. That situation would be serious enough if it were in isolation, but each of the Government's budgets has shown a progressive amount of borrowing, so that for running the country we are £650 million in the red as against our current income from taxes. That, added to our overall borrowing in the past, is calculated to be of the order of £2,250 million. For a country of our size, with an economy of the outturn we have, the impact of the interest on the volume of borrowing must make for continuing difficulty for this and for future Governments and must almost ensure that, far from taxes being capable of being eased, they will have to rise continually in order to try and meet the heavy interest charges on this relatively huge volume of borrowing that has taken place in our name. All of this is merely to service the debt not to mind raising sufficient resources to begin paying it off.
That is all against a background of a continuing deteriorating employment situation. No doubt the Government will be very quick to point out that while they have been imposing taxes and borrowing money for running the national housekeeping account they have been providing additional pay-cuts for those who are unable to provide for themselves. This would be very satisfactory if the situation were normal, but when we consider that these additional payments are being paid to more and more people, particularly unemployed people, with every prospect that there will be many more thousands unemployed in the near future, and taking the converse of that, that many thousands fewer will be in employment and therefore in a position to contribute by way of tax to the Government's coffers, we find ourselves facing a disastrous prospect.
Can the Minister now, after these weeks since the introduction of his budget, point to any upturn that is likely to be showing in the immediate future? If he cannot, then we are truly in a crisis situation and cannot get through without getting things much worse if the Government continue to indulge in self praise for what they are doing in other aspects of their activities. How long can we continue to borrow for our day-to-day expenditure? How long can we continue to spend more than we are collecting by way of taxation? How long could any individual expect to be solvent if he continued to spend substantially more than he was earning?
That is the situation the Minister must clarify. Are we going to continue borrowing? Are we going to continue running down the economy? Will we continue to stand aside and allow, without making any effort, more and more of our work force to become redundant and unemployed? Will we continue to stand aside and see more of our production units and factories going on short time or closing altogether? Will we continue to stand aside and see more of the business community going into liquidation?
In the memory of a number of us there used to be one sheriff for the city of Dublin. I understand there are now 24 such people, with all the attendant officials necessary for their operations. I am not suggesting that they are not doing any work or that these jobs were merely created for some of the boys. These jobs are a necessity because of the activities sheriffs must engage in. My information is that these men are overworked at the present time trying to get back from those who found that, under this present method of operation, their businesses are going to the wall. These firms are going into liquidation and the sheriff has the unpleasant job of trying to salvage whatever is left of the wreckage. As I said, there are 24 men today doing a job which was done by one man and an assistant not so very long ago.
The Minister in his reply must address himself to this subject, not just to satisfy those who are critical of his operations as Minister, but to try to allay in the public mind the very great disquiet that things will get much worse because the people can see no light at the end of the tunnel. Unless there is some way the Minister can show us that the picture is not as bad as it appears, then he and the Government must seriously contemplate a very fast, progressive, deterioration of the economy and the real disaster situation in the immediate future.
If he has any basis for an optimistic view, he has a duty to tell the public and so allay to some degree the fears and disquiet in the business and manufacturing communities. In this way they will endeavour to hold their ground in the hope that something better is around the corner. This is a serious situation for the whole country.
The taxes imposed in the recent budget were ill-conceived, brutal in their application, and will have disastrous consequences. The consequences can already be seen to such a degree that a great deal of the additional income the Minister had hoped to get will not be forthcoming unless there is a vast change in the downward swing in business, particularly those businesses he hit so savagely on the 28th January.
I remember not so very long ago listening to the caterwauling of the Minister in this House telling us the Arabs had screwed things up and the energy crisis was such that we had to take all kinds of steps not only to minimise the impact of the brutal Arabs in their application of new increases for their products, but we were taxing petrol further in order to try to make the public use less. It was supposed to be a two-pronged attack—one, to get more money and, two, to try to limit and reduce the demand for petroleum products of all kinds. That we were loath to swallow but we had it rammed down our throats, as did the public who have had to pay the piper since.
At that stage the price was increased by 15 pence per gallon in one jump. Now, without any provocation whatever and on top of those and other increases which took place in the intervening period, the Minister is increasing the price of petrol again. At the same time, as if he had a vendetta against motor users, he slams a tax on cars. This is totally inexplicable to anybody who looks at the picture in a fair way. Who is the Minister trying to penalise? What is he trying to do? He is hitting the dispersed workers of this country, of which there are thousands, who are endeavouring to participate in gainful employment instead of sitting by their firesides in rural Ireland, drawing assistance at the expense of the taxpayer. These workers are prepared to travel far from home to their places of employment. To do this they must provide their own transport because public transport could not serve them. Is there any Deputy who will concede that those people are using small horse-power cars which the Minister seems to favour? Are these men travelling to building sites, which are getting scarcer as time goes on, in six and seven horse-power cars? Of course not. They are grouping together and using higher horse-power cars in the 14 to 20 horse-power range to travel 20, 30 or 40 miles daily, five or six of them, to and from work. They could justly stay at home and claim unemployment benefit or assistance from the State; but the Minister for Finance, who should bear that in mind, slams those people not only in respect of petrol, the cost of which is substantial for high horse-power cars which most of these people use, but also selects them for increases of up to 100 per cent in road tax. He has given no indication to them, as I think he should, that they are entitled to claim tax free allowance for the expense of getting to work in circumstances where they would be entitled to go unemployed and draw from the State if they so wished.
These people who must necessarily use their cars as part of their job should be properly treated by the income tax code. They are not being so treated at present. Instead, they are encouraged to go on the dole or draw unemployment benefit and let the State pay more to them than they would ultimately gain from their work when they have to travel long distances to it and pay exorbitant prices for fuel and road tax. They also have to bear other increases about which the Government seem to have nothing to say but which are occurring each year such as insurance. All this additional expense falls on those who can ill afford it, people for whom the car is essential in their daily work routine. They are ignored as regards the granting of relief to which they are properly entitled.
The Minister says: "If you have a car over eight horse-power we will really nail you and the higher the horse-power the more you will be nailed". He forgets that the higher the horse-power the more tax he gets on the petrol that car uses because it burns more petrol per mile than the smaller car. There is no justification for the double increase—petrol and road tax. This is ridiculous and vindictive, or else it is crassly stupid, which I doubt because the Minister's advisers are far from stupid. I take it that it is the Minister and some elements in the Government who have devised this penal taxation. I cannot understand why; because they are hammering people who would be justified in refusing to work at such distances and justified in signing at the employment exchange and drawing money from the State, as much or more than they have left from a week's wages after paying expenses. They prefer to work, but the Government do not want them to work. That seems to be the message. This can, and may well have a further very serious effect on the employment situation in the country generally.
I should like the Minister, who, no doubt, has had a very rough feedback from his supporters and his Deputies since 28th January, to try to justify this double, penal below against people who must use cars as part of their work. How can it be justified? How does he justify the progressive increase in tax with horse-power rating? How is it that some baby cars are enjoying a decrease in tax? What sort of people are using these cars of under eight horse-power? Will anybody assert they are used by those who must have them for their daily work? My experience is totally to the contrary. If there are luxury cars, quite a proportion of them are in the under eight horse-power class. There are second and third cars in families; that is where you find them, but outside the workman's home you find the 14 to 20 horse-power car, bought second hand at a fairly chancy price to take himself and his pals to work. These are the people who are being hammered unmercifully by a Minister who, in our present circumstances, should be leaning over backwards to encourage such people to continue to seek work and travel far for it. Instead, he is discouraging them and rather encouraging them to draw the dole and unemployment benefit. That is the effect of the budget in regard to this essential private transport.
Apart from those travelling to work there is the farming community who must be considered while agriculture remains our primary earner, but the Minister, entirely disregarding the present situation, is lambasting these people who, of necessity, must use cars because they live in rural areas in isolated circumstances. If they could do without their cars it would be unfair to ask them to do so. The cars they use are very much dual purpose vehicles, general work-horses on the farm, with a towing hitch on practically all of them for use with a trailer for many purposes. Naturally, these are cars from 12 to 20 horse-power as they must be to fulfil their functions and do all the jobs necessary and make farm life bearable in rural communities. These people are also being walloped unjustly and unnecessarily. If a man is a marginal farmer he is discouraged by being singled out to be hammered by this special tax that hits the horse-power rating of the car which uses more petrol and he is being slammed on that score also.
The Minister seems to have completely lost touch with the general community in the country and must be getting the feed in of information which allowed him to do this stupid thing, in the wrong way. This Minister is a very sharp and observant man. That has been my experience of him over the years. I am amazed at him misleading himself to the degree he has on this particular aspect.
There are other various types of people, such as doctors, nurses and vets whom the Minister may say are well able to bear this extra cost, but they are not. If they have to bear it they will in turn through the services they provide pass this on to the community they serve. They must surely get increases in return for their labours. Their costs are being increased substantially by those two particular taxes of the Minister.
We have all this against the background of the campaign and the propaganda of the Government trying to develop an atmosphere in which there should be a pay pause and in which there should be no increases sought, never mind granted during the coming year in order to give us breathing space to try to pick ourselves up from our knees where we now are. While making that plea and propagandising the reasons why we should make that effort the Government are the prime offenders, the prime movers, of operations which will defeat what they claim publicly they want. How can any Government, who on the one hand impose additional taxes which will increase everything every member of the community uses, make a big plea that workers are not to look for any increase? The Government are primarily responsible for making it impossible for our work force of all descriptions, whether professional, manual, skilled or unskilled, to face the prospect of the continual rise in the cost of all commodities.
How can the Government with any basis of honesty accept a pay pause and refrain from granting new demands for increased wages when they have irrevocably created a situation wherein the basis for wage claims is justifiably there to such a degree that those people must get increases? It is a conundrum to me what way the Government are thinking about this matter. On the one hand, they are seeking a pay pause, seeking to limit any increases during the year and, on the other hand, they are making certain by their actions, by increased taxation, that the very claims they are asking to be withheld must be met in order that the people in various walks of life can keep up with the increased costs they are asked to bear. The community are being asked to do that on a frozen wage packet and escalating daily costs. It cannot be done.
Unfortunately for the country, this is the sad situation as it stands at the moment. If the Minister cannot admit how wrong his budget has been, and his financial concept for the coming year, perhaps he can at least give us some explanation which might go part of the way to explain to the public just how we are in the mess we are in and how he is creating further demands for wage increases on the one hand and crying out on the other hand to the workers not to make such wage demands, that it is wrong, that it will ruin the country. The Minister owes the House and the country an admission of his wrong in doing this or an explanation, which is so difficult to see that nobody must be aware of it except himself, as to why he wants this. Things are far too serious for the high handed financial operation the Minister seems to be indulging in at the moment.
Have the Government and the Minister taken into account the impact on tourism as a whole of the increase in petrol tax and road tax on cars and vehicles? Surely the Government are fully aware that tourism, which has been going through a bad time in recent years, has been showing fair signs of recovery in recent times? The Minister has dealt tourism a body blow again. While he and his other colleagues in Government are justly looking for greater activity on the tourist front and while we are spending many hundreds of thousands of pounds that we can ill afford through our State-sponsored transport bodies to go abroad to try to whip up custom for this country, the Minister is imposing those taxes. The Government members must be as fully aware as I am of the impact of those taxes on the tourist industry. Is there any explanation why the budget should be geared in such a way that it contradicts the efforts made at some considerable expense by other elements of the Government to try to boost our tourist influx while the Minister's taxes are virtually saying: "Stay away. We do not want you. Go somewhere else"? That is really the message this brings to our tourist potential outside the country.
This is certainly the story we are telling to our people of the six northeastern counties. We are telling them to stay where they are or go somewhere else. We are telling them to use their cheaper petrol in the Six Counties, get their cheaper liquor in the Six Counties and not come across the Border because we want to take extra taxes from them. There are exceptional circumstances in relation to cross-Border traffic. We are imposing those taxes to the detriment of our Border counties which depend heavily on cross-Border traffic, which has been traditional so far as those counties are concerned. In my county we are saying to the people: "Do not come in here. If you do we will charge you more for petrol than you will pay at home. If you come we will charge you more for liquor than you will pay at home". Those are the everyday things which our people have to face up to and they are the contradictions which are being clearly made by the Government. We are telling the people outside the country to come and see Ireland but at the same time we are telling them: "Do not come because if you do we will charge you more for doing it. It is cheaper to go elsewhere". No matter what part of the budget we look at we will find these contradictions. The contradictions are consistent. That is about the only consistency there is in the Minister's and the Government's financial operations. Consistency in contradictions is evident in every aspect of the budget.
We have a particular economic difficulty in the Border counties. Are the Government aware that before the budget, and particularly since 1st March, our towns in the Border counties are becoming ghost towns? In the matter of prices for all sorts of materials and foods, the Six Counties are beating us to such a degree that excursions are being run daily from 50 miles and more from the Border into the Six Counties on a regular basis. Ten, 12 or 14 housewives are going in minibuses to do their week or month's shopping in the Six Counties. Who can blame them when you see the disparity and the difference in the prices of the everyday things we use?
More astounding for the south Border county people is it to find well-known products selling in the Six Counties at anything up to 33? per cent less than they can buy them on this side of the Border where they are manufactured. There are all sorts of explanations for this, but the impact and the effect of it on our people cannot be eradicated. They are continuing in ever-increasing numbers to cross the Border to buy southern Ireland products at anything up to 33? per cent less than they can buy them in the towns in which they are manufactured. You can explain all you like about export profits being tax free, and about British Government food subsidies, but the fact still remains that, with all the difficulties and troubles and bother they have had along the Border in recent years, by virtue of Government action we are adding to their difficulties in these towns and, in a very short time, we will create a situation in which every Border town south of the Border will be a ghost town. I am not exaggerating. I know it. I see it. I observe it day in and day out.
We are now saying to them: "You will have the benefit of the cheap foods and the cheap goods you have been crossing the Border for in recent months, and we will give you a bonus of getting petrol so much cheaper that you can make the journey at no cost because you can fill up with petrol out of a pump in the Six Counties". I do not believe the Government are fully cognisant of that situation. If they were, they would not behave as they have behaved. If they were blind to it when they were doing it on 28th January, they should remedy the situation and not add to the difficulties and the problems in the Border counties south of the Border these additional economic hazards and difficulties which will wreck our towns which had been building up from a very bad start since the Border was first put there. They are now being walloped back into the ground again under the present mode of operation.
All I can say in regard to liquor prices is that the Government really went to town with their liquor tax increases. I am afraid they will not get what they are expecting to get, but they will create quite a problem within the liquor trade and those associated with it. Redundancies and unemployment are bound to be created as a result of the lesser volume of throughput arising from the brutal and penal taxes which have been added to our liquor prices. Everybody in this House except the youngest Members will remember when a penny on the pint could change a Government in Dublin city. I remember members of the present Government at that time lashing the then Government for putting a penny on the pint. The same outfit now put five new pennies on it which is the equivalent of 12 of the pennies I am talking about.
Only 20 years ago they lambasted the Government and made such propaganda that it was recognised that a penny on the pint was capable of putting the Government out of office. Now they put on 12 old pennies, plus what has been put on since as a result of the VAT change on 1st March, together with the increases allowed to the brewers, all of which will bring the increase up to something like 10 new pence. To be conservative we are talking in terms of an increase of 20 pennies, 20 times the penny of the late fifties. If an increase of a penny in the fifties could change a Government, what should 20 pennies do in 1976 to the Government? They should put them into space, permanently circling the earth, far away from it where they could not do any more harm. That is the sort of operation in which the Government have engaged.
We have to borrow three times as much as the optimistic estimate made by the Minister will give us from the increased stupid vicious and penal taxes wrongly placed on the main heads he has had a go at. Even on his most optimistic calculations of the various penal taxes, £3 will be borrowed in addition to every £1 he hopes to raise. That is the manner in which our country is being run at the moment. Obviously it cannot continue for very much longer. He has already done such damage that even if the Government change and remedies are applied the damage has been done irrevocably and irretrievably. The progress the country was making has been set back for years. To put a number on those years is beyond me, but there can be no doubt that progress has been set back for many years regardless of what steps may be taken and will have to be taken in the not too distant future.
We are in a mess. There are no two ways about it. We are in a bad way. One thing that seems to be keeping the wolf from the door in one sense in so far as the Government are concerned is that they have been adding to the benefits going to those who most need them. I do not think that is done on the basis of their increasing need in a deteriorating situation. It is a matter of feeding the dog with its own tail.
We continue to give to the growing number of unemployed increases each week. The Government justify and laud themselves on the very fine sentiment that those who are out of work and who cannot help themselves are entitled to the help of the community through the Government and the Exchequer. They laud themselves on that basis but it is not an honest basis. It is merely a method of trying to keep quiet those who in normal circumstances would have risen up to such a degree that the Government would have had to go to the country. The dog is being fed with his own tail, not for the love of the dog but in order that he does not bite his master.
The Government are doing this to such effect that the country will suffer for many years to come as a result of this wanton spree. The Government do not seem to know where they are going. They do not know where they have come from or where they are going; in fact, I doubt if they know where they are at this moment.