Dáil Éireann debate -
Thursday, 8 Apr 1976

Vol. 289 No. 9

Finance Bill, 1976: Second Stage (Resumed).

Question again proposed: "That the Bill be now read a Second Time."

Mr. Ray Burke

In the very near future happily, in the forthcoming general election, when the political correspondents are examining the causes for the rejection by the electorate of the Coalition, one gigantic blunder will in my opinion be pointed to and that is the January, 1976, budget and this Finance Bill which gives legislative effect to that budget. The record of the term of office of this Coalition if examined by some future historian, if he has nothing better to do, which I doubt, will be of an Administration which came to power through the proportional representation system, with the backing of a favourable Press which speculated on the overall wealth of talent available to the incoming Taoiseach in his choice of Cabinet. The last three years have shown that the brilliance, if it was ever there, which I doubt, is akin to a lighthouse in a bog, brilliant but useless. The Irish people have suffered three years of mismanagement and lame excuses all building up to the present position where different Ministers and Parliamentary Secretaries, not forgetting the occasional assistant Whip, make diametrically opposed guesses as to the direction in which they should lead the Irish nation.

All the miscalculations over the last three years are typified by this Bill now before us. At a time of rapid inflation, massive unemployment and a complete breakdown in confidence by the business community in general in the ability of this Coalition Government, the country's greatest fears are confirmed in the budget proposals and the provisions of this Bill. The Minister in his budget statement called for a wage pause and simultaneously introduced a budget which increased the inflation rate in the ensuing three months by 7.3 per cent. The figure was announced last week. If this were an end of it, it would be bad enough but everybody knows that the VAT increases are only now working their way through the economy and further inflation is inevitable, inflation probably to the tune of approximately 20 per cent, this year. We have the abysmal situation in which the Minister for Finance calls for a wage pause, the Minister for Labour says no statutory wage pause is possible and the headline in The Irish Independent today proclaims that a pay freeze is now abandoned by the Government. Mr. Chris Glennon, the political correspondent, reports as follows:

A complete pay freeze is not now a practical aim, the Government tacitly admitted yesterday.

This emerged after the pay summit when the Taoiseach studiously avoided any reference to a pay pause...

And Foreign Minister Garret FitzGerald told the Dáil that the Cabinet still hoped for a pay agreement.

These were clear indications that the Government had abandoned a pay freeze until the end of the year.

Significantly, beside the article by Mr. Glennon, there is a cartoon by Doll showing the Coalition Government breathing the kiss of life into wages talks. Really, it should be the other way round: wages talks should be breathing the kiss of life into the Coalition Government. We all know, of course, that it is impossible to bring a corpse back to life, and Doll knows it, and if ever there were a corpse surely this Cabinet and this Coalition is one.

When we look at the budget introduced in the neighbouring island— remember, we are affected by what happens in the neighbouring island, and at the budget introduced here in January last, it is quite clear that the British budget spells disaster to any chance of economic recovery here. Now the blame for that must be laid fairly and squarely on the shoulders of the Minister for Finance and his Cabinet colleagues. How can our exporters hope to compete with the British with an inflation rate, stocked and fuelled by the decisions of this Government, running at the level it is and a projected level of 20 per cent later in the year while the figure in Britain will be approximately 10 per cent? What hope is there for our industrialists and exporters of any economic recovery?

To a certain extent I have a certain amount of pity for the Minister for Finance. It is recognised throughout the length and breadth of the country that he is the whipping boy of his own Cabinet colleagues. It is only right that the record should be put straight. The Minister for Finance is merely the spokesman on behalf of the Government and it is not fair of his Cabinet colleagues to go around the country privately blaming the failures of the Government on their Minister for Finance. He is not singly incompetent. There is a Cabinet of 15 who are totally incompetent as they have proved by their decisions, their lack of decisions and going back on their decisions over the last three years.

There are 83 sections in the Finance Bill. To go through it in the necessary detail would take more time than I have available. I will have the opportunity on Committee Stage of discussing various sections at greater length. This morning I intend to concentrate on the more dastardly sections and provisions of the Bill.

This year we are celebrating the anniversary of the 1916 Rising. At that time our patriots came forward when they were needed. New patriots are being brought forward today, maybe not voluntarily but they are being brought forward because of Government decisions. A housewife facing ever-increasing prices, with her husband out of work and less money coming in must be considered a patriot when she faces every morning not knowing where the money to provide the necessary food and clothing for her family will come from.

A body of Irishmen and women that must come under the heading "patriots" are motorists. In the eyes of the Minister the motorist is the man who has a car for luxury purposes. I had hoped that that mentality had disappeared many years ago but apparently it still lingers on in the mind of the Minister for Finance. The motorist was savagely attacked in this budget and Finance Bill by the massive increases in car tax and petrol. At the same time, he is being asked to drive on inadequate roads. No provision is being made in the allocations to local government to improve our roads.

Whether the Minister is aware of this or not—and apparently he is not —most people use their cars to get them to and from their jobs because of the inadequate public transport service or because they are part of their jobs—commercial travellers, doctors, vets and so on. The Minister is completely unaware of this situation. If he was aware of it, how could he possibly justify section 79 which provides revised annual rates of motor vehicle duty for private cars from the 1st March, 1976, as follows:

(d) Other vehicles to which this paragraph applies—

not exceeding 8 horse-power	£4 for each unit or part of a unit of horse-power
exceeding 8 horse-power and not exceeding 12 horse-power	£5 for each unit or part of a unit of horse-power
exceeding 12 horse-power	£6 for each unit or part of a unit of horse-power
electrically propelled	£22

This indicates that the Minister still has an antiquated view of the motorist. He is prepared to attack the motoring public realising that they must have their cars and that they will have to pay this tax despite the fact that they are not in a position to do so. It is a major struggle for these people to keep their cars on the road, even though they need them.

To make certain that the motorists are penalised not just by an increase in car tax, the Minister increased petrol by 10p plus VAT. Section 73, 74 and 75 of the Bill ensure that whatever liberal interpretation was taken previously of the display of tax discs and so on, the Minister has now decided to go to war on our motorists. This is another example of a Government bankrupt of ideas when they have to attack a section of the community in this way.

It would be bad enough if this attack was only on our own people but it is also an attack on our tourist trade. How can we hope to entice the motoring tourists to Ireland when petrol costs about 18/- old money per gallon? The British Chancellor increased petrol by one penny a gallon. The Minister should look at the effect of his increases in the Border counties. In December, 1974, in a few momentous moments the Minister introduced a 15 per cent increase in the price of a gallon of petrol. One reason he gave was the different prices of petrol north and south. By his decision in the budget and the Finance Bill he has guaranteed that not one gallon of petrol will be sold on this side of the Border until the levelling up of prices.

The Minister has succeeded in doing something I never believed possible. He has created unemployed—as we all knew he would—in every section of the community. There was one section in which I honestly believed not even the Minister or his Cabinet colleagues could create unemployment, that is, the brewery business. He has even succeeded in causing unemployment there. At one fell swoop he has reduced considerably the employment content of an industry that was keeping our social services going; he has done severe damage to the licensed trade and the brewing industry.

Being reasonable men the licensed vintners met the Minister and put forward proposals as to what could be done to put their industry back on a proper footing, but, in typical fashion, the Government rejected any advice or offers from them. The Minister, referring to this matter yesterday, stated:

The pattern of beer consumption following the budget but prior to the trade increases in price, would indicate the correctness of the Government's tax calculations.

That does not stand up to the light of day. The Minister further stated:

Relevant to any consideration as to whether the price of beer should be reduced is the purpose to which recent increases are applied. Every penny of the 6p tax increase is returned to the public benefit, the other 4p increase goes to the private interests which imposed them. Having considered with great care every aspect of the situation——

I presume he is including the offers made by the licensed trade.

——the Government are satisfied that the correct course is to adhere to their original taxation measures which were designed to result in additional revenues of approximately £23 million in the current year for the public benefit.

They may have been designed to bring in £23 million but there is no way they are going to bring in £23 million when the average fall-off in consumption is reckoned at 40 per cent. How can we hope to attract tourists if we are charging such a massive price for drink? The increase is a direct result of the Government's decisions in spite of the fact that the Minister tried to palm it off by saying:

Subsequently, with effect from 1st March the breweries, albeit with the approval of the National Prices Commission, and trades generally, without the approval of the National Prices Commission, increased the price of a pint of beer by a total of 4p.

The National Prices Commission would not have approved the increase unless they felt it was justified. It was justified because of the mishandling of the economy by the Government and the raging rate of inflation we have. A particularly anti-social effect of the increase in the price in the pint is that we have reached the situation where a half-one costs less than a pint. Any of us who started drinking did so by taking a pint of beer or stout but the young person now, because of his limited money, if he is lucky to have a job, will choose a small whiskey instead of a pint because it is cheaper. That is a bad trend. It is wrong that young people should start by drinking hard liquor but the blame for this lies squarely on the shoulders of the Minister and his colleagues in the Government.

We have reached the situation where the working man, if he is fortunate enough to have a job, cannot afford to have a pint to refresh and stimulate him on his way home. It is terrible that we have reached the stage where one can only buy a pint and 20 cigarettes with £1. In general, the budget is a disincentive to investment, to work and production. Nothing brings this home more forcibly than the emphasis placed by the Minister on anti-avoidance methods. Everybody wants to pay his share of tax but the Minister appears to have a mental block about anti-avoidance. There are many anti-avoidance clauses in the Bill and the Minister referred to them on numerous occasions in the course of his speech instead of making an effort to stimulate investment in the economy and producing more jobs for our people. The Minister has gone the typical Coalition way by taking a little more from those who are doing a little for their country.

That point is illustrated by the decision of the Minister to tax co-ops. The imposition of that tax is the rock on which the National Coalition will perish. I do not think the Irish people will stand for that. It is indicative of the mentality of the Government; if one is successful in providing employment and a service one must be taxed for it. Co-ops will suffer because they are attempting to create employment. That mentality was responsible for the introduction of the wealth tax in spite of the fact that our wealthier neighbour did not see fit to introduce such a tax. It is that type of mentality which has shattered the confidence of our people in the ability of the Government to govern. It is only when people have confidence in a government to govern that the economy will develop and be put in a healthy state. The investing public have lost confidence in the Government. The Government have lost confidence in themselves and have gone back on a series of decisions they made such as the equal pay agreement.

You have a whole series of Ministers making independent statements with no idea of collective responsibility. You never know if a Minister is speaking as part of a Cabinet or expressing his own personal views. If the reaction from the public is favourable, it is as a Government Minister he speaks and if the reaction is unfavourable he is speaking on his own behalf with no connection with the Government. This can no longer go on. The people will no longer stand for it. The cry throughout the country at the moment is for a general election. The Minister in his slightly confined world may not be aware of this cry. The people are only waiting for the opportunity to show their displeasure at the mismanagement of our affairs by the Government. The sooner it comes the better. The fate of this Coalition is destined to be that of its two predecessors, one term and then rejection by the people.

Mr. Staunton

I welcome the opportunity to make a few remarks on the Second Stage of the Finance Bill. I am glad the Minister is present to hear the comments of our opponents, which no doubt can be answered very easily. I should like to make a few comments on a matter which has been commented on a good deal recently in the national press and in regard to which there has been some debate. I refer to the role of private enterprise in the country and that of public investment. It seems to me that we cannot afford to adopt an approach in this area in favour of one method of developing the economy as distinct from another.

There are some points we could mention regarding this country which are not entirely understood. There is a facile view that the vast proportion of enterprise takes place in the private sector. It is interesting to look at the facts and to realise that the situation is quite different. One of the problems we have had since the foundation of the State is that standards in the country and the level of development in particular, especially in areas of industrial development have been such that we are very much behind developed countries. This meant that while successive Governments encouraged private enterprise and investment in the private sector they found that private enterprise could not expand the country at the rate desirable in the national interests and the interests of the total involvement of the people. They had to adopt a policy of getting involved in enterprise, getting involved in development, in the area of public expenditure, public development and corporations, in sectors where private enterprises were not developing certain resources.

The result of all this is that if we look at the matter statistically the country already has a vast proportion of its economic activity and development activity in the hands of State and semi-State agencies. In the major EEC countries 60 per cent, or more, of all capital investment is made by private enterprise, whereas in this country the proportion in the same sector is under 40 per cent. This shows that already, without seeking to expand public activity in the development area, we have about 60 per cent or 70 per cent less capital investment in the private sector than do our EEC partners.

This shows up one of the problems which the Government are facing. When the State are involved in such a vast proportion of capital investment it means the State must find the money for this purpose. The burden in our small country is proportionately greater taking into account the lesser level of development, the great needs there are for investment and to create jobs, the tremendous need to grant aid capital investment in industry, agriculture, the fishing industry and other areas. In addition to the direct grant aiding of such projects, there is the necessity where infrastructure is concerned to provide the needs. In many parts of the country, where we want to get development going and where it is vitally necessary, it is not sufficient to grant aid the industrial project alone. There are great infra-structural needs in fundamental matters such as water and sewerage which place an enormous burden on the State. This is a problem we are facing at the moment.

My view as a Deputy on this side of the House, in relation to private enterprise investment, is that to the greatest extent possible we must encourage private enterprise. There is flair and innovation in this. Overheads, to a very considerable extent. can be contained to a greater degree than they can in the State sector where the priorities are different and where the rationale is different. We must, to the greatest extent possible, encourage private enterprises and private investors to take up what options there are in relation to resources, industrial development, fishing, offshore development and whatever sectors we want to look into. It would be a mistake to increase to any great extent the level of public activities.

The vast extent to which there is public activity in relation to electricity, telephones, semi-State sectors and various industries has already been illustrated. If, in the continuing encouragement of private enterprise, there are certain national resources which are not being developed, if there are certain aspects of the national economy about which the Government are not satisfied, if private enterprise are not prepared to take up options which are apparently there and have been sought, obviously the day has come for the State to take a closer look at such issues. In my judgement it would be better for the State to look at such issues on an ad hoc basis rather than adopt a public policy of deliberately increasing the proportion of developments in the hands of the public sector. This is an important matter and I am glad this debate is taking place when there are fundamental issues at stake. My view is that private enterprise to the greatest extent possible should be encouraged and we should pursue policies along that line.

We had a good deal of criticism recently of Government policy concerning the budget. Yesterday in the House, Deputy Leonard quoted the chairman of Córas Tráchtála. I have not seen the script provided by the chairman, Mr. Barnes, and I am only quoting from Deputy Leonard's quotation. He said:

A wide ranging attack on the Government's fiscal policy was delivered yesterday by Mr. Colm Barnes, chairman of Córas Tráchtála, the State export board. He said it was time for the Government to demonstrate political conviction to integrate the economic and social policy that will once again make Ireland a land of opportunity. The present political climate in Ireland is hostile to business.

There are some points to be made about this type of remark. It is true that the present political climate is difficult here as well as in other European countries. We are living in difficult times. We know the background to the economic crisis and the intense pressure there is on the Minister for Finance to direct policies in the right direction. We know that the side effects from the economic crisis have been horrific. The decline in activity in the markets to which we are selling our manufactured goods is well known and has put our exporters under extreme pressure, and the decline in the industrial world has lessened interest in outside investment in this country.

I can understand comments made by uninformed sources about the economic position but I find it very hard to accept unfair criticism from informed sources, especially those engaged in the export of goods from this country who know how extremely difficult it is to export in a world which lacks economic buoyancy. Traditionally, we talk about matters such as competitiveness. We know that with the hardening of some currencies the competitive position of this country is being greatly enhanced despite inflation and the other problems which are ravaging us. We have our problems but we can look at Germany where there are five or six German marks to the £ or to Norway where there are 11 kroner to the £. I heard Deputy Burke complaining about the price of drink here and I would point to the price of a pint of lager in Norway, which is £1.

The essential problem has been that we have been living through a period of recession and berating the Government for all the ills that exist in our society. That is much too simple an exercise and less than worthy of some of the informed sources from which criticism has come. Of course, it is natural in a time of high unemployment, in times of other difficulties such as rising prices, to seek a scapegoat, to seek where you might put the blame, and the Government of the day are the natural ultimate source of such criticism.

I will quote from the same type of biassed criticism from informed sources, a speech made by the president of the Association of Chambers of Commerce at Athlone or Mullingar and quoted extensively in the national Press. In regard to the recent loan of £150 million got by this country from EEC sources, the president of the Association of Chambers of Commerce said that this handed out of the control of this country fiscal policy decisions which rightly belong to the State. It is regrettable that such criticism can emanate from such informed sources. The fact that we were able to negotitate such a loan shows the credit-worthiness of this country and to suggest that this is handling out of the country's control fiscal policy decisions is unacceptable. Would the president like to tell us the alternative which he would suggest in this area? What is the alternative to borrowing money when the country needs funds? Would he suggest that we cut back in capital investment in industry, in the provision of an infrastructure at local government level, that in very difficult times there should not be an attempt made by the Government to further help the less well-off people?

This is the type of facile criticism which is totally unacceptable when it comes from informed sources. He said also that the taxation system here is a deterrent to investment and even to work. This is much too summary and sweeping. Of course, at the higher levels of income, the tax is at a higher rate, but we should look at some other countries where there are higher rates, in Britain, for instance, and in Scandinavia. There is Sweden, one of the world's wealthiest countries, where the rates of taxation are completely penal, much more so than here, and where private enterprise and industry are still developing at very fast rates. We might direct our attacks at the efficiency of management as much as at Government level when we talk along these lines. We criticise capital taxation, capital gains tax and wealth tax, but the facts of life are that the Government level when we talk along these lines. We criticise capital taxation, capital gains tax and wealth tax, but the facts of life are that the Government abolished estate duty and are getting less resources from the present capital taxation code than were available when estate duty existed. That tax was abolished as a result of substantial representations to the Government, especially from the agricultural sector, but also from the commercial sphere. The abolition of estate duty was very much to the benefit of many people holding substantial resources here.

The president of the Association of Chambers of Commerce—obviously he does not represent the attitude of all chambers of commerce—might have dealt with investment and development. He would have been talking about a country in which there are the greatest incentives to development and investment anywhere in Europe. Vast amounts of money have been paid by Irish taxpayers towards incentives to export goods all over the world and we have a system under which exporters pay absolutely no tax on exports. They are given complete relief for practically a generation from the payment of income tax on profits from exported goods. Statements that do not put these matters into perspective are quite unacceptable.

I have dealt with this speech because of the credible source from which it came. He suggested that the Minister for Finance ad nauseum blamed international recession and the energy crisis, and went on to say “that is simply not true”. Of course, the Minister has blamed international recession. I know there are matters closer to home over which we supposedly have control, but the fact that there are does not mean the Government have full control of the situation. The Government are subject to the pressures involved in this sector. Closer to home, we may have rises in the price of foodstuffs and of agricultural produce. Whilst in theory that is something happening within these shores over which we have control—because that resource has grown here—effectively the Government do not have control.

Through our involvement in the EEC and the seeking of a better deal within the EEC for our farmers by the Minister for Agriculture and Fisheries, we get substantial price rises within the EEC for Irish farmers who constitute a higher proportion of our population than do the farmers of any other EEC country, which makes it good sense for this country to get such increases in price. The natural effect of such price rises is an increase in the price of foodstuffs in this country. Therefore, statistically it would seem to be something over which the Government have control but, having regard to the external factors of the EEC—these are the agricultural prices for our farmers— effectively it is beyond the control of the Government. In so far as it is within the control of the Government, the Government introduced a range of subsidies on foodstuffs last year which costs millions of pounds per annum and without which the price of foodstuffs would be substantially greater here than they are at present.

According to the president of the Association of Chambers of Commerce, the Minister for Finance has blamed ad nauseum the international recession and the energy crisis for the situation. He went on to say that was simply not true. It is incredible that from supposedly informed sources we get this type of exercise. Apparently, according to him, the cause of all of this lies with the Minister for Finance and his colleagues. He continues to suggest that the fiscal and economic matters of the State have been grossly mismanaged and misdirected. I am glad to have the opportunity to rebut significantly what he chose to say at that time.

We had criticism recently from the Opposition of the industrial policy of the Government. We had Motions in this regard. Where the general public who are interested in development and the creation of jobs are concerned, it is one thing to be critical of the Government and of attitudes but they might also ask themselves what an alternative Government would produce in the way of policies which might result in more jobs being created or a greater level of development. It was interesting that the Opposition spokesman on Industry and Commerce sought to put down a motion recently, when this topic was being discussed, seeking a situation under which the Industrial Development Authority would be forced into the position of not giving more grants to foreign investors in industry here than to Irish private enterprise. It might seem a popular political sentiment at surface judgment because, obviously, it is infinitely more desirable, if possible, that the highest proportion of such investment be from Irish sources. Of course, the policies of successive Governments have been to attract investment from abroad because we did not have the capacity, resources or technology within our shores to develop at the desirable rate. The suggestion of the Opposition was that the IDA should be forced into the position of not giving more grants to people from outside these shores than to Irish private enterprise. If implemented, this would have a disastrous effect because whether we like it or not a far higher proportion of capital investment in industry here comes from foreign sources. Private enterprise within the country and Irish participation are being encouraged to a very significant degree. The introduction of such a policy would not guarantee that we would have a higher level of Irish participation. If we do not have a higher level of Irish participation, the effect of such a policy would be to reduce the level of investment to the lowest common denominator. For example, if a quarter of such investment were in Irish hands and three-quarters in the hands of foreign investors, the effect would be to whittle down the three-quarters investment from foreign sources to one-quarter, resulting in many millions less being invested here and fewer jobs being created. That is the natural corollary of the policy viewpoint of the representative of the Opposition benches in the area of industry and commerce. That was merely to illustrate the alternative suggestions there are at present.

Where offshore oil is concerned, we had criticism from Opposition sources of Government policy in developing these resources. People might wonder why more oil or natural gas is not coming onto these shores. The Government have been in office for three years now. Within that time policy has been teased out. A fundamental attitude to the development of the resource has been adopted by the Government. It is a blend of encouragement of private enterprise and the situation under which the State will have options to invest in offshore oil activity when there is greater knowledge of the extent to which the oil exists. It is a happy marriage of technology and private enterprise and constitutes the protection of our national interests. That it is such a happy marriage is indicated by the fact that when policy announcements were made by the Minister shortly afterwards intense interest was shown by major petroleum countries all over the world and options taken by the most prestigious companies which suggests that we are on the right track.

In regard to criticism of the Government one might look at what is happening in Europe in the two other principal countries in which there is offshore oil and wealth—I am talking about the North Sea, Britain and Norway. Oil is at present coming ashore in Norway where it is of remarkable benefit to its 4,000,000 people. It constitutes between 20 per cent and 25 per cent of the gross national product of the country. It provides untold millions of pounds as a source for Government investment in many sectors with which this country could do very badly, which we need for development because investment is crucial. If we look at what has been happening in Norway we will see that oil coming ashore there now is coming ashore because of Government policies taken there more than a decade ago. From the initial consideration and announcement of policies by Government, going through the range of options being taken up by the international consortia, through the research and development stage, all the work that has to be done until oil physically comes ashore, many years can pass. If people want to point at any responsibility of Government for the fact that oil is not coming ashore here, then that responsibility certainly lies with the previous Government which had been in office for 16 years because it was their prime responsibility throughout that era. The only development we saw was with one particular company that came in at a bargain basement price. We are not criticising that so much because, in fairness, we can say that at that time the issue was not as critical as it is at present. But there was no development of that policy, no encouragement of other interests, no getting down to farming out what this State owned, no selling on world markets of the idea that people should come in and take a look. The result of that lack of policy is that we are at least a decade behind the British and Norwegians in this regard. This vast resource will be coming ashore here, if we find it, very much later.

I should like to address a few remarks to the whole issue of inflation. Again, much of it within the country is not under our control. I believe the prices commission are doing a good job. This is a difficult area. One cannot effectively control prices other than seeing that the public are not robbed or conned in the purchase of goods in regard to quality or price. Beyond that point one cannot effectively control. The system under which the prices commission monitor what is happening is a reasonable one because it gives us the assurance that at least a look is being had at this issue, at a Governmental source. I do not think one can protect the general public beyond that point.

During a time of rising costs unemployment has been greatly increased within the country. In the industries involved there is going to be a downturn in business, companies will go into liquidation and it will result in severe consequences for the country. Agriculture is a big factor in inflation in this country. Farmers have been getting increased prices for their products. This policy must continue because farmers amount to about 45 per cent of our population, and we must continue to do what we can for them. This problem does not arise in Britain or West Germany where the farming community amounts to about 5 per cent of the population. The increased prices in turn put pressure on the housewife in the city.

Some people have criticised the social welfare policy of the Government. That is not entirely fair because from the initial bond with the EEC and from the increased prices which we are subject to, we would have had a social disaster if during this era there were not increased social welfare benefits. There would appear to be abuses of them from time to time, which are very undesirable and which have been highlighted.

An Leas-Cheann Comhairle

What is involved here is taxation rather than expenditure.

Mr. Staunton

In the area of taxation it would be wise for the Government to have a look at this whole question of unemployment benefit and assistance because this impinges on tax. A review might be necessary despite the fact that levels are better than they have been. The majority of unemployed people want work and given a reasonable opportunity they would be very glad to work. The Government could look at this issue and at the very least hold an investigation into it to see if it is possible to get people working, especially in rural Ireland where works are held up because of insufficient income from taxation from the Government.

There are local improvement schemes which are starved for funds. If these could be assisted it would provide employment. It is an area in which there is considerable disquiet and which the Government could usefully investigate. People do not like to see too much money going into unemployment benefits. They are paying for it through taxation. The nation's will is behind any project that will create employment.

Mr. Brennan

This Finance Bill is a culmination of the misdeeds of the budget and gives us an opportunity of covering a wide area of Government activity. I do not know how one could describe the contents of the Bill and to what it seeks to give legislative effect. To put it mildly, it is vicious. The Minister is quite different in his approach to this Bill than to anything we have ever had before. In order to keep us from seriously discussing the Bill and the measures which are in it the Minister gives us an elementary lecture on what taxes are for. He pays tribute to the literacy and intelligence of the Members and at the same time expects then to believe that this elementary lecture on what tax is for is sufficient to satisfy them that the Minister is right in what he is doing. In other words, if he imposed twice or ten times as much it would have been a better job and the more tax imposed the greater the benefit being conferred on the people. I take issue with the Minister for that approach. It is a long time since Rome learned what tax is for, and in 1976 the Irish have to be told that tax is necessary. It is what it is being used for, how it is being used, the quantity that is taken at a given time, and the inadequacy of it, that we want to be lectured on, not the basic principles. It is a dishonest approach which will further irritate the people who are disgusted with the tax burden which they are bending under at the moment.

Tax is necessary but it is the manner in which the money so collected is being used that will concern people at any given time. Eventually people reach a stage where they will revolt. One sometimes wonders to what extent this modern fabric of society is being affected by the behaviour of people like the Government who take money without using guns. That is the only difference between them and bank robbers. If people thought that the money was being used properly and that some hope lay in the future they would willingly part with it. The Minister talks about a broader basis when he means that any way money can be got by tax it must be got. That is what is meant by a broader base. Nobody is to escape. I should like some Government speakers to attempt to justify the use made of all the money collected. I should like them to let us know where it is leading the economy and to what extent it is being used to slow down inflation and create employment and to what it is being used to slow down inflation are create employment and to what extent it is being used to stabilise the cost of living and keep down prices. These latter are urgent requirements.

Deputy Staunton was apologetic. He made an effort at saying : "Now do not rock the boat. It is a bad situation and it might be better but maybe it is not as bad as you think." I suppose that is about as far as anybody on the Government side can go though it is stretching the imagination to go even that far. The Government must realise that we are living in times when the public generally are almost in revolt because of the situation developing day after day. Nobody can understand the double think on the part of the Government in relation to the economy. Either we can do something about it or we cannot. It must be one way or the other. It is due to circumstances beyond our control. We are sick listening to that. When we go to the trade unions looking for a pay pause action must be taken to correct the situation. The Minister uses superlatives in describing the situation that will exist if we do not have a pay pause. As reported in the Press on 3rd April he said:

The wage demands made during the past week could not possibly be met without rocketing unemployment, the closure of many industries, an intolerable increase in taxation——

I take it he means further increases

——and the crucifixion of the whole national economy.

The pause is off and we are facing crucifixion. I do not know when the people will cry "Halt", or get an opportunity of doing it, but they must get it some time.

The last speaker referred to the controversy developing as to whether we are heading for a free private enterprise economy or a Marxist Socialist state or a bad mixture of both. Mark you, there is a great deal said on both sides here that may be exaggerated for purely propaganda purposes but we are reaching the stage at which the facts are obvious and someone must explain them. There is a lack of investment and people are wondering what tomorrow will bring and there is dire necessity for someone speaking on behalf of the Government to tell us where we are going and what the plans are for the future. The Minister for Finance told me at Question Time the other day that when a Minister is speaking with collective responsibility he will announce that and on other occasions he will speak for himself.

The Minister for Finance announced some time ago that it was impossible to plan in present circumstances. When pressed by this side of the House, he admitted that there would have to be a plan and a programme and he promised a green paper. Even in the absence of a plan, if someone from the Government would indicate how the Government propose to proceed and what their intentions are, we might have a better idea of the situation where the Government are concerned. The Leader of the Labour Party, the Tánaiste, told us the other day that the old system has failed, the bubble has burst and never again can we expect the good times of the 1960s. They have gone. Now radical policies must be produced. Is that Government policy? Is that the message going out to the people whose investment we would welcome, according to the last speaker? What will be their interpretation of a statement like that from the Deputy Prime Minister. I would tell Deputy Corish, the Tánaiste, that he is speaking for himself and, if any bubble burst, it is the Coalition bubble. That is obvious to everyone.

We will get back to the better times of the 1960s and rapidly. That can be done and will be done but not by this Government. To those who contemplate investing in this country and are interested in what the future of this country holds and in what type of party is the alternative to the present Government I would tell them to have no hesitation in investing here because the country will be in the hands of people who will ensure that no Marxist doctrine will prevail and that private enterprise will be allowed to operate and create wealth and thereby get us back on the road to progress again. That is the message now from this Opposition. That will be Fianna Fáil policy in the next election. We will take immediate steps to create employment.

Does anybody on the Government benches now make any reference to the Government's policy or lack of policy in regard to price control. Perhaps we refer to it too frequently on this side but it is fundamental in the light of what has happened in the last few years. The 14-point programme did undertake to stabilise prices, reduce the cost of living and so on. The Coalition explicitly promised to do that. What has been done? Are we not entitled to some explanation if some effort was not made to do just that? We were told that the National Prices Commission was not adequate to cope with the task and a new method of tackling prices would be adopted. Why was a new method not adopted to tackle prices and cope with the problem of raging inflation which is bedevilling the whole situation?

Why do the Government continue to use the prices commission whose job is very difficult and are not capable of measuring up to the gigantic task they now have to face? I am amused when I read of the many millions of pounds they save the country—£7 million last year. This figure is calculated by taking the increases applied for and the number granted. Every applicant going to the prices commission asks for twice what he expects. If he gets three-quarters, he is more than pleased. The balance is what the prices commission save the country. This is laughable. The root of the problem must be tackled.

There is no problem for an employer to come to the prices commission and say he had to pay extra wages, extra rates to the county council, extra health insurance, extra social welfare contributions, more for electricity and telephone and must have an increase. The prices commission must automatically grant as much as they can.

I was amused when the last speaker was saying how difficult it was to import goods because of declining selling markets abroad. That is nonsense. As he said, the weakening of the £ should be of immense benefit to our exporters. The import prices of many materials dropped over the past year. That advantage is more than offset by the rising unit cost of production at home due to direct Government action.

When a manufacturing industry have to pay more for every facility, telephone, electricity, fuel, rates, insurance, and so on, they will not ask the prices commission to lower their prices but to increase them. How long the people will bear with this situation I do not know. The Minister in his budget increased the cost of living to a very serious degree and now he is asking the workers to agree to a pay pause. The workers can prove beyond doubt that they are entitled to an increase. Equally, the manufacturers can prove that they are not in a position to pay. If we are to have a pay pause, we must have a watertight agreement between the Government, the unions and the employers.

Under this Bill the Minister must go to the negotiating table and play his part. He must try to pull back from the brink the things he has done which necessitated a call for a further round of wage increases. He must reduce rather than increase. Even he must clearly see that he has reached the stage of diminishing returns.

We lost a golden opportunity when we did not aim at being one of the low cost countries in Europe. We had the chance but we threw it away. Some people say the energy crisis did not matter. If the Arabs imposed a serious price problem on us by increasing oil prices, why did the Minister hit us twice as hard? He is the worst Arab this country has ever known. How can he justify the continuation of that argument?

He must introduce another budget —and I am sure he is already contemplating it—in which he will reduce most of the taxes he imposed. This will show workers that they will benefit and it will show producers and employers that they will be able to reduce their unit production costs. We will then have taken a very worthwhile step towards getting back on the road to progress. This is the type of action we want. We, as an Opposition, are often criticised for not giving the Minister constructive advice. I am doing that now. In one or two years' time, with hindsight, he will know whether we were right. He should ease off some of the taxes already imposed and let the Government play their part in making a pay pause possible. He can put more money into the pockets of the workers while, at the same time, not crucifying the economy, as he predicted. That will get us moving even at this eleventh hour.

When the Minister was going to America in 1973 he was interviewed at the airport. He made great play of the fact that he had inherited a serious inflationary problem. I said that he was one man who identified our problem and hoped he would take the necessary action to cool the economy without taking drastic deflationary action which causes an immediate recession. We had been trying to play cool. That advice was as easily and as readily available to the present Government as it was to us. Political expediency took over. Then the borrowing began. Prices began to rocket, inflation began to spiral. Now we are up to our necks in debt with a bill double that for the entire history of the country. We are now told to look at all the benefits we get by paying tax—education, good roads, motor cars and so on. We hear this from the incompetents in Government. I hope the day of delivery is not far off.

We spent too much on consumption and too little on investment. We are eating seed potatoes. Every effort to change their dangerous trends meets with noisy protests. The survival of democracy is dependent on communal wisdom. The nation must come to its senses quickly if widespread hardship is not to provide convenient and plausible opportunities for sinister forces. Those are words used by the Minister for Finance.

When I spoke on the budget earlier this year I said we were eating seed potatoes. I am delighted that the Minister has belatedly learned the errors of his ways and shown signs of combating the sinister forces. Those are forces which prompt statements like "the bubble bursting" in relation to private enterprise. Those are the tip of the iceberg which is fostered by an economy allowed to sink to its lowest level. Then you have the sinister forces coming to the surface seeking to take advantage, telling you that this, that and the other system has failed and that now you have to try the one that he knew was good for you all the time.

We are not succumbing to any of the sinister forces. We will get back to the better days of the sixties. They will be better than even the sixties were. Private enterprise will have an opportunity, with the shackles removed, to create wealth in the country at a time when it will not be impeded by any Marxist brakes, sinister rumblings or suggestions about what is likely to happen when the crucifixion of the economy takes place.

Deputy Staunton tried to throw some oil on the troubled waters in relation to the path we will tread. He pointed out that a great deal of money was already invested in State-sponsored bodies, that there was a continuing investment. That is due to the losses by some of the State-sponsored bodies like CIE and Gaeltarra Éireann which lose a few million each year and have to come to the Exchequer for it. In the golden days of Fianna Fáil and progress it was recognised by the late Seán Lemass that there were certain projects which private enterprise could not undertake. Those are obvious to most people now.

We have enterprises like Bord na Móna for the development of our peat industry, the international airlines and quite a number of things such as the development of rural electrification that no private individual, I am sure, would have taken at that time. We had a number of different individuals undertaking the provision of electrification in different urban areas at that time. Many of them did a very good job with turbines, which were driven by streams. Those projects were all taken over by the ESB. That is a form of State enterprise. I will not dwell on it now except as far as it concerns the taxation problem. I would like to come into the House some day to develop the question of having the ESB farmed out to private enterprise in regions, as it was before. People looking for connections could have it done by private enterprise, by the local contractors, instead of paying, £600, £700 and sometimes even £1,000, to have a connection made by the ESB. This could be done by private enterprise for a fraction of the cost.

There were many things in those days which private enterprise could not undertake on a commercial basis and State-sponsored bodies had to be set up for such things as the ESB, Aer Lingus, Bord na Móna, CIE and many others. We are now at a stage where many of those could be parcelled out to private enterprise. That does not make a case for those who advocate the complete nationalisation of all our institutions, the banks, insurance companies and every conceivable type of development in the country. Private enterprise has not failed. It is only the Coalition bubble which has burst. If private enterprise gets a fair deal it will deliver the goods much better than State-sponsored bodies can or will, but some of the newly imposed shackles have got to be removed to give it an opportunity to do that.

We have become rather disenchanted with our EEC performance in recent times. The entire responsibility cannot be put on one country. The EEC, unless different attitudes are adopted, will devolp into an international forum for the provision of propaganda statements for domestic consumption by national Governments. We are scratching each others backs in relation to the whole matter. Every national Government is as relevant today as it was prior to joining the EEC. We have a greater responsibility in this respect. When we get a few pounds from the EEC we should not get dictation about how we will spend it. They would not dictate to us if they had not the knowledge that what we are already spending is being badly spent. We have our own work to do in relation to our problems. When we have done our work we may then go to the EEC and say: "That is what we have done. We have done our share as a member state in the spirit of the Treaty of Rome. What are the Community doing about it?" We are getting away from the original idea which was sound and is still capable of being developed if the attitudes are not allowed to drift in the wrong direction.

An Leas-Cheann Comhairle

That is not relevant to a debate on the Finance Bill.

Mr. Brennan

It is relevant in so far as the crisis we are experiencing is to some extent in the minds of some people capable of being offset by our membership of the EEC, but this is not so. The EEC only help those who help themselves. We are not helping ourselves. The Government are not doing what a national Government should do. This imposition, this crucifixion of the taxpayer is a demonstration of the incompetence of the Government. I would like to hear what members of the EEC Commission would say after reading through this Bill and seeing the amount of money the Minister is taking, without pistols, from the citizens, while at the same time telling them about the benefits he is offering. Our inflation is running at a record figure and the consumer price index has gone out of control. Our adverse balance of payments is building up and our exports are declining in volume. How could the EEC Commission support us if they were presented with that picture? If one goes into a bank seeking a loan and the bank is aware that that person made bad use of the last loan the bank is not likely to treat that person very kindly. I am sure we are in that position.

The last speaker referred to the situation being experienced by county councils and I hope that what I have to say on this matter will result in serious action being taken by the Government to redress the situation that has developed. During the progressive sixties, and up to 1973, many big programmes of development were undertaken by county councils. This was part of the ongoing progressive development that was taking place in those years. There was a good deal of employment at that time but now we have reached a situation where there is no money to finance those schemes. The amount provided is not sufficient. The Minister has told us that he has given extra money but the additional money would not meet the increased cost. For instance, where it would have cost £1 million to do a stretch of road some years ago it would now cost up to £2 million to do a similar stretch. There is little use, therefore, in talking about extra money.

An Leas-Cheann Comhairle

I should like to remind the Deputy that the question of expenditure is not relevant; taxation is involved here.

Mr. Brennan

There is a close link between the two. The Minister has given us a lecture of the benefits conferred on our citizens by the tax we pay but I have never seen so many things requiring attention. At every Fianna Fáil cumann meeting I have attended I have heard of the problems relating to accommodation roads, drainage and housing and I have been told that there is no money to deal with these problems. The people attending those meetings represent the grass roots of our organisation, the salt of the earth. Hundreds of unemployed troop into our villages every week to sign for dole. I am sure that Government backbenchers are also made aware of these problems by people in their constituencies. Even though we have these problems we are being asked to pass a Bill which will impose huge increases in taxation. It does not make sense. Who can blame the people if they show unrest? Where is the example coming from? In my view it is coming from the top.

The Minister for Finance will have to play a full role in the negotiations for a new national pay agreement. I have personal experience of having to deal with such a problem and I can tell the Minister that he can only play his part by taking off some of the taxes he has imposed. Workers can prove that the rapid increase in the cost of living justifies them obtaining an increase in pay while the employers can easily prove that they cannot afford to pay increases. The other party in such negotiations is the Government. Fiscal adjustment is essential and must play an important part in these negotiations. Would the Taoiseach, the only sensible man in the Government, get something going immediately to reduce our dole queues? When I was a Minister it was fairly common for us to have to face periods of recession but we never allowed them to develop.

The advice from the Taoiseach and from those most closely associated with the pulse of the economy, the Department of Finance, was to get forestry work going, to get harbours developed where the fishermen were calling out for it, to have roads surfaced, to have sewerage schemes and house building plans put into operation and to get the economy going as rapidly as possible. The impact it had on threatened recession was immediate and it obviated the disaster that could easily have been brought about.

I urge on the Taoiseach to talk sense to his colleagues, if that is possible. I know the problem he has to face is not an easy one—perhaps it was easier in our time. I was speaking to somebody the other day about the Government and I said that you cannot ride two horses at the same time. He said that if they cannot they should not be in the Coalition circus. You can serve two masters if you make an effort to do the right thing by both but you cannot please two sets of political expediency, and that is the Taoiseach's dilemma, one which will ultimately bring the country to its knees.

We are discussing a Bill that will give legislative effect to the most vicious budget this country has ever known, and the effort being made to sell it is cynical and arrogant, and when the Minister devoted a full page of his speech to the benefits being conferred on us by the taxes being imposed, it was the limit. The message was that if he had imposed twice as much tax we would have had twice as many benefits and, of course, the extent to which the Minister may take money from the people to confer benefits on them is unlimited.

We have had enough. Soon, I hope, we will have an opportunity of asking the people what they think and in my opinion they will vote in favour of emancipating themselves. I seriously suggest that in the interests of the people the Minister will reconsider the taxes he has imposed. If we are not to have the complete crucifixion of the economy he will have to rethink his budget and take remedial action.

The Taoiseach

Deputy Brennan used some extravagant language in the course of his remarks. Normally he is a most reasonable debater but the fact that there is an impending by-election has affected his comments and it may well be that this part of what he said was in preparation for an after-Mass meeting. He said taxation by the Government was like bank robberies, that there was no difference between the Government's conduct and that of men with guns who hold up banks. He said that in both cases people were obliged against their will to part with money.

Surely that was extravagant language? Every penny of taxation taken is taken as a result of laws passed after exhaustive discussion in this House, and precisely the same procedure has been used since the State was set up by every Government and Minister for Finance, and the money is used by the Government to finance the different public programmes and the schemes administered by individual Departments, as well as the State as a whole and the various local authorities.

Deputy Brennan went on to speak about the shackles being removed and said that in some way or other the Government were acting in a way comparable with those who extracted money by force. That language was excessive and extravagant. He even expressed the view that this was only the tip of the iceberg.

I must remind the Opposition and the House in general that the only occasion—the Deputy referred to "the good sixties"—since the foundation of the State on which public money was misappropriated was when Fianna Fáil were in office. I do not want to dwell on that but I would remind the House of the facts. A great deal of talk has been expended here in criticising expenditure and in suggesting that it is excessive. Week after week in Private Members' debates there have been consistent demands from the Opposition for more expenditure. There have been demands for increased expenditure for this project or that, coupled at the same time, in debates before or following Private Members' Business, with demands for retrenchment.

Let us be quite clear on this. The Government or the State can only expend the money they get from the taxpayer and can only spend what is authorised by statute passed by the Dáil and appropriated for the schemes or projects authorised by legislation. The money expended by this Government has been for the purpose of administering the various schemes considered to be in the national interest and for financing development projects.

I want briefly to give an example of the increase that has taken place. I suppose there is no area nearer home than my own constituency in County Dublin. To give an example of the investment that has taken place, the annual capital allocation for private housing in County Dublin in the year 1972-73 was £1,200,000 and £24,000 in Dún Laoghaire. In the years 1973 to 1976 the average for County Dublin was £8,450,000 and for Dún Laoghaire £46,000, in one case an increase of 604 per cent and, in the other, of 92 per cent. In respect of the annual capital allocation for local authority housing in County Dublin, in 1972-73 it was £3,348,000, for Dún Laoghaire, £397,000. In the period 1973 to 1976 for County Dublin it was £5,724,000 and for Dún Laoghaire £993,000, an increase in the first case of 71 per cent and in the case of Dun Laoghaire of 150 per cent. Between 1970 and 1973 in County Dublin—this includes Dún Laoghaire—a total of 2,868 dwellings were completed; that was the annual average. Between 1973 and 1976 the annual average increased to 4,627. The number of local authority houses increased from 527 to 776; private dwellings by 61 per cent and local authority dwellings by 47 per cent. That is an example that could be multiplied or reproduced for any other part of the country during the years in which this Government have been in office.

The aim of the Government has been to provide employment, providing the incentives necessary in respect of grants to industry under the Industrial Development Authority, a scheme that was started initially by an earlier Coalition Government and recognised as being of immense economic and financial benefit to the country. In addition, the tax concessions on exports attracted to this country outside investors. Both of the measures undertaken by the State in respect of the Industrial Development Authority and those introduced in respect of tax concessions are designed to provide employment.

The Opposition, in their attitude of having it both ways, must decide which role they want the State to play. We have assisted private enterprise through the Industrial Development Authority. We have assisted private enterprise through the tax concessions on exports. Where necessary, we have initiated State enterprise. We have fostered the development of the economy through the use of both State and private enterprise. The example given by this party initially was followed subsequently by the Opposition in Government and has been carried on, extended and developed by the National Coalition during their period in office. There is not a conflict, except this one, and this is the real distinction—when Fianna Fáil address one group in the community, for example, businessmen, they say that the social welfare benefits are far too much, there is wholesale abuse; there are abuses that should be corrected; there is a misuse of public funds—but when they are talking to people in isolated areas, when they are canvassing in such areas—we will probably all be canvassing in such areas in the near future—they say the benefits should be greater; the Government are not extending or increasing the benefits.

They are carefully selective when talking to businessmen, traders or to industrialists when they say the State is spending too much. What does that mean? In effect it means—but it is not said—we should pay less to civil servants, the Army, the Garda, teachers, post office workers, Board of Works employees, forestry workers, every category of State employee because these are the people who absorb the bulk of public expenditure. Of course, in a few selected cases it is easy to isolate the top people whether they be civil servants, ourselves, as Ministers or Deputies, judges or the higher echelons of any category. In fact the bulk of public expenditure in respect of public employees is spent on the average, and the average includes the people I have mentioned. Fianna Fáil do not say, when they are going throughout the country, that that should be cut back. Of course, it is easy to suggest that it should be cut back when they speak to industrialists or businessmen, in the hope that the other sections of the electorate will not hear. The fact is that every single motion introduced here by the Opposition in the last six months, since we resumed in October, has advocated more for medical cards, more for health benefits, more for accommodation roads, more for amenity grants and more for housing grants, although we are giving more than Fianna Fáil ever gave. The clamour has been here in every motion and debate for more money for every single category of expenditure that can be thought of. If they are not covered by existing headings they think up new ones. At the same time the spokesmen, when they enter into other debates, advocate retrenchment, saying that the State is spending too much.

In the course of this debate comparisons have been made with the British budget. It is important that we do the necessary homework to understand the distinction and difference. The financial circumstances of our two countries are quite different. The deficit on current expenditure in this country this year represents 19.4 per cent as against 19.2 per cent of total current expenditure last year. The British Government have a current public expenditure deficit of 12.8 per cent which is 2.3 per cent above last year but still below our deficit. If we add together the deficit on the current budget and the capital requirements we find that the total public sector borrowing requirement in Britain is 18.5 per cent of the total expenditure whereas in this country it is 34.9 per cent. Therefore, it is obvious there is no further borrowing capacity available to the Irish Exchequer. As Deputy Brennan rightly pointed out, when he criticised the EEC, the EEC will help, is designed to assist and has been of benefit to all economies of Europe, including our own, but we have to make a contribution and take certain steps ourselves. One of the guidelines laid down by the EEC is that which I have mentioned and was applied in the case of the recent loan. Therefore, we have the extraordinary spectacle of the Opposition on the one hand advocating further expenditure and, on the other, suggesting that if it were done the only way to do it would be to increase the current deficit by many more millions of pounds rather than the reverse.

One of the reasons for the high level of Government borrowing in this country—and this is a fact that has developed over the years—is that the State makes over 60 per cent of all capital investment compared with less than 40 per cent in many of the EEC countries. With industrial development expanding—that notwithstanding the world recession—obviously the Government must borrow to provide the necessary capital.

It is significant that, despite the development that has taken place, our official external reserves are at a record level. First, it proves that there is international confidence in our capacity and national solvency and the figures I propose to quote indicate the development in this direction. In December, 1972 our reserves stood at £432.2 million. In December, 1974 they rose to £495 million, and in January of this year they had increased to £737 million. In common with other countries we have been affected by the level of unemployment and the fact that it has been higher than in recent years must be judged against the background of the international situation and the population in this country which is 113,000 more than it was three years ago. That is the biggest increase in any period of our history since the famine.

Mr. Brennan

From what source is that figure taken for the increase in population?

The Taoiseach

The Central Statistics Office is the best source I can get. The year to year percentage inincrease at mid-March for unemployment is the lowest for 18 months. Naturally we are concerned about the level of unemployment. The measures we have taken, the incentives provided in industry, and the whole strategy of the budget were designed to maintain economic activity at the highest sustainable level. Car sales for the period of February of this year are nearly 2½ times what they were in February 1975.

Mr. Wilson

That was to beat the tax.

The Taoiseach

From 1975 there has been a spectacular growth in sales. The trend in unemployment has stabilised in recent months and indications are that in common with other countries there is an improvement manifesting itself.

One of the areas of Government policy is to ensure that we operate a policy that will not deflate the economy. As well as other European countries we have been affected by the recession.

The budget strategy in our last three budgets—January of last year, the supplementary budget of June and the last budget, the present Finance Bill—is designed to keep the economy at the maximum level possible. With that end in view, funds raised from the taxpayers are expended. A not well thought out suggestion by the Opposition was that there should be a cut of 10 per cent in all public pay, including the categories I have mentioned—the Garda, the Army, nurses, the Board of Works and other employees—and also a cut of £30 million in social welfare. At the same time Deputies opposite are advocating increases in social benefits, or increases in respect of the benefits in connection with medical cards. It is impossible to discover what their specific policy is in any area. On the one hand they advocate retrenchment and on the other hand increased expenditure.

Some of the comparisons that have been made between the tax in Britain and here are refuted by the facts. When figures are extracted for the levels of taxation and the burden of income tax in respect of married and single persons in the range between £1,000 and £5,000, the Irish share of tax is lower than that in Britain. This is an established fact in their budget proposals which were announced this morning. They depend on wages not being increased more than 3 per cent this year.

We have endeavoured in the course of the changes that have been made to spread the burden as fairly as possible. Sometimes this has been criticised. Over the years when our predecessors were in office the number of income tax payers with smaller incomes had increased from 160,000 to 750,000, but the number of surtax payers had dropped from 9,000 to 6,000. The experience in other countries is that when countries neglect to reform the tax code they leave themselves open to many forms of unrest. There is a far greater danger of social and other upheavals in the operation of a system that is obviously inequitable. We have endeavoured to frame the system so that it will be fair. It is recognised as sound economic and financial policy that reward should be encouraged, that profits should be encouraged, that the tax system should be such that it will give a fair return on moneys invested. It is equally obvious that the system should be framed so that people are seen to be treated, as far as it is possible to do so, on an equitable and comparable basis.

One of the extraordinary developments over the period I have mentioned is that the number of income tax payers had grown from 160,000 to 750,000 whereas the number of surtax payers had declined. That was obviously a case which needed some revision. The purpose of the changes that have been made are to initiate and establish a more equitable system.

The positive steps taken in the budget were to make more money available in respect of capital for industry and construction and so on. The budget has a capital budget of £596 million, which is an increase of £129 million, or nearly 28 per cent of capital expenditure last year. In addition it provided a definite and distinct swing from an increase in current expenditure to an increase in job-promoting capital expenditure. This has been reflected in the changes I have mentioned and in the fact that the increase in the mid-March unemployment figure is the lowest in the last 18 months. It is recognised, I believe, that the policies we have been adopting have not merely promoted the wellbeing of the economy but that, in so far as published information goes, the indications are clearly in favour of what the Government have done. The demands of the Opposition for increased expenditure and at the same time retrenchment, are two aspects of conflicting policy. It is, of course, the privilege of the Opposition to indulge in this kind of thing but we have to deal with the situation as we find it and it is not possible to increase expenditure on the one hand and adopt a policy of retrenchment on the other.

I believe that the policy enshrined in the budget has been reflected in the fact that in our economy now, compared with a number of our competitors, the rise in unemployment was lower. It is necessary to maintain that trend and to ensure that the measures taken in respect of costs are so framed that we will be in a position to remain competitive. I have stressed this and so have other Ministers in the course of discussions here and elsewhere. The approach we have made to the unemployment problem is to tackle it from two aspects. On the one hand, we have increased public expenditure to produce the expansion and demand reflected in the examples I have already given and, simultaneously, we have increased benefits to those who are unfortunate enough to be unemployed to shelter them from the worst effects of the recession.

It is obvious that in a period of world recession what one country can do to ameliorate unemployment is limited and, as far as this country is concerned, it is more limited than many others. Our exports and imports are equivalent in value to more than 90 per cent of what we produce. This means that we are more vulnerable and if export markets are bad because of general recession then our ability to export is affected because almost 40 per cent of GNP is involved.

It is worth quoting again some figures to indicate that the position of this country, relative to a number of other countries, is by no means as bad as has been suggested. Between December, 1973, and December, 1975, unemployment in France rose by 71 per cent; in Germany, the strongest economy in Europe and one of the strongest in the world, unemployment rose by 18 per cent. In the United Kingdom it rose by 34 per cent. Here it rose by 24 per cent. These figures are, of course, subject to a number of qualifications because the methods of compiling them vary from country to country, but, no matter what qualifications are allowed for, the fact is that, relative to these other economies and with a small open economy, we have fared reasonably well. I believe there is a recognition and a realisation that if we act prudently and in a responsible manner it will be possible for this country to avail of the upsurge that is coming in Europe and the general improvement reflected in other economies as well. In that context I believe it is essential that in discussions here and elsewhere we should approach this whole matter in a responsible and reasonable way.

In the discussions we had at the EEC we expressed some disappointment at the effects of monetary compensatory amounts but it is well to recognise that the overall advantage for this country of EEC membership is very considerable. It is inevitable that at a time at which Europe and countries far beyond it have come through a period of recession, or are only emerging from such a period, there should be an element of caution in these economies. If we are in a position to keep our unit costs of production in line then we must be in a stronger situation because of the very substantial capital investment in industry and in agriculture because of the very substantial opportunities offering and the higher prices as a result of CAP. There is also the improved social structure, the increase in technological advances in education and the new skills provided as a result of developments in technology and science. All of these afford this country an opportunity it never had before, an opportunity that only we now have a chance to avail of, and the only limiting factor will be our own unwillingness or inability or some misguided approach or failure to pool our knowledge and resources and commonsense in order to ensure that this improvement in the world economy, accompanied by the improvement in the European economy, will be availed of by the country as a whole.

We have, of course, the continuing problem of dealing with the overall security situation which imposes very considerable burdens. Subject to these limiting factors we face improved prospects, opportunities that are within our grasp provided we apply reason, commonsense and a measure of goodwill. This is a small country with an open economy but, at the same time, there are no big disparities between one group and another as there are in other countries. If we are prepared to tackle the problem in a national and united way I have no doubt we can overcome and surmount the present temporary difficulties and move into economic and social conditions of a character better than we have experienced in the past and better than any previous generation had an opportunity of enjoying.

Mr. Wilson

This Finance Bill indicates in reasonable detail the process of getting and spending. It is indicative of the approach of this Government that the most important work upon which an Administration can engage is that of screwing as much tax as possible out of the people who, in a declining employment situation, are lucky enough to have jobs. The Taoiseach talked about persistent demands from this side of the House by way of motion and otherwise for increased expenditure.

He said that at the same time there was a reduction of taxes. This is a simplistic view of the Opposition's policy with regard to our economy. We have maintained consistently that the Government should be exerting themselves in the creation of opportunity and wealth. It is only from created wealth that money can be spent. It is only if you can provide reasonable employment for a large section of the community that you can equitably take taxes from them, taxes which may be used for social and development purposes.

This is only part of the picture of the Finance Bill and the budget on which it is based. The Minister should look at the history preceding his taking over of that important portfolio. There was a deficit of £5 million in 1972. In 1973, there was a deficit of £10 million, although we budgeted for £30 million. There was a deficit of £92 or £94 million in the nine-month period of this Administration's handling of our affairs. Last year there was a deficit of £259 million. If we are to believe the Minister, this year there will be a deficit of £327 million. If he does not improve his sums, it will not end at £327 million. It may very well be £1 million a day, £366 million or even £400 million by the end of this year. This is the full picture and that is why the Government have put the economy in a parlous position.

We have heard various voices from Government indicating various policies within the Cabinet. It was good to see the Taoiseach, head of the part of this country that is free, representing us in the United States over the period of our national holiday. Before he left he put a letter in the post to the employer/labour conference. That letter was published on Thursday, 18th March, and in it were dire threats about statutory pay pauses. On Friday, 19th March, the Minister for Labour stated categorically that there would be no pay pause. Straws in the wind; indications of split policies in the Coalition.

I was interested in the Taoiseach's speech today and in his concentration on the affairs of Dún Laoghaire/ Rathdown. Is this an indication that we are to have a general election soon? It looked like that to me when the Taoiseach spent a large part of his speech on the most important Bill of the year talking about local affairs. I noticed that he also burned incense before private enterprise and a grain of incense before State enterprise. He had to think of the Fine Gael support when he was talking about private enterprise and, lest he get a tap on the shoulder in the Cabinet Room, he had also to do obeisance to State enterprise.

A distinguished Member of this House spoke at one stage about the Coalition donkey being pulled to the right of the road by one group, to the left by another, and finally it ended up with head stagger and collapsed in the middle of the road. There seems to be a tendency to do that at present. I do not blame them for doing that when I realise the situation which has been created by their incompetence. This Administration were supposed to have almost a monopoly of expertise before they took over the administration of this country.

The Taoiseach also mentioned that on current account Britain has only a 12.8 per cent deficit and we have a 19.4 per cent deficit. He went on to say that the total percentage of current and capital expenditure was 18.5 per cent in Britain and 34.9 per cent in Ireland. He said that the State had to expend 60 per cent on capital expenditure as against 40 per cent elsewhere.

Our contention is this: if the economy were being managed in a way that inspired confidence, we would not have such a high level of unemployment; we would not even have the high reserves about which the Taoiseach boasted in his speech. We are not importing raw materials for industry, therefore, we are not providing more jobs in industry. Last year, as those who read the documentation will see, there was a huge increase in savings. This might look a good thing but these savings are due to the fact that people are not confident the country is being governed properly and are afraid in prevailing circumstances to invest their money. It is only by investment of that kind of money that more jobs and more wealth will be created. This brings me back to my starting remarks: it is only out of created wealth that other services can be maintained.

The Taoiseach was guilty of juggling with figures when he was talking about the unemployment situation since the autumn. The one thing he failed to give, which would be revealing, was what percentage of the work force is unemployed here and in the countries he was using for comparison. It is easy to see that if five are unemployed this month and ten next month, there is a 100 per cent increase. This kind of juggling with figures, in my opinion, is slightly insulting to the House.

The Minister spoke about the advantages various people get from taxes. He spoke about the advantage to parents in that £750 in each year can be allotted to expenditure on secondary and primary schooling. As I have a certain responsibility for education, I would like to say that if parents are unfortunate enough to have children who need remedial teachers, the Government have not seen fit to provide adequate finance to train teachers to deal with this social and educational ill in our society. The same is true of handicapped children. For the people who are mulcted particularly by taxes, the amounts spent on medical services for parents and children does not affect in toto many people who are suffering most under heavy taxation.

The Minister also referred to the amount of State aid in industry per job created. Suggestions have been made by certain economists that we should for the future concentrate on industries which are more labour-intensive than capital-intensive. I suggest that one particular line, which is being attacked by the Government's tax policy, is the activities of the agricultural co-operatives which should be encouraged into the field of food processing. I do not think it will cost the State £3,500 per job to develop that industry.

The Minister whimpers about the level of borrowing that is necessary. He said yesterday:

When—as now—taxes and linked revenues cover only £66 of every £100 spent by the State and £34 of every £100 spent has to be borrowed there is obviously no scope either for a reduction in taxes or for an increase in State expenditure.

There is an element of fallacious reasoning in this because if people were in productive employment a certain amount of that £100 expenditure would be saved. It is quite clear that the strongest influences in the Government have been to push them into spending without putting at the very centre of their thinking the important point of creating wealth. I am quite sure that this is the case. I am quite sure that the Fine Gael members of the Coalition realise that, and some of their supporters realise it quite well and are now openly saying that the emphasis should go from expenditure yearly to the creation of wealth.

The 1975 Cement-Roadstone annual report gives figures for the expenditure of the Road Fund. That company have a major interest in how the Road Fund is spent. The report takes the statistics from the Statistical Abstracts of Ireland and shows that in 1966 £9.6 million was collected in motor vehicle tax. The Road Fund expenditure in that year was precisely £9.6 million, that is 100 per cent of the road tax was spent on the roads. In 1976 the estimated amount from the road tax— this is probably an underestimation due to the draconian measure which the Minister has included in this Finance Bill of forcing people to pay tax even when they are not using their cars—is £37.5 million and the Road Fund expenditure from that is estimated to be £24.4 million or 65 per cent. There is an increase of 291 per cent in the ten-year period in relation to the collected tax but only an increase of 154 per cent in the expenditure.

This is part of my thesis, that, even at this late stage, there should be a change in priorities in the Government's thinking on finances. They should put in the centre of the national stage the incentives for enterprise and the creation of wealth which are so badly needed at the moment. This report says that income tax now bears too heavily on all sectors of employment. Its effects are felt on the shop floor where they act as a disincentive. There is a growing reluctance by employees to work shifts or overtime. The differential payments for the skills of tradesmen and supervisors are being seriously diminished by taxation. This has its own repercussions on industrial relations. The erosion continues into management. The report also states:

Through penal income tax on earned income only 23 per cent of any salary increases given to compensate for increases in the cost of living can be retained.

The chairman said that he noticed towards the end of 1975 what he calls the "buds" of public awareness, that the prosperity of everybody calls for encouragement of healthy enterprise. I am afraid the buds of public awareness were killed by the Minister's budget, by his penal taxation, both income tax and indirect taxation. The Minister should exert considerable pressure on the economy in the direction of rewards for work, enterprise and for the person who is willing to take the risk. This is what is lamentably absent at present.

It is important that the Government indicate to farmers that they are not on a witch-hunt in their case. Many farmers who worked hard seven days a week all their lives are discouraged. They find it hard to get labour. They feel that their work, its risks and hardship, are not appreciated at Government level at present. Some of them are being taxed on farms they inherited when heavily in debt. Those farmers had many years of worry but when they finally got their heads above water they found that in every outhouse there was a sleuth from the tax office. I am not using my imagination. I had visits from farmers—many of them traditional supporters of Fine Gael who now feel that Fine Gael let them down —who claim that they can no longer put in the amount of work that they have been putting into their farming operations. Some of them are advanced in years and they feel there is no longer an incentive. They feel that all their exertion left them poorer than if they had not put in the exertion at all.

This will result in less wealth being created, there is no question about that. Why should a middle-aged man who finds it hard to get employees do violence to himself so that he may be taxed? Farmers fear that the thin end of the wedge is all that has been driven in yet; they fear that the tax authorities have got carte blanche to screw them still further in the years ahead.

In regard to the relief to the banks for advancing house loans at a lower rate of interest, I would be interested to know how successful that scheme is. The Minister explains—the idea is a good one—that the scheme was designed to put the banks exactly in the same position as if they had not loaned the money at the lower rate. The general reports are that this lending for the building of houses is at a very low level. Would the Minister enlighten me on this matter? The whole idea was introduced with a flourish of trumpets but I should like to know if it is as big a failure as newspaper reports seem to indicate.

Section 32 is one of considerable importance to rural Ireland. The general principle that taxation should be equitable, spread evenly and fairly over the members of the community, is a sound one, but this section under which the Minister allows the beady eyes of the Revenue Commissioners to rest on the agricultural co-operatives should be rejected by this House. In my constituency, Counties Cavan and Monaghan, the social and economic life depends almost totally on the co-operatives. In fact, Cavan was the pioneer in the development of the co-operative movement. This may be due to the fact that one of the early missionaries of the co-operative movement was Father Tom Finlay, a Jesuit whose nephew was a Member of this House and is now a distinguished member of the Judiciary. That priest campaigned all over the couny for the establishment of a co-operative.

Killeshandra and Bailieboro', in Cavan, and Lough Egish, in Monaghan, are the bulwarks of the social and economic life of those counties. I remember the late Seán Moylan telling the story at a teachers' conference that in every household in his part of Cork there were three books in the library, a book on poetry, a book on theology and a book on economics. The book on poetry was Old Moore's Almanac, the book on theology was the Penny Catechism while the book on economics was the Creamery Book. The creamery book is a most important book on economics in my area.

The societies are the economic and social sheet anchor of the whole community. The shareholders are the small farmers and they are involved through the co-operatives in the production of wealth. The production of wealth should be central to our national economic activity. The societies provide employment at auxiliary creamery level in the way of transport and butter making and anciliary industries have been established. They provide an educational service also. Qualified agricultural scientists are employed and they have a good knowledge of the area. One of the big failings in agricultural research has been that it is not related to a specific area, but the agricultural scientists employed by co-operatives in my area are familiar with the people, with the potential of the soil and the general potential of agriculture. They are on the ground so to speak.

Their scientific knowledge is part of their educational equipment, but their activity in applying that knowledge is one of close relationship with members of the co-ops. Many of them are circulating a publication in which there are exhortations to better utilisation of land and equipment. Not merely that: those co-operatives do not see their role as a peculiarly economic and scientific one. They play a big part in social developments. In my area, not unconnected with economic developments, they are engaged in promoting group water schemes for farmhouses. They are cleverly using propaganda for that type of promotion.

There is a little paragraph as follows in the Minister's statement:

The Government are, of course, fully aware of the special problems of agricultural and fishery co-operatives and are therefore studying the matter most carefully in the light of the submissions which were made by representatives of those co-operatives and of the discussions which both the Minister for Agriculture and Fisheries and I have had with those representatives.

Is there an implied weakening of the Minister's position there? I hope there is and that the Minister has been taught how to suck eggs. There is a tacit admission of a mistake having been made and I hope to hear an announcement from the Minister saying he will not go ahead with this taxation.

There has been a great deal of talk about beer. The imposition on beer by the Minister was punitive. He pointed out in his speech that the tax increase on beer approved by the Dáil on 28th January was, between excise duty and VAT, 6p per pint. He announced it as if it were nothing at all. It is 14 or 15 old pence on the pint. It makes one wonder about the bona fides of people who used to parade. One old penny on the pint, and the hearts of the protesters used to swell, in turn with indignation and sympathy, for the working man. A penny on the loaf of bread used to bring them out in the streets. Without an undue amount of cynicism, I am led to believe that the motivation of the people who used to parade about the penny on the pint and the loaf of bread was not above suspicion, that what they were doing was using these things as an excuse to parade their opposition to a Fianna Fáil Government. It looks like nothing else.

In his statement the Minister went on implicitly to exonerate the brewers for any blame but he tended to lay the blame on the traders because he said that the National Prices Commission did not approve of their increase. The Minister should remember that the traders are substantial unpaid tax collectors for the Department. It is easy to forget that. The bankers are growling again and if they go on strike the publicans may very well be the people who will again provide a banking service as they did before when they were left with bits of paper. One man told me that he could paper a wall with the bits of paper he had which were not honoured when the bank strike was over.

The Minister seemed to indicate there has not been any diminution in the consumption of beer since the tax was imposed—I am using the word "tax" loosely: it is money on, anyway. Indications are that it is as much as 40 per cent and nobody with any experience in the business is claiming there is less than one-third drop in consumption. The Minister has set his stony heart against changing the imposition on beer.

I think he will get less money for his purse out of the venture in the end. He should watch the graphs carefully. He may have to come back and admit he was wrong when the graph for money coming to him falls. He has said that 4p goes to the private interests. It does not necessarily go to the private interests which imposed them. They have staffs who have to get increased wages; they have increased heating and lighting costs to pay; they have damages to repair, some of them not accidental; they have higher rates and insurance to pay.

I do not need to emphasise that the largest proportion of tourists who came to this country were workingclass Britons. The indications are that the fall-off that took place due to the troubles here is not now so serious. The indications seem to be that we will have some of those people back this summer for various reasons. One of the reasons is that tour operators to continental countries are finding that business rather difficult to handle and quite a few companies have collapsed. A Yorkshire man or a Lancashire man is basically a beer drinker and he likes the quality of the beer here.

That is a matter that is exercising people's minds in Britain at present. This Finance Bill puts the price of a pint of beer at a prohibitive level for that type of man. The Minister should get his officials to do costings of good beer in northern England—I am not talking about the new fad for natural beer developing there but about the normal run-of-the-mill northern England beer—and compare prices when he will see that it is a serious business for the tourist.

Petrol costs and road tax on cars will also affect tourism but, in fact, it affects the ordinary citizen far more. I cannot understand how the Minister justifies the continuous liability idea he has introduced. The idea of a person being liable to car tax when he is not using the car is indicative of a certain tendency in life generally at present, a tendency in administration vis-à-vis the ordinary citizen. It is a tendency to punish the honest citizen because of the misdemeanours of the dishonest one. In other spheres it is a tendency to curb freedoms and rights of individual citizens who are law-abiding because there are others who break the law and are anti-social. Take the example of a retired civil servant or retired teacher, a man who has grown old and who does not like driving his car in the winter months, who has established a practice of laying it up during those months. Surely that man is entitled to freedom from taxation on that car for the period he is not using it. In the spring or in the summer he should not be deprived, in his retirement, of the pleasure of taking his car out when he feels like it just because there are people who abuse the system as it stands at present.

This question of blanket liability to deal with lawbreakers, involving the punishment of honest people, will be an increasingly serious problem in our society. In a sense it reveals the minds of the people who thought this up. It is tantamount to saying, in fact, that the majority of our citizens are dishonest and tend to break the law. I know the statistics are not good with regard to road taxation. This is a serious problem and the Minister would have the support of the House in making sure the law is obeyed so that the burden falls equally. I contend there is a serious issue involved and that certain rights which people have should not be taken from them just because of the difficulty of enforcing the law, just because there are lawbreakers in our midst.

I cannot understand why the Minister felt it was necessary now to extract stamp duty on building land purchased by private house developers from local authorities. The excuse given by the Minister seems to me to be a lame one. The amount involved cannot be very great. It looks like petty larceny to me but it is an indication that the Administration is slouching around seeing where an extra few quid can be picked up and put into the national Exchequer. There seems to be a kind of bloodhound basis to the whole thing.

With regard to section 53 and the ending of VAT exemption for short-term car hire, the same kind of criticism applies, this kind of mooching around looking for something upon which to light and suck a few drops of monetary blood out of small ventures. I have had some correspondence from Irish groups in Britain about the car hire situation generally. I suppose it would be an exaggeration to say that the application of VAT would stop people from coming who had intended doing so. Nevertheless, it is a disincentive. Without any great loss, the Minister could allow the situation, as it obtained, to continue. The groups that contacted me are also worried about the forms of insurance on these short-term car hire transactions. However, I will raise that matter in another place.

The money available from the European Social Fund to the Minister for Labour and AnCO has been utilised over the past few years taking a certain amount of pressure off the unemployment situation for school leavers, since it was being used to train people in electronics and the various fields of engineering. I cannot help thinking that the stiff taxation imposed on radios, televisions and so on in this budget will affect employment in those industries. I have been contacted by some of these people who have been trained, whose firms are contracting and who are now out of work. It is a sad thing to see young people who have been trained and seeking a career in, for example, electronics, because of ministerial action, finding themselves out of work after a very short time. We must sustain hope amongst our young people, the people in our regional technical colleges and other technological institutions at present.

The horrible feeling that they are all dressed up in a skill with nowhere to go, and nowhere to work, is beginning to have a very serious effect on the thinking of our young people. The central point of my thesis is that the priorities set by the Government are wrong. If the Minister in his Finance Bill had concentrated on incentives and rewarding of enterprise and skills and the rewarding of people who are prepared to take a chance, the tremendous power that can be exerted by the Minister for Finance would be exerted in the right direction. The Bill as I have contended should place at the very centre, not how much money will be spent or how ingenuity will be exercised to get it in, but the problem of creating the wealth to be distributed. I have already mentioned Ciaran Kennedy's paper in the Central Bank report. He emphasised the importance of skills in our society and the importance of industries that are labour intensive. The Fine Gael section of the Government have reached a stage where they should put down their foot and say: "We must set about creating wealth out of which we will all live and from which we can pay social benefits. We cannot keep borrowing money to spend on non-productive schemes". Roman emperors satisfied the mob with bread and sacrifices. They exploited other people to do this. Whatever bread we eat will have to be earned and can only be got if the Government set their priorities right and work hard, and tell the people that they will have to work hard to produce wealth.

There is no point in blaming everything on external factors. The people are not prepared to listen to that. There were two election campaigns recently in Australia and New Zealand where the cry was that the economy was as it was because of external factors. As a result of those two campaigns, the Government was kicked out of office. People demand that the Administration should be responsible for what is going on. If the economy is on a downturn, the Government must bear the responsibility, not the Opposition not Sheik Yamani nor anybody else. It has been said that the Opposition party established, in the face of very strong laissez faire economic policies, the social welfare services in this country and strengthened them and was always conscious of the necessity of paying its bills and doing a reasonable balance on its budget, and only going into deficit if the money was going to be invested in such a way that it would produce wealth. I will not emphasise that but it is a very important factor. Because this Government operates on different philosophies there is no sign of the Government taking a firm stand on the important decisions that have to be made for the development of our economy. When the Taoiseach wrote a letter to the Employer/Labour Conference which was published on the 18th March the Minister for Labour came out on the 19th March with a totally different point of view. That is what is causing the stagnation and the paralysis. That is why we cannot have economic planning. That is why we cannot have proper quick judgments on the important matters that affect our economy. The economic malaise gets worse. I suggest that it is time the Minister and his colleagues moved over.

Mr. F. O'Brien

Obviously, when one comes to talk about taxation nobody is interested or wants to pay additional tax. Everybody wants to participate in benefits—greater social welfare benefits, greater health benefits. When we talk about implementing tax increases we are the bogeymen. Of course, responsible people outside know exactly what the position is. We are listening from the far side of the House day after day to condemnation of our overspending. At the same time, there are demands for additional substantial spending. Deputy Brennan wanted to know where the money was being spent. If he reads the Book of Estimates he will see quite clearly where the money is being spent. He talked about very high inflation rates and pricing ourselves out of other markets. From May, 1974, to May, 1975, the rate of inflation was 24 per cent and from May, 1975, to date the rate of inflation is slightly over 18 per cent.

This shows the determined effort by the Government to get to grips with inflation. One of the reasons for the decrease was that the Government in June last introduced food subsidies to ensure prices would be contained. There is a great deal of talk about increased prices. Today bread is 14.3 per cent cheaper than it was on 1st April last year. The kilo of flour is 17.8 per cent cheaper. The pint of milk is 12.5 per cent cheaper. Margarine is 4.45 per cent cheaper. Butter is 2.1 per cent dearer. These figures are a clear indication that inflation is being checked. These are the facts. Prices have been kept down because of the measures taken by the Government. Of course, the only way in which a subsidy can be paid is by increasing taxation in other areas but the areas in which taxation has been increased are areas which do not affect those in greater need.

Any taxation system must be an equitable system and this Government have striven to produce equitable comprehensive forms of taxation. Deputy Colley said he was tired of the Government's insistence on equity in the tax system. I do not wonder at that because his party were responsible for perpetuating an inequitable system. It is the duty of a Government to spread the burden of taxation equitably across the board. That is not always easy but I believe this Government are placing the burden where it should be placed. There is no witch hunt for more money. It is a question of ensuring that those who can pay do pay. Naturally, people who escaped the tax net react when they find themselves caught within the net. There should be a reaction. A reaction is a healthy sign. I believe people realise they have an obligation to society. There are people in our society for whom nobody ever takes up the cudgels when they are caught in the tax net but they will take up cudgels very quickly when the better off complain about being caught. That should be spelled out. No particular section is being over burdened by tax impositions. Everyone should pay his or her share remembering the services and benefits provided by way of taxation.

There was a complaint that we are not doing enough to promote employment. The capital budget for this year shows an increase of £129 million which is an increase of almost 28 per cent over the capital budget last year. There is a distinct swing away from an increase in current expenditure to an increase in job promoting capital expenditure. Every cut in current expenditure, expenditure which does not promote jobs, was savagely and irresponsibly attacked by the Opposition. Again their attitude is one of complete dishonesty. They ask where is the money being spent. I am a member of the council and in Dublin city in 1972-1973 the allocation for local authority housing was £6½ million. This year the allocation for Dublin city is £23.7 million. Last year it was £11.3 million so there is an increase there of over £11 million. In 1972-1973 there was a sum of £31,000 for water and sewerage. In 1975-1976 the allocation is £1¼ million, again a substantial increase.

This refers to money, where we will get it and why we are trying to raise it. We removed health and housing charges from the rates. This meant a substantial reduction in rates and this money had to be made up by taxation. The Opposition, if elected, are now committed to removing completely rates on dwellings. They do not say when, where or how they will fund such an operation. A book on local government expenditure and local authority rating issued some time ago. They came down on the side that this could not be done or, if it was, that it would mean a substantial increase in income tax.

As I said, if Fianna Fáil completely eliminate rates on dwellings they will have to increase rates substantially. They are not saying that, but that is the only way it could be done. If money is taken out of one area, it will have to be put on in another. The central taxation fund would seem to be the only area in which this could be done. How can the Opposition be honest and sincere and say the Government are spending and borrowing too much while day after day they are asking for greater expenditure in other areas? They have a commitment to do away with the rates, but they do not say how this expenditure can be met. One of the few advantages of being in Opposition is that one can indulge in this sort of thing. It must be remembered that a man cannot ride a number of horses. One must come down on the side of truth and responsibility and spell out exactly what one would do.

Pay restraint is important. A lot will depend on how employer/labour relations get on over the next year or two. The Opposition pay a certain amount of lip service to pay restraints while, at the same time, creating an atmosphere of discontent and frustration. If they are serious about pay restraint they should spell it out in a positive way. Our economy is very dependent on what happens in this area. The trade union movement have always been a highly responsible body. They will always act responsibly because they know the reality of the situation. If people are paid too much it will lead to unemployment and greater hardship. They must represent their members to the best of their ability. I wish them well in the present talks. I have no doubt that in the end their responsibility and the reality of the situation will come to the fore.

Over the last few days the Opposition were highly critical of our attitude in raising the price of drink and petrol. We can all be critical of increases but the Government must meet their commitments and face up to the responsibility of making the books balance. To do that they must raise money. There were certain options open to them where to put the additional burden. They came down on the side of drink, petrol and motor taxation. On balance, that was the best thing to do. They could have increased the VAT, put VAT back on food, cut social welfare or cut back on essential services. If they had done that, that would have been a retrograde step. The Government must face up to their responsibility and pay their way. If this means imposing additional taxation, they must try to impose it in areas where it will hurt least. Of course, when any taxation is imposed it will always hurt somebody.

Our car ratio is not very high. Therefore this tax will not hit a great number of people. People can exercise an option on drink. If direct taxation had been increased, people would have no choice. They would have to pay it. They can decide to have a pint less or not drink at all. The Opposition cannot deny that we must raise money somehow. How would they do it? Where would they get the money without increasing taxation? As I have already said, our tax reforms will, in future, bring increased taxation. A developing nation needs money to develop services to cater for the growing demand in education, better health services, social welfare services, unemployment benefits and so on. These important services need to be updated and improved regularly.

While we are doing a lot in regard to education, much still needs to be done. We hear about people in the middle class bracket who are being, as somebody said, "screwed". Many of them have children going to university. The subvention given for the education of the university student is approximately £1,000. Quite a number of people are deprived of education for social and other reasons. They do not reap the benefit of that expenditure. The people who are well off receive this benefit and they should remember that when they are asked to pay taxation.

The Government can be proud of their performance since they came into power. They are looking after the less well off in our society. The vast majority of people feel the same way and are prepared to pay for the additional welfare benefits. It is unfortunate that there is a high unemployment rate to deal with, which eats up a lot of money. Many other countries are up against the same problem. Once we come out of that situation there should be even larger sums of money available for the people who I believe should get it, the elderly, the disabled and the mentally handicapped. Those people who cannot look after themselves need State subvention at a very high level. Our record in that regard has been very good. We should carry on improving the social welfare services even though we are not as economically buoyant as we would like to be at the moment.

The indicators in Europe and America are that they can expect an upturn in the future. We will obviously reap benefits from that. Europe will then look for markets and factories. This country has a very good employment force and we have the incentives. This will help us to build up our economy. I believe we have a very bright future. We always had downturns in cycles in the economy. Those are part of the whole make-up of a nation.

I believe we are making a very big impact in Europe and even though we are a small nation we will become a strong force there. If our oil, gas and mineral resources are developed in the right way there is a very bright future for us. We should be confident about ourselves instead of being depressed. Our Ministers who go abroad sell the country well. The onus is not on the Government alone. They can provide incentives and advice. There have been certain innuendoes that we do not know where we are going, whether or not we are a mixed economy or whether industry should be State or private owned. Of course, we know where we are going. We are a mixed economy. We have worked well in the past as a mixed economy and we will continue to do so. We have semi-State bodies which do a good job. Private enterprise also does a good job. If everybody works together there is no reason why we should not look forward to a bright future. I believe that State and private enterprise can develop together.

Deputy Brennan spoke about the Marxist Society. That is more of the red scare tactics which nobody takes very seriously. We still have industry coming into the country and the IDA are doing a very good job. The Government are supporting the IDA by providing additional money to ensure that we have the incentives for new industry to come here. An additional sum has also been provided for AnCO which will ensure that we have trained personnel.

The Opposition are bereft of ideas. They continually criticise and blame the Government for spending too much. They have now been in Opposition for three years and I have not heard one concrete policy from their think-tank. That is very bad. I looked forward to their ideas. If they were good I would like to have seen some of them implemented. It is regrettable that we are getting no ideas from them. If the Opposition are serious about getting back to this side of the House they should produce some policies and put them to the people. It will not fool anybody if they are seeking to return to this side of the House just because they were here before. In the recent by-election the people in the west showed that they were happy with the performance of the Government. I have no doubt, when we go to the country in 12 months, 18 months or even two years' time that the people will return this Government because they know our Ministers have the ability to devise and implement policies for the betterment of the country. The performance of the Government since they took office was very good particularly when one considers that they ran into one of the worst economic blizzards ever to hit the western world.

Debate adjourned.