Dáil Éireann debate -
Thursday, 12 May 1977

Vol. 299 No. 6

Finance Bill, 1977: Second Stage (Resumed).

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

Mr. Power

Before reporting progress I was referring to the change of heart on the part of the Minister since making his budget statement in regard to the question of valuation of farmers who have a trade. In his budget speech he agreed that because he was reducing the threshold to nil, people with only very small acreages would be brought into the tax net and that he would allow the notional system to be used rather than to ask those people to produce accounts. He has indicated now that he wishes them to produce accounts. I consider it very wrong that a person whose income from a small holding may be as little as £200 a year would be required to spend money on engaging an accountant or a bookkeeper in order to prove that that was only the amount of the income. This is a matter that is concerning greatly the people in question. The difference for them between the notional and the accounts system would be very small. Despite the Minister's remarks today I can assure him that my contentions are based on facts presented to me by an accountant who is dealing with such people in his everyday work.

One of the effects of the Minister's proposal is that people who normally engage in hire work for their neighbours are not interested in continuing that activity out of a fear that, by reason of their names appearing in the books of their neighbours, they would be brought within the tax net. Let me make it clear that I am not making a case for the exemption from tax of all farmers. I am making a case for those engaged in hire work and who perform an essential service for the farming community. The Minister's proposals in this regard are indicative of an urban mentality and show a lack of realisation of the benefit of these people to the rural community.

Our national debt stands at £3,400 million. In other words, the Government have succeeded in their short term in office in more than doubling the amount that had been borrowed during the previous 50 years. When we proposed borrowing £1 million for capital expenditure the Minister sneered at us and told us that our efforts to provide jobs in that way would come to naught, that nobody in Europe would lend us the money. I should like to know what has happened to our credit standing in Europe in the meantime. It was good when we left office. My opinion is that it has been eroded by the squandermania of this Government, who frittered away millions of pounds in dishing out the goodies so as to court popularity and to buy cheap publicity when they should have been building for the future. Our purpose in borrowing was to provide jobs. We did not intend adopting the policies that this Government have pursued in the field of borrowing.

The greatest sin on the part of the Government has been their failure to produce jobs for our young people. They are now making promises in this area and we hear much of the job creation programmes of public bodies for 1977. Yesterday the Minister for Health indicated the job creation programme he had in mind in the Eastern Health Board area but we are convinced that this is merely another pre-election gimmick and that it contrasts forcibly with the penny-pinching of the past three years. During that time when we looked for extra dentists or doctors or community care people we were told that we would have to work within the stringencies of our financial allocations.

No doubt the decay that has set in in the meantime will not be capable of being put right by any move at this stage. It is amazing that a situation has now been reached where money can be provided to procure jobs while only a very short time ago no such money was available. For instance, in one of his first speeches after assuming office the Minister for Education remarked that no money was available for the purpose of reducing the pupil-teacher ratio or for extra remedial teachers. This is a typical example of the Coalition's blundering because in a class of 45 pupils there are bound to be produced some who will require remedial attention. As a teacher I am convinced that this is a matter which should be tackled immediately. Such matters as the drainage of rivers and the improvement of roads might be left for another year or so. But if one fails to give a child a chance it needs, one is culpable to the extent that one cannot remedy that failure later. I should like to impress upon the Minister that it would be our policy to pay people to work rather than pay them to idle. It cost £80 million to pay unemployment benefit and assistance last year. Yet the Minister wondered where we might get the £100 million we would plough into capital expenditure to provide jobs. At the commencement of his Ministerial office I wonder did he question where he would get the £80 million to pay people each year not to work.

Great prominence has been given to this new employment incentive scheme. It has got a certain amount of publicity which might do good in so far as it might attract people to it. We have the Minister for Labour's personal guarantee, backed up by his photograph and signature, and he mentions that it is hard fact and hard cash too. The workers of Newbridge Industries, long since closed down, will remember the first employment premium scheme when they asked the present Government for consideration that would allow them to be paid social welfare on certain days, that they would provide work in the factories for, I think it was, a day-and-a-third each week. They were told that they would not get unemployment benefit unless they were at home sitting by their firesides, that they could not work and be paid. That is the thinking that has permeated the Government, that people must be paid to be idle and cannot be paid to work. I hope this new employment incentive scheme will be more effective than its predecessor. However, it appears to be another eleventh-hour promise and I am very doubtful whether it will be effective. It is like the recent effort of that showy character in racing, The Minstrel, in the Two Thousand Guineas; the Minister timed his effort a little late. It is no wonder that the Leader of the minority party in the Coalition, Mr. Corish, wants a June election to get out before the Minister for Labour is forced to pay his IOUs.

Possibly reference to The Minstrel affords me an opportunity to draw special attention to the decline in the bloodstock industry here. I am convinced—and I made this point in the House before—that this decline is a direct result of Government policy, particularly that of wealth tax. When it was first mentioned I indicated to the House that I had information on which I could rely that millions of pounds had been frightened out of the country by the mere mention of this tax. That has happened.

Parliamentary Secretary to the Minister for Finance (Mr. Begley)

Bloodstock is exempt from wealth tax.

Mr. Power

Those who own the bloodstock, must have a certain amount of acres to be in the bloodstock business at all, and particularly to keep a stallion. That indicates that they would be in the wealth tax bracket straightaway. If the Parliamentary Secretary briefs himself on this he will find that I am correct. Millions of pounds were frightened out of the country by the mention of wealth tax—money we now have to borrow abroad and which was formerly available here for investment. Very few people make money out of bloodstock breeding. Their capital outlay is very high, the risks are enormous and they must wait for years for any return on their outlay. Because of the different financial climate here now some of our large breeders are selling out. The Japanese and others are buying our stallions and mares. Our leading blood lines are going abroad. Increasingly one notices that the sire of a particular big race winner is now mentioned as standing abroad and being no longer available to the bloodstock industry here.

The only hope we have in the future is that, for some reason or another, once bloodstock is exported from this country it does not seem to retain the qualities that commended it to people abroad, that in a few generations in the different climate or country to which the horse goes, the qualities are bred out, and they have to come back here to replenish their stock. I hope that will be borne out, although the recent number of horses bred abroad winning here would indicate to me that we have reached a very crucial stage in the bloodstock industry. The thoroughbred industry means a lot to the people of Kildare; it creates jobs for a lot of people, an international market abroad which must help our balance of payments and a great sale every year for our yearlings and older stock. It is one industry that has got no help or subsidy whatsoever from any government. It has kept going at all times, during recessions, wars and everything else. If we deliberately discourage investment in the industry by the wealth tax we are in danger of killing it off altogether. While I have no great hope that the Minister would help the industry I would ask him at least not to hinder it.

The Minister said in the course of his speech :

The farming profits of the larger farmers have been brought into the tax net and so have capital gains. The wealth tax has ensured that those who have large fortunes make an appropriate contribution to the Exchequer.

That phrase "large fortunes" indicates the thinking behind that type of speech. We in Fianna Fáil believe that farmers should pay their fair share of tax. But what I deplore is the setting up of one section of the community against another. There has been a tendency— which has been aggravated recently and which every year becomes more apparent—for farmers to be set up against consumers and every green £ advantage for which the Minister for Agriculture claims credit is construed by other members of the Coalition party as meaning increased prices to the housewife. The use of the phrase "large fortunes" indicated to me that that type of thinking has reached the Minister, if he is responsible for that speech, and I presume he is. He should refrain from such expressions in the future. There has been a marked tendency to carry on this activity, and it is something that needs to be curbed. The Coalition party have a duty to endeavour at least to unite the people of this country. Perhaps they would endeavour to unite the people of the Twenty-six Counties, seeing that they have washed their hands altogether of the hopes of uniting those in the 32. Any contribution, such as that I have just quoted, only serves to fan the flames of an anti-rural or anti-farmer bias and should be avoided in the future.

I mentioned that unemployment benefit and assistance cost us approximately £80 million last year. We in Fianna Fáil introduced a redundancy fund. When Deputy Brennan was Minister for Social Welfare that fund had grown to a considerable size. At that time very few people expected that it would be depleted or that there would be such demands made on it. In our party we often exhorted Deputy Brennan to allow us money out of that fund for other purposes but he said we should leave it there, that the day may come when it would be needed. Indeed that day did come.

We introduced also pay-related benefit. This was something to be used for a limited period to cushion the effects on those who might find themselves trying to live on a smaller salary than that to which they had become used, those who had entered into commitments, hire purchase, mortgages and so on, during their period of prosperity. This was something to cushion them and bridge that gap. It has been abused rather than used by the present Government. I have often written to the Minister for Social Welfare on behalf of people inquiring why they were not granted pay-related benefit.

We were informed that if pay-related benefit were added to their unemployment benefit they would have a higher income from social welfare than they would have earned during the year for which pay-related benefit was paid. Accordingly, they were not entitled to pay-related benefit. We must have a close look at this. When a worker looks at his take-home pay after stamp, tax and other deductions have been made and when he takes away the cost of transport to his work he wonders if he is a fool to be working at all. This Government have contributed to removing the incentive to work. The rumblings emanating from the Government suggest that they are thinking in this fashion at last.

From time to time we have made constructive suggestions which have been pooh-poohed and we were told that they were unrealistic. Before the last general election, when we first mentioned our policy on rates we were told by the greatest brain at that time in Opposition, now Minister for Foreign Affairs, that we were wrong. Now that the Government have tried to implement our policy in part, it is seen that we were right. We have offered to do away with rates completely. The Government are taking away a quarter of them. It is often said that the greatest flattery is mimicry. In this instance the Government have copied us. This is an admission that we were right and that they were wrong. Our policy on food subsidies is shown to be correct because the Government have adopted that also. It seems that the suggestions which emanate from this side of the House are not all wrong.

I will conclude by remarking on the cockiness of the Minister when he introduced this Bill. He said that in this year, the Government's fifth year in office, he was privileged to introduce his sixth Finance Bill. It is a great relief to me that it will be his last. The Government have brought the people to the awful situation that they are in. I can say that never again will the present holder of the portfolio of Finance occupy that position. It is a relief to know that this will be his last budget. He will never be forgotten by the Irish people.

Mr. L. Belton

This Bill is a machine to give effect to the many benefits which the Minister introduced in his budget. In 1976 the Minister adopted a policy of reform or remedy. He felt it necessary at that time to introduce certain possibly unpopular taxation measures to lay the foundations for the reliefs which he foresaw could be enacted this year. The Government's determination to implement the taxation reforms programme has made possible those reliefs and fiscal incentives in 1977. The Government do not by any means claim that this is the end of improvement or that all improvement that they would wish for in the tax code has been reached. However, they have started on the correct road to create a situation where all sections of the community will bear their fair share of tax.

The Minister when introducing this Bill said that an industrial manager, for instance, might be paying income tax at the rate of 80 per cent, while another person with a similar income, operating through avoidance devices and tax havens might pay no tax whatsoever. A wealthy farmer with a similar net income might pay no tax at all without resort to any tricks or devices to avoid it, because farmers have not been taxed heretofore. Another person might have a similar income through capital gains and he would pay no tax. This is an unfair position which any Minister with a sense of responsibility could not allow to continue. Since 1973 the Government have radically altered the position. They do not claim that now or at any time people in similar circumstances will pay exactly the same tax. They do claim that there will be less variation in the amount of tax paid by people with similar incomes. Under the present scheme the highest personal tax rate will be 60 per cent. The profits of the larger farmers have been brought into the tax net and so have capital gains, and the wealth tax has ensured that people with sufficient wealth will have to bear their share of tax. The Government have also introduced tax incentive schemes. For instance, manufacturing industries which show an increase in employment or in production will pay a reduced rate of 25 per cent which will apply for three years.

The Government have abolished death duties. These represented a tax imposed at the time when people were in the worst possible circumstances to bear it. Deputies on every side of the House will recall cases where farms and business have had to be sold because people had not the necessary finance to pay death duties. The Government have ensured that this will no longer be the case. The tax changes made by the Government since form a logical pattern the object of which is to obtain a fair contribution from all classes.

The Government have taken special care of people most in need. They have given special reliefs to the less well-to-do section of the community in a very special manner. The increases in social welfare payments have been of the order of 120 to 160 per cent during the term of office of the Government. The Government have pushed ahead rapidly with providing houses and the Minister for Local Government was happy to be able to announce that the building programme of 25,000 houses per year has been maintained. Yesterday in reply to a question from a Fianna Fáil Deputy it emerged that the combined figure for housing in the private and the public sector was in the region of 25,000. Of course, the figure was disputed by the Opposition because they do not want the people to know how successful has been the Government's policy.

The Government have given incentives to manufacturing firms to expand and to create employment and this will relieve the unemployment situation. Speakers from the Opposition benches have been trying to ride two horses in this debate. On the one hand they have claimed that the Government are only now realising that prices have increased but, on the other hand, other speakers have accused the Government of using the price increases to get into office. They say that before the last election Government speakers claimed they would reduce prices if they were returned to power. Fianna Fáil cannot have it both ways.

Long before this Government came to power they were aware of what was happening in the area of price increases. When we were in Opposition we urged Fianna Fáil to remove VAT from foodstuffs but they stubbornly refused. As a result of this Government's policy, where VAT was removed from foodstuffs and where subsidies were granted, inflation has been reduced by 3½ per cent.

When Fianna Fáil were in office they said they could not give any relief on rates but the previous speaker kept referring to their rates scheme. Before the last election they ridiculed this Government for what they promised with regard to rates relief. Long before the election it was our policy to do something about health and housing charges and this was scorned by Fianna Fáil who said it was impossible. Three months prior to the last election they issued a White Paper in which they stated it was impossible to do anything about rates and that was still their policy at the dissolution of the last Dáil. Those of us who have fought elections know how little time there is to talk about policy when we are out on the road looking for votes but that was the time Fianna Fáil enunciated their rates policy. We criticised them for the hurried way they did it. Everyone knew it was only an election gimmick so far as Fianna Fáil were concerned. The present Government have carried out their promise to remove health and housing charges. We have now gone further and this year there was a 25 per cent reduction on rates. These are actual facts, not airy-fairy promises.

At the moment Fianna Fáil are wondering what will be their next move. They know their rates policy has been discredited and that the Government have carried out their promises. The Government have also given an extra £2 million towards a rates waiver scheme. Recently there was an announcement in the papers that anybody in County Dublin with an income up to £2,000 per year can avail of that scheme. This is a very liberal allowance and it has been made possible by the Government.

The Government have been criticised for the unemployment position but we know it is due to the economic conditions prevailing throughout Europe. Fianna Fáil make much of the fact that the Government promised to reduce unemployment. Many of us remember when a former leader of Fianna Fáil promised 100,000 new jobs but they never materialised. The only places where there were jobs were in London, Birmingham, Manchester and Coventry.

The people know all about the false promises of Fianna Fáil during the years. They also know that the Government are determined to carry out their policy, as they did with regard to rates. Fianna Fáil have claimed that they wanted the Government to introduce food subsidies but a previous Fianna Fáil Administration will always be remembered for having slashed food subsidies after they promised to retain them.

This Government have been doing a very good job in the areas of social welfare, local government and foreign affairs. The people know that they can be trusted. There is no doubt that Fianna Fáil are worried about the prospect of a general election. Not alone are they afraid of the defeat which they will suffer but they are also concerned about the inquests that will be held afterwards. They dread those inquests because they can see their party disintegrating.

Mr. Kitt

What section is the Deputy dealing with?

Mr. L. Belton

I am talking about general Government policy which is covered in every section. I intervened in this debate because the Government were ridiculed by Opposition speakers. The Government, and the Minister for Finance, have adopted the correct policy and they will not move from it. The result will be that when the next budget is introduced the Minister for Finance will be in a position to grant more benefits to our people.

Mr. Kitt

I am glad to have the opportunity of speaking on this Bill. Since I became a Member of this House I noticed that successive Finance Bills did not contain any basic plan or show any real thinking on the part of the Government. The budget has been described as a mild one but one must also take into consideration the severe budgets introduced in 1975 and 1976. I accept that the budget contained concessions regarding personal taxation but since then the purchasing power of the pound has decreased. There is little use in talking about a taxation system which will benefit anybody when prices are rising all the time. The day after the budget was introduced in January the Government sanctioned a big increase in the price of coal and such increases make nonsense of budgetary policy.

The Minister told us that one of the main features of the budget related to the changes in the personal tax structure which will benefit every taxpayer in the country. He said these changes were one of the two major elements in the pay increase—tax cuts package which was the basis of the national wage agreement now in operation. We were all fooled as the events that took place after the budget was introduced indicate. A short time later increases were granted in the price of coal, bread, motor insurance and electricity charges. We are all aware that old age pensioners who must exist on a social welfare payment must also pay the full price for coal. Old age pensioners living alone in our cities face a particularly difficult situation. The two main problems facing the country are unemployment and inflation and they were not tackled in the budget. There is no evidence in the Bill that it is the intention of the Government to tackle them now. An economic plan is necessary to tackle these problems. The Central Bank, in the course of their annual report, state that very little progress was made in solving the related problems of inflation and unemployment.

The only success that has taken place with regard to industry has been under the small industries plan. However, in the west, particularly in the towns of Tuam, Glenamaddy. Dunmore, Ballygar, and Mountbellow there has been a decrease of almost 30 per cent in the number of people employed. What have the Government done for this part of North Galway? Tuam is in need of special attention and public representatives and many interested groups there have made representations in the hope that employment would be created in the town. We are hoping that next year a factory will be in operation there. If more industry is not set up in the town, the population will decrease. Many felt that the motorist was not taxed as severely in the recent budget as he was last year but a short time after the budget car insurance premiums were increased with the result that it is very difficult for very young and first time drivers to get insurance at a reasonable rate. However, the big problem for all motorists, particularly those living in rural areas where there is virtually no public transport, is that the price of petrol has been increasing steadily since 1973. I should like to remind the House that in 1973 a gallon of petrol cost 37p. Since then we had increases ranging from 1p to 15p which was imposed in December, 1974. The price of petrol has increased since 1973 by 60p per gallon.

It is no good for the Government to blame the Arabs for all those increases. In 1974 petrol was increased by 15p per gallon although the Arabs wanted only 5p. What happened to the other 10p? Presumably it went into the Exchequer, but we have seen very little in the way of extra employment created with that money, it has only added to our inflation rate. In the past four years petrol has increased no less than 15 times. The Arabs were looking for 12p but petrol had increased here by 60p per gallon. This is typical of the Government's policy, whereby all their failures are caused by the world recession or our entry into the EEC, and the benefits such as those that will accrue to the farmer in the event of a devaluation of the green £ taking place, will be to the credit of the Government.

In relation to farmers' taxation we are glad that the Minister has postponed the payment of tax in advance, which was due on 1st September. Farmers, like anyone else, are business people and it is unfair to ask them to pay tax in advance. The Minister makes a distinction in his speech between farmers. The Minister said that confusion had arisen over part-time farmers. This group comprises farmers engaged in a trade or profession on a self-employed basis. The Minister said that such people would be liable for income tax on their farming profits regardless of the rateable valuation of the land. The Government and the Minister who introduced this policy, do not know about the co-operation that exists between farmers. A person who does contracting work in a rural area is a very valuable asset to the community. From this Bill it is obvious that a person with initiative, a farmer with a sideline, will be penalised. This seems to be a contradiction of the employment premium scheme where £20 is being given to an employer to take on extra adult workers and £10 to take on young people. If the employment premium scheme is encouraging initiative, this section of the Finance Bill is destroying it. I know the Parliamentary Secretary will agree that the co-operation that exists between farmers will be broken down because of the penal clause in this Bill.

The greatest unemployment has occurred in the building and construction industry. There is very little in the Finance Bill to help this industry. The Minister in his speech asked why should the building and construction industry be eligible for the special relief given in relation to corporation tax, and tried to justify why this relief was not given. Realistic grants and loans must be made available to prospective house purchasers if the building and construction industry is to be put back on its feet. A married man earning more than £2,050 cannot get any grant from either the county council or the Department of Local Government, and if he earns more than £2,350 he cannot get a loan from the local authority. If he gets a loan, it will only amount to £4,500. At present day house prices a man would need twice that amount. The eligibility limit for loans and grants must be increased and the grants must be increased.

Very little has been done in this Bill in relation to education. Grants for higher education, university or third level education were not increased and the eligibility limits for these grants have remained static. A couple with a child ready for university would have to earn less than £1,600 to qualify for a grant for the child. A man earning £1,600 would only have about £30 per week. That is unrealistic. A married man with no family would easily qualify for a medical card on that amount of income per week. We discussed this problem in Private Members' time recently and the Minister told us that more money was being made available in education. There is no point in making money available if fewer people are qualifying for the money. With present-day prices it is very difficult for a family to maintain a son or daughter in university or at a third level without a grant.

The Minister for Local Government says that he is providing more money for houses and for grants, but again fewer people are qualifying for loans and grants. This question must be studied carefully by the Government. Housing and education are two very important areas. No plan has yet been made to deal with problems in education and no money has been provided for extra building in our primary and post-primary schools.

An Leas-Cheann Comhairle

The Chair does not want to interrupt the Deputy at this stage, but these matters of expenditure cannot be reviewed now. We are dealing with taxation measures at the moment.

Mr. Kitt

I was making the point that in dealing with unemployment it is important to create incentives for the building industry. I was trying to make the point that the extra classrooms which have to be built would create more employment.

On the whole question of unemployment, many industries are set up but, unfortunately, they never develop and reach the target which it was hoped they would reach. This affects us particularly in the west where everyone is concerned about creating more jobs. When an industrialist sets up an industry in the west, he finds we have a very poor telephone service, we have not got the necessary infrastructure services, and there is a very big problem with transport on our poor roads. I often wonder if industrialists are given the full information before they set up industries. It is important that they should, and that they would be under no illusion as to the backup facilities in particular areas.

I know of one industry in Gort, County Galway, which closed recently. The major reason for its closure was that there was no automatic exchange, no automatic dialling in the area and it was very difficult to have any communication between Gort and Dublin, or Gort and other countries, and markets were severely affected. A similar situation is developing in Loughrea where a factory will be closing in July for the same reason. No money was made available in the budget to provide the necessary infrastructures. In the budget, telephone charges were increased and this creates a big problem for industry.

A motion was circulated this morning signed by a number of Labour Deputies stating that Dáil Éireann notes with satisfaction the massive increase in telephone investment and development in the past four years and urges the Minister for Posts and Telegraphs to continue to implement these progressive policies. In Galway quite a number of manual exchanges will not be converted until 1979 or 1980. This is a problem. In certain areas in the west there has been a decrease in the number of people employed. Deputy Daly asked the Minister for Industry and Commerce the number of people in employment in the Shannon Industrial Estate in 1973, 1974, 1975 and 1976. On 31st December, 1973, the figure was 4,551 and on 31st December, 1976, it was 4,033, a drop of over 500. At the same time at least 50 new industries were created in that area. It will be quite a problem to deal with unemployment. The Government have not played their part in providing the necessary extra jobs.

In the past few days we have heard promises about the jobs which will be created. The Minister for Health said there will be extra jobs in the health services. The Minister for Transport and power said extra jobs will be available in the tourist industry, particularly summer jobs. Bord Fáilte are responsibile for tourism and my information is that no such jobs exist. The Minister might have been mistaking jobs he thought Bord Fáilte had for jobs which the local authorities have in local improvement schemes and amenity projects in different areas. We cannot get any information from the Minister on this, because Bord Fáilte are responsible for their own affairs and the Minister is not allowed to answer questions concerning the jobs Bord Fáilte may have. I hope I am wrong, but my information is that Bord Fáilte have no summer jobs.

Deputy Belton mentioned the policy on rates. We all agree with the principle of reducing rates, which is a social need. During the last general election campaign, the Government laughed at the idea of Fianna Fáil stating they would abolish rates on private houses. They do not seem to be laughing at it now. They are giving a relief of 25 per cent on rates this year.

Mr. Kelly

I do not think we ever laughed at the idea. What seemed laughable was that the idea was pulled out of the hat three days before the election although Fianna Fáil had said the rates could not be reduced.

Mr. Kitt

That was Fianna Fáil policy and Fianna Fáil policy consistently. What was pulled out of the hat in the budget was a 25 per cent decrease in rates.

Mr. Kelly

Fianna Fáil's policy on the abolition of rates was pulled out of the hat three or four days before the general election in 1973. I am sorry to interrupt the Deputy.

Mr. Kitt

Is the Parliamentary Secretary referring to the manner in which it was carried out? Would he not agree that it would be ideal to have rates abolished?

Mr. Kelly

I am completely against the system.

Mr. Kitt

I am glad of that. The budget was very misleading and deceitful in the sense that so many price increases were sanctioned after it was introduced. By the end of the year our national debt will probably be over £4,000 million and we will have to pay back a substantial part of the external public debt in the next couple of years. There is no point in the Government saying everything in the garden is rosy. The facts presented in the report of the Central Bank are very frightening. Deputy Briscoe said yesterday it was costing us £500 per minute to pay back the debt. He informed me today that he was mistaken, that in actual fact it cost £800 per minute to pay back the debt.

Mr. Kelly

That is absolute nonsense.

Mr. Kitt

The Parliamentary Secretary will have to take that matter up with Deputy Briscoe. The Government have not borrowed money to create employment. We are paying our way on a day-to-day basis. I hope, after the next election when Fianna Fáil get back into power, that they will not delay, as the Coalition have done, in producing an economic plan. This is the only basis on which a country can work.

The Government did not carry out a census. As the Parliamentary Secretary is aware this would have given jobs to our young people. A census is for their benefit because they are the future of the country. It is very difficult to make any plan when there is a scarcity of statistics. No Government in any country would have waited so long before producing a plan to work on. This will be a priority when Fianna Fáil are returned to power.

Dr. Gibbons

The Minister said that this year's budget was the sixth one he brought in. It is the sixth time that he has stated, on behalf of the Government, that their financial policies will solve all the problems of the State and leave the State better off at the end of the year than at the beginning. However, when we take the ordinary indicators of progress and advance we find that this is not so. I refer particularly to the figures indicating rising prices and unemployment.

This budget indicates a change of policy in comparison with the two previous budgets, which were very harsh. They were offered to the people as the solution of our problems. On this occasion we had a change from the extraordinary taxation of the two previous years to giving some taxation concession for this year. One can be pardoned for saying that this is an election year. If the Government thought that this budget would be so successful why did they not introduce a budget like this last year and the previous year and let the success start earlier?

Mr. Kelly

I would like to apologise to Deputy Kitt. I have just worked out the figures and he is not so far off the mark.

Mr. Kitt

I thank the Parliamentary Secretary.

Dr. Gibbons

There are a few points I would like to put on the record. The first is that the Minister in his budget statement made very little reference to saving. The Finance Bill offers no encouragement whatsoever to people to save. This is a very important thing not alone for the State but also for families because of the spending which we see taking place throughout the country, particularly at weekends, but also at other times throughout the year. The idea seems to have gone abroad that it is not necessary to save at all. The Government should ask the ESRI to look into saving, publish a paper on it and try to convey to the people how important saving is. On the other hand, is it more important that the people should spend their money?

In the past each family as a unit advocated that saving was a virtue and that by saving it was hoped that one would be able to provide for oneself in the future. However, with the onset of the paternal state there probably is not as great a need for this kind of argument now or in the future. Some lip service is paid to it from time to time in budgets and incentives are offered to people to save. I do not believe they go far enough. There is an advantage to the State and to individuals if some inducement is offered to them to save for the future because people would not have to depend on the State to the same extent with regard to building their houses and providing for the education of their children. The taxpayer would then be relieved of some of the burden he bears.

It has to be seen, however, that it is an advantage to the State that large amounts of money are spent because the State can collect a large amount of VAT on goods which are purchased. Perhaps this is one of the reasons why the State do not do more to encourage saving. They seem to be allowing spending to increase. It has to be accepted that the extra expenditure adds to the buoyancy of revenue and provides the State with money to spend which they might not have.

The ordinary individual cannot go into this problem and get facts and figures on it to indicate which is the better policy from the point of view of the State and of the individual. The Parliamentary Secretary should ask the Minister for Finance to establish something more definite in relation to saving. This is a very important matter. Many people feel that money is not worth keeping in view of the inflation which takes place from one year to the next. It is hard to believe that that could be absolutely right. I would like to see the arguments for and against this. I hope my remarks will get more positive reaction this year than they have got in the past.

The next thing I would like to refer to is the taxation of farmers. It is generally accepted that farmers, who are in a position to do so, should pay tax. Nobody regards the paying of income tax as a pleasant duty and, therefore, there is a natural resistance to it. We are told that those with a valuation of over £75 will be included in the tax net following this Finance Bill. It is feared down the country that this limit will be extended downwards from year to year so that every year more people will be caught within the net. It would be nice to think that farmers would become so prosperous that there would be justification for including them in the net by reducing the valuation to a lower figure. There is an objection to the national system of indicating taxable income, the relation of the £65 to the £1 valuation. The expenses allowed on it are very limited. One relates to the payment of rates while the other relates to the employment of persons who are within the PAYE system.

There are three important matters which do not seem to be included and which are causing concern. First, there is the regional consideration. The land is not similar in every area. It has not similar capacity for production. Indeed, in some areas its capacity to produce is very limited, sometimes limited to the production of nothing more than grass. The second factor is that the figures, as they stand, do not take into account the losses that farmers may suffer as a result of deaths or of disease of cattle. The farmers complain that while there is much talk about the big prices obtainable for cattle, there is no consideration given to the fact that the replacement of these animals is a very costly business so that the figure realised at a mart for an animal is not representative of a net gain.

As reported at column 1344 of the Official Report for 15th March, 1977 I asked the Minister for Finance if he would indicate all the sources of statistical information that prompted him to raise the production value of £1 valuation of land from a notional one of £40 to £65. The Minister replied, and I quote:

. . . the most recent available statistics for income arising in agriculture are those for 1975 prepared by that office and published in table 9 of the June, 1976 issue of the Irish Statistical Bulletin. The figure given in that table for “Income from self-employment and other trading income” is net of expenses related to farming, including rates on land . . .

I set about reading the document, quite a challenge for one who is not used to dealing with figures. The first point that occurred to me was that the figures in it seemed to be based largely on the 1952 system of estimating agricultural output and which was changed further in 1957, in 1959 and in 1962. An outline is given of how the gross agricultural output is arrived at and also of how the figure for net agricultural output is ascertained. Finally, there is the income figure for members of the family. However, those figures seem to be estimated on the basis of sale prices without making any reference to the cost of replacing animals or to the regional situation. Neither is there any reference to losses due to death or disease.

Having some idea of the competence of the people who compile these figures I am reluctant to suggest that there is something very wrong about the information but since the figures are now an important feature of agricultural life, either the Minister for Finance or the Minister for Agriculture should be given the task of indicating how exactly the figures are arrived at and, secondly, the full significance of the figures.

The first figure in the book relates to income from self-employment and other trading. In this regard the figure for 1973 was £364 million while in 1975 it was £483 million, an increase of £119 million or about 33 per cent. By increasing the notional value from £40 to £65 the Minister is increasing that figure by more than 55 per cent. There is some justification for asking the Minister to explain this further. He has made some reference to using the 1976 and 1977 figures but this whole matter should be explained.

The other point is that the income is family income and takes no account of the work done by the owner of the land. It represents work carried out by his family. This is another matter that the farming community wish to be taken into account and they argue that they should be allowed more by way of claims for expenses to cover this point. In replying the Minister may find it possible to fob-off all I have said by telling us that if a farmer so wishes he may present accounts. However, there are many farmers who are not prepared to avail of this option but for those who are prepared to avail of it they would like to be assured that the three matters to which I have referred would be included in estimating their incomes.

Another feature of this increased notional value is one that may concern the social services of the medical side because there is a feeling abroad that this increase is now being used by the health board for the purpose of assessing eligibility for medical cards. The result of this is that people who held cards in the past, whose stock position has not changed, have lost their medical cards. The only explanation for this would appear to be that the health boards decided to take the increased notional value as an indication that the card holder's income had increased.

Date adjourned.