Dáil Éireann debate -
Wednesday, 18 May 1977

Vol. 299 No. 8

Finance Bill, 1977: Second Stage (Resumed)

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

Mr. Noonan

I had been speaking yesterday evening about the importance of providing the necessary incentive for farmers to increase production and I stated that the taxation system proposed in this Bill will have the direct opposite effect. Therefore, this is a matter which the Government must tackle without delay especially since the agriculture industry is our greatest national asset and is responsible for more than 50 per cent of our total exports

In regard to taxation and, in particular to the taxation of farmers, it is the policy of Fianna Fáil that the necessary incentives be provided at all times. We favour greatly the notional system. It has now been agreed by all concerned that farmers must pay their fair share of taxation. They have no objection to that but they must be given the necessary scope to increase production.

The notional system must be retained if this very necessary incentive is to be given. While retaining the notional system we must take into consideration the other various expenses associated with farming such as contract charges and wages, including family wages. The Government have fallen down in relation to these considerations. Most of the work on quite a number of farms is done by the family and they must receive compensation for their work in contributing towards farm output. From time to time we have had assurances from the Minister for Finance but later on we found that those assurances meant nothing. We had an assurance in relation to farming taxation two years ago and we now find that more and more farmers are coming into the tax net. Small farmers and farmers with very low valuations who have to resort to other work to augment their incomes are included in the tax net. This is a further disincentive to increased production.

Among the worst anomolies contained in this Bill is the one where a farmer will pay double the amount of tax when compared with a person earning a similar income in a different walk of life. That is the muddled thinking contained in this Bill. Rates can also be considered as a further taxation on a farmer's line of production. People in industry pay taxation only on their profits, but a farmer pays rates irrespective of his income, in a good year or a bad year. Farming is a type of industry which depends on the climate. This is not taken into account particularly by the members of this Government who complain that farmers are not paying their fair share of taxation. The notional system of taxation must be retained, taking into account the various other expenses that arise, otherwise the taxation imposed on farmers through the notional system can be drastically increased at the whim of any Minister for Finance who finds himself short of money.

It is quite obvious in this Finance Bill that the Minister finds himself very short indeed through the mismanagement and inability of the Government to right the finances of the State. We must take a careful look at the system of taxation for farmers, because they are the wealth of the country. With increasing farm incomes all the other sections of the community benefit. Farmers are not a privileged class of citizen, but as builders of our staple industry they should not be subjected as they are now by this Government, to repressive taxation. We should consider what farming could mean to the development of our country in the years ahead. We should realise that we cannot hope to increase agricultural production under the present system of repressive taxation.

The concept of taxation as outlined by the Minister last year and this year is harsh and repressive. I find it extraordinary that a man who says he is committed to the development of this country and its industry and its people should take this extremely harsh attitude to agriculture. It has become fashionable for some sections to say the farmer is doing well. We must consider the good years with the bad years. For many years the farmer found it difficult to make ends meet.

I urge the Minister to have a major rethink on the whole question of farming taxation and to ensure that the incentives which are necessary for increased production are safeguarded. The Finance Bill does not do that. I hope that on Committee Stage the Minister will consider the many fine suggestions made from this side of the House on this matter and many other matters which affect the economy. The Government are responsible for inflation and unemployment because of their budgets this year and last year. The taxation imposed in last year's budget was responsible for 4 to 5 per cent of the inflation which hit the country last year. We hope the days of this Government are numbered and that, when we are discussing the Finance Bill next year a Minister for Finance from the Fianna Fáil Party will be leading the country again to the progress and prosperity we enjoyed up to 1973.

Mr. J. Gibbons

Looking around the House and noting the absence of any member of the Government we see the contempt the Government feel for this House and for the democratic process which sent us all here. That contempt is well represented by the fact that not one single member of the Government would deign to grace the House with his presence during the debate on the Government's own Finance Bill.

It has become more or less standard procedure during the reign of the Coalition that one may find oneself talking in the House to nobody except possibly one person from the Government side such as the Parliamentary Secretary, Deputy Begley who has been sent in, presumably against his will, to hold the fort for the whole National Coalition. This is an indication of the contempt in which the Cosgrave Government hold this House and the democratic institution it represents and their unconcern for the observations of Members of the House who have been sent here by the electorate in their constituencies to offer opinions and suggestions on the situation in which the country finds itself at present. It is apparent, it is manifest, that the Government are not interested in what Members of the House have to say. If they were, one of them at least would come in to hear what was being said.

It so happens that we, the Irish nation, find ourselves in what I hold to be a crisis situation. The crisis arises on the one hand, from a flagging, falling economy, the running down of of industry and the running down of agriculture. Agriculture is running down and I will demonstrate that in due course. On the other hand we have a quite peculiarly composed population of three million which is rising rapidly. It is peculiar in its composition in that an extraordinary number of young people make up that population. I understand about half the Irish population are under 25 years of age, and a very large proportion of those are still attending school. The vast majority of those who left our educational establishments over the past couple of years found no place to work and nothing to do. They are contributing to the building up of a time bomb of disillusion and frustration which will be all the more dangerous to our social structures in that the people who make it up will have been well educated in our educational system which developed, as it happens, under Fianna Fáil Governments over the past couple of decades, and will have nothing to do.

It is disturbing to find oneself worrying about the implications of the frustrations of the young people of one's own nation. That is what we must worry about now. The minimum any nation can guarantee to its young people is an opportunity to work. Having given that guarantee, rejecting as I do the socialist concept that the State owes you everything else, the guarantee of the right to work and an opportunity to work, the State would then have discharged a great deal of its obligations to people, apart from the disabled, the sick and people who are unable to provide for themselves.

In that context the duty falls on the Government to strengthen the Irish economy which has been flagging and stagnant for so many decades for good and sufficient reasons, because of our total economic bondage within the United Kingdom market. We have now broken out of that bondage by our entry into the European Economic Community which was opposed by part of the National Coalition. Now we have the time and the opportunity to say to ourselves that we must throw off the lethargy which was imposed upon us by our incapacity to expand beyond a certain point prior to our entry into the EEC and make an Ireland which will cater adequately for our young people. Nothing has been done. In fact, all the economic indicators are in reverse.

Let us look for a moment at our biggest industry, the agricultural industry, and look at the prime indicators. In 1973, the number of cows and heifers in the country was almost 2,400,000 or, to be accurate, 2,355,000. That has fallen 2,187,000. These cattle are the source of the national herd upon which the whole dairy and meat processing industry, as far as beef is concerned, depend. Up to 1973, and particularly since 1965 under the influence of the incentives offered by Deputy Paddy Smith when Minister for Agriculture in the 1960s, the herd had been rising very rapidly. The Irish cattle herd is our main source of wealth and the biggest contributor to employment. This should be remembered by the Labour Party and particularly by Deputy Barry Desmond and Senator Michael Mullen. Under the management of the Coalition Government this resource is being severely damaged, though it will not be totally destroyed.

The bacon industry is vital. Twenty years ago Holland had the same number of pigs as we had, about two million. They now have 12 million and we have 109,000. We had 130,000 in 1973. The figure for 1976 is a recovery figure; prior to that it was about 90,000. There is much talk about the Minister for Agriculture bringing the French Government before the Court of Justice in Strasbourg on the question of the French system of excluding imports of mutton and lamb. What has happened to the sheep flock during the period of the Coalition Government? The number of ewes in the national flock has fallen from about 1,900,000 to 1,600,000.

As I mentioned earlier, there is an urgent need to provide more wealth, more production, more jobs for the people coming after us. Our time is nearly finished. The most important sector of our population is the young people and the resources upon which they must depend must be developed regardless of anything else. The Government have been meticulous, as I have demonstrated, in allowing agriculture to run down.

The use of fertiliser is about half what it was in 1973, and this is a vital factor. The picture is really worse than it seems when it is expressed in tonnage. The vital plant nutrients—potash, calcium, phosphates—are not being used; as a kind of substitute nitrogen —based fertilizers are being used. The use of nitrogen in this unbalanced way means that existing resources of calcium, magnesium, phosphorous and potassium in the soil are being flogged and torn out of the soil by the use of nitrate fertilisers which are, essentially, stimulants. They have a stimulating effect on the soil because there can be no plant growth without a drawing off of the other minerals, and nitrogen, of course, is not a mineral.

Following the most recent meeting of Agriculture Ministers in Luxembourg for the annual price review, one of the newspapers announced a bonanza in the region of £150 million for the Irish industry. The prices paid for agricultural exports are being raised very steadily by the European Community. There is no particular act of heroism on the part of the Minister for Agriculture or the Coalition Government because they actually delayed the introduction of the green £ for about nine months and they have dragged their feet on each successive devaluation of the green £. In doing that, largely unknown to the majority of farmers, they taxed the farmers to the most appalling extent.

During the early months of this year the amount of taxation on one steer being exported to the Continent reached about £100 and the tax was paid by the seller. The existence of that tax was denied both inside and outside this House. It was very imperfectly understood by the Minister for Agriculture and by his colleagues. Whether understood or not, the tax was levied. Measures taken by members of this party in the European Parliament and this Parliament to highlight the imposition of monetary compensatory taxes on Irish exports— discriminatory as they are—got no support at all from the Coalition Government. On the contrary they were embarrassed by the exposure of this situation and forced into the position of lessening by the devaluation of the green £ these discriminatory taxes against our basic industry.

Nevertheless, the revolution which has taken place in agriculture and marketing since our accession to the European Community has been dramatic. The effects of it have been dampened down by the tardiness of the Government in seeking a proper solution to the question of monetary compensatory amounts. Behind a screen of what amounts to falsehood, the Government have been painting a picture of success in the agricultural field.

Debate adjourned.

Business suspended at 1.30 p.m. and resumed at 2.30 p.m.