We are resuming the debate on Financial Resolution No. 8 in accordance with the time motion already agreed, and a Member of the Labour Party will reply.
Financial Resolutions, 1979. - Financial Resolution No. 8: General (Resumed).
Debate resumed on the following motion:
That it is expedient to amend the law relating to customs and inland revenue (including excise) and to make further provision in connection with finance.
—(Minister for Economic Planning and Development.)
It is something of a surprise to look back at the budget. So many events have occurred since then that it appears to belong to another political era. A former British Prime Minister said that a week was a long time in politics. We have seen that a little over six weeks is a very long time in polities, maybe not in terms of time but in terms of the changes which have occurred in public opinion towards this Government.
This Government were riding high in public esteem. There has been an improvement in the economy, as there had been in the world economy, and we benefited from that world improvement. From all sides we hear of protests and public demonstrations. A lot has happened since this budget was introduced. It was produced by its authors as a budget which, above all, attempted to meet the claims of the PAYE sector. In my contribution on the night of the budget, I said I would base my judgement of the budget on what it did to improve industrial relations, which even then were in need of improvement and help. I said that the way the budget could assist the difficult industrial relations situation was to afford some genuine relief to the hard-pressed PAYE sector. I thought many of the reasons for industrial disputes were the result of the growing tax burden on that sector and felt that many of their grievances resulted in industrial disputes and stoppages of one kind or another.
If wage and salary earners are overtaxed they will seek to remedy the situation by lodging very large claims, and they will be forced to try to remedy the imbalance in their taxation position by seeking a remedy on the wages front with their employers. We have seen a major proportion of discontent in the public sector in the past few months. That is the sector in which the Government have most immediate responsibility.
A lot has happened since the budget was introduced a few short weeks ago. On Budget Day, I described it as a masterly presentation in PRO terms: we all make mistakes. Even quickly totting up the figures, it did not appear to offer a very genuine bargain to the PAYE sector. The allowances, taken in conjunction with the clawback on children's allowances and dividing it into the various family sizes, did not appear to give the average PAYE wage and salary earner a very significant bargain. I noted too that the trade unionists who had made pre-budget submissions to the Minister for Finance had put a figure of £100 million on the size of the contribution they thought he should make to the PAYE taxpayers. As was apparent even that night, he had made a contribution of £27.7 million and would be taking far more revenue from that sector this year while giving back very derisory amounts by way of increased allowances.
This Government are approaching the half-way mark in their parliamentary life with our current economy returning to double digit inflation. It is accepted by all authorities that that will be the outfall for the end of the year. Rising inflation throughout 1979, will be in excess of 11 or 12 per cent, although we must even now revise those figures in the light of the decisions reached by the OPEC Ministers yesterday. What the increase in the price of crude oil will add to domestic inflation must be taken into account. We cannot blame the Government for that, although I recall a Government which were blamed for increases in oil prices. In 1973, after the close of the Yom Kippur War, because of circumstances the Coalition were forced to absorb a four-fold increase in the price of crude oil. From listening to the then Opposition spokesmen one would think that the Arabian Gulf was represented by the National Coalition, so great was our blame for that situation.
Now this Government are the recipients of further bad news from the same part of the world. This will undoubtedly have an adverse effect on our rate of inflation this year. In my view we should anticipate an inflation rate in excess of 12 per cent as a result of yesterday's decision. The secretary-general of that organisation when asked what he believed would be the final price level reached as a result of yesterday's decision—it is noted that there was a two-tier arrangement in that decision —spoke about the market finding its own maximum price, very ominous words in terms of the prices we will be paying. I will return to that aspect later.
It is fair criticism to say that those who devised this budget were unheedful of the consequences on inflation of the decisions taken in the budget. It will be recalled that prior to the budget they had added their own twist to the inflationary spiral by abolishing the first phase of food subsidies. In the budget they added to that spiral of inflation; they did not do sufficient to lighten the burden of the PAYE sector and they sharpened the already bad industrial relations situation. As a result the Government, allowing for external causes the blame for which cannot be laid at their door, are the major authors of the rise in the consumer price index and in domestic inflation during the first quarter of 1979. In that sense they could be described as being unheedful of the impact of their budget on the home inflation situation.
The main constituents of the escalation in price levels in the first few months of 1979 have been food, mortgage rates, fuel and the increasing rate of indirect taxation arising out of the budget. People are becoming psychologically attuned once more, if not reconciled, to the prospect of rising prices throughout 1979. A future which is dominated by rising prices carries an inevitable consequence for the level of wage expectations over the same period. If the evidence is increasingly pointing to an annual inflation rate in excess of 12 per cent then the prospect of obtaining a pattern of moderate wage increases in 1979 recedes.
Government Ministers have made it clear that they based their hopes for the success of the targets they are working towards in employment and so on on the budgetary measures and on attaining moderate wage increases. The inflationary outlook will make that difficult to attain. Government actions have not been directed towards bringing about a climate in which one might confidently predict support for moderate wage settlements from trade unions during 1979. Wage earners have been offered very little inducement to settle for moderate pay claims.
The budget evaded the task of income redistribution. One would have thought that would have been a vital element to tackle in the budget as this problem needed to be tackled if a sane agreement was to rule in industrial relations.
However, it was not tackled in the budget and any speeches made on this side of the House on that theme were treated with scorn as though it was economic madness to suggest that that problem needed to be confronted. It is not possible to get a basis of agreement for moderate wage settlements if those to whom the lectures on moderation are addressed are not convinced that income redistribution and fairness in the taxation system are the goals of Government.
Wage and salary employees have been the wealthiest people escape virtually all forms of capital taxation. No serious attempt has been made to make our tax code more fair or just. We are ruled by an administration which fails to see the connection between redistribution and incomes moderation. From the first day of the life of this administration, wage and salary employees have heard extolled the good tidings of the manifesto. I would describe the good tidings of the manifesto as a philosophy of the pig trough which, since it avoids the question of fair distribution, cannot provide a basis in which necessary consent for agreement on moderation in incomes can be anticipated.
The inroads made by rising prices on the living standards of the low income groups are not fully reflected in the consumer price index. Such families—all the research that has been done on this subject bears this out—spend a higher proportion of their income on food items such as milk, butter, cheese and bread and on heating and public transport. As a result, the taxation and welfare concessions of the budget do not go anywhere near recompensing them. The removal of the first part of the subsidies for the four child single earner family has added an average of £2 a week to their food bill. They have not been recompensed to a like degree by the budget.
If the criterion by which the budget is to be judged—a criterion by which I suggested it should be judged on the night it was presented—is its contribution to improving industrial relations, it has failed. It failed to alleviate the position of PAYE wage and salary earners. I am not saying this at a point when that message has been driven home by marching feet throughout the country; I said it on the night of the budget and again two days later in a television broadcast on behalf of the Labour Party. I believed then as I do now that the budget failed to tackle the great taxation scandal which sees wage and salary earners contributing £9 out of every £10 income tax collected. The few employees who escaped the tax net in the budget will be drawn into it in the course of 1979 as rising inflation expands their incomes in a nominal fashion.
If social welfare recipients were to maintain their position comparable with last year vis-á-vis the rest of society, they would have required an increase of 24 per cent. In the event, they received between 12 and 16 per cent. In the same way as the budget short-changed the PAYE sector, the majority of our taxpayers, a similar fate befell the social welfare sector. However, a further bitter twist was given to the shabby treatment meted out to them. Probably in the history of the State, no administration has succeeded in dividing our society as this one has. Taking their taxation policies into account, their general views on how the economy should be operated, one can say that no administration has been so insensitive to the desirability of keeping the normal bonds of society in existence.
Therefore, it comes as no surprise that this administration came upon a new division which they decided should be ordained to operate in the social welfare category. They divided the unemployed into short-term and long-term recipients, a new class within a class, the short-term recipients to get an increase of only 12 per cent. One does not know whose brainchild this division is. It had the squalid purpose of saving money for the Exchequer which could be so generous under the banner of assisting the economy, which could be so meticulous in regard to the owners of capital, as to abolish their taxation with one stroke. The administration was meticulous when it came to saving money at the expense of the poorest.
How short-term can the employment position be for the man or woman in his or her forties declared redundant—what a euphemism for a person facing the sad experience of redundancy at the age of 40? Does that employment term not become life-long? This division into short- and long-term is more ironic, more inexplicable, unfair and unjust when one considers that 85 per cent of the money for all social welfare is paid by the employees themselves: there is no charity here. Most of the money is contributed by those who work and who live in the State. Those who have been declared redundant and who have been classed as short-term unemployed very often are the poorest in the community and suffer the worst living standards.
When the budget was presented with such a fanfare this year, there was not such applause from the back benches opposite, but there was a general look of satisfaction on the faces of the 84 over there. A lot has changed since then. The headlined benefits have been analysed, the allowances have been examined, PAYE people have seen that the budget officially described as assisting their plight has done very little. The capacity of the Government to deliver on undertakings solemnly given has begun to diminish seriously and we are faced with the strange situation that as the Government's capacity to deliver on specified targets declines, the rate of their promises increases in volume.
The most marvellous exponent of promises in any Government since the war promised total solution not in this century but in the next decade. I do not have to name him: the identity of the person whose style amounts to that of course is the Minister for Economic Planning and Development. As about other matters, there is a controversy about what has been achieved and what has not been achieved in regard to jobs. A person reading the manifesto would believe that last year we should have had a reduction of 20,000 in the unemployment register. "Not so," says the Minister for Economic Planning and Development. "Read more carefully". He would then make the point, as he has done so frequently, joined by other members of the Government, that when it comes to employment creation the Government, like ourselves, are lacking knowledge, up-to-date material. Their targets may have been achieved, but this Government have announced that one new job does not necessarily mean a decrease of one person in the unemployment register. I accept that but there has not been the same diligence this year in regard to the exact implications of the unemployment figures as there was before the election. Before the election the point was made by that Minister and others that an increase in employment of so many meant in layman's terms that the unemployment register would show a reduction of the same number.
Whichever way you look at it, the 20,000 was not achieved in 1978. We have a higher target for this year, in which all the omens now point to an inflation rate which will again reach double digits. I believed late last autumn that the inflation rate for this year would be at that level, although at that time it was not the view of the establishment economists. I do not claim any seer-like powers in the matter of forecasting how the inflation rate would go in any year, but I was banking on some of the things happening which indeed the Government were forced to do before the budget, when there were cuts of £57.7 million in public expenditure. Of course if you could separate in time from the budget as much bad news as possible, the news is not so bad on budget day—it looks all the more palatable.
At this point I do not want to enter into the controversy on the job creation question. The Government have set a target of 25,000 new jobs this year as against 20,000 in 1978. It does not give me great pleasure to say it, but on the basis of present policies and from what I can see on the inflation front, what we can see happening in economies around us and from the performance of manufacturing industry last year and the number of new jobs it was found possible to create there, I am faced with making the prediction that the 1979 job target will prove as unrealisable as that of 1978 and that the shortfall will be even more extreme at the end of 1979. It gives me no satisfaction to say this. Apart from the unemployment figures many more failures can be pointed to to assist the Opposition case. The employment policy of the Government will be seen to be the most severe casualty during 1979. The Government utilised the public service to a very great extent in creating jobs last year but it will not be possible to continue doing that because the present borrowing requirement must be cut down.
When the budget was introduced the Minister maintained that the kind of GNP growth we are expecting this year meant that we were on target in terms of the reduction in borrowing. Like many more of the targets and the policy objectives, there is a good deal of controversy surrounding the growth figures for 1979. There has been criticism of the Government from the Central Bank and the ESRI, who predicted growth figures at variance with those predicted by the Government. In political terms, growing numbers in industry are disillusioned with the effect of Government policy. It is more important now for the Labour Party to intensify our opposition to the lack of Government policies. This Dáil must be sensitive to the thoughts passing through people's heads, the real opposition that is growing throughout the country and we must respond to it.
Government representatives cast about in every direction, in every weekend cumann meeting, in special RTE interviews and so on to explain the malaise in industrial relations and to explain who is responsible. Apparently, nobody is responsible, least of all the Government. Not a week passes without the Taoiseach or a Minister giving a homily on the practice of good industrial relations to some unnamed listeners, presumably the trade unions. No Government have made as many speeches on the need for improved industrial relations. They deal with industrial relations problems from a distance, in radio and television interviews, in the newspapers or in the cosy confines of a cumann organisation meeting. From these vantage points they address themselves to the problems in industrial relations, yet there is the extraordinary paradox that the great difficulties that have arisen during the last year in industrial relations arose in the public sector.
Of course, there is an answer to that.
The most congenial answer for any member of this administration when in difficulty is to blame the previous administration. We are almost half way through the parliamentary life of this Government, yet the previous administration are still a fertile source of explanations for difficulties encountered. The Minister for Posts and Telegraphs, who has been dealing with the problem in that Department, will explain that the problem arose because of some shortfall during the term of the previous Government. The Minister for Finance recently explained that the difficulties in the public service have something to do with the ignominies of the National Coalition and have nothing to do with the present Government. The manifesto which brought this administration to office made the bold claim that there would be an improvement in industrial relations in the postal service. Recently, in one of those numerous interviews, the Minister for Posts and Telegraphs claimed, apparently oblivious of the situation surrounding him and the shambles throughout the postal and telecommunications system for which he has administrative responsibility, that there had been an improvement.
Sorry, Deputy, we cannot discuss specific disputes on the budget debate. We can deal with industrial relations but we cannot get into specific disputes.
This specific dispute has gone on for six weeks and is holding up the industrial and commercial life of the country. It is some specific dispute.
We will leave it at that.
Yes. Obviously the size of the majority has led some members of the administration astray, the people who were once proud to call themselves the party of reality. One wonders what their contact with reality is in the present day. They deal with industrial relations as if it was not their concern, as if the troubles were due to the failures of others. They address homilies to the nation on how it should be improved without any recognition of the fact that the major proportion of disputes and difficulties arose in the public sector for which they have administrative responsibility. They speak as if they have no responsibility for much of the muddle in industrial relations. The economic policy of the Government has a major influence on the state of industrial relations. The taxation policy, for example, has a major immediate impact.
At present the public service is experiencing a degree of militancy unknown for some considerable time. It amounts to a cynical evasion of responsibility for the Minister to suggest, as he did on a recent RTE programme, that responsibility for the problems being encountered in the public service could be laid at the door of the previous Government. That was considered to be a sufficient omnibus explanation for the problems in the public service. It would not do justice to the facts to ascribe that as a single comprehensive reason for the high level of conflict obvious between both sides in industry and throughout the public service at present.
In a period marked by significant change from a recession to a growth pattern in the economy, the Government's handling of the taxation issue, the taxes to be collected, who is to contribute, the proportions and so on, tended to intensify the sense of grievance held by PAYE workers in general and by low-paid groups in the public sector in particular. There are low-paid groups in the public sector. This grievance is a fertile ground for disputes and conflicts.
One can picture the grievance of many workers in the public sector who have seen other groups move ahead of laid-down norms while their own wages and salaries have been held back. No Government policy has been announced on that matter. It has been ignored. Homilies on moderation and the need to mend their ways addressed to the trade unions so frequently in weekend interviews with members of the Government come ill from an administration who, by their actions, have fed the sense of injustice felt by taxpayers. They have fed the sense of injustice felt because the tax load of the wealthiest was lightened while that of the PAYE sector was tightened, again a fertile ground for a sense of grievance.
This Government's largesse to the wealthiest in our society when they abolished the wealth tax, and virtually abolished the other capital taxes, was mindless largesse from a Government who should have seen that the national interest required above all agreement on the need to stabilise incomes this year. They said their policies depended on acceptance of and willing support from the trade unions for wage moderation. Yet they abolished the food subsidies before the budget, but as part of the general strategy of the budget, part of their general outlook for this year. They abolished the food subsidies despite the arguments advanced against that decision.
Arguments have been advanced in favour of that decision. The Minister for Economic Planning and Development explained that the wealthy were beneficiaries of the food subsidies as well as the poor, a very novel and interesting line of argument. Strangely enough, it was not used when the taxes on the wealthy were abolished. When they abolished food subsidies the Government ignored the immediate cut in living standards represented by that decision for the most submerged economic section of our population. It certainly did not assist families. As I said already, I calculate that for the three children family with a single wage earner, the effect of that decision is an increase in the family food bill of £2 per week.
The Government also ignored the history of the subsidies introduced by the Government of which I was a member as part of a bargain with the trade unions. On our part this was a deliberate action to turn down inflation in 1975. We received the support of the trade unions for that June decision. They voluntarily amended what was rightfully theirs in the closing stages of the national agreement. That was intelligent budgeting. The then Government knew the effect of one action on their part in return for a response from the trade unions.
This Government abolished the food subsidies and now they wonder why the trade unions point out quite legitimately that the previous Government introduced them in return for a particular action. This is another illustration of the fact that the various policies and actions of the Government do not mesh. It is an illustration of a very strange feature of this Government in comparison with previous Fianna Fáil Governments. In Opposition we had learned to admire a certain style and co-ordination in their every action.
This Government are composed of individual Ministers acting in an uncoordinated fashion. Whether this has anything to do with the vacuum in leadership at the heart of this Government is outside the scope of this debate. Undoubtedly it is a fair surmise that the leadership vacuum and the jockeying for position in the Cabinet have a lot to do with the kind of dissonance in policies we see emerging. They ignored the recent history of the food subsidies. Probably I have less reason to castigate them for ignoring another consequence of the abolition of the food subsidies, or the first phased reduction in the food subsidies. The compensation for social welfare recipients for the withdrawal of the food subsidies on the basis of the cost of living figure from February to February was not an adequate substitute because the effect of the removal of the food subsidies would not be reflected in the official figures until March.
Members of the Government would have been better employed in ensuring that the budget measured up to the grievances of the PAYE sector if the primary objective of policy this year was to encourage a climate for moderate wage settlements. They would have done more to improve industrial relations if they had used the budgetary instrument to that effect. That was the criterion I applied to the budget. On the night it was presented I felt that on that criterion it had failed. They cast about for all sorts of reasons to explain the industrial militancy: failings of the previous Government, human nature, British unions and the 101 reasons which have been cited for this extraordinary manifestation of militancy in the public sector which is their administrative responsibility. The Government would have been better employed in reviewing the effect of their own decisions as a contributory factor to the growing social estrangement observable throughout the society.
The vast majority of their 84-seat mandate was won by the appeal of this Government to our young people. Ours is a very young population. We have the highest proportion ever of young couples seeking homes of their own. Yet this Government presided over a period in which the cost of housing has become historically high. Undoubtedly the cost of financing housing constitutes a significant element in the pressure for higher incomes from a population with so many young people in it. There is a potent source of wage claims in the pressures on any young couple attempting to get a home of their own when one considers the amount required to finance mortgage loans and so on. We can consider the astronomical rise in the price of houses and ask ourselves why the budget did not allocate more for housing. The manifesto did not overlook that. I am sorry to have to come back to that embarrassing document.
Whom is it embarrassing? It is not embarrassing me.
Let the Minister be the judge of that. The manifesto commitment was that it would be made easier to buy a house and cheaper to keep it. Those are immortal words.
Whenever the next election may come it will be helpful and even topical for the Opposition parties to ensure that every household in Ireland is furnished with a copy of that manifesto. We could not think of more potent propaganda contrasting the promises of this administration with their performance. If the Minister can tell me with as much confidence whose advantage it will be to cite that manifesto if we are both alive in two years' time, I hope he will say it.
The Deputy can say it now and we would be delighted.
The Minister is a man who sticks literally to the first interpretation of his first statement, and he will agree that interpretations are necessary. His Delphic utterances need to be analysed and the usual sequel is that he has been misinterpreted or misunderstood. If we are here in two years' time, as I hope we both will be whatever our political fortunes may be, I hope the Minister will be able to say with as much confidence that the manifesto promises and undertakings can still be seen as of advantage to his party. That toll of thousands of young people has become probably the most flagrant example of broken political promises of the decade.
The country is bitter with this Government, and for good reason. A period in which the economy was growing in company with other economies around us was not utilised to bond together the entire community behind policies designed to expand employment. As we absorb the news about the meetings of OPEC Ministers and what they may mean for our inflation rate this year we realise that that precious growth time was squandered by this administration as they went along dividing the community further by their taxation policies, unheeding of criticisms that they should do this or that. If they are serious about employment targets and objectives, then it is necessary that their policies should mesh together and that the trade union movement looking at those policies could say, "Here is a Government. We may not agree with all they say, but they are serious about expanding employment and about getting the support of society generally behind them". They squandered precious time. We do not know what the outcome of the OPEC Ministers' decision will be in inflationary terms for the economy this year. I made the point earlier that it would push us to about the 12 per cent point. I have in mind especially what the Secretary-General of that organisation said in today's Financial Times, that maximum prices would depend on the development of the market. I have already noted that these were ominous words.
There are many other items which I would like to have considered, but before sitting down I will say that I hope the Minister for Industry, Commerce and Energy, who has responsibility in this area, will clarify the oil supply position as it faces this country with as little delay as possible. We have here at present a form of unofficial rationing at certain petrol outlets. The Minister should let us know the present supply situation and what it is likely to be in the near future. One or two schools to my certain knowledge are experiencing difficulties in supply, and that may be more widespread than I am aware of. If there is a shortage problem facing us the Minister should consider drawing up some guidelines regarding distribution. It is too early to say what effect these OPEC decisions will have on the retail price of oil for domestic purposes, hospitals, schools or industry in general, but the news is not good. It gives me no satisfaction to see this great trouble looming on the horizon. We have many more home-contributed problems in the last year and a half and certainly in this budget. We have seen precious time wasted. Now this administration, confronting their first bit of really bad news from abroad in the shape of increased oil prices, are entering a very testing time indeed.
Deputy P. Barry to conclude.
I am not sure what we are concluding because I am not sure if there is any budget before the House. There seem to be mixed views among the Deputies in the House as to whether this debate should be concluded. One group say that because the budget has been, is being or may be totally dismantled as bearing no relation to that which the Minister introduced on 7 February, the most honest thing to do is to get it off the Order Paper and get rid of it. Another group say that because the budget is still not completed and we still do not know exactly what it contains, it should be kept on the Order Paper until it has come to a final point.
I am inclined to agree with the people who say that we should get it off the Order Paper as it is a waste of time to discuss it. I do not believe that any other Government have so early and quickly pushed aside the budget which they introduced. Within six weeks this one apparently has been completely dismantled. I hope the Minister will tell me whether there are other changes in the budget besides the most specialised and those which give rise to the most controversy. I am thinking particularly of the about-face of the Minister regarding the farm levy. As late as yesterday he described the Government's attitude as being unequivocal in this regard. This is not strictly true. There is still doubt as to what he means by the farm levy being introduced on I May.
I want to raise a point and I ask the Minister to take note of what I am going to say and perhaps he will find a solution within the next 48 hours. The financial year comes to an end on 5 April and from 6 April changes notified in the budget as regards stamps and levels of taxes will apply. Because of the postal strike employers and employees do not know what levels of tax will be applied to them or what deductions should correctly be made by employers in regard to the new pay-related stamps scheme, nor in regard to tax free allowances or the level of taxes from Friday week onwards. I believe the Revenue Commissioners have telephoned a number of the larger firms, telling them that the necessary documentation was available if they wished to go round and collect it. I am told also that when these firms went to collect that documentation—again because of the postal dispute—it could not be given them. That is a matter of concern for every employer and employee in the next ten days because the first pay day of the new financial year will be Friday week. I would ask the Minister to make some arrangements within the next 24 hours—because firms will start on Monday morning and indeed some computers, including that of the Minister's Department, will probably be working over this coming weekend calculating the amount of wages to be paid. That cannot be done unless the employers know the amount of deduction to be made from each employee. I do not know whether it can be solved by placing advertisements in the paper, or whether there are some other means of solving it but the Minister should address his mind to it immediately.
I want to say something about some aspects of the budget which are to be welcomed. Oppositions are charged always with picking out the parts of a budget to which they object and for not paying tribute to the features which are good and are to be welcomed. That criticism may be somewhat unfair, but it has been levelled at me personally. Perhaps the reason for this is that the matters to which we object in a budget receive publicity whereas those we welcome publicly do not receive the same publicity. I should like to repeat somewhat my first reaction to the budget and to mention some features I welcome. The first of these is the easing of the means test for the War of Independence veterans. That is good and something that should have been done. There are fewer of these people remaining each year. Anything the Houses of the Oireachtas can do to render their last years somewhat easier and put a few more pounds in their pockets is a good thing.
Also to be welcomed are the VAT changes relating to record players and radios. I can envisage the tremendous problems the old system held for traders, particularly those near Border areas. That they will now be afforded a better opportunity of competing with goods on the other side of the border will be helpful. I understand that this is an expensive undertaking and I regret the Minister could not see his way to doing it in regard to televisions and some other goods.
The relief granted to one-parent families is generous and is to be welcomed. There are also what are called the pre-1968 widows; the movement towards full parity of pensions for these widows is a step in the right direction. I only wish the Minister could have seen his way to going the full distance instead of the five-sixths he has done. But that at least he appreciates the problem and is moving in that direction is to be welcomed.
I welcome particularly the extra money being allocated to the Arts Council. I understand the difficulties of any Government providing money for bodies such as this. There are very many calls even in the most affluent of times on any government in this respect. There are different priorities and a government must be determined to ensure that some money is directed towards things of a cultural nature. When Minister for Education I declared my intention, within the Department and the Government at that time, to steer as much money as possible towards bodies such as the RIA, the museums and three or four other comparable bodies under the control of the Department of Education. A nation is not really mature unless it appreciates the value of these for its citizens and demonstrates that appreciation in the amount of money it devotes to them. Some years ago there was a scheme introduced by a former Minister for Finance which allowed artists living here a tax free income earned from literature or from the pursuit of their art. It was a worthwhile scheme which brought renown to this country. It also attracted here many people recognised throughout the world as leaders in their own field in the arts. Of course, it brought others as well who are not recognised but who have come here purely to avail of the facility. However, one must accept that under any scheme one will have the rough with the smooth. I should like to see that scheme extended. I am not sure that it would be possible because, by definition, the people who receive relief under that scheme introduced some ten years ago by the Minister, Deputy Haughey, are those who have an income, or else they would not be liable to income tax. There is another group of people struggling in what is broadly termed the field of the arts who have no incomes. Therefore that scheme is of no benefit to them. Perhaps some scheme could be devised, through the Arts Council, the Department of Education or some other Department under which young and struggling artists—and every country needs them if only to prod our consciences from time to time, to make us stretch ourselves and broaden our minds; we all need the young struggling artist as much as the established, renowned one—could be given cash grants, be they painters, writers, choreographers, musicians, ballet dancers or whatever, those who have not got means sufficient to warrant their paying tax thereby rendering them eligible for the tax free allowance for artists. Naturally one thinks first of helping those who are Irish, living here, who want to study and work in this country. But possibly the scheme could be geared so that we might attract other young people, not in the taxable income bracket, who are struggling wanting to build a career for themselves in the arts and to establish in this country an atmosphere and environment which encourages and helps young artists. I put it no stronger than saying that it would be good for all of us here to have people of that type mixing among us, influencing our way of life, the values, standards and quality of life we all hope to build here, which is the only justification for having our freedom at all—that we can establish a different and more worthwhile quality of life here as opposed to the position when we were part of the British Empire.
In introducing the budget the Minister said, at column 636 of the Official Report of 7 February 1979:
It is my task to present today a budget which will promote stability, while also contributing to continued economic and social progress.
Does the Minister think now, some six or seven weeks later, that the budget he presented on that day promoted stability and contributed to economic and social progress? A lot of what is contained in the budget and indeed the stance of the Government towards the people since they came into office has been seriously divisive. It is ironic that we are now facing an oil crisis, because early in our term of office the Yom Kippur War occurred and at that stage we could see the effect the quadrupling of oil prices would have on inflation. We visualised a downturn in world economies. We knew the situation in our economy would be bad but we could also visualise the effect the oil crisis then would have on the economies of other EEC countries to which we were determined to export. We could see a danger of a rift between the various sections of the community if we did not act to minimise the effect on the economy of this ballooning inflation and the quadrupling of oil prices. We were anxious that the effects of those problems would not greatly hurt those least able to afford to grapple with them.
The situation now facing the Government is not dissimilar to that which we faced in 1973 and I will be interested to see what they do in this regard. The OPEC countries yesterday announced an increase in oil prices of 9 per cent and the chairman of that body has stated that the price of oil should be able to find its market level. That means that the price of oil will go up more than 9 per cent; it may rise by as much as 20 per cent. Some of this morning's newspapers referred to this as a "crisis situation". I will compare what the Government do to deal with this crisis situation with what we did in 1973 to deal with a 400 per cent increase in the price of oil. The Minister is fond of referring to 1974 and 1975 and to the fact that there was a 20 per cent rate of inflation then, the implication being that it was the fault of the Government; but he does not refer to the 400 per cent increase in the price of oil then. Will we be told later this year that the hope of a rate of inflation of 5 per cent, as expressed in the budget, cannot be achieved because of the increase in the price of oil or will we be told that it cannot be achieved because of the Government's ineptitude in handling the situation?
There is no doubt that the Government have borrowed themselves into a corner and their freedom of movement in the face of the external winds that will affect us is limited. I do not understand how the Government can expect to get the co-operation of those on PAYE in preparing an incomes policy in view of the statements made about an end of the year inflation of about 5 per cent. A statement to that effect is contained in five different parts of the Minister's budget statement and has been repeated by the Taoiseach, the Minister for Economic Planning and Development and other Ministers since. The repetition of this, mostly in the context of the necessity for a moderate wage increase. is an effort by the Government to persuade the unions that inflation will be down to 5 per cent this year.
After some probing last week the Minister for Economic planning and Development told us that this 5 per cent end of the year inflation was got by annualising the figure of 1.25 per cent, the increase in prices between mid-August and mid-November next. He told us that was a guess but later informed us that he was not a prophet and could not tell us what the annual rate would be. Those negotiating with the Government on a wage agreement and those, like us, who say that the increases in social welfare benefits and income tax allowances in the budget were inadequate find it difficult to understand how the Government can arrive at an annual rate of inflation of 5 per cent. According to the consumer price index for the quarter ending mid-February food inflation is now running at 28.8 per cent and the current annualised rate of inflation would be four times 4.2, or almost 17 per cent.
A fortnight ago the Minister was defending the abolition of food subsidies here and by implication appeared to be saying that inflation was moving towards single figures. That was within 48 hours of the figures I have just quoted being produced. I do not know whether the Minister had those figures that night or whether he can get them officially before the rest of the country, but I am certain that if he can talk about an end of the year rate of inflation of 5 per cent in December he can make a better shot at the actual rate of inflation 48 hours before the official figures are released rather than telling us that we are moving towards a single figure rate of inflation.
It is like the scheme moving towards the abolition of ground rents.
Exactly. It has absolutely no relevance to reality.
People are being sent to prison for not paying ground rents although they have been abolished. It is very odd.
On the same basis, food inflation is running at 28.8 per cent. What did the Minister say in the debate on 13 March, volume 312, column 1315 of the Official Report? He said:
It is obvious that the social welfare payment increases of the kind announced in this year's budget will more than compensate the recipients for the effects of the reduction in the food subsidies. In addition to the increases in social welfare payments, I also announced in the budget changes in the personal income tax allowances. These changes, combined with the social welfare children's allowances, will be sufficient to more than compensate all families, whether large or small, for the increases in food prices resulting from the partial removal of the subsidies.
Two days after that those figures were produced.
We all know that a far greater proportion of the income of social welfare recipients and of those on low incomes goes on food than that of those who are well off. We know that food subsidies were abolished the first weekend of this year when the Government hoped that, as it was a bank holiday weekend, the matter would not be reported or read as fully as it would be any other time. When the Dáil resumed at the end of January both Opposition parties immediately started to look for a debate on the abolition of food subsidies. We were put off by the Taoiseach, but eventually the debate was allowed 48 hours before those figures were out and when the Opposition could not have them. Was it only coincidence that the debate on the abolition of food subsidies was arranged before those damning figures from the Government's point of view were produced? Was the timing of the debate deliberately arranged so that the Opposition would not have those figures? I do not know if the Government or the Minister for Finance had those figures before that debate took place. I know they had them before they were available to the public generally.
This is the kind of cleverness which typifies everything the Government have done since they assumed office. They say one thing and then say afterwards they were misreported or that people did not understand what they said. We have been told by them that they did not say they would reduce unemployment by 25,000. They said they would put 25,000 in jobs, even though it is clear in the document referred to by Deputy O'Leary that they said they would reduce unemployment by 25,000. Anybody who is not a lawyer and who does not engage in parsing and analysing sentences for the sake of proving a legal point, the people who understand and speak normal English, know that reducing unemployment by 25,000 means bringing down the only measurement we have in this country, whether it is inadequate or not,—the live register—by that figure.
Is the Deputy seriously suggesting that is what those people believe?
Yes, I do.
Those are the people who stood over the figure of 160,000 the time the EEC reported 100,000.
The only measurement, however inaccurate it is, of unemployment in this country is the live register.
Apparently it does not matter if school-leavers get jobs.
The Minister is making the point I am trying to make, that this is the kind of clever legal talk which we get from the Government. The only measure we have for assessing unemployment is the live register. Most people understood by the phrase used by the Government that the live register would be reduced by 25,000, but that has not happened. The same can be said about end of year inflation of 5 per cent. It is quite clear when we read the budget statement that end of year inflation of 5 per cent is what is meant, but most people take that to mean 5 per cent inflation for 1979. The Minister came along later and said that that was not what he said, that he said that it would be end of year inflation of 5 per cent. The Government are only making a guess at what inflation will be between mid-August and mid-November next. This is the kind of clever wording of phrases we get from the Government trying to cloak what is intended, but the people see through them. It is because they see through them that 250,000 people marched last Tuesday week looking for increased tax allowances.
The same thing happened with regard to the levy on farmers and a meeting between the Government and the farmers on 27 February last. The 2 per cent levy was introduced in the budget. I said then that this was anti-national and anti-farmer. I said it was anti-national because it took the feet from under the Minister for Agriculture in Brussels who was trying to stop the EEC Commission and his fellow Ministers on the Council from imposing a levy on produce all over Europe. How could he put his hand on his heart and say "No levy" when he was part of a Government who introduced a levy on their own farmers? I said it was anti-farmer because it took no account of the ability of farmers to pay it. No matter how small they were they would be liable for the 2 per cent levy.
That was the position until the annual gathering of the Minister's party. At that stage the Minister announced some readjustment of the levy to exclude people west of the Shannon, pig breeders and some others. Within 48 hours the Taoiseach, the Minister for Finance and the Minister for Agriculture met representatives of the farming bodies. The following morning there were headlines in the papers stating "Farmers write their own tax", "Levy gone". The Government were warned that this would provoke a backlash from the PAYE taxpayers. The Minister came back and said that the Government would decide what tax would be paid. The day before that he attended a press conference at which the Minister for Agriculture said, on 28 March, according to The Irish Press, that he was pleased that the farming organisations expressed their willingness to work out an income tax system which would be equitable.
The Cork Examiner stated:
The Minister for Finance, Mr. Colley, said after the meeting that the proposals had evolved from ones put forward by the farming organisations to the Taoiseach, the Minister for Agriculture and himself. Mr. Gibbons who was present with Mr. Colley at the meeting with journalists said he was pleased the farming organisations had expressed a willingness to work out an income tax system that would be equitable.
The Irish Times and the Irish Independent said the same thing. The Minister for Finance last weekend referred to the document as the most badly reported and misinterpreted document ever circulated in the country, but on reading it it is obvious it was carefully worded. It is quite obvious what was agreed. The Minister for Finance was present at the press conference and he heard the Minister for Agriculture make that statement but he made no effort to correct him. The Minister for Agriculture was one of the people who drafted the document but now the Minister for Finance is blaming unfortunate people for misreporting it. He made no effort to correct the Minister for Agriculture but allowed the impression to get out to the farmers that they were a special category and could devise their own tax system, although it is obvious from reading the document that was produced and circulated that that was not so. The Minister for Finance allowed the papers the following morning to print something he thought would help to clam the anger of the farming community because of the levy.
That impression was allowed to persist until there was the inevitable backlash from the PAYE sector and a week later the marches started. Then, of course, it was pointed out that the Government would devise a tax system, that the farmers would only be consulted with the Revenue Commissioners, that the Government would have the last say and introduce a tax system. However, the damage was done and they could not catch up with the original story, that one section was going to write its own tax bill. This is the kind of divisive policy that has set one section against another and the Government are directly responsible for it.
I should like to make a query regarding capital allowances. Has the Minister received representations from industry and from the IDA regarding this matter? Is it true that this is not going to be part of the budget? With regard to the proposal to tax people who have a preferential rate of interest from their firms, will the Minister state if that will be taken out of the budget also? I do not know if the Minister's silence means it is or is not going to be taken out of the budget——
Is the Deputy looking for an answer now? I will give him an answer now if he wants it.
If the Minister deals with it later I will be happy.
I will deal with it now if the Deputy wishes.
If the Minister deals with it in his reply that is fine.
I will deal with it when it suits me. I have told the Deputy that if he wants me to deal with it now I will do so.
It is customary to put points to Ministers who deal with them in their replies. I have raised two points.
The Deputy appeared to be inviting me to reply now. That is why I said anything. The Deputy referred to my silence.
I have raised the two matters and I formally asked the Minister to refer to them in his reply. Perhaps he will tell me if the items are still part of the budget or if they have been dropped.
Last night the Minister spoke about the farmers' levy. He said that people did not understand what had been agreed and that unless it was agreed publicly by the farming community to assist with taxation the levy as announced in the budget would go ahead from 1 May. Does that mean that the subsequent reliefs offered are no longer on offer? Last night the Minister used the words, "the 2 per cent levy as announced in the budget". Was it a case of bad drafting or does the Minister mean that the reliefs announced at the Fianna Fáil Ard-Fheis are no longer available and that the 2 per cent levy across the board will go ahead on 1 May? Perhaps it was just careless wording last night; perhaps the Minister means that the levy, as proposed to be amended, will go ahead. I should like clarification on that point.
I have said on several occasions in the past 12 months that unless we export we cannot support the numbers coming out of our schools, we cannot give a decent standard of living to those at work or support old age pensioners. We must export to live. If we are going to export, the quality of our goods must be at least as high as those on offer from other countries and our prices must be at least as low as those of other countries. If we are not competitive we will not sell. Nobody owes us a living. A Government can make a contribution in this area in three ways. First, they can make available to industrialists the highest expertise they can train or hire to encourage and help them to produce high quality goods. Second, the contribution they make through the achievement of a wage agreement will ensure that our unit wage costs are lower than those of our competitors. It will be accepted by both sides of industry that they have this right, and that they have this contribution to make. The third is that they can help industrialists to open new markets.
I will take the last point first. I do not think anybody disputes what I have said. Nobody will dispute the dedication and patriotism displayed by the employees of Coras Tráchtála Teoranta, since its establishment, in helping Irish industrialists to get new markets. Their contribution in this area has been enormous. Why are the Government not giving them this year an amount of money equivalent to that received last year? The amount set aside for CTT in 1979 is not 10 per cent more than the amount set aside for them in 1978. No doubt the Minister's answer will be that it is almost in line with inflation, as we understood it, in November or December, but CTT are not concerned with industrial inflation; they are concerned with costs in other countries. They have to sell in Germany, France, the United Kingdom and America. That is where their costs are incurred.
If we are going to tie the amount for CTT to an inflation increase, which I think is the wrong approach, it is the inflation in those countries that should be taken into account, not ours. To expect them to meet extremely though competition in world markets this year on the same amount of real money as they had last year, in Irish terms, is nonsense. I beg the Minister to reconsider this matter because it is a serious mistake on the Government's part.
We had the first indication of an increase in oil prices last December when the supplies from Iran were cut off. It could be seen that the world economy would be sliding into a recession at the end of this year. If that is so, it is the wrong attitude to expect CTT to pull in their horns and not to be as active as they were in the last few years. We should give them much more money and tell them to be more active and aggressive and to go into the field and sell more goods because there will be greater competion this year. Our goods will not sell themselves. I have not spoken to anybody in CTT but I can imagine their attitude in the last few months since these figures were published must be one of deep worry. As I said, I beg the Minister to reconsider this retrograde step of not giving them a great deal more money than they have already and encouraging them to sell more goods abroad.
Yesterday in reply to questions put down by members of the Labour Party about the contribution the private sector made to the creation of jobs in the last year, the Minister in an aggressive tone said that last year was not the private sector's year; it was the Government's year for priming the pump of the economy which would be passed to the private sector this year. He said that if they did not perform this year he would have something to do and say about them at the end of the year. Does he really expect private industry to react to that kind of semi-threat? Does he not know the type of men who run businesses? We have a relatively small private sector. Does he not know that the first thing they want is stability, not, even though they take them, grants and tax concessions? They are all very welcome but the primary thing is the environment and their assessment of what the future holds. Would the Chair say that this Government have contributed to a feeling of security among the business community in regard to what this year holds? How long were they without telephones last year? When we had post, how many Deputies got letters from the Department of Post and Telegraphs regretting that cables were not available to install telephones?
We have not had any post for five weeks. I do not want to go into that subject now because this is a sensitive area. I was glad to see from one of this morning's papers that something may happen over the weekend. I hope so. This Government cannot afford to adopt the intransigent, tough attitude they have already adopted. Many people have sympathy for men earning only £53 per week. They do not feel that is a reasonable wage. I can understand the Government not wanting to break established procedures but the postal dispute is having a disastrous effect on the confidence of the business community, on the efforts of the IDA field men who are trying to encourage firms to establish new industries here, and on the plans for expansion of existing industries. These are the points that matter to businessmen. Of course the tax levels and the freedom in which they are allowed to conduct their affairs are important, but far more important is their assessment of what the Government are doing to the general environment in which people live and work.
It was reported in the foreign Press that one-third of our taxpayers took to the streets because they felt they were being unfairly treated—and we have not yet found out exactly what they mean by that. The Minister referred to the improvements he had made in the tax system and how much better off people were now on the books, than they were before he came to office. If that is so, why were the people on the streets? The Minister sought to deflect attention from the genuine grievances of PAYE taxpayers and to reduce the numbers of the march by accusing the organisers of being in the hands of the Fine Gael and Labour Parties.
We fixed it all up about three weeks ago.
At column 1316 of the Official Report of 13 March it is stated:
... where were all these people who are now calling for strikes about the tax situation two years ago when the Coalition introduced in the budget proposals to tax farmers which would produce a yield of £35 million and within a short time changed them to reduce that yield by £20 million to £15 million, and got nothing in return? Where were these people who are calling for strikes then? ...Was it that their friends were in office? Was that the trouble?
Where does the Deputy think they were?
There is an obvious answer to that.
Tell us what it is.
I would be lowering the standard of debate in the House if I did that. Does the Minister remember the well-heeled, articulate women? I suppose the Fine Gael and Labour Parties were responsible for them.
Let us stick to one issue at a time.
The marchers last week, Fine Gael were responsible for them?
Did I say that?
The Minister will add 50,000 to the number the next time if he continues to talk like that.
"Was it that their friends were in office? Was that the trouble?" Who was the Minister referring to if it was not to Fine Gael and Labour people?
Has the Deputy no idea of what I was talking about?
I have an idea that the Minister was trying to keep some supporters of the Fianna Fáil Party off the march by pretending that it was a Fine Gael-Labour organised march and they would be letting down the party if they joined it. However, supporters of the Fianna Fáil Pary thumbed their noses at the Minister, joined the march and said that they had enough.
Where is the sense of grievance coming from and how will it affect the wage talks at present being engaged in by the Congress of Trade Unions, the employers and the Government? The kernel is; what effect has the stance of the Government since this budget was introduced had on that wage agreement and what effect will a wage agreement that interferes with the competitiveness of Irish goods on world markets have on employment? How much can be traced back to the stance adopted by the Government and the impression they allowed to be created that one section of the community could write its own tax bill? The Minister deliberately allowed that impression to be created because he thought it would be of benefit to the Government at the time. It was only when he saw that PAYE workers were incensed and outraged by this that he clarified the position and highlighted the fact that the Government would draw up the tax bill. At that stage it had gone too far and PAYE people are now saying, maybe unreasonably, if A can get it, B can get it. The Government and the Minister have nobody to blame but themselves for the present position. I implore them to get down off their lecturing platforms and stop telling the people what they should do. They should listen to what the people are saying and should not divide the country between urban and rural as appears to be what they set out and succeeded in doing.
When there was an oil crisis at the end of 1973 we foresaw a possibility of divisions of this nature arising. We moved to correct them in many ways. We introduced capital taxes. They were not introduced for the amount of revenue they would bring in because they would have brought in less than 1 per cent of the total revenue collected. I would refer the Minister to an article in yesterday's Financial Times dealing with capital taxes. They are not used in any country in Europe as revenue collectors. They are used for social reasons to ensure fairness to all taxpayers. That is where this Government and this budget have failed.
We will all pay the price for this Government's lack of sensitivity to the legitimate demands and aspirations of all the people. Rightly or wrongly, intentionally or unintentionally, Fianna Fáil have given the impression over the last two years that they are in office thanks to, and to cater for, one part of the people, Unless they mend their ways there will be deeper rifts in society and a more divided community and we will all pay the price for that.
The Government have not done anything to unite the people to the tough times ahead. The have done nothing to get people to recognise that every section of the community must contribute if the country as a whole is to advance. The budget which they introduced did not help in that regard. The Government's action since then has made the situation a great deal worse. I would ask the Minister before it is too late to look after three sections of the community fairly and without threats, the old, the farmers and the PAYE section.
It is obvious that the social welfare reliefs given in the budget will not compensate for increase in the cost of living. It is obvious that the blunt form of taxation imposed on farmers, the levy, whether it is back to the 2 per cent or is a modified version, was unfair. It is obvious that taxpayers, no matter what juggling of figures produces are contributing £9 out of £10 to the running of the country and they want that fairly distributed. The Minister has a chance in the Finance Bill to make amends for this divisive budget and I hope he takes it.
Since we debated last night and will be debating again tonight the motion and amendment in regard to taxation i do not propose to spend very long on that area. However, there are one or two things which are directly in response to what Deputy Barry said. He said that the capital taxes imposed by the Coalition were introduced to create an element of fairness. He was, of course, talking about the wealth tax. He could not have been talking about the capital gains tax which was demonstrably unfair in the way it worked, and we have had to make it equitable. He can hardly have been talking about capital acquisitions tax which, from the point of view of fairness—he was talking in terms of people who were less well off and their views of those who are well-off—is a tax which enables people to distribute slices of their fortunes valued at up to £250,000 to their spouses and their children and pay no capital acquisition tax. That could hardly be held up as an example of introducing fairness into our economy.
Therefore, he was obviously talking about wealth tax. I dealt with that last night and I will not waste time on it again. However, I should like to tell Deputy Barry and anybody else who is interested that in our economic circumstances as they were when he was in Government, and to a lesser but still important extent today, one of the greatest injustices is unemployment. The first effort of any Government who are trying to remedy injustice must be to tackle unemployment. The wealth tax did a great deal of damage to the efforts to tackle unemployment. Its abolition, combined with a number of other things done by the Government, has created the climate in which we have been able to make the greatest growth ever in the history of this State in tackling unemployment. They are the facts.
The debate on the Financial Resolutions commenced on 7 February. Development of events outside the House since have introduced either new factors or have lent different emphasis to matters which could be regarded as the fundamentals on which the debate was based. I refer particularly to the discussions which have taken place and are taking place with farming representatives originating from the proposals in respect of the agricultural levy, and to the emphasis which has been placed on income tax, particularly PAYE, in the talks with the ICTU and the employers.
However, in view of the separate debate on taxation which is going on, and to which I contributed last night, I propose to confine my remarks on the budget primarily to specific points made by Deputies in the course of the debate. When I refer to specific points, I will not be able—a Minister never is in a debate of this length—to deal with every point raised. I hope to be able to deal with those of the greatest importance.
Opposition Deputies have been particularly critical of the economic strategy underlying my budget. Deputy Barry went so far as to describe it as being against the national interest. Deputy FitzGerald said the Government have created a budget that does not bear any relation to our economic needs, that it is a budget for emigration, nothing less. If one were to listen to those and to some other speakers during the debate one would imagine we are living in an economy in dire difficulty instead of one which is achieving the fastest rate of growth in the EEC. Of course there is not anything new in these attitudes.
Much the same sort of criticism was offered last year and I should like to recall some of them because the record shows they were completely groundless. Last year Deputy FitzGerald during the budget debate attempted to assess the extent to which the budget measured up to the requirements of the economy. As reported at column 477 of the Official Report for 2 February 1978, he concluded, predictably, that it was a budget doomed to disaster. In the same debate Deputy Barry stated:
This budget is supposed to generate employment and expand activity. Where are the jobs? Where is the expansion? The budget contains absolutely nothing for the job seekers.
Deputy O'Leary, at column 433 on 1 February last year, is reported:
Nothing that we have heard today provides any firm basis for the belief that job expansion on the scale required will occur in 1978.
That is what they said in the budget debate last year, but the record of the achievements of the budget last year speaks for itself.
Government action raised the growth rate in 1978 to a near record level. The net increase in employment was the highest in the history of the State, and while registering that progress we cut the rate of inflation substantially. The relevance of all this to the present debate is direct: just as the Opposition were proved wrong in their assessment of last year's budget, I am quite certain they will be wrong again this year.
The Opposition's criticism of the budget seemed to reflect quite a divided mind on the economic problems we faced and on the way we should tackle them. I do not think any of the parties in the House would disagree that unemployment is a major problem. As I have indicated, as far as the Government are concerned it is the major problem. It therefore follows that the fastest possible growth must be aimed at because that is the way to make the quickest and the greatest inroads on unemployment. Deputy FitzGerald acknowledged that when he said it is only if we can keep our growth rate greater than 5 per cent that we can hope for more jobs.
This Government have been tackling our growth and unemployment problems in a systematic and energetic manner. We are not dogmatic planners but we believe in the value of a programmed approach. So, too, I imagine do quite a number of Deputies on the other side. Nevertheless, Deputy FitzGerald asserted that the Government's hands are tied by their pre-election manifesto, that they have lost freedom of action in managing the economy in the way it needs to be managed. I was surprised to hear the Deputy describe the setting down of what everybody would regard as desirable economic targets as tying our hands, or adherence to a desirable course of action as the loss of freedom of action.
What is economic planning, what is it for if it does not involve commitment to aims and methods? Does anybody believe that economic planning can go ahead hand in hand with short-term opportunism? That was the difficulty with the previous Government—that was the way they governed. It is not the way we govern or propose to govern. We are all aware there are here deep-seated economic and social problems which can only be eradicated by long vigorous and patient effort, and that is the justification for the planning exercise the Government are engaged in.
We know our goals and we will not be deflected from them by illusory attractions, the kind of short-term freedom of action to which the Leader of the main Opposition party seems to attach such weight. This brings me to our objectives for this year.
The background to them, both economic facts and the policy we intend to pursue, has been set out in our planning document. I made our position crystal clear in my budget speech. I described them as targets, not forecasts of what will happen which would be let to run their course without any real effort on anybody's part. I acknowledge that, if the effort is not strong enough, the targets will not be reached. Whenever anyone sets an ambitious target there are always those, including many experts, both selfstyled and genuine, who say they cannot be achieved. But history is full of examples of doubters being confounded. I have no doubt that the targets we have set can be realised. I am not saying it will be easy—far from it. We will need to develop a much greater sense of communal purpose and discipline if we are to achieve them. I believe in the abilities of our people. If we can convey the aims and how they can be achieved, they are capable of demonstrating the qualities necessary to enable us to achieve these objectives.
Deputy FitzGerald and others made much of the differences between the Government's targets and the economic forecasts produced by various outside agencies. Opposition Deputies have gone very far in their language on this issue. Deputy Barry described the budget as being based on false figures. Deputy O'Leary described the Government as facing both ways in their budgetary calculations and Deputy FitzGerald said that in his period in Government they accepted that basically the country must be told the truth and that my budget marked the first time in his recollection that there was a departure from that. The Deputy alleged that the figures were falsified to the point of absurdity and self-contradition, These are very serious charges. I have no hesitation in rejecting them categorically. I am quite amazed by Deputy FitzGerald's charge that the figures in this budget were falsified. I was careful in my budget speech to make specific reference to the basis for all the figures. I indicated clearly that the macroeconomic figures are targets, that their achievement depends on a coherent communal effort and that if the effort is not strong enough the targets will not be reached.
Deputy FitzGerald's departure from the standards reasonably expected from the newest backbencher in this House is one thing, but what is more important is the effect his statements could have on confidence and economic activity. If some representative people continue to throw cold water on the Government's targets and say they cannot be achieved it may become more difficult to generate the national responses which are undobtedly needed to achieve these targets. A coherent national effort is required to meet the ambitious but realisable targets set by the Government. It is hoped that the Opposition's unfounded assertions will not lead to any reduction of general confidence in the prospects for economic growth or to a reduced effort on anyone's part. It is also hoped that responsible people abroad, making decisions affecting the well-being of our people, will ignore Deputy FitzGerald's reckless and unfounded allegations.
I presented a budget which assumed that the Government's main economic targets would be met and which did all it could to ensure this. This is the only sensible course of action. Does anybody really think that a Government should set economic targets generally welcomed by the social partners and then proceed to introduce a budget based on the premise that the targets will not be met, particularly after they had succeeded in meeting ambitious targets in the previous year? If a Government frame economic targets that they believe are achieveable with effort, they have no option but to prepare their budget on the basis of the targets. The relative size of the State sector in the nation's economic life is now so great that any other basis would ensure that the targets were not met. Fast economic growth demands, for example, the provision of more infrastructure, a greater allocation to the IDA and other industrial development agencies, more money for housing and so on. We have provided this. The public capital programme this year shows an increase of 22 per cent on last year. Equally important, the net budgetary position, taking the revenue and expenditure sides into account, must be designed to give the appropriate degree of stimulus to the economy. That is what my budget is designed to do.
Deputy FitzGerald referred to forecasts for this year produced by the OECD, the ESRI and the Central Bank. The Deputy said that the Government are not convincing when they say that this year they will be right with the figures, that they are different from those offered by these three bodies. I do not see much point in getting involved in a debate on whether the forecasting track records of these bodies is better than the Government's, but let us look at the situation for last year. The latest estimates of growth in the economy for last year are: Central Bank, 5¾ per cent; ESRI, 6¼ per cent; OECD, 6½ per cent. Our forecast, produced later and based on more up to date information, including the upturn in consumer spending and industrial exports in the fourth quarter, is for a growth rate of about 7 per cent. The other estimates underline the important central fact that the economy grew well above its trend rate in 1978 and that the Government's strategy of moving it on to a higher growth path succeeded. The public are not interested in sterile arguments over quarters, halves or percentage points. Some Deputies were very emphatic in denying that investment last year rose by 15 per cent as we claimed. Indeed, Deputy FitzGerald said that investment is falling, not increasing. If the Deputy is not aware of it, he might be interested to know that no commentator agrees with him on that.
I do not recall saying that.
I will give the Deputy the quotation if he questions it. Does the Deputy question having said that?
That investment was falling?
That investment was falling, not increasing. Before I conclude I will give the Deputy the reference.
I referred to the forecast of 12 per cent increase of other moneys.
The reference can be checked. It is at column 767 of the Official Report for 8 February 1979. Deputy FitzGerald said in that column in regard to investment that the 15 per cent figure was nonsensical. The two most important indicators for investment are cement sales and imports of producers' capital goods. On both, we have data that even Deputy FitzGerald will hardly question. The volume of cement sales in 1978 rose by 15½ per cent, the value of capital goods imports rose by 30 per cent and the volume by about 20 per cent. In the light of these figures it is probable that our estimate of a 15 per cent volume increase in investment is, if anything, too conservative. The upsurge in business confidence, due to our enlightened and imaginative policies, resulted in a large increase in investment and capacity in 1978. This has very important implications for the current year, because it means that we have the extra capacity to enable us to achieve our growth and employment targets.
Could the Minister quote where I said investment was falling in column 767 please?
I said I would give the Deputy the reference in that. It is around there. It is being checked and I will give it to the Deputy before I finish. May I take it that the Deputy is denying it?
I never suggested that it was falling.
The Deputy is denying it. Before I conclude the Deputy will get the reference to it.
In 1979, there are a number of reasons why the Government's forecasts should be superior to those of outside bodies. First, they were prepared later and, therefore, there was more up-to-date information available on the current and prospective situations. Second, they were prepared in the full knowledge of the Government's budgetary intentions. That is an important factor which is frequently overlooked. Our economic forecasters do not live in isolation. They make a much greater effort than most to be in touch with the climate of opinion in business and in the economy generally. Their forecasts are coloured inevitably to some extent by the prevailing mood.
The expectation in many quarters that there would be a harsh budget no doubt is part of the reason why outside forecasters were less sanguine about the prospects for 1979 than I am. Those expectations were well off the mark. As I say, our forecasts for 1979 were prepared in full knowledge of what the budget actually contained and, to that extent, they are more reliable.
The Government's targets for the economy in 1979 are realistic and achievable. We have the labour reserves required to achieve fast growth, and we are doing all we can through the largest training effort ever to fully realise that potential. We also have the manufacturing capacity. I have already referred to the substantial increase in capacity stemming from investment in 1978. This is borne out to a great extent by the January monthly industrial survey produced jointly by the CII and ESRI. I picked the January one because it was before the budget and indicated what the situation was then.
They found that capacity utilisation in manufacturing industry was 66 per cent. That is far from being excessive. They also found that business intended and expected to be able to mobilise this capacity. The survey points out that in the months ahead the general level of activity was expected to improve and that production, exports, home sales and employment were all forecast to increase. As I said, this was before the budget.
The budget has strengthened the climate of business confidence since then. That is borne out by a survey carried out by "Business and Finance". A key finding in that survey was:
...in terms of the perceived effect of the Budget on the national economic scene, the results indicate that there is considerable optimism by leading businessmen about prospects for industrial output, the investment climate and exports. Certainly the optimists largely outweighed the pessimists on all these key economic factors.
The survey went on to show:
...probably most encouraging of all ... 75 per cent of these influential businessmen believed that the level of employment would be stimulated by the budget. To sum up we have the labour, the industrial capacity and the spirit of business confidence required to attain the Government's growth and employment objectives this year.
As well as attacking the Government's economic targets, Deputy FitzGerald went on to refer to the budget estimate of income tax receipts. He is reported at column 778 of the Official Report of 8 February 1979 as follows:
There is no doubt whatever that this figure has been grossly inflated and once again it has been inflated by an amount beyond the tolerable margin of optimism or pessimism which a government may show in putting figures into the budget statement. There is a certain margin within which there can be legitimate disagreement and legitimate argument, but that figure goes beyond what is legitimate.
It is not an honest figure for revenue buoyancy.
Deputy FitzGerald is reported in The Irish Times to have said that at a press briefing the following day, that is 9 February 1979, civil servants could have agreed to the revenue buoyancy figures because of a permissible margin of optimism. In other words, what was, to quote Deputy FitzGerald, beyond the tolerable margin of optimism or pessimism one day, by the following day apparently had become a permissible margin of optimism. I wonder would Deputy FitzGerald care to explain that? I have already asked him publicly on a number of occasions to do it and he has not done it. I would gladly yield to him for a moment if he would explain to us how within a space of one day what had been beyond a tolerable margin of optimism or pessimism became a permissible margin. Would deputy FitgGerald care to explain that?
I should be more than happy to do so if the Minister wishes.
Thank you. Briefly, of course because the Deputy will be taking my time.
Naturally. The issue at stake here is the incompatibility of the buoyancy statements in the part of the budget dealing with buoyancy with the statement about income.
Income Tax.
Income. In his speech the Minister said that an increase in unit wage costs in Ireland could be kept within such a figure—having cited the figure in EEC countries as 6 per cent —only if further increases this year were small. He added that the increase in average earnings per worker in 1978 worked out at over 16 per cent and incomes clearly should not continue to grow in 1979 at the rate set in 1978. These two statements, as I endeavoured to make clear—I am sorry if I did not make it clear to the Minister's satisfaction—are incompatible with the buoyancy estimate which implied an increase in incomes far beyond the level indicated by the Minister in the income section of his speech. It is the incompatibility of the two sections of his speech and the lack of honesty as between the two which I have criticised.
I thank Deputy FitzGerald for that alleged explanation. Now, may I give him the facts? The quotation I gave from what he said on 8 February 1979 in this House did not refer to income. I will quote the whole paragraph now for the Deputy's benefit, as reported at column 778 of the Official Report of 8 February 1979:
I note in passing that Ken O'Brien in The Irish Times today said that the income tax buoyancy figure is £50 million too high.
Note that: the income tax buoyancy figure, not the income.
Would the Minister like to start two sentences further back?
This is the paragraph:
Other economists have put it at £60 million. There is no doubt whatever that this figure has been grossly inflated and once again it has been inflated by an amount beyond the tolerable margin of optimism or pessimism which a Government may show in putting figures into the budget statement. There is a certain margin within which there can be legitimate disagreement and legitimate argument, but that figure goes beyond what is legitimate. It is not an honest figure for revenue buoyancy.
The figure referred to repeatedly by the deputy in that paragraph is, to quote his own statement, the income tax buoyancy figure. That is what the Deputy was talking about.
Yes, precisely.
The following day——
Would the Minister read the two sentences he has deliberately omitted?
We cannot have two Members making speeches in the House at the same time. The Minister is in possession and he has a limited amount of time.
The Minister is adopting a technique which is impermissible by quoting part of what was said. The two previous sentences read:
However, I understand from careful calculation, the figure is consistent with an expectation that incomes will rise by at least 16 per cent this year. That 16 per cent, in turn, is not that far out of line with the 14½ per cent provision the Government have made for the public sector.
The Minister must be allowed to make his own speech.
I can understand the Deputy's discomfiture at precisely what he said being quoted.
Part of what I said.
No amount of wriggling by Deputy FitzGerald——
The Minister deliberately omitted the two previous sentences.
——will convince any right-thinking person that when he said the figure was beyond what was legitimate, and so on, he was not referring to the figure he had used which was the figure for income tax buoyancy.
Exactly. That is precisely what I said.
I quoted the Deputy and he got his chance to answer. Unprecedently, I gave him an opportunity to speak. He can be judged on what he said today and that day.
Has the Minister found the reference?
The Minister without interruption.
If the Deputy is denying that now, he can stand on it.
We will know at the end of the year.
The Minister, please.
Is it ready yet?
It will be ready.
Deputy Barry, the Minister must be allowed to make his speech.
I take it that Deputy Barry is prepared to stand or fall on the honesty of Deputy FitzGerald and by whether that is produced.
Yes, I am.
Deputy FitzGerald has denied it now. Is that the position?
Yes.
All right, the Deputy must wait his turn. We have already dealt with one distortion—I am using a kind word—from Deputy FitzGerald. At least I have dealt with two, but that was the more blatant. It is not all, because Deputy FitzGerald was reported also in the Irish Independent for the same press briefing on 9 February in respect of that as saying that the calculation of income tax receipts was difficult because of taxpayers moving between the various bands, and that he was being cautious, given the difficulty of making the calculations. I have no fault whatever to find with that statement. It is perfectly reasonable, but let us contrast it with what he said the day before. He said, “There is no doubt whatever that this figure—” the figure being the figure for income tax buoyancy—“has been grossly inflated by an amount” and so on. The following day Deputy FitzGerald was talking about the difficulty of calculations because of people moving between the various tax bands and he had to be cautious, given the difficulty of making the calculations.
I was cautious, but will the Minister come clean in terms of the earnings increase figures?
(Interruptions.)
Has Deputy FitzGerald any sense of responsibility at all to come in here and say cold-bloodedly and calculatedly, not in the heat of the moment, that there was no doubt whatever that that figure was false and distorted, and the following day——
(Interruptions.)
The Minister, please. Deputy FitzGerald and Deputy Barry, it is now six o'clock. This debate has been going on since 10.30 this morning without any interruption up to now and it should continue that way.
There were fewer distortions in other speeches.
(Interruptions.)
Deputy Barry is long enough in the House to know that this debate cannot be conducted by way of question and answer. The Minister without interruption, please.
I fail to understand how I can be accused of distortion when I am quoting Deputy FitzGerald's own words and not out of context.
It is all out of context.
The calculation of income tax is, as Deputy FitzGerald said, on the second day—not the first day—a complex and difficult matter which is usually best left to experts. I do not consider it necessary to get down to the detailed calculations underlying the 1979 income tax forecast.
Because the Minister cannot.
Will the Deputy listen? He has told enough lies in this House. Deputy FitzGerald one day said that these figures were undoubtedly distorted and false and the next day he said they were difficult to calculate. I want to tell him something about them which I think he overlooked. First of all, with regard to the PAYE receipts, there are special factors which will increase the 1979 receipts. For example, there is the termination of remission for the public service on transition to the PAYE system which is operating this year. Secondly, there is the application of PAYE to share fishermen and discontinuance of tax relief on social welfare contributions. That is being given instead by a reduction of the rate of contribution but it affects the PAYE receipts. In the non-PAYE area, tax on farming profits was unduly low in 1978 because of the change in the date of payment of this tax, but 1979 receipts are expected to double the 1978 receipts. Other Schedule D receipts rose very little in 1978, by less than 3 per cent. These receipts tend to fluctuate and it is expected that this year some of the apparent shortfall in 1978 receipts will be made up, together with a substantial further increase in receipts in the light of the significant increase in profits and professional earnings in 1977 and 1978, and in the light of the tax evasion measures announced in the budget. Apart from this special factors, which together make a big difference to the overall total of receipts in 1979——
How much?
——I indicated clearly in my budget speech that the tax revenue estimates assume firstly a continuation of the buoyant position of 1978, secondly a 6.5 per cent growth rate for the economy, and thirdly, additional buoyancy that will be generated by the budgetary adjustment.
What increase in earnings?
The Government's estimate takes account of a 25,000 increase in employment, and this is much higher than outside forecasts, but the same applied in 1978 when the Government's achievements in regard to employment confounded the most sceptical commentators who earlier were saying that it could not be done. In addition, the Government's estimates for revenue buoyancy take account of the stimulus of growth resulting from this total budget package. I mentioned this in the budget statement. As outsiders, including Deputy FitzGerald, were not privy to all the budget's details, they could not have taken this into account.
In addition, the revenue buoyancy estimates for 1978 fell far short of the actual outturn because there was a significant change in trend during the year compared with the previous year. The elasticity of tax yield with respect to GNP shifted significantly upwards; that is, the percentage increase in tax yields adjusted for changes in tax rates in relation to the percentage increases in GNP was much higher than in previous years.
All of these factors have to be taken into account and there are others but I am not going to waste the time of the House in going into all of them. I merely demonstrate how much was left out of his calculations by Deputy FitzGerald when he came in here and made his baseless and reckless charges. I regard the Revenue estimates given in my budget as perfectly resonable. Indeed, the ESRI forecast for total revenue in 1979 set out in their December commentary is very much the same as that of the Government.
Based on a 14 per cent increase in earnings.
I tell the Deputy it was 7 per cent, allowing for the carry-over.
On 14 per cent earnings year on year. What is the Minister's figure?
The ESRI figure is 7 per cent allowing for carry-over and a 4 per cent growth rate. Does the Deputy know that? Yet they arrived at the same figure as the Government. Does Deputy FitzGerald say that the ESRI figures are fraudulent?
The Minister is afraid to tell what his figure is.
If they were not, how can he say that the Government figures are fraudulent when they are based on better and later information? It is a totally irresponsible, reckless statement by Deputy FitzGerald and he cannot justify it. He can keep interrupting me but he cannot justify it. Out of his own mouth he shows himself to have been reckless in making false allegations in this House.
The Minister is afraid to give the figure for earnings increase.
The Minister is entitled to be heard the same as every other Deputy, and I am amazed that the Leader of the Opposition has continued to interrupt for the last half-hour.
That is 23 interruptions since the Minister started to speak. It is disgraceful conduct.
Is that including your own interruption?
Maybe it will reduce the temperature a little if I go off that topic for the moment and go back to one I mentioned in which it will be recalled that Deputy FitzGerald denied that he had said that inflation was falling and not increasing.
Sorry, I said investment.
I am sorry, Deputy, I meant to say investment. He denied it—you heard him—and Deputy Barry kept asking me to produce the reference, did he not? Wait for it—on 8 February 1979 may I quote Deputy FitzGerald at columns 768-9 of the Official Report, the sentence reading:
This is highly dangerous to our economic future because by refusing to face the fact that growth is falling by more than one-third, from 6 per cent to 4 per cent, that inflation is rising from the 6.1 per cent of the year ended last May to 10 per cent in 1979, and that investment is falling, not increasing——
Did Deputy FitzGerald say it or did he not?
Read on.
Is that another statement that I am distorting?
The Minister should read on.
Right, I will read on.
It says:
...it had never reached the growth rate of 15 per cent that the Government dreamt up——
It is perfectly clear.
"...it had never reached the growth rate of 15 per cent that the Government dreamt up—the Government have created a budget that bears no relation to our economic needs." End of sentence, end of paragraph.
End of story.
Deputy FitzGerald——
(Interruptions).
Minister and Deputy FitzGerald, please. There is to be only one speaker at a time in this House, and without interruption. This debate has gone ahead without interruption for days on end. There is no reason that it should arise at this stage. The Minister without interruption.
He is inviting interruptions.
I am not endeavouring to raise the temperature in the House. I think people will understand that I, having been the recipient of these false baseless allegations, want to defend myself.
I apologise to the Minister. I should say, in fairness to the Minister, that the wording, as reported, is open to the construction he puts on it. The clear intention, if one reads the whole thing, is that the——
Sorry, Deputy, there can be only one speaker in the House at a time.
——and the Minister could ministerpret it in that way.
I thank Deputy FitzGerald for his attempt to apologise in regard to that matter. But I want to make it quite clear that I did not misinterpret him. What is more, earlier on I demonstrated that, even the basis on which he says I might have misunderstood it was false, his 15 per cent objection was false.
Before leaving this matter there is another thing I want to mention. The previous Government, of which Deputy FitzGerald was a prominent Member and indeed contributed quite a bit to their economic record, to use a neutral word——
Success in very difficult times.
That Government had the experience of seeing their tax revenue forecast turn out to be wrong. For example, income tax receipts in 1975 turned out be some 9 per cent less than was originally budgeted for, despite the fact that they had two budgets that year, so that they were able to calculate much more accurately later in the year—but they were still wrong.
A lot of people say there were 26 budgets that year.
(Interruptions.)
The Minister, please.
In 1976 income tax receipts were over 10 per cent higher than the budget estimate. But let me remind the House about 1977.
Look for a clap.
That year what did the Coalition Government do when they brought in the budget? Having done all the sums they added on £60 million for revenue buoyancy to take account of, and I quote: "Increased personal consumer spending and employee remuneration which will ensure as the budgetary injection circulates throughout the economy".
That was their optimistic forecast.
Deputy Flynn should not help the Minister.
(Interruptions.)
Is the Minister addressing the Chair or Deputy Flynn?
This allegation by Deputy FitzGerald was in relation to this year's budget, that we had grossly inflated all the figures and so on. However, an analysis of what he said shows that he ran away from it the following day. Let us look at what happened when Deputy FitzGerald was in Government. Without rhyme or reason they added on £60 million to try and reduce the deficit. Of course the figure they added on was quite wrong. I want to ask Deputy FitzGerald—rhetorically, in case he wants to interrupt me——
Obviously the Minister does not like my answers.
I want to ask Deputy FitzGerald does he think that the action of the Government of which he was a member in adding on those £60 million was fraudulent? Does he think it was grossly inflating the figure beyond what was permissible? I did not say at the time that it was. I am not saying it now. I am merely saying that for a man who was a party to that to come in here and to say what he said about the figure this year is, in my view, indefensible. It is particularly indefensible from the Leader of the main Opposition party, a man with some pretence to knowledge of economics.
The Minister is the man who did not have high standards in high places.
I have indicated already that we have the capacity to achieve our growth target. Of course capacity is not enough; it can be used to produce saleable output only if we are competitive.
As regards the rate of inflation we have heard a great deal from Deputy FitzGerald and others. Indeed only this afternoon, before I got up to speak, Deputy Barry was waxing eloquent on this, apparently saying that we were trying to deceive people in this regard.
That is correct, successfully.
I wonder what one has to do to convey precisely what one means because I want to remind the House that as long ago as January 1978 in the White Paper, National Development 1977-1980, we set out the target—5 per cent end year. We set it out quite clearly there; it is specifically stated.
End year to end year?
And we set it out again in the White Paper, Programme for National Development 1978-81.
"Annual rate of inflation at end of year" were the words used. Quite right.
How Deputy Barry or any of his colleagues can suggest that to say that is the same thing as to say 5 per cent inflation for the year passes my comprehension. Obviously if you are saying that the inflation rate for the year is 5 per cent, that is what you say. But if you say: 5 per cent end year, whatever you mean you mean something different from 5 per cent for the year. That is obvious. How can anybody suggest, as Deputies opposite are now trying to suggest, that we said it was 5 per cent for the year? We said no such thing and Deputies know we did not say it.
What they said was the annual rate of inflation at end of year.
That is the first time since——
(Interruptions.)
If Deputy Kelly takes up a White Paper, if he sees a column and if he sees "5 per cent end year" in brackets, does he interpret that in the same way as being 5 per cent with nothing in brackets after it? Does he?
What value is it? It is of no value. It is only to cod the people.
The Deputy knows very well that this is a further misrepresentation by Deputies opposite.
But they said the annual rate of inflation at end of year; in the 1979 White Paper. Those were the words used, not the last quarter. They changed their feet. I think the Minister will move away from that one rapidly.
The Minister without interruption.
I would have thought Deputy FitzGerald had had enough in what he got. He is very foolish to start interrupting because he is tempting me to go back to some of his other misstatements in which he covered himself with anything but glory, and he knows it very well.
Did he not cover himself with glory against you people in 1973?
Deputy L'Estrange should go outside the House if he cannot listen without interrupting.
A lot of people are annoyed because Deputy L'Estrange has come into the House.
The Deputy's party managed to keep him quite for more than four years.
As far as moderation in pay increases is concerned a number of Deputies, not least Deputy FitzGerald, said that the Government seemed to have given up all hope of negotiating a rational and reasonable incomes agreement for this year but nothing could be further from the truth. The Government are committed to securing moderation in incomes development and my budget bears ample witness to this. Deputy FitzGerald also said that the Government expect, and are encouraging, a substantial increase in public service pay later in the year on top of the 2 per cent second phase in the current national agreement. That statement is totally without foundation as should have been clear to anybody from the relevant part of my budget speech. We have been told that the increases in personal income tax allowances in the budget are too small to secure moderation in pay and Deputy FitzGerald said that the concessions I announced are insufficient to be of real assistance in income determination. Deputy Barry spoke of a failure to introduce a budget which would assist in achieving moderate wage claims this year and Deputy O'Leary said that the budget failed the test of whether it would improve industrial relations. From those comments one would think I had introduced savage direct tax increases in the budget instead of granting reliefs. Of course, this is understandable coming from people with the record of those opposite.
I did all I could to pave the way towards moderate pay increases. It will be recalled that as well as the tax reliefs I provided substantial increases in social welfare benefits, a new system of pay-related social welfare payments which will help the lower paid and a new arrangement for health contributions and entitlements to services will make our health services much more egalitarian. The emphasis given to job creation in the budget continues to be unusually strong. Those steps are not only desirable in themselves but are in the direction in which the trade unions have favoured. They ought, therefore, to weigh in their members' minds when they form their attitude to pay developments this year.
Why are they on the streets protesting?
Is the Deputy back?
Why are they protesting?
Ask Deputy Michael O'Leary.
Deputy Barry asked me a question about that. I should like to know what Deputy Collins would think if he found a prospective candidate from one of the political parties trying to organise marches against PAYE when he realises that the record of that party, when they had a chance to do something about the situation, is that they increased the overall level of taxation from 40 to 46 per cent of national income. I should like to tell the Deputy that it is now back to 41 per cent.
What is the intention contained in the White Paper?
Does the Deputy know about PAYE and what happened to it under the Government which he supported?
The trade unions were not on the streets then.
Does the Deputy know that the level of PAYE being charged on the average industrial wage is substantially reduced, whether they are single or married, and it has not gone nearly far enough. However, the Government have reduced it but the Government the Deputy supported increased the level of taxation of our workers in a way that produced the result of the election in 1977.
It was organised disorder like we have in the House. The Deputy's leader is setting an example by his interruptions.
Deputies are welcome in the House but not to interrupt. The Minister must be allowed continue without interruption. The job of the Chair is difficult enough without Front Bench Members interrupting continually.
All that other Minister is capable of doing is interrupting. We are being provoked because the Minister is running away from the problem.
If Deputy Collins does not cease interrupting I will ask him to leave the House. I am getting to the end of this.
I do not think trade unions or wage earners in general are indifferent to the measures taken in relation to social welfare and job creation by the Government. I do not believe that the dangers both to growth and inflation of irresponsible pay demands are lost on unions or most of their members. They are keenly aware of the realities of industrial life and know that those who suffer most from the effects of excessive pay settlements are workers, particularly those who find themselves without a job as a result of the reduced competitiveness of their firms.
The proposals from the Irish Congress of Trade Unions which were put forward some time ago are now being examined by working parties. It will be recalled that the Taoiseach, as far back as last January, called for a national understanding in regard to the whole range of economic activity here. As far as we are concerned the proposals from Congress are matters of considerable importance and interest. As the House is aware, they are being examined by working parties following discussions between ICTU representatives, on the one hand, and the Taoiseach, the Minister for Economic Planning and Development and myself on the other. The Minister for Economic Planning and Development has stated that the Government are encouraged by the positive attitude towards discussions and understanding adopted by ICTU in the statement they issued. It is clear that there is broad agreement between Government objectives and those set out in the ICTU statement; for example, the aims of full employment and of full sharing of the growing national income with the underprivileged. The Government look forward to a constructive outcome from these discussions with the ICTU.
The House is aware that at the same time there are discussions going on with employers and the farming organisations. I hope the outcome of all these discussions will be very close to what the Taoiseach called for as far back as January, a national understanding on how we go forward, where we are aiming and where we are to put the emphasis. In achieving any aims there has to be certain priorities. If we can reach a national understanding on the priority areas and what has to wait somewhat longer we can achieved in relation to employment, inflation and the development of our social services in the broadest sense.
I do not wish to be too difficult about remarks made by Deputy FitzGerald in the course of the debate but he made so many unfounded statements that it is difficult to avoid them. I must return to another statement he made.
It is hard to know where to start——
With all the statements made by Deputy FitzGerald it is hard to know where to start. According to the Official Report for 8 February 1979, column 772-774, Deputy FitzGerald referred to a traumatic change round in the relationship between exports and imports last year. He also referred to that at columns 825 and 846. I was puzzled by the suggestions made by Deputy FitzGerald that there had been some fundamental turn-round in our external trade performance last year. He thought there was a significant speed-up in the growth rate of imports in the second half of the year while export growth was slow. The growth in import volume in the two halves of 1978, compared with the corresponding periods of the previous year, show little change. In the first half of the year imports grew by almost 13 per cent in volume while they increased by about 14½per cent in the second half. More important, however, if one examines the quarterly rates of growth in imports one will see that there was a slowing in the second half of the year in imports.
The largest rise in import volume last year was that of 21 per cent in the second quarter over the same months of 1977. In the third and final quarters the rate of increase in import volume slowed to 15 per cent and 14 per cent respectively. Furthermore, as I imagine the Deputy is aware, the fastest growing category of imports last year was the capital goods group, reflecting the buoyancy of investment activity. This category, together with imports of materials for further production, accounted for about 70 per cent of the total increase in imports in 1978.
Export growth slowed in the second half of 1978. Much of this was due to a small rise in agricultural exports, which had been exceptionally buoyant in the early part of the year. There was something of a temporary pause in the growth of industrial exports in the third quarter but they gathered strength again in the last quarter of the year, being 13½ per cent up in volume over the final quarter of 1977. It is obvious that there was not, as the Deputy alleged, a traumatic change in the relationship between exports and imports last year. As far as the balance of payments is concerned, developments last year were quite favourable. The balance of payments deficit recorded only a marginal increase from £120 million in 1977 to about £150 million in 1978 while our external reserves rose to the record figure of £1,252 million. This was a much better performance than anyone had anticipated.
I am afraid I must come again to some further statements by Deputy FitzGerald about growth. When speaking in the Dáil on 8 February, as reported in the Official Report, volume 311, column 761, he correctly quoted the Central Bank winter bulletin as follows:
There is some evidence that the economy reached a plateau at mid-1978; in other words, there may have been a pause in growth in the second half of 1978.
and later "the outlook for 1979 appears to be somewhat less favourable". He then went on to say that the real world is one in which:
the Central Bank tells us that growth has been declining since the middle of last year and that in fact the short-lived consumption boom which Fianna Fáil imposed on top of the solidly based growth achieved by the National Coalition...came to a sudden sharp end within a year of their coming into office. The economy is sliding down a slippery slope of declining growth.
Deputy FitzGerald has, to put it no stronger, put a misleading gloss on the Central Bank's words. The Bank's commentary is put in carefully guarded language. They say that the economy may have reached a plateau, Deputy FitzGerald's gloss on it is quite different. "The outlook for 1979 appears to be" is what the Bank said but Deputy FitzGerald talks about the economy sliding down the slippery slope of declining growth. Deputy FitzGerald said that statements from the bank cannot be made before the budget quite as bluntly as at other times. The reason is that the data on which the tentative judgements were made by the bank are partial, they are not up to date and they are open to different interpretations. They had to make this some months before.
Deputy FitzGerald knows that growth never proceeds at a uniform or straight line rate through each year. Sometimes it is above trend and sometimes it is below it. In the first half of 1978 it was well above trend because of Government policy to give a sharp upward lift to the economy. It levelled off in the third quarter and it then took off again in the fourth quarter. If the Deputy has any doubt about that I can give him a few figures which I believe will confirm that what I have said is correct.
Will the Minister quote what the Central Bank said? They said that there may have been a decline in the fourth quarter.
The Deputy said that the economy is sliding down a slippery slope of declining growth.
The Minister without interruption.
I know the Deputy does not like to have the facts but nevertheless let me draw his attention to the fact——
The Minister is misquoting me.
I quoted the Deputy correctly. Is he now denying this quotation?
(Interruptions.)
The Minister, without interruption. Deputy FitzGerald should be helping the Chair rather than making it impossible for the Chair.
I know the Deputy does not want the facts to come out but by now he should recognise that he has been quoted fully and fairly and he has been shown up. In one case he actually got up and half apologised. Would he learn from that and not deny what he said. Let him keep his head down or have the guts to acknowledge that he was wrong. Let him have the manliness to acknowledge that he came into the House and made unfounded allegations. The following day, recognising the possible consequences, not in relation to me but in relation to civil servants and others, he ran to the press and tried to take back what he said. At the same time, for political purposes, he pretended he did not. Would the Deputy have the manliness to get up and say that we will forget the whole thing? If not let him not be trying to cover up once more when he is being quoted fairly in relation to what he said.
In relation to the volume year on year percentage increase in retail sales, we have figures for various months. The latest one I have here is for October and it bears out the point I was making. September was 7.7 and October was 8.3 per cent. Imports of producer capital goods in September were 23.6 per cent, October 47.7 per cent. Cement sales in September were 11.4 per cent, October 11.9, November 19.1 and December 19.8 per cent. Industrial exports were 14.7 per cent in September and 21.4 per cent in October. Industrial production, unadjusted, in September were 8.7 per cent and in October 9.2 per cent.
What were the retail sales for December?
I do not have them here. The point is that all of those indicators cannot be wrong. The fourth quarter showed that the economy took off again. I will make the Deputy a present of a little bit of information which he may not have. There is a strange phenomenon about this. For each of the last three years the figures in the third quarter showed a drop. There may be some statistical reason for this. The fact is that anybody who says, as the Deputy did, that we had the boom in the first half of 1978 and then things dropped is not speaking in accordance with the facts. That is the point I am trying to establish for the Deputy's information.
I am trying to esstablish what the Central Bank said in relation to retail sales in December. The Minister has not heard about that.
Of course I have.
The Minister, without interruption.
The Deputy is found out. Let him not try to cover up. I will tell him something else he said which is more of the nonsense which we have to put up with from time to time from the Deputy. He said in the Dáil on 8 February last that they, meaning the Government, have reversed the upturn in economic growth which the National Coalition Government had achieved to almost 6 per cent in 1977 and succeeded within 18 months in pushing it down towards 4 per cent in the current year.
Deputy FitzGerald earlier in his speech said that the growth in 1977 was 5¾ per cent. The official figure is 5½ per cent. Both of them, Deputy FitzGerald's earlier figure or the official figure, are below this 6 per cent which it suddenly became when Deputy FitzGerald was trying to make that point. Furthermore, he conveniently ignores the fact that about 1 per cent of this growth in 1977 was attributable to the change of Government and the policies of that Government in mid-1977. All outside forecasters revised their growth rates between the second and third quarters of 1977 by this amount, 1 per cent. The Deputy omitted that in his claim for the Coalition's alleged performance. The official figure for 1978 is about 7 per cent. The Central Bank figure is 5¾ per cent and the ESRI figure is 6¼ per cent. But whatever basis is taken there is an increase in the growth rate on 1977, not a reversal. Even if Deputy FitzGerald's figure of 5¾ per cent in 1977 were adopted together with the lowest figure for 1978, there would not be a reversal of growth. Deputy FitzGerald's statement in that regard is also untrue and unfounded. I did not misquote him.
It is a simple quotation from the Central Bank.
The Deputy can keep hiding behind anyone he likes but he is struck with his own words. He uttered them in this House in a careful and calculated manner intending to damage not just this Government—that would be reasonable enough within the political rules—but the Deputy was reckless and did not care what damage he did to the country internally or externally. If anybody outside the country believed for a minute that there was any substance in the allegations the Deputy made, that the books were cooked and that the figures were falsified and distored, they would not deal with the country for one minute and the Deputy knows that. He actually adverted to that in his speech. He made the statements but the following day he ran away from them. He has had long enough to explain but he has not been man enough to explain the running away the next day or justifying what he said the first day. It was a disgraceful performance by the Deputy and it is one that I trust those who are interested in these matters will have noted carefully.
I also find it difficult to understand what fiscal policy Deputy FitzGerald thinks would be appropriate this year. When speaking in this House on 8 February he said:
The Government have created a budget that bears no relation to our economic needs. It is a budget for emigration, nothing less.
At another point he said:
What has this budget done to boost our economy again, to get growth up from the 4 per cent to which it is now moving to the kind of figure that would yield a continued growth in employment and a further fall in unemployment?
Later he said:
The budget's main contribution to changing the economic situation lies in its impact on inflation, not on growth.
He said also that action must be taken designed to moderate the unfavourable trend in exports and imports and in the balance of payments which the Deputy thought existed. Of course it did not.
The first two comments seemed to call for a more expansionary budget. Of course they ignored the job-creation content of the budget. What does the Deputy mean by his comment that action must be taken designed to moderate the unfavourable trend in exports and imports and so on? Is the Deputy calling for a deflationary budget? In an interview with The Irish Times on 10 February the Deputy is reported as saying:
The measures introduced last week are on the deflationary side. I suspect they will borrow more and, therefore, I would not over-stress the deflationary aspect. We may well end up with a neutral budget.
First, the effect of the discretionary budget changes will be to add about 1½ per cent growth. Secondly, how can a budget be described as deflationary when the borrowing requirement remains at the level of 10½ per cent of GNP which is very high by international standards, when the volume of both current and capital expenditure is being increased and when additional taxation is modest? The 1978 Budget was markedly expansionary because conditions warranted that, but since it succeeded it is not necessary that this budget should be quite as expansionary. To describe this change in the scale of expansionary input as deflationary is a distortion. Deflationary budgets are introduced by Governments who wish to dampen down economic activity because some constraint has arisen or because inflation is becoming excessive. At present inflation is not the major problem and there are no pressing constraints. Furthermore, the policy of this Government is not to dampen down economic activity; rather it is to maintain growth at a near record level. Therefore, the circumstances in which we find ourselves and Government policy do not call for deflationary action and the budget reflects this.
In arguing that the budget is deflationary, is Deputy FitzGerald prepared to follow the logic of that argument and say that the borrowing requirement should be held at 13 per cent of GNP or even increased? It would be interesting to hear the Deputy's views and no doubt we will hear them at some time. He is fond of quoting independent economic commentators. I should like to quote an independent economist, Dr. Kennedy of UCD, who wrote the following in The Sunday Press on 11 February:
A number of economic commentators have suggested that the budget is deflationary simply because the borrowing requirement is reduced. This is simplistic and untrue.
Later on she states:
In so far as the borrowing requirement does affect the level of activity in a small open economy like Ireland, the composition of the expenditure for which the borrowing is undertaken is crucial. Borrowing to finance public sector pay increases may simply mean more imports of consumer goods while borrowing for increased house building, for example, may directly generate more employment.
Of course Deputy FitzGerald is aware of the substantially increased expenditure provided for this year in the public capital programme.
There has been some reference to emigration. The Opposition have attempted to suggest that the unemployment figures are explained by massive emigration this year. There have also been references to the absence of net passenger movement figures to enable an assessment of emigration trends to be made. The Minister of State at the Department of the Taoiseach, in reply to a question in the Dáil on 20 February about air passenger movement figures, pointed out that because of an industrial dispute in Aer Lingus in March-April 1978 there was a delay in publishing net air passenger movement figures since February. He also said there was a further difficulty in this regard because of staffing problems at airports and that the backlog was only now being cleared.
Is the Minister seriously suggesting that a Government with 84 seats cannot produce passenger movement figures for 14 months?
Net passenger movement figures provide only a rough guide to the level of emigration in intercensal periods. The decision to cancel the 1976 census did not, of course, help us in getting accurate figures in this regard.
There was no emigration then.
Does the Deputy not know what happened? When does he think emigration started again? We had finished it in 1972 but it started again under the Coalition. Does the Deputy not know that?
The figure last year was 14,000.
We are bad enough without Deputy Murphy getting involved at this stage.
Has the Minister the figures?
Net passenger movement figures must be adjusted to take account of the relationship between net passenger movement figures and the level of emigration in the last inter-censal period, which was 1966-1971. On this basis of calculation the estimated level of emigration for the 12 months period to April 1978 was 7,000. Even if net passenger movement figures were available up to October last, as in the case of the net sea passenger figures, this would still be less than adequate for the purpose of calculating last year's emigration because of the need of a 12-month period which is not affected by tourist traffic flows. The 12 months ending February is the best period to use for this purpose.
October is equally good.
Later this year we will have the figures up to February and at that stage there will be a better basis for estimating emigration for the year ending April 1979.
Has the Minister even taken the trouble to inquire from the British——
I want to state emphatically that there is no basis whatever for suggestions that a high level of emigration occurred in 1978 and that this contributed to the very significant reduction in unemployment achieved last year.
How does the Minister know that, if he does not have the figures?
Has the Minister taken the trouble to inquire from the British what their——
Since Deputy Murphy has honoured us with his presence I want to refer to something he said in this House on 15 February as reported——
(Interruptions.)
The Minister has eight minutes to finish without interruption.
This from the law and order Government and we cannot even have law and order in this House.
Would you expect it? Look what is happening to law and order. Deputy Murphy, as reported on 15 February at column 1290 of the Official Report, said:
We now borrow around £800 million a year, mostly from abroad.
As I said at budget time the 1978 Exchequer borrowing requirement was £810 million, or 12.9 per cent of GNP. The temporary increase in Exchequer borrowing which took place in 1978 was a necessary part of our strategy to boost growth, to increase employment and to reduce inflation. In line with this policy Exchequer borrowing will be reduced to 10½ per cent of GNP this year and the reduction will continue in 1980.
Deputy Murphy is mistaken if he is implying that most of the Exchequer's borrowing came from external sources in 1978, or indeed that it is the Government's intention to maximise foreign borrowing in 1979. Of the £810 million borrowed by the Exchequer in 1978, only £23 million, or less than 3 per cent, consisted of foreign loans denominated in foreign currencies. In 1978 this direct Exchequer foreign borrowing was in fact at its lowest level since 1972-1973.
Wait until the EMS boat comes in.
Does the Deputy want us to say no, that we do not want the money?
The Minister has five minutes to conclude.
It is purely coincidental that the massive foreign borrowing happened during the years when Deputy Murphy's party and Deputy FitzGerald's party were in government. You will note that I said that last year it was down to the lowest level it has been since 1972-73. I hope the significane of that did not pass over Deputy Murphy's head.
During 1978 in the region of £300 million of the money received from the sales of Government securities came from non-residents. The indications are that a considerable proportion of this inflow may have arisen from the external insurance companies and pension funds covering their Irish liabilities with assets denominated in Irish pounds in anticipation of our joining the EMS. There is also some evidence that a proportion of this inflow was speculative and while this was not actively sought by the Government, nevertheless it demonstrates the confidence foreign investors have in the Irish economy.
There are many other points I should deal with, and one or two were raised by Deputy P. Barry this evening to which I wanted to refer. The first was in regard to the PAYE situation and the post office dispute. In accordance with their usual practice at the commencement of every tax year, the Revenue Commissioners will shortly be putting advertisements in the daily newspapers dealing with the question of how employers will deduct tax after 6 April, if they have not received tax free allowance certificates because of the post office industrial dispute. They will be asking for the co-operation of the public in dealing with the PAYE deductions by continuing the tax-free allowances now current. Any over-deduction resulting from the procedure will be dealt with on the cessation of the industrial dispute while the cumulative system of PAYE, which has the effect of reviewing on each pay day the total liability to date——
What about the social welfare stamps?
With regard to the restriction of interest relief, detailed representations have been received about various implications of this matter and they are being considered in the context of the Finance Bill which will contain the detailed provision for appropriate restriction of relief in relevant cases.
What about the social welfare stamps next week. Up to now it was a fixed rate but from next week it will be pay-related. Will the employers be told about this by advertisement or some other way? I can see how PAYE can be continued——
That is all I am dealing with. I am not dealing with the other matter at the moment.
Would the Minister deal with that matter now?
I cannot tell the Deputy about it now——
Will the Minister bear it in mind because it will be a problem next week.
We have had an interesting budget debate, interesting from a number of points of view. It was very revealing, first of all, of the degree of political desperation that Deputy FitzGerald is understandably suffering from. There is no other explanation I can think of for his attitude and for what he did in his contribution to the budget debate. His performance this evening simply highlights the appalling nature of what was done by him as Leader of the main Opposition party. However, I will not pursue that matter, I am merely commenting on it in the political sense, that it illustrates the sense of desperation which he understandably suffers from.
From the public's point of view, one of the most interesting aspects of this debate has been the virtual absence of any contribution from the other side of the House of any constructive or alternative proposals. It is hard to blame Opposition Deputies for this. After all, people still remember, and will go on remembering for a long time yet, what these men did when they were in government. Any alternative proposal they put forward is going to be measured in the public mind against the performance of these men when they have a chance to do something about it, whether it relates to PAYE, to jobs or both. I think that is very significant. I hardly ever hear a Fine Gael or Labour Deputy express any view about how we should be getting more jobs. I just hear them cribbing about what we are doing or saying the figures are not right. Does anybody ever hear anything constructive about how we should be getting more jobs.
Fire the Government.
(Interruptions.)
The public now know very well that whatever may be expected from Fine Gael and Labour, separately or in combination, one thing that cannot be expected is a coherent economic policy designed to give our young people a chance to advance our social services, our health and our education, things which we all want. You need to have a coherent policy that works. Whatever defects there may be in our policies—we are not supermen but we are getting the results—the message is that there is no alternative from the other side of the House.
Question put.
The Dáil divided: Tá, 72; Níl, 53.
Tá
- Ahern, Bertie.
- Ahern, Kit.
- Allen, Lorcan.
- Andrews, David.
- Andrews, Niall.
- Aylward, Liam.
- Barrett, Sylvester.
- Brady, Gerard.
- Brady, Vincent.
- Briscoe, Ben.
- Davern, Noel.
- de Valera, Vivion.
- Doherty, Seán.
- Fahey, Jackie.
- Farrell, Joe.
- Faulkner, Pádraig.
- Filgate, Eddie.
- Fitzgerald, Gene.
- Fitzpatrick, Tom. (Dublin South- Central).
- Fitzsimons, James N.
- Flynn, Pádraig.
- Fox, Christopher J.
- Gallagher, Dennis.
- Haughey, Charles J.
- Hussey, Thomas.
- Keegan, Seán.
- Kenneally, William.
- Killeen, Tim.
- Killilea, Mark.
- Lalor, Patrick J.
- Lawlor, Liam.
- Lemass, Eileen.
- Lenihan, Brian.
- Leonard, Jimmy.
- Leonard, Tom.
- Leyden, Terry.
- Browne, Seán.
- Burke, Raphael P.
- Callanan, John.
- Calleary, Seán.
- Cogan, Barry.
- Colley, George.
- Collins, Gerard.
- Connolly, Gerard.
- Cowen, Bernard.
- Daly, Brendan.
- Loughnane, William.
- Lynch, Jack.
- McCreevy, Charlie.
- McEllistrim, Thomas.
- MacSharry, Ray.
- Meaney, Tom.
- Molloy, Robert.
- Moore, Seán.
- Morley, P.J.
- Murphy, Ciarán P.
- Noonan, Michael.
- O'Connor, Timothy C.
- O'Donoghue, Martin.
- O'Hanlon, Rory.
- O'Kennedy, Michael.
- O'Leary, John.
- O'Malley, Desmond.
- Power, Paddy.
- Reynolds, Albert.
- Smith, Michael.
- Tunney, Jim.
- Walsh, Joe.
- Walsh, Seán.
- Wilson, Jhon P.
- Woods, Michael J.
- Wyse, Pearse.
Níl
- Barry, Peter.
- Begley, Michael.
- Belton, Luke.
- Bermingham, Joseph.
- Boland, John.
- Bruton, John.
- Burke, Joan.
- Clinton, Mark.
- Cluskey, Frank.
- Collins, Edward.
- Conlan, John F.
- Corish, Brendan.
- Cosgrave, Liam.
- Cosgrave, Michael J.
- Creed, Donal.
- Crotty, Kieran.
- D'Arcy, Michael J.
- Deasy, Martin A.
- Desmond, Barry.
- Donegan, Patrick S.
- Donnellan, John F.
- Enright, Thomas W.
- FitzGerald, Garret.
- Fitzpatrick, Tom. (Cavan-Monaghan).
- Gilhawley, Eugene.
- Hegarty, Paddy.
- Horgan, John.
- Kavanagh, Liam.
- Keating, Michael.
- Kelly, John.
- Kenny, Enda.
- Kerrigan, Pat.
- L'Estrange, Gerry.
- Lipper, Mick.
- Mannion, John M.
- Mitchell, Jim.
- Murphy, Michael P.
- O'Brien, Fergus.
- O'Brien, William.
- O'Connell, John.
- O'Donnell, Tom.
- O'Keeffe, Jim.
- O'Leary, Michael.
- O'Toole, Paddy.
- Pattison, Séamus.
- Quinn, Ruairí.
- Ryan, John J.
- Ryan, Richie.
- Spring, Dan.
- Taylor, Frank.
- Timmins, Godfrey.
- Treacy, Seán.
- White, James.
Tellers: Tá, Deputies P. Lalor and Briscoe; Níl, Deputies Creed and B. Desmond.
Question declared carried.