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Seanad Éireann debate -
Wednesday, 26 Mar 1930

Vol. 13 No. 15

Central Fund Bill, 1930 (Certified Money Bill)—Final Stages.

Question proposed—"That the Bill be considered on Report"—put and agreed to.
Question proposed: That the Bill be received for final consideration and do now pass.

The Minister, in reply to my question on the Committee Stage of this Bill, said that a similar case might arise with regard to old age pensions and to all other pensions. He also said that the land annuities were a debt due by the farmers to the stockholders. All these statements are incorrect. The old age pensions paid direct to the people by the Treasury here are quite different to the payments referred to in my question. We do not pay the R.I.C. pensions here. What is done is that the Minister for Finance sends direct to the British Government a sum equal to the R.I.C. pensions, but our Minister does not pay the pensions direct. I want to know why he does not pay the R.I.C. pensioners direct? Apparently, the Minister has contracted to pay to the British Government a sum equal to that which is paid to the R.I.C. in pensions. As the Minister does that, it seems to me that he accepts that as a liability, that he cannot deny that it is a liability of the Treasury here to the Treasury in Great Britain. Therefore I say that, if anything is a liability, that is one.

The Minister's statement in reference to old age pensions is not correct. With regard to the land annuities, the money which the Minister pays over is paid direct from the Treasury here to the Treasury in Great Britain. That money is not paid, and never was paid by the people here to the stockholders. The Minister knows perfectly well that it was paid into what was called the Land Account. The Minister has arranged, apparently, more or less on his own account, to pay a sum, in respect of the land annuities, direct to the Treasury of the British Government. If it was a case of the people who had bought land paying the money over to the stockholders it would be a different thing. The Minister knows quite well that the people here never paid that money to the stockholders. It was paid into what was called the Land Stock Fund, and in regard to that the Minister has undertaken to do an extraordinary thing—that is, to pay an amount away annually whether he collects it or not. He has to pay a definite lump sum over each year to the Treasury of the British Government whether he collects it or not. In the same way he is committed to pay a lump sum over to the British Government on account of R.I.C. pensions. Therefore, for my part I am unable to see how these payments differ from any part of the National Debt.

There are many matters which I might discuss on this Bill, but I do not intend to go into them now. I am referring to these matters because under this Bill the Minister is taking power to borrow. The Minister is now proposing to raise another loan, or rather a piece of an old loan. In order to do that, and to obtain favourable terms, he goes around issuing statements that the National Debt of the Free State is only a small sum. I think he has put the figure at thirteen million pounds. He deducts from that what he considers are assets. As far as I know, the Minister has never put the National Debt as high as twenty millions. I maintain that this statement of the Minister is perfectly incorrect, because I submit that you must take into account the liabilities of the State to a foreign Government. I have mentioned two of these liabilities. There are many others. There is a direct liability, not from the people but from the Treasury here, to pay over to the British Government in respect of land annuities a bulk sum whether these moneys are or are not collected. I assume, therefore, that is as much a liability as any other debt. I cannot see any difference between it and any other debt. Therefore, when the Minister makes out these reports in order to make the newspapers favourable to him and goes around acclaiming the wonderful benefits that have been derived, without going into debt, he was doing so under false pretences. If any business concern were to make the statement that its assets were so much, and left out all mention of its liabilities, as apparently is being done in this matter, it would very soon find itself landed in gaol. Goodness knows what is going to happen Ministers one of these days. I do not know, but something of the same sort might happen one of these days.

There is also the circulation of the statement that this State has the smallest national debt in Europe. We have that statement made in spite of the fact that we are paying five million pounds a year to the British Government for which we do not receive anything in return. If that sum is capitalised on the basis of relative taxable capacity as between this State and Great Britain, and at the rate stated by the Minister himself, it will be found that the national debt of this State comes to the sum of £858,000,000, whereas the national debt of Great Britain is only about £700,000,000. That statement is quite correct, and nobody can contradict it. Senators may laugh, but I defy anyone to contradict that statement.

Cathaoirleach

I think the Minister will contradict it.

He will be very rash if he does. There is nothing easier, of course, than to stand up and say it is wrong, but I maintain the figure is right. The Minister has admitted that he pays five million pounds a year over to the British Government.

Cathaoirleach

Does the Senator mean for ever?

For a period of seventy years. When we are all dead the payment may come to an end. We have been paying that sum now for a number of years, so that up to date we have paid a total of thirty-five million pounds to the British Government for which we have received nothing in return. As to the relative taxable capacity of the Free State and Great Britain, the Minister for Finance himself has put the figures at 66 to 1 or 100 to 1.5. In the Dáil, in December, 1925, he stated that was the estimate made by the British Treasury. I suppose he will not go back on that statement now. If anybody chooses to multiply the sum I have given by 66 he will find that the national debt of this State is eight hundred and fifty-eight millions—that is according to our relative taxable capacity. The British Government is complaining that their country is being ruined because they have a national debt of seven hundred million pounds.

The figure, I think is seven thousand seven hundred millions.

If any Senator takes the trouble he can make the calculation himself. Take the sum of five millions a year and multiply that by 66.

Cathaoirleach

That would give you the figure of three hundred and thirty millions.

You have first to capitalise the five million a year. That will give you roughly about one hundred and thirty millions. Let us take it that the figure is one hundred millions, and multiply that by 66. If Senators do that, they will find that, according to relative taxable capacity, our national debt is greater than that of Great Britain. Anybody who knows anything about common arithmetic cannot deny that fact. The Minister for Finance also stated that we have the smallest national debt in Europe. He goes around asking people to invest their money on that statement, whereas it is quite untrue.

Somebody may yet have him in the dock for making these statements. I would not like to see him in the dock altogether, though I may say he deserves it for the way our finances are being treated. He and other people have gone around praising this debt, asking people to put their money into what he described as the safest security in the world and saying it is a splendid thing for this country to have this debt.

If any of us had a great friend and saw that he was getting more deeply into debt year after year, never making an attempt to meet his liabilities or to pay his debts, never balancing his budget but going on year after year borrowing money, we would surely say to him that he was going headlong into ruin. We would not say to him that he had any reason to be delighted with his position. The position with the present Government is that they are borrowing money year after year, sometimes five million pounds at a time, sometimes more and sometimes less. They are getting more and more into debt, and all the time holding that up as an example of what wonderful things they are doing for the country. I maintain that this money which passes direct by agreement from our Treasury here to the British Government is a liability of this State. We are getting no return for all that money. When the Minister talks about the assets of the State he must speak of its liabilities, too. The position with regard to the old age pensions is altogether different to the money that we pay over to the British in connection with the R.I.C. pensions and the land annuities. The old age pension money is paid to our own people here, and there is no necessity to count that. As regards these two items that I refer to, that is money which we pay to a foreign Government.

I am not sure whether the Senator desires that this matter should be treated facetiously.

Not at all.

The smiles will not appear in print, and it may be that some of the lamentable doctrine preached by the Senator will affect certain elements in the country and outside of the country to the disadvantage of this country. The Senator has put forward certain theories regarding the liabilities of the State and how the Minister had deceived the public by minimising those liabilities. I suppose that one may imagine that hard-headed business men who are running banks and insurance companies and the like are just as capable of examining the national accounts as most of us. They at least, do not believe the story that the Senator has put forward, notwithstanding that they are well aware of the national commitments. If they did think that there was such doubt and such misleading as alleged I have no doubt that the National Loan would not be standing at its present figure. If the Minister were tempted to examine the case made by the Senator, I would suggest to him, if it is allowable that even such debts or liabilities as are indicated by the Senator ought to be capitalised before you can arrive at the sum denominated debt, then equally the Minister ought to arrive, if at all possible, at the capital sum denoting the assets. After all, the national assets are potentially very great indeed. If we are able to capitalise these, I think that the accounts would be more clearly square than the Senator suggests. At any rate, my first point is that you cannot capitalise one particular type of liability without capitalising all the liabilities, and if we are going to capitalise these liabilities you must equally capitalise the assets, even potential assets.

Senator Johnson said that the smiles will not be recorded. When I saw some Senators here smiling at what my friend Senator Colonel Moore had to say, I thought to myself. "Well, we are a very lighthearted people!" Did Senator Moore utter one word that cannot be substantiated? What he has said is that the sum of five million pounds a year is being paid out of this country to another country in respect of claims which we on our part do not allow—that is, export of capital amounting to five million pounds a year. Capitalise that in any way you like, and the capital sum is at least one hundred million. Senator Colonel Moore then went on to say that the financial strength of the Free State is only one sixty-sixth part of the financial strength of Great Britain, and that in order to arrive at the correct proportion you must multiply the figure of one hundred and five or one hundred and thirty millions by, I think he said, the figure of 66, and then do you not get more than the capital liabilities of Great Britain—with all her dependencies and all her resources?

This is a very serious question we are discussing. I am afraid that with all our smiles and our lightheartedness, we do not consider how serious it is. Senator Johnson, I am sure, must have read a report which was published some days ago by a body in England which looked into this question of finance. The Committee which published that report had on it leaders of the trades union movement in England. The whole burden of their song was this, even as regards England: Bring down taxation in order that you may get employment for the people. That is the burden of our song here to-day— bring down taxation in order that you may get employment for the working man. Pay what you are bound to pay, certainly. I, for one, would never consent to repudiate a single shilling of what we are legally bound to pay. I am equally certain that we should insist that we are not going to pay more than we are legally bound to pay.

In the last three or four years Senator Moore has been an open protagonist of a particular movement to have an investigation into what our liabilities are in respect of this money that we pay to England. He has been a protagonist of that movement. The movement has flourished under his inspiration, and no matter how much Senators may smile—and the smiles are not taken down—the people are thinking about what the Senator has said. He has a case, and we want that case investigated. We also want taxation reduced in order that the working man may get employment. We are not in favour of this lighthearted, smiling, whistling call for increased loans. So far as the national loans are concerned, that is loans contracted since the Free State came into operation, of course the money we have borrowed seems very small in comparison to the borrowings of other nations which are longer established. I think it is wrong that we should continue borrowing. Senator Johnson said that we have potential assets, and should take account of our assets. So far as I can see, the only asset that we have is an asset which we would spend if we could spend it—that is the grass that grows every spring. That is the only asset that we have in this country. As for industrial development and the giving of employment, there is no such thing. There is no desire whatever for industrial development. There is no genuine impulse in this country towards industrial development, and if the grass did not grow in the spring, you would have nothing. So far from smiling at what Senator Colonel Moore said, I think members of the Seanad should take it seriously and ponder upon it. I venture to prophesy that what Senator Colonel Moore has been saying for the last five or six years will become the central and dominating factor in another six or seven years. I would not say a word against members of the Seanad, whom I have known for the last twelve or eighteen months, smiling at a man when he makes a mere slip, but what I do say is, behind that smile let there be in your minds the determination to consider well what the Senator has said on the subject.

I am not sure that it would not be wrong to do anything to destroy the effect of two Senators who have just spoken. It would perhaps be better instead of smiling at them that Senators should pity them because of their pathetic waste of time on these ridiculous points which they have raised again and again. The point was raised with reference to the R.I.C. pensions being paid through the machinery of the British Government, but the fact that that is so makes no difference whatever. These pensions were arrived at on service given during the time of the British Government. The pensions of postal officials and the pensions of many Civil Service employees are paid direct by this Government to people who resigned since the change of Government, or people whose pensions were otherwise payable direct. They are not different fundamentally in their character from the R.I.C. pensions. They are paid to people who live either here or outside the country as they choose, and the R.I.C. pensions are paid to people who live here or outside the country as they choose. A great many of the R.I.C. pensioners live here, and the same applies to civil servants whose pensions are paid direct by the British Government to the Saorstát Government. In nothing is the character of the payment altered by the fact that it is paid through the agency of the British Government, and in no characteristic whatsoever in respect of the R.I.C. pensions, so that these pensions are precisely the same as the liability in respect of any other pension, and to suggest that they should be capitalised at 4½ per cent., 3 per cent., 6 per cent., or some other rate of interest that we choose, and should be added to our national debt is patently absurd.

With regard to the land annuities, they are fundamentally a debt due by private individuals who are the borrowers. They are from their national aspect in no way different from the debts that a trader here owes to a wholesaler in England from whom he has got goods. They are simply private debts due by private individuals, and some of the creditors live here and some outside the country. A substantial proportion of the land stock is held here, and a substantial proportion of the land annuities go to pay the half-yearly dividend on that stock held here. If we were for any reason able to calculate the liability in respect of land annuities as a public debt, we would have to put against it the capitalised value of the land annuities due by the farmers, and we would have a cancelling out if we were to do that, but there is no reason why these private debts should be included in a statement of liabilities issued by the Government any more than an account of the debts due by any private firm which might have issued debentures, or have debentures held in England, or which might have bought goods in England and not yet paid for them. The debt due by the farmers is much the same as a debt due by a shopkeeper, or by a manufacturing firm, for the purchase of plant or the erecting of machinery.

If you go into private debts you have to go into private assets. If we were to take into account for national purposes the debts due by private individuals to outsiders, then we have to take into account the assets held by private individuals outside, and as has been frequently said in connection with the income tax, they reach a very big sum. But that would be a sort of thing that has no relation to ordinary governmental accounts. Senator Colonel Moore began by seeming to suggest that the returns were inaccurate or misleading. They are not. Every factor in connection with the whole matter is known, and nobody except somebody with the mind of Senator Moore would take the reading of it that he does.

I would like to ask the Minister if it is true that Lord Halsbury, who was Lord Chancellor of England when Wyndham's Act —which created the land stock— was going through the House of Lords, said that these land annuities were part of the national debt of Great Britain.

I am not going into that now. It has been discussed several times, and I am not going to answer conundrums that arise. Senator Dowdall knows what I think of them.

Question put and agreed to.
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