Seanad Éireann debate -
Friday, 14 Jul 1933

Vol. 17 No. 4

Finance Bill, 1933 (Certified Money Bill)—Second Stage (Resumed).

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

Mr. Dillon

There is a matter in connection with the Finance Bill that I would like to mention. It is stated by experts and economists generally that high protection destroys the outgoing as well as the incoming side of trade. That means that the outgoing trade would displace a certain amount of industry in occupation at home and, consequently, naturally displace a corresponding amount of employment. It is held sometimes that experts and theorists are not right when they state that outgoing trade is destroyed. I want to put to the Seanad the position of the butter trade in this country. Before the start of the economic war —I am not mentioning the economic war for the purpose of discussing it— in July of last year our butter trade had been dwindling. I suggest that was as a consequence of the high protection imposed previous even to the start of the economic war. It is accepted generally that a reduction in general trade is brought about by world depression. On that, I would like to mention that although it is said England is not giving as big a price as hitherto for food products she has at the same time increased her imports of butter as between the years 1928 and 1931 by something like 100,000 cwts., so that on these figures there is plenty of room for our butter on the English market if we had it to export. The reason why I suggest we are not able to sell more on the British market is because of high protection. It is generally agreed that if you cannot buy you cannot sell. I put it to the Minister and to the House that, even if the economic war were to finish in the morning, our trade will, as a consequence of high protection alone, be diminished and is diminishing. That is the accepted view of experts. I suggest that the trade of the country, particularly our trade in agricultural exports—in fact our whole agricultural industry—is being destroyed as a consequence of high protection.

Let us take the Cement Bill that the House has been discussing recently. It is estimated that in the two cement factories that it is proposed to set up here 200,000 tons of cement will be manufactured. It has been stated that the manufacture of that quantity of cement will give employment to 500 men. According to our own experience. as well as the advice of economists, the manufacture of 200,000 tons of cement here must displace something like £300,000 worth of our outgoing trade. Will the employment of these 500 men compensate this country for the loss of an export trade of that value? Probably it is true that at the present time we are getting cement in this country at an abnormally low price. If the price of cement were normal, I suggest that the value of the loss in our export trade might reach say about £500,000. Therefore, I want to put it to the House: will the occupation of these 500 men in these two factories compensate the country for a loss such as that in our agricultural exports, and especially the loss that will be sustained by the small farmers who are the principal exporters of eggs and butter? Reference has been made to exports of butter and other commodities. We see that we have to subsidise and pay bounties on our commodities in order to maintain our exports even in a small way. I suggest that our trade is being destroyed absolutely through the process of high protection. I do not say that protection is all an evil but I suggest that, if there is any virtue in it, it would be to extend protection over a number of years; say, a generation or two, in order to allow our factories and our manufacturing industries to grow naturally instead of, as at the present time, starting them over-night as it were and, while doing so, displacing the employment of small farmers and agricultural labourers throughout the country.

I come from a district where the farming industry is fairly intermixed between both large and small farmers, and I feel that I must declare in this House that the position in both cases is the same.

Mr. Quirke

Might I ask the Senator one question? Is he trying to prove to the House that the economic war was started as a result of the protective policy of the present Government and not for the various other reasons that have been suggested in this House and in the other House?

Mr. Dillon

No. I do not think Senator Quirke's interruption is altogether relevant, because I have kept away from the economic war as far as possible.

Mr. Quirke

I did not mean it as an interruption by any means.

Mr. Dillon

I know that some may be wrong but I suggest that everybody cannot be wrong and, as a farmer, I feel bound to say that I am very chary of accepting the policy of high protection. In the experience of every agricultural country in the world it has been found that it is the agricultural population that must carry the burden and bear the sacrifices and the victimisation of all subsidies, bonuses, and everything else that goes to bolster up what, in my opinion, is an industrial position that is imposed on the country, so to speak, overnight. If we are to have a country completely self-sufficient, I think it must grow up naturally in the course of time. Here we have a big exportable surplus of agricultural produce and it is aimed at having that surplus consumed at home, but, taking into account the volume of our agricultural produce, I suggest that it would take something like 40 years for our population to grow sufficiently to be able to absorb our exportable surplus. It is grossly unfair to ask the agricultural population to bear all the burdens of protection which is put on, so to speak, overnight. These, I think, are the main points that I wish to cover.

Minister for Finance (Mr. MacEntee)

Possibly, it might be better, before dealing with the points raised by Senator Sir John Keane, if I were to take the more polemic portions of the debate first. In that connection, I do not know whether I should begin first with Senator Miss Browne or with Senator Jameson. Senator Jameson took exception to the policy which the Government had adopted of providing bounties and subsidies on exports. I think, however, that in criticising that aspect of the financial provisions which are being made he overlooked the purpose for which these bounties and subsidies on exports are being given. They are our defence against the economic aggression of Great Britain. They have been imposed in order that we may retain as much of the British market as is possible during the period that the dispute in regard to the land annuities between us and our neighbours continues.

It has been said, and I think Senator Jameson adverted to it in his speech, that these bounties and subsidies are ineffective—that they are not reaching the people for whom they are intended. I think that, in considering that argument, we cannot leave out of our minds the impression—and I should say the judgment— which responsible persons in high positions in Great Britain have formed as to the effect of these bounties and subsidies. On Thursday last in the Dáil I referred to a leading article which appeared in the Irish Times, I think, on the preceding Wednesday, in which Mr. Baldwin, who is, I think, the Lord Privy Seal, had stated that the experience of this economic dispute had shown him clearly that import tariffs and import duties could be counteracted—and the implication was that they could be wholly counteracted—by the provision of export bounties and subsidies. Major Elliott, the British Minister for Agriculture, in recent statements in Great Britain, has reiterated his considered judgment in this matter and has continuously referred to the effect which the export bounties and subsidies, given by the Free State Government, had in overcoming the restrictive action of the import tariffs that had been imposed upon Irish live stock and Irish live stock products entering the British market.

I think that, in a matter like this, it would be well for those who say that the farmers are bearing the whole cost of the economic war not to close their minds to the implication of such authoritative pronouncements as these on the effectiveness of the measures which our Government has taken to defend the position of our producers in the British markets. So effective have these measures been that, as Senator Jameson admitted, they are arousing strong feeling against us in Great Britain; strong feeling on the part of whom? They are arousing strong feeling on the part, undoubtedly, of the British producers, of the British farmers, and of the British agriculturists who find our farmers as strong competitors as heretofore in the British markets. Once again, referring to this leading article in the Irish Times—and I think people must accept these statements as being the expression of a very conservative view in regard to these matters—it was stated in that article that at Leicester a fortnight ago fat cattle were being sold at prices of from 17/- to 35/- a cwt.

Mr. Wilson

In England?

Mr. MacEntee

Yes, in England. Fat cattle at Leicester market, according to the Irish Times—I presume that when the Irish Times uses the expression “fat cattle” it uses it to cover that class of animals which are generally connoted by fat cattle—sold from 17/- to 35/- per cwt. for the finished article. As I said in the Dáil, if that is the price fat cattle are fetching in the British market at present, with this 40 per cent. import duty, what price does any Irish farmer think store cattle would fetch in the British market, if there was unrestricted import into the British market?

Mr. Counihan

Does the Minister say there is only 40 per cent. duty on cattle going into England?

Mr. MacEntee

Whatever it may be, it does not matter. If it is more than 40 per cent., it strengthens my argument. What would the effect of lower prices be upon the British farmer, if our produce had unrestricted entrance into the British market? I hope Senators will ponder that for a moment and then ask themselves this question: would not the effect be so great that, whether it was ourselves or our predecessors were in office and in charge of the concerns of this country, they would have, possibly, to submit to some restriction being imposed by the British Government on the entrance into the British market of products that were competing with the native article? It seems to me, therefore, that those who ascribe the imposition of the import duties solely to the existence of a dispute on another matter between Great Britain and this country must modify their views, more particularly after having heard the statement of Senator Jameson, who said that these bounties and subsidies were arousing feeling against us in Great Britain. Why? Because the entrance of our produce into the British market was lowering the price of the native article. I might say, in reply to what Senator Jameson has said that it seems to me that those who allow themselves to be annoyed because of these export bounties and subsidies at once give the case away that Great Britain, we are told, has been making for the imposition of these tariffs.

Mr. Counihan rose.

Cathaoirleach

What question does the Senator want to ask? I cannot allow the Minister to be disturbed by combative argument.

Mr. MacEntee

We are told that these tariffs have been imposed merely in order that Great Britain may collect what is justly due to her.

Mr. Counihan

May we ask questions when the Minister has concluded?

Cathaoirleach

I do not think so.

Mr. Counihan

It would save a lot of interruptions.

Cathaoirleach

If the Minister is willing to answer I shall certainly allow him, but I shall not request him to answer. I am sure he would be desirous to assist.

Mr. Counihan

I do not want to interrupt the Minister.

Mr. MacEntee

If the sole reason for the imposition of these tariffs is to enable the British Government to collect what it claims to be due to it, it ought to welcome the grant of export bounties and subsidies by the Free State Government. It ought to be delighted that our trade is being maintained at its former volume, so that it may more easily, more readily, and more quickly receive the moneys which it claims. That is not the general feeling in Great Britain, according to Senator Jameson. I agree that the recent pronouncements of responsible members of the British Government indicate that the dispute with Great Britain was made the excuse, but was not the real reason for the imposition of these tariffs; that these tariffs were imposed against us, as they would be imposed against any other country competing in the same way with the British farmer in the interests of the British farmer. Coming back to what I said earlier, no matter what Government were in power, even if our relations with the British Government were as amicable as those of any other member of the Commonwealth, we should be faced with the demand, which has already been put up to other members of the Commonwealth to accept a restriction on our imports into Great Britain in the interests of the British farmer. Naturally, why should we not?

After all, the first concern of the British Government must be the British people themselves, as the first concern of the Free State Government must be our people. When they see their agriculture reduced to the condition it has been during the past five or six years, it seems to me they have no other alternative. Unless they are going to drive their farmers out of production, and going to endanger the whole safety of their population in times of stress and warlike conditions, they must do something to maintain their agricultural production at the highest level. That is a factor to which those who criticise the present Government for going ahead as rapidly as may be with industrial development in this country must give the fullest consideration—the fact that, no matter what we do, the market for that agricultural surplus about which we talk and boast so much is in future going to be severely limited and restricted. Therefore, unless we are going to allow our population to decline—and we can only allow them to decline now by starvation; there is no opening in any other country for them; there is no livelihood anywhere else, nothing to attract them to leave Ireland—unless we are going to allow them to decline by absolute starvation, something must be done to provide our people on the land with some alternative means of support. That is why that, almost at whatsoever cost, industrial development in this country must, in the present circumstances, be pushed forward with the utmost expedition. What I have said applies not merely to Great Britain but to many other countries.

In that connection I should like to refer to a statement which I have heard repeated so often by Senator Miss Browne.

Senator Miss Browne's conviction that this Government is the instrument of all evil and her absolute innocence of what is going on in the world are both charming and disarming. As I said, she is convinced that this Government is the instrument of absolute evil and that possibly the worst agent in it is the Minister for Finance who smiles when he should scowl.

Miss Browne

No, the Minister for Agriculture.

Mr. MacEntee

I have been reading The Times, of Wednesday, July 12th, in which there was a leading article dealing with the position of French agriculture and the French farmers. Possibly the Seanad would bear with me—it might be no harm, since I think we should all know what is going on in the world—if I read one or two extracts. At any rate it would be no harm to have these quotations from a very competent observer in the London Times:

"Agrarian discontent showed itself in the wholesale resignations of provincial mayors, in withholding of grain stocks and in protest meetings all over the country, particularly after the passing of the Government's proposals for increased taxation."

This sounds almost like the birth pangs of the Centre Party.

"The first signs of real trouble appeared in 1930 when the continued fall in prices of raw materials began to break through the defences of French agriculture. The Government of the day showed little hesitation in attempting to repair the breach. Faced with the alternative of helping the manufacturer by letting foodstuff prices decline or of protecting the farmer MM. Tardieu and Laval raised duties to a fantastic level, and later made a vigorous use of quotas. In this way they managed to keep the farmers quiet, if not contented, until July, 1932."

That is just about the period of the outbreak of the economic war. Referring to the losses that the industry sustained, this correspondent goes on to say:—

"In better times the industry could have stood such a loss, but since the beginning of the crisis farmers have come more and more"—and this is very significant—"to depend on wheat as their last line of defence."

The present Government is providing the Irish farmer with something he has not had hitherto, a tillage policy as the last line of defence.

"When that gave way they were desperate and the proposed increases in direct taxation did not improve their temper though one may doubt whether as a class they have ever been brought into anything like subjection by the income tax authorities."

I have read these quotations to establish this argument, that however bad the conditions of the Irish farmer may be at the present moment, conditions are as bad everywhere else. They are bad because of the general decline in world prices. We do not produce in this country such a specialised article that we are able to demand a specialised price for it. If prices have fallen here, they have fallen because the general price level has declined and from the consequences of the decline in that price level we cannot escape. I do not think there is much more substance in any of the points raised in the debate beyond those two or three except what was said by Senator Sir John Keane and I should like to come to that now. I should say at the beginning that I very much appreciate a speech of the type made by the Senator because it is really helpful criticism and it does remind the Minister for Finance that there are certain ways in which financial practice and procedure in the State might be improved. It is possible, and I shall show in a moment that it has happened in this case, that a certain amount of misapprehension of the effect of certain things may sometimes account for the criticism but it is well at any rate that on those matters where any doubt remains in the mind of any Senator, every opportunity should be given of letting the Seanad and the country through the Seanad appreciate what the real position is.

The first point that Senator Sir John Keane made related to the delay in tabling estimates of receipts and expenditure. It is true that under Article 54 of the Constitution these estimates are to be prepared and tabled as soon as may be and it was the practice up to 1928-9 to table them if possible before the close of the previous financial year. In practice it has been found difficult to comply with that requirement. It has been particularly difficult in those years in which a general election has taken place, because the estimates of receipts and expenditure may in some cases undergo a change by reason of a change of Government. Apart altogether from that, a general election imposes a considerably added burden, not merely on the Minister but on the staffs of the Minister who are hampered by the fact that Ministers engaged in the conduct of an election are able to give very little attention to official business and therefore decisions that should clearly be taken at an early date are sometimes deferred.

The fact of the matter is that it is not correct to say that the practice was to table these estimates at the close of the previous financial year. That was the practice up to the year 1928-29. Since that date the White Papers giving the estimates of receipts and expenditure have been issued on the 6th April, the 8th April, the 19th April, the 3rd May and 10th May in successive years. In that connection I should say a matter which is agitating my own mind and I think it agitated the mind of my predecessor, is whether it is advisable to table these estimates in advance of the Budget statement because the White Paper, as it is prepared, may often include under the head of expenditure, expenditure upon capital works which would be normally defrayed by borrowing. If a deficit, as disclosed in the estimates of receipts and expenditure, should appear in the White Paper, and has to be met by borrowing or otherwise, if it were to appear unduly large, a certain amount of alarm might be occasioned among the taxpayers by this fact. Possibly it might have rather detrimental repercussions on the ordinary conduct of trade and business in the country because of the fact that taxpayers not being aware of the manner in which the Government proposed to meet the deficit, whether by borrowing or whether out of taxation, might feel compelled to reduce their commitments in business and industry in anticipation of an increased burden of taxation. That is a factor that has been brought forcibly to my mind during the past two years, where this deficit, as disclosed in the estimates of receipts and expenditure, has been of considerable proportions.

Mr. Johnson

The estimates are published.

Mr. MacEntee

Yes, but the estimates of revenue are not published until later.

Mr. Johnson

When they are published they are published on the basis of the existing taxes?

Mr. MacEntee

Yes. As to the second point, Senator Sir John Keane pointed to the apparent discrepancy between the figures, shown at the bottom of page 6 of the Estimates, £27,000,000 and £24,210,000, given as the actual expenditure on Supply Services during the year 1932-33. The correction of that is made by deduction of the unissued balances of all the Votes, £2,852,000, which gives £24,210,000, makes the necessary adjustment and leaves the balance correct. As to the expenditure of £1,652,245 upon superannuation and retiring allowances, that is in respect of R.I.C. pensions, the whole amount was actually taken out of this Vote and disposed of in two different ways. Approximately £418,000 was used in paying Civil Service pensions, and the balance, representing Royal Irish Constabulary and other payments to Great Britain, was lodged in the Suspense Account. It was subsequently taken from the Suspense Account to meet the expenditure of last year, and to provide the surplus which I referred to in my Budget statement.

Senator Sir John Keane also referred to the amount allocated in Item 69 for Relief Schemes, that whereas £400,000 was provided in the Minister's Budget speech, only £150,000 was shown in the White Paper. It has been the custom in connection with the provision of receipts and expenditure in the White Paper, merely to provide for services which existed at the date the White Paper was being prepared. It is only when further examination of the financial and budgetary position is made, after the Revenue Commissioners have submitted their report, showing the inflow to the revenue during the year which has closed, and after the Minister has had an opportunity of discussing with them in greater detail their estimates for the revenue in the coming year, that any further extension of the public services can be considered. For that reason it is not possible to include in the estimates of receipts and expenditure, as presented in the White Paper, all commitments, or indeed all the retrenchments which the Government may ultimately feel compelled to make.

The Senator also referred to the fact that the Finance Accounts of the State were only laid in dummy. If the Senator will look at the title page of the Finance Accounts he will see that they are published pursuant to a very old Act—speaking from memory, I think an Act of 1854. At that time, the finances of the State were not at all as complicated and involved as they are now, and it was much easier to prepare them in proper form for presentation to the Parliament. Since that day, both here and in Great Britain, the public finances have grown in volume and complexity, and the presentation of them, in the form which would clearly elucidate the position, has become more difficult, and occupies a much longer time. In consequence of that, the British Government, like ourselves, have had to adopt the expedient of tabling the accounts in dummy at the statutory date, and circulating them in due course, as soon as they have been properly audited and arranged for the information of the Oireachtas and of the Parliament.

The Senator suggested that there should be some statement showing the local loans position, having regard to all the transactions taking place through different Government Departments. Most of the information in connection with the operation of the Local Loans Account will be found in the report of the Commissioners of Public Works. There will be found on page 19 a statement showing the responsibility and the finances of the Commissioners of Public Works., not merely in connection with the Saorstát loans, but also loans issued by the late Government of the United Kingdom. On pages 48 to 51 inclusive there will be found a statement showing the manner in which these loans are being disposed of, and accounted for, up to date. There is not, however, any consolidated statement published showing the exact position of the Local Loans Fund, and there is no statutory obligation, so far as I can ascertain, which would compel such publication to take place. However, I think the point which has been raised is an important one, and I propose to look into the matter to see whether some provision might not be made to publish what Senator Sir John Keane is looking for a consolidated account showing the true position of this fund from year to year. I agree that it is information that ought, in the ordinary course, to be available to the public.

The Senator also suggested that now that half the annuities have been remitted only half the tax liable on the £12,000,000 in respect of Land Bonds should be taken as a direct State liability. It would increase the national indebtedness to about £43,000,000 or £44,000,000. I am inclined to agree with the Senator that that is so, and subject to further investigation and consideration of the matter, the 1933-34 accounts will be prepared in such a way as to represent that as the position. But, I am making just this reservation: that I have not had time since the House adjourned last night to consider the matter very exhaustively. I shall do so and, if my first opinion in regard to it is borne out, I shall do what the Senator asks. I cannot commit myself, as the Senator understands, because it is important not to mislead the public in any way in regard to these matters.

On the question as to whether the Minister examines each year the Exchequer assets, and on the further point whether the Local Loans repayments were value for the full amount in view of the indebtedness of the local councils; whether, for instance, the £463,000 in respect of creameries and the £50,000 in respect of the Industrial Trust Company were a good asset, the Exchequer assets are examined every year and carefully scrutinised. For instance, in regard to the creameries within the last two years—I have not had time to verify the date—the value of the creameries in the books has been written down by, approximately, £150,000. I am not sure whether it might not be necessary to write those down still further. At any rate, the position of the creameries purchased and held by the Government under the Dairy Disposals Board has been engaging the attention of the Minister for Agriculture and myself, as a result of which we introduced into the Dáil an estimate for, I think, approximately £100,000 to write off the trade losses which have been incurred by the Dairy Disposals Board during the period from 1926 to the 31st December, 1931.

As to whether the loans advanced to local authorities were value for the full amount in view of the indebtedness of those bodies, I should say yes, because, if at any time the local authorities were to default, the Government have power to attach the grants which are made to the local authorities from year to year. The Industrial Trust Company does not appear, and will not appear, as an asset in the accounts for 1932-33 which have not yet been published. The Senator asked why the savings certificates equalisation account is not included as an asset. That has been established to meet the charge which falls upon the revenue in respect of the accruing interest on savings certificates. Therefore, it has been established to meet a revenue charge and could not be regarded as an asset.

On the point as to whether the £92,000,000 to which I referred in respect of the land annuities was a gain to the State, the Senator stated that this does not represent the position of the Exchequer, and said that the Minister did not suggest that the remissions of the annuities are increasing the taxable capacity of those who benefited. I am afraid I would make that suggestion very strongly: that the taxable capacity of the people as a whole has been considerably increased by the remission of those annuities, because these moneys are now being retained by private individuals instead of being collected by the State, and can be utilised by them for the development of their farms or whatever other industry they may be engaged in. I think it has very much more important reactions than that. I should like the Senator, and other public representatives, to consider the very important effects that this remission is going to have on the credit worthiness of the agricultural community as a whole, and the extent to which it will help Irish banks to secure an exceedingly liquid position.

I think that the benefits of this remission of the annuities are going to be far-reaching: that they are going to mean an appreciation in the price of the land, and that they are going to, as I said before, reduce the overhead charges of the Irish farmer. They are going to have reactions all through the classes of society in which people have to work actively, and I believe they will be exceedingly beneficial to this country. If I may refer again to the article in the London Times I think that the remission of the land annuities is going to do in a much better and more far-reaching way what the French Government endeavoured to do in November, 1931, when according to this newspaper:

"Another measure destined to relieve the farmer is a proposal to allow the downward revision of all rents fixed before November 15, 1931, on the ground that they no longer represent a fair proportion of working costs."

I think, because we are making a present to every farmer in this country of half of his farm—for that is what it amounts to——

Mr. O'Hanlon

What are you taking from him?

Mr. MacEntee

——of half his holding free of annuities and are going, as I have said, to put him in a better position than he has been in hitherto to meet his obligations to his domestic creditors. We are, at the same time, leaving those domestic creditors in a freer position to finance the new developments to which we are all looking forward. The Senator asked if the Guarantee Fund will be continued and what happened in regard to the payment of the annuities into the revenue last year. The actual sum collected from the Irish farmer last year and paid into the Suspense Account on the pre-1923 land annuities was £1,284,000. Actually, in the Suspense Account, there was transferred to the Suspense Account of the Central Fund originally £2,900,000 and, when the Supplementary Estimate for the relief of the Guarantee Fund was introduced, £1,616,000 of this money was withdrawn from the Suspense Account and distributed to the local authorities as part of the Supplementary Agricultural Grants. Will the Guarantee Funds be continued? Yes. The Land Bill, which has just been introduced in the Dáil, provides for the continuance of these Guarantee Funds which we regard as an essential part of land purchase finance. It is quite possible that, in certain circumstances, it might be impossible to collect these annuities unless we had some guarantee from the local people—something that would ensure that local opinion would be brought to bear upon local defaulters.

Sir John Keane

Arising out of what the Minister has said, would he consider giving the local authority power to collect the annuities in arrear?

Mr. MacEntee

In a matter like this, it is considered that the Central Government, being more impersonal and more immune from local influences, could discharge this sometimes unpleasant task much more effectively and much more efficiently. The Senator asks why is the device of over-estimation adopted? Is it done in any country? It is not done in Great Britain and I am not sure that it is done in any other country, but I think there are very good reasons why it ought to be continued. The main purpose for writing down the aggregate total of all the estimates is to ensure that excessive taxation will not be imposed. When the estimates are being prepared the officer responsible for their preparation, no matter how carefully he may scrutinise them, is after all, not a prophet. He is merely a human being and his judgment with regard to departmental activities is fallible, but he has got to map out a programme during the year and make provision for the expenditure necessary for the carrying out of that programme. Matters may arise which will impede and slow up the work of the Department and slow up expenditure. That may be, in many ways desirable; but at any rate, whether desirable or not, it is a contingency which does occur and it is a contingency which he must provide against unless he is to put himself in the position that he may be called to account because his Department does not operate as expeditiously as public opinion might ask or as the requirements of the Government might demand. He must, when he is preparing his estimate, see that he is provided with the necessary parliamentary authority to carry out all the programme as he sees it before him at the date upon which these estimates are prepared. Experience has shown that these programmes do not march with the regularity of an automatic or mechanical conveyor. We know, as I have said, that they are subject to delay and sometimes to suspension because a matter may arise in the course of their execution that will show that further expenditure should not proceed, and experience has shown that, inevitably and invariably, all the moneys sanctioned by Parliament are not expended at the end of the year.

Mr. Johnson

I should like to call the Minister's attention to the fact that for a long time the practice in Britain, as a method of check upon over-estimation, was to use the surplus for the paying off of debt.

Mr. MacEntee

That has not been the practice here. Of course, in that connection, last year we did use a surplus, which arose in extraordinary circumstances, to pay off our floating debt. In Britain, I understand, the practice is to put it either to a sinking fund or to use it to pay off some portion of the floating debt. Our Exchequer position does not permit us to take advantage of that position. First of all, we have no floating debt at the present moment, and ample provision is made by means of the ordinary sinking funds for the due redemption of existing debt.

Mr. Johnson

Does the Minister realise that it is a valuable check on the practice of deliberate over-estimation?

Mr. MacEntee

I am not so sure that it could be a check in the circumstances. The only check against deliberate over-estimation is the careful scrutiny of the Department of Finance, and I may say that this year, in view of the stringency of the position, the Department has been even more rigid than heretofore in its requirements. It was very exacting during my predecessor's term of office, and it has grown no less exacting since I have taken office. However, no matter how careful the investigations we may make, no matter how carefully the estimates are prepared, where you have services, some of them involving the expenditure of millions of money and many of them running into 68 or 70 separate items, there is bound to be, in the aggregate, a considerable amount of over-estimation. The point arises as to whether we are going to write that down by some fixed and definite proportion each year or whether we are going to allow it to stand at what would be its nominal proportion and impose additional taxation on the people in order to provide expenditure which experience teaches us is not going to be reached in any financial year. Accordingly, in imposing this taxation, the item of expenditure is written down by a fixed factor every year.

Senator Sir John Keane asked would the Minister consider the suggestion of having a capital and an ordinary budget. I think it would not be possible; and my own opinion at the present moment is that it would not be desirable that we should segregate the various items into what might be called working and capital expenditure. First of all, it would be difficult to apply that principle generally and universally because if we were to build a house, if the Board of Works were to build a barrack, or anything like that, we would have to charge it to capital expenditure. If an improvement were made in an existing building, that also would have to be charged to capital expenditure. The erection of an additional lamp at Dun Laoghaire pier or the provision of a new flight of steps, if the arrangement were to be carried out logically and consistently, would have to be charged to capital expenditure. In every Vote there are items in which expenditure has been undertaken which partakes of the nature of capital expenditure and also partakes of the nature of maintenance expenditure or of working expenditure or of ordinary recurring expenditure for the public services, and I think that the task of preparing a budget of that sort consistently would be very difficult. Apart from that, however, it seems to me that the inevitable effect of presenting a budget under these two heads to the Dáil would be that the pressure which would be brought to bear on the Minister for Finance to provide for the Government services out of borrowed moneys would be such that it would be impossible to withstand it and that more and more the Minister would be driven to include in the capital budget items which his own judgment and the dictates of prudent finance would tell him ought to be met out of normal revenue and out of taxation. That, I think, is the big argument against the suggestion that we should segregate our expenditure under these two heads. As it is, at the present moment, the position I have taken up has been a modification of that taken up by my predecessor, who, in my opinion, was disposed to rely too largely upon borrowings for items that might be classed as capital expenditure. I have taken up the position that it is only where the undertakings are of a novel and non-recurring kind, or are of unusual magnitude, and possibly also where an asset yielding a specific financial return to the State is going to be created, that we should meet the expenditure out of borrowing; but that in all other cases expenditure should be met out of revenue. I think that meeting only items which fall under a very narrow and restricted head out of borrowing, and the balance of Government expenditure under other heads out of revenue, is the only sound principle and the only principle that will compel Governments to seek true economies in the public services.

On the question of the propriety of borrowing on the deferred annuity fund, I think there should be no doubt that we are justified in borrowing in that way. The annuities fund has been created by the funding of the three years' arrears. During that period the Exchequer has shouldered the full consequences of that. It has not withheld from the local authorities any portion of the local grants by reason of this funding. We are creating an asset which will accrue to the Exchequer from year to year. It will be fully secured, first of all, upon the lands of the annuitants, and ultimately, out of the grants payable to local authorities in the future.

Mr. Wilson

Could the Minister say how much it amounts to?

Mr. MacEntee

It amounts approximately to £2,500,000. On the security of that fund it is proposed to borrow this year £1,245,000. I say approximately because I have not the exact figure in my head. We are proposing this year to borrow £1,245,000 on the security of that fund, which has been created by the action of the Government in granting these moratoria in order to enable us to provide these bounties and subsidies which are counteracting the effects of the import tariffs. It is a perfectly sound asset secured on the land of the annuitants and on the grants to the local authorities, and it is going to be collectible henceforward by an expeditious method of collection.

On the question of the wisdom of collecting excess profits duty now that prices have fallen, as compared with the time they were earned, there has been no change in the policy pursued heretofore. In 1926, I think, my predecessor, Mr. Blythe, indicated that, now that they had the Revenue Departments going, an attempt was going to be made to get in the arrears of taxes which had been hitherto due. It had been clearly indicated in 1923 that the then Government did not propose to forego in any way income tax or other taxes which were properly due to them. Between 1923 and 1926, so far as the limited resources as regards staff and organisation would permit them, this policy of collecting excess profits duty was pursued. In 1927 the Government set up a special investigation branch to deal with the matter and intimated to the taxpayers that they were doing this; and they collected the excess profits duty with greater vigour and zeal.

Mr. Johnson

And success.

Mr. MacEntee

And very successfully, as Senator Johnson reminds me. I think that altogether there was something over £1,600,000 of unassessed taxes collected during that period. We have simply continued the policy of our predecessors. I should say that the 1926 Act provided that this duty should be only collected in cases where there was fraud or wilful neglect. Before proceeding to make an assessment or investigation, some facts had to be brought to the notice of the Revenue Commissioners which would lead them to believe, at any rate, that there had been fraud or wilful neglect. The circumstances that emerged to convince the Revenue Commissioners that there had been fraud or wilful neglect was very often a matter of pure chance. You, therefore, had this position: that you had the unlucky individual whose misdemeanour had been disclosed to the Commissioners being pursued for his tax, whereas another person, who evaded his responsibility with greater skill and, possibly, greater dishonesty, enjoyed immunity, but only temporary immunity; because, almost inevitably, as soon as the person died and his estate was examined for estate duties, or something like that, the position was disclosed to the Commissioners, and then they could proceed, possibly in much less favourable circumstances from the point of view of the taxpayer, to collect the back duty. In regard to these cases, we have said that if the duty is going to be collected at all every defaulter ought to pay, and it ought not to be left to a mere freak of fortune as to whether he would escape, while possibly another person somewhat less guilty was made to pay.

Mr. Kennedy

With the Minister's permission, I should like to ask a question.

Cathaoirleach

Might I suggest that there will be an opportunity on the Appropriation Bill of considering the Estimates for every Department. We have had some statements from the Minister about farming economy, and I am sure the farming members would like to raise that question when the time comes.

Mr. Kennedy

It is only a simple question.

Cathaoirleach

Perhaps the Minister would like the Senator to ask it.

Mr. Kennedy

Is this excess profits tax that the Minister for Finance alluded to the tax that the Minister for Finance termed a blood tax?

Mr. MacEntee

I do not know which Minister for Finance the Senator refers to.

Mr. Kennedy

The present Minister for Finance.

Mr. MacEntee

At that time he was not Minister for Finance. Not knowing all the circumstances, because the information I had when I was in Opposition was conveyed to me by interested parties, who did not disclose the full facts—I am not prepared to admit that I used that particular expression, but I may have in my ignorance and my innocence referred to it in those terms. I am perfectly prepared to say that I know better now.

Mr. O'Hanlon

The disarming Minister.

Mr. MacEntee

I hope one of the qualifications for the office I hold will be an ability to learn. While we were removing this disability under which the Revenue Commissioners laboured, in the equitable levying of the assessments of the tax, we, at the same time, offered a concession to those who might have been among the luckier individuals who had escaped so far. We indicated to them that while the fulfilling of this duty was going to be an obligation of every person who owed it, nevertheless, there were many cases of which the Revenue Commissioners had not present knowledge, and that, whether they had present knowledge or not, to any person who came forward and made a full disclosure of all the circumstances, we offered a concession of a remission of not less than 25 per cent. of the duty and a complete remission of all the penalties he had incurred by his failure to disclose this vital information to the Revenue. I think we have met the position very fairly. A considerable number of taxpayers have taken advantage of that concession and made a disclosure—a considerable number of taxpayers of whom the Revenue Commissioners had no previous knowledge whatsoever. We have to collect from them now 75 per cent. of the duty which they owed, and in view of the fact that we have to do that we cannot allow any person in future to escape if we do get any information regarding them.

If we did allow such persons to escape, what would be the consequences? We feel that there is about £2,000,000 back duty to be collected. If we forego the collection of that, what alternative have we except to impose additional taxation on those who have already discharged their obligations to the Revenue? If we do not collect the back duty, we have got to take that amount in some other form of direct or indirect taxation from people who have already paid their way in regard to the financing of Government services. I think the case for the collection of this duty is conclusive. We have made a very generous concession to those people to induce them to make a full disclosure and if they have not availed of that we cannot be held responsible. I think I have dealt fully with all the points raised. I am grateful to the Seanad for the indulgence they extended to me last night and for the opportunity they have afforded me to-day to deal with the various points raised.

Sir John Keane

May I thank the Minister for taking my remarks in the spirit in which they were intended? There are certain points which he has cleared up but there are other matters which I should like to get an opportunity of pursuing on another occasion.

Mr. Wilson

In regard to the question of the Guarantee Fund, the Minister has allowed ratepayers a certain remission of the amount due from the rates on account of people not paying their annuities. Would he consider allowing the ratepayers for arrears of more than three years? You are writing off these amounts at the expense of people who paid their way and you are asking people who have already fulfilled their obligations to bear the liability for people who did not meet their obligations.

Cathaoirleach

That point might be met by a recommendation on the Land Commission Vote.

Mr. Counihan

Shall we not have a further opportunity on this Bill of dealing with the matter?

Cathaoirleach

I cannot say that, but the Senator will have a very good opportunity on the Appropriation Bill.

Mr. Counihan

Will there not be an opportunity of making a recommendation on the Committee Stage of this Bill?

Cathaoirleach

Yes.

Question put and agreed to.