After the illuminating remarks of Senator Mac Fhionnlaoich and Senator Honan, I feel that my request for enlightenment on Government policy in relation to the Finance Bill has been met, and that I am now free to make my contribution to the debate with a clear conscience. I also feel rather tempted to speak sympathetically with reference to the Bill, and to the Minister responsible for the Bill, partly by way of balancing the oratory in this House, because most of the oratory seems to have come from this side of the House, and most of it has been rather unsympathetic. I suppose the Minister would agree that it would be quite possible to disapprove of a Budget of £32,500,000 to be spent on one set of objects, and yet approve of a Budget of £32,500,000 to be spent on a different set of objects. In other words, there are two aspects of the matter. One is the amount proposed to be raised by way of public taxation, and the other is the way in which this amount is being distributed by way of public expenditure. For a full discussion of our financial position and policy, we would need to consider both aspects of the matter together. However, I am not prepared to go further into that aspect of the matter to-day, as it would take too long. I shall assume, for the purposes of the rest of my remarks, that the Minister has decided, and that we accept his decision, that in one way or another he must get £32,500,000 by way of taxation, by hook or by crook. Most of my remarks will be concerned mainly with the wisdom of the various methods which he has elected to use in order to obtain that very considerable sum.
Before coming to that, I should like to point out certain relative figures which ought to be in the minds of all public representatives, and one of them is the relation between public taxation and national income. In 1929-1930 we collected by way of revenue something over £24,000,000, and in that year the national income, as estimated in the report of the Banking Commission, was something short of £162,000,000. In other words, taxation represented in that year one-seventh of the national income. In 1936-1937 the revenue receipts were over £31,000,000. In that year the national income could not have been much in excess of £150,000,000. In this year I doubt very much whether the national income is in excess of £150,000,000 at all. In this year taxation must be over £32,500,000 out of a national income which I am estimating at £150,000,000. Therefore, we have this year one-fifth of the national income represented by the amount taken by way of public taxation. In other words, the proportion which the public revenue receipts is bearing to the national income tends to increase. I am more alarmed by that increase in the proportion which taxation bears to the national income than I am by the absolute increase in the amount taken by way of public taxation. Because in a situation in which the national income was steadily increasing we might contemplate with equanimity an increase in taxation, or the Government taking year by year a greater absolute amount in taxation so long as the proportion which that represented or bore to the national income was a diminishing one and not an increasing one.
What alarms me about this Budget is that the proportion of the national income taken in taxation is increasing in addition, of course, to the increase in absolute amount taken. As things stand at present, we appear to be taking as much of the national income proportionately as our neighbours in Great Britain are taking. The national income of Great Britain is estimated at £5,000,000,000, and their Budget is well up to the £1,000,000,000 mark. That is a lot of money, and the proportion appears to be much the same as ours, but the proportion with reference to a national income which is more than £100 per head of the population in their case, is a very different thing in comparison with ours, where the national income is only about £50 per head of the population. If we go on increasing that proportion we are bound to have increasing national stringency and serious economic difficulties.
Our experience with regard to the national income has been rather an unhappy experience in recent years. I do not intend at the moment to go into the reasons for that. But I would like to say that other countries whose circumstances were in many respects similar to ours have been more fortunate than we in their experience with regard to their national income in the last six to eight years. Let us take, for instance, Denmark. Denmark was badly hit in the crisis of 1931, and by the British commercial policy in 1932, but in 1934 Denmark had reached and passed the national income which it had obtained in 1929. The United Kingdom was badly hit in 1931-1932, but already in 1935 the national income of that country had risen to the figure at which it stood in 1929. Since 1935 the national income in Great Britain has continued steadily to rise. I do not want to hold the British up to admiration in any spirit of slavish imitation. But I think Senators will admit that, like "Old Man River," John Bull does know something. One of the things which he seems to have done with reference to his financial difficulties was in the first year or two after 1931 when he reduced public taxation. Then, when the national income afterwards began to rise again —which it did in 1933—the public revenue began to increase automatically. Great Britain did not have to increase taxation until some years later, when the armament crisis came upon them headlong. In Great Britain it is clear that they tried, and succeeded, in keeping down taxation at times when the national income was showing signs of stagnation. Then when the national income is showing buoyancy there is less reason for keeping down taxation. We in the last six to eight years attempted adjustment of our whole economy in a different way, though to what precisely we have been attempting to adjust it I do not know. Up to 1938 there was, as our official policy, the effort to obtain a maximum degree of self-sufficiency and industrial development. But after making the agreement with the British in 1938, we got back our free export market for agricultural produce. The whole circumstances of our national economy were, in consequence, different, and therefore we required a different kind of economic policy if we were to make the best possible adjustment of our new and happier situation. For a time we made a certain amount of limited progress.
Our national income, even after the bleak years 1933-1935, showed a certain slow increase. That increase continued not as rapidly and vigorously as I would have liked. But nevertheless it showed an upward trend until 1936-1937. Since 1936-1937 there are indications of a certain stagnation in our economic expansion, and certain evidence that the national income has not continued to make a satisfactory increase. For one thing, according to the information at my disposal, the physical output of agriculture has now sunk again, after having risen between 1933 and 1937. It has now fallen below the level of 1929. For another thing, the recently published report of the trend of employment and unemployment gives rise to a certain feeling of disquietude as to the economic value of the protected industries. There are indications that unemployment is breaking out amongst these protected industries. We have still further evidence that the number of people employed in agriculture has diminished by 17,000 people in these few years. These are figures which give evidence that the position with regard to economic stagnation is one that gives rise to alarm.
If the Minister really wants to get £32,500,000 from the taxpayers' pockets, I could suggest various ways in which he could obtain that money much more easily than the methods he has chosen to adopt. His object is to increase the yield from public revenue. The best way to do that would be to reduce certain rates of taxation. By reducing the rate of public taxation he can increase revenue. Why not do it? To give an example. In 1929-1930 the tax on boots and shoes imported to this country was fixed at 15 per cent. and the revenue obtained in respect of imported boots and shoes that year was £268,000. In 1937-1938 the tax was at the rate of between 30 and 60 per cent., with quotas in addition, and the revenue received was a beggarly £42,000. In the case of clothes, in the earlier year when the tax was between 15 and 20 per cent., the sum of £680,000 came into the public treasury from the import duty on clothes. In 1937-38, when the tax was at an almost prohibitive level, that amount diminished to £380,000. In other words, by raising the tax to the region of 50 or 60 per cent. we diminished the yield to the public revenue from boots and clothes by as much as £500,000.
I suggest to the Minister that, if he wants to raise revenue, the easiest possible way for him is to bring down the tax again to something like the 15 or 20 per cent. level, and let us have this easy money from the import of increasing quantities of shoes and clothes. Of course, the answer that I will get to that suggestion is that we have put 10,000 additional people into employment in making clothes and boots. But, it does not follow that, if those 10,000 people were not making clothes and boots they would be completely idle. Some of them, at any rate, to my own personal knowledge, are the sons and daughters of farmers living conveniently near the factories where boots are being made, and, instead of looking after pigs and poultry, of acquiring a knowledge of housekeeping duties to fit them to be the future wives and mothers of a race of peasants, of a people devoted to the soil, they are learning the outlook on life of the typical factory worker—of quick money easily earned and easily spent—and are probably not developing the kind of virtues that we like to look upon as being characteristically Irish and characteristically rural. Therefore, I do not regard this additional employment of 10,000 people in boot factories as a clear national gain. For my part, I would gladly see less people employed in those projects, provided that the tax was so adjusted as to increase the revenue from the imports of boots and clothes. I feel that even if they disappeared from the statistics of employment, it would not mean that those people disappeared from the statistics of useful occupations, even though that meant remaining at home engaged on domestic and agricultural work.
Now, the real cause of our financial stringency is the economic policy that we have been pursuing for the last six or eight years. I sympathise with the Minister in regard to that, because, in his capacity as Minister for Finance, it is his business to incur all the unpopularity which he must know is the indirect and inevitable result of the economic policies to which he has to give his approval in other capacities. The general nature of our economic policies has been to make it possible for sections of the community to levy taxation on the rest of the community. In this way each section in turn gets an advantage, but when the wheel has come full circle, and when everybody had had his whack—his quota—at the expense of everybody else, we find that everybody is in the same relative position as before, except that we are all much poorer.
There is a proverb in the North of Ireland, from which country the Minister, like myself, is a willing exile, and it is to the effect that it is an easy thing to be generous at somebody else's expense. They call it "cutting the whang out of another person's leather." It strikes me that the Government's policy has been directed to encourage one section of the community after another to cut whangs out of the leather belonging to the community as a whole. In the end they suffer more as members of the general community by this effort of the Government to please one section after another.
The whole of the Government's economic scheme is subject to the same criticism: how difficult is the effort to raise oneself from the ground by pulling one's shoe laces? As part of the consequence of this effort to improve things generally by giving each section privileges at the expense of everybody else, we have in fact allowed and encouraged sectional interests to levy, for their own advantage, what amounts to private taxation on the community as a whole. We have had in a public report—I congratulate the Government on having had the courage to publish it— clear evidence that the bacon-curing industry was levying as much as £500,000 a year on the community as a whole by way of excess prices for bacon in a recent year. But bacon is only one of a dozen things. To-day, certain interests have been put in the position of levying taxation on the community as a whole. That occurs mostly, of course, in industry. But it also occurs in agriculture. Certain sections of the agricultural community—for example, the dairy producers —have been enabled to levy taxation on taxpayer-consumers. In the case of butter that private taxation may well amount to as much as £1,000,000 a year.
Then again, we have the case of the 14,000 people who have been given allotments of land at the expense of the taxpayers by way of a dead-weight debt amounting to £600 per person. Those 14,000 persons are really in the position in which they are levying on the rest of the community, including the unsuccessful applicants for land, taxation amounting to a sum in the neighbourhood of £350,000 a year. You get in or about that figure if you multiply the £600 per person by 14,000 and calculate interest at 4 per cent. And so we may go through the whole list and analyse it in detail. If we were to do that, I believe there would be no difficulty in showing that our economic policy has brought about private taxation which does not come into the public revenue at all but which does come out of the pockets of the consumers, amounting to as much as £10,000,000 a year.
In other words, our economic policies have diminished the real taxable capacity of the community by some formidable amount which, I think, is at least £10,000,000 a year. If you want to bring about a buoyancy in the public revenue, and to relieve the financial stringency that we find to-day, what you need to do is to reverse that economic policy and mobilise for real public objects some portion of that £10,000,000 of taxable capacity that has been diverted to private interests.
One aspect of our economic policy has been the substantial increase in the net industrial output between 1929 and 1936. It has increased by as much as £8,500,000. Most of those goods produced at home, under conditions of artificial encouragement in many cases, were of the kind known as "consumers' goods." In fact, we may say that practically all of them belong to that category. According to the figures given in the Census of Industrial Production in 1936, we imported, in 1929, £33,000,000 worth of goods "ready for use" which, presumably, means "consumers' goods," and in 1936, only £16,000,000 worth of goods "ready for use." In other words, between these two periods the imports of "consumers' goods" diminished by £17,000,000, but the provision of "consumers' goods" by our own factories and workshops only increased by £8,500,000, so that from that point of view the community as a whole appears to have been, so to speak, £8,500,000 worth of "consumers' goods" down on balance. It had much less "consumers' goods" to use in 1936 than it had in 1929. My suggestion to the Minister is that if he wants to increase the yield of public taxation, and, at the same time, reduce the cost of living, all he has to do is to reduce certain absolutely prohibitive and very unproductive taxes.
I had the curiosity to go through in the financial accounts the list of goods which bear customs duty, and, with reference to some 100 articles, the total revenue yield amounted to less than £50,000. I do not know how much employment was given in the production of those goods at home, but I doubt very much whether the employment given with reference to that kind of small matter amounts to much, either individually or in the aggregate. It would greatly simplify our commercial tariffs, as well as greatly reduce the cost of doing business and the cost of living, if you could wash out some hundred tariffs which affect small things, and with reference to which no national object is really served.
Another obvious source of a rapidly expanding yield to revenue would be provided if we could destroy at least three out of our four sugar factories. There may be an advantage in having one sugar factory, in case of an international emergency, to provide us with a certain minimum of that necessity of life, although sugar is a commodity that could easily be imported and stored, and there seems no reason why a nation should not provide against all reasonable contingencies by storing enough sugar to tide over any foreseen emergency. However, there they are, and it would be a pity, perhaps, to destroy them all, but if you could wash out about three-fourths of the sugar-producing capacity of the country, the imports of sugar bearing the ordinary customs duty would immediately bring into the public revenue something approximating to three-quarters of a million of money, and the consumers would be paying no more for their sugar than they now pay for mainly home-grown sugar. In that way, the Minister would find a considerable buoyancy coming to his financial position.
In the eighth Table published with the Financial Statement, there is an interesting series of figures purporting to show the assistance given by the Government to agriculture. It amounts in the aggregate to 10½ million pounds, and includes such items as the cost to the taxpayer of the beet subsidy, which is put at about £1,000,000, and the additional yield to the farmer from the growing of wheat, and so on. Surely this is rather a poor sort of joke. The growing of beet on some 40,000 acres of land cannot possibly benefit more than a few thousand farmers who happen to grow that beet, and is a positive injury to the rest of our agriculture, because the people concerned have to pay in one way or another more for that sugar than they would if it were merely imported. The same general remark applies to wheat. Wheat, also, may possibly benefit a few farmers whose land is suitable for growing wheat, but, as it has had the effect of greatly increasing the cost of flour and bread for the rest of the community, including the rest of the agricultural community, the injury to agriculture, as a whole, is far more serious than the benefit conferred on a small section of it. Similar remarks might be applied with reference to securing a high price for home-grown cereals at the expense of the people who must buy those cereals in order to feed pigs and poultry in other parts of the country.
In conclusion, I should like to emphasise again some remarks made by previous speakers on this side of the House about the terrific importance of expanding our agricultural production. I think the present situation is one in which we should take the fullest possible advantage of our new freedom of export, and that agriculture is and must remain our chief national asset. The Minister knows how important an asset it is from every point of view, and not least from the point of view of the building up of our somewhat diminished sterling balances. I am convinced that there are important directions in which our agricultural production could rapidly and properly expand if only the farmers had the working capital which would enable them to acquire the additional equipment and employ the additional labour which they would need in connection with such expansion. Consequently, I would ask the Minister to give his most serious attention to the scheme for agricultural credit recommended by Senator Counihan, or indeed to any scheme of agricultural credit which would enable our agriculturists rapidly to get under way in the direction of increasing production. With that final request— almost a petition—I sit down.