I also do not want to delay the House very long, particularly as I feel, in a way, that, with the Minister for Finance here defending this Bill, there is not much good in our arguing, because, in one way, the Minister for Finance is the last Minister who should come in here to defend this Bill. We know the Cabinet system. Before the present Government came into power the Minister went around telling everybody of the marvellous economies that could be made in national finance. This Party came into power and he became Minister for Finance. How does that work? Each Minister is responsible for one Department. The Cabinet meets, and each individual Minister in charge of a spending Department urges further expenditure on his Department, and, as a matter of fact, one can almost form a judgment as to what happens at Cabinet meetings by seeing the way in which money is spent by different Departments. One will notice that the worst Departments for wasting money, if I may use that word, are those in charge of Ministers who—again, if I may use the term—have the habit of throwing their weight about very considerably. I have no doubt that the Minister in those secret gatherings of the Executive Council fights very hard against this scandalous expenditure which is disastrous for the country. What is his function? The Ministers for Industry and Commerce, for Agriculture, for Local Government, and all the others, come up and demand vast sums of money to be thrown broadcast by their Departments. The Minister for Finance, ultimately, has the aggregate of the bills presented by each of them before him. His function is merely to decide that all that money is to be extracted from the unfortunate people of this country. In the present situation everybody knows perfectly well— though Ministers make speeches denying it—that the country has been living upon its accumulated capital, that it has been living upon the savings accumulated in years of greater prosperity. These savings were an enormous asset to this country. It was by reason of these savings that the standard of living has gone up to what it is.
Under the present conditions the Minister is not able to say: "The taxable capacity of this country is so much; therefore, we must not, during this year, extract more than that." But as the matter stands the sum which he is to extract from the unfortunate taxpayers is fixed by the other Ministers and his business is to find the best, quickest, and most adequate means of getting in that money. The Minister for Finance is in reality the least guilty member of the Executive Council. The truth is that every representative of the spending Departments should be here present to defend the money which he proposes to get away with for the current year. I would like to suggest that the Cabinet system should be this:—That the Minister for Finance and his officials, who presumably are best qualified to consider the financial position of this country, should come before the Cabinet and say: "The maximum that we can legitimately gather from the people of this country during this year is £x." Then he could say to the other Ministers: "You can now decide amongst yourselves what proportion of that £x goes to each one of you." At present in determining the amount of money to he extracted in taxation and in considering the whole financial position no consideration whatever is given to the amount of taxation which the country can stand. The position is that each Department, because of certain sentimental ideas now prevalent in this country, has decided that it is to spend so much on such and such services.
When our annual national expenditure is calculated what happened normally is that each year is treated in this way—what is the amount that can be paid out of taxation? Everything else is treated as exceptional and therefore as capital expenditure. It is true that in our Government finances the method is this:—That as soon as the Government borrows it begins paying back. Because if it borrows £10,000,000 to-morrow, in its accounting it will immediately allow for interest and sinking fund to pay off that £10,000,000. If the Government spend £25,000,000 a calculation is made that say, £10,000,000 is borrowed for capital or abnormal expenditure. That capital borrowing involves paying back immediately interest and sinking fund. That is quite true as regards one year, but when you take this position of affairs over a number of years you will find that we are miscalculating. In the year 1932 there was clearly abnormal borrowing. So many millions were borrowed. In the year following more money was borrowed. If you take a series of years you must recognise that there is one type of expenditure which is recurrent every year. There are other types of expenditure which are not recurrent. Strictly speaking if one takes any period one likes in the last seven or ten years, one finds that every year we borrowed a certain amount and our national debt increased. There is no reason to believe that this was strictly for abnormal expenditure. There was nothing abnormal in relation to the business for which the money was borrowed. Every year we have to borrow before we pay back on previous debts and our national debt is accumulating because our calculations are wrong. We only regard as normal expenditure that which occurs every year and anything else is regarded as abnormal. We take no account of the fact that ever since the State existed money is being borrowed and the result is that our debt is accumulating all the more.
In the debate in the other House in relation to finances all sorts of specious arguments were put up. When the Opposition speaks of reducing taxation all sorts of propagandist organs are dragged in and immediately the interest of large sections of people in the country is being appealed to. We were told we can only reduce taxation by reducing social services. The greatest condemnation of this Government—and of the last Government of which I was a member—is that this country requires so many social services. Now, I am not blaming the Government for not working a miracle. We in the last Government did not work the miracle. What I would like to see is a movement towards a trend of affairs in which the necessity for so many social services would not be present. What the Government has to work towards is such a state of affairs that every man in this country willing and able to work will know there is work available for him and that he will have the right to the reward that is appropriate to the work he does.
For years past we are constantly increasing these social services, social service that are necessary because you cannot stand by and allow men to starve merely because a peculiar position exists in which a man is willing to work; in which he is capable of providing by his labour for himself and his family, while there is no opening there for him to do so. But the Government comes along and boasts of the growth of social services. That should be the one thing that they should conceal. They do this for propagandist purposes. They try to put the Opposition into the position of advocating a reduction of the social services. Now the great object of this and of any other Government in this country should be to abolish, in a proper way, this wasteful expenditure on a great many of these things that we call social services.
We are told about housing. Strictly speaking the fact that public bodies in this country are forced to build houses which must be let at uneconomic rents is really a condemnation of the Government. What should be the right condition in regard to housing? The right condition should be that a man who pursues his reproductive labour should be paid such a wage that he should be able to pay an economic rent for his house and be able to maintain his family. These social services are each year actually accumulating a fresh debt. There is a vast number of houses built by public bodies and we know that whatever rent comes in for these houses is nothing like sufficient to pay the debt, the interest on the debt, the up-keep of the house, the rates and so on. There is another argument put up when we talk about the economic position of this country at the present time. We are told that the country is now much better than in 1934. One might as well say that a man who finds that his overdraft has accumulated by over £1,000 one year can point to an improvement when he sees that his overdraft has gone up in the succeeding year by only £500. During the period when we are spending more than we are producing we are accumulating an actual debt. Now we are told to rejoice not because we are paying the old debt back but because the old debt is still growing but growing at a slower tempo than previously.
I would prefer that the Opposition and the Government would face up to this thing and cut out propagandist arguments. These propagandist arguments have been used against us. Government speakers have said when we are arguing for a reduction in taxation that what we are really arguing for is a reduction in social services. I believe in one way that a reduction in taxation will lead to a reduction in social services. The need for them will disappear. That is because the present enormous burden of taxation is putting this country slowly but continually out of production. We have less production and fewer people employed. In addition the more people who are employed at a rate which requires help through the social services such as housing, unemployment assistance and relief works, the more social services will be needed and the worse it will be for the country. The result is that you have taxation increased and, as a consequence, reduced production calling for still more social services which again require further increased taxation.
I do think that we ought to get away from the Party argument, face up to the situation and to any unpopularity which that may involve in certain quarters. The country was in a bad condition in 1934, so bad that even those who were responsible for it are ready to admit now that it was in a bad condition at that time. The Coal-Cattle Pact of 1935, the renewal of it in later years, and the Agreement with England last year were all calculated to relieve the situation, but there can be no real relief of the situation until we find our people are able to live, all of them, on a fair standard on what the country can produce. At the risk of being unpopular—I like being unpopular—I may say that one of the social services, of which we have heard so much, has provided for a reduction in the working hours of town workers and an increase in the holidays given to town workers. The necessary result of that, just as the necessary result of the policy of mad tariffs, was to increase the cost of production. It is no good saying that every agricultural worker shall have a 40-hour week, shall have a minimum wage of £3, and shall have a fortnight's holiday in the year. It simply is not possible and this country lives on agriculture.
Another argument is put up. We are told that 800 new factories have been established in this country, but we are not invited to examine that at all. I remember when Ministers were in opposition, and when periodically they read out the number of businesses that had gone bankrupt. It is a fact— though it may not be a popular thing say it—that it would be to the national benefit if a good number of the new factories were to make up their minds to become bankrupt. Just to illustrate how the imposition of tariffs, and the creation of industries thereby, may be wasteful we shall take an extreme case, a case in which, say, a tariff of 100 per cent. is imposed on any commodity, boots, for example. The price of boots is then increased by 100 per cent., so that what you got for £1 formerly now costs £2. What does that mean? It is quite obvious that there must be a certain amount of waste in material and so on. Inasmuch as the boots can be produced in England for £1 per pair, it is quite certain that the whole of the additional £1 does not go in wages to the workers. I take 100 per cent. because it gives a clearer picture than a fractional figure. It would be much better if you were to bring in all the boots you required from England, sell them at £1 per pair, and distribute the extra £1 amongst the poor people who require it. When you can buy the imported article for one-half the figure you have to pay when it is manufactured at home, it is quite obvious that there is absolute waste, that it would be really better to import the article and distribute that 100 per cent. amongst the people who have been making the article here and wasting their time.
It is true, of course, that when the Government slaps on a tariff of 70 per cent., as they have frequently done, automatically, factories will grow up, but does it follow that these factories are economic? You are paying for them by imposing taxation on the people. The Government, since it came into office, has increased taxation by £8,000,000 or £9,000,000. That is what you find in the Government accounts, but the fact is that the Government has also farmed out taxation. If the Government tell me that they will put a tariff of 100 per cent. on an article and that I undertake to make that article after such a tariff is imposed, it means that the unfortunate people of the country, every time they buy one of these articles, is paying 100 per cent. tax on them. That tariff, of course, is not going into the Exchequer. The Government only gets it if the article happens to be imported. Nobody has taken the trouble to ascertain how far the actual taxation on consumers in this country has been increased since 1932, but if you balance that with a real calculation as to what is the relative production of this country in 1939 as compared with 1931, you will find that production has diminished and taxation has increased and that it was perfectly natural that unemployment and the various other social evils should increase with it.
I do not want to delay the House in this matter but there is just one other aspect of the question to which I should like to refer. There is this argument that all additional taxation goes either in increased social services or is due to the present war scare in Europe. That is not true. When I took over the Army—I think it was in 1927—the cost of the Army was £2,300,000. I think when I handed it over to my successor—I cannot be exact about the figures—the figure had been reduced to £1,300,000. I may be wrong as to the exact figure but £100,000 either way does not much matter. That was roughly the figure at any rate. What happened when the Government came in? The Army is not a social service. There was then no war scare in Europe. Immediately following their advent to office, they sent even to the Antipodes for men who had taken part in the civil war against the National Army and appointed them to the Army with officer rank. It is to be presumed also that the police are not a social service. There was a party here one night and there was a fire. There were suggestions, at least it was rather hinted, that that fire was the result of sabotage and that therefore we required additional police. I never heard what was the cause of that fire but, at any rate, the police force was increased and so was the Army considerably at a time when there was no war scare. Now we are told that there has been an enormous increase in the cost of the Army as a result of the newspaper scare about war and people think that that is eminently justified.
Personally, I do not think—though I would not like to prophesy with any degree of confidence or to wager any large amount of money on it—that there is going to be a war in Europe. If there is going to be a war, I do not think the preparations which the Government is making for it have any relation to the situation which is likely to arise. I have seen articles suggesting that, in the event of a war between the western and the mid-European Powers, our western ports were likely to be attacked by mid-European aircraft. Surely we give these people credit for more common-sense than to think that they would face the barrage which would be directed against them from fortified centres in England, when crossing that country, and that they would pass over centres like London and Birmingham to come over and drop their bombs in Connemara? It might of course happen, but in all these matters one uses a certain amount of prudence and common-sense. What you see here is a country with production decreased, taxation increased, a country which had to face an economic war crisis and so on. We are going to spend additional millions, and on what are we spending them? I am satisfied that much of the money spent in regard to this defence ramp is a waste of public money. We are, as usual, following the English model. It does seem to me, and I have good reason for believing, that a great amount of what is being done so ostentatiously in England is done to placate public opinion in England and that it has not very much utility. What we are doing here with A.R.P. and all sorts of preparations with the Army has not even that justification, looking at the thing in a common-sense way. A certain amount of damage was done when the Government took over the ports. The British, as the Government must know, argued with me in 1928 that we would have to take over those ports. But, as they say in America, "I come from Missouri, and you will have to show me", so I wanted to know what the result would be. The British argued then that we would have to take over the ports within ten years. This Government came along and took over the ports. Then they came back and made an awful cry about the thing. There was talk to the effect that while the British were in those ports our neutrality and sovereignty were impinged upon. They were nothing of the sort. I myself think that the present position, with the Government wasting money in equipping those ports which the British equipped previously, and the Government taking responsibility, as I think it will have to do, for running those ports in time of war, endangers our neutrality much more than if we were simply able to say: "The British hold those ports, and we are not responsible for what they do." But that is only an aside.
We have taken over those ports. What is going to happen if there is a war? I am not in a better position to prophesy than anybody else, but we have got to use common sense. When people talk about a war, they talk about a war in which Great Britain will be involved, with certain other countries, as against certain European countries banded together. Are we going to be involved here in this country? Why should we be? People say: "We send food to England." Of course we do, and I have no doubt that a country fighting against England would like to see that stopped, but in every human activity you put first things first. In order to drop bombs on the docks in Dublin an enemy would have to come right over England, facing the barrages there, and if I were the enemy, having an economic sense, I would say: "We will drop bombs in London, and do a lot more damage, rather than risk losing planes and lives crossing over England first of all. Even if we do get across and drop bombs on the Dublin mountains, we have got to get back again." It does seem to me that, in the case of war, as long as Great Britain is not beaten, as long as the British fleet holds its position on the seas, no enemy will be in a position to come to this country and do any damage.
If that position is changed, if it does happen that we are involved in a war, and that the enemy of Great Britain declares us their enemy, and that they overcome the British fleet, what are we to do? We are increasing the Army. Last night I saw bands going around calling for recruits for the Volunteers. What Army can we put up—I realise that this is an unpopular thing to say —against, a combination of great powers that have overcome England, and are free to land their troops in this country without let or hindrance from Great Britain and its Navy and its Allies' Navy? I think—again this will be called unnational and unpatriotic and all the rest of it—as soon as you have the Central Powers, with England beaten, landing their troops in this country the best thing to do is to say: "What are the best terms you are offering us?" All this ramp about the situation in Europe and the special crisis which calls for additional expenditure in this country, which for years past has been spending and not producing, seems to me to be the sort of thing about which the newspapers make headings, but which has no basis of reality. When you are responsible for running a country you have to use your prudence. You have to run certain risks; you have to run the risk of a certain amount of unpopularity. When you are the Government that is your responsibility. The Opposition really ought to be in a position to get up and say the nice popular things all the time, while the Government, with its responsibility, ought to be fathering everything unpopular. But the Government gets me so upset that I have to get up and say unpopular things, while they go ramping around the country saying that everything is splendid, that there will be more doles and more social services, and nobody must ask where the money is to come from. I do think it would be much better if we had all the other members of the Cabinet in here, and dealt with them. We could put the Minister for Finance on a pedestal and say: "We know he did his best. We deem him innocent, but he is the only one who is innocent. All the others we mark down as very definitely guilty."