Public Business. - Finance Bill, 1941 (Certified Money Bill): Second Stage. – Seanad Éireann (3rd Seanad) – Wednesday, 2 Jul 1941

Public Business. - Finance Bill, 1941 (Certified Money Bill): Second Stage.

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

Minister for Finance (Mr. O Ceallaigh)

It is eight weeks since I introduced my Budget proposals in the Dáil and, no doubt, in that long interval members of this House have become familiar, and in some cases even painfully familiar, with the main features in the balance sheet of the nation for the current financial year. The Budget was, I am sorry to say, a record as regards magnitude, and the large and growing scale of national expenditure compelled me, much against my will, to impose additional taxation. Once granted the expenditure, however, the rest inevitably followed, and I am sure there are few Senators who will say that the burdens we have taken on the Exchequer are unnecessary, and fewer still who will contend that we should have had greater recourse to borrowing in order to balance the national accounts. I had, indeed, to raise the amount to be defrayed from borrowing to a figure greater than I originally intended, as certain remissions of taxation were, by common consent, forced upon me, but I think I can claim to have kept the borrowing element in the Budget within manageable proportions and not to have unduly disturbed the somewhat precarious balance I had achieved. Budget balancing is a difficult enough feat in ordinary times in this country with its apparently insatiable thirst for expenditure, but in war time it is either impracticable or to be achieved only with a degree of sacrifice the community is not prepared to bear. It was my ill-fortune to be called upon to assume the portfolio of Finance in the first European War which this young State has had to face. It is my conviction now, after 22 months' experience of that conflict, that if Finance Ministers controlled the destinies of the world, nations would never fight to settle their differences. The Exchequer loses on the double by hostilities. We burn the candle at both ends; expenditure rises and revenue declines. For neutral countries it means that additional taxation has to be imposed on a contracting national income.

I have tried to keep the burden of this taxation as low as possible and to distribute it as equitably as possible. When it became clear that some of my proposals would not only inflict financial hardship on the interests concerned, but prove fatal to them, I made adjustments and modifications in order to preserve important sources of employment and, in particular, I removed from one tax its retrospective character to which exception was taken by all Parties in the Dáil.

I do not propose to lead Senators through the maze of figures to which I had, of necessity, to treat the other House, but I may refer briefly to the major items appearing in the accounts. Tax revenue at £26,045,000 and non-tax revenue at £5,638,000 made a total income on the pre-Budget basis of £31,683,000. Central Fund and Supply Services, including certain Supplementary Estimates for the Departments of Agriculture and External Affairs and provision for the purchase of shares in Irish Shipping, Limited, totalled £40,626,000. The deductions for capital expenditure, following what is now a well-established precedent, amounted to £1,178,000, leaving to be found by taxation a sum of £39,448,000, to which had to be added a provision of £724,000 for additional allowances to recipients of unemployment assistance and of old age pensions and blind pensions and pensions under the Widows' and Orphans' Pensions Acts, making a grand total of £40,172,000.

To close the gap between revenue and expenditure, I had to raise the standard rate of income tax from 6/6 to 7/6 in the £, to increase the charges to corporation profits tax and impose an excess surtax and corporation profits tax, to raise estate duty rates, to increase the duty on petrol by 50 per cent. from lOd. to 1/3 per gallon, to make a basic addition of 5/6 per lb. to the customs duty on tobacco, by raising it from 13/4 to 18/10 per lb., retaining the concession of 1/4 per lb. on hard-pressed tobacco which was granted last year. The main rate of duty on matches was raised from 3/8 to 8/4 per gross, and an additional 2½ per cent. was imposed on office betting. Extra postal and telephone charges were also imposed, and a sum of £100,000 was appropriated from the Road Fund. These various additions to taxation are assumed to bring us in a further £3,947,000. Adding this to the £31,683,000 mentioned above, we get £35,630,000 as our total revenue, against a total expenditure of £40,172,000, leaving an uncovered balance of £4,542,000, which I hope to meet by borrowing.

The object of the Bill now before the House is to give continuing effect to the various taxes and duties embodied in the Financial Resolutions following the Budget, which have statutory effect for a limited period under the Provisional Collection of Taxes Act, 1927.

As regards the yields of these taxes and duties, I must emphasise to Senators what I have already stated on numerous occasions during the Dáil debates, that the estimates of revenue on which this Budget is based are necessarily conjectural. This applies not only to customs duties but also to excise and inland revenue duties. The taxable capacity of the nation is declining as the economic machine runs slowly down. Diminished supplies of industrial raw materials and semi-manufactured goods, of petrol and coal for transport and of other essential commodities are leading everywhere to unemployment and short time. Salaries, wages and profits are all, I fear, going to be less, and with the decline in purchasing power there will be a smaller consumption of dutiable goods. At the same time, the ability of firms and individuals to meet their taxation liabilities will be reduced with detrimental effects on the flow of revenue to the Exchequer.

I may illustrate my remarks by reference to the returns for the first quarter of the financial year issued on Monday last. Expenditure by comparison with the same quarter of last year advanced by £1,225,000, while revenue was down by £79,000. The fall may appear insignificant on the face of it, but there have been heavy increases of taxation in the 12 months' interval and the details given in the Exchequer statement reveal several disquieting features. The fall in customs revenue is particularly striking —from £3,527,000 to £2,889,000, a decline of no less than £638,000, or nearly 20 per cent. Motor vehicle duties are down by £15,000 and estate duties by £63,000. The day was saved—or partly saved—by property and income-tax which, at £1,446,000, showed an increase of £499,000, and by corporation profits tax which rose by £33,000.

The difference between the total revenue and total expenditure for the quarter was £2,430,000, as compared with £1,125,000 in the corresponding period of last year. The gap has thus more than doubled and we have had to effect heavy borrowings in order to close it. A sum of £1,850,000 has been raised on ways and means advances from Departmental funds and there has been an excess of borrowings over repayments of Savings Certificates of £47,000, while the balance in the Exchequer has declined from £728,000 on 1st April last to £195,000 on 30th June, a fall of £533,000. These three items together make up a total of £2,430,000, which was the amount required to balance the accounts.

In the coming months there is no reason to believe that conditions will improve from the revenue point of view. Indeed, our trade statistics seem to indicate rather the reverse trend. Total imports for the five months to the end of May at £12.6 million, were approximately £10,000,000 down on last year's figures, while exports, at £10.3 million, were approximately £2.2 million down. The stagnancy of conditions in external trade is reflected also in the internal position, where cattle disease adds to our economic tribulations. It requires courage in these circumstances to press forward with a programme of increased taxation and fortitude and endurance on the part of the taxpayer to meet his liabilities to the Exchequer.

I am sometimes taken to task because I do not produce—with a flourish of trumpets, I suppose—a long-term economic or financial policy, but I think it would be about as useful as laying down the lines of a landscape garden in the middle of an earthquake. All the factors that enter into consideration in framing a long-term policy are uncertain. No problem, mathematical or otherwise, can be solved where you have too many variables. We are largely at the mercy of forces which we cannot control and there is little or nothing we can do that will determine the shape of things to come. The length of the war, its ultimate issue, the resumption of international trade, the demand for our exports, our capacity to purchase imports and the future economic relationships between the present belligerents and the neutral countries that have been swept into the maelstrom of hostilities are all matters of more than doubt. One cannot even make an intelligent conjecture about them. The war does not seem, even yet, to have entered what I might describe as its static phase. The area involved and the contending parties are still not clearly defined. The conflict has taken the most bewildering turns even lately, and has involved countries, large and small, that at one time seemed likely to keep clear of it. While we have had it brought home to us frequently and in no uncertain manner that we are very close to the war zone and also that we cannot hope to keep entirely clear of its reactions and disastrous financial and economic effects, we have so far, through God's Providence, escaped being involved in the conflict. It is our wish and earnest prayer that this good fortune may continue to favour us to the end of this awful struggle.

In all the circumstances, I think I am justified in declining to assume the role of a financial Messiah. Not that I will not take thought for the morrow. Indeed, the present Finance Bill, which I now recommend to your favourable attention, is the fruit of such thought.

Mr. M. Hayes

The Minister's picture is one of unrelieved gloom, but perhaps he is not to be blamed for that. He told us he could not now assume the role of a financial Messiah. I am not quite clear of the implication of the metaphor, but the Party to which the Minister belongs, and for which he was a continuous and vigorous propagandist, did at one time assume the role of a financial Messiah, and held before the people a picture of the financial and economic paradise which would be reached shortly after they had been entrusted with the kind of task which the Minister is now facing. Unfortunately, they turned out to be false prophets. I agree with the Minister that when expenditure has been determined the rest follows, and that the Minister for Finance in every Government is, to some extent, the victim of circumstances over which he himself has not complete control. In the case of the Minister for Finance, the policy of his Government is one with which, in expenditure at any rate, he may not agree. A Minister for Finance frequently finds himself in the position that his heart, his political protestations, his political past and ideals are in agreement with those of his colleagues; but, somehow or other, his head—into which his officials have been endeavouring to insert heresies which his colleagues would not like—is endeavouring to minimise expenditure necessitated by Government policy. In the present circumstances the Minister is the victim, not only of Government policy, but of a war over which he has no control. The situation is a very difficult one, and none of us would begrudge money to meet it, but one wonders whether this particular experience of ours is doing us any good or teaching us—in this hard school which we are attending—any lessons for the future.

The principal increase is in income-tax, which is a fair tax—except in cases where, through certain confusion, it is so imposed as to interfere with employment and business, and thus reduces the resources of the country, and ultimately the amount of money available to the Minister himself. Those who advocate higher taxation to provide certain monies for Government expenditure must remember that the collection of the money by the Government and its expenditure are much more expensive than by private individuals. Relief work undertaken with money obtained from householders is not as advantageous as if the same amount of money were spent by the householders themselves on repairs and decoration or such like.

I take it that, on this stage of the Bill, we have leave to discuss general questions of policy and some particular questions which we would have no opportunity to discuss at all on any other stage. Here in this country it is nearly 20 years since the first Finance Bill was introduced, and I do not know whether we have learned much in the interval. A great many of us believed, very sincerely, that political freedom was the cure for a great many spiritual and material ills from which our country suffered or from which we thought it suffered. We have now come to the stage when we recognise that political freedom is far from being the nostrum or cure the Minister—and I was in complete agreement with him at the time—thought it was. Apparently it is not a solution for these evils. Having got that political freedom we adopted the particular fashions of the time. We went in the direction of economic nationalism and self-sufficiency. It was preached and believed that tariffs and the development of what are called our natural resources would give us a situation in which we would have less expenditure, higher national income and more comfort all round.

I think we can be in agreement that tariffs even before this war did not provide the solution for unemployment. The present Government, supported wholeheartedly by the Labour Party, put into operation a very thorough-going tariff policy, and even before this emergency was upon us this tariff policy had failed to solve unemployment and failed to give a higher standard of living, and had struck certain blows which made our whole economic structure rather dangerous. Similarly we have been in the habit of boasting that our expenditure is very great, because we have many social services and because we give considerable subsidies to agriculture. But surely these two things are indications of themselves that our policy has failed to secure for the people a standard of living in which they would not need a great deal of social services and a situation in which agriculture, our principal industry could fend for itself. We had not reached either of those situations. We failed to solve unemployment and we have failed to sustain our farmers in reasonable production, which would be reasonably profitable to them. So that intensive industrial development plus an intensive nationalism have not gone far towards the solving of our problems. Added to that the Minister had a policy of wheat production, and I have often heard it said that that wheat policy has saved us in this emergency. It is arguable that if we had not that wheat policy we would have more wheat and more flour, and we would not be in a danger of a bread shortage. It is because of the preaching that wheat should be produced in this country that we are in the position that we did not buy wheat when it was cheap and when shipping was available. We might have imported and tilled as well.

We do not know what kind of new order will succeed this. Various belligerents and various prophets are preaching the new order or new orders of different kinds. Whichever side wins the war, or whether it is inconclusive and is concluded in such a way that nobody is the victor, it is, I think, quite clear we shall pass out of the phase in which small States will have or will appear to have complete control of their own affairs. That is not to say that they will not have control to some extent, perhaps they will have cultural and educational control, but there can be very little doubt that the policy of a great multiplicity of small States, each aiming at economic self-sufficiency, is gone. We in this country should be taking some thought of what the new situation is going to bring to us, and how we must adjust ourselves to it when it comes, even if we cannot predict what precisely it is going to be like. In this country at the moment to anybody who remembers the last war the position would appear even gloomier than the Minister painted it. Our industrial policy, instead of demonstrating that we can be self-sufficient, seems to me to demonstrate beyond question that we cannot, and that we must rely on external trade in order to have a reasonable standard of living, and that we are dependent upon external trade for the greater part of our employment, and even for a considerable part of our agricultural employment. The national policy, since 1922, has not succeeded in stopping emigration.

I took a meal on Monday evening last in the house of a national teacher, a married national teacher who had just retired because she was 61 yesterday. In that small school 30 years ago there were 120 girls and 96 boys, and to-day there are less than 100 on the roll and the average is falling. In other words, we have not succeeded in stemming emigration and in maintaining our rural population. Nor do we appear to be on the road to doing that in spite of all our protestations and in spite of all our plans and in spite of the very vigorous effort that the present Government has made in putting their policy of self-sufficiency into operation. Now, Sir, let us turn to another thing which is gloomier still. One of the reasons why some of us were very anxious for Irish freedom was that we might have control of Irish education. I remember some of those regarded as great extremists many years ago, long before the Treaty was signed—I remember Terence MacSwiney, for example, saying to me one evening that one might consider taking almost any kind of Home Rule that gave us control of the school. We have control of the schools, and we have been teaching Irish in them and we have been teaching Irish history, but I wonder is our national spirit any better as a result, I wonder is it any higher, any more vigorous than it was in 1921, or even if I may go back further, in 1911, which was perhaps rather a low point. I stayed last week-end near a very flourishing Irish town, where everyone tells me that hundreds of men and a considerable number of women have gone to England to work, and are going every week.

Apart from those, we must remember those who have gone to join the British Army over the Border and figure, I presume, as part of the contribution of the Six Counties to the British war effort. The thing that struck me most about it was, that nobody appears to think there is anything wrong about it, and in spite of our education and preaching of nationalism nobody appears to think there is any obligation on anybody to make any sacrifice to stay at home. It means a considerable amount of money coming into the towns from these people in England and I wonder in spite of our neutrality, of which we are so proud, whether we are not contributing as much in men and women to the British efforts in this war as we did in the last. It is not the same kind of war, men do not get killed in the same way in bayonet fighting as they did in the last war. It is fought in a different way. Man-power is used in a different way, and woman-power is more important than ever. Granted the changes in the system it does appear that we are contributing as much as ever we were in the last war, and at the same time we are maintaining an Army at home and paying the immense sum of money that the Minister demands in this Budget.

At the same time our situation differs very materially from our situation in the last war, because neither our farmers nor any other section of our population are making any profit now. I am very far from saying that it is within the power of the Minister or anybody who might replace the Minister suddenly to remove that situation. It would be good for us and for our future if we did some thinking, some facing of the facts and if we realised that particular things, upon which we placed great reliance, have failed us, that a new situation faces us to-day and that we must inevitably adjust ourselves to it. One of the things for which I would not begrudge any money is the committee the Minister has set up for the finding of substitutes for articles which we cannot get from outside. The argument that money should not be spent for that purpose because the war might suddenly end is a bad argument. I think that everything possible should be done in that direction. Nobody would begrudge any expenditure for that purpose. One wonders why, at the outset of the war, that committee was not set up.

Again, take a point the Minister mentioned to-day, which shows how politics and political speeches and Acts of Parliament cannot overcome hard, economic facts. During the whole period of our industrial drive, when factories were being built, when immense capital expenditure was being undertaken, very often without any regard for cost, our customs revenue was good. In spite of all the taxation, goods still kept coming in. One of the great losses to the Minister for Finance at present is the decrease in that customs revenue, either because the goods are not able to come in or because they are not there to come in. One wonders whether it would not be a good thing for Ministers, instead of stressing our neutrality and instead of preaching to us the horrors of war, to try a little public education and to indicate the things which we used to believe in and which do not now seem to have the same value that they once had. At the moment, our relationship with foreign countries is in the hands of the Minister for External Affairs and our economic relationships are very largely in the hands of the Minister for Supplies.

The Minister for External Affairs hardly ever talks about external affairs except on the wireless to America. Sometimes he talks rather enigmatically at home. At other times, he talks at a great distance on the wireless in circumstances which remind me always of the Leader of the Sinn Féin movement and not at all of the Minister for External Affairs of a recognised State. We cannot have it both ways. We cannot take upon ourselves the responsibilities and duties of an organised State and, at the same time, behave as if we were merely members of a political Party in a country "rightly struggling to be free," as the phrase used to go. The country gets no assistance at all from the Minister for External Affairs on this question of external affairs.

With regard to the other question of our economic relations with the people who supply us with goods—who turn out to be the British, in spite of all the talk—we have to depend on the Minister for Supplies and the Minister for Supplies has made a reputation for unreliability. We have to depend upon him to tell us what our economic relations with other countries are with regard to supplies. He appears to me to be a past master of frank and forceful misstatement of simple facts. Over and over again, he has misstated our position with regard to supplies coming from Great Britain. He has excused himself and he has never scrupled to misstate the position where it would appear to suit his political book. That is a very serious state of affairs for the people. We are really in the position with regard to the war that if we do not get into it—and I hope we shall not—we are expected to thank the Government and if we do get into it, then, at any rate, Ministers have told us it is a very bad thing.

May I come to two smaller points. The Taoiseach spoke last Saturday at Ennis and mentioned the evacuation of cities. I wonder what Government policy on that matter is or whether, in fact, their policy could have any clear statement. The Taoiseach said it was the duty of heads of families to take such steps as were open to them to get their children away to the country. Anybody who knows Dublin City—and the great danger, presumably, is in Dublin City—knows that the great majority of the heads of houses, and of the heads of families who have no houses but who live in rooms, are quite unable to take any such step. The Taoiseach suggested that a "little experimenting during the holiday period" would not be out of place. A little experimenting! Imagine the people of Gardiner Street "trying a little on experimenting" during the holiday season. It is possible for me to experiment and for a certain number of others to experiment during the holiday season but we are a small minority. Having seen the bombings convenient to my own house and in Donore Avenue and the North Strand, it would appear to me that the real danger is, as the Taoiseach and other Ministers have stressed over and over again, the bombing of our thickly-populated tenement-house areas in the City of Dublin. One wonders what precise steps it is intended to take regarding these people. It seems to me that there has been, in that matter, great uncertainty of touch. It is a long time since the City Manager in a broadcast at, I think, the suggestion of the A.R.P. authorities of the Government, suggested that the people should evacuate their children from Dublin. People cannot evacuate their children from Dublin except under a Government scheme. Instead of purporting to deal with that matter, it should be left alone or it should be dealt with clearly.

Another thing stated as a matter of Government policy in Ennis on Saturday was this:

"The military forces could not be too strong and men of military age and physique should, if free, regard it as a duty to join up. Those unable to join the whole-time forces should join the Local Defence Force but, except under exceptional circumstances, young men should not attach themselves to the Local Security Force, which should be reserved for older men."

I am not one of the young men. Therefore, the matter does not concern me. I should like to ask, as a person with no military knowledge and no technical understanding of the problem, if it is true that the best place for a man at the moment is in the Army? We have all read the newspapers since September, 1939, and surely the various nations which have suffered defeat in this war did not so suffer defeat because of lack of soldiers. Surely, if the broadcasts to America are to be believed—and I accept them in full— what we lack is not man-power but equipment. If more men are to be taken into the Army, it would appear to me that they should go, not into the Army proper but into the Construction Corps. I wonder which is the policy of the Government, because this Bill taxes us to provide for the Army. I wonder whether, in fact, certain types of people should be forbidden to join the Army. I am a member of the Local Security Force, and I was on duty in the North Strand after the bombing. One thing that struck me and everybody else who went there was that the demolition squads, the people who had to pull down houses and to search for bodies, were composed of men who had skill and experience, who needed skilled supervision, who needed great physical strength and who were absolutely indispensable in that situation. I doubt very much, for example, that builders' foremen should be allowed in the Army at all. Have we any rule about that? Quite a number of these people have gone to England, but instead of saying that every young man in employment should join the Army, I wonder should they be encouraged to join the Army?

We were speaking about national spirit a few moments ago. Quite a number of people have had, nevertheless, to go to England to seek the wages offered there. Is it advisable to say that the demolition corps, the Air Raid Precaution services and even the Local Security Force service do not require a certain number of young men? I regard that kind of statement as being apt to be very much misunderstood and as displaying very little acquaintance with the work of these bodies. It is certainly not proper, having regard to the duties we have seen the Local Security Force perform, to say that no young man should join the Local Security Force. It may be that men from 18 to 25, or even up to 30, would be better in the Local Defence Force or in the Army, but in the case of bombing or air raids, the duties to be performed by the police—and the Local Security Force are a police force—are very onerous and they require, even at the North Strand, to take our latest example, young men to perform them. From my own personal experience, I could not agree at all with the suggestion that no young man should join the Local Security Force. I think that we ought to encourage people to join the Air Raid Precaution services, the Local Security Force or the Local Defence Force according to their circumstances and according to their inclinations. Certainly, having watched the Air Raid Precautions people in operation, I am strongly of the opinion that this service should not be manned exclusively by people over 40, still less by people over 50. They do require, at any rate, a certain number of young men.

The view that what we want is soldiers in uniform is very shortsighted. It is an easy thing to say, but it by no means corresponds with our real needs. I hope that is not the policy. I wonder if the Taoiseach before he enunciated his views consulted responsible military and Gárda officers, or medical officers, or whether he consulted the Minister for Finance himself. The Minister has not only to contribute for the Air Raid Precautions or the Local Security Force, but he will have to pay in full for the soldiers. Perhaps he was not consulted, but in any event I think we should have some more close thinking on the matter than is displayed in the paragraph I have quoted.

It seems to me that one of the best ideas put forward and which should get every development it possibly can was the Construction Corps. When the war is over—it must be over some time—we shall be obliged, instead of demobilising our Army at one fell sweep, which would be impossible, to turn a considerable portion of it into a construction corps, so that the more framework and the more machinery you have for that purpose during the war the better for everybody. It seems to me that in this desperate situation there is no use in talking about not having enough men for turf cutting. It should be possible to get men for every job that has to be done, if necessary by compulsion. That may not be a popular thing to say, but when we are in the position the Minister has talked about, where our taxation is increasing and our productivity is decreasing, where the possibility of getting taxes is becoming less and less, then if there is a job to be done, steps should be taken to see it is done. Of course, again it is difficult for a Party Government to do that, but it is easier to do it than to deal with a very desperate unemployment situation later on.

Mr. MacDermot

Would the Senator support the Government if they introduced compulsion?

Mr. Hayes

Senator MacDermot has a right to speak for himself. It is comforting to reflect that he speaks neither for the Government nor the Opposition, but he always has some little remark to make which is going to curry favour with somebody. I think it was the Taoiseach—with whom I sometimes do agree—who said here one evening that Senator MacDermot did not understand the Irish people and never would. I leave it at that. I am speaking for myself at the moment. I have not had an opportunity of discussing the matter with my colleagues, but I think this is a matter on which people should express their own honest opinion. I think if possible that we should have a different type of debate in the Seanad than in the other House despite the efforts that have been made to construct us on a replica of the other House. I am, as I say, expressing my own views. I take the opportunity of putting these questions to the Minister. I sympathise with his statement on a former occasion that he is not a Pooh Bah and cannot answer everything, but I think we should have some clearer expression of policy about evacuation and all these problems than we get from the mere statement that people should experiment with evacuation during the holiday period.

The real problem is the problem of the very poor, and when I say the very poor I do not mean the destitute or the unemployed, but the average person who is working and whose wages does not allow him to keep two houses, one in Dublin and one for his children in the country. We should have some clearer expression than we have got about this matter. I think that the statements we have already had on the question of young men joining the Local Defence Force, the A.R.P. services and the demolition services is not a sound one. I should also like to say that all our nostrums upon which various people pin their faith did not succeed even in peace time in solving our problems. We must increase our production in some way, particularly our agricultural production. After the war is over, I think there will be very little national sovereignty left. That used to be a grand resonant high-sounding phrase in which we all believed, but I do not believe there will be very much national sovereignty left in the world when the war is over. Greater nations than we are appear to be losing it—some of them at war, some of them at peace and some of them nearly at war.

After this war we shall have to live in some particular orbit or combination. We must direct our policy so that we can live and survive the war as best we can and so that we can live in some particular combination because it must be in a combination. There will be no such thing in future as national entities which will be free to do what they like in their own particular sphere— build up tariff walls and do what they please. Both in our education of adults and in our education in schools we must have something better to offer our people for the future that is before them, no matter how uncertain it is. The other nostrum, economic nationalism, did not save us in the past. We now have all kinds of credit schemes and finance schemes which it is alleged will save us if we adopt them. I am not professing to be an expert but I am quite sure they will not save us. I am quite sure nothing simple will save us, and that no kind of Act of Parliament will save us. But our greatest trouble is that we have got into a certain frame of mind, a kind of wilful blindness, which prevents us from seeing things as they are and, therefore, prevents us from doing any thinking along the lines upon which these things ought to be solved.

Mr. Goulding

Senator Hayes is very interesting and his views on a federal state of Europe are very well worth considering, but that belongs to the future. What we are considering is the present and the immediate future. Perhaps I had better go back a little into the past also, as Senator Hayes has done. Senator Hayes told us, as he has told us often before, that the policy adopted by the present Administration has proved a failure, and that nothing has shown it up more clearly than the present situation in the country.

The present situation is not the creation of the present Government at all. I wonder if we had not adopted that policy of self-sufficiency that has been so much derided of late, would we really be economically in a sounder position to-day than we are? Take wheat, for instance. Senator Hayes has told us that but for this wheat policy of ours we would have more wheat in the country now than we have or will have. Surely that is not so. When we imported practically all our wheat, we never had such a stock of wheat that would carry us over two or three years without constantly importing more. Wheat came in to us at regular intervals. It came into every port in the Twenty-Six Counties. It was discharged at Waterford, Limerick, Cork, and Dublin, but it was never stored in such quantities that would carry us through a crisis such as we are facing at the moment. If we had not a wheat policy, where would we find ourselves to-day? If we had not wheat growing in our own fields now, that will ensure us against an absolute shortage of bread during the next winter, where would we find ourselves?

It is a matter for conjecture.

Mr. M. Hayes

It is indeed.

Mr. Goulding

Professor Johnston

I must say that I approached this debate with mixed feelings, in which a sense of sympathy for the position in which the Minister finds himself is perhaps, the principal ingredient. Looking at the Finance Bill as a whole, I think I would say that if it erred at all, it erred on the side of rigid financial virtue and, if I might make a superficial criticism, I would say that comparing this Finance Bill of our Minister with the Finance Bill recently introduced in a neighbouring country, it is a significant fact that we are arranging to borrow only one-eighth of our contemplated expenditure, whereas, in the neighbouring country, more than half of the contemplated expenditure is being borrowed in one way and another and a substantial part of that borrowing is taken from the banking system.

It might be suggested, although I do not personally make the suggestion, what is the use in pursuing a policy of such rigid financial virtue when we live in a world in which rather less rigid financial standards have of necessity to be observed. However, that is by the way, and perhaps it is a somewhat injudicious thing for the likes of me to say. Referring for a moment to some of the remarks made by Senator Goulding, I would say that I would dislike strenuously that this debate should develop into a series of reciprocal recriminations of a definitely partisan type. There is always rather a temptation, of course, to indulge in that kind of thing, and it is a temptation which, I hope, will be resisted.

Mr. MacDermot

It was not Senator Goulding who started it.

Professor Johnston

No matter. However, I hope personally that I shall not be accused of falling into that crime if I explain what my own personal attitude has been to this wheat policy. I think that in the light of events which have happened, it would have been much wiser if the Government in power during the years, shall we say, from 1932 to 1939, had systematically arranged for the import at 5/- a cwt. for which it could then have been got, of enough wheat to supply our requirements for, at least, two years, and to arrange for the storage of that wheat in suitable granaries, following the example of my great namesake in Egypt long ago. Then it would have been a wise policy not to have done anything specially to encourage the cultivation of wheat in this country, while doing everything possible to maintain an economy in which mixed farming and a reasonable proportion of tillage still remained, because where you have the ability of tillage, and the machinery of tillage, a country like ours can go over to the growing of wheat at a moment's notice. Then when the war came on, and it became evident that we would have to rely on our accumulated stores and on our own production, for our food supplies for the next few years, of course the Government would have been wise in doing everything possible to encourage the growing of wheat.

It is frequently maintained that we are in a better position as regards home-grown wheat, because we have been in the habit of growing so much wheat during what I may call the inter-war period, but, actually, we are in a worse position for growing wheat than if we had grown no wheat at all in those critical years. In those years, much wheat was grown on land which should have been used for other purposes, with the result that the land is exhausted, and is not now in a position to grow wheat so as to yield an adequate crop. From that point of view, the wheat growing of those years was a waste in the light of events which have since happened. That is my attitude, and I make it known, not in the spirit of recrimination, but merely as my attitude to a factor in the agricultural position in which we find ourselves to-day. On the other hand, some elements in the economic policy pursued in those years have been an advantage and have made it possible for us now to adjust ourselves more easily to the difficult situation imposed on us by that halfway house between a peace economy and a kind of war economy. One of these things is the success in establishing a large-scale cement industry, relying as it does to a large extent on home-produced raw materials. That is of tremendous importance in the present crisis. In one way in particular, that industry is useful as by means of concrete silos you can preserve fresh grass for winter feeding of cattle and so replace the imported meals, which we can no longer import. The existence of the cement industry guarantees to us the adaptation of our agricultural economy to a condition in which we must feed cattle winter and summer on the material available at our own doors. I congratulate the Government on their foresight in establishing that cement industry.

Coming to more general considerations—and I hope the Minister will not think I am being either pedantic or academic in the remarks I am about to make—we have been passing through a transition period in our national economy. The economy which we had in 1939—whether we were wise in creating that or not is beside the point—is no longer capable of being adjusted to the situation in which we find ourselves. We must adjust ourselves to a war emergency economy, in which we cannot count on importing adequate quantities of fuel and raw materials for the industries which we took such trouble to create. In such a period it is likely—in fact, the Minister himself has said so—that the money income of the community is a diminishing one. I would like some authoritative statement by the Minister or by that battery of financial experts I see sitting behind him, as to what the money income has been in 1939, 1940, and 1941.

It is of the utmost importance in considering a Finance Bill of this kind that we should have some reliable estimate of the money income of the nation and its trend, and of the real income of the nation and its trend. In that connection it is a matter for regret that the recommendation contained in paragraph 366 of the Banking Commission Report has not been carried out. It could have been carried out easily, whether one decides to establish a central bank or not. The recommendation was that a research department be established in association with the monetary body which we still have—the Currency Commission—and that the research department should have access not only to public documents and statistics but to confidential or semi-confidential information in the Government's possession. That research body could keep the Government—and the public if necessary—informed on such vital matters as changes in our national income. It could also make investigations about various elements in the movement of prices. It would have been invaluable in the present situation. The Government has sown its wild oats in the somewhat distant past, and after treating its subjects to a diet of husks for a number of years, it is now on the way back to more civilised conditions in which calves are fattened before being slaughtered.

At any rate, I congratulate the Government on its orientation towards sounder economics and sounder finance, though we may be going too far in the direction which has been hitherto regarded as sound, in the emphasis laid on taxation as a means of raising the wind. The Minister says that the money income of the community is diminishing. We know that price levels— especially those which concern the ordinary consumer — have been increasing. The increase in the cost of living is, I think, in the region of 25 per cent. If that be so, and if the aggregate of the money incomes of our people is less than it was, while the prices they have to pay are higher than they were, that in itself is a statistical index of the decline in the real income of the country, in terms of goods and services. I hope the Minister is unduly pessimistic in his implications that the aggregate of our money income is diminishing. Personally I think it inevitable that that aggregate should diminish at first. It did diminsh in the first year or so of the present war. If meanwhile an adjustment of our economy has been made to the new conditions and the opportunities presented by the emergency, we should now be at a stage when the aggregate of the money income is showing an upward trend. If so, our position, though difficult, is not as difficult as it might have been. I am especially anxious that public policy should do nothing which would in any way impair the natural tendency of our people to adjust themselves to a difficult position and by expanding production to maintain if not increase their real income.

In a period of transition such as that through which we have been passing, while the nation as a whole has been impoverished, the proverb, "It is an ill wind that blows nobody good," finds illustration. Certain sections of our economy find themselves tempted to profit by the existing situation and take advantage of opportunities for profit-making which so to speak were handed to them on a plate. Some of the sections of our economy which were presented with these abnormal profit-making opportunities were, for example, the millers and grain merchants. They had been doing pretty well for themselves during the previous ten years. In fact, they might almost have been described as the spoilt children of the previous economic regime.

Last autumn these interests were presented with an opportunity to buy many hundred thousand barrels of oats at as low as 12/- a barrel, with the certainty in the minds of every rational person that they would be able to sell that oats at a very much higher price within six months. As a matter of fact, that was realised, and I do not know how many hundreds of thousands of pounds these favoured interests were able to put in their pockets by that means. That was a windfall for them and a real loss to farmers, many of whom sold the oats at less than the cost of production. If the Minister for Finance could have included in his Finance Bill some method of scooping some of this money out of the merchants' and millers' pockets into the public treasury I, for one, would have vigorously applauded his efforts in that direction.

In turning now to the agricultural section of our community, I do not wish to imply that every section in this agricultural portion has interests exactly the same. In other words, I am aware of the fact that the agricultural economy itself falls into numerous sections. However, that is by the way. For the purpose of this consideration I speak in a general way of the agricultural interest as a whole. Now it would be true to say that in the previous decade before the present war agricultural interests as a whole were somewhat under the weather and it is also, I think, true that in spite of many untoward incidents, like the outbreak of foot-and-mouth disease and the comparatively poor prices which we are obtaining for our exports, the incomes of the agricultural section of the community are now showing at long last a certain tendency to increase. Now it would be disastrous if the Minister should get busy with his financial extracting machine to cut that wheat, so to speak, before it is ripe. In other words, let these incomes increase a bit more before seeking to increase the incidence of taxation on the agricultural community.

I am glad the Finance Bill contains no special provision which bears specially heavily on the agricultural section of the community but, at the same time, the present situation is one in which agricultural production is about the only form of economic activity which can expand, and which is not prevented by almost impossible circumstances from pursuing a policy of continuous expansion. That being so, a time may come in the next year or two when agricultural incomes are even higher, and when it comes the Minister would do well to keep that fact in mind, to keep it in the back of his mind as something which he may consider having a "go" at by way of special taxation. That is perhaps an unpopular thing to say, but I have more than one reason for saying it. I will postpone consideration of some of these reasons. In the meanwhile it is more important to emphasise that taxation should not be increased on the agricultural section of the community now, as they are going through a transition to a new economic state, and in that they are incurring a heavy strain both on their capital, where they have it, and on their credit. Now it would be a mistake from the public point of view to levy taxation on any private interest which is in a position to expand production, because it might happen that taxation would undermine the credit of the interest which was trying to expand production and might prevent production being expanded. In that way the ultimate effect of taxation would be to undermine the credit of the nation as a whole, in addition to undermining the credit of the particular interests whose credit had been affected, and whose production had been paralysed by that taxation.

On the contrary, I think farmers should receive every inducement for the use of credit where they have it, with a view to adapting and expanding their agricultural activities. I want to give here an example of how the farmers' need for additional credit has been intensified by the circumstances in which they now find themselves. There were many farmers, both big and small, whose principal reliance was perhaps on grass in the summer and on imported meals which they bought from the merchants in the winter. In fact, all the year round a considerable amount of imported, or at all events bought cereals were used by them as part of the normal machinery of production. These farmers were then in a position in which they bought supplies for a week or perhaps a month and paid for it in six months' time. There was generally a time lag of about six months between the payment and the materials they got, but this season these farmers have been put in a position in which they have to produce on their own land the produce with which they hope to feed their animal population during the next 15 months, and they have to incur extra expense for labour as well as other expenses. In the process of producing those foodstuffs they still have to keep up payment due to the merchants for the cereal produce which they have bought, so that it imposes on that section of farmers an additional financial burden, which must be met from some source or other if agricultural production is to be adjusted and expanded.

It would be a wise expedient of public policy to do everything possible to encourage farmers so situated to use such credit as they may possess productively in the process of making that adaptation which is as necessary for our welfare as it is for theirs. In fact the position is now, that where formerly the banking system was perhaps doing all that was necessary in financing the merchant while the merchant financed the farmer, the farmer now must either finance himself or get his finances from the banking system, because the merchant no longer needs so much credit and the farmers have not got into the habit of expanding their reliance on banking credit. In general I would say, if it does not seem too academic a statement that the credit of the State depends in the first instance on the tax collecting efficiency of the Ministry of Finance, and we will all agree that while there is nothing wrong with the tax collecting efficiency of the Department of Finance, at another remove it depends on the taxing capacity of the citizens, and that in turns depends on the productive capacity of the citizens.

Therefore, ultimately and fundamentally the credit of the State depends on the productive capacity of the citizens, and only in a more immediate and superficial way on the capacity of the Treasury to rake in, in the form of taxes, wealth from the country. Our policy should not be a policy which is likely to impair productive capacity and make it more difficult for particular interests to adjust themselves to the new economic situation and to expand production in it. That is why the only feature of the Bill that causes me some disquiet is whether it does not rely too much on taxation rather than too little as a means of extracting the cost of running the country for the next 12 months.

A great deal could be said about the danger of inflation, if we failed to balance our Budget. It used to be orthodox finance to maintain that failure to balance the Budget by taxation and legitimate borrowing was the first step in the process of inflation, but I do not know whether that is quite such orthodox finance now, and certainly in the light of experience, both in England and elsewhere, it would seem that there is a good deal more to it than that, and that inflation is a thing about which one cannot dogmatise. If a rough and ready definition of inflation is wanted it might be defined as an effort to spend money income which is there on goods which are not there, or putting it another way it is an increase in prices relative to money incomes. Now when a Government borrows from a banking system rather than borrowing from private investors it leaves money in the pockets of these citizens which would not be there if the State had proceeded on more orthodox lines by way of taxation or borrowing from private sources. So that, to that extent, the aggregate of the money income of the community is higher than it would be if the State obtained all its requirements by way of taxation or borrowing of savings. The fact that money is left in private possession which, strictly speaking, should have been taken possession of by the State, constitutes a kind of mechanical condition which facilitates inflation but which does not constitute the essence of inflation. The essence of inflation arises when you have competition between private persons who are tumbling over one another to spend all their money and the State is also spending what it must on goods which are in short supply.

Recent experience in England has shown that you can have a considerable amount of borrowing from the banking system but, so long as private individuals are content to allow their cash balances and money in the bank to increase—so long as the velocity of circulation, as it is described, tends to diminish—the essence of inflation does not begin to exist. In our own case, for example, if I am right in thinking that farmers' incomes are tending upwards, so long as these farmers are using their additional incomes to pay off their loans to the banks or so long as they are content to allow their deposit balances in the banks to increase, the only effect of that process will be that the banking system will show a diminishing total of loans to agricultural customers and an increasing total of sterling assets. From the inflationary point of view, the Minister for Finance might regard that process with equanimity.

On the other hand, there is the possibility of inflation when certain privileged sections of the community are able to expand their money incomes without expanding the contribution which they make in terms of goods or services to the common pool. That starts what is called the "inflationary spiral" of wages and prices and I think the Government have been quite right in rigorously resisting any tendency, either by trade unions or business interests, to expand their money incomes and monetary profits in circumstances in which their contribution in goods or services was likely to diminish rather than increase. I approve of the Government's attitude to money increases in wages in general but I think it might, perhaps, be qualified more completely than it has been qualified. The Government has increased the allowances in money for the more unfortunate sections of the community—the dependants of the unemployed and others—and they have introduced a number of allowances in kind—bread and, I think, milk—for certain sections of the community. That principle is one which ought to command our hearty approval and I should like to see the Government go further in the provision of what one might call an "iron ration" of necessary food supplies for every person in the community, which he should be able to claim as a civic right. Especially in the present hard times, that is a thing which, I think, ought to receive the serious and sympathetic consideration of Government because, even though we are all passing through a time of great difficulty, that very fact, in itself, is all the more reason why the poorest section of the community should be guaranteed against the major horrors of starvation and destitution. The best way that can be done is by their being allowed, as a civic right, a certain minimum provision of such necessaries as potatoes and milk. They are much less likely to misuse such things than they would be to misuse actual money, if given to them in increased amount. The whole situation would also be more completely under the control of public authority.

Another step in the same direction would be the provision of family allowances as a supplement to wages. That raises all sorts of difficult questions but, at the same time, questions which clamour for consideration and investigation, especially at present. I know that the Labour Party in the neighbouring country and, possibly, in this country are not particularly enthusiastic about family allowances. If their position is that every occupation should be paid such a wage as would maintain in decent comfort each marginal worker in that occupation whose family dependents were of the maximum number, then I think they are maintaining a position which is economically impossible, from the point of view of employers, and financially impossible from the point of view of the State. If the members of every occupation were to be paid a wage big enough to sustain in frugal comfort Mr. X, his wife and ten children, then all the other members of that occupation would be obtaining far more money than would be enough to sustain them and their more limited number of dependents in frugal comfort. The prices of the goods they turned out would be inflated in consequence of that phenomenon and, altogether, the thing is economically impossible. On the other hand, it is not impossible to frame a scheme by which, either with or without the co-operation of the National Treasury, the wages of persons in industrial occupations could be supplemented on the basis of the number of their dependents. If that principle could be introduced in conjunction with an extension of the principle of grants in kind, then I think that every moral aspect of the demand for increased wages in present conditions would be fully met and the State would be perfectly justified in sternly resisting any general tendency for wages to rise.

There is another possibility of inflation: it might arise in consequence of the sterling foundation of our currency itself becoming inflated, but this is a danger which it is for our neighbours to guard against, rather than for us. I have no doubt that they are perfectly well aware of the danger from their own point of view, and that they will take whatever steps are within their power to forestall it. Another aspect of inflation is one which, perhaps, has not received adequate consideration in this country yet. When you have, in a country situated as ours is, a condition in which exports are possible but imports are becoming more and more impossible to obtain, then you might have a situation in which incomes derived from production of goods for sale on the export market would be increasing, while the natural correlative to such an increase would be an increase of imports if that were possible. You might have the situation in which money becomes expanded, but in which there would be a constantly diminishing supply of goods available on the home market. Some such situation did exist between 1918 and 1920 and accounted for the inflationary movement which affected particularly the price of land in these years. So long as our farmers are able to increase their deposits or to repay their loans to the banks there is nothing very much to worry about, but if our exporters began to expend their money on the limited supply of goods available on the home market some kind of inflationary movement would be inevitable, and I think the Minister would be well advised to consult his "debt and investment council" and consider what steps might be taken in order to counteract that dangerous tendency. In the meantime, since imports are practically impossible to obtain in any case, why continue the farce of putting additional difficulties in the way of imports by maintaining high tariffs or, indeed, any tariffs on consumers' goods, which we would be glad to have under any terms under the present conditions?

Peadar Mac Fhionnlaoich

Ní thaithnigheann an Bille seo le haoinne ach tá fhios againn go bhfuil sé riachtannach. Ba mhaith liom cúpla poinnte a bhaineann leis an mBille seo a luadh. Sé an locht atá agam ar an dtairgsint seo i dtaobh foraoiseachta ná go fhfuil sé ró-bheag. Is suarach an méid é le foraoisí d'aithbheochaint in Eirinn. Dar liom go ndubhairt an tAire ins an Teach eile go bhfuil 800,000 acra de thalamh na hEireann ionchurtha faoi chrainn, sé sin níos lugha ná milliún acra agus níos lugha ná cúig sa chéad d' ithir na hEireann.

Leas-Chathaoirleach

Ní maith liom cur isteach ar an Seanadóir ach is dóigh liom go mbaineann na rudaí seo leis an mBille a bheidh os ár gcomhair an tseachtain seo chugainn.

Peadar Mac Fhionnlaoich

An é do thuairim nach mbaineann na poinntí seo leis an mBille seo?

Leas-Chathaoirleach

Ní dóigh liom go mbaineann.

Mr. Douglas

It takes a strong mental effort to intervene in this debate on a hot afternoon, particularly after reading the recent very depressing speeches we had from the Minister for Supplies and from An Taoiseach, followed by the wholly depressing speech we had from the Minister for Finance to-day. It is unfortunately my own conviction that the depressing statements made by these Ministers are quite justified and that the people generally have not at all realised the position. They got so used to listening to Ministerial utterances in the past when there was little danger that now when there is real danger, they are inclined to pay little attention to the warnings addressed to them and they think that "wolf, wolf" is being called when there is really no necessity for it. The Minister for Supplies himself complained that people were not paying sufficient attention to the actual facts of the situation although they had been warned again and again.

There were in the Minister's speech to-day one or two brighter touches which interested me. First of all he was good enough to explain his consideration for us by saying that he would not go into figures—I do not know whether he said the maze of figures or the amazing figures—which had already been put before the Dáil. Whether he refrained from doing so out of respect to our age or intelligence, whether he came to the conclusion that we could understand the Bill without the figures, or that we were more intelligent than the Dáil, or the reverse, I do not quite know. It interested me but not nearly so much as the suggestion at the end of his speech for solving the problem of future wars by a League of Finance Ministers. I should certainly prefer to see him cartooned with the dove of peace rather than as he sometimes is cartooned but, nevertheless, when one comes to think of some Finance Ministers in other countries, it occurs to one that a better method of avoiding war than by simply calling all Finance Ministers together must be found.

The other suggestion he made—I do not know whether he included me amongst those for whom he mentioned it—was that a long term policy might be introduced for finance, and presumably for taxation, with a flourish of trumpets. The idea of introducing a Budget with trumpets seems to be superfluous, because there is no doubt whatever that if there is one thing you may be sure of getting a good Press for it is proposals for taxation. The fact that those who criticise taxation do not get the same publicity makes one wonder whether it is really true that we all hate the idea of taxation and that we would like to do without it.

It seems that most of us have sufficient political sense to realise that taxation is just as much an essential part of carrying on the affairs of the State as any other legislation and not something to be apologised for, provided it is imposed on proper lines had with proper care. There seems to have grown up an idea—I do not say it started with the present Minister—but there seems to have grown up, if you can speak of a want of originality growing up, a sort of acceptance amongst the various Ministers for Finance that they must not devise any new taxation or any new methods of taxation, that they must go on adding to the old. It is the easiest thing to do. It requires less mental effort and no doubt in the first year or so it will probably cost less to increase existing taxation.

I thought last year that, with the possible exception of income-tax, the Minister had got pretty well to the limit of most of the existing taxes. I found I was entirely wrong. For my part I criticised the Minister for the direction which a number of taxes took. Even though I agree that he had to get taxation somehow, that does not mean that he has to get it anyhow. I think I am correct in stating there is scarcely, if at all, a new form of taxation in the Budget. To have to raise taxation to such an extent simply by adding to existing taxes obviously involves a very grave danger that taxation may not be so equitable as the Minister seems to think. I am very seldom foolish enough to read my own speeches but in the course of looking back for another document I came across a speech I made this time last year on the Finance Bill. I find that I endeavoured to draw the attention of the House and the Government to my conviction that there was just as much need for a definite State policy in regard to economic problems as there was with regard to defence, and that I rather expected it would be economic danger rather than military danger that we would be faced with. I then outlined to some extent the fear which I felt with regard to maintenance of industry and with regard to supplies. It is no satisfaction whatever to say that what I said was true. But one of the remedies which I then suggested I believe to be still a remedy. I believe that one of the causes why you have the Minister for Supplies, for instance, complaining that people are not paying attention to suggestions that have been made—to a certain extent that is also implied in the Taoiseach's speech—is the fact that, whereas you have had Parties coming together and a certain amount of joint action in the matter of defence, no such joint action has taken place on economic matters and no effort, as far as I am aware, has been made to obtain it.

Apart altogether from my own views, which are well known, it seems to me to be the height of folly—especially when you have a statement made by the Minister for Supplies that Party politics do not count nowadays—to go through a crisis such as we are facing with a purely Party Government. I think that is one of the reasons why you are not able to get the people to believe or realise the danger. If there was a National Government or—if that were quite impossible or undesirable— even if you had an economic council I believe the existence of a body of that kind would waken people up to the fact that there was a danger and that measures which a great many people can take and ought to be taking would not be put off to the last minute.

The Minister for Finance no doubt will criticise me and say I want trumpets or something of the kind, but I still think that whereas you cannot have a long-term policy in war, we must have an economic policy such as will appeal to the people and will make clear the way in which you wish them to act. Just as in defence, I believe—although there are always ultra selfish people—a very large proportion of the population would be willing to follow a policy if there was a clear lead. I am utterly unable to find that lead.

For instance, with regard to the question of unemployment and the question of prices, I want to put a problem to the Minister, a problem which many people are now facing and which a great many are certain to face within the next six months. Where an industry or a trade or a business finds that its turnover has substantially decreased because of lack of supplies, or for other reasons, and that by some increase in prices it would be possible to make enough profit to make ends meet and retain the present staff, should that be done or should prices remain at the previous rate and the necessary number of staff be sacked? That is a practical problem. In the various speeches we had on Order No. 83 and other matters, I have not seen anything I could regard as a definite lead. Until comparatively recently it had been quite impossible to increase prices because the person who did so in order to maintain his staff, even though he was making no profit, would be accused of profiteering and would be liable to be sued and fined because he had increased his price somewhat in order to maintain that staff in employment. I am not suggesting that it is an easy question to answer, but what I am suggesting is that this question of the maintenance of employment during a period of acute crisis, and the question of prices somehow or other have got to be related to each other in a way we can understand and endeavour to follow.

I notice that the Minister for Supplies, for the first time,—it was certainly quite contrary to what the Prices Section of his Department told various people—did say that the maintenance of employment was more important than the maintenance of the lowest possible price. He was not at all explicit. Of course I only read a newspaper report. I should very much like if the Minister for Finance could tell us something about what is the definite Government policy in that regard. The problem we are facing is an acute one for many of us. Whereas it would be quite different if we were in England, on the whole, I am inclined to think that here the proper method is to keep your staff going as far as is practicable. Ordinary competition would prevent the carrying of prices too far. It would be better, even at the risk of a certain amount of increase in price, to keep people employed than reduce staff simply in order to keep the price low. I am not sure. I am open to conviction. I would be perfectly willing to follow a national lead if we could get a definite lead in that matter. The line certainly 12 months ago was: "no; prices must remain low at all costs and, somehow or other, you have got to keep your prices down."

In the early days of this House I had occasion to apologise to the House for a mistake I had made in relation to the Standing Orders. After the sitting was over the then Chairman, who was the first Chairman of the Seanad, called me over and said that, as an old and experienced man, he would like to give me a little bit of advice. He said: "It is very bad politics to admit you ever made a mistake. Take my advice and never admit, in public at any rate, that you ever made a mistake." I think that was bad advice.

For that reason I approve of and admire the Minister for Finance in coming here and telling us quite frankly that he made a mistake when introducing the Budget, and that he found, whereas he only intended to wound, he might actually have the effect of killing; while he only meant to cause a certain amount of financial embarrassment by taxation proposals, he found that the effects of the first taxation proposals might have been the actual closing down of certain industries. I believe he was perfectly right when he came to that latter conclusion. I believe that was the case. I also believe he was very wise indeed in dropping the proposals for retrospective taxation, and I do not think when he introduced them that he realised what extremely awkward situations could arise. In view of the attitude of certain people towards the Minister and the ill-informed criticism I have seen, I would like to give some reasons why I believe it was absolutely essential for him to drop the proposals for retrospective taxation with regard to business.

I can best illustrate that by mentioning the case of a small manufacturing concern in which I had no financial interest but which is run by a friend of mine. He came to me as soon as he had discovered the nature of the Budget proposals and told me that as a result of increased turnover he had made a fair increase in profit, and believing, I am sorry to say rightly, that a great deal of his normal trade would not continue, he had put the whole of that profit into new machinery and stock in the hope of carrying on and keeping his people employed. He asked me what he should do, or whether he should go into liquidation at once, because he was now without cash to pay the taxation proposed. I mention that as a kind of thing which you would inevitably get if you introduced the principle of large retrospective taxation into business. When profits have been assessed following the Finance Act of the year, and steps have been taken to put any spare cash into machinery or stocks or buildings or something which cannot be immediately realised. As the Minister has admitted, such a form of taxation might actually cause the closing of a business.

There is one matter on which I personally feel rather strongly, not in relation to this Budget alone, but to all Budgets, ever since income-tax grew to such a high figure. It seems to me —and this is where I disagree with my friend Senator Hayes when he says that income-tax is a just tax—that income-tax on an individual's income which he could spend for the purposes of his living would be a just tax, but to treat income paid out for the purpose of personal expenditure in exactly the same way as profits made and remaining in the business and used for the purpose of further expansion is, to my mind, a bad policy. It did not matter much when income-tax was started at 2d. in the £ in England, or when income-tax was at a comparatively low figure—a great many of the newer industries were started when income-tax was 3/- and 3/6 in the £— but it is quite a serious matter when income-tax is 7/6 in the £. I am convinced that there is a very grave danger in the case of industries which are now in their third or fourth years of existence—and I may say en passant that I am not speaking for any industry in which I am personally interested— that they will find themselves, after ten years of existence, in far too weak a position, because it will be quite impossible to make even small payments to shareholders and provide adequate reserves.

I am in favour of the principle of limiting the amount which can be paid out to shareholders during the emergency, but I go much further than that. For my part, I am, and always have been, right from the beginning, in favour of the principle of an excess profits tax for the period of the emergency, and I think one of the faults of the present Government has been their failure to devise a fair and adequate method of obtaining an excess profits tax which would not be too great a drain on existing industries. I said that the Government have failed, because they did not bring in that tax a year ago. We need not go back over that now. They failed in attempting to make it retrospective, and they did not make any adequate provision to provide for an excess profits tax over the period of the emergency. For the sake of argument we will assume—I hope it is wrong—that the period of emergency is likely to be one of five years. I would be perfectly satisfied that any industry or trade should be taxed 75 per cent. or 80 per cent. on excess profits over its pre-war standard during that period. But I am not at all satisfied that you can, without grave danger, as was proposed, take one good year out of five and impose a tax of 80 per cent., and risk two or three years of losses which would mean possibly the winding up of the company. If you take it over five years, and provide for repayment, if there is a loss above the amount of profits paid, then I think you could get a considerable amount of excess profits and, at the same time, avoid the risk of serious danger to any of the industries which would not then be worse off, and would run no risk of being worse off. The fact that you were taking a certain percentage of the profits made in excess of the pre-war standard, and that it could be paid back if there was a loss, would, to some extent, strengthen the position of the concern, as they could sell as much at low prices without having to make provision for dangers ahead which could not possibly be foreseen.

If the Minister does not like being asked to have a long-term economic policy he will realise how extremely difficult it would be for any industry to have a definite policy over the period. Some industries, including those of which I have first-hand knowledge, had substantial increases in their turnovers during 1940. That turnover went up by leaps and bounds in certain industries following the circumstances of the summer, when we had the Ministerial speeches advising people to lay in stocks. Shopkeepers at that time laid in very substantial stocks, with the result that there was considerable trade for six or eight, or nine months. It was not fully maintained partly because the effect of the speeches wore off. It could not possibly be maintained because the supplies were not there in 90 per cent. of the industries. If the tax as originally proposed had been proceeded with, several dangers would have existed. If you took 75 per cent. of the whole property by the Minister for one or two good years, you are faced by a situation in which, in order to maintain employment, a big drain would be imposed on the concerns affected. A great deal of your industrial policy might thus be seriously injured, if not destroyed by this step, but if actual excess profits only over the whole emergency period were taxed, I believe it would be a wise and proper policy and would result in no such dangers.

I do not think it is too late yet—the Minister would be well advised to do so—to withdraw the excess corporation profits tax and substitute a revised profits tax. Even now the situation could be met by a fair system of tax which would take the profits and losses over a long period into consideration. I am putting forward what seems to me to be a reasonable and adequate method of getting excess profits tax over the period of emergency, which does not cause the same danger to firms as the method originally proposed in the Budget and now before us in a modified form.

I do not want to cut the Senator short, but this Bill deals with taxation. The Appropriation Bill deals with expenditure.

The McGillycuddy

As regards the foot-and-mouth disease, I suggest that the Government is very much to blame for allowing it to spread from Dublin to the Kerry mountains. In England they have had this disease again and again and have managed to keep it under control. Before the war it was a very minor problem. When it appeared here some years ago—in 1927, I think—the then Minister for Agriculture stamped it out in about three weeks. We all know what is happening here at the present time. In a country where three-fourths of the money required for our Budget comes from the agricultural community it seems incredible that the outbreak has been treated by the Government as carelessly as it has been. There was no general standstill of any kind throughout the country. I suggest that if, at the very outset, the Government policy against this thing had been a general standstill, it would not have gone so far. It has led to very grave injury to the country, and I suggest there is no guarantee that it will not continue for another six months. A commission of some kind, independent of the Civil Service, should be set up to examine the whole policy, to find out exactly what collective action the Government took to stop the disease, how the Department had prepared for any outbreak which might take place, and what effect certain interests in the country had on the precautions which were taken to keep it under control.

Amongst other things we appear to be extremely exercised about essential supplies, and I might say this, that a year ago I wrote to the Minister for Supplies a personal letter asking him if he would take a census and get some control of wholesalers and their stock and make issues as they were required. I think most people when this war broke out had a general idea that we would probably suffer from the effects of an attempt to isolate one of the belligerents, and in fact we have suffered very severely. The Minister wrote me on that occasion and thanked me very politely for my letter, and said he had no reason to consider that a rationing scheme of any sort or kind was necessary at the time. The question of military equipment has been raised, and one rather gathers from the broadcasts that the Taoiseach has made at different times that there appears to be a shortage of what is required for the Army, for which we are asked to pay £9,000,000. I suggest that in the meantime these men should be used for some of the other purposes to which Senator Hayes referred, such as civil work, on turf work, and A.R.P. On that I would like to say a few words. I have had experience, practical experience, of the necessity for adequate and complete A.R.P. precautions in three major cities, and I am not at all satisfied that the Government have taken adequate steps to secure us in case of eventualities which might occur. I will say no more than that.

The outstanding thing in all the A.R.P. service is the fire-fighting. It has got to be a disciplined service, and I suggest that the surplus soldiers who apparently are not equipped should be trained and allocated to the various big towns, so that if we do suffer any of the misfortunes which we hope will not occur we will be prepared right up to the hilt to do what we can to minimise them. I would like to point out that however good volunteers may be, you want very large numbers of them, and they cannot go on working hour after hour. They have got to be constantly relieved, and that could only be found if you have an adequate trained personnel to jump into the breach. I should like the Minister to consider that as a matter of policy as regards A.R.P. for the whole country.

Leas-Chathaoirleach

I should like to ask Senators to confine themselves to matters properly arising on the Budget, and not to discuss matters which will properly be dealt with on the Appropriation Bill. It is a waste of time to have long discussions on matters of Departmental policy on this Bill.

Senator Hawkins says that there was opposition previously to the growing of wheat. Previous opposition had nothing to do with the position last harvest and this spring. Weather, of course, has something to do with it. Whatever you may do in the factories and workshops, when you are on the land trying to sow and reap, you have to take the weather into account. You can increase the area under wheat to a certain limited extent, but anybody who knows the country knows the farmer's attitude to his own land. When he is the owner of his land, he does not want to abuse the soil any more than he wants to abuse his horses or his workmen. Despite all that has been said and spent and all the propaganda and advice, the necessities of the situation are the great compelling force. The necessity was there and, despite that necessity, there has not been that response on the part of the landsmen to the requirements of the situation that would be adequate. It is all right saying that men made speeches against the growing of wheat. Men have said that the growing of wheat was uneconomical. Senator Hayes has said that if we had not had all the propaganda in favour of the growing of wheat, the probability was that there would be more wheat in the country. I have turned that statement over in my mind and I have come to the conclusion that it is true—that, if there had not been that drive, we would probably have more wheat stored in the country than we had when the war broke out and that we would have been in a better position to start in on the growing of wheat than we were.

Apart from the growing of wheat at all, take the general position in regard to food—wheat and other crops. Wheat produces only one kind of food. I made a statement here earlier in the year which was applauded by some members of the Government Party, that the growing of potatoes was not any less important than the growing of wheat. The same remark applies to other grain crops. Apparently the Government have not yet got any figures from the census of tillage for this year, and that is something we should have. In fact, I suggest that there has been some failure on the Government's part in not having these figures weeks ago. They would enable the Government to take stock of the position, enable them to arrive at a decision as to how the food was to be distributed, and what stock the people should dispose of, because we ought to make sure, first of all, that we have sufficient food for humans, and should not place ourselves in the position of trying to feed stock for which we are not likely to have food. We have not got the returns yet, but I think we may accept it, from what the Taoiseach said, that our ploughing campaign has not come up to expectations, and will certainly not provide us with our full requirements.

I believe myself that there has been failure on the part of the Government or there would have been a greater area under tillage. I have gone into this matter at length on previous occasions. I have had various motions in this House urging a policy that I believe would have brought a response from the farmers of the country. There are limits to what the farmers can do. We know that at present, from every district in the country some of the best labourers are leaving the farms and are going off to another country. That will leave a rather terrifying situation for the farmers' next harvest. It is something that should be immediately looked into, because, mind you, there is not much point in sowing a harvest and attempting to reap it if sufficient labour is not available to save it. If people go hungry this year, or are short of supplies; if animals have to be killed before they are matured, because we are not able to harvest the crops we have sown simply owing to the fact that men have left the country, that I suggest is something that should not have been permitted to happen.

I think that the Government should take action immediately. We know that thousands of men are leaving our towns and cities also. They might not be so successful in the harvest field but we cannot afford to lose at harvest time particularly the men who have helped with the sowing of the crop. If we are going to be short next harvest, remember it is not the farmer who is going to be hungry first. We do not know what situation is going to confront us but I urge on the Minister that this is a matter which should be examined. I believe that if the Government had adopted a credit policy which would provide the farmer with the means to enable him to employ sufficient labour, we would have more food now. A scheme of that kind would have been worth anything we could spend on it, because there are times when we cannot translate money into goods and that time is fast approaching.

Take the situation in regard to fuel. Again I do not think anybody can suggest that we had not the means to produce fuel. The materials were there and if we have not succeeded in providing ourselves with fuel for the winter——

Peadar Mac Fhionnlaoich

Bhfuil an méid sin in ordú? Ní rabh mise in ordú nuair a bhi me ag cainnt faoi fhoraoiseacht.

Leas-Chathaoirleach

Tá faitchíos orm nach bhfuil ach níl aon leigheas agam air.

Mr. Baxter

I was going to say that the problem with which the Minister is confronted is the problem of finding taxation. He adverted to the fact that revenue is dropping and he was not very optimistic about the future. If the Government had taken the necessary measures to provide employment for many people in the provision of food and fuel, it would have created for these people a capacity to pay taxation which they have not at the moment. Senator Mac Fhionnlaoich and others think that I should not say that and that I should be ruled out of order, but this is something that should be said so long as I believe it.

Leas-Chathaoirleach

It is not the truth of what the Senator says that Senator Mac Fhionnlaoich questioned at all but whether it had any relation to the Finance Bill.

Mr. Baxter

If I am not in order in stating that the taxable capacity of the inhabitants of the country would be considerably higher if a great many people who at present have no taxable capacity were put to work, I do not know what one could say on the Finance Bill. It was said, and said repeatedly, in the other House. Take the situation in regard to fuel. It seemed to me, from the statement made by the Parliamentary Secretary, which I read this morning, that he is attempting to face up in a courageous fashion to the problem, but unfortunately it is rather late to start to get fuel from the bogs now. Had it been done in March or April last a considerable quantity of fuel could have been saved meanwhile.

The Taoiseach, in a speech the other day, urged those of us who were accustomed to the work to produce a second crop of turf. The Taoiseach cannot be familiar with conditions in the country if he expects a farmer to produce a second crop of turf at the same time as he has to attend to his other crops. If you expect farmers to make their hay, to build their turf into clamps and to attend to their other crops all at the same time, I am afraid many of our cities and towns will be left without fires this winter. It is not the men who are trying to save their harvest and to get in their hay at the same time as they are expected to produce turf who will be responsible for this failure. It is the Government.

The Minister has indicated that the Government have had to raise funds by borrowing and that they have reached a rather precarious position. Senator Johnson gave his views about borrowing. Perhaps one might say that it was a somewhat academic discourse, but what puzzles me is this. This is a point I have never been able to understand, and I should like some enlightenment from the Minister. On other Budgets, before ever there was a war, I urged how highly important it was to have our land fully stocked, and I asked that, if necessary, money should be lent to the farmers to enable them to stock their lands to the fullest extent. The Government, however, threatened us with the danger of inflation before there was any war at all. They talked a good deal of nonsense in my judgment. The Parliamentary Secretary has stated now that the Government are going to back turf production as long as their finances last. I am not quite clear whom he was referring to, whether to the county councils or other people, but if you look at the other side of the Channel, you see that the British Government have authorised the issue of another credit to the tune of £1,000,000,000. What is the backing for this £1,000,000,000? One thing certain is that it is not gold, unless it is the gold that has yet to be mined in South Africa. As far as we can judge the backing for it is the earnings of those who are manufacturing bombers, torpedo boats and shells.

I want to ask the Minister what the Parliamentary Secretary meant in stating that the Government would continue the production of turf as long as the finances lasted. Senator Johnston spoke about the dangers of inflation. Authorities outside this country believe that you cannot have inflation so long as you have people available for employment in productive activities. I want to ask the Minister how are we going to continue turf production so long as our finances last? What is wrong in our credit position that prevents us getting money to put men at work on the bogs when you would be able to put the turf produced against the credits that would be issued?

What do men want when producing turf? They want food and clothing, and they have to pay their rents. If you can provide them with these things, if you can give them their food and clothing and pay their rent, cannot they go on producing turf or, if you can give them the thing you call money, cannot they go on producing turf and provide these things for themselves? I have said earlier that I believe that money really is service and labour translated into paper, coins, and so on. I want to ask the Minister for Finance to tell us what is wrong with our position here that we cannot find credits to pay our people to go on and on producing turf? You have something there that you can translate into cash. You can fix a price that will pay every penny that has to be expended on its production.

What is wrong with our community here and with the Government operating in the name of the community that we cannot construct some organisation and some form of recognition for services given that will enable us to get on with this kind of work? If we have not succeeded in doing that, I suggest that the failure is the Government's failure. To get up and declare that we are going to be short of fuel because we cannot provide money to get the turf cut and reared is to my mind an appalling confession of failure at a time like this. If it were required for the production of goods that were to be exported out of the country or if it were to be given to people to spend on goods which were imported into the country I could understand that there might be certain risks that people were not prepared to take. It seems to me we are prepared to take the risk of going cold and hungry rather than the other risk.

In regard to inflation, personally, my opinion is that the farmers, at any rate, could do with a bit of inflation to-day. Senator Johnston suggested that taxation ought not to be levied on us to-day that would take from us any of the little bit of money we are putting by. I would like to meet a farmer who is putting money by. In my own experience, the farmers never had as tough a time, not even during the economic war. Many of them have cattle that they cannot market, and there is a prospect of grass being short and fodder being short in the winter. To say that farmers are putting money by is not true. In conditions like these, the farmer would like a bit of inflation. He could put up with it. It might help him a bit out of some of his troubles if there was a slight inflationary tendency. It would put more money into circulation in this country and would in turn give the Minister a chance of taking some of it back, just as they are doing in the other countries where they endorsed a huge volume of credit the other day. Men are given work and they earn money, and from each £1 earned there is a certain amount taken by the Minister for Finance, and, so to speak, stored away for another day. All I can say about it is, that I would not like to be the Minister for Finance in that other day who would have to make provision in his Budget for the interest on all that stored-up money. It is going to be a very funny situation indeed, when the Minister for Finance will have to pay interest and sinking fund on all these moneys which the citizens are lending to the Government of the day. They are managing to carry on with that scheme anyhow, and managing to do marvellous things, to have amazing earnings and to have production of every type and description that human science and ingenuity can invent.

We cannot get food and fuel in a country where we have enough land and bogs, and unemployed men standing at the street corners and at labour exchanges. Why cannot we get it? If we cannot get it I suggest it is due to the failure of the Government to set up the organisation and to link up all these entities in our composition. These things could be provided if the Minister for Finance had more courage. I do not think they can be provided by the orthodox methods accepted by the financiers of the past, but I think we all accept that the old financial scheme of things in this world is gone.

The quicker we realise that, the better and the quicker we begin to straighten things out for ourselves, the better it will be for the Minister for Finance, and the sooner he will get rid of a lot of his worries. I know, of course, that to a number of people that is very unorthodox—it is heresy. There are a great many heresies being preached to-day, and they may be the accepted doctrines of the days to come. I think our whole economic, financial and social life could do with a little reconstructing. We cannot stand still, and the Minister who is so perplexed and concerned about the future and his ability to get revenue from the people because of less employment and lower earning capacity, must turn his thoughts to unorthodox methods.

As far as I am concerned, I want to see more from the land and more from the bogs, and, mind you, by the hands of men, because it seems to me we are not going to get so much from the machines at all. I would rather see our people working with their hands in this country than working on machines in England or anywhere else. They would be much happier, and I think it is the aim we ought to have. I would be all in favour of compulsory methods to make them work with their hands rather than to permit them to run away to work machinery elsewhere. I hope that the Minister will turn his thoughts to these things and that he will not be too much afraid. If he is pessimistic he will discourage the people who have the money with the type of speech he made here to-day. They will feel that the number of people in service and the production from these services will drop lower and lower, and that where there are any savings stored up the Minister will have to have recourse to them to a greater extent in the future to go on balancing the Budget, and that there are going to be black times ahead for us all.

I suggest that the Minister should try to do something neither orthodox nor unorthodox, but a bit risky if you will. There is nothing as risky as sitting still and doing nothing, and leaving people cold and hungry in a country where there is plenty of fuel and of food to keep them warm and fed. It is better to get that complex into the minds of the people about work in their own country. I may say that I have no room for the attitude of mind of the fellow who says that his job is to sit at a desk in days like these. On the land you must be able to take the scythe one day and to sit behind your horses on the machine the next, to take a sléan to the bog another day, and during the morning, perhaps, to act as a veterinary surgeon doctoring your cattle, or perhaps as a blacksmith looking after some implement on the land during the evening. You have to be half a dozen things rolled into one. That is why I say that the type of man who thinks God Almighty ordained that he was to sit at a desk and do the same type of work and nothing else day after day, and that food and clothes and fuel and all these things will be provided for him, must be taught to help himself. We have got to get a complete change into our attitude. But the Minister, I suggest, need not be half so pessimistic as he is. He used to be optimistic when we were pessimistic about his policy.

If he sticks to the land and to the bogs there is plenty of work and food and fuel for our people, and there ought to be a means found that will get the people to work because when the goods are produced, they can be sold back to our own people again. With all these earnings, the Minister would be able to get from them as much as would enable him to carry on, and if he did not completely balance his Budget from direct taxation, he could have recourse to borrowing, perhaps, from the savings which would accrue from the added labour which the people had a chance of making, and there would be something on which he could call. To go on accepting that we are on a slope and there are dangers no matter what you do, and that you were at the limits with regard to borrowing, that the factories must close and that we are not going to have enough fuel for our people is, I think, a dreadful line to take. I am surprised to see the Minister take it, but I think at the back of it all he is not half as discouraged as he would like us to believe.

Mr. Quirke

I suggest that we adjourn for tea until 7 o'clock, as the Minister has been here all day.

Mr. MacDermot

I move the suspension of business unless Senator Quirke intends to speak.

Sitting suspended at 6.15 p.m. and resumed at 7 p.m.

Mr. MacDermot

There has been some discussion in your absence, as to what it was and what it was not relevant to say in a debate on the Finance Bill, but I take it that it is at any rate certain that one can discuss the ways and means by which revenue has been raised on this occasion, and that one also can say something about the general economic background according to which the Budget must be judged. I hope not to stray outside those limits. It seems to me that the Government and the Ministers are, on the whole, to be congratulated on this Budget. As far as one can judge, the Minister has obtained a reasonable balance between what he is about to raise by taxes and what he is about to raise by borrowing. I would be inclined to sympathise with those who criticise him for not having borrowed more and taxed less, were it not that it seems only too probable that the taxes will, in fact, prove less productive than he anticipated, and that he will become compelled in the end to borrow more than, so far, he intended borrowing.

He has been accused of being unduly gloomy, but gloom is not to be regretted unless it is gloom expressed in the kind of way that produces paralysis rather than effort. Unfortunately, there is a great deal of ground for apprehensiveness, and a great deal of reason to take a serious view of the situation; but those with any degree of patriotism and determination will feel no reason for sitting back and throwing up their hands. On the contrary, they will feel bound to follow any responsible lead which the Government may give in order to ward off some of the dangers that threaten us.

There are one or two concrete suggestions that I would have made had I been called into consultation in the framing of the Budget. One of them the Minister has told us has been made by a great many people, that is, a tax on bicycles, and I imagine some day or other he may come to that. The licensing of bicycles has proved a successful revenue-raiser in certain other countries and I do not think it would be an unwise or inequitable form of taxation to impose here. Perhaps the Minister holds that in reserve for another occasion.

The second point I want to make is, I am afraid, likely to be a somewhat unpopular one, but it seems to me to have an importance far greater than the mere question of the sum of money which it would bring in to the Treasury. That is, I wish the Minister had availed himself of the occasion to apply income-tax to Parliamentary allowances even though he and the Government had thought it wise simultaneously to increase the amount of Parliamentary allowances. I think the fact of these Parliamentary allowances being exempt from income-tax does great damage throughout the country. An attempt has been made to say that so far as any damage has been done it is the fault of those who are hostile to Parliamentary institutions and who never miss an opportunity of saying something nasty about Parliamentary institutions and the Government. I honestly do not believe that is so. I could mention people in various walks of life—and I have met a good many of them—who feel very strongly on the matter. The stock answer I know is that these are expense allowances and ought not to be regarded as salaries, but even with the best will in the world that is an answer that I cannot accept. I think that they are in fact salaries, and in so far as is proper expenses can be set against them in making an income tax return. A certain number of people in both Houses probably regard their Parliamentary allowances as the main source of income, and some perhaps as their only source of income, and if that is so it is not any discredit to them whatsoever. But if that is the case there can be no justifiable reason for a distinction between the salary of a member of the Dáil or a member of the Seanad and the salary of a civil servant or a professional man or anybody else. If it be said that the result of applying income-tax to Parliamentary allowances would be to make it impossible for certain persons to live as becomes a Deputy or a Senator, in order to carry out his duties properly, then the answer is that the amount of the salary should be increased, but I would make it liable to income-tax. When the Parliamentary Allowances Act was passed through this House I introduced an amendment making them subject to income-tax, but unfortunately it did not succeed in getting the requisite amount of support and fell through. I should like the Government to consider the exemption again, because I believe it has a bad moral effect throughout the country, altogether out of proportion, of course, to the small amount of money that a change would bring to the Treasury.

Now as regards the general economic picture behind this Budget, Senator Hayes referred to the fact that during the last 20 years we had experienced a certain amount of economic disillusionment. We discovered that economic difficulties and poverty, that we were in the habit of attributing to the evils of British rule persisted after British rule had ended. It was customary, I know, to assume that because we were poor it was the British who created our poverty, to assume that because our people emigrated it was the British who had driven them out, to assume that because we had few raw materials and minerals it was because the British had malignantly prevented them from being developed and exploited. I think that Senator Hayes or anybody else who mentions these facts performs a public service because we have undoubtedly well-founded complaints to make about British rule, without making ones that are ill-founded. There is one thing that is certainly inescapable about our international relations whether we like it or not, the British are our nearest neighbours and always will be. Geography has decreed that we will always be either helpful or a torment to one another, and it is much better that we should be the first than the second. That being so, anything that is said, especially when it is said by somebody with what is known as a national record rather than somebody like myself, that may tend to reduce any sources of bitterness, seems to me to be very valuable.

Now, everyone is conscious that this Budget suffers from something that no previous Budget except perhaps last year's suffered from, and that is, that its foundations may be swept away in a very short time by events entirely outside our control, events of a non-economic character but with tremendous economic repercussions. We have got to be realists. We know that only a day or two ago the American Secretary of the Navy announced that if sinkings went on at the rate they had been going on the end could only be the victory of Germany, but looking at it in another way, if sinkings are in fact as described by the Secretary of the American Navy, then it is obvious that our war against poverty, which is much the oldest and the grimmest enemy of the Irish people, is going to be made very much more difficult. I believe that the very serious speeches that the Taoiseach, the Minister for Supplies, the Minister for Finance and other Ministers have recently been making are justified and are useful but they are not in themselves enough. I am inclined to sympathise with Senator Douglas's appeal for a clearer and a bolder lead from the Government. In many respects there does seem to be sometimes a certain confusion of mind, a certain confusion of thought and of purpose when one compares the utterances not only of one Minister with those of another, but the utterances of one Minister one day and the utterances of the same Minister another day about the appropriate way of looking at some of these very difficult economic problems. I see the need here for a bolder and more definite lead.

The question of something in the nature of industrial conscription, the use of compulsory labour, has been touched upon both by Senator Hayes and Senator Baxter, and I made an interjection which obviously annoyed Senator Hayes very much asking if the Government were to propose anything of the kind would they receive the support of the Opposition? I did not make that interjection with any wrecking intent, but because it seemed to me thoroughly relevant. Up to the present the sort of co-operation we have been getting in the Defence Conference has been valuable to a certain point. But when it comes to the Government doing something likely to be unpopular, or which is shown to be unpopular, one does not feel at present any security at all that the Government will get the sort of support that one would like to see them getting for a measure that is right but unpopular, the support one would like to see them get from the Opposition. Personally, I believe the case for the Trade Union Bill, not every word of it but the general principle, is overwhelming. Similarly, the case for the Wages Order is overwhelming, but if the Opposition are found actively attacking the Government for measures like that it makes one a little pessimistic about the chances of their refraining from attacking the Government if the Government were to propose anything so revolutionary as industrial conscription.

Personally, I do believe that it is highly likely that we shall come to something of that sort and I share the hope of Senator Goulding that, if we do, such conscription will be no respecter of persons but that all classes and all ranks of life will be placed at the disposal of the Government to perform such tasks as the Government, in the national interest, think it desirable they should perform. There are an immense number of people in the country longing to help the Government and to make themselves useful if they only knew how to go about it.

I think that the Government could afford to run very considerable risks in the matter of stirring up what I might call purely political or Party opposition without getting the country against them. So far as the country is dissatisfied with the present Government—and it is dissatisfied with it— that dissatisfaction does not come from a feeling that the Government has been doing anything too drastic but rather from the feeling that there may have been lack of hard thinking and lack of foresight on the part of the Government. Some of the complaints about that lack of foresight are, certainly, not justified. Others are more justified. I think that the Government could afford to take its courage in both hands on a lot of these vital subjects as long as it succeeded in convincing the country that it was fair-minded, determined, industrious, and not living from hand to mouth. It is very important not to give the impression of chopping and changing or of having no clear or comprehensive outlook.

A part of this discussion turned on the old subject of whether the policy of self-sufficiency, so called, had been an error or not. Nothing could be more hackneyed, nothing could be more barren, nothing could be more irrelevant as regards the finding of any sort of solution of our present difficulties. With great respect to everybody who is inclined to indulge in discussions of that sort, I suggest that the time has come to drop them. It is not merely that they waste time but they have the positive, adverse effect of keeping a bone of contention between the parties when what you want is the greatest possible measure of co-operation between them.

Senator Douglas suggested that it would be a good thing to have a sort of all-Party economic conference on the lines of the Defence Conference. I do not completely agree with that suggestion but what I would suggest, and have suggested, is that the Defence Conference is very inadequate as a Defence Conference unless it takes within its purview questions of supply. The whole question of defence is intimately bound up with questions of supply and it seems to me that nothing that has to do with supplies should come upon the Opposition members of that Defence Conference as a surprise at the same time as it reaches the general public. They ought to be in the Government's confidence as regards supply difficulties, which are an essential part of the defence situation. As regards anything further than that in the way of an economic conference, I am inclined to think that it would be dangerous. You would have all sorts of questions of the type to which I referred a few minutes ago—the Wages Order and matters of that kind— demanding the attention of the conference and you would have it breaking up in a passion and members walking out. More harm would thus be done by the conference existing than would have been done if it had never been called into existence. When it comes to unpopular measures, it is much safer to have members of the Opposition Parties actually members of the Government rather than loosely tied up with them in an economic conference. It is in the economic sphere that unpopular measures are most likely to be necessary.

Senator Douglas also referred to the question of a coalition. I only wish to say that I, too, have long cherished that idea and hope to see the day when it will be realised and when members of the Labour Party and the chief Opposition Party will be a part of the Government of this country but I do not think that any sentiment of that kind should blind us to the necessity of getting the confidence of the country behind the Government we have. I should like to see a Government with a broader basis, I admit, but as the chances of that seem small, I should wish to do everything possible to maintain the prestige of the present Government and the confidence of the people in them provided they give evidence of sincere, hard work, hard thinking and, most of all, courage.

Mr. O'Callaghan

I entirely agree with Senator Baxter that the Minister was not looking his best this evening. I am sure that Senator Baxter will agree with me that the Minister is looking and feeling much better now. I do not know whether it was Senator Baxter's speech which so considerably improved him. Anything I have to say on this Bill will be as much out of order as that which has been said by most of the other speakers. There will be one merit about it—that it will be very short. I have heard no criticism of the Finance Bill in the country. The only thing I heard suggested was that there might have been more relief for agriculture. The Minister referred to the tribulations due to foot-and-mouth disease. I have been wondering whether his outlook was confined to the sums of money paid out by way of compensation or whether he was envisaging the glut of cattle likely to arise in the fall of this year as a result of cattle not being moved out at present. It seems to me as if, when the fall of the year comes, cattle will be valueless. I think that every step should be taken to get away all the fat stock we have. At present, there is only one way of getting them away. That is by the dead-meat trade and I do not think that sufficient is being done in that direction. I hope the Minister will take back a message to the Minister for Agriculture and ask him to do all he can to facilitate those people who have engaged in the dead-meat trade so that farmers may be able to get away their stock while the trade exists on the other side. There is a good trade for fat stock on the other side now. If, in addition to the dead-meat trade, representations could be made with a view to getting live stock shipped for slaughter on the other side, it would be a great boon to farmers generally.

Reference was made by some speaker to the Construction Corps. I think that the Construction Corps is a very useful body and one that will, probably, live after the war. I do not think that it is right that the conditions of service in that corps should be less attractive than the conditions of service in the Regular Army. Numbers of these men are engaged in fuel production at the present time. They could be used in districts where big harvesting operations will take place. They could be employed generally in the development of food production and in increasing the agricultural output of the country. I would appeal to the Minister to consider increasing the remuneration of these men and of making the corps generally more attractive.

We had a considerable amount of criticism on the wheat scheme. I would say that it is rather unpopular, unfashionable and bad politics in present conditions. If the criticism which we have had from the Opposition were continued outside this House it would mean that the price of wheat would have to be increased and the price of bread would be accordingly dearer. I do not think that will redound to the credit of those who are responsible for it. I would suggest to the Opposition that they should drop that form of propaganda immediately. Senator Baxter has stated that a great deal of land in this country is not suitable for wheat growing. That statement is correct. It would be very unwise to grow wheat in some of the mountain districts of the country. I, however, have had considerable experience of growing wheat on many different kinds of land, and I can say without fear of contradiction that this country will grow wheat for many years to come without any danger of the land suffering as a result.

Senator Hayes has spoken about education. Anyone who contrasts the agricultural state of this country with that of some of the modern agritural countries of Europe will realise that we are 150 years behind time. Any change in our educational system should be directed towards bringing this country more into line with some of the up to-date countries of Europe. I have very little more to say except to add that the Bill generally is a good one, as good as we could expect in the circumstances. I should also like to say to the Opposition that if it had not been for the anti-wheat propaganda and the anti-beet propaganda in which the Opposition has indulged, we would have plenty of wheat to feed the population of this country. Now is the time to appeal to the people to sow more wheat in 1942. In the past five or six years we have increased the wheat acreage from 20,000 acres to 500,000 acres. That is a great achievement in face of the opposition we have had to contend with. If we would all behave reasonably, I think we could increase our wheat acreage by a further 50 per cent. If we do that people need have no fear of being short of food.

Professor Tierney

I have a double reason for trepidation in rising to speak on this Bill. In the first place, having preached relevancy to many Senators already, it is now incumbent on me to practise my own precepts. In the second place, I am far from being an economist, and I take it that a discussion on this Bill should range round economic questions —questions concerning the economic situation of the country and the relation of that situation to financial possibilities. The Minister spoke about being accused of pessimism in this Budget. The feeling I have, speaking as a man in the street, is that this Budget is far too optimistic.

I noticed a curious contrast last week between the utterances of the Minister for Finance speaking on the final Stages of the Bill in the Dáil, and of the Minister for Supplies speaking at a Fianna Fáil meeting somewhere in Dublin. The Minister for Supplies said that we were facing a crisis of unparalleled magnitude—a financial, industrial and social crisis that might have consequences which it would be beyond our power to deal with. It was a very grave, almost a startling, speech and the warning it conveyed was the most serious warning which this country has got yet. I think it was on the same day that the Minister for Finance, speaking in the Dáil in reply to a suggestion that we should borrow more money said: "We must think of posterity." I would suggest to the Minister in all humility that the moment when we are facing an unparalleled financial, industrial and, possibly, a social crisis is hardly the moment when we ought to worry over much about posterity.

The situation undoubtedly is extremely grave. Probably enough this country has faced no more serious crisis in the economic sphere since the great Famine of nearly 100 years ago. Not merely our fate for the next two or three years, for the duration of the war, but our whole fate as a people for the next century or more may depend upon our financial conduct at the present moment. It is a very serious situation, and the feeling I have about it is that, so far from being pessimistic, the Minister is hardly taking it seriously enough. I think the discussions we have had on this Budget, and on matters relating to it in general, have not been anything like sufficiently far-reaching or profound. I think the general attitude of the man in the street to all these questions is one of considerable bewilderment. We know that there are a number of people in the country who have a fair understanding of our industrial and financial situation, but those people, whether justifiably or not in view of the circumstances of the time, are very chary indeed about giving us any particular enlightenment on the facts of that situation, certain aspects of which we can only guess at. In this situation we are presented with a Budget that would be regarded as extremely ordinary in the most ordinary times. The Minister, while his colleagues can tell us that the situation is one of unparalleled gravity, is relying on the most common-place orthodox methods of financing the country during the coming year. I cannot help asking myself whether, in fact, the time has not gone by for these orthodox financial methods, whether all the talk about balancing the Budget or meeting expenditure out of taxation is not largely irrelevant to the situation in which we find ourselves, and may not be far more irrelevant to the situation in which we may find ourselves in six months' time.

In that connection, I would suggest that the most serious consideration should be given by people who are in possession of the facts about these matters, to the framing of some sort of economic plan for the coming year, and for the years ahead, the outline of which we can dimly begin to foresee. That is why I, for one, agree thoroughly with what has been said by Senator MacDermot and Senator Douglas. It is too much altogether to expect that in the situation in which we find ourselves we are going to get through by ordinary Party Government or by ordinary Party machinery. The politicians and the people in the other House, on both sides, should wake up to the fact that circumstances have arisen in which the differences that have existed between the two Parties will be of no consequence whatever. The old slogans and the old shibboleths, whatever meaning they may have had in years past, are going to be relegated to the realms of history in a few months, if they are not already so relegated. All the talk about the rights and wrongs of protection has really been deprived of any meaning whatever by the situation into which we are going, and going very rapidly now.

It is an easy thing on a Bill like this to criticise the policy of the Government for the last ten years. Personally I could, if I set myself to the task, find many things to criticise in their policy, but I suggest that there is no point in doing that now. We can get nowhere by such criticism except to make escape from our difficulties more difficult still, or, by harassing one another to complicate a situation which is already complicated enough. There is no use in going back to ask what the Government did about housing, wheat growing, or anything else. We have to take the Government policy of the past year as a datum line. We have to start off from that, and not in the light of past prejudices and past political or semi-political slogans, but in the light of practical common sense and with the help of the best intelligence we can get in the country, to consider what we are going to do with ourselves for the next year, and for as many ahead as we can plan for. I suggest first and foremost that we should have a national Government, and in the second place, that that Government ought not merely to rely on Party politicians, but that it should call to its help every expert economist that can be got in this country to study these matters, and to see that they are presented to the people in some intelligible and rational form.

It is very difficult for the man in the street to make up his mind on those matters. Take the question of wheat. I have tried to find out—a question which seems to be cardinal in the whole matter—for how long a period you can store wheat. If you cannot store wheat for any long period, what is the use in talking about importing it to store it? That is the sort of question that I and thousands like me should like to see answered. There are scores of other questions about which the facts could be secured and which should have been put into some kind of rational form long before now. Remember, the people in power must lead the country, but the country must know in what direction it is being led. Unless the people are in a position to act according to some rational principle, they will not follow any rational lead. They are likely to go milling round in circles rather than in the one direction which would be capable of saving them from the difficulties which are likely to face them.

The fault that I have to find with this Budget and with the Minister's whole attitude is, that he seems to think that he can carry on with the most ordinary orthodox, or so-called orthodox, methods at a time when perhaps everything may depend on a departure from these orthodox methods. The question whether the amount of money, which the Minister needs to finance national services for the coming year, is likely to be produced by these taxes seems to me to be fundamental. If the taxes are not going to bring in the revenue we need, where is the money to come from? If the Minister has to go to the country in six months time for a far larger loan than he is now contemplating, is there not a possibility that he will not be able to get money nearly so easily as he can get it now or as he could have got it three months ago? These are the questions about which the man in the street cannot help wondering. I must say, as one ordinary uninstructed citizen, that I cannot help having a great deal of doubt as to whether the Government have any sort of real policy themselves to meet even a short term situation. If it is true, as the Minister says, that you cannot have a long term policy at the present moment, you could have some sort of policy.

You could have some sort of policy besides the policy which worked very well in peace times but which almost certainly is not going to work over the next year or two years. If that is the case, if these prognostications which we have heard so often from the Minister for Supplies and other Ministers are correct, then surely that situation should be reflected in the Budget and in the measures that the Government are taking to deal with the financial situation. The feeling I have — and I think it is a rational feeling — is, as I say, that all these questions about protection and self-sufficiency are largely matters of history. We are going to be faced with a situation in all probability in which we will have far more self-sufficiency in this country than any of us, even the most extreme exponents of the doctrine, will want and it is in order to deal with that sort of situation where, not merely for one year but for quite a long term of years, we may be thrown back entirely on our own resources, that we ought to collect our own resources. The first resource we have is, surely, the intelligence, the brains, of the best educated and the best equipped of our citizens.

I feel that there is a charge to be made against the Government. I am very far from wanting to make any difficulties for the Government or to criticise them in any Party spirit, but I do feel it possible that there is a charge to be laid against them of treating this whole situation too lightly and imagining that an odd speech by the Taoiseach over the wireless or an odd address by the Minister for Supplies to a Fianna Fáil Club is going to stir up the people to such a degree that they will do things for themselves which the Government ought to be doing for them. If this country reaches a catastrophe in the next few years, it is the Government that is going to be blamed for it and all those who are at present in prominent political positions are going to share in that blame. It is not going to be borne by the man in the street. It is not he who will go down in history as being responsible for the calamities that may well come upon this country through no fault of our own except to the extent that we have not wakened up in time to the danger and have not taken any, even distantly requisite, methods to deal with it. It is not the man in the street who will be blamed; it is the Government, the people who have been in power for ten years, and not merely the Government, but the whole political system that has been governing this country since the Treaty of 1921. All that may quite possibly be in the melting pot before this next two years or so are over, and it is up to us now to try—even if it may be beyond our power to get through it unscathed—at least, that we will not collapse in the middle of the storm because we have not been sufficiently far-seeing and sufficiently patriotic to get together and sink our differences and form the only sort of Government that I am convinced is going to be capable of seeing us through these difficulties.

Is this happening in areas where there are men needed to cut turf or in the City of Dublin?

Mr. Campbell

This is in the City of Dublin. I understand from a clerical friend in a certain town where there are 285 unemployed that only 25 could be found to cut turf and that whatever benefits they were receiving have been cut off. I will not vouch for the strict accuracy of that statement, but it was made to me by a priest friend last week and gives us an idea of the situation. I agree with Senator Tierney that many of the things we are discussing might be relegated to the realms of history. This country is confronted with a desperate problem. People might think that I am exaggerating it, but I am not. I am in daily and constant touch with what is going on. Apart from the economic situation and the situation created—if I may say so without transgressing the rules of the House—by the nefarious Trade Union Bill now before the other House, I sincerely and with all the vigour I can command warn the House that there are elements now abroad organising opposition which, while it may be directed against two nefarious measures—the Emergency Powers (No. 83) Order and the Trade Union Bill—may be diverted to other points much worse than people here can envisage.

Once again, I deplore the fact that the Government has not made any serious effort to solve the unemployment problem. Tariffs have helped in some respect, and I agree with Senator Goulding that we might easily be in a worse position were it not for the protection policy carried out up to the present. We are in a much better position at present than we would be if we had taken no steps to safeguard our own interests. Senator Baxter suggested more eloquently than I could methods by which an endeavour could be made to solve that problem. I believe that adherence to all those economic theories of the financial pundits is at the root of the trouble. This Government should take its courage in its hands and take a chance, and, at least for the period of this emergency, make certain that no man, woman or child, in the next 12 months—which I believe will be the most crucial period in the history of this country in recent times—shall suffer want or hunger of any kind. Poverty is a hard thing to define, as many working men are on the verge of poverty at present, when their wages are only sufficient to buy the bare necessaries of life. Although they are in full-time employment, the money value of their wages is becoming less and less every day, on account of the increase in the cost of living. That cost has risen 27 per cent. since the war broke out and is covered only by an average increase of 5 per cent. in wages. Something should be done in that respect.

Senator Douglas referred to the fact that the good type of artisans and craftsmen who purchase their houses find now that it is impossible to keep them. I referred to that before, and I was glad to hear Senator Douglas refer to it. The whole position of that class is becoming worse and worse. In addition to the permanent pool of unemployed that we have at present, many of those will be added in the near future. Supplies are diminishing in the industry with which I am connected. There is only a few months supply of paper in the general printing trade, and it is something the same in the newspaper trade. If paper supplies cease, 5,000 more will be added to the unemployed list. I would strongly urge the Government—as one who is not unfriendly to the Government; I make no secret of that and everyone knows it—to grapple seriously with the task that confronts them. I say that in all sincerity, as I know what is happening at the present time and as I am afraid that, if the position is allowed to develop, we may be faced with very serious difficulties before the year is out.

Mr. Hawkins

As this debate is more or less a review of events in the past year, we should examine some of the very important events that have taken place. The first is the answer to the appeal of our leaders to join the Forces in defence of our country. Men who have taken up arms in the civil war and who have been politically divided for years have come together in the defence of our country. In view of that, we could well follow their example in this House and in the other House and sink our political differences. There is nothing to be gained by one side telling the other that if more wheat had been grown we would be in a better position, or in the reply being made that but for the policy of self-sufficiency adopted by Fianna Fáil we would have imported wheat and so be in a better position. That will get us nowhere. Dangling propaganda like that before the faces of our people is only adding insult to injury. We should follow the example of those who have joined the Defence Forces and unite in attempting a solution of our difficulties.

In reference to the statements broadcast by the Taoiseach and other Ministers, Senator Douglas has said those statements did not appear to be taken seriously by the people. I quite agree that statements made this time last year were not taken as seriously as they should have been. An appeal was addressed to merchants and importers to import a stock of all possible commodities and the Department sent inspectors around to every industry and, I understand, arrangements were made with the banks for cash advances. Everything possible was done, yet some of those people— especially after the fall of France last year—said the war would be over in three months, and that prices would go down. The result has been that we have not stocks in this country at the moment that we should have.

Still we have people blaming the Minister for Supplies when the blame really lies on the people who would not take heed and would not avail of the facilities he had provided. I think as a worker we should thank the Minister for Finance for the great benefits he has conferred on the unemployed, benefits consisting of food, and increased unemployment assistance. I mix a good deal with these people and I can assure the Minister that they appreciate what he has done for them, and are very thankful to him. There is another type of people who are coming into the ranks of the unemployed. They are people who have contracted a great debt and have got furniture and, perhaps a house on the hire-purchase and they are in a serious position. These people are turned on to the unemployment ranks and no doubt in a few months' time many of them will get into difficulties. They will have to meet their annuities either for rent or for furniture and I would suggest that there should be set up in each district some court whereby cases like this could be heard. Otherwise, these people would be thrown out and evicted and their furniture would be seized by the hire-purchase people and they would be made victims of something which is beyond their control. Their present position is due to the war.

I think there should be some court set up in each centre at which cases of that kind would be heard where the present position of the person affected is due to the war position. As I said at the outset there is nothing to be gained by this type of propaganda, and I would just like to mention that neither is there anything to be gained by statements such as were made by Senator The McGillycuddy when he accused the Government of being responsible for the outbreaks of foot-and-mouth disease. He asked that a commission be set up and suggested that there was some vested interest at work. I think that that is a very serious statement to make, and he also suggested that our soldiers, not being equipped, could be put on to cutting turf. While we may not have all the equipment we would like to have I think it is a very serious statement for the Senator to make, a statement like that that will be quoted perhaps in the foreign Press and may do damage to the country.

The McGillycuddy

The Government have made it themselves.

Mr. Douglas

The Senator is entitled to attack the Government.

Mr. Hawkins

We heard a lot about fuel, and everybody seems to be talking about it these days. Senators told us that there were no men to cut the turf, and that there would be no men to harvest it. I do not know what the position about cutting turf is in other places, but I know this much that you can get a certain amount of turf cut on a turf bank each year, and when you have got that turf it has got to be spread out and it has got to dry on that bank before you can cut more turf. Cutting turf is not producing turf just as something is produced out of a machine by just turning a wheel. The Senator does not realise the difficulties in the production of this turf. It was also suggested that we should have compulsory labour to get the turf cut. I do not know what the position is in other places, but I know as regards the City of Galway the unemployed have volunteered to go out and cut the turf themselves. As a matter of fact on more than one occasion people who were on unemployment assistance have come to me and asked me to get the men on the labour exchange to put their names down to go out and cut turf. I think the county council have some few hundred men out on that scheme. We have also a scheme in which the unemployed are cutting turf for their own use, and here I would like to mention that we are very grateful to the Minister for Industry and Commerce for arranging that these people need only sign for the dole once a week. In all this talk about producing turf we do not seem to know all the difficulties we are up against. We cannot get new banks. The trouble is that you can only produce a certain amount off each bank until that turf is dry. But I do say that we should make greater effort to get those people who are ordinarily producers of turf to cut more turf. When they have taken off their turf they can get a second cutting of turf, and even if it has to remain on the banks until January or February that is the time I say when it will be most needed.

Mr. Cummins

A housekeeper in adopting and planning her budget for the coming year will naturally take three viewpoints: firstly, whether she can exercise economies; secondly, whether taxes may be imposed, and thirdly, whether she may borrow to overcome a difficulty. I am sure the Minister has taken all three viewpoints into consideration, but I would criticise the Department in which he has exercised economies. We have heard much about the Land Commission. Instead of bringing land into cultivation an immense amount of land is at present under the Land Commission still unbought. It appears that the Land Commission has ceased its operations, and the staff have been diverted to other duties, perhaps very important duties, but I think it is rather a pity to take these men from the job in which they were well qualified to play an important part, and to put them on to work where they may not be in a position to bring such skill to bear on the work. Now production from the land is one of the vital things that we have to look upon to stabilise our Budget. There is an immense amount of uncultivated land, and the idea that compulsory tillage was effectively carried out in the last few years I think is a misnomer. It mainly affected people who had already carried out a fair amount of tillage and those who had large tracts of virgin soil were left untouched. I do think that the Minister might consider that it was a mistake practically to end the operations of the Land Commission.

Another point—and, perhaps, it is of importance as having a bearing on the prosperity of the country—the country must depend ultimately on education, whether it is primary, technical or professional education, and the Education Vote has been decreased, and the colleges where male teachers have been trained in the past only carry a very small percentage of students, and I would not like to see a situation arise as you have in America, where the teaching is mainly done by lady teachers even in boys' schools. It is well known that the standard of education in countries where such a thing happens is not, at least in the case of boys, high. There will be a great danger if these colleges which cater for the training of male teachers are to be kept closed. I think that the economies exercised in regard to land division and education were wrong from the national standpoint.

As to the imposition of additional taxation, we all realise that it is necessary to some extent, but we should not forget that there are some articles consumed by the poor, articles which are necessary to their happiness, which are affected by indirect taxation. These are known to everybody, and need not be mentioned. Borrowing is, I think, the most important of the three points. The Minister should not go to the nation to borrow. The Minister should go to the banks which hold the nation's money. A sum of £12 million a day is being spent by one of the belligerents, and they borrowed that money only to a small extent from the people. They stepped outside the orthodox canons of finance and £12 million a day could be produced. We are at war not with a neighbour, but with a very dreadful enemy—the enemy of poverty—which is threatening us, as is generally acknowledged, in a way which it has not threatened us for practically a hundred years. The Minister and the Government should step outside the orthodox canons of finance and create within the country such a system as will enable the people who are at present deprived of nourishing food, —which is going to waste at the moment on the land because there is no outlet for its export—to obtain such food. I strongly support the viewpoint of Senator O'Callaghan, that every step should be taken to encourage the exportation of cattle in the form of dead meat. It does not seem as if much provision had been made for that.

If the nation is to be sound financially, the Budget must be of such a nature that it will do away with unemployment. No serious steps have been taken for some considerable time to deal with unemployment. We have had merely patch-work measures—the clearing of a drain here and the improvement of a road there, and a bit of afforestation somewhere else. We have had no planned economy, and no planned agricultural system has been laid down by any of the Governments we have had for the past 20 years, with the result that we have the population of land workers going down from 579,000, employed males, to less than half that number. I should be ashamed to say what the number at present is. It is true that it is difficult to get workers for the land in certain areas. It is true that there are not in certain places sufficient men for turf work. On portion of the Bog of Allen people who are engaged as a matter of private enterprise in cutting turf cannot obtain sufficient labour.

I entirely approve of the Construction Corps. It is doing useful work. The problem is both psychological and physical, and it was one that had to be tackled some time. I hope that the functions of the corps will be extended. I would not approve of the Army doing this work unless they were paid at a reasonable rate. I do not think that it would be right that they should enter into competition with the ordinary layman who has not the advantage of living communally and, therefore, cheaply. Going back to the question of unemployment, I earnestly ask the Minister to take up this problem. A solution of it cannot be found in the factories because of the shortage of raw materials. The cry should be: "Back to the land". The work there has great possibilities. Food can be produced in enormous quantities, and we know that there are thousands of people suffering from malnutrition in all parts of the country while the food is not being produced. The Minister has done a good deal for the social services—perhaps as much as he could do in the circumstances. But that is a mere bagatelle when we consider the extent of the unemployment problem. If the unemployment question were dealt with, these other problems would disappear. As to compulsory labour, the less said about the compulsory regulation of labour the better. I do hope the Minister will move cautiously in that respect. We all sympathise with the Minister's difficulties. A situation has arisen which nobody would dream of 12 months ago. The Minister will have the help of everybody in trying to find a solution of his difficulties.

Mrs. Concannon

The Minister, in his opening speech, spoke of the difficulty of long-term, economic planning, and used a very illuminating metaphor.

He said that it was like landscape gardening in the midst of an earthquake. The Minister himself has had, by the circumstances, imposed upon him a very much more difficult problem. That is, that of national housekeeping in the midst not only of a universal earthquake and seaquake, but in a beleaguered country, because that is what we are to-day. It is in these circumstances that the Minister introduces this Budget. I think that he is to be congratulated. When he answers the criticisms made, he will have one very strange criticism to answer-that the Budget was too good. I have been listening to criticisms of Budgets for a long time, but I never heard that criticism made before. I do not think that it is true at all. The Minister is a realist. He knows the situation much better than most of his critics, and he took cognisance of that situation in introducing this Budget. He did a very wise thing—he did not indulge in any wildcat schemes, and he did not want to be panicky. The worst way in which we can face up to the situation—whatever is before us—is by being panicky, by losing our heads, and imagining that all sorts of things are going to happen. They may, if God does not avert them, but, as the Minister said, and as the country should be told, the best way to meet them is with courage on the part of the Government, and with endurance and steadfastness on the part of the people. That is the spirit in which we should approach whatever is before us —a spirit of realism, a spirit of comradeship, a spirit of sharing the burden.

That was, I think, the predominant note in the Minister's speech. He tried to spread the burden as far as possible and he tried to meet the needs of those who are most in want. He thought of things which, I suppose, have not appeared in any other Budget. This provision of milk and bread for the poor is a departure of which we must be proud. That is in the Budget and these are the notes we should emphasise. We should be very proud of our Minister and of our country that it is possible in times so difficult to introduce such a Budget.

The Minister has stressed, as one of the difficulties he has to face, the ever-increasing unemployment caused by the blockade and lack of supplies. In Galway, we have had that brought home to us in respect of the petrol shortage. That has caused a diminution in the bus services, with very regrettable consequences to men in whom I am particularly interested. I hope I am not going beyond the permitted limits of this debate. We had in Galway a very excellent local 'bus service which under the Transport Act was taken over by the Great Southern Railways Company. Unfortunately the service of men with the local company did not count when they were taken over by the Great Southern Railways Company and consequently when the work had to be rationed, these men were counted, although they were men of long service, as newcomers. They were not newcomers but we have the sorrow—and it is a very heartfelt sorrow for those of us who know their families—of seeing them unemployed now. I think when anything like that happens, when there is a shortage of work, some attempt should be made to ration the work evenly. Between the Government and the trade unions some system should be devised by which if men are rendered redundant and are liable to become unemployed, there should be some spread over—"staggering" I believe is the technical term. I hope that the Government will be able to do something in regard to this very important matter.

Mr. Lynch

I think it was on the same measure last year that I addressed a few remarks to the House in regard to the developing economic situation. I asked at that time if the country were entirely cut off from our markets across the sea, what would be the economic situation in this country and how the Government would produce plans and methods to deal with such a situation. It seems to me that, with the lapse of the intervening time, the situation which I pictured has very largely developed and is here with us to-day. My friend, Senator Campbell, has referred to the extreme distress and poverty which surrounds us. I do not propose to go over the ground which he has already so adequately covered but I hope the Minister has been impressed by the statement made by Senator Campbell in that regard because there is a very difficult and, I do not think it extravagant to say, a dangerous situation developing in this country from the economic standpoint. How to get over that situation is a great difficulty and I quite appreciate the position in which the Government finds itself. I think I may say, however, that the problem which faces them must be solved; it must not be allowed to develop or to get more poisonous and dangerous than it is at the moment.

Senator Tierney, in my opinion, touched very seriously on the problem. He asked what the Government proposed to do. He, too, like us, was impressed with this dangerous situation. He realised and appreciated the difficulties which the Government were in, but I think he also said, what to me was significant and to which I subscribe, that something must be done to meet this situation. The Minister, speaking in the other House on the question of essential services, referred to the allowances which are to be given under this Finance Bill. In the nature of these allowances I think we have what I may call the kernel of the situation. I am quite sure that the Minister and the Government are very desirous of giving infinitely more than what is prescribed here and that it is not their desire that these allowances should be so small but, apparently, they are bound to have regard to the existing position and to the resources at their disposal and, consequently, as the Minister said in his speech in the Dáil, they can do nothing more than they have done. I think, as Senator Professor Tierney said, we will have to consider some other method of dealing with the situation. As Senator Mrs. Concannon said, the country has been put into the position, rather, of a beleaguered city. We fear that that position will develop considerably more seriously, and we have information from the Government to lead us to believe that that situation will develop infinitely more seriously in the course of the next four or five months.

What then is to be the position of the unprecedented number of unemployed, and people who have never been subject to the rigours of unemployment before? How are we to meet that situation? I do not think anything that was said here this evening was said in any carping criticism of the Government. I suggest there must be some method of dealing with the situation and with this problem other than by the time-honoured methods of taxation and borrowing. As far as we can see this great pool of unemployment, due to circumstances over which we have no control, is going to develop seriously and no method employed up to the present is going to satisfactorily deal with that situation. Consequently, the Minister and the Government will have to think of some other method. What that method is to be I do not know. They are in charge and it is a question for them.

The lack of supplies which have been cut off is going to develop the situation and the question of meeting that position will be largely one for us internally. We will be thrown back on our own resources. How those resources in food and fuel, in the very first instance, are to be developed, how they are to be increased, and how they are subsequently to be allocated is a problem which the Government should be thinking about seriously. They may have their plans. We were told, I think, this time 12 months ago, that plans were in existence to deal with this developing abnormal situation and, to some extent, I suppose the Minister would say that that position has been met up to the present, but I am sure the Minister is cognisant of this fact, that the position will develop infinitely more seriously in the next 12 months and, unfortunately, in the winter season.

It has been suggested here this evening—and it has been suggested here more than once—that a national Government would meet the situation. I doubt very much if that panacea, if applied, would work, but I do more whole-heartedly subscribe to what Senator Tierney called bringing together the best brains in the country in the shape of something like an economic council, so that those brains, harnessed in what is called in America a brains trust, might analyse problems of an economic character and make reports and recommendations, etc., for the Government to act upon. I do not think that economic council would supersede the Government or in any way trespass on its executive functions, but I do think there are people in this country, outside the Civil Service, who would be able to render very excellent service to the Government in all these matters which are developing at the moment, and which, apparently, are going to cause us very serious alarm. I hope that the speeches made here this evening from that point of view will impress the Government, because those of us who are concerned to some extent with the economic life of this country see a very serious situation developing. We see no hope whatsoever of that situation being met by the methods of finance or economics which have been applied up to the present. A revolutionary situation, from that point of view is developing because of the manner in which our trade is being severed from the other country, and it will require quite new and, I think, quite unorthodox methods to deal with that situation and to overcome it satisfactorily.

Mr. Baxter

Will the Minister make his own speech? The Minister is merely misrepresenting Senator Baxter's speech.

Mr. O Ceallaigh

Well, I will ask the Senators to judge if I am misrepresenting Senator Baxter, and they are the best judges. They know and can make up their own minds. Senator Baxter wants to know why the turf scheme was not started last April or May. It was started last April, wherever turf could be cut last April. I am not in close touch with the bogs—I might be a better man if I were—but I think it is not possible, generally speaking, to cut turf in April unless it happens to be a very dry season. However, the organisation of the scheme was started even before April.

I paid Senator Baxter the compliment—I suppose he would scarcely believe this—of reading carefully a series of articles he wrote in a certain weekly newspaper on finance and agricultural credit. I have kept them and will read them again if I get a chance, but I have failed to find any constructive suggestion there which would help me as Minister for Finance. I am willing to go anywhere—even to Senator Baxter—for a useful suggestion, and will not fail to tell him in public if I get a suggestion from him that I find useful.

Mr. Baxter

Did the Minister ask any of the Fianna Fáil farmers?

Mr. O Ceallaigh

The Senator talked about agriculture and the farmers, and the farmers' position. Where is the farmers' party in this country but Fianna Fáil? Where else would you get farmers? The vast majority of the people who put us into office and who have kept us in office are farmers—small and big farmers and middle-sized farmers. We would not be in office one week if the farmers did not support us. The Senator himself said that 75 per cent. of the people of this country, or about that number, derive their living from agriculture in one way or another. If there are 75 per cent. so discontented with this Government, why are we in office? That answers that argument, and I hope we will not have to come back to it again.

I do not think I was unduly pessimistic, as Senator Baxter has suggested. I thought I stated the position truthfully as I saw it and will repeat, if I may, what I said:

"The taxable capacity of the nation is declining as the economic machine runs slowly down. Diminished supplies of industrial raw materials and semi-manufactured goods, of petrol and coal for transport and of other essential commodities are leading everywhere to unemployment and short time. Salaries, wages and profits are all, I fear, going to be less, and with the decline in purchasing power there will be a smaller consumption of dutiable goods. At the same time, the ability of firms and individuals to meet their taxation liabilities will be reduced, with detrimental effects on the flow of revenue to the Exchequer."

I said there that their taxable capacity would be reduced: I did not say there would be no revenue, or that there would be no goods so that one could draw revenue. I hope—and I built my Budget on that basis—that sufficient production will continue in the country, and that sufficient raw materials of one kind or another will be available and coming in, though in short supply, to realise the revenue I have estimated. However, I did mention the fact that it is unwise to be too certain in these days, and I would be foolish if I said I will get for certain all that revenue. I may be short by a considerable sum of the total amount, but I am optimistic enough, and I believe I am telling this House truthfully what the situation is when I put these figures before you.

I do not agree often with political statements of Senator Hayes in later years, but I do agree with him that political freedom is not a cure for all our ills—spiritual, economic or financial. I think I am a good deal older than Senator Hayes, but we were closely associated long ago in the same movement, and I believed that with political freedom all our ills would disappear. I do not know whether he was as optimistic altogether as I was in that. Maybe he was, and maybe he was not. I did believe it then, but I have found since that it was not so—that with regard to many things our ills only began then. There was an old ballad which Senator Hayes may remember—if not, others here may remember it—in which the lines occurred:—

"On our side was virtue and Erin,

On theirs was the Saxon and guilt."

That kind of thing was all right in its time and we believed it and acted up to it and did our very best to rid ourselves of the evil as we saw it. We know now that there are some evils which made themselves more apparent to us when we got the measure of freedom that we have.

Not in the first year. I think it was 50 in the first year. However, a considerable amount of this tax will not be payable until after the next Budget, and we shall have time to look at representations made by others as well as Senator Douglas and ascertain what may be desirable. I am not making any promises, but representations made on these matters will be examined. Senator Douglas referred to the fact that there was not much originality in the Budget—that there were not any new methods of taxation. I wish he could make a suggestion or two to me. I should be very happy to consider any new methods of taxation. I am not tied down to any particular type of taxation, orthodox or unorthodox, if it produces the cash, and if it will not have undesirable or disastrous consequences on those taxed.

I always pay the most serious attention to what Senator Campbell says. I have known him as long as I have known Senator Hayes, and that is a long time. We all three were associated with the same organisation. I, therefore, pay serious attention to whatever Senator Campbell says. I know he is a man who does not speak wildly, a man who has the interests of the poor at heart, and who is not a disruptionist at any time. I think he will give me and the Government credit for being interested in the welfare of the poor also. I do say, in all seriousness to him and to the House, that the standstill order was brought into existence and promulgated with the hope of helping the poor, with the hope of seeing that there would be some wages for them, and that they would be able out of these wages to have sufficient to maintain them and to enable them to survive the crisis even though we knew that the cost of living would rise.

We are trying to do all we can by methods of this kind. By stopping the increase in wages and salaries, in profits and dividends, as we have done, we have tried to secure that that inflationary rise that took place during the last war, and which had such disastrous results after the war, would not be repeated this time and that there would be money available in wages and profits, not to anything like the extent that operated in the last war—that is impossible, but that there would be enough available to go round to feed as large a portion of the population as could be continued in employment by any means that we could adopt. Similarly, we are satisfied to do all that in us lies to provide for it that nobody will die of hunger in this country as long as there is a cent left in the Exchequer. But it certainly was not with a view of hurting the poor classes of our people, of injuring them more than other classes, that the standstill wages order was introduced. On the contrary, it was a measure of protection for those who, as Senator Campbell said, are least able to protect themselves.

Senator Cummins criticised us for taking away the Land Commission staff and transferring them to other posts. We transferred a great number of the Land Commission staff to organise food production all over the country. I have some responsibility for that because it is to the Minister for Finance that the Department of Agriculture had to look to provide staff. We had to get men who were experienced in land matters, experienced in agriculture, to go around the country to endeavour to see that the Compulsory Tillage Order would be put in operation. I realised, too, that you cannot have a Compulsory Tillage Order in operation on one hand and a vigorous land division policy in operation on the other. One had to go. We stopped, partly at any rate, the land division policy. The division of lands that were in the machine, in process of being divided, was continued, but there were other lands that had not yet got into the mill, so to speak, and we stopped, to an extent, land division. I could not say to what extent, but we stopped at any rate to the extent that was necessary when we took a considerable portion of the staff that would normally be engaged in land division work. Most of them were men who were born on the land and were associated with land work. That was a pool there of experienced men that we could get who would look after the Compulsory Tillage Order and its operation in practice. We took them away and they are doing, for the time being, more useful work than if they had remained in the Land Commission, in my opinion.

Senator Cummins also criticised economy in education. I wonder if Minister for Finance will ever hear a word in praise of economy in practice from any Senator in this House or any member of the Dáil. I have not heard it yet. In the 20 months or so that I have been Minister for Finance I have been appealed to and implored, begged and urged to economise. I have never yet introduced an economy, no matter how small, that I have not been criticised and damned for my foolishness in daring to economise on such a subject. That is the history of my effort to economise.

I have kept the House longer than I anticipated. I think, as I said in the beginning, that for the times we are going through, the Budget is a reasonable one. I was urged in the Dáil, urged by responsible people from the Front Bench to the back bench, urged by some members of my own Party, too, to borrow and borrow and still borrow. We have got to be very careful. We have got to be reasonable above all things. I do not want to put a burden of taxation on this country beyond what I think it can bear, but at the same time we would be unwise, not knowing how long this emergency is going to last, to rush into a policy of unlimited borrowing. If this emergency continues for another five years—and that is not an unreasonable period to look forward to—if it goes on for a period of ten years, God knows what our financial position may be at the end of five or ten years. At any rate, I think I have gone as far as, in prudence and wisdom, a Chancellor of the Exchequer in any country could go in the circumstances with which we are faced. It might have been wiser, some suggest, to borrow with greater liberality, to put the burden on the backs of future generations with greater generosity, not caring what is going to happen in future. I think I struck a modest course—admittedly there is nothing heroic about it—but I think it was a wise and prudent course that will be best for the country's financial future and general welfare in the long run.

Seanad Éireann debate - Wednesday, 2 Jul 1941