The occasion on which the Appropriation Bill is considered in this House should be a very important occasion. Unfortunately—the Minister might say "fortunately"— the Appropriation Bill reaches us usually in July, when most members are tired and are looking forward to an adjournment of a month or thereabouts. As a result, the Seanad very seldom fully recognises its responsibilities in relation to the Bill. The Appropriation Bill furnishes the only occasion on which this House has the duty placed upon it of making recommendations or criticisms of the general administration of this State through its Ministers and Departments. This House has not complete control over any Minister or any Department. It cannot require the attendance of Ministers. It cannot ask for their dismissal. It has really only the power of criticism. I suppose it could make a recommendation to reduce the salary of a Minister, but that would be futile and it has never been the practice here. I think I am correct in saying, subject to you, a Chathaoirligh, that anything which would be in order on the Vote for any Department of a Minister would be in order on this Bill. I myself have not the slightest intention of taking full advantage of the Bill or of speaking upon anything like all the matters which I should like to see raised or in which I have an interest. However, there are a few matters in respect of which I should like to take advantage of the opportunity afforded by the Bill to set forth my views in the hope of obtaining the views of the Minister.
In the first place, I propose to deal with one or two matters which are directly related to the Department of Finance. I should like to know from the Minister whether he has under active consideration the question of excess corporation profits tax and its, probable effect on future industrial development. In the debate on the Finance Bill, in May last, his predecessor said that as long as this tax continues it will be a deterrent to enterprise. He also said "If we are going to have industrial development on anything like a large scale encouraged here, it cannot be brought about until excess corporation profits tax disappears." I should like to know from the Minister if he agrees with that statement, made by his predecessor. I should like to know if he recognises—as, I think, he does—the need for further industrial development if we are ever to have a full employment policy here and if he proposes to do anything about it. We have had several statements from the Minister for Industry and Commerce to the effect that many plans have been made for further industrial development here. The former Minister for Finance said that the present taxation was a deterrent to industrial enterprise. If the Minister could see his way—not, of course, to-day but some time in the near future—to indicate Government policy with regard to this tax, it would be of great help to many people who are considering new projects and would, certainly, help them to make up their minds whether or not to proceed with them.
I should like to point out that excess corporation profits tax very often works as a tax on efficiency. I cannot think of anything which will reduce profits more quickly than inefficient management. But it will not reduce prices. What we want is a reduction of prices, not necessarily a reduction of profits. It is obvious that the two do not necessarily go together. There is—I think it applies to every section of the population—widespread dissatisfaction with present high price—levels. Some of these may be due to profiteering but I do not think that that is the main cause. Last week, Senator Duffy suggested that the Department of Supplies was ineffective in dealing with profiteering. I do not believe that there is nearly as much in that as Senator Duffy thinks. The methods adopted by the Department of Supplies may not always have been the best but there has, certainly, never been any want of energy or lack of enthusiasm in enforcing them. Every manufacturer and shopkeeper I know will agree with me in that. Last week, Senator Duffy, on a different Bill, stated that he was in the company of a manufacturer who saw an article in a shop window—I think he said that it was an article of clothing—priced 31/6, and the manufacturer said to him that that was an article which his firm made and that the cost price was 10/7. I took it from Senator Duffy's remarks that he thought that was an instance of profiteering. My comment on that is that it is an instance of the futility of certain people. I should like to make clear, as a person interested in manufacture, that if that had been an article which my firm had made and if I knew that the price was 10/7 and that it was being sold at 31/6, I would immediately have reported it to the Department of Supplies. I am perfectly certain that they would have investigated the matter without the slightest delay. I think that there is some snag in the story somewhere. What I want to point out is that it is up to the manufacturers to insist on seeing that there is no undue profiteering in respect of articles they make.
Another statement was made on the Finance Bill by the Minister's predecessor to which I should like to refer. He said that if any case of hardship under the operation of combined income-tax and corporation profits tax and excess corporation profits tax was proved to him, he would ask the Dáil to alter the law so as to get rid of the hardship. A week or so after the Minister made that statement, the President of the Chamber of Commerce, Mr. Brock, who is recognised as one of the most experienced accountants in this country, made a speech in which he said:—
"One of the reliefs for which we pressed related to small companies, particularly those formed since 1939, in which there is more than one whole-time working director or proprietor. We are satisfied that the present incidence of excess corporation profits tax on such companies is unduly harsh."
He went on to say:—
"The position now is that they are obliged to pay more in direct taxation than their counterparts in Great Britain and Northern Ireland, notwithstanding the apparent favourable differences in the rates of taxation applied here."
I would like to know from the Minister if he considers it a case of hardship if small companies, in which there is more than one whole-time working director, have to pay a higher taxation than they would have to pay, under the same conditions, if they were operating in Northern Ireland. Was it the intention of the Government that certain companies should pay a higher rate of taxation than in Northern Ireland and, if it was not the Government's intention—and I do not believe it was at any time—I would like to know if the Minister will look into Mr. Brock's statement and see if it is accurate — as I believe it to be? If it is accurate, then clearly there are cases of hardship and in that case I would like to know if the Minister is prepared to implement his predecessor's promise and to have the law altered.
I would like also to refer to a matter raised in the Dáil during the debate on the Vote for the Minister's Department. It relates to the computation of lump sums payable to male civil servants who were superannuated in the period from July, 1940, to December, 1944, during which the Civil Service bonus was stabilised by reference to a cost-of-living index figure of 185. I will endeavour to be as brief and nontechnical as possible. I am not asking for any fundamental change in Government policy. On the contrary, I want to contend that, as regards a particular group of retired civil servants, there has been a failure to implement Government policy.
Prior to 1909, a civil servant on retirement received a pension equal to 1/60th of his salary for each year of established service, up to 40 years, so that the maximum pension on retirement was 2/3rds of his salary. A disadvantage of this scheme was that although it was recognised that the pension was really deferred pay, if the official died before or after the fixed date of his retirement, there was no provision for his dependents. In 1909 a new scheme was embodied in the Superannuation Act of that year which provided that a civil servant's pension on retirement should be 1/80th of his salary for each year of established service, subject to a maximum of 40/80ths—that is, 50 per cent. of his salary on retirement—but that, in addition, there should be payable a lump sum on death or retirement equal to 1/30th of the salary for each year of service subject to a maximum of 45/30ths for the 45 years of established service. That would be 150 per cent. of the retiring salary. The right to this lump sum payment was, therefore, accorded in view of the reduction of the pension to 3/4ths of that previously payable.
The new scheme applied to all male entrants to the service; it did not apply to women. A man who was already in the service was allowed, if he wished, by express agreement with the United Kingdom Treasury, to change from the old scheme to the new one and, if he did, he was granted a small increase in the lump sum. When the so-called "bonus" was introduced after the 1914-1918 war, it became necessary to take account of it in determining pensions and lump sums. I will not take up the time of the House going into any details of the bonus scheme, except to point out that it was not a bonus in the sense in which we ordinarily understand a bonus in business. It was a sliding scale adjustment by reference to the changes in the cost of living since July, 1914.
All basic salaries of civil servants in this country are still fixed in terms of 1914 monetary values. I have often wondered why that is continued, but there it is. When the cost-of-living index was 185, as compared with 100 as at July, 1914, the lowest paid civil servant on a basic salary equal to 35/- a week received a so-called "bonus" equal to 85 per cent. of his salary. But the sliding scale allowance was progressively reduced for all salaries above the minimum of 35/- per week and on the highest salary paid to civil servants in Éire the adjustment for the reduction in the purchasing power of money since 1914 was 15 per cent.
In the years 1933 to 1935 the cost-of-living index figure hovered around 150 to 155; that is, the percentage increase over July, 1914, was about 50. From that point it rose rapidly and, when it had reached 185, the Government made an Order stabilising it. In May, 1941, the Government made the general standstill Order stabilising, subject to emergency bonus, the salaries and wages of workers outside the service. By that time the operative index for the Civil Service had become 210 and the cost-of-living index had risen to 296 by November, 1944. I believe the latest figure published is 295. The Government, nevertheless, maintained the index figure governing the remuneration of the Civil Service at 185 until December, 1944. This applies to the point I want to raise only to the extent that it affected the superannuation of men who retired from the service during the period when the so-called "bonus" was stabilised at 185. Since the lump sum and pension are determined by reference to the amount of the salary plus bonus enjoyed by the officer on the date of his retirement, the latter amount vitally affected the pensioner's future.
In arriving at the amount of the pension it has been the practice, as from 1922, to take into account 100 per cent. of the bonus, but whilst there is no provision at all for increasing the original pension if the cost of living rises, the portion of the pension calculated on the bonus falls to be reduced by quarterly reassessment when the cost of living falls. Obviously, this quarterly reassessment could not be applied to the lump sum and it was, therefore, arranged in 1922, when the cost of living was falling rapidly, that only 75 per cent. of the bonus should be taken into account in computing lump sums. This practice was expressly designed to allow for a fall in the cost of living during the remainder of the pensioner's life after his superannuation and it should clearly have ceased when the Government stabilised the bonus on a rapidly rising cost-of-living index. In spite of this it was continued up to the end of 1943. In May, 1944, the Government announced that lump sums of civil servants superannuated on or after 1st January, 1944, would be computed by reference to 100 per cent. of the bonus but applications to have the amended practice extended to retirements effected on or before 31st December, 1943, for which there is exactly the same case, have all been refused.
In December, 1944, the Government made an Order providing that the index figure of 210 which, it seems to me, should have been operative all along, should be taken as the index figure governing bonuses on salaries as from 1st January, 1945, and, following a debate in the Dáil on the 1st December, 1944, a further Order was made on the 20th February, 1945, applying, as from 1st January, 1945, the 210 index to the pensions, that is, to the annual allowances but not to the lump sums of men superannuated during the period 1st July, 1940, to 31st December, 1944, for which the bonus had been stabilised at 185.
The policy underlying these recent changes seems to me to be reasonably clear. The Minister's predecessor declined to reimburse civil servants for the losses in salaries suffered by them through the adoption for over three years of an index figure much below that applicable to employees outside the service, on the ground that to do so would produce another factor leading to inflation. I am not now concerned to comment either for or against that attitude. But the recent changes mean that it is the aim of the Government to place civil servants and Civil Service pensioners who have been superannuated since the bonus was stabilised, for the future—that is, from 1st January, 1945—on a level with employed persons outside the service. That appears, in theory at least, to be the effect of the adoption of the 210 index figure. It has, I think, been expressly stated that the adjustments were designed to place fixed income classes on a general equality.
Bearing this in mind, let me take the case of two men, each of whom, when superannuated, had a basic salary of £200 per annum after 45 years' service, one superannuated on the 31st December, 1943, and the other on 1st January, 1945. Originally, both would have been entitled to a pension amounting to two-thirds salary and bonus, but both elected in 1909, by agreement with the Treasury, to take on retirement a lump sum, plus half salary and bonus. As from 1st January, 1945, the pension in each case will be £178 per annum—a little less than £3 10s. 0d. per week—but the lump sum paid to the man who retired on 1st January, 1945, was £561, computed by reference to 100 per cent. of bonus calculated on a stabilised index figure of 210, the real index being 296, whereas the man who retired one year and one day earlier, when the real index was approximately the same, received only £457.
It is proposed to maintain this difference of £104 as between the lump sums awarded to the two men. If the men concerned had chosen to be pensioned on two-thirds salary and bonus, each would be receiving the same pension, that is, £237. Each of them has paid the same price, a reduction in pension of £59, for his lump sum, but the lump sum in one case is 22 per cent. higher than in the other. I do not see how it can possibly be contended that these two men are placed on a footing of equality as from 1st January, 1945, when the capital sum awarded to one is £104 less than that allotted to the other. The cost of living and all other conditions for both of them will be the same for the rest of their lives and will be sufficiently difficult on pensions amounting to less than £3 10s. 0d. per week.
I have referred specifically to the case of the junior civil servant because the hardship is greater in that case. If the two men had attained at retirement to salaries of £1,000 per annum, the difference in their lump sums would be £213. The proportionate loss to the man who retired in 1943 would be less, but the principle is the same. A further anomaly arises from the fact that only the male civil servant suffers. All female civil servants who retire after 40 years' service are pensioned on the basis of two-thirds salary and bonus, and a female officer who retired any time between 1st July, 1940, and 31st December, 1944, would get the full benefit of 100 per cent. of the 210 index as from 1st January under the terms of the Order made last February.
I said at the outset that the anomalies to which I refer seemed to be due to some confusion in the mind of the Minister, or possibly his advisers, and that there had, in consequence, been a failure to implement the Government's policy of effecting equality as from 1945 onwards between the classes within and without the Civil Service affected by wages standstill Orders. The confusion seems to have arisen in this way: the Government has so far declined to make good to civil servants the losses in salaries suffered by them up to 31st December, 1944, through the stabilisation of the bonus at 185 instead of 210. It would appear that, in the minds of the Minister's advisers, the losses in relation to lump sums suffered by men who retired during the period of the stabilisation of the index figure at 185 have been aligned with the losses in salaries suffered during that period.
If I am correct in this, it could have arisen only through a failure to have regard to the essential character of the lump sums. The salary payments made during the relevant years were payments for work done month by month in those years. The lump sum, whenever it is paid, is a provision for the future, paid in lieu of a higher pension and must be looked at in precisely the same light as the pension itself, for part of which it is, in fact, a substitute. Unless, therefore, the lump sums, as from the beginning of stabilisation, are adjusted, the Government's policy of effecting equality as from January, 1945, is clearly not achieved and discrimination of a character which it seems to me cannot be defended on any basis of fundamental justice is exercised against a number of men who have retired after long and faithful service.
I do not claim to have any expert knowledge of Civil Service superannuation, but I have gone into this matter with some care, and it is my considered judgment that an injustice has been done to men who retired between 1940 and 1944. I am satisfied that this is a strong case for careful examination by the Minister. I do not, of course, ask him to deal with a complicated question of this kind to-day, but I do urge him to give it his personal attention. No question of Party politics is involved. All Parties would like to see economies, but none would support economy if they believed it meant injustice to a few civil servants who have retired after years of faithful service to the State.
Before I conclude, I should like to say a word or two on what I regard as the great importance of our external affairs policy in the next few years. Before the war, there was very little interest amongst the people generally in international affairs and I do not think I would be wrong if I said that the general idea was that our external relations policy, except perhaps in so far as it concerns the British Commonwealth of Nations, did not matter very much. I did not think that attitude was right then and I am absolutely convinced that it is not right now.
It is becoming more and more clear that a policy of isolation will not be practicable for any small country, if it wishes to progress and to develop its resources. If we are seriously to attempt a full employment policy, of which we hear a great deal nowadays, we shall have to have close trade relationships with as many countries as possible. Our neutrality in the war may have made us somewhat unpopular in many quarters, but it certainly has established beyond doubt a recognition everywhere of our position as an independent State. I know, as we all know, of course, that six counties are cut off and are not independent. We all want to end Partition, but, in my opinion, we should be careful not to let the existence of Partition interfere with our good relationships with other countries. If we do so by any chance, we shall only be playing into the hands of a small number of people who wish to maintain Partition.
We cannot close our eyes to the fact that there is a great deal of bitter criticism of this country at present. Some of it is so unfair that there is nothing to do but simply ignore it. I have a good many friends and relatives in the United States and Canada, and I receive a great many newspaper cuttings and letters from them. Some of these, as I said, are so obviously unfair that I do not see that anything can be done about them, but some are obviously serious and can do us a great deal of harm. I have also met quite a number of representative people from European countries during the last year or two, and it is true that there is an impression abroad that we have, or had, sympathy with the Nazi and Fascist régimes. We know here that this was never true of the vast majority of our people, and I think every opportunity should be taken to emphasise that fact.
The visit of the Taoiseach to the German Minister did us a good deal of harm. It received publicity far out of proportion to its importance, and some of the comments in the foreign Press were almost violent in their character. The Taoiseach has explained his reasons in the Dáil. There is a strong difference of opinion in this country as to whether he acted wisely or not but I see no use in discussing it further. There is nothing more that we can do about that now. What I want to suggest to the Government or the Minister is that they should carefully consider whether the time has not come when we should do a certain amount of pro-Irish propaganda ourselves. I think a good deal can be done to prove what we all know to be a fact—that is the fact that our neutrality during the war was a friendly neutrality both to Great Britain and America. I shall not go into the details but there is quite a lot of things which will prove that, which are more or less known here but which are not known externally and which will be only made known through a certain amount of repeated propaganda. I know that a certain kind of propaganda is supposed to have some relation to lies, but I am not suggesting any propaganda which is not strictly the truth, and I think whereas we cannot and should not try to get away from the consequences of our being neutral, we have a right to correct propaganda, which suggests that our neutrality was not a friendly one.
There is also an impression abroad that we want to keep to ourselves and that we do not desire to co-operate with other nations. Now that is, of course, equally quite untrue and it will take time to correct it. I think it would help if members of the Government would speak more frequently on international problems and would encourage an interest in international affairs amongst our people. I think also that the greatest possible use should be made of international conferences of all kinds at which we should be fully represented. Only last November there was an international business conference held in New York at which we had two representatives. Switzerland sent 13, Sweden 19, Portugal 12, and Australia 6. I have not got the figures for other countries, but I think that we should have had at least a dozen, and they should be representative of all classes of business interests without, of course, any regard to politics. Personally, I should like to see the development of closer relations with some of the smaller European States, especially Norway, Sweden and Denmark as soon as this is practicable. I recognise that it will probably be some time before this is possible. I think myself that an Irish Minister sent to these small States might be of more real value than possibly representatives sent to some of the larger States, because I think the smaller European States, more particularly those I have mentioned, have a great many interests in common with us.
There are to my certain knowledge quite a number of people in England and in the other States of the British Commonwealth who really believe that we are only looking for an opportunity to leave the British Commonwealth of Nations. I listened very carefully to everything that was said by the Taoiseach in this House last week. It was very clear to me that he has not the slightest intention of breaking our present connection with the British Commonwealth, that he recognises our very close ties as a mother country with the peoples in Canada, Australia and New Zealand and that he desires to co-operate on the basis of mutual friendship. Unfortunately the newspaper reports, particularly in other countries, of his speeches in the Dáil and probably his speeches here—though I did not see any reports of his speeches here— were mixed up with the question of whether or not we are entitled to call ourselves a republic, about which comparatively few people outside this State are really interested. In the past the word "republic" was used to mean breaking our present connection with the British Commonwealth. The debates in the Dáil made it clear to anyone who read them carefully that in the mind of the Government it does not mean that. Unfortunately again I am afraid that was not nearly so clear in the newspaper reports.
Personally, I do not exactly know what the Taoiseach meant when he said that he was not going hat in hand to anybody. I do not think anybody would suggest that any Minister needs to go hat in hand to anyone. It is only inferiors or people with an inferiority complex who go hat in hand to anyone else. But surely there is nothing infra dig in stating that we are just as vitally interested in world peace as any other small nation—that we think we should be invited to all conferences concerned with the future peace of the world. Having been neutral, we have no right to take part in conferences relating to the war but it would not be going hat in hand to say that we ought to be present at conferences at which the future relationships between States associated in the British Commonwealth are being discussed. I cannot help feeling personally that it is unfortunate that we were excluded—I take it we were not invited—from some of the recent conferences and that it was good neither for us nor for the Commonwealth as a whole.
