I should like to express my complete agreement with the provisions of this section and to congratulate the Minister on having brought it in. It will be an encouragement both for pure research and for industrial research and should result in an improvement in industries themselves.
Finance Bill, 1946 (Certified Money Bill) — Committee.
Sections 1 to 4, inclusive, agreed to.
SECTION 5.
Question proposed: "That Section 5 stand part of the Bill."
Question put and agreed to.
Sections 6 to 13, inclusive, agreed to.
Recommendation No. 1 not moved.
Sections 14 to 23, inclusive, agreed to.
SECTION 24.
Question proposed: "That Section 24 stand part of the Bill."
I intend to refer to certain matters arising out of this excess corporation profits tax on the Final Stage but I would ask the Minister to consider this rather limited aspect of the case now. I think it is very important to have some indication for future guidance to show under what general categories this excess corporation profits tax has arisen. I do not imagine, even though some was due, that very much has been paid by the agricultural community but I think it is necessary that the public and that students should know under what main categories it has arisen. I hope the Revenue Commissioners when they prepare their report covering this period will set out these categories under general headings, stating so much for the manufacturer, possibly divided into main groups such as textiles, so much for wholesalers, so much for retailers, sub-divided under appropriate headings. It is most important to have this information, as this tax is staggering in volume and it casts a very disquieting light on what went on and the profits made under conditions of scarcity during the war. Perhaps the Minister would consider conveying to the Revenue Commissioners a request for information on those lines in their annual report.
The suggestion which the Senator makes will be examined. The receipts from excess corporation profits tax have never been reported by the Revenue Commissioners in the form of categories and I can see that there would be a lot of duplication as between wholesalers, retailers and manufacturers. A person who is a manufacturer may be a wholesaler and retailer at the same time. It would be difficult to set out the various categories in absolutely watertight compartments. However I will have the Senator's suggestion examined.
May I point out that any figures on the lines suggested by Senator Sir John Keane would be completely misleading? In the case of a multiple store selling every conceivable kind of article, they may have made the profits out of luxuries or may have made them out of necessities. In the case of such stores, they do not usually calculate the profits on specific classes of goods. It would be absolutely impossible to get any kind of figure which could be relied upon for statistical purposes.
Question put and agreed to.
Sections 25 to 29 inclusive agreed to.
SECTION 30.
Question proposed: "That Section 30 stand part of the Bill."
May I congratulate the Minister on the inclusion of this section in this Finance Bill and express the hope that the sum provided there, not exceeding £5,000,000, to be made available in the year commencing the 1st April, 1946, will be fully availed of by local authorities and that it will be fully expended by that date? In my opinion, as a member of a local authority, this provision of a Transition Development Fund, taken in conjunction with the statement of the Minister that money would be made available for, say, housing at 2½ per cent. for a period up to 50 years, is one of the greatest steps taken to solve the housing problem. I hope that local authorities will avail of it to the full extent.
Question put and agreed to.
Sections 31, 32 and 33 agreed to.
First and Second Schedules agreed to.
THIRD SCHEDULE.
On behalf of Senator Kingsmill Moore I move Recommendation No. 2:
In page 21, that all words after the word "remain" in line 16 down to and inclusive of the word "shorter" in line 18 be deleted and that the following words be substituted instead:—"until the first opportunity when he can be brought before a judge of the High Court to abide such further order as such judge may be pleased to make."
Senator Kingsmill Moore asked me to move this recommendation because he is delayed on a case in the courts and finds it impossible to get here in time. While it is not my recommendation and, not being a lawyer, I cannot deal with the exact wording in it, I am in agreement with him in regard to the principle which seems to be raised. It appears to me that under Section 27, to which this schedule relates, if the Revenue Commissioners decide—and no one has questioned that, in certain cases, it is right and proper they should so decide—to take a case to the courts in an endeavour to secure payment of income-tax or other tax, then the effect of the section, plus the wording of this schedule as it stands, is that the courts have no option. If they are satisfied that the tax is properly due, and if this becomes the law, they must make an order in this form.
The effect of an order in this form is that, if the sheriff is unable to obtain goods, the man must be put in jail, irrespective of whether he can pay or not. In dealing with this, the Minister said that the Revenue Commissioners would never press a person or take him to the courts if they were satisfied that he could not pay in fact. I have no doubt that that is correct, but I suggest that they cannot be absolutely certain. If they take him to the courts, it means they believe he can pay and if, on attempting to seize goods, it turns out impossible, then—if I understand Senator Kingsmill Moore's proposal correctly—it is desired in this recommendation to provide that the man may be taken to prison to await a decision of the court as to whether he should stay there or not. That seems to be a far more reasonable and a far wiser practice than that existing at present.
I am not a lawyer and I am not perfectly certain, but I understand that this particular schedule does not and is not intended to make any change in the existing law, except in the wording of certain orders, which are now to be worded in a way which the Minister for Finance presumably prefers. This is an opportunity—if I am right and there is no change in principle here; and the Minister may correct me if I am wrong here—to make a change where there should be a change. Along with many other things, I myself am much interested in prison reform and alterations in prison law and I am particularly interested in an Act passed by the British Parliament in 1930, I think, which changes the law considerably with regard to money payments and justices' procedure. I think the effect there is that the court will only commit a person to prison for non-payment, either of tax or even of debts, after careful inquiry and being perfectly satisfied that the person could pay.
The purpose of this recommendation is to raise the principle involved. It is not an attempt to claim that the provisions in the Bill effect a change in the law. The Minister did not explain in any great detail—unless he did so when I was not present—exactly why this change is made in the form of the Order. He said it was to substitute a more modern form for some archaic form and I am sure that is all the explanation necessary. If there is something else there, I do not know of it and I am assuming there is nothing else there. By this recommendation, we are raising this principle on the first occasion on which we have had an opportunity to raise it.
I am sorry that Senator Kingsmill Moore was not here to move his recommendation, as Senator Douglas is naturally at a disadvantage in stating its purpose to the House. I am also sorry that this schedule has been introduced into the Bill, as the proper place to introduce the form of execution order given in the Third Schedule would be into the Rules of Court.
Now, at the present time the Rules of Court are being revised and brought up to date. I assume that the form of execution order set out at form No. 37 in Schedule "N" of the Rules of the Supreme Court (Ireland), 1905, would be brought up to date by the Rules Committee. However, apparently, the Revenue Commissioners feel that there is some urgency which requires that this form of execution order should be introduced into the Finance Act of this year. Now, while I have said that, I feel that there is no substance in the amendment which has been moved on behalf of Senator Kingsmill Moore by Senator Douglas.
Under the old common law when a plaintiff recovered a judgment for debt or damages against a defendant that judgment could not be executed against the person of the defendant unless the judgment was for a debt due to the Crown in which case the Crown had the right to seize the body of the debtor and keep him in prison until he had satisfied such debt. Under the old common law, in the ordinary course of events, neither the person of the debtor nor the debtor's land could be taken in execution. One of the oldest writs of execution was the writ of Levari Facias which is mentioned in Section 27 (1) of this Bill. Now, there has been a great deal of confusion as to the meaning of that writ. It has been believed that the writ of Levari Facias was a writ for the purpose of taking in execution the body of the debtor. It was no such thing. The words “Levari Facias” occur in this writ and mean “cause to be levied”. In the old days, as I say, lands could not be taken in execution, and, therefore, in order to satisfy the judgement debt this writ of Levari Facias empowered the sheriff to levy the fruits of the land, such as growing corn and other produce, the soil excepted, and also the goods and chattels of the debtor. In addition to that writ, there was a writ known as Fieri Facias, commonly known to-day as a writ of Fi Fa. The words Fieri Facias mean “cause to be made of”, so that the writ empowered the sheriff to cause to be made out of the goods and chattels of the judgement debtor the sum due by him.
Now, in 1285 a new writ called a writ of elegit, was made under which a judgment creditor had the option or election of taking half the lands of the judgment debtor. In other words, it entitled the judgment creditor to go into possession and take the profits of the lands until the judgment debt was satisfied. From 1285 the writ of Levari Facias appears to have fallen into disuse. Blackstone wrote in 1765 that it was in a sense practically obsolete having been superseded by the writ of elegit and so obsolete had the writ of Levari Facias become that under the Bankruptcy Act of 1883 Section 146 (2) it was enacted that the writ of Levari Facias should no longer issue in civil cases. Of course that did not prevent the writ of Levari Facias issuing in criminal cases, nor did it prevent the writ of Levari Facias issuing in Ireland which, of course, was not bound by the Bankruptcy Act of 1883 as that Act only applied to England.
Early in the last century the writ of Levari Facias was issued by the High Court in London to recover a fine of £50 which had been imposed by justices and which on appeal was confirmed by the High Court. When the sheriff tried to levy the rents and profits and the goods and chattels of the debtor, he failed to recover the full amount of £50. I think he only recovered £30. Another writ of Levari Facias was then issued to recover the balance of the £50, but only £10 was recovered, so a writ of capias ad satisfaciendum was then issued for the arrest of the judgment debtor.
In 1905, when our Rules of Court were being revised, the Revenue Rules of 1860 were introduced into our rules in a more or less modified form and this so-called writ of Levari Facias was thus introduced into Schedule N of the Rules of 1905. Although called a writ of Levari Facias it was not in the proper sense a writ of Levari Facias because only the first part of the writ was a writ to levy on the goods and chattels of the debtor and the rents of his lands. The second part of the writ which corresponds to the portion of the Order here which Senator Kingsmill Moore would desire to amend, required that the debtor should be brought before the High Court to abide by whatever order the judges should make. Hence while it was called the writ of Levari Facias it was partly a writ of Levari Facias and partly a writ of capias ad satisfaciendum.
That so-called "Writ of Levari" of course appears in the Rules of Court in a very archaic form. I am not going to weary the House by going through it. There is a lot of old legal jargon which very few people except lawyers with a knowledge of the history of law would understand.
Now, to come down to realities it was always the prerogative of the Crown in England to arrest a person who failed to pay what was known as a Crown debt. That has been the law from time immemorial. In 1869 an Act was passed in England called the Debtors Act which abolished imprisonment for debt. It was held in England that that Act did not affect Crown debts because the Crown is not bound by an Act of Parliament unless it is expressly mentioned in it. A corresponding Act was passed for Ireland which was called the Debtors (Ireland) Act of 1872 which abolished imprisonment for debt in this country. It contained a proviso that a person could be imprisoned for debt if he had the means and refused to pay. Now, when the Treaty was passed and when the Constitution of Saorstát Eireann was enacted all that law was carried over to the Free State under Article 73 of the 1922 Constitution. Under the Finance Act, 1924, Section 38, sub-section (2), it was enacted that "moneys due or payable to or for the benefit of the Central Fund shall have and be deemed always to have had attached to them all such rights, privileges and priorities as have heretofore attached to debts due to the Crown." By Statute of the Oireachtas, therefore, all the rights attaching to a debt due to the Crown attached and continue to attach to debts due to the Minister for Finance for the benefit of the Central Fund. The right to arrest for debt due to the Crown was re-enacted here and inures for the benefit of the State.
Under the Courts of Justice Act, 1925, jurisdiction was given to the District Court to try cases where claims were made by the State against persons for debts of £25 and under. Rules of Court were made under the Courts of Justice Act; 1924, and under Rule 85 of the Rules of the District Court, it was provided as follows: "In proceedings for the recovery of any tax or duty under the management of the Revenue Commissioners, the civil process shall state the nature of the claim and the amount of the claim to be due in respect thereof. The decree in such cases shall be in accordance with such modification of form XX in the second part of the First Schedule as may be suitable." When we come to the second part of the First Schedule to these Rules, we see the form of execution order. It empowers the sheriff to seize the goods of the debtor in respect of a debt of less than £25 to the State and it provides in much the same way as the Third Schedule provides here that if the sheriff should fail to levy the full amount, then he will hand the decree to a member of the Gárda Síochána, who shall with all due expedition arrest and convey the defendant to the nearest prison and there deliver the defendant so arrested to the governor of such prison, there to remain and be kept by such governor until satisfaction be made of such debt. This Rule of Court provides that if a person who owes a debt of less than £25 to the State should be decreed in the District Court and if he did nothing to satisfy the debt then he should be taken to prison and detained there until the debt should be satisfied—perhaps detained indefinitely. That Rule of Court was expressly approved by this House by resolution on the 22nd July, 1926, as follows:—
"That the Seanad hereby approves of the District Court Rules made by the Minister for Justice on the 9th day of July, 1926, under Section 91 of the Courts of Justice Act, 1924 (No. 10 of 1924), with the exception of Rules 20, 24, 36, 95, 171 and 180."
I do not know whether Senator Douglas was a member of the Seanad in 1926, but if he was a member then this House expressly approved of this form of execution order designed to deal with what I might describe as small debtors to the State.
In 1929 the validity of that execution order was tested in the courts. It appears that a man named Brennock who was a van-driver, owed about £18 15s 6d. for income-tax. He was sued in the District Court by a collector named McGinty on behalf of the Minister for Finance, and the case is reported in the 1929 Irish Reports, page 177. There was no appearance for the defendant in the District Court and the District Justice at that time felt that a great onus had been pressed on the District Court, namely, of issuing an order to arrest and put into prison a debtor for a sum which was within the jurisdiction of the District Court. He stated a case for the opinion of the High Court on the whole question. Unfortunately, however, Mr. Brennock did not appear in either the District Court or the High Court so that when the matter came before the High Court it was a one-sided argument. Counsel for the Revenue Commissioners, however, put all the facts and law before the court. The court at that time consisted of the President of the High Court (Mr. Justice Sullivan), Mr. Justice Hanna and Mr. Justice O'Byrne, and there was a very full hearing, at which, of course, only one side was represented. The President of the High Court said at page 186:—
"I am of opinion that debts due to the Revenue Commissioners have attached to them the rights and privileges formerly attached to debts due to the Crown."
We find then that that principle was reiterated by the High Court in 1929. That being the position under Section 11 of the Finance Act, 1924, power is given to sue in the Circuit Court for sums under £300 due to the State in respect of taxes and under Section 169 of the Income Tax Act, 1918, any sum may be recovered in the High Court. Therefore, the position now is that debts due for income-tax may be sued for and recovered in the District Court, the Circuit Court and the High Court.
There is a form of execution order for decrees given in the District Courts and that is authorised by Rule 85 of the District Court Rules, but there is no such form of execution order at present in force for the Circuit Court and the form of execution in force in respect of the High Court is archaic and out of date.
The position then is that it will be generally agreed that persons who are unable to pay a debt should not be imprisoned. The days of imprisonment for debt are over, but the power of the State to imprison for debt still remains. That is a very important power and that is the power which is placed in the hands of the Revenue Commissioners. Under this Schedule, however, this form of execution order— under Section 27, sub-section (2), will only be issued if the complainant or informant so requires. Therefore the complainant, the collector or the Attorney-General, as the case may be, will have the option as to whether this form of execution order will issue or not.
I am satisfied that the power given by this Act to the Revenue Commissioners will not be abused. I have not before me at the moment particulars of the estimates for income-tax over the last few years and the details of the yield. I think on the whole the yield has been satisfactory and this has been achieved without machinery in the form of this execution order. I think the majority of the people in this country have paid their income-tax and that there are very few defaulters.
Income-tax is a tax which oppresses different people in different ways. It oppresses the civil servant because it is taken from him before he gets it, so to speak.
That is the best scheme of all.
Perhaps it is the best and safest way of all because then the civil servant will not have so many sleepless nights over it.
He will not sleep at all.
Under the system of taxation which requires that income-tax for this year be assessed on the income of last year, it is quite possible that some people may be unable to pay because of circumstances which have arisen in the meantime. The taxpayer may have had a bout of sickness or may have suffered some ill fortune. In such a case, it would certainly be a hardship and a cruelty to put the taxpayer into prison. I am satisfied that the Revenue Commissioners will use this power wisely. If they were to use it widely, there would not be sufficient prisons to hold all the defaulters after the receipt of the white notice or even the red notice. I am satisfied that the Revenue Commissioners require this power and will use it only in very exceptional circumstances. I do not think that any person here or elsewhere has sympathy with tax evaders or people who do not wish to pay their fair share of taxation. If they do not pay their fair share and if they incur fines or penalties, very few will have any sympathy with them. It should be noted that, in the form of execution order scheduled to the District Court Rules, 1926, it is provided that a person shall be detained in prison until he satisfies the debt. In the form of execution order in the Schedule to this Bill, it is provided that he shall be detained for not more than six months. That was brought about by the enactment of Section 18 of the Finance Act, 1943, which reduced the period of imprisonment for non-payment of tax or duty to a maximum of six months. Therefore, I am of opinion that this is a power the State should have to deal with exceptional cases.
We read of certain racketeers and gangsters across the ocean being committed to prison for non-payment of tax. Now that our air services are so efficient, it may be that some people in this country will endeavour to move to some other country and leave behind a legacy of debt to the State. This is a very useful power in the case of such people.
The Revenue Commissioners have also power under Section 165 of the Income Tax Act to arrest, or cause to be arrested, any person who neglects or defaults in the payment of income-tax. For those reasons, I think that the amendment should not be pressed. A good case can be made for the provision in the Bill, though I should have preferred that the Revenue Commissioners had waited until the new Rules of Court would be available. Then, the matter could be discussed, perhaps, in a more academic atmosphere amongst lawyers. The Oireachtas is not a place for what I may call technical detail. As the Revenue Commissioners evidently require this power, I am prepared to give it to them.
In spite of the fact that Senator Ryan thinks that this is not a place for technical detail, he has given us a great deal of technical detail. Speaking for myself, I found it very interesting and I am very grateful to him for it. He made it quite clear that this schedule, which is a form of execution order, is not, in fact, new, that it simply carries over power to the State which always reposed in the Crown. The State is, of course, heir to the powers of the Crown. There are two questions which I should like to ask in regard to this matter. As Senator Ryan has pointed out so clearly, this is really a new rule of court and it might have been left over for the rule-making authority. It certainly should have been submitted to the President of the High Court who is, I think, the proper authority in this regard. Before the Rules of Court are changed, as they are being changed by this schedule, there should be consultation with the proper judicial authorities.
In the second place, I am inclined to agree with Senator Ryan that the Revenue Commissioners will not go around seeking to put citizens in jail for non-payment of income-tax. That would be a very expensive method of dealing with income-tax defaulters and I think that the Revenue Commissioners know a trick or two better than that. I wonder if the Minister has figures for the last financial year, 1945/6, or any recent financial year, to show how many people have been arrested under this provision or any similar provision. It is probable that very few have been so arrested.
In any event, the six months' period is the maximum period, as Senator Ryan has pointed out, and there is the question of the exercise of the prerogative of the Crown which descends to the Minister. That would reduce the period to some time short of six months. If we knew whether the President of the High Court, or whoever is the proper judicial authority, had been consulted regarding this change, and if we knew the number of arrests which have taken place under such provisions as this, we should be in a position to come to a determination on this amendment.
I was very glad to hear the history of legislation dealing with imprisonment from Senator Ryan. It has been the policy of Legislatures to do away with imprisonment for debt unless the debtor is able and unwilling to pay. I do not like the form in this schedule. It authorises the sheriff to go out and look for the goods of the debtor. If he cannot find sufficient goods, he is bound to issue a certificate to the Commissioner of the Gárda Síochána. The Commissioner is then commanded to take the taxpayer into custody and keep him in custody until the debt is paid or until the period of six months expires. Once an order is issued for seizure, I do not see any option. If, after the order for seizure is issued, sufficient goods are not found, the sheriff must give a certificate to the Gárda Síochána and the man must be arrested and kept in prison until he pays the debt or until the expiration of six months. I should rather see this matter left over, if the Minister could see his way to do so, and dealt with as one of the new Rules of Court. Possibly, it would be worded differently. If that course cannot be adopted, I should like to see the amendment, or something in the nature of the amendment, considered by the Minister either now or on the Report Stage. If a man who cannot pay is arrested, it is a hardship if he cannot go before a court.
I should like to see some little improvement in the amendment. I do not know whether the statement, "when he can be brought before a judge of the High Court", means that the commissioners must bring him or that he can bring himself. There should be some method by which he can be brought before the court. It is unfair to imprison a man unless he is wilfully evading his responsibilities. If he is, nobody can have any sympathy with him. If he is brought before the court the court will be able to determine whether he is or is not evading his responsibilities. If the court holds that he is evading his responsibilities they will leave him in jail for the six months. If they find that he is not, say, that he has spent his money and has none left, they will order his release. If he made £3,000 the year before last and had a loss the following year, there is an execution order for the tax on £3,000 although he had a loss the subsequent year and he would find it very hard to pay up. I think myself that it is the very best type of citizen who spends what he earns. I do not think the best people are those who save up all the money they earn. I think people who spend do a great deal more good for the time being. I, therefore, would have a good deal of sympathy with the debtor if he were not wilfully evading his responsibilities.
I should like to see two forms of certificates, one being a form to seize the goods, and no more. Then if the sheriff reports back that he cannot find the goods, that he believes, for example, that the debtor has transferred them somewhere else or is hiding them or that he believes that the debtor has money and is hiding it, then a certificate could be issued for his arrest and he could be imprisoned. If that happens, it would leave a great deal of discretion in the hands of the commissioners. I am sure they would not exercise it unfairly. It would be a better system than this complicated system of having one warrant for levy and one warrant for seizure of the body.
I am very grateful to Senator Ryan for his exposition of the genesis of this particular form of execution order. He has explained very clearly how it arose and the state of the law to-day regarding the matter. He has pointed out that although the State inherited from the British Crown and the British State the right to imprison for debt due to itself, this State put a limit on the time for which a man could be imprisoned for such debt.
I do not think there is any limit in regard to debts due to the State in England. Senators are naturally worried as to how often this particular writ of execution would be put into effect and how often an income-tax payer could be put into prison, if the Oireachtas approves of it. During the last seven years, from 1938 to 1945, I suppose there were almost 1,000,000 assessments made by the Revenue Commissioners. They had powers of imprisonment. They had power to go to the District Court and, as Senator Ryan pointed out, they had also power to put a man in prison without going to the court but, all told, out of all the people on whom those 1,000,000 assessments were made, five income-tax payers went to jail. Arrests were authorised actually in 38 cases but I suppose the money came along when arrest was ordered and eventually only five income-tax payers had to be put in prison. I do not suppose if we make this particular form of execution order the standard form for the High Court, that there will be any greater percentage of defaulters in the future than in the past.
Senator Ryan pointed out that the particular form, which we are asking the Oireachtas to approve for the High Court, has been the form for the District Court for almost the last 20 years. He has pointed out that that particular form came under the review of the High Court in 1929 and that the Revenue Commissioners were upheld by the High Court in the action for which they sought approval. The High Court at that time had actually before them that Form XX which was a rule of court for the District Court. "In my opinion," said Mr. Justice Sullivan, "the district justices have power to make a decree in this case in accordance with Form XX."
One question involved in this is why we are not doing this by rule of court rather than by Act of Parliament. A doubt arises as to whether we should approach the rule-making authority for the higher courts and ask them to make the same rule of court as has been made for the District Courts. Somebody raised a doubt as to whether the rule-making authority for the higher courts had power to do it. It seems always to be the function of lawyers to raise doubts but it is the function of poor politicians to resolve them.
Not very sensibly it seems.
Sometimes we do fairly well. I was saying that it had not been made a rule for the higher courts, but it was made a rule for the lower courts. It came before the High Court in 1929 and Mr. Justice Sullivan is reported in the Irish Reports of 1929, page 182, as saying:—
"Form XX in the second part of that schedule authorises the arrest and imprisonment of the defendant should his goods when seized by the under-sheriff prove insufficient to satisfy the amount of the decree, with costs and expenses. I am of opinion that, as debts due to the Revenue Commissioners have attached to them the rights and privileges that formerly attached to debts due to the Crown, and as the District Court has jurisdiction in proceedings to recover such debts when not exceeding £25, the rule-making authority have power to make the rule and form in question, and that the same are intra vires and valid. It follows that, in my opinion, the district justices had powers to make the decree in this case, in accordance with Form XX of Part II of the First Schedule to the District Court Rules. The question asked by the district justice should, therefore, be answered in the affirmative.”
The other judges agreed with Judge Sullivan in that judgment. However, although the High Court said that the rule-making authority for the District Court has power to make the rule and form in question, a doubt has been raised as to whether the rule-making authority for the higher courts has that power and authority, so we are asking the Oireachtas to make this order.
Of course, I hope that there will be no necessity for the Revenue Commissioners to put this particular writ of execution into effect, but it is of the utmost importance that the State should have the power to enforce the collection of debts due to the State. If one individual can effectively deny the right of the State to collect taxes due by him, then, naturally, every other citizen will have a grievance if forced to pay. The best thing to do is to stop any such tendency before it becomes a general one. By and large, the people of this State have paid up their taxes very well and the Revenue Commissioners have had to go to extremes in only five cases during the last seven years. I think that is a good record and I hope they will not have to go to any further extreme in future.
Senator O'Dea raised a question as to whether, instead of having one form, we should have two, that is, first of all that there should be a form which gave the sheriff power to distrain goods and then report back to the court for authority to seize the defaulter if no seizeable goods were available and the court were satisfied that he had the money. Actually, the Revenue Commissioners have the power to distrain without going near any court and it is only in rather large cases that they would go to the court to get specific authority for seizure. If a defaulter owes a sum to the Revenue Commissioners under £25, they have power at the moment to go to the District Court and get from the district justice a writ directing the officers of the State to look for the goods and if they cannot get the goods to take the person and put him into jail. We are asking for exactly the same sort of form and all that is being done here is to have the same modern form for the higher courts so that, when a man owes more than £25, the tax collectors can take the defaulter before the higher court and get exactly the same sort of writ returned against him—power to search for the goods and if they cannot get the goods to take the person. All that is happening by this legislation going through is to put the man who owes more than £25 in exactly the same position as the man who owes less than £25. As Senators are aware, if a man owes over £25 he cannot be taken before the District Court.
From every point of view, I think it is necessary to have this particular form of writ. The Revenue Commissioners have convinced me about it. I went into the matter very thoroughly and I am satisfied that, if we are to have an orderly collection of debts due to the State, this particular form is necessary, or at least is very desirable. As Senator Ryan pointed out, it is not altogether necessary, as without going near any court at all the special commissioners, under Section 165 of the Act of 1918, have power to direct, by a warrant under their hands and seal, that a defaulter should be committed to prison and kept without bail until payment be made. Instead of operating that power of acting without going to the court, we want this particular form of order which the High Court will make when approached by the Revenue Commissioners and when it is proved before the court that the debt is lawfully due to the State.
I am glad I moved this recommendation, though it is not my own, as we have had a very useful discussion and have heard the interesting historical points made by Senator Ryan and also those in the speech by the Minister. One of the things I have watched with very great interest in the last 20 years is how conservative people can be when they become Ministers, how much respect they have for the laws passed in Great Britain in the past, how they are always ready to justify anything by explaining that it really is the same as what was there before, with a very slight difference. I would probably act in the same way if I were Minister—which, thank God, I never will be.
I am in agreement with the views expressed by Senator O'Dea, who has put them better than I could express them. When we are going to the trouble of doing this, it is better to deal with the actuality. The Minister himself has said that no one ought to be put in jail until it is perfectly certain that he could pay. Apparently, there is general agreement on that and, much though I admire the conservatism, I think that we should bring the laws into ordinary commonsense phrases in which we could understand them, without the great number of Latin phrases—the various classes of writs—which Senator Ryan mentioned. I cannot remember a quarter of them, but I have nothing but admiration for the way in which Senator Ryan was able to rattle them off. I was very pleased indeed to find a lawyer like Senator O'Dea agreeing with me in favour of simplicity.
Obviously, there is no object in pressing this recommendation though there was no harm in having introduced it. There was one point which Senator Hayes raised and which Senator Kingsmill Moore wished to raise, but I forgot it, as I spoke at very short notice and without much preparation. He was anxious to know whether the proper judicial authority had been consulted. I understand from the Minister that they were consulted and they were doubtful if they had the power to make rules in this way. I think that is an important point. I would be rather interested to know, in relation to the 38, five of whom went to jail, the others having paid, whether it was the relatives who paid.
Recommendation 2, by leave, withdrawn.
The Third and Fourth Schedules agreed to.
Title agreed to.
Bill reported without recommendation.
Agreed, that the remaining stages of the Bill be taken now.
Question proposed—"That the Bill be received for final consideration"— put and agreed to.
Question proposed: "That the Bill be returned to the Dáil."
On that question, I make no apology for referring, once again, to the very present danger of inflation. Frankly, I was not reassured by the Minister's attitude towards this matter by what he said on the Second Reading. He said, in effect: "I have committed no offence against orthodox monetary control over inflation; I have not borrowed from the banks and I have not printed notes," but surely the story does not end there. The statistics show that there is a very marked danger of inflation. My point is that the Government are to blame if they do not take every step possible to prevent a rise in the cost of living. I propose to show that they have not taken every step that might have been taken to do that. Take the question of the return from money received from excess corporation profits tax. As compared with pre-war, the sum taken in excess corporation profits tax is, roughly speaking, £4,000,000 in 1945.
If that represents only 50 per cent. of the increased profits, I say that £8,000,000 has been taken out of the pockets of consumers in the form of increased profits in the year 1945 as compared with the pre-war period, because, roughly, that is what excess corporation profits taxes are. No doubt there are certain variations in the standard of profits allowed, but, as a generalisation, excess profits are profits in excess of those earned before the emergency. My point is that in 1945 these had reached the alarming sum of £8,000,000, and that sum has been taken out of the profits of the public on a scarcity market. To that extent, it has materially contributed to the increased cost of living. We see there a definite indication of the source of inflation. My point is that the Government have been ineffectual in preventing it.
The Minister may say that price control has nothing to do with his Department. I have no doubt that manufacturers would say that there has been a most irksome form of price control. If there has been price control, it has not been effective in keeping prices down in the way that the ordinary consumer would wish. We cannot, I suppose, undo what has happened in the past, but it is no answer for the Minister to say that he has taken £4,000,000 in increased profits, and that he has given it back in the form of reliefs. I suggest that there has been a very inequitable distribution of the burden. Of course, the way to do it would be to take steps to avoid these increases, because every increase in the price level causes a whole host of troubles. It causes labour unrest, it causes great hardship to rentiers and to the ordinary people living on fixed incomes. It means the setting up of various kinds of tribunals, so that it is no answer for the Minister to say that he is giving back these increased profits in the form of reliefs. It may be asked, what bearing this has on the past, and what is the good of post mortems? I say that it has every good as a warning for the future. I say that because I feel that this inflation may, at any moment, gain most dangerous proportions. We cannot, and the Minister cannot, merely be satisfied that he has committed no offence against purely monetary orthodoxy. I admit that he has not committed any offence against that very limited aspect of inflation.
The statistics show what a real danger there is. Why, even the legal tender in circulation has risen in three years by, roughly, £14,000,000, while the purchasing power in the hands of the banks has risen by a very marked amount. All that takes the form of purchasing power and has a bearing on the scarcity of goods. Until the scarcity of goods has passed, until we can see ample supplies of fresh commodity goods coming forward, I think that the Minister should hesitate to give these reliefs except to those with low fixed incomes. I think there is great danger in promising to remove the excess corporation profits tax as from the first of next year except in so far as these excess profits are used in capital development. That would be right and proper. But, are we sure that all those people who have made excess profits are in need of this money for capital development? Some of them are retailers. Presumably, they are non-manufacturers whose need for fresh capital development is small, if not possibly non-existent. I should prefer to see the Minister keeping the excess profits tax for the present, taking it all and setting it to the credit of taxpayers who can prove that they require money for deferred maintenance or capital development. Substantial sums should be held to their credit until the occasion arose for such expenditure. That, in my opinion, would be a very effective way of checking, from that quarter, the dangers of inflation. Mind you, the danger of inflation is a nightmare. Manufacturers may be happy enough about it since they can pass on its effects to the consumers. The Labour Party may be happy enough about it because through their power they can get increases in the wage level.
There is the standstill Order.
I understand that is coming off. I have a certain amount of sympathy with Senator Duffy's interjection because I think that the Labour Party got a rather raw deal under the standstill Order in the sense that it has not been effective in controlling increases in prices. I understand that steps are being taken to remove or very much mitigate the effects of the Order and I understand when that comes about labour can counter to a large extent these dangers of inflation. You have, however, a large bulk of people, civil servants, pensioners and thousands of others, who live on a fixed income and who would be caught in that vicious spiral. Although the Minister may not be the Minister concerned with this it is the concern of the Government as a whole.
I have great difficulty in finding out what, on broad lines, is the intention of the Government with regard to imports and with regard to increasing or tightening up the tariff barriers. I have lately come across one or two instances where import licences have been refused for articles which have not been manufactured here on the grounds that they may be manufactured here in time to come. That in itself undoubtedly has a bearing on the increased cost of living. Call it what you like it is inflationary. I am very alarmed at what I believe is the tendency in Government quarters to further tighten up these tariff controls and by that means hand over the market to an increasing degree to a narrow circle of home manufacturers who are manufacturing for a limited market and who, in the nature of things, are not the people in many cases who produce at a scale which enables the lowest cost to be attained. In effect, that will further add to this very great danger of growing prices.
I speak with some difficulty in this matter of the future tariff policy or even the present policy with regard to import licences because there is undoubtedly—I do not like the word "conspiracy"—but an understanding of silence among traders not to let me at least and others also know what is going on. Occasionally, one hears things which indicate that the attitude of the average person who wants a licence or who wants quite legitimate advantages from the Government is not to get a black mark by agitating in reference to matters which he certainly may for the moment benefit from but which he himself considers unsound economics. That is the danger. I do not want to enlarge this into a whole debate on the tariff position, but there is a very real danger there where you have a narrow market, a small population, and with the high protection we have got.
Look at the case of the duty on wireless sets, for instance. It is 75 per cent. other than for British sets, with a minimum of £7 10s 0d. That is one instance of that protection and that is to protect, I imagine, a very small number of people engaged in the manufacture of wireless sets. There is danger that the Minister may say that that has nothing to do with the Finance Department, but I hope he will regard it as his responsibility and the responsibility of the Government to peg this spiral.
You have at present inordinately high prices and the Minister should not consider that inflation can come about only by abuse of the monetary organism. It can come about in a number of ways, and so far as the consumer is concerned it is the price he pays that counts. It is the duty of the Government to avoid, where possible—it cannot always, of course, control prices; it cannot control foreign prices—but it is their duty to avoid this danger and to control this rapidly-mounting price level.
There is more material for thought in one statement giving the facts of experience than in the theories we have been listening to here. Frankly, I am left puzzled at what Senator Sir John Keane is driving at. I am going to give one instance where the actual information I have is worth more than all these theoretical statements. We have had many statements made here from time to time about the inequity of high prices and I am not here to defend that section of the community, whether manufacturer or farmer, who took advantage of the acute economic scarcity to get abnormal prices, but let us realise that that is not confined to the farmer or the industrialist. You have the jobbers and the hotel keepers. What did they do during the years of the emergency? I do not defend this thing of high prices charged when articles were scarce.
On my desk this morning I got a letter from my solicitor dealing with property which I use, owned by a Dublin bank, property which has had a rental of a certain amount over the past 14 years. The bank acquired that property in ways that are known to those who deal with banks. They are not responsible for inside or outside repairs. For my own manufacturing processes I want a new lease of that property but this letter indicates that I am to pay 75 per cent. increase in rent over what I have been paying. An interview with the bank elucidated the statement: "Circumstances justify us in looking for these rents. We have another property from which we have been receiving £400 for the last ten years and we have just made a letting by which we will get £700."
These are facts not theoretical statements. Do these things not affect the cost of living? Must not the article produced from these works in respect of which the increased rent will have to be paid reflect the increased cost? What has the bank done to justify that exorbitant increased rent? I certainly am not going to pay that increased rent demanded without having a full exposure of the facts. If they insist on getting the increased rent I will have that exposure before I conclude the new lease. We have heard a lot about £4,000,000 being got from the excess profits tax, but surely no one is better equipped than Senator Sir John Keane to know what the increased circulation of money generally has been.
The fact remains that if the legitimate trader has made £100 excess profits the parasitic black marketeer who came in and cashed in on the emergency got £200, £300, and £400 and the State got none of that. We know quite well that the attitude of the public in the last three or four years has been not "where can I get goods legitimately" but "get me goods at any price." I could cite cases where the legitimate trader, the manufacturer, perhaps, and the man who has paid on more than ordinary profits to the State sold articles say at £10 and the first buyer resold those articles again for £20 or £30. The public were willing to pay that. We are asked to accept the view by Senator Sir John Keane that the ordinary citizen was a helpless victim of the Government, in the first instance, and then of the rapacious shopkeeper and manufacturer and should I say the farmer.
We have been living through an abnormal time. There has been a huge increase in spending power. Money was spent. I did not get any of it in my business. There has been that spending. Try to get a room to-day in a Dublin hotel. Where will you get it? It is not fair for Senator Sir John Keane or any other Senator, in a place where speeches are reported and where there is a public record to state more by insinuation than otherwise, that these great evils exist or to exaggerate evils that actually do exist.
I make no defence but I say that industry will need, in spite of all the criticism it has received, all the reliefs it can get to face the future. During the past seven years, the attitude of the community generally was "Thank God for the Irish manufacturer." There were goods available which, but for him, would not have been available at all. Now, a certain section of the community are only too ready to forget what is due to the native manufacturer for providing those goods. It is a case now of getting goods anywhere—I had almost said, except from the native manufacturer. I hope that we shall never go back to the position when this country was a ranch for the production of cattle, while we exported people who should have been kept in employment here.
They are going to France now.
That is not my fault. They will come back when they have learned the language and, perhaps, teach it to us. Arthur Griffith taught that we needed an industrial arm. It was a blessing for this country that there were people here in recent years who believed in that doctrine. There were splendid men in the Government which preceded the present Government. They initiated some of our best industries and that industrial movement was accelerated by the present Government. If we had not had those industries, what would have been the plight of the country in recent years? Some other industries are merely developing and others are merely creeping. It would be a sad day for the country, as well as for industry, if, because of short-sighted criticism, a flood of goods from God knows where were permitted to come in now and destroy those industries.
Senator Sir John Keane raised an issue which is of fundamental importance. Like Senator Summerfield, I think that he did not sufficiently clarify his point of view. At all events, he did not do so so far as to enable me to fully understand his attitude. My understanding of the effects of taxation on a possible inflationary situation is that, if the Government is able to draw off funds in the way of taxation, that lessens the possibility of inflation. I gathered from Senator Sir John Keane that he found fault regarding the redistribution by the Government of some of the taxation levied. He was inclined to say to the Minister for Finance: "Keep your taxation at the high level of last year and collect what you can by way of corporation profits tax." What is the Minister to do with the money if he collects it? Is he to add to our surplus funds in Great Britain, as the Central Bank is doing, without getting services or goods in return? Is he to do, as is being done to some extent in a way which was long overdue, to redistribute the funds amongst that section of the community which needs redistribution most? Some of the funds raised by way of taxation have come back to agriculture but what has come back is not adequate to meet the demands which Government policy makes on agriculturists by way of taxation and increases in wages. I was surprised that Senator Sir John Keane did not advert to a potential cause of inflation which, to my mind, is a real danger. I think we cannot ignore it any longer. Inflation is made possible by permitting a situation to develop in which the currency available in the country increases out of all proportion to the goods available. That may be said to be coming about to a certain extent. I suggest to Senator Sir John Keane and to the House that the greatest addition to surplus funds here has been made by money coming across from Great Britain.
I was dealing with what the Government could do to avoid the danger of inflation, short of rearranging the whole currency. There are certain automatic effects, which it is not within the power of the Government to change.
It is within the power of the Government to make a change and that is what is not being faced. The Minister is, apparently, quite satisfied with the situation. He said that he would welcome any money which came in here. Everybody recognises that there has been a considerable addition to the funds available for purchase purposes in this country by way of the money imported from England, by the earnings of our people in England which accumulated there and which they were unable to spend on goods there.
It amounted to £13,000,000 last year.
That £13,000,000 might not have a considerable effect on the price level if we were doing anything to increase the available amount of goods. But we allowed our people to leave the country, to earn money in Great Britain and to accumulate savings there and that money is being sent back here to play ducks and drakes with the economy of those who remained at work at home. That constitutes a major contribution to this inflationary situation. Then, countless persons are coming across from Britain to purchase farms, businesses, homes and anything they can get here. My information is that that movement has been greatly accelerated and absolutely nothing is being done about it.
From what the Minister said the other day, I take it that he has no objection to that situation. I should like to hear him on that matter. We have a small population and we have certain resources in consumer goods and capital assets in the shape of land and property. It will not require a considerable new importation to influence our economic and social life here. I think that that is going on without any effort to check it and, apparently, without any real consciousness of it on the part of the community or even on the part of responsible people. That is a situation to which we cannot close our eyes any longer. I suggest to the Minister that the question to which Senator Sir John Keane referred, that of inflation, may become an increasing danger not only here but everywhere. We cannot close our eyes to the factors which may be a real menace to us so far as inflation is concerned.
Senator Summerfield has left the House. I wish that intelligent industrialists, such as he, would reach the stage when they would have a better appreciation of the meaning of words. When I heard him speak about this land being a ranch for the production of cattle and the export of human beings—well, I do not want to describe how I felt. We have not done a great deal to change the situation with regard to the ranches. The truth is that we have exported far more human beings since we started to talk of abolishing the ranches than we did for some time before.
What is the alternative?
There is an alternative and that is why I quarrel with the policy we are carrying on at present. There is in this country and there has been during the war a shortage of goods and a shortage of all kinds of services which should have been provided at home. We shipped men and women out of the country, who, if we had kept them at home, would have earned a weekly wage and would have also produced goods against that weekly wage. It did not matter what kind of service they gave us—cleaning rivers, preparing work for the electricity supply services, the production of some years' fuel advance in the bog—if they did any or all of these things we would have something to show. At least if we kept them employed here and paid them, the money would have been here and the services would have been provided. Instead of that we shipped them out of the country and they earned money in England. When they sent notes back here, these notes were honoured by our banks and we gave to the families of these people the equivalent of the earnings which they sent home from England. Here at home, however, there were no products against the money which had been earned in England. That is where I find fault with the Government policy. I must confess that the Minister for Finance is one member of the Government that I do not understand. I certainly say that I have very considerable admiration for the changes which he has made in Government financial policy but this thing is part of a whole. I did not intend to go into that aspect of the matter if somebody had not led me on to it. All these are issues in our economic, social and national life that are to a certain extent either being ignored or are not being sufficiently understood, in a way that would enable us to alter a policy that, to my mind, is not satisfactory.
I do not know what Senator Baxter wants. It is true that over the last five or six years a number of our people left the country and went to work in England. We did not ship them out of the country, as the Senator says. We did not ask them to go; we did not want them to go. We offered them what living we could if they remained at home. The Senator says that if we had kept them in the country they could have done so-and-so. Does he mean that we should have arrested them or put a ring of bayonets around the ports and around the Border to keep within the country those who went out of it, or what does he want? The Government did its utmost during the war to continue the policy that it had been operating, as best it could, prior to the war. That was, to develop a reasonable self-sufficiency in the essentials of life. The growth of unemployment during the war was due to the fact that by 1939 we had not so developed the resources of this country that we could provide the essentials of life for all our people and particularly the equipment necessary to develop our resources. Certain industries shut down which had been employing large numbers of workers. The provision of housing ceased; the whole motor business practically shut down because petrol was cut off. Even the railways had to go on short time because there had not been sufficient developments in the production of native fuel to keep them running. Many other industries shut down.
Workers were unemployed and the question arose as to whether we should say to them: "Even though you are unemployed you must stay in the country and accept unemployment assistance or unemployment insurance." We had no alternative skilled work for motor mechanics who were out of a job. We had employment for agricultural and turf workers, and under the Emergency Powers Acts we prohibited such workers leaving the country. That was a very drastic power, indeed, but the Government had recourse to it only because they felt that the life of the whole community depended upon the production of sufficient fuel to enable the people to cook their food without having to burn their furniture as people had to do in other countries. We did not ship those who left out of the country. We did everything to provide alternative employment for them.
One other statement which the Senator made I want to contradict. He said that in the last five or six years as many people went out of the country as for several years before. The fact of the matter is that between 1922 and 1930 300,000 people left this country for America not to talk of those who went to England.
How many left in 1931 and 1932?
None, because America would not let them in. They shut down on emigration. In the last few years there were about 250,000 permits issued to people to go from here to England. Deducting the number of those who came into the country from the number who went out there was a nett emigration of 78,600. That compares with the 300,000 who disappeared out of the country between 1922 and 1930.
How many went to the Six Counties?
A very big number went into the Six Counties, but they are coming back. They were counted in, because they had to have travel permits to go to the Six Counties, and the 250,000 who got travel permits include those who went to the Six Counties.
It is, of course, the duty of the Government to watch everything that affects the economic, social and cultural life of our people, and one of the things we have been watching as best we can is what movement of foreign capital there is into this country. While a few spectacular foreign investments in farms and houses have occurred recently, it has very little meaning in comparison with the amount of money we have invested abroad. Senator Johnston will tell Senator Baxter if he likes that up to the end of last year we invested £140,000,000 outside the country during the war. I think that very much less than the 100th part of that has been invested back here by outsiders.
Are there exact figures on that?
There are no statistical figures.
But you have a check?
We have kept our eye on that movement and I can assure the Senator that the movement of capital into the country is nothing like 100th part of the movement of Irish capital for investment abroad over the last five years. Senator Baxter put me a question on the last day as to what was my attitude about the movement of money into the country, as he called it. What has occurred in that £140,000,000 additional investments abroad, is not so much a movement of money to the country, but a movement of promises to pay into the portfolios of the banks, who have increased their external investments considerably during the war, into the portfolios of the Central Bank, which has increased its sterling holdings very greatly, almost £20,000,000 in this last five or six years, and into the portfolios of the Department of Finance which Department invests the savings deposited in the Post Office Savings Banks and the trustee savings banks.
If I had my way, if my word was to control all activities in the country and outside it, we would not have accumulated in these portfolios these foreign assets during the war. Instead of having increases in external assets, we would have translated them into capital goods, brought them back here for the development of the country and given remunerative employment to some of those men who left, and some of those who remained at home idle. There is no use in crying over spilt milk. The fact of the matter is that in 1939, we had not reached a situation whereby we had capital equipment, acting on native resources, to the extent that would provide remunerative employment for all the people who were here in 1939 when certain works shut down and the alternative for the individual was to emigrate or to remain at home in idleness. The alternative for the Government was to keep the man at home in idleness or let him leave. It was by no desire of ours that they left and it is no use for Senator Baxter or anyone else to say that we shipped them out of the country. Let us talk realistically about what has happened and try, realistically, to discuss solutions for our problems.
Senator Sir John Keane spoke about the dangers of inflation. There are many definitions of inflation and there are many signs of its existence. It is naturally my job as Minister for Finance to keep tabs on the volume of money within the country and the activity which that volume of money shows in its action on goods. There has been no increase here in the volume of money during the war due to the policy of the Government or the activities of the Central Bank or the commercial banks or the Department of Finance. That is absolutely true. There was only a small increase in State debt during those years amounting in all to £16,000,000 or £18,000,000.
There was an increase in our external assets of £140,000,000. There was an increase of bank deposits in the commercial banks and in the Post Office Savings Bank and there is this £16,000,000 worth of increased State debt. The three combined make up about £140,000,000. There you have the thing equated—the increase in purchasing power available to the people in the form of notes, those deposits of the commercial banks and of the Post Office Savings Bank. The £140,000,000 increased savings of the people is equated to £18,000,000 in the form of increased State debt and to £124,000,000 up to the end of last year in the form of increased external assets so that the big volume of savings held by the people in the form of notes, deposits in the savings banks, extra deposits in the commercial banks was due to the increase of the volume of money in England, not here. £16,000,000 of those savings was due to the activities of the Irish Government in increasing national debt, but the remainder of the amount, £124,000,000, one way and another, is represented by an increase in the British debt.
There was one way we would have prevented that increase in saving, by using the bayonet to keep the people at home.
If you raise their wages you keep them at home.
Please do not let the Senator interrupt me. We could have detached ourselves from parity with sterling. We could have appreciated our £1 in relation to the British £1 and we could have made it so that if a person went over to England, got £6 in English money and sent £4 back here, he would only get £2 in Irish money for it. That could have been done and it would have set up a certain psychological handicap to people going. Any step not even of such magnitude, but even half or quarter or one-tenth of the way towards it, would have been a very drastic step indeed. When all is said and done, the balance of gain, so far, has remained on the side of our keeping the existing parity with sterling. Senator Baxter, in a certain mood and if he were not too careful, might plump for that appreciation of our £1 in order to stop emigration, but when the farmer sold his cow in England for £40 British and got only £20 Irish, he might change his tune. Senator Sir John Keane, in a certain mood, might plump for appreciation of the Irish £1, but he would not be very long until he changed his tune if the banks, when they went to the Central Bank, got only half the number of pounds Irish for the British pounds they paid in. As I pointed out before, the big effect of changing the parity with sterling, up or down, is not so much—in the first instance, at any rate—to change the over-all international trade position but to make a very big difference between those who depend on exports for a living and those who depend for life and comfort on imports. Appreciation or depreciation will affect those two classes differently, according to which you do.
Again, if there were a very delicate position in regard to our international balance of payments, there might be a big case to be made for examining the position, to see whether or not, in order to keep the delicate balance, we should make new adjustments in our currency as against foreign currency. But that situation does not exist. By and large, we have what is called a favourable balance of trade and we have a very big cushion of reserve investments abroad, which is sufficient to support our currency with the greatest of ease. That particular reason does not exist for making a change at the present time.
We could have stopped emigration to a large extent, we could have stopped the flow of purchasing power into the hands of our people on foot of work they did in Britain or goods they sent to England, by the appreciation of our currency, but I do not think that the game would have been worth the candle. When we get down to it, if we want to improve the economic conditions of our people, if we want to bring down the prices of goods in relation to wages and salaries, the only thing to do is to get a capital development as quickly as possible that will produce consumable goods in the necessary quantity.
Tariffs may be necessary in order to give our manufacturers a chance to build up; subsidies may be necessary in order to enable our farmers to produce the wheat and other requirements for our people; but whether it is by subsidy or by tariff, or by lending from the banks or from the State, all the measures it is necessary to take in order to build up our capital equipment should be taken. I hope that the Minister for Industry and Commerce will continue to give encouragement to industrialists here to get ahead with their work and that the Minister for Agriculture will continue to give the same encouragement to farmers to produce the goods and other food as he has given in the past.
Would the Minister be prepared to ask his colleagues to consider, in view of the anxiety about the whole tariff policy, the revival of the Tariff Commission?
I am not in a position to go into that question in any great detail. The Minister for Industry and Commerce has under constant review the trend of prices in particular industries and he has recently indicated, or certainly was discussing with members of the Government, the taking of further steps to inquire into the efficiency of industry as a whole and even into individual concerns. However, the Minister himself will deal with that and I forget the details for the moment. I think he made a public speech in connection with it and that there may be legislation or schemes of one kind or another involved.
I would like to see certain prices falling pretty drastically, but I would like to see that happen because of an increase in efficiency. Where it is necessary for a farmer, for instance, to get a certain price in order to continue in production, I would not like to see prices fall to the extent that would drive him out of production. Neither would I like to see the manufacturer, by some artificial driving down of prices, driven out of business. I hope to see both industrial and agricultural prices fall naturally, as industrial and agricultural efficiency increases. I am hoping that one of the results of the State foregoing the collection of the excess profits tax will be to induce more people to go into industry and to create those conditions of competition which are the best guarantee the community has of reasonable prices. With the best will in the world, I do not think the Minister for Industry and Commerce and his staff can control prices of commodities with the minuteness that he and that I would like to see. Competition in industry is the best method of getting prices reduced.
In a free market?
Yes, and a free market is not necessarily a market that has foreign competition. I remember that by 1939 there were certain items of consumption which, although they had a 33? per cent. tariff against imports, were sold here at a cheaper price than they were in Britain. I have absolute evidence of that because I know people in the Six Counties who came in to buy the articles. A market is free if there is a sufficient number of native competitors. They do not want outside active competition to keep prices down. However, if home manufacturers attempt to get into a ring——
That is it.
—— the only way to break the ring would be by allowing them to feel the full weight of foreign competition. In some cases—in the particular case that I have referred to—foreign competition would not have settled it because the native prices were lower. If we could get industry going, if we could get sufficient capital into it, if we could get up-to-date machinery and equipment, I see no reason in the world why, in regard to a great range of industrial products, we should not produce them as cheaply here as any other country in the world.
Under equal conditions?
Under equal conditions. I think I have dealt pretty fully with the points that have been raised.
May I ask the Minister whether he has any views on the inflationary effect of cheap money, and, in that connection, whether he has anything to say about the reduction in the interest paid on Post Office deposits which, I believe, are part of the Budget.
I believe that it is socially necessary to have public debt bearing the lowest possible rate of interest. I believe that it is economically desirable for capital, in the form of houses and other public utilities of that kind, to be financed at the lowest possible rate of interest. The higher the rate of interest on gilt edged Government debt, the greater will be the tendency for people to save in that form. There is that consideration from the social point of view. But people can save in several ways. A man can buy an extra roll of cloth and not have it made into a suit; he can save by buying a piece of furniture or a house; he can save by buying a piece of a factory in the form of shareholding; he can save by improving his land or he can save in the form of buying Government debt. From the social point of view it seems to me that if people invest their money and want to save in the form of Government debt—I am talking now about normal times—and refuse to invest in ways which will give employment to their neighbours, then that will eventually force the Government to invest in some form or another in order to distribute purchasing power.
It seems to me that the lower the rate of interest on State debt certificates the greater will be the tendency for money to circulate outside the State organisation: that Pat Murphy will give his pound to his neighbour to improve his land or to make a pair of boots or a suit of clothes for him rather than give it to the State. If he gives it to the State it is not available to purchase the results of the labour of his neighbours. The State then, if it wants the total products of the community to be purchased, must itself undertake some activity which will cost money. It must undertake some industrial or public development utility, or else it must distribute it directly to the consumers, or to some section of the consumers. That is merely on the question whether a high rate of interest or a low rate of interest is to be regarded as socially desirable. It is only one particular aspect of the matter.
I do not believe that the Post Office depositors are seriously affected by the small reduction of interest that has been made on deposits up to £300. It amounts to about one and the one-fifth of a penny in the £ per annum. Instead of getting 6d they will get 4d and four-fifths of a penny, if I remember correctly, on sums up to £300. They will get 1¼ per cent. on the excess above £300.
The average rate of interest on a total sum of £1,000 will amount to around 1½ per cent. If, however, a person wants to save and does not want to accept the 2 per cent. up to £300, from the Post Office, we propose to offer him an investment in national Savings Certificates which will yield him £2 10s 1d, if held to maturity for 11 years. It may be that during the year we will also offer a 2½ per cent. long term Government security.
There are these three alternatives open to the person who wants to save in the form of State debt of that kind. The Post Office Savings Bank is a State debt. So that if that person does not want to accept the ordinary commercial bank rate, or the Post Office 2 per cent. he has the option of making an investment in national Savings Certificates up to £350 for each member of his family, bearing slightly over a 2½ per cent. rate of interest if held to maturity, and we may probably offer him the other 2½ per cent. in a long-term loan. I think that these opportunities for saving are sufficient to prevent those who might save, squandering their money. I would prefer to see people who, once they have cared for their families, given them sufficient food, clothes, and reasonable housing, keeping off the market for consumer goods at the moment and giving prices a chance to fall. I would like to see them putting their money into these Saving Certificates, or in the Post Office or the commercial banks rather than squandering it competing for goods in short supply.
I think I have answered Senator Johnston's question as to what my attitude is in regard to cheap money. If I get money from the Post Office, from Savings Certificates and from the long-term Government loan, if necessary at 2½ per cent., I will be able to re-lend that money for housing development and for public developments of all kinds. It makes a very big difference to the rent of a house whether the rate of interest is 5 per cent. or 2½ per cent., or even if the difference is between 4¼ per cent. and 2½ per cent. The last loan the Government gave for building houses was at 4¼ per cent. for 35 years. It required 2/1 per week per £100 to repay it in 35 years. Given a loan of £100 for 50 years at 2½ per cent. the weekly charge would be 1/4., so you have the difference between 2/1 and 1/4. That is a very big reduction. If we were forced to give more to the public for money, or if we offered people 4 per cent. or 5 per cent. for their money in the hope of inducing them to save, the prices of houses would go up accordingly.
Might I ask the Minister if the 1/4 is related to a loan for 35 years also?
I said 50 years.
As against 35 years in the first case?
That is right. A 4¼ per cent. loan for 35 years requires 2/1 per week for each £100 to repay in 35 years. A £100 loan for 50 years at 2½ per cent. interest requires 1/4 per week.
Might I interrupt to suggest that the Minister should borrow all he can at the 2½ per cent.? That rate might be too good to last.
I disagree with the Senator. I think we have come to the end of that period in the world's development, and that people to-day understand exactly where money comes from and they understand how it is to be controlled. The one thing that is lacking is the will to control it in certain cases.
Universally absent.
I hope the Minister is right.
There is no longer any mystery about how to provide money, but one thing that is absolutely necessary if we are not going to misuse the power of controlling the volume of money, is the will to control it. There is nothing easier than to turn out all the money we want either by way of Government notes or through the commercial banks but it would be disastrous that the volume of money should increase in a proportion greater than the increase in consumable goods. The one thing I fear is that people, now that they know they have the "know-how," may misuse the modern powers over which they have control.
Our main effort must be to develop the output of consumer goods, and to do that we will require capital development. Any immediate effort on the part of any section of the community to grab for themselves more than they are at present entitled to will result in setting back future development. With a certain amount of consumable goods in existence, if certain people get more of them, somebody must go short, and with the way modern life is so closely interlocked, selfishness on the part of a few can bring down the whole structure. It would have terrific repercussions all through the economic life of the country if certain people should start a chain of price rises by demanding and securing for themselves a very much larger increase in their salaries and wages. I hope that both the salaried people and the wage-earners throughout the country will see that it is only wise in their own interests not to go too fast about demanding that their salaries or wages should be increased. If such a campaign were started and were successful, the people who would suffer most in the long run would be those tied down to a wage or salary.
Might I ask the Minister whether it is his intention to convert existing Post Office deposits and Savings Certificates to the new rates he has suggested?
I only want, as the person responsible for the opening of this debate, to thank the Minister for his exceedingly courteous and helpful reply to our remarks.
Following the passage of this Bill, I propose to give notice that on and from the 1st January, 1947, the rate for Post Office loans up to £300 will be 2 per cent.
That covers existing deposits?
All deposits that will be put in or left with us after the 1st January, 1947. In respect of the existing Savings Certificates, those that have been issued in the past, we have accepted a contract to repay the rate of interest that is on the face of them and we will continue to pay it. Future Savings Certificates will, however, have a lower rate of interest. That rate will, as I indicated, be £2 10s 1d if held to maturity—for 11 years.
Question put and agreed to.