I am speaking of only since 1948. That is the position now and was the position last year. The State is providing well over half the cost as a free grant. The rest is divided between the local authority and the tenant. The whole system of financing house building is very confused. There are so many areas from which money is drawn as subventions, I think it is only prudent to have the matter clarified, and to put the subventions on houses on a basis that everybody will understand.
In respect of the general project, I say that we have recognised that a very heavy arrear has piled up in connection with the provision of houses, and that we could do either of two things about it: let houses be built at the normal rate, postpone overcoming that arrear for a generation and a half, or speed up the programme as fast as we can to meet it in a more reasonable time. We have decided to speed it up. Our opinion is that we are speeding it up to meet a wholly abnormal situation. We decided to put that as a capital service. It is not a capital service in the way in which Senator O'Brien described two of the three matters he mentioned. We do not directly provide the money. We raise the general level. There were reasons that Senator O'Brien gave that I think were praiseworthy, and certainly met any of the arguments that were put against us. I want to stress that this is an abnormal situation and we are meeting it in this way, partly because of the abnormality. We are spreading the exceptional cost of houses over a reasonable period and we hope that we will, in a reasonable period, overcome the arrears.
There has been comment with regard to distribution under the farm improvements scheme. I am sorry that Senator O'Reilly is not here to listen to the explanation. The farm improvements scheme is down as one item. It is true that some of the money that used to be found for that purpose will no longer be found. The reason is that there is far more money going to be provided for land reclamation. The scope of the work has been very definitely widened. As far as applications are concerned under the farm improvements scheme, farmers were tied to a narrow range of circumstances, and were so tied that the best they could get was 50 per cent. of the labour content. Now they can get two-fifths of the entire cost. I think applicants will benefit by the change. There were certain small points made and queries, but I say that the building of piers for gates, or the supply of water for houses are items in the farm building scheme, and I assure the House that there is no attempt to restrict the area in which that could be done. That is being carried under a different Vote, and much better provision is made by a greater amount of money while the cost to the applicant is lessened.
On the vexed question of subsidies, or on one part of the question of subsidies, I was asked—in fact I was not asked, it was suggested to me by a member of the Seanad, who said that he did not know the price at which Irish butter was sold on the German market, but he was certain, nevertheless, that it was being subsidised. He spoke, and he revealed himself either from ignorance or from nescience. At all events, he did not know that there is no subsidy whatever on the butter is being sold to Germany. Butter is being sold at a rate which is the economic price. I think, indeed, that there is a slight profit being made over and above the economic price, which will go in relief of the subsidised price here. The quantity we are sending to Germany is, unfortunately, not a very great one—something of the order of 400 tons. I think the figure, in the end, will amount to twice that, but the fact is that there is no subsidy at all. The subsidy has been fully remitted.
On another aspect of the question of subsidies, I do feel that I am entitled to complain. The statement was made here more than once that the present cost-of-living index number is a fake index number. People have not hesitated to use that word in relation to the number, and it has been explained by one member of the Opposition that he used that phrase, seeing that the officials were instructed to have regard in the compilation of the index figure, only to the subsidised prices of limited commodities, and to ignore the fact that economic prices had been fixed for certain commodities where they were brought outside the ration. That is an inaccurate statement. No instructions have been issued to officials to act in the matter that we have heard suggested here. The officials in charge of the compilation of the cost-of-living index figure and their enumerators go round to where they made the same inquiries before. If they find that a subsidised commodity is also being bought at unsubsidised prices outside the ration, in certain quantities, they take cognisance of that, and the figure is made up on the same basis as it was always made up. I am not sure that it is a good thing. I do not think that one should go to the length of providing a commodity like flour at a very reduced rate. If extra white flour is being bought, or if extra bread which is made from unsubsidised white flour is being bought at something approaching economic prices, that gets you into the region of luxury, and should not be taken into account, but, so far as we know, no change has been made in the instructions to the officials who have to compile the index figure.
I might inform the Seanad that that was not always the way and that there was distortion at one time in the index figure. I have already given the history of this to the Seanad, but I should mention briefly now that when Deputy Lemass was Minister for Industry and Commerce and spoke in this House on June 15th, 1947, he made a calculation in his speech that the British cost-of-living index figure was really a false figure. He argued certainly that it was false by comparison with the figure we had here. One of the complaints made by Deputy Lemass when he was Minister was that the British Government tried to keep down the cost-of-living index—not the cost of living—and he went on to explain what he meant.
He said they imposed heavy taxation on tobacco and drink, items which were weighted very lightly in the compilation of the cost-of-living index figure, and he suggested that the British used the revenue to subsidise food prices which were rated rather highly in the compilation of the index figure. At the time he said that is what the British were doing and he gave himself a pat on the back, so to speak, by saying:—
"We do not do as the British do. They only give a light weight to tobacco and drink, and use the revenue to subsidise food prices, which are weighted more heavily in the compilation than the prices of these commodities."
The then Minister for Finance, Deputy Aiken, followed in June, and more or less went over the same ground, but he did refer to English tobacco, cigarettes and drink prices. The burden of his speech, which we have all heard repeated, was that the man who got a few extra pounds in England had to pay a lot more money for certain articles in his daily life in England than a man here. The then Minister for Finance said that the man in England would have to pay far more for the things he needed than he would have to pay here. The Minister was then making comparisons between the terrible prices of tobaco, beer and cigarettes in England in comparison with here.
But in October, 1947, the then Government decided to do what Deputy Lemass had criticised the British Government for doing. In British they had high taxation on tobacco and drink and used the revenue to subsidise food prices. The then Government here went further, and they gave an order or instruction to the Director of Statistics here that he was not to include the increased prices of tobacco or drink in the cost-of-living figure at all. The director was not too sure that the cost-of-living index prepared that way would be a true picture of the cost of living and apparently protested. Correspondence ensued and the Director of Statistics forced his way to this extent, that in the December issue of the Trade Journal he published a note pointing out that the Government had decided that essential items would be the most useful to include in the calculations for the compilation of the cost-of-living index figures. The result was that items such as alcoholic beverages, tobacco and amusements were not considered in the compilation. That was done by Government Order, although these were the things that had been accepted in making a comparison between the British cost-of-living figure and our own cost-of-living figure. The autumn budget of that year increased the prices of alcoholic beverages, tobacco and amusements, but steps had already been taken to see that they would not come into the compilation of the figure in future. That is the history of the cost-of-living index figure here in 1947. It was distorted because it had not been built up as it had been. Certain things were left out. The prices of certain commodities were increased, but they did not want that to be reflected in the cost-of-living index figure, and it ill behoves anybody who was a party to that transaction to say that the new Government, who have not varied the instructions given to enumerators at that time, have faked the cost-of-living index figure. That term should be applied rather to those whom we have succeeded.
Of the smaller points that were made during the course of the debate I do not think I need refer at length to many. Senator Summerfield said something about wireless broadcasting and he made a mistake which I corrected at the time. I could harp a good deal on that phrase of his about wireless broadcasting, and say that I do hope that at a very early stage wireless broadcasting might disappear from the Book of Estimates. It is a service that ought to run itself and it ought to be financed by the fees of those who have to get licences and by the advertisement revenue, or what comes in from the firms who use the station for advertising purposes. In that situation they should be able to cut their clothes according to the quantity of cloth they have and, at the present time, they are getting a fair abundance of cloth.
Senator Summerfield usually casts a jaundiced eye when he speaks here. He talked about the Custom House and described the stones as marble. But, if he can see any marble or luxury building at the Custom House, I would be glad to know where it is. Perhaps it could be shown to me—that is, if he was not looking at the building in Store Street. I must say that any luxury building at the Custom House has escaped, not only my personal observation, but my accountancy as well.
I know that an infinitesimal type of expenditure is being incurred at the Custom House, but it is in stones—I know of no marble. I know that the gardens at the Custom House are being so arranged as to permit of the erection later of a memorial which is to be put there by the Old I.R.A., and to be financed by them. I know of no marble there at the moment. I wish that the Senator would show me some marble around the Custom House and that he would also show me some examples of the fine speculative type of business men that he referred to in his speech. I would insist that he would rule out from that category any man protected by tariffs or by any monopoly arrangements. I would like to hear him telling us something about the fine old independent type of business man—the man who does not want to get something from the State. Senator Summerfield said—and he worked himself up into something of a passion over this—that the working man of long ago would have been ashamed to accept from the State what he now demands from it as a right. If you substitute "business man" for "working man", I think you have a fairly good analogy.
In a speech which was, I think, entirely in favour of the particular matters with which I am concerned, Senator Finan used a phrase which I should like to underline. He said that no one would object to paying a greater amount by way of income-tax if his income was higher. I wish he would go and tell the dairy farmers of the country that and see if he would get a response from them.
The general matters that have been dealt with, however, are the big matters which were brought to a head, and mainly referred to by most of the speakers, in the admirable speech which Senator O'Brien delivered to this House. I think it is a sad commentary upon the Press of this country that a speech of that type should get the limited space it got in this morning's papers. It is probably one of the most important speeches delivered here, and is certainly of tremendous educative value. I hope it will have a very steadying influence on the whole community in regard to this development which we are bringing about, and, since the newspapers have not given it circulation, I must see if it is not possible to give it the circulation it deserves in some other way.
I am very much under an obligation to the whole Seanad, and particularly to Senator O'Brien, for what he has said on this matter, and in particular, I should like to get better known through the country his division of these capital schemes into the three divisions in which he put them. I am very grateful to him for the very lucid analysis he gave of what he considered to be the requirements of any big housing programme. He set out the matters which he thought should be critically examined under five headings: the rate of interest on housing loans; the high cost of building—and there he is referring to labour and particularly to output; the high cost of raw materials—he wondered whether these were being increased to any high point by reason of tariffs or any sort of monopolistic controls; differential rents and sinking fund arrangements; and finally he hoped that all this building programme would be confined to the sector in which the private builder does not operate.
I certainly would take his remarks as a guide to future investigations of this whole housing situation, because there is a danger in this housing situation. Everybody is concerned to get the housing arrear overtaken. We are so concerned that people have often made the remark: "Finance will not stand in the way," but finance may stand in the way. It may not be possible to get the money, but we are far from that point yet. There is a danger, however, in going too fast. Senator O'Brien has put it on the ground of the discontent and the results of discontent which might arise, if we did not go fast enough, but there is this danger inherent in going too fast, that you create, so far as the building trade itself is concerned, a condition not merely of full employment, but of over-full employment. That, of course, has its temptations for everybody—the operatives, the people who provide the building materials, and the contractors themselves.
Apart from all that, there is a possible danger arising from inflationary pressures simply blowing things up. In flation has had its effect already on house building. Many Senators—those who are from provincial areas in particular—have complained of what seems to them the far too great increase there has been in the cost of house building as compared with previous years. Part of it is due to the fact that, when you are pressing on with a programme of this type, you are open to a certain amount of exploration, and, unfortunately, there are people in the country, from all angles, who are inclined to exploit the present situation. That is why I am very gratified by Senator O'Brien's speech in which he gives a careful analysis of seven or eight matters which have to be examined, because, if we are going to make further speed in connection with housing, the dangers are growing and multiplying as we advance.
Senator O'Brien ruled out from his consideration—and I think he was wise; they are better dealt with on another occasion—a variety of things, but he brought in one aspect of a general matter, the general matter being ruled out from his consideration, that is, the Irish banks, the position they are in with regard to their customers and the moneys they have at their disposal for lending. I have on many occasions objected to this whole matter being made the occasion, as it frequently is, for launching an attack on the banks and trying to represent the banks as a group of people unnationally minded and determined, in the words of the popular phrase, to sabotage all the national effort with regard to a variety of matters. I do not think these attacks should be launched on the banks, and certainly the comments made should not be phrased as they are.
Senator O'Brien again put that in its proper perspective when he said that the banks are in a difficult position, because—I can collapse what he said into this—they must keep, by reason of circumstances, the sort of liquidity attaching to a savings bank. Later on he referred to the timidity that may assail the owner of savings, the persion who gathers up and does not spend, the accumulation of all these individual efforts being the amount of the savings we have. They are the people who have to be tutored in all this. It is not the bank directors. It may be that the bank directors are adhering too closely to a system which is a little outworn, but, in the main, they have to attend to the circumstances under which they get money, and unfortunately in this country they get money from people who have not the habit of investing on their own but who simply put money into a bank, and the bank, accepting it in a particular way, says: "We have to be prepared to repay on very short notice".
I think they overdo that, but it seems to me that Senator O'Brien does hold up a warning finger to us—do not have the people who are really saving and putting the money into the banks made timid, because if you do, it is so easy to transfer these moneys, held more or less in a liquid way, across to the English system or the North of Ireland system. That is why I want the Senator's speech given a wider circulation than it has got, because I think we will be able to assure these people that there is no revolutionary movement on with regard to the banks. I think there is some movement that ought to be made by them, and if necessary the Government can get in touch with them and see how far they consider they are tied by circumstances and investigate how far what they regard as their obligations are correctly understood by them. It may be that if necessary the State will have to make some arrangement with them, possibly by some form of guarantee whereby the State would put the banks in the position in which that money which in other countries is used for medium and long-term investment would be provided here for the same purpose, preserving at the same time the depositors' theoretical liquid position. The speech was very welcome from that angle and all that is required is to give it circulation and get these matters discussed in the reasonably calm way in which they were discussed by people who want to change but do not want to break down a system which has stood the test of time.
Senator O'Brien has said with regard to borrowing that borrowing is not necessarily inflationary and I think he went on to say that he did not see any likelihood of inflationary results coming from the borrowing that is being done. At the moment—possibly I did not put this clearly before the House because I mixed up certain funds, not thinking of a single period but moving on to different periods—borrowing, so far as I am concerned, is mainly being done from the Loan Counterpart Fund—this being taken as a sort of Ways and Means Advances that I hope to have repaid quite soon, but I will not be able to repay unless I get money in the ordinary way by borrowing from the public.
When I introduced the matter of other moneys at my disposal, I was referring to such services as national health insurance where there are certain accumulated funds. These are there for investment, but they are being invested in particular ways at the moment and I think it is possible that a change might be made there. Again, I can assure the House that nothing revolutionary will be done. I think the moneys could be put at the disposal of the country for the development of our resources and we will try to have it done in that way, but it will have to be done with the consent of the people who own the money. We will have to try and talk them into a better frame of mind, if we can, in regard to the use of these moneys, through the instrumentality of the various lending agencies.
I come back to one of these misconceptions. I welcome Senator O'Brien's explanation of the phrase that is often quoted from the Banking Commission Report. No doubt, in 1938 the Banking Commission did advert to the dissipation of sterling assets and criticised that; but the difference between what was being done then and what is being done now is this—and Senator O'Brien used something like this phrase—that the Banking Commission were looking at savings being dissipated because of the poverty of people at home. No doubt, at the time of the economic war, there were people cashing in on certain investments merely in order to live on them. It was not a case of changing the source of investment. They could not get money from other sources where they were entitled to get it and, therefore, their investments disappeared. That is not the situation at the moment. Any money that is being taken home is being switched over from one type of investment in England to another here, from one good investment there to one equally good here, giving an equally good rate of interest and the same amount of security, if not far better security. The security in a home investment is, in the main, a better one than that in a foreign land. I think the history of foreign lending over a long period—this will apply to the nations that used to be creditor ones and had big sums of money to lend— has been that more than 50 per cent. of the foreign investments have been lost. We have lost a certain amount of what can be called our foreign investments. I do not think anyone would have any hesitation in accepting the lessons of history and deciding to accept the better security at home.
The second last misconception is with regard to what is called the increased bill for the public. I think that, if only to mark the change, while the ordinary Estimates and the Vote on Account pertaining to them should be taken at this time of the year, there would be something to be said for the capital side of the year's expenditure being taken at a different period, in order to get it put better before the public. There is a great deal of confusion when one comes to deal with this Book of Estimates. There are Estimates proposed to be met out of ordinary revenue and then you have the segregation of capital items, or you find the segregation is done in the Budget. It may be better to mark this change by breaking the tie and letting one see how the two accounts run. It would mean several opportunities for debate instead of one. Someone might say that the time would be wasted, but I cannot complain of that for the last couple of days here. Public debate helps to educate the public mind and it would be a good thing if Deputies, Senators and Ministers could afford the time.
Misconception naturally arises as to whether or not the taxpayers' burden has been increased. I say it has not been. It has been said two or three times that the people who form the present Government made a lot of promises about reducing taxation. They have reduced taxation. If that is doubted, will the people who doubt it look up the Order made between 18th February, 1948, and the first week of March, 1948, taking off the duties which were put on in October, 1947, on tobacco and beer? That Order is still operative. It lost me, in connection with finance, some £6,000,000 or £7,000,000, which was given back to the community. That £6,000,000 or £7,000,000 was to be taken from them through that tax. People who look at the Finance Act, 1949, will find that income-tax has been reduced by 6d. and there are certain other reliefs, supposed to cost about £1,250,000 in a full year. There is no doubt that taxation has been reduced. Other taxes would have been taken off if the people who form the present Government had not decided that the obligation on them, deceived from their promises, made it necessary to increase the pay of civil servants, Garda and Army, to give more to old age pensions and to increase the tea ration and therefore increase the amount of money for subsidy. I had the calculation made several times and gave the figures in detail. There is £11,000,000 that is either saved or else is switched expenditure from certain other things to these payments for old age pensions, civil servants and so on. There is, as between the reduction of taxation and the switched expenditure, a sum of about £11,250,000.
An attempt is made to confuse the issue by saying that Fianna Fáil spent only so much in their last year. That was all they were allowed to spend. They brought in a Supplementary Budget in October, 1947, but they forecast the expenditure for the full year and that was reflected in the Book of Estimates, and when I came first into contact with it it contained that figure which I have often spoken of, £70,500,000. It is true to say that Government expenditure in certain areas is going up and it is also true to say that the public are subscribing, through lower rates of tax, a very big revenue. That is because we are on an up wave. Senator McGuire has referred to the fact that, even though income-tax is less by 6d., it is bringing in pretty near the same amount as last year. We have to take not merely the reduction of the 6d. but also all these other reliefs which, in a full year, would cost £1,250,000. We find pretty much the same amount of money is coming in. That can be explained in a variety of ways. The taxpayer in his capacity as taxpayer has been relieved. Groups of individuals all over the country are providing the revenue we require for the running of the State at the moment. There has been a reduction in taxation, and a considerable one.
Senator O'Brien was good enough, when opening, to refer to the Shannon scheme. I am very thankful to him for what he said and very complimented by what he said about it. I did not hear it mentioned or think of it again until Senator Quirke mentioned irresponsible statements and then I did think of the Shannon again. People who know only now of the Shannon scheme as an accomplishment have no idea of the way in which its birth was greated. I have a series of quotations here. One newspaper said that
"the whole business was a gamble", that
"the board I was setting up would need to be super salesmen if they were to justify the Minister's optimism."
An editorial said that it was
"bad and dangerous"
"it was to be hoped that the Seanad would insist boldly upon its right of amendment and delay."
Another newspaper told me the Bill was
"State socialism in one of its crudest forms"
and said that
"no Socialist Government could go further than I was going in that regard."
It said that no Socialist Government could go further than I was going and it was a mild comment to say that we were taking a big risk on it.
One leading article thundered in this way:—
"The country as a whole is afraid of this scheme. It is too uncertain in results. The money could be better spent. The Shannon scheme is premature and ought to be suspended. By acknowledging that fact now the Government would do the greatest service to the nation and to itself."
We were told in another comment that the scheme was audaciously speculative and that the Government
"has yet to justify the strictly preposterous policy of organising power on a great scale in the hope that the supply will create demand".
Finally—and I always took this to be a sort of personal reference—we were told that the Ministers of the Government were young and ardent, that in the desire to get things done they were knowingly taking great chances, and that they treated some national interests in the most arbitrary fashion.
Another paper wound up by saying:—
"The present scheme for the Electricity Board bids fair——"
this sounds a mad comment at the moment, but it was in tone with all the others at the time——
"to develop into a crazy, overgrown megalomaniac enterprise whose financial foundations are from the very outset unsound."