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Seanad Éireann debate -
Wednesday, 18 Jun 1952

Vol. 40 No. 21

Finance Bill, 1952—Second Stage.

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

The main purpose of this Bill, I had better say at the outset, is to increase the rates of taxation so that we shall raise an additional £11,290,000 for the maintenance of the existing public services and for the new social services which will begin to operate as from the first of next month, that is to say, as from the 1st July. Having regard to our resources, this is quite a considerable additional imposition on the people and, therefore, I have no doubt that the Seanad would desire to know how the need for these additional taxes arises. They will be particularly concerned to know that, in view of the statements which have been made during the past few weeks, this additional taxation is unnecessary.

Perhaps the best way to begin the explanation is to refer to the table explanatory of the Budget which, no doubt, members of the House have studied with care. If they refer to that table they will see on the one side that the total expenditure upon Central Fund and Supply Services for the current year is estimated to amount to almost £108,000,000. In more specific figures it is estimated to amount to £107,956,000. Members will notice that against that, on the revenue side, we expect a total revenue from taxation and from other sources amounting to £86,581,000. Therefore, the gap is of the order of £21,400,000. We are proceeding to reduce that by deducting £9,277,000 from the expenditure side for those services which my immediate predecessor described as voted capital services. As I said last night in another place, I did that with a great deal of reservation, because I was very doubtful whether many of these services would be described as capital services at all.

I have mentioned that, among those which have been so described and which were regarded by the last Government as being properly of a capital nature, was the provision made for supplying day-old chicks to Irish farmers. Because it was felt that the term "capital" was so elastic as to embrace this particular type of service, day-old chicks, the life of which it would not be over-pessimistic to describe as being uncertain, are being paid for by an annuity which is being spread over a period of 30 years. Among the other services which were described as capital services—and here I have jibbed at accepting the term— was the purchase of such things as rolls of flannelette used, I gather, to make pull-throughs for rifles and costing, on the average, £1 per roll. They, too, have been brought under this category—voted capital services—with, however, this distinction: whereas our predecessors thought that the useful estimation of life of a day-old chick could be spread over 30 years, they were not so certain as to what term of years might be regarded as being reasonable within which to amortise the cost of rolls of flannelette at £1 per roll.

Instead of going through the solemn process of calculating what the annuity on these would be over a 30 years' term, they decided that these would have to take more or less pot luck and that the cost of these rolls of flannelette would be ultimately borne by the ordinary provision which the State makes for borrowing for normal capital services like, say, the extension of the electricity supply system or the capital works which have been carried out under Bord na Móna.

As I have said, I jib at including the rolls of flannelette with the day-old chicks in this category of voted capital services. I must confess that I felt it would be a better and a sounder policy to charge these readily exhaustible materials against revenue. With that solitary exception—oh, yes, there is another one, too, the provision which had been made for spare tubes and covers for bicycles and motor cars —I think it will be found that, so far as the voted capital services go, we have conformed to the standards which were put down—I was going to say laid down but, in fact, depressed—by our predecessors.

We have done that, not because we accept this principle as being a sound principle, but because the problem we are facing this year is so enormous and the burdens which we have to impose on the taxpayers this year in order to redress the position which was created by our predecessors would be so large, that we have accepted that these voted capital services in this year will be defrayed— whether properly or improperly is another matter—out of borrowed moneys.

These voted capital services amount in all to £9,277,000. Deducting that from the £107,000,000 or £108,000,000 to which I have already referred, we are left with something over £98,679,000 as against which we have a tax revenue of £86,581,000, with the consequence that the gap of £12,090,000 approximately has to be closed in one or other of two ways. We can either close it by reducing the provision to be made for current expenditure, that is to say, by curtailing existing Government services or by increasing taxation.

Fortunately or unfortunately, we cannot proceed to do that immediately because there are certain contingent commitments to be honoured. Our predecessors, when they took office, pledged themselves to introduce a comprehensive measure of social welfare. That measure took an unaccountably long time in gestation. It became visible to the naked eye sometime about March, 1951. It was born in somewhat chequered circumstances.

It was still-born.

It was not still-born. It came alive. It materialised on the First Reading and ultimately in the text of the Bill which was debated at some length in Dáil Éireann in March, 1951, it passed its Second Reading, certain inducements having been held out in order to ensure that the infant would live through its first two months. These commitments would have involved the Exchequer last year in additional expenditure, according to the then Minister for Social Welfare, amounting to £1,250,000. However, before the Social Welfare Bill did become law, and before the proposals could be made effective, the Dáil was dissolved. With the dissolution, the proposals which were then before the Dáil for these extended social services perished. However, the present Government had undertaken in the course of the discussion upon that measure to bring in a measure which would deal with our social security problems in a way which we thought would be better adapted to the circumstances of the country than those which our predecessors had formulated. That undertaking was given and has been honoured as readily as circumstances would permit, with the consequence that in this year's Budget we have to provide a sum of between £1,750,000 and £2,000,000 to meet the cost of the provisions of the new Social Welfare Act which will begin to operate as from the 1st July, that is, within 13 or 14 days from to-day.

We have also had to make some provision for the unforeseen matters which we know will inevitably arise in the course of this year, including some further and better provision to deal with the members of the Old I.R.A. who served this country during Easter Week and the Black and Tan Wars. These things, with other contingencies which I cannot specify, compel us to make provision in this year's Budget for a further additional sum of £3,000,000. When we add that to the £98,679,000 over which we have no control—which we have inherited, in fact, from our predecessors and which are the embodiment of the obligations and commitments which they entered into before they dissolved the Dáil in May of last year—we are left with the sum of £101,679,000. As against that let me repeat again, we have a tax revenue amounting to £86,581,000, that is, we are left with a gap of over £15,000,000 to close. I have already indicated that that can only be closed in one or other of two ways, or by a combination of both— either by reducing existing expenditure or by increasing taxation to provide the full amount required. We have chosen what I think is the middle way. We have decided to reduce the public expenditure upon those services which we think are abnormal and will, we hope, soon be unnecessary.

We propose to seek a reduction in expenditure by reducing the amount of money which is provided in order to subsidise foodstuffs. With that in view, we propose to abolish—as the Seanad perhaps, already knows—the subsidy on tea, butter and sugar, and to reduce the subsidy on bread. If these proposals were carried out without any compensatory action on our part, the Exchequer would save £6,668,000 in this year. We have felt, however, that it would not be equitable to do this unless we had regard for the position of those who are in receipt of marginal incomes and for whom the subsidies on these foodstuffs represent a very real benefit. We propose, therefore, to mitigate the effects of these reductions by providing in a permanent form compensatory social benefits the cost of which in this year will amount to £2,750,000, thus leaving the Exchequer with a net saving of £3,918,000.

As Senators who have been able to follow the figures will, no doubt, have calculated by this time, that does not fully cover the gap. We are left to find a sum of over £11,000,000 in order to balance the current Budget, without making any provision whatsoever out of taxation to meet the cost of those voted capital services for which our predecessors borrowed and for which we shall, in due course, have to borrow ourselves in this year. The £11,290,000 we propose to meet by increasing the standard rate of income-tax from its present level of 6/6 in the £ to 7/6 in the £. Again, we are mitigating the effect of that increase by giving very considerable concessions both in regard to earned income relief and in respect to reduced rate relief, and also in regard to what are now known, I think, as age reliefs. The net effect of these concessions will be that the yield from the increased rate of income-tax will be reduced from a sum of, I think, £2,800,000 to £910,000 in this year.

We propose, in accordance with the provisions of the Bill, to increase the tobacco duty so as to bring in £5,500,000; beer duties to bring in £2,360,000; spirits duties to bring in £1,020,000, and the duty on petrol and hydrocarbon oils to bring in £1,500,000, making a total of £11,290,000.

That is a very considerable increase in the tax burden upon the community, but let us see how it arises. We are not doing this of our own volition; we are not doing this in any abitrary way; a very large part of the increase which we are imposing upon the people this year should have been imposed upon them in last year's Budget. For instance, among the principal factors which have increased the cost of the supply services from what it was last year to £94,000,000 in this year are the additional charges for the remuneration of the civil servants, the Gardai, the officers and men of the Defence Forces, the national teachers, secondary teachers and vocational teachers. These amounted last year to over £3,600,000.

Did these charges arise before the Budget last year?

These charges were foreseen in the Budget last year—at least they would have been foreseen by any person who could see beyond his nose. If a Minister solemnly sends his representatives into consultation with, say, the representatives of the civil servants and enters into that discussion on the hypothesis that an increase in the salaries and allowances of the civil servants must inevitably be given in view of the increase in the cost of living, and if he in fact makes an offer and then because agreement cannot be reached on the matter goes to arbitration, surely he must know that the inevitable result of the arbitration will be to increase the charge on the Exchequer for the cost of the Civil Service.

Could any Minister have fixed the amount in the face of the arbitrator? Surely he could not?

The Senator is very helpful. I hope that he will keep on inspiring me, but I want to say this before I get on to the Senator's point: any Minister who had entered into these negotiations with representatives of the civil servants would, of course, have foreseen or should have if he had the normal quantum of intelligence——

Poor McGilligan. We all sympathise. He has no intelligence. Is it not very sad? The Minister must not wring my heart.

The last thing of which I would accuse my predecessor is lack of intelligence.

But I can accuse him of lack of candour; I can accuse him of lack of honesty; I can accuse him of lack of backbone; I can accuse him of an undue amount of trepidation in putting the full story before Dáil Éireann; but I do not accuse him of lack of intelligence.

That is sense.

All these things would have been clear to a person of normal intelligence and, I have no doubt, were clear to my predecessor, clear as the noon-day sun. He must have known that the inevitable result of the arbitration would be to give to the civil servants something more than had been rejected. He must have known that following inevitably upon the arbitrator's award of increased remuneration to civil servants the rates of pay of the officers and men of the Garda Síochána, the pay and allowances of the officers and men of the Defence Forces, the pay of national teachers, secondary teachers and vocational teachers, must be increased also. All these things were clear and plain to him, and I have not any doubt about that whatever. Therefore, as this increased expenditure was bound to arise in the course of the year, I should have thought that any prudent Minister for Finance who wanted to be able to come to Dáil Éireann at the end of the year and say: "My Budget has balanced", would have made the same allowances to cover contingencies as we are making in this Budget. The one thing which we foresee as arising inevitably is the expenditure under the Social Welfare Act, but we are not foolish enough or simple enough to believe that that will be the beginning and end of the new services, which will have to be provided for out of taxation this year, and accordingly we are leaving a margin to cover these services so that we shall be able to avoid borrowing at the end of the year for current expenditure.

And so that you will have something to distribute.

I do not think so. That is one of the slick arguments which any pettifogging attorney might use——

I am not an attorney.

The poor solicitors.

——who wanted to justify the fee which had been marked on his brief, and to justify the refresher which he was going to receive in the course of the proceedings. Here is the point, Senator Baxter: It does not mean, you know, when an attorney puts forward these arguments in debate or in court that he himself accepts them wholeheartedly; at all times he advances them with all the reservations which attach to the fact: "Another person told me this was so".

That applies to both sides.

We are taking the odium of this Budget upon us; we are taking the unpopularity and people do not do that lightheartedly. They do it——


——only when they very well know that there is no other way out of it. Senator Baxter says "stupidly". Senator Baxter is one of those who believe that it is stupid for any man to make provision to meet his lawful obligations and inescapable commitments. That, we know now, is the mentality which characterised the proceedings of the Coalition regarding this important question of the public finances. They thought that it was simply stupid. Their attitude was: "We promise the people everything and make insufficient provision to pay for anything."

However, let me get back to why it is essential for us to impose this additional taxation in the current year. As I have said, our predecessors had accepted commitments to increase the salaries of civil servants, the pay and allowances of the officers and men of the Garda Síochána, the allowances and pay of officers and men of the Defence Forces and the salaries of national teachers, secondary teachers and vocational teachers. Not only that, but they knew very well what the magnitudes of these increases were likely to be because they themselves had set a headline. On, I think, May 4th, the Minister for Health, who happened at that time to be also Taoiseach, sent out a circular letter to the health authorities indicating to them that in his view the salaries of the officers of these authorities should be increased by one-eighth, that is to say by 12½ per cent., and that these increases should be made retrospective to a date several months anterior to 1st April, 1951.

That circular letter was sent out by the Minister for Health who was then Taoiseach and head of the Government. A similar letter was sent out by the Minister for Social Welfare who happened to be Tánaiste, and a similar letter was sent out by the Minister for Local Government, all—make no mistake about it—within a few days of the introduction of the Budget, but before the Dáil was dissolved on 8th May, 1951. Does anybody expect me to believe that, having regard to the fact that the Government is collectively responsible for everything that every one of its members does, the then Minister for Finance was not consulted by the Taoiseach, was not consulted by the Tánaiste and was not consulted by the Minister for Local Government before these letters went out, which would inevitably react upon the arbitration proceedings in respect of the pay of civil servants which were then pending?

We all know that the last Government was not a happy family, but surely the Taoiseach, who was head of the Fine Gael Party, did not withhold this very essential information from his colleague, the Minister for Finance, who was also one of the pillars of the Fine Gael Party, or was even the Fine Gael Party divided against itself as the Coalition was? Therefore, the only deduction to be drawn from all this is that my immediate predecessor, the Minister for Finance, was well aware of what his colleagues, the Minister for Health and Taoiseach, the Minister for Social Welfare and Tánaiste and the Minister for Local Government proposed to do.

As I have said to Senator Hayes, no one who knows him is going to underrate Deputy McGilligan's intelligence and nobody is going to believe for a moment that he was not well aware of the fact that these letters were deliberately setting a headline for the abritrator then considering the claims of the civil servants in respect of increased remuneration and was not well aware of all the financial consequences which would flow from them.

Therefore he knew that, if he were going to budget honestly, there were two things he had to have regard to: first, that the arbitrator's award would operate retrospectively and, secondly, that the award the arbitrator would make would be such as to increase the pay of all these public employees by an amount approximating to one-eighth of the then existing cost. Therefore, he must have known that he should have provided in last year's Budget to meet a contingent expenditure of the order of at least £3,500,000.

He did not make that provision last year. We were not able to make it, because, if we had tried to make it, if we had brought in a Supplementary Budget, the Opposition in Dáil Éireann and here would have taken the same line as they have taken on this Finance Bill; they would have said that the Supplementary Budget was unnecessary. We would be told that the revenue would be so buoyant that it would not be necessary to tax the people further in order to provide £3,500,000 to meet the additional cost in respect of the remuneration of public officers and servants which flowed from the arbitrator's award of last May. Therefore, we just had to face up to the fact that we could not, in existing circumstances, get the people to believe what was the truth, but this year——

It is very hard to get them to believe it yet.

Last year, in order to meet the deficit on my predecessor's Budget, we had to borrow for that service among other services, but this year we cannot adopt that expedient. This year and every other year hereafter, some Government will have to tax the people in order to provide this sum of £3,500,000 which ought to have been provided by our predecessors last year. When we are told, as I have no doubt we shall be told, about the inequity of taxing the poor man's beer and spirits, so that the poor man's beer will bring in £2,360,000 and his whiskey £1,020,000 to the Exchequer, let us not forget that the additional 3d. on the pint and 6d. on the glass of whiskey are not even sufficient to cover the increased expenditure which falls upon the Exchequer by reason of the increase in the remuneration of civil servants, of officers and members of the Garda Síochána, of officers and men of the Defence Forces and of the three groups of teachers I have mentioned. These increases in the remuneration of public servants of one kind or another total about £3,500,000 and the total increased yield from the duties on beer and spirits by reason of the increased rates provided for in the Bill amount to only £3,380,000. They fall short of the full bill by £120,000.

Let us be quite clear. This Government is not responsible for the fact that the principle of arbitration in respect of the remuneration of public officers was accepted by our predecessors. We are not responsible for any of the consequences which flow from that and we are not responsible for any of the taxation which must necessarily be imposed in order to provide for these consequences.

Were you against the arbitration?

The fact is that once the grace has been conceded, we are not withdrawing it. Mind you, we fought a general election on that issue and had the overwhelming support of the people behind us in regard to it. If it were put to the people again, I think we would probably find that the people would not be wanting or lacking in their support for us. In any event, because of the political exigencies of the Coalition, this was conceded to the public servants, and we are not withdrawing it. We are honouring it. We are not doing what was done in regard to some institutions which were set up by the Fianna Fáil Government prior to 1948—we are not kicking people out. We are allowing the situation as it exists to continue, and are giving full effect to it.

We are not prepared to carry on our shoulders the responsibility which is being handed over from something which was done by our predecessors. One of the many direct consequences of some of the things which the Coalition Government did is the fact that, in this Budget, we have to increase the rate of taxation upon beer and spirits, in order to bring in £3,380,000 to cover an increase of £3,500,000 for the wages and salaries of public servants. That is a responsibility to which our predecessors did not face up. They were not able to face up to it. They could not come to the Dáil and say: "We propose to increase the rate of duty on beer and the rate of duty on spirits." Instead of that, they chose another course, which I may refer to before I sit down. Our predecessors brought in the 1951 Social Welfare Bill —the Bill which was aborted. In order to get that Bill through, they had to promise that they would increase the rates of old age and blind pensions. However, they did not live to fulfil that undertaking, and it is very doubtful whether, if they had managed to survive the critical divisions of May, 1951, they would have fulfilled it, because my predecessor made no provision whatever for that promise when he was submitting his Budget to Dáil Éireann in 1951.

It would be no harm, in that connection, to advise the House of what he did say in regard to it. Perhaps the Seanad will bear with me if I repeat his paragraph in full. I am quoting now from Volume 125, column 1887:—

"On the other hand, if this year's Budget is to be framed with some approach to the prudence that the economic situation demands, I must anticipate that current expenditure in the year will exceed the original estimate."

May I comment on that? That is precisely the sort of anticipation that I am making in regard to the Budget for 1952—the ordinary anticipation which prudence would dictate— because, though I have indicated that the provisions for social welfare will cost us £1,750,000 or, perhaps, £2,000,000, one cannot be very specific in regard to these matters. Nevertheless, I am providing, over and above that, an additional £1,000,000 to meet increases in any expenditure which may arise under other heads in the course of the year. Therefore, as I have already said, I am giving effect to my predecessor's proposition that one must anticipate that current expenditure will exceed the original estimate.

I shall now continue the quotation:—

"Last year, as I have already mentioned, the excess amounted to almost £1.4 million. This year it will be somewhat greater. As already announced, the Social Welfare (Insurance) Bill provides increases in old age and blind pensions and further substantial modifications of the means test."

If my recollection is correct, originally the Fine Gael Party decided that the means test was to be abolished. Apparently, that pledge had been watered down.

Might I ask if the Minister is reading, or making part of his speech and reading from Deputy McGilligan's speech? Nobody knows.

I am commenting upon passages as I come to them.

Would you tell us what was your comment and what was Deputy McGilligan's speech?

I do not want to retrace my steps. I shall take up at the sentence I had reached when the Senator interrupted:—

"As already announced, the Social Welfare (Insurance) Bill provides increases in old age and blind pensions and further substantial modifications of the means test..."

There my quoting for the moment ends. I have in my possession an election address issued by the former Taoiseach, Deputy Costello, at the General Election campaign of February, 1948, in which he specifically declares that the Fine Gael Party was in favour of abolishing the means test. I will go on to say that apparently that pledge had been watered down by May, 1951 so that Deputy McGilligan, as Minister for Finance, was in a position to say that they were providing for further substantial modifications of the means test. I am now proceeding to resume the quotation. I hope that is quite clear to the Senator—

"and a beginning must be made this year to meet these and other expenditures of social security. A mother and child scheme, which will come into operation in this financial year, necessitates outlay greater than the sum already in the Estimates. A Bill now before the House envisages increased grants for the Tourist Board. I have, therefore, decided that I should add at least £1,500,000 to the Estimates of expenditure, not indeed to be on the safe side..."

Mind you he was not prepared to take any risks in order to ensure that the Budget would balance—

"but as a minimum precaution, I must utter a warning against any facile assumption that this provides me with a reserve into whch I can dip to meet the demands that are being pressed upon me from various quarters."

I shall refer to one of these demands in a moment—a demand which was being pressed very strongly upon him from one quarter.

"The £1,500,000 must be regarded as already fully committed and any additional expenditure must entail corresponding increases in taxes or other charges."

My predecessor allowed in his Budget for the year 1951, £1,500,000. To cover what?—the increased expenditure which he knew was going to arise in respect of the remuneration of all classes of public servants and employees. That would amount to £3,500,000. He was also counting on that £1,500,000 to cover the cost of giving effect to the then Social Welfare Bill which was before the House, and to his pledge and his undertaking to increase old age and blind pensions. I have been trying to ascertain what precisely was the estimate for the cost of the provisions of Deputy Norton's Social Welfare Bill—the Bill which was abolished when the Dáil was dissolved in May, 1951—and what was going to be the cause of giving effect to his pledge to increase old age and blind pensions.

It was very difficult to find these figures because, in effect, very little consideration was given, it would appear, as to what the ultimate cost of this Bill would be. The minimum, so far as I have been able to ascertain it, under both these heads, would have been £3,000,000. That was the amount which would have been required to give effect to the provisions of the Social Welfare Bill of 1951 and to the complementary increase in old age and blind pensions which would have been embodied in that Bill if it had ever come to Committee Stage. Three million pounds was the amount which the Exchequer would have had to meet in the year 1951-52 if the Coalition Government had remained in office. We have £3,600,000 for the remuneration of public servants and £3,000,000 for the social welfare provisions, making a total of £6,600,000. As against this my predecessor had set the paltry sum of £1,500,000. That is not the end of the story.

I have referred to a letter which the Minister for Health, who happened to be at that time the Taoiseach, Deputy Costello, issued in the first week of May, 1951, some days before he decided to dissolve the Dáil. That letter suggested that—in fact it coerced—local authorities to grant substantial increases to their officers and employees. These substantial increases, as everyone knows, fell to be borne, for the most part, by the Exchequer. In order to reimburse the local health authorities in accordance with the provisions of the Bill which we enacted in the year 1947, the Health Authorities (Finance Provisions) Act, we had to provide at the end of the last financial year, by way of Supplementary Estimate, the sum of £850,000. We now find that the provision, which Deputy McGilligan was aware would have to be made in last year's Budget to cover these three items, comes to no less than £7,500,000, £7,500,000 to cover the increases in the remuneration of public servants and public employees; the cost of the provisions of the Social Welfare Bill of 1951; the complementary increases in old age and blind pensions which were promised, and the cost of the increases in the remuneration of the officers and employees of health authorities which had to be reimbursed by the Exchequer came to £7,500,000.

But that was not the end of the story. Deputy McGilligan had been made aware by Córas Iompair Éireann, before the last Budget was introduced, that he would have to find a sum of almost £2,500,000 in order to meet the deficit on the operation of this nationalised undertaking—a deficit which flowed inevitably from the provisions of the Bill which nationalised that company. He was told that he would require something of the order of £2,500,000. He deliberately closed his ears to that, shut his eyes to it and walked into Dáil Éireann with a Budget that made no provision whatever to raise that £2,500,000.

Of course, if it had not been raised, Córas Iompair Éireann would have had to go into liquidation. The transport system would have had to shut down. The cash had to be provided by us out of borrowing last year in order to enable it to carry on, but this year we cannot borrow it. We know there is going to be a deficit on Córas Iompair Éireann. We know that is inevitable because of the way in which the undertaking has been managed and run and the way in which the statutory provisions have been flouted by those who were responsible for operating the undertaking. We have to find the money this year out of taxation. Last year it would have amounted to £2,500,000. Add that to the £7,500,000, which I have specified already and we have a total deficit, a total uncovered expenditure on last year's Budget, of the order of £10,000,000.

I have left out of consideration in this regard the £2,700,000 which had to be provided in order to liquidate the accumulations of fuel losses over the four years. I do not want to detain the Seanad unduly in regard to this matter, but I could go on and remind the Seanad how our predecessors disposed of coal for 20/- or 30/- a ton in the spring of the year 1950. Before the end of the year, they were buying coal to replace the coal they had sold at 30/- and were paying anything from £8 to £10 a ton for it.

Was it the same type of coal?

I do not know whether it was better coal or worse coal.

It might be worth inquiring into.

But I know that the coal which the then Minister for Industry and Commerce sold for 30/- a ton in the beginning of 1950 would have been very welcome if we had had it in stock at the close of 1950. I know that if we had had it we should not have had to go to South Africa and America to buy coal at anything from £8 to £10 a ton. The only point I want to make in that regard is that our predecessors, while they were taking full benefit and advantage of the fuel stocks which we had left behind in reserve for them, and while they were liquidating these stocks and applying them to meet ordinary expenditure, made no provision to meet the accumulated losses, and these, with interest, amounted to £2,700,000.

I do not want to be tied precisely to the figure which I am going to mention. Included in that £2,700,000 was an item of about £300,000 for interest charges alone which had accumulated over the period of three years. If we tot up all the figures I have given to the Seanad, we will find that there is a deficit—if you like, an aggravated deficit, having regard to the inclusion of accumulated fuel losses—on the Budget for the year 1951-52 amounting to something of the order of about £13,000,0000.

It is quite true that the charge in respect of fuel losses is not a recurring charge but it is a charge which ought to have been met over the three or four years. If it had been met over the three or four years, it would not have had to be found last year. It ought to have been met out of taxation over the three-year period as we had met it out of taxation over all the years preceding.

Leaving it out of count, we come down to two net figures, a net figure of £10,000,000, representing the deficit on the Budget of 1951-52, in respect of the normal current charges of the State. As against that, my predecessor provided a sum of £1,500,000.

It follows from all this that we are in this year compelled to increase taxation by much more than double the amount by which taxation would have had to be increased if our predecessors had followed the ordinary honest rule of paying one's way. If they had met their obligations as they arose, we should not have had to increase the tobacco duty by anything like the amount which we are doing to-day. We should not have had to increase income-tax by anything like the amount which had to be provided for to-day. We should not have had to increase the duty on beer and spirits. The increases on beer and spirits which are provided for in this year's Budget, as I have already, I hope, convinced the House, cover merely one item—the increase in the cost of remuneration of public servants and public employees, an increase which it was manifest to my predecessor would inevitably take place and would have to be provided for with retrospective effect.

Leaving that out as one of the charges which should have been imposed last year and making allowance again for the fact that there are these recurring charges in respect of the provisions of the Social Welfare Act, for the deficiency in the revenues of Córas Iompair Éireann and for the increases in the remuneration of local health authorities, we are left with the fact that, arising out of the general trend of increased world costs, the rates of increase in taxation for which we would have been responsible would have been considerably less than those for which, in fact, we have to carry the odium this year. Our predecessors shirked their duty when they brought in the Budget for 1951-52. We have to make up the deficiency which they left uncovered. Because of that we have to tax in this year to increase revenue by approximately £10,000,000, revenue which they should have provided by increasing taxation in their Budget of 1951-52, and we can accept responsibility only for the rest. I think it is necessary that I should say that so that if we are going to have the sort of general debate which we have had elsewhere it is as well that the Seanad should be aware of the basis upon which this Finance Bill has been constructed.

I do not know whether it would be desirable for me to state briefly the various provisions in the Bill. Section I, of course, is the usual section which provides for the charging of income-tax and surtax for the current tax year and for the continuance of the previous enactments relating to this tax. Section 2 is a very important section because it is likely to be a permanent section in the Bill. As the House is aware, the standard rate of tax which is fixed by Section 1 tends to vary. It has gone up and it has gone down. In 1932 it was, I think, 5/- in the £. Then it went down to 4/6. Then it went up to 5/6. Subsequently it was increased during the Emergency to 7/6, and was reduced by us to 6/6 in the £. It was increased again to 7/- and now it has gone up to 7/6 in the £. It is a variable rate. It is not fixed. It is not constant. If times get better it is likely that—and we all hope it will be—substantially reduced. On the other hand it is unusual for the allowances, once they have been granted, to be withdrawn.

That is where the importance of Section 2 of the Bill lies. Section 2 of the Bill increases the earned income deduction. As the House is aware, heretofore the allowance for earned income has been fixed at one-fifth of the earned income subject to a maximum deduction of £300 per annum. This earned income relief is now being increased to one-quarter of so much of the earned income as does not exceed £800 and then one-fifth of so much of the earned income as exceeds that figure subject to a maximum deduction in all of £400. Concomitant with that, we are amending Section 4 of the Finance Act of 1951. That section provided for the relief to persons aged 65 or upwards whose income might be derived in whole or in part from investments and did not exceed £500. The rate of this relief, which was one-fifth of the total income, is now similarly being increased to one-quarter. As we are increasing the overriding maximum of relief in respect to ordinary earned income, so the prescribed limit of income in respect of the age relief is being raised from £500 to £600. Section 3 of the Bill, again, is a relieving section. It brings the income limit of a dependent relative for the purpose of income-tax relief from £50 up to £80.

Section 4 introduces a new graduation in the rate of income tax. As Senators are aware, hitherto the first £100 of taxable income has been charged at half the standard rate. For 1952, the first £100 will be charged at two-fifths of the standard rate, that is, at 3/- in the £ and the next £100 will be chargeable at four-fifths of the standard rate, that is, at 6/- in the £. Both of these represent very substantial concessions to those who enjoy smaller taxable incomes.

An amendment is also being made in the law in respect of relief in connection with life insurance premiums which has hitherto been allowed at half the standard rate of tax. It would obviously be incorrect to allow this relief at 3/9 where the taxpayer is paying only at the rate of 3/- and a consequential change in the rate of this relief is being effected. While we are anxious to make a concession to the person who is insuring his life and making provision for dependents, we cannot permit him to get back from the Exchequer more than he would be paying out. In the future the relief will be granted at the effective rate of tax borne by the taxpayer on his taxable income up to half the standard rate.

Section 5 terminates Section 2 of the Finance Act, 1941, which is now inoperative in so far as there is no person taking advantage of it. Section 6 of the Bill provides for an increase in the rate of customs and excise duty on mineral hydrocarbon light oils. The customs duty goes from 1/4 per gallon to 1/8 per gallon during the period from the 3rd to the 16th April and to 1/9½ from the 17th April of this year onwards. The excise duty is being correspondingly raised.

Section 7 increases the rates of customs and excise duty on hydrocarbon oils not otherwise liable to duty. The real reason for Section 7 is, of course, that, unless we had this section which imposes broadly a duty on diesel oils, Section 6 would not be as effective as it is essential it should be. By levying an unduly favourable rate of duty in respect of diesel oils, we would allow the yield from petrol duty to be inordinantly reduced, because people would switch over from petrol engines to diesel engines.

Section 8 provides for an increase of £1 19s. per proof gallon in the basic rates of customs and excise duties on spirits. Section 9 increases the rates of customs duty on beer and Section 10 provides for a corresponding increase in the excise duty on beer. Section 11 raises from 10/- to £1 10s. per standard barrel the rate of the rebate allowed to each brewer on the first 5,000 standard barrels of beer brewed by him in any one year where— and this is an important provision— not less than 80 per cent. of the cereals are home malted.

Section 12 provides for increases in the existing rates in customs and excise duties on tobacco. These new rates are set out in the Second Schedule to the Bill. Section 13 provides for the levying of excise duty upon stocks of tobacco which were held by licensed tobacco manufacturers at 5 p.m. on 2nd April, 1952. It also provided for the deferment of the payment of the duty to a date not later than the 1st January, 1953.

Section 14 provides for the repeal of the entertaminent duty on dances imposed by Section 12 of the Finance Act, 1949. I do not know whether I should comment on the fact that my predecessor, who imposed this duty on dancing in 1949, removed the tax from amateur wrestling exhibitions in 1950. I suppose that he preferred the bunny hug to the ordinary old waltz.

Section 15 sets out a new definition for the valuation of goods for customs purposes. Section 16 allows the delivery of imported goods by giving security by way of deposit or otherwise to cover the customs duty. Section 17 is again a relief section which amends Section 33 of the Finance Act, 1935, so as to provide that where a deposit in a bank held by a survivor or survivors of joint depositors does not exceed £500 it will not be necessary to produce a certificate from the Revenue Commissioners that the relevant duty has been paid.

Section 18 adds two new categories to the existing categories—Irish citizens and suchlike—relieved by subsection (4) of Section 13 of the Finance (No. 2) Act of 1947 from payment of the 25 per cent. in connection with conveyances and transfers. The categories which are relieved consist of bodies corporate without a share capital formed in this State since the 15th October, 1947, and of companies with a share capital formed since the 15th October, 1947, whose shares are held by other Irish bodies corporate formed since that date. Section 19 affords a virtual exemption from stamp duty in the case of conveyances and transfers of property from parent companies to their subsidiaries.

Section 20 extends relief from the higher 1947 rates of stamp duty granted by Section 13 of the Finance (No. 2) Act, 1947, in favour of voluntary dispositions of land from parents to children, uncle to nephew and brother to sister. In future this relief will also extend to transfers from children to parent, grandparent or stepparent, from nephew to uncle, from husband to wife, from brother to half-brother and from stepparent to stepchild. In these cases of voluntary dispositions the maximum duty will be now 1 per cent.

Section 21 provides the same relief for conveyances and transfers on sale. Remember that the difference between Section 20 and Section 21 is that Section 20 relates to voluntary dispositions and Section 21 relates to conveyances and transfers on sale between the groups of relatives to which I have referred and gives to them the same concessions. It will be appreciated that the justification for that is that if a son wants to sell to his mother, a mother to her son, or if a farm is inherited in common by a group of children and one wishes to buy the others out of their share to become the sole owner himself it would be unjust to charge them at the rates which have hitherto prevailed.

Section 22 extends the existing categories which are relieved from payment of the 25 per cent. rate of stamp duty on leases in the same way as these categories are being extended under Section 18. Section 23 has a twofold purpose. The first is to adjust the provisional annuity fixed for 30 years at 3½ per cent. in respect of the voted capital services for last year.

The actual expenditure on the services so described in last year's volume of Estimates came to £9,753,499, but to this we have to add a demand of £2,727,323 in respect of arrears of fuel subsidy, which is being similarly redeemed, making a total expenditure of £12,480,822. After allowing for the net amount redeemed out of last year's annuity, the approximate annuity for the next 29 years, at 3½ per cent., is £662,716, as against an annuity as provisionally fixed of £653,594 by last year's Finance Act. The second purpose is to fix provisionally an annuity of £501,922 again for 30 years at 3½ per cent., in respect of the deduction of £9,276,516 made this year from the supply services in respect of the estimated expenditure on the items which are classified as capital services in the 1951-52 volume of Estimates.

I do not take any particular pride in this Section 23, although apparently it is a source of pride to those who initiated this procedure. I cannot see that there is any justification for being unduly elated or thumping one's breast and proclaiming oneself an honest man and, unlike the rest of humanity, by reason of the fact that you borrow millions in this year, pay one-thirtieth of them, approximately speaking, this year and leave to posterity, to your children and grandchildren and those who come after you in responsible positions such as mine, the responsibility for raising the requisite amounts over the whole of that period.

I think it would be much better if we faced up to the fact that the majority of these voted capital services are, in fact, services of so highly speculative a nature and of a kind which tend to be self-perpetuating, in the sense that, while we reedeem one fraction of them this year, we incur a corresponding expenditure upon another quantum of them in the following year, so that they tend to be just the same in nature as payments in respect of unemployment assistance and unemployment insurance in that, while they may vary up and down in one year, they tend to recur year after year, and that they should be treated as services which are properly chargeable against revenue.

That is, I think, the correct way to treat these, but, because, as I pointed out at the beginning of my statement, this would have imposed much too onerous a burden on the people in this year, we have to be content to follow the bad example set by our predecessors and to leave to posterity the obligation of repaying the money which we shall borrow and spend in this year on works which will yield no early and indeed no ultimate economic return.

Some of us thought that the calm atmosphere of this House might have induced the Minister to make a speech on the Finance Bill but, alas, that was not so. He rather recognised that himself, because after an hour's accusations against various people, he said that the debate had roamed over many topics. He did a good roam himself for nearly an hour and then gave us, in a rather drab monotone, a summary of the provisions of the Bill which might well have been left to the Committee Stage. Then the Minister more robustly concluded with some more accusations.

The Minister is obviously very sick of this Finance Bill and I think he is as unconvinced himself as he has left us. His speech was a hesitant, halting and very unconvincing speech. He had only one member of his Party on his front bench to listen to him and he spent all his time defending himself. He told us very little about the Bill and his speech, which took nearly one and a half hours, was, in the main, allegations against other people. The Minister accuses his predecessors of dishonesty and it strikes me that, with all the talk about our adverse trade balance and the gap in our Budget, the Minister is much more afraid of Deputy McGilligan than of the adverse trade balance. He devoted much more attention to Deputy McGilligan than to the adverse balance or any other financial topic, and I notice that in his discussion the Fine Gael Party loomed very large. I thought the Minister had been at the funeral of the Fine Gael Party—that it was dead and that the Minister had buried it; but now, apparently, he cannot make a speech anywhere without telling us of the iniquities of these very lively Fine Gael people. It is really astonishing how the Minister can be on two sides at the same time. He is a very interesting example of the kind of person who does not learn anything.

Twenty years ago in Dáil Éireann, in the month of May, 1932, I heard the Minister introduce his first Budget. He did it in almost the same terms as to-day. He said it was a harsh Budget; he said the prospect was grim; he said it was so framed that there would be a hard time for the whole of us, and in order to excuse it he said that the blame rested entirely on his predecessors. He did not blame the well-known trade slump which had occurred in the years 1930, 1931 and 1932. He blamed everything in his Budget, including an increase of 1/6 in the rate of income-tax from 3/6 to 5/-, on his predecessors and, so far as my recollection serves me, he said that with a little courage, a little prudence and a little foresight, the previous Government could have avoided all this austerity.

We have the very same thing to-day. His predecessors had no courage, no prudence and no foresight, and, while he admits that his predecessor in the Ministry of Finance has brains—a very mild admission on the Minister's part about his predecessor—he thinks that gentleman has no backbone and has no honesty. Anybody who knows the two people can judge on the question of backbone or honesty. The Minister must have an extremely bad case when he knows no other way to make it than that kind of statement about the people who went before him. In 1932, he thought the year before us had a grim and forbidding aspect, that it would be a hard year, a year of self-denial for all of us. Having been in office for 17 of the intervening 20 years, it now appears that the year before us, again with Fianna Fáil in office, will be a year of self-denial for all of us and a year which wears a grim and forbidding aspect.

That is the normal stock-in-trade of the Minister and his colleagues. He had been in office himself for 15 years in 1947 and his colleagues, the then Tánaiste, and now Tánaiste and Minister for Industry and Commerce, Deputy Lemass, told us in Letterkenny in September of that year:—

"The country is entering upon four years of acute difficulty in which economic disaster will threaten on every side."

Acute difficulties; economic disaster; grim and forbidding aspects—that is the whole story. It is not a new story and it cannot be entirely the fault of the previous Government, because, in 1947, after 15 years of Fianna Fáil rule, when they had everything to themselves for the whole of those 15 years and when for most of that time the Minister himself was in charge of the Department of Finance, things were apparently very bad.

Therefore, in this way also, the Budget is an example of the consistency of Fianna Fáil. The Minister, instead of telling us about the sins of his predecessors and instead of indulging in vituperation and misrepresentation, might have told us something to justify the harsh impositions that this Budget imposes on all classes of the people. It has certainly raised the cost of living, but the Minister did not tell us a word about that, nor did he tell us how it is going to be dealt with. It is restricting enterprise.

In addition to the impositions of the Budget, one must remember that ministerial speeches, for a long time before it and in many cases since it, have also tended to restrict enterprise and investment and to reduce employment. This Bill is based upon the notion that all the people in this country, including those in the lower-income groups, and the poorest people, have too much money to spend and that the Government ought to take that money from them and keep them from spending it. That has been declared on several occasions to be the policy of the present Government. Surely, that policy will reduce purchasing power, bring about a reduction in industry and cause unemployment and short time. It seems to be part of the deliberate policy of the Government to lower the standard of living and to do so while, at the same time, the Minister blames everybody for it except himself.

He tells us that he has made calculations as to the amount of revenue which will be received from the taxes imposed on tobacco, beer and spirits. If he expects to get that amount of revenue, surely it must mean that the man of the house will give less money at home and that more money will be spent on beer, spirits and tobacco and less money on the household goods. That will mean bad results from the health point of view and it will be bad from the point of view of the shopkeepers, the manufacturers and from the point of view of distributors.

There are two gaps of which the Minister spoke, and in both cases he painted an extremely bad picture. He told us that our balance of trade was very bad and that, even making allowance for what are called invisible exports, our balance is not correct. However, he forgot to say that, for a number of years past, our exports have been increasing steadily and had increased very consistently while the Coalition Government held office. They were worth £39,000,000 in 1947, £72,000,000 in 1950, £81,000,000 in 1951 and, for the first four months of this year they are over £29,000,000. Since the exports for a full year are normally nearly four times those of the first four months, it seems that this year's exports will run well over the £100,000,000 mark. Surely the Minister will admit that, if this is so, and that if, in addition to that, we have the increased tourist trade which the Tánaiste anticipates and a reduction of imports following upon the taking up of the slack that occurred during the war, this particular problem will be well on the way to a solution. If it is on the way to a solution it is because of the policy which was pursued by the previous Government and which is now bearing fruit.

The other gap which the Minister mentioned with great elaboration was the gap between the Book of Estimates and the estimated receipts. It is very difficult to judge what the precise figure may be in these cases. If the ordinary householder is faced with the problem of not paying his way, as the Minister says, he has two remedies. He may either reduce his expenditure or increase his income. What the Government has done is to decrease their own expenditure and to increase their income. That is to say, they have decreased expenditure, apparently in only one way; they have taken away the subsidies on essential foodstuffs and they have increased Government income by the tax on beer, spirits and by increasing income-tax. On these the Minister will get about £20,000,000, but is there no possibility of bringing about any saving in the Estimates of £95,000,000? Is the Minister not actually playing the game whereby he lets the Estimates run to the highest possible figure, makes the lowest possible forecast of expenditure and then gets the greatest possible gap? If I am not mixing my metaphors, he then begins to belabour his predecessor, although one could not belabour anyone with a gap, but one could fall in a gap. Perhaps that is what the Minister will do.

The Minister has not told us very much with regard to subsidies. The subsidies which are now taken away were introduced as a war-time measure. They run with rationing naturally, and their object is to combine with rationing to ensure that the worst-paid people will get their fair share of existing foodstuffs and that the well-off people cannot buy an unfair amount at a high price. If one leaves out subsidies and has no rationing, then the better-off people can buy at any price, practically speaking. The subsidies were increased substantially in 1947 by the present Minister for Finance and by his colleagues. However, if they increased subsidies they also increased taxation. These subsidies have become part of the economy of the country. If they are to be removed, they should certainly be removed by a gradual and not by a sudden process. They cannot be suddenly plucked out of the economy of the country without having very acute and definite results, both upon the cost of living and upon industry. The cost of living has already increased within the last 12 months, and it will increase still more as a result of the removal of the subsidies. Does the Minister think that a high cost of living will be accepted by organised workers without making any effort to secure an increase in their wages? If they do get an increase in their wages, does not that defeat the whole purpose of the Budget? The policy of the Government apparently is that there should be an ordinary price for food unaccompanied by subsidies, and that people who can should then engage in a struggle for higher wages to meet the higher prices.

I will now quote from a document which was issued as a guide to the Fianna Fáil canvassers and speakers during the present election campaign: "As we know, the cost of food is not coming down. It is far better for workers to make arrangements for increases in their wages, so that they will be able to meet higher prices."

Are we to take it the Government policy is that food is to find its own level and that then there is to be a considerable demand for wages in order to meet the higher prices? I do suggest that that is a policy that is going to cause great hardship and great injustice to a great many people If people are spending too much and the Budget means to curb their spending and to syphon the money into the coffers of the Exchequer, then higher wages will defeat the Government's purpose. Yet higher wages appear to be Government policy. Of course, organised wage earners can get into the race to enable their wages to catch up with the cost of living. It is the general experience that it is not easy and that, in fact, in many cases it has proved to be impossible, for wages to overtake the rise in the cost of living.

A rise in wages means a rise in the cost of goods, and consequently a further rise in prices. There are a great many people in this country who would not be in the race at all between wages and the cost of living—for instance, white collar workers, teachers and pensioners. Civil servants or people of that kind, in spite of their arbitration, small farmers and farm labourers, no matter how organised, always lag behind the increases gained by organised town workers. It seems to me, therefore, that that particular kind of policy is going to lead us into a great deal of social unrest. It will lead us into very great difficulty, and will probably in the end defeat the objects of the Budget altogether.

The rises in the social services mentioned by the Minister will not be sufficient in the case of pensioners and other people of that kind to meet the increases that will take place when the full impact of this Budget is felt next month. It seems to me, therefore, that there is no need to impose these taxes. They will defeat their own objects and cause inflation and unrest.

Another of the Minister's lines was that Marshall Aid had been squandered. Marshall Aid was surely arranged by the Minister's Government.

Not at all.

Is the Minister telling us that he is against the acceptance of Marshall Aid?

No, I am merely correcting a misstatement.

Is the Minister saying that we should never have accepted it?

The Senator has just made a misstatement and that is what I am correcting.

Did not the last Government send a Minister specially to Paris to make arrangements for Marshall Aid?

I am not going to be cross-examined by the Senator. I am telling him he made a misstatement.

Not a single objection was offered by any ex-Minister of the Fianna Fáil Government or by any Fianna Fáil Deputy or Senator to the acceptance of Marshall Aid. This is a second thought on the part of the Minister. The Minister is very good at that, or should I say bad? It is the same thing. Whenever he gets a problem, financial or economic, he immediately gives it a political twist so he can get some kind of refuge.

Am I right in saying that the head of the present Government called Marshall Aid "an act of unparalleled generosity"? I think he did call it "an act of unparalleled generosity" which, indeed, is was. Now, for the purpose of a dirty, political stunt, the Americans are being abused. We are told that the Americans are taking a mean advantage of us in some way or another. Only one voice was raised against Marshall Aid in the Dáil. I could quote the Minister on the owner of the voice but I would be ashamed. He had a very low opinion, indeed. No objections were offered to Marshall Aid.

Marshall Aid was stopped in 1951. The Marshall Plan administrator, Mr. Foster, stated in Washington in May, 1951—it was reported in all the Irish papers:—

"The suspension of E.C.A. aid is the best possible recognition of the strides the Irish people have taken toward economic self-sufficiency under the impetus of the Marshall Plan.

With the dollars and technical assistance provided through E.C.A. help, Ireland has accomplished agricultural and other economic reforms in three years that otherwise would have taken a generation to achieve."

That is an American's testimony to what the last Government did with Marshall Aid. The American was looking not only at the Irish picture but at the general European picture. He was not a politician. It was his business to see the economic results of the money the Americans were giving, what the Minister now deprecates but what his Leader once described as "an act of unparalleled generosity". That impartial, objective, American observer thought that in three years we had accomplished agricultural and economic reforms of very considerable importance. That is a testimony which, I am sure, the Minister will tell us he will not accept, but there you are.

The real aim of the Budget is to take money from the people and put it into Government spending on the basis that they know best how to depress the standard of living and to cease capital development altogether except in so far as it may be financed from current revenue. The Minister spoke in the Dáil of £35,000,000 for capital expenditure. Where is he going to get the money? He has no place to get the money and he does not intend to continue capital expenditure except in so far as he is taxing to pay for it.

In regard to the Budget, there is a great deal of talk about millions, a great deal of arithmetic. Apart from the arithmetic in the Budget and apart from the rather squalid politics about the gap in the balance of payments which he charges his predecessor with, the Budget affects human beings. It means a great deal of human suffering.

If it is true that the people have to make sacrifices, then the matter should be put to the people clearly. It should be unaccompanied by slander and insults. If the Minister was in earnest in thinking that there was a real crisis at the present moment, he surely would have made a different approach to this whole business. This Budget will upset our internal economy. It will interfere with production and exports, and will aggravate rather than solve our problems.

Above all, the Budget reveals the consistent view of the Minister and his colleagues that nobody is right and nobody can be right but themselves. It is quite incredible that anybody elected to the Dáil, except the members of the Fianna Fáil Party, can have an ordinary degree of honesty, competence and common sense. It is incredible that anybody is devoted to Ireland who is outside the Fianna Fáil Party. That is the Minister's view. He admits that his predecessor had brains, but nothing else. In 1932, his predecessors had no courage, although the accusation was made against us, mainly before 1932, that we had too much courage.

The Minister says that no courage, no prudence, no foresight exist except in the ranks of the Fianna Fáil Party, just as he says there is no unity whereever a man can get up and give his opinion and not be beaten down. Surely, that particular way of solving our economic and financial problems must prove in the end to be disastrous. We can all become competent and get a backbone which Deputy McGilligan has not got by joining the Fianna Fáil Party. They have backbones galore. All you have to say is "up Dev" and at once all your previous political sins are forgiven you. Anything you ever did wrong is forgiven you. You become an Irish patriot. You get backbone, common sense and sincerity. You get everything that goes to make a good Irishman. That is a point of view the Minister should have given up by now. The most unbalanced thing in this country is the Minister himself, and the most unbalanced tongue is the Minister's tongue.

That is true, anyhow.

This Budget is bad, not only in substance but also in form and presentation. The Minister seems to be incapable of learning, and the only thing I can say to him is that he will live to regret this Bill.

Like Senator Professor Hayes, my contribution will also be brief. At the outset, I think it my duty to congratulate the Minister and the Government on facing up to the realities of the situation in the country to-day.

If there is any quality more than another that is required in the country to-day it is realism—the facing of facts and the acceptance of responsibility by those in charge of the destiny and the affairs of the country. The difficulty about the position to-day is that there were people in charge of the country's affairs who were not prepared to face up to their responsibilities and to meet the requirements of the time as they should have met them. If they had done that, the increased burdens that the people of the country are being asked to shoulder to-day would not be so great. We find ourselves faced with the spectacle that the very people who brought about this position are the loudest in their condemnation of this Government and of this Minister who, as I have said, because of the improvidence of their predecessors in office, have to face what I would describe as an unpopular task.

Listening to Senator Hayes and reading the speeches of the Opposition groups in the Dáil in connection with the partial abolition of subsidies, I cannot help throwing my mind back to 1947 when the then Government thought it necessary to introduce certain measures in order to enable the people of the country to purchase the ordinary commodities of life at a cheaper rate than they had hitherto been paying for them. We remember the outcry by certain politicians at the time when the Government deemed it necessary to adopt these remedies, when there was an inflationary trend in the country, when too much money was chasing too few goods and when something had to be done to regulate the financial and economic position in the country. These people then had recourse to every kind of abuse and every condemnation that could be thought of. Now they are the very people who pretend to have great sympathy for all the sections of the people who will have to pay more for tea, sugar, butter and bread. I do not see any consistency in the attitude of those people.

The question is, if the Coalition Government had been returned to office in 1951, would they not have had to do something to correct the financial chaos that had set in during the three years of their term of office? Like the present Minister and the present Government, they would have been faced with this deficit of £15,000,000 which, the Minister tells us, exists. The point is that if they wanted to carry on the government of the country and provide for the Estimates for the various Departments of State and carry on all the activities of government, what would they have done to bridge the gap between national expenditure and national receipts? I think the Seanad and the people of the country are entitled to know the answer to that question. Would the Senators or those politicians outside who are condemning the Government for having taken these measures point out to us what State services should be cut down so as to make ends meet in our national housekeeping?

It is not sufficient, in my opinion, to condemn the Government for having imposed additional taxation here and there. The people who do that have an obligation to themselves and to the country to show us exactly in what part of the national field of activity State expenditure should be curtailed. Would they advocate the curtailment of the social services? I have not read any speech by the members of the Opposition in Dáil Éireann which would give any indication as to what their view is on that matter. It is all very well, when it comes to the reckoning, to condemn the Government for trying to bridge the gap between national expenditure and receipts. If there is to be any reasonable approach to the problem, it is the duty of those who find fault to show us exactly where expenditure should be cut down. As I say, I have not seen where any responsible person belonging to the Opposition groups has pointed that out.

We have heard a lot from Senator Hayes and other people about Marshall Aid. The Senator would like to ascertain our attitude towards Marshall Aid. Everybody must admit that the granting of Marshall Aid by the American Government was an extremely generous gesture. I, for one, would look upon it as such. However, it is one thing to get money from such a source and another thing to utilise that money in the proper way. That is the fault we have to find with the Opposition. We believe that the $128,000,000 have not been utilised for the promotion of the objects that were envisaged by the people who granted the Marshall Aid.

What were those objects?

I read in to-day's paper a report of the speech of the former Minister for Finance, Deputy McGilligan. It set me thinking. I quote from to-day's Irish Press the report of the speech which Deputy McGilligan made yesterday in Dáil Eireann:—

"Mr. P. McGilligan said that in 1947 this country was a starved land and outcropping had done its worst. The crop yields were going down year by year on the depleted land. Now the country was humming with fertility, and that was the best reserve in the event of war. That fertility was built up with purchases made with part of the American money."

Can anybody point out to me—and I have asked this question before—where this money was spent? We were told by members of the previous Government and especially by the ex-Minister for Agriculture, Deputy Dillon, that this money was going to be put into the land, that there was to be a new era, that there was to be a new policy and that the land was to be rehabilitated and reclaimed, but where and when did all this take place?

Did you not spend £26,000,000 while your predecessors spent only £18,000,000?

Let the Senator make his speech.

When Deputy McGilligan speaks about the land humming with fertility the inference is that some of the money was used to fertilise the land. I remember that when the land rehabilitation scheme was passing through the Dáil one of the proposals which the people on our side of the House put to the then Minister for Agriculture, Deputy Dillon, was that provision should be made for cheap fertilisers for the farmers of the country in order to step up production and to give early results. That proposal was turned down, at least no specific provision was made for it in the Act. I would like to hear from somebody here, especially from somebody who claims to represent the farmers, where and to what extent cheap fertilisers were made available to the farmers of the country by the Marshall Aid money. That is the question. We can then come to some conclusion as to the truth and accuracy of the statement that the land of this country is humming with fertility as a result of Marshall Aid.

It now transpires that the money was spent on other things. As has already been mentioned by the Minister and as was mentioned in the Dáil, that money was spent to meet current expenditure, to pay for things that should have been paid for out of revenue, and that that money was not put into the land at all, or if it was the amount was a very negligible quantity. We all, of course, supported the land rehabilitation scheme because we expected some good to come of it. Towards the end of the Coalition régime a question in the Dáil elicited the information that only roughly £500,000 was spent under that scheme and that half of that sum went on administrative expenses. That, it seems, is the amount of the Marshall Aid money which was put into the land and these are the steps to which Deputy McGilligan referred which were taken to improve its fertility.

These proposals in the Finance Bill are realistic and equitable, the idea being to spread the increased burdens over the community as a whole so that no section would be too hard pressed. As well, measures have been taken to relieve the impact of the increases on the most needy sections of the community. Old age pensions and widows' and orphans' pensions are to be increased. Children's allowances, sickness and disablement benefits, unemployment benefits, etc., are to be increased substantially. All the social services are to be stepped up and I hold that the benefits which will accrue from the new social welfare measure will compensate the most needy sections of the community for the increased burdens they will have to carry as a result of these financial proposals.

I do not think, for instance, that the increased tax on petrol will impose a very heavy burden on the public as a whole. In fact, I think that it was more or less expected. I remember that on the very day the Budget proposals came before the Dáil I travelled to Dublin with a certain garage owner. I asked him what he thought the increase on petrol would be and he said 4d. a gallon, exactly the right figure. He anticipated that and every thinking person knew that an increase of at least 4d. per gallon could be expected.

Did he expect the new horse power tax?

It must be conceded that even with the increased tax on beer, cigarettes and spirits the price of these commodities will still be very far below the price in Britain and Northern Ireland. Everybody knows that there was any amount of smuggling of cigarettes across the Border and that certain people were able to make a handsome profit on that business. I hope that this increase in the price of cigarettes will to a certain extent at least do away with that illicit traffic.

If these proposals were not adopted, and if the Minister and the Government had not the courage to face realities, the position would be much more difficult to face later on. It is a very dangerous fallacy for anybody to fall into to think that he could go on spending money and entering into commitments from day to day, and that if he could not meet these commitments everything would be all right in the long run. Everybody knows that that could not last very long. The principles of national housekeeping are the same as the principles which should guide the ordinary private individual. He can escape his financial responsibilities for a time, but in the end he will be faced with the stark reality that he must pay, and it is the very same with those who are in charge of the country's affairs. If we do not face up to our responsibilities now we would have to do so at some time in the future, and it would be much more difficult then.

I congratulate the Minister and the Government on having the courage to tackle this difficult problem, and to do so in the only way it could be done, by getting the people to realise that they cannot continue to live in a fool's paradise, that they will have to meet their commitments, and that everybody will have to pay his way. I believe that the people fully appreciate the necessity for this increased taxation. It is not being done for fun, but to rectify what would develop into a dangerous unbalance in the nation's finance in a few short years. The position is already bad enough.

I propose to approach this matter entirely in a non-Party way. I do not think that the annual Budget debate, because that is really what this is in the Seanad, is properly a subject for scoring Party points. The last Senator who spoke referred to the importance of the national housekeeping. What we are doing on this occasion is making our annual review of the housekeeping accounts of the country. We are doing it in a period of admitted difficulties. I am not saying who is to blame for these difficulties—they are very largely outside the control of any politicians in this country—but the fact is that the world and this country are going through a period of difficulty. Therefore, when the Seanad discusses these matters of the national housekeeping accounts in such a period, it should do so with a sense of great responsibility. We should try as hard as we can to transcend Party politics on such an occasion.

The Budget, of which this Finance Bill is really a part, is something more than the mere housekeeping accounts in the modern world. It has been frequently said here in the past couple of years—it has become a commonplace which is accepted by everybody to-day —that the modern Budget is something more than the mere account of the Government's annual revenue and expenditure. It has become a very powerful weapon, by means of which the Government is able to influence the economic life of the country. There are two main things which a wise budgetary policy can assist in attaining The first I would call the stability of the system and the second the progress of the system. When we talk about the stability of the system we must draw a distinction between the internal stability of the system—avoidance of booms and slumps, with unnecessary unemployment—and external stability, about which there was a great deal of discussion last year, the balance of payments. The two are related, but for purposes of discussion they can be kept separate.

When I talk about progress and the Budget being an instrument of progress, I mean, of course, progress measured by purely material measurements—an increase in the standard of living of the population or an increase in the population, or, best of all, an increase in both. These, I think, are the two criteria of a well-governed country to-day, a country which is stable and progressive. The Government, through the Budget, has the power of effecting, to some extent at any rate, these two aims and, therefore, has a great responsibility. The Seanad, even more than the Dáil, being largely a non-Party Chamber, has a peculiar responsibility to give the Government whatever advice and criticism on these matters it is able to supply.

I suppose the best definition one can give of the stability of a country is the absence of either inflation or deflation. If either of these conditions is present, it is possible for the Budget, to some extent, to correct it. Inflation and deflation are generally accepted nowadays as being a disproportion between the amount of money spent on everything in the country and the amount of goods of all kinds becoming available. If the amount of spending seems to be too great, it is possible for the Government to damp it down. It can damp down private expenditure or a Government expenditure, both on consumption goods and investment. If the total amount of expenditure seems to be too small, it is possible for the Government to increase up, to build up demand for consumption goods and investment, both on the part of private investors and of the Government itself.

During the 30's, the world as a whole was suffering from depression and this new conception of the Budget grew very largely in those years. During those years, the problem facing the United States in particular and other countries was to build up demand, by means of various methods which I need not go into now, to stimulate activity and to bring into use the resources of labour and capital which were idle at the time. The economic policy of the 30's in the United States was a policy of expansion, a policy to prevent what was known as over-saving, not in the sense that the country was saving too much but that what was being saved was not being productively invested.

It is perhaps not sufficiently appreciated by public opinion that conditions now, 20 years after, have completely and absolutely changed and that the appropriate policies in all countries to-day are the reverse of the policies which were appropriate in the 30's. It is necessary to damp down demand as far as possible, to disinflate or to deflate and to reverse in the 50's every policy which was appropriate in the 30's. That assumes, of course, that we are living in a period of inflation. I admit that there is some unemployment and that there seems to be overproduction in certain trades, but I think it is generally agreed that nothing like a general depression is on the country at the moment, that, in spite of pockets of depression, localised unemployment and certain trades being overstocked, on the whole we are still in the inflationary phase.

In this country, I suggest that the way in which the internal inflation is shown is by the condition of the balance of payments. In some countries, an inflated condition is shown by a rapid rise in the general price level. In this country, there has been a rise in prices, but I think the greater part of that rise in prices is due to causes which have flowed in from abroad. I think it may be the result of inflation, but not exclusively an Irish inflation, and, if it is not the result of Irish inflation, an Irish Government cannot do very much to cure it. The rise in prices in this country reflects three inflations. It reflects the world inflation which, in its turn, reflects American and British rearmament; it reflects the sterling inflation which, I think, is a hangover, if I may use that word, from the period of cheap money; and, finally, it reflects to some extent the home-induced inflation. In this country, wages have risen; costs have risen and public expenditure has risen. All these are inflationary factors, so therefore the rise in prices does indicate an inflation but an inflation generated more, I think, abroad than at home.

In other countries a state of inflation is characterised by a depreciation of the exchange rate. In this country, the exchange rate is tied, and, if the Irish £ is over-valued, it is not free to move and not free to show that over-valuation in the exchange rate. Therefore, the only test left, the only thing which is free to move and that has moved in response to internal conditions is the balance of payments. A disequilibrium in the balance of payments is a symptom of an internal inflation. In this connection I should like to say that I think that Senator Hayes is correct in predicting an improvement in the balance of payments this year. The export figures are improving. I do not wish to enter into any figures in the course of what I propose to say—I propose to deal rather with some general principles— but I will say this, that if the trend in the balance of payments is showing signs of improvement, that trend should be taken into account in the Budget proposals. I do not think it is too much to hope that that trend will continue and that, therefore, possibly, a certain relaxation of budgetary severity, anticipating further improvement, may be legitimate.

Having said that, I do, of course, admit that the balance of payments is still unsatisfactory and that it must find equilibrium again. I am sorry to repeat something which I said in a debate in this House some months ago. However, it is so important and, I am afraid, so misunderstood by a large number of people that I think it is necessary to restate it. It is this: in every country equilibrium in the balance of payments will, sooner or later, be restored. In the long run, imports and exports will prove equal at some period and at some level. When I talk about restoring equilibrium in the balance of payments, what I am suggesting is that an effort should be made to restore equilibrium at a high level that is consistent with progress and prosperity and not at a low level at which it may be restored if unwise courses are too long persisted in.

Other countries with greater freedom of financial action than we have, possess certain weapons which I do not think are available here for restoring such equilibrium. Everything that reduces internal income and internal purchasing power will, of course, have an effect on imports and, in that way, on the balance of payments. As everybody knows, that is the justification for the policy of high interest rates which is now being pursued. I feel that I am correct in saying that this policy is being pursued in every country in the world without exception. As has been said in debates in the Seanad before, it is difficult for the Irish Central Bank and for the Irish Government to pursue a policy of independent interest rates. Anyhow, since last March the interest rates in this country are high enough. Therefore, a mere reliance on an interest rate policy and on internal disinflation of that kind in this country is probably not sufficient to bring about the desired correction in the balance of payments.

I am afraid that I have said before what I am about to say now, but I feel it is my duty to say such things, even at the risk of boring Senators. What I want to say is this: in the short run a certain reduction in imports may be justified and may almost be necessary. That, I feel, justifies some of the taxes imposed in this Finance Bill. Some of the additional duties that the Bill imposes—the duty on petrol and on tobacco—fulfil a double function. They raise revenue, and they reduce imports. To that extent, they have a double justification. Other duties of the same kind, not imposed in the Finance Bill, might possibly be justified. As I said before, motoring generally in this country imposes a serious charge in the balance of payments. I feel, therefore, that the Minister's proposed increase in the horse power tax is justifiable from that point of view.

As everybody will agree, and as we have said several times in the Seanad in the course of the last year, a reduction of imports is only a second best method. In the long run, what this country really requires is an expansion of exports based on an expansion in production, based on an expansion on investment in the export industries.

I have no intention, in this debate, of opening up a discussion on agriculture. In the first place, it would be irrelevant, and, secondly, I have not got the type of courage necessary to enter into such a discussion. It seems to me that as soon as any agricultural question comes to be discussed in this country it always causes our tempers to rise to the highest emotional pitch. However, I would like to refer to the articles with regard to agriculture that have recently appeared in the Irish Times. I refer particularly to an article last Thursday by Mr. O'Driscoll with regard to the great expansion that has taken place in the export of dressed meat. A most significant development has taken place in this trade since the war. It is only fair to say in public that that development is very largely due to the initiative and enterprise of the officials of the Department of Agriculture. The only reason I mention it is to show what can be done in the way of building up our exports of agricultural products. That is a great achievement, and it is that achievement which is partly responsible for the improvement in the exports to which Senator Hayes referred. However, as I said already. I have neither the knowledge nor the courage to dash into an agricultural discussion. Anyhow, it is not relevant to this debate. Everybody will agree that a further investment in agriculture, in a general way, is desirable. I hope Senators will not consider me irrelevant when I mention this matter. I do not think I am, and I will show that I am relevant very soon.

The problem we have to discuss in this debate is this: where are we to get the savings for the desirable investment? I do not think it is sufficiently realised in the democratic world to-day and in countries which are pursuing advanced policies of social welfare that all such investment necessitates some previous saving on the part of somebody at some time or in some place. The present generation seems to me to be taking for granted the great savings of past generations in Ireland. For hundreds of years this country has been built up out of the savings of the Irish people. In the 18th century great canals, roads and country mansions were built on a very extensive scale out of the savings of the people. The great public buildings in the City of Dublin necessitated a large amount of savings. In the 19th century the railways, the harbours, the docks and a great many houses were all built as a result of the savings of the people of this nation. All the projects in the 19th century which were carried out in this country were almost entirely financed out of the voluntary savings of the Irish people. The Government invested very little. In the present century up to recent times, there has also been a considerable amount of saving. The great accumulation of external assets to which so much reference was made was also due to the efforts of past generations. The present generation seem to take that for granted. They seem to assume that the Irish railways, roads and public buildings were given by nature in the same way as the Irish bogs and climate were given. The fact is that all these things represent a very considerable degree of private savings on the part of past generations.

No country is saving enough unless it is saving enough to do in most countries four things, but luckily, in this country only three things. The fourth thing which we do not have to save for at the moment is defence and armament. Leaving that out, no country is saving enough out of its current income unless it is saving enough to do three things, first, to keep all current capital intact, secondly, to build up a desirable quantity of new productive investment and, thirdly, to finance a certain amount of social and amenity investment.

I put those three things in that order with a purpose. If existing capital is not kept intact our capital structure begins to disintegrate. It is only when that is done that there is enough saving to build up new productive investment. By productive investment I mean investment that will produce a profit on the investment, a return in goods or services, something which can be sold and, above all, in this country, if possible something which can be exported. It is only when a sufficient quantity of saving to finance that type of investment has been found in a community that a community can legitimately indulge in social and amenity investment.

I think the word "investment" has been used in recent times in quite a wrong sense. The word "investment" is used to-day to cover what, in my opinion, should be described more properly as durable consumer goods. It is very hard to draw the line between putting one's savings into a dwelling-house and putting them into a refrigerator or a grand piano or any other durable consumer goods. If this can be properly described as "investment", it is the sort of investment which can only be afforded when productive investment has first been provided for on an adequate scale.

Investment cannot take place unless there is a considerable amount of savings out of current income. Up to a certain point and within limits, investment could be financed in two ways other than what I have suggested. One way is by the sale of old, external securities. That is the policy which, in this country, is described by a new emotive term, "repatriation of capital", almost suggesting that our capital invested abroad is in somewhat the same position as the emigrants from the country languishing in a foreign land longing to return.

The other method by means of which, to some extent, the deficiency in current savings could be made up, is by borrowing from abroad. That will be my only reference to Marshall Aid in this debate. But these two methods, selling external securities and borrowing from abroad, are necessarily limited in their extent. They are limited, in the first place, by the amount of external assets available for sale and, in the second place, by the willingness of foreign lenders to lend.

In addition to being limited, they are costly. They are costly in the sense that when we sell external assets, we sacrifice something from which we get interest or dividends. To that extent, we injure our balance of payments. Borrowing from abroad is costly in the sense that foreign loans sooner or later have to be repaid. When the period of repayment comes, we put an additional burden also on our balance of payments.

The point I want to make is that if we finance our investment in these two ways—and we can do that within limits —we are not dispensing with the necessity of savings. We are using the savings, in the first place, of past generations of Irish people and, in the second place, of Americans or other people who are willing to lend their savings to us.

The statement that no investment can take place without previous savings is, I suggest, universally true. If we do not provide enough savings out of current income, our investment programme will be discontinued when we have used up the savings of past generations and exhausted the willingness of foreigners to place their savings at our disposal. I do not wish to make as a categorical statement something about which there can be a bona fide controversy. I do not want to fly any red rags or raise any bad feeling in this debate, but I think I am correct in saying that most people would agree, looking at the matter calmly and dispassionately, that ever since the Treaty, this country has not been saving enough. The history of this country for the past 30 years has been one of a country which has failed to maintain an increasing population. It has maintained the population fairly stable, and it has maintained that population, to some extent at any rate, by the dissipation of the savings of the past.

I do not think that the country has been saving enough currently either to support the existing population still less to allow the population to grow. I do not for one moment deny—I have said this in the Seanad before in the debate on the balance of payments— that there should be some repatriation of foreign assets for the purpose of making truly productive investments, preferably in Irish agriculture. I suggest that our investments in recent years have concentrated rather unduly on protected industries and on amenity investments.

I think that, in the future, we should attempt to reorient our investment policy and build up the productive capacity of the land with the object of restoring equilibrium of the balance of payments at the desirable high level at which we should aim, and not at the undesirable low standard to which we may be driven. I think, perhaps, I may, at this stage, point out that, although investment depends on savings, that investment itself will produce more saving in the future. Investment will produce surplus income in the future, out of which additional savings can be made. There will be something like a cumulative upward process of mutual generation of saving and investment.

I am coming now immediately to the Finance Bill proper, although I mentioned it once or twice before. In considering the Budget statement, I think we should bear in mind that the objectives of Government policy should be to introduce stability in the Irish system, to restore equilibrium in the balance of payments at a high level and to combine that with progress in increasing the size of the population and improving the standard of living.

To come more directly to the Finance Bill, an investment policy of that kind would not only have the effect of improving the balance of payments and improving the standard of living but it would also have the effect of expanding the possibility of desirable Government expenditure. I do not wish in this debate to discuss the volume of expenditure in the present year. This House is not debating the Estimates. Of course, one can say in a general way that if the Government were spending less it would have to tax less. We are all agreed about that. It does not bring us very far. If we say that, and if we ask, as the question has already been asked this afternoon, in what particular directions retrenchment might take place, I, for one, not being a member of the House that considers the Estimate, do not feel bound to make suggestions to the Minister on that matter. My attitude is that whether the volume of expenditure is too high or too low, on the Finance Bill debate, which is concerned with raising money and not with spending it, the volume of expenditure in the current year must be taken as part of the problem we have to discuss.

What I can say, and what is relevant to what I have said before, is that whatever the volume of public expenditure may be it becomes relatively lighter and relatively more tolerable when the national income expands. Just as the real weight of a burden depends not merely on the absolute weight of the burden itself but on the strength of the shoulders of the person who carries it, a given volume of public expenditure in the country depends very largely on the amount of the national income of the country. Therefore, the larger the national income the larger the tolerable amount of public expenditure.

That brings me back to the point I have been making all the time, namely, that an expansion of production based on an expansion of investment, based on an expansion of saving, will produce multiple good results for the economic life of this country.

Assuming that what I have said is correct, I think we are now entitled to examine the Finance Bill from the point of view of that criterion. Does the Finance Bill before us tend to increase the volume of investment and saving? I wish to say something on that subject about one particular tax which seems to me to be the most relevant from this point of view. I refer to the increase which the Minister proposes in the standard rate of income-tax. I do not intend to discuss to-day another question which I hope to discuss some other day in the Seanad, namely, whether or not the distribution of the burden of income-tax is equitable. I am taking the income-tax as it is and simply dealing with the standard rate. But I think I am entitled to make the point even on this debate that if all the inequities in the distribution of the tax were removed and if the tax were more evenly spread over all people with assessable taxable incomes, the standard rate could possibly be lower. However, that does not arise to-day.

We will take the tax as it is. I want to say something about the increase in the standard rate. Income-tax, of course, cannot be considered in isolation. It is part of the whole system of direct taxation in this country. Income-tax must be taken in conjunction with surtax and death duties. The point I wish to make is that the present level of direct taxation in this country has an adverse effect on saving and that, therefore, to increase direct taxation will have adverse effects instead of beneficial effects on the programme of investment which I have been trying to advocate. High direct taxation, of course, must have an effect on the power to save. Generally, in the past, saving has been done by people with surplus incomes. I will not use the word "rich" because there are not many rich people in this country but, I shall say, the "not so poor."

The whole history of the 18th and 19th centuries, to which I referred a few moments ago, is a history of rich people putting their savings into productive enterprises, trying out untried experiments, building up new industries. The whole history of the industrial revolution is based on the fact that there was a class of people with sufficient surplus income to be able and willing to take the risk of investing it in new types of untried enterprises and, in that way, to build up the modern world on the productive side.

It is extremely difficult for anybody nowadays who pays all his direct taxes to accumulate a fortune. Therefore, the fund out of which industrial savings used to come in the past is being sucked dry by all this high direct taxation. But, in addition to the adverse effect on the power to save, I think there is an even more adverse effect on the will to save. This is a matter to which I do not think sufficient attention is paid to-day. A high standard rate of income-tax reduces the net yield of Government securities to what may be a dangerously low point. A government security carrying interest at 4 per cent., from which income-tax is deducted at 7/6 in the £ is really paying only 2½ per cent. When you consider that a large number of people pay surtax as well as income-tax at the standard rate, and when you consider that really prudent people make some provision in the course of their lifetime for insurance against death duties, the net return at present on gilt-edged securities in Britain and here in the case of a great many people, and especially rich people, is a great deal less than 1 per cent.

Business suspended at 6 p.m. and resumed at 7 p.m.

I was dealing at the Adjournment with the low net yield on gilt-edged securities caused by high direct taxation, and I pointed out that when full account is taken of income-tax, surtax and death duties the net yield on a 4 per cent. bond nowadays may be less than 1 per cent. I think that possibly the greatest revolution of our time in the matter of finance has partly been unperceived, because it has come so gradually. I refer to the change in the relation between a capital sum and the income derived from it. I think that now the net income derived from capital sums has become so small that people are inclined to speculate and look for capital gains which are free of income-tax. I will give an example of what I mean.

If 50 years ago a man had £1,000 saved and invested it at 4 per cent. he got an income of £40 a year. Income-tax was very low, practically negligible, and money was very stable. He was paid in sovereigns of a very stable value. Therefore, it would have been very imprudent, thriftless and wrong for a person in those days to live on capital. In 25 years his whole capital would have disappeared, and he would have spent his savings once and for all. Compare the position to-day. A man who has saved £1,000 to-day can still obtain £40 a year gross. The net rate of income-tax in this country is now 7/6 and in England 9/6; a large number of people pay surtax on top of that, and also some allowance has to be made for death duties. It may be that the net return on that investment is less than 1 per cent. In that case, if the person were to spend that £1,000 on current expenditure, it would be 100 years before he was worse off. It seems to me that that change in the income-capital multiplier has produced a complete revolution. It seems that the prudent, thrifty man to-day is not the man who accumulates but possibly the man who decumulates.

That, of course, is largely the result of high taxation but it is also the result of unstable money. At a time when most people believe that the value of money will decrease still further in the long run and when direct taxation is rising all the time, as it is rising a little in this Budget, the incentive to save and accumulate has been greatly reduced.

Another factor—I admit of a passing character but nevertheless one of which the memory is not soon lost—is the great fall in gilt-edged values which takes place from time to time. In the last three years 2½ per cent. Consols have fallen from 97 to 57. People who bought Consols three years ago were getting a gross yield on their investment of 2½ per cent. reduced to a net yield of a good deal less than 1½ per cent., and now they have suffered a capital loss on their investment which represents the income for a good many years.

The point I am coming to is this: the whole modern atmosphere is unfavourable to saving. A capitalistic society depends on harnessing the thrift, the foresight, the cupidity and the greed of the private individual. These qualities may be virtues or they may be vices but, whether they are virtues or vices, they can be turned to public account. The essence of a capitalistic economy is that private saving habits have good public results because they result in the accumulation of capital. What I am suggesting is that modern democratic societies cannot have it both ways. They cannot, by inflation, by rapid changes in capital values and by high direct taxation, drain away the reward of thrift and saving and expect people to go on being thrifty and to go on saving. It may become prudent and rational to take the short view, to enjoy present pleasure and to live for the day.

In this matter, we can derive some lessons from the experience of other countries, and I should like to refer to the recent loan floated in France. France is a very much richer country than this, judged by any criterion. It is generally admitted to be the richest country in Europe. The French Government recently has had to barrow on the following terms: it has had to pay 3½ per cent. free of income-tax, and the loans are exempted from all death duties; they are accepted in payment of taxes at their face value; and they are accompanied by a gold clause, that is say, they are repayable in a sum fixed on a sliding scale with any change in relation between the franc and gold. If you come to think of it, there are three guarantees in that arrangement. The freedom from income-tax and death duties is a guarantee against increases in taxation; the acceptance of the loans at their face value is a guarantee against a fall in capital values, such as occurred in the case of Consols; and the gold clause is a guarantee against depreciation of the currency.

The point I want to make is that, if the richest country in Europe has to pay that price for loans, can the other countries in Europe expect to go on borrowing in the old way? Have the old incentives not been killed? Have the thriftiness and prudence of the old generation not been taxed out of existence? It is considerations of that kind that lead me to say that an increase in the income-tax rate and a high rate of income-tax are inflationary. I started my speech by saying that, on the whole, this country is suffering from an inflation rather than a deflation, and that financial policy should be directed against inflation. I now suggest that an increase in the income-tax rate is an inflationary factor, adding fuel to the fire. The reason I say that is that an increase in the income-tax rate reduces the propensity to save and increases the propensity to spend. Another inflationary factor in our system of direct taxation, but tending to be overlooked, is the fact that death duties are used for current revenue purposes by the Government. Death duties are a form of capital tax. They involve the decumulation of capital by savers, and yet the proceeds are used by way of current revenue on current expenditure.

I wish also to put another consideration before the Minister arising out of this increase in the rate of income-tax. The differential between the Irish and the English rate has attracted a certain amount of foreign capital into this country, partly by attracting foreign residents and partly by attracting people living abroad to invest here. The capital attracted in that way is, I suggest, of a desirable type. It is capital contributed by private investors at their own risk and it is largely capital invested in risky enterprises, ordinary shares and business properties. By raising the Irish rate, the differential is being closed, and I think it is only fair to call attention to the fact that, up to £50,000, death duties in this country are still higher than in England on corresponding sums. Therefore, I suggest that raising the income-tax rate not only has an unstabilising internal effect of an inflationary character, by promoting spending and reducing saving, but has a bad effect on the external stability as well, by exercising an adverse influence on the balance of payments.

The Minister, as far as I know, made no reference in the course of the debates on the Finance Bill in the other House to the situation created by the Control of Manufactures Act. All I will say is that, in the opinion of many people, the Control of Manufactures Act has a discouraging effect on the entry of foreign capital into this country, at a time when I, for one, am of opinion that foreign capital could play a useful part in providing material for investment and helping the balance of payments.

In the debate in the Dáil on the 13th May at column 1434, the Minister made a very strong case against increasing the rate of surtax in this country. He said that surtax as it is paid in this country is a tax where an increase in rate might quite easily result, not only in a reduction in the tax yield but in a reduction in employment and in a a reduction in investible resourses. The Minister then goes on to point out that the effect of the increase in surtax would be to make certain rich people emigrate and to prevent other people from coming in. The Minister said:—

"We have to keep in mind that though large fortunes are extremely rare in this country, as compared with others, these fortunes are highly mobile.

So long as their owners are domiciled here, we can collect estate duty on them in due course. If their owners divest themselves of that domicile and assume another, we cannot. So common sense dictates that taking the long financial view, our estate duty code should induce the owners of large estates to make their domicile here rather than drive them elsewhere."

With that I agree, but I fail to see how, if that is correct, my argument against the increase in the rate of income-tax could be incorrect. Assuming that high direct taxation in this and other countries—what I am referring to is not peculiar to Ireland—has the effect of reducing both the power and the will to save, assuming that our external assets are beginning to come to an end and assuming that the willingness of foreign lenders to lend to us is not inexhaustible, the country will be faced with certain alternatives about which it must make up its mind.

One alternative would be to reduce the volume of investment. The adverse consequences of that policy on the balance of payments, on the amount of employment, on emigration and on the standard of living would be so great that I dismiss it as a practical alternative. No matter what Government is in power, I think it will have to try somehow to maintain the volume of investment. If the wells of thrift and of saving are dried up, if the savings of past generations are exhausted, if the willingness of foreigners to save on our behalf has come to an end, and if a reduction in investment is not regarded as desirable, some other form of saving will have to be devised. There is one country in the world which has devised an extremely effective form of saving, and that is the Soviet Union. In the Soviet Union the amount of savings is decided by the planning authorities and is effected by means of changes in the turnover tax. There is nothing revolutionary in the turnover tax. Taxes are imposed on tobacco and petrol in this Finance Bill. If we multiply the number of articles on which there are excise and customs duties, we will soon have a general turnover tax. A turnover tax of that kind would succeed in imposing a considerable volume of saving on the community, provided it was accompanied by the same measure with which it is accompanied in Russia, namely a standstill Order on wages. That is the alternative.

It seems to me that if the richer classes are taxed out of existence, if their willingness to save and to lend is dried up, either investment will come to an end or saving will have to be forced out of the poor. One difficulty about that is that capital raised in that way would not be available for risky and experimental investments. If the entrepreneur is eliminated from society, investment can only take place by means of some variety of Government loan. Furthermore, the real cost of savings of that kind would be very great. It would lie on the poorer members of the community and on unwilling shoulders. However, that is the form by which saving is being forced from people in very large areas of the world to-day. I would not like to see it forced in that way on the people of this country.

The last thing I would like to say is this. It may appear to be slightly more controversial than what I have said up to the present. I have the feeling that the increase in income-tax in this Budget was put in largely as a sort of window-dressing, a sort of tribute to the hoary tradition that there must be some sort of ideal balance between direct and indirect taxation, and that every time indirect taxation is raised direct taxation must also be raised at the same time. Otherwise, the Government could be accused of taxing the poor and of exempting the "not so poor." Examining the Finance Bill, and listening to the Minister's explanation this afternoon, we will find that the yield from this extra shilling on the income-tax is rather low. The Minister told us that concessions have been made to many income-tax payers. I hope I will not offend the Minister in expressing this opinion. I have the feeling there is a certain amount of window-dressing in the increase in income-tax—a certain sop to public opinion. I think everybody in this country, to a greater or lesser degree, is infected by current political and financial thinking elsewhere. I feel that this almost automatic increase in direct taxation, this levelling down of the higher incomes and the general equalisation of incomes in society is an Irish version of some rather out-of-date Fabianism from across the water.

Direct taxation in this Budget is being raised. High direct taxation has adverse effects on saving, on enterprise, on risk-taking and on the import of capital from abroad. It tends to disappoint legitimate business expectations and it interferes unduly with people's titles to property. Taxation has gone so far to-day in every country that it is almost regarded as old-fashioned to suggest that taxation is in itself a thing which needs justification. The fact is that income-tax and death duties on the level which they are being imposed to-day constitute a serious inroad on the rights of private property.

The burden of the indirect taxes proposed in this Finance Bill will, on the whole, be shifted by many of the people from whom they are collected. I am not so concerned with the increase in tobacco and petrol duties because for a very large section of the population those taxes will be shifted into higher wages. Of course, we will then have the vicious upward spiral to which reference has been made. It is very difficult for people who pay direct taxes to shift them. If the whole burden of increased taxation tends to fall on one class of the community it produces a very unfair result.

We seem to have come to an extraordinary paradoxical position in the world to-day in that the only countries that seem really to value capital are the Communist countries, whereas the capitalist countries are entirely concerned with the interests of labour. In the Soviet Union a very large fraction of the national income is saved. No other country in the world makes greater sacrifices for capital accumulation of one sort or another than the Soviet Union. In one sense you might say that the Soviet Union is the most capitalistic country in the world. It is the country that attaches most importance to capital accumulation. The capitalist countries seem to be willing to do anything at all to please the working classes. It seems to be an extraordinary paradox in the world to-day that the one country that really values capital is the country whose economic doctrine is founded on the labour theory of value.

Senator Professor O'Brien referred to the dead-meat trade in this country. He talked about its great value and with that I entirely agree. He went further and said that the credit for the meat industry belonged to the Department of Agriculture—I understood him to say that. When the history of the dead-meat trade in this country comes to be written, the credit for the initiation and development of that industry will fall on other shoulders.

There is an industry in Waterford, Clover Meats, the general manager of which is a man named Mr. Landy. He is a man who was trained in the stockyards of Chicago, and I think a lot of the credit for the dead-meat trade in this country must go to him whenever the credit is being apportioned, as I have no doubt it will be in time to come. I think it is right for me to make that correction. We all listened with great respect to Senator Professor O'Brien, and accepted the statements made by him, but I think it would be wrong if the statement to which I have referred were to go abroad without being corrected.

Senator Hayes referred to the agricultural reform that took place in the years 1948-51. I think he quoted some American ambassador or other person when referring to this matter. Anyone travelling from Cork to Dublin by train would see very little sign of that great agricultural reform. Instead of the land humming with fertility, as referred to by some other speakers, it is a dreary waste. Everywhere one looks there are signs of lime and phosphate deficiencies. One can even see it in the tillage fields. I often wonder why something is not done to stimulate agricultural production in the Curragh of Kildare.

I do not want to say anything disparaging about the horse-breeding industry. That is a good thing in itself, but it would not take in the least from the horse-breeding industry or racing or the turf if a little more production were got from the land which is not actually used for racing and horse training. I think that anything that will stimulate agricultural production in this country is good.

I would like to refer to the petrol situation in remote districts. It is very difficult to get supplies of petrol. The country is now becoming highly mechanised and it ought to be possible for people in remote towns and villages to get petrol pumps. There appears to be some kind of restriction and people in villages and remote areas are unable to get any petrol from the distributors. That means that if people want petrol they must drive their lorry or car a distance of five, ten, 12 or 15 miles to a town in order to get their supplies. That position is not right and I would draw the Minister's attention to it. If there is to be restricted trading and if the sale of petrol is to be confined to certain people, then something ought to be done to issue licences and charge for these licences in the same way as is done with beer and spirits.

Senator Professor O'Brien also referred to the repatriation of our external assets. I understood him to say that repatriation would be justified if the money was used in creating production. I do not think there is any increase in agricultural production. As a matter of fact, I think that statistics go to show that it is all the other way.

Somebody suggested that if we had subsidised the use of artificial manures instead of going on with the land project as it is there would be a considerably greater production. I do not want to say that the principle of the land project is wrong but I do say that if we had pursued the policy of subsidising artificial manures very much greater agricultural production would have occurred. Manures are subsidised across the Channel and they are subsidised in the Six Counties. I think there is great need for the subsidy here.

I did not intend to speak were it not that I wished to correct a statement made by Senator Professor O'Brien. I hope I have done so efficiently.

It is not particularly easy to speak after the long, interesting and thoughtful speech that we have had from Senator Professor O'Brien. I am not an economist. Like most business people, I feel it is my duty to respect and listen to economists. I always listen to lectures on economic subjects with a very considerable amount of interest, a certain amount of bewilderment and almost certainly with a certain amount of disagreement and yet feel that I am not altogether competent to agree or disagree.

I do not propose, except in relation to one or two matters, to follow Senator Professor O'Brien. Obviously, it would be very difficult to do so immediately after he had spoken.

I was amused at his reference to the goose which would refuse to lay eggs. It reminded me of a quotation which I read a short time ago in a book of quotations that was given to me as a Christmas present. The quotation was by a gentleman named Colbert who was a finance minister. He said that the "art of taxation consists in so plucking the goose as to obtain the largest amount of feathers with the least amount of hissing". While I am prepared to give the Minister credit for artistic qualities in various ways, on that standard I am afraid he is not an artist in taxation.

I have listened to Budgets over a great number of years and I cannot remember any Budget which was more generally unpopular amongst almost every class and disliked by almost everyone that one meets. Even its supporters, including the Minister, so recognise that fact that they spend at least 50 per cent. of their defence of the Budget in blaming it on their political opponents. I think there is, nevertheless, more to the quotation than supply a humorous reference. When taxation is necessary I believe that in a democracy it is not simply sufficient to impose any kind of taxation that will meet the bill. It may be the easiest way of doing it to say: "We must pay our way and, therefore, you will have to pay what we propose." I think it is necessary to use considerably more subtlety and to consider carefully the best methods by which taxes can most easily be paid with the least hardship and with the least resentment.

As Senator O'Brien suggested at the beginning of his speech, the financial policy of any Government as expressed in the Budget is probably more important than any other aspect of its policy. The daily lives of the people are often more affected for good or evil by a Budget than by all the other legislation passed during the year. In recent years, it has become more than ever the practice of Governments to enforce their general policy by means of the Budget. This has been fairly evident in recent years in Great Britain, and I do not suppose the Minister will disagree with me if I say that the present Government's general outlook can fairly be judged by an examination of the Budget and of the ministerial speeches in relation to it. It is, I think, also correct to say that the distinction in general policy between the two Governments is more clearly expressed in their difference in financial outlook than in any particular item of their legislative programme.

It is not, perhaps, strictly connected with this Budget, but there is an aspect of financial practice to which I should like to draw the attention of the House, and to refer to certain features in the way in which a Budget is prepared. I cannot help feeling that the whole system of taxation requires examination and revision. I believe that many taxes are imposed or altered without the care and consideration which is desirable in a democratic country. A Government can impose its will on the people more effectively by means of taxation than by legislation. When legislation is contemplated, very great care is exercised and, when practicable, consultations take place with persons likely to have expert knowledge. Before a Government Bill is introduced, it is prepared by civil servants in one of the Departments of State, acting under the general supervision of a Minister. A draft is submitted for criticism to every other Department likely in any way to be interested before it reaches the form in which it is submitted by the Minister to the Government, when it may be criticised by any member of the Government. In most cases, the subject matter of the proposed legislation is submitted to a meeting of the Party or Parties supporting the Government —and Deputies are by no means as docile at Party meetings as they may appear to be in supporting a Government in the Dáil. After a Bill has been introduced there is ample opportunity and time for the general public to make known their views to Deputies or Senators.

I suggest we should contrast this with the system which operates when a Budget is introduced. Because of the need for secrecy, the Minister for Finance can consult only a very small number of senior civil servants. He can, as a rule, obtain fairly reliable information as to the yield from existing taxes and the probable yield from changes in these taxes, but he cannot possibly make a full investigation as to the probable effect of those changes on business generally or on the lives of the people. If new taxes are proposed, he cannot consult other Departments in the same way as would be done in the case of ordinary legislation When a Budget is prepared it can be shown only to the Cabinet immediately before it is introduced, and other Ministers have very little time or opportunity for amending it. The Party supporting the Government has no knowledge at all of the contents of the Budget until it is introduced in the Dáil and must accept it completely or turn out the Government.

Might I suggest that, as a matter of courtesy, the Senator might have asked the permission of the House to read his speech?

I am not reading my speech. I am reading portions of it.

Only 90 per cent. of it.

I do not suggest for a moment that the system can radically be changed, but what I want to suggest is that the fact that it is not practicable to have the same care in the introduction of new taxes or any amendments to old taxes requires some form of periodic revision of the effects of taxation. I suggest that the Government ought seriously to consider the setting-up of a general commission on taxation more or less on the lines, though not necessarily so, of the one which has been set up on the other side of the water.

As an instance, Senator O'Brien considers that the tax on petrol is a reasonably good tax. I do not. He seems to be under the impression that, in the main, it is borne by motorists. He may be right. I doubt it very much. I believe that is a tax which has not properly been examined by either Government. It is a convenient tax. It is in operation. It is easy to add 2d. or 4d. according to the opinion of the Government of the day. I believe it should be investigated and that it is important to see how much of this tax is borne by private motorists, how much is borne by the agricultural population, and what effect it has on the production of goods generally. Almost every industry makes a considerable use of petrol. In the case of commercial travellers it is a large portion of the expense in the earning of their livelihood. I believe that is a mistake, for the public jump to the conclusion that it is borne by motorists. I think that, in actual fact, it is borne by a much larger portion of the population and has an effect on prices. I may be completely wrong. I do not think so. I give it as an illustration of the kind of tax which I think requires further investigation.

There is a very general impression that taxation is not fair or equitable. I am by no means sure that it is so, but until we in this country set up a commission or some body of our own which will investigate and report on the incidence, not only of income-tax, with which I am not dealing at the moment, but of all taxation, we will not do anything to check that impression which may be erroneous, but which none of us is entirely in a position to describe as inaccurate.

The Minister for Industry and Commerce, in a speech in Bundoran recently, expressed the view that a proper adjustment in the balance of payments was a much more difficult problem than financing home expenditure. The Minister for Finance devoted a large part of his Budget speech to this problem. He said that he had devoted particular attention to consumption, savings and the balance of payments, because these were significant factors in our present situation and formed the background to this year's Budget. He said that his Government were opposed to any general system of import control. He said:—

"It prefers that the public should increase its saving, lend more to the Government for domestic capital development and economise as they think fit in its purchases of consumer goods from abroad. This is the only safe and sure way of achieving the reduction in the balance of payments deficit which the national interest demands.... The road back to a healthy economy is by way of increased savings, increased home production, and for the time being, reduced imports of consumer goods."

I take it that that expressed in brief form the policy upon which the Government decided in the Budget proposals. I think that probably the fairest way of criticising or examining the Budget is to do so from the point of view of these objectives. Senator O'Brien has emphasised the discouragement in the Budget to increased savings. I have not made sufficient notes to follow him in all he said but it seems to me that whereas he has emphasised the effect of increased income-tax on those who pay at the rate of 7/6, he has not fully realised that the effect of the Budget will not only discourage savings or increased investments by individuals but that it will probably have the effect of taking out of industry money which would have remained in it and which, as such, would have been and, in fact, was saving within industry itself.

By far and away the greatest incentive to saving is the desire to provide for old age or premature retirement through illness, and persons who did save during the last 20 or 30 years have, as pointed out by Senator O'Brien, suffered considerable loss in the value of their savings. Is it fair, wise or necessary to increase that loss by increasing income-tax to a standard rate of 7/6? The Minister has made what every Minister for Finance calls concessions and he has provided that for earned income of £800 or under there will be a 25 per cent. allowance, but he has completely ignored, except in relation to people over 65, the effect of the 7/6 income-tax on persons with a low income which is not earned income according to the provision of the Income-tax Acts. I would suggest to the Minister that that is a mistake which he has made. I am not accusing him in any sense of doing it intentionally, but I think that he has overlooked a very real hardship on certain classes of people.

I take the figure £800 because it is the figure that he has taken on which to give the increased earned income allowance. An income of £800, which at the moment, is virtually a pre-war income of £400 or less, is not a large income and I suggest that any able-bodied person who has the good fortune either through an inheritance or savings to have £400, £500, £600 or £700 a year from investments will almost certainly earn a salary as well. The class of persons in which I am interested are those who either through their own savings or the savings of a relative have an unearned income but who are disabled or for various reasons are unable to earn an income in remunerative employment. They are just as much affected as the others by the provision increasing the cost of bread, sugar, tea, and butter. The State comes in at this stage and takes from these people who have an income from investment income-tax at the rate of 7/6 whereas able-bodied people who can earn money are given special concessions. I think that is something which is quite unjustifiable. I did not fully realise it until I came across one or two cases myself and understood what it amounted to.

I am glad that the Government have followed their predecessors in maintaining and improving the provision as far as persons over 65 are concerned, but I do not see why a person who is disabled or a widow with young children who is unable to earn what is described as earned income should be penalised because through savings on their own part or on the part of a relative they have some unearned income. In the higher income groups I think there is a good deal to be said for making a substantial distinction between unearned income and income which has not been earned, but I do not think that it is justifiable in the lower-grade incomes. I dare say that there are a few people with investment incomes of £400 or £500 who are too lazy to work, but I think that the number of such people is very small indeed.

The effect of the Budget in discouraging savings has been emphasised by Senator O'Brien. I had intended to dwell on that at greater length but in view of his speech I will not do so except again to emphasise my last point. A few years ago I saw a list of the applications for shares in a preference share issue of an industrial company and I was very much interested and somewhat surprised to find that about 80 per cent. of the applications were for amounts under £500 and over 50 per cent. for amounts under £300.

That type of small investment, which is obviously an investment of savings, is, to my mind, a type of investment which should be encouraged. Such investors are definitely being discouraged at the moment. From the dividend there will be 7/6 in the £ deducted, although, if their incomes are very low, that will be adjusted. They will be affected definitely in the coming year, not only by having a smaller yield from such dividends but they are also going to be affected in quite a serious manner by the effect which the 7/6 tax will have on the profits of companies in which they have invested their money. I understand that the Minister expects to collect £900,000 from limited companies.

No. £900,000 is the total yield, but mainly from companies.

The figure I saw in the paper was £900,000—it is probably wrong—mainly from companies.

Mainly from companies and surtax payers.

I did not know that surtax was included. The impression I got from the Minister's speech and from one or two other speeches, one of them being a speech by another Minister, was that the net yield from the increased income-tax was very similar to the amount he expected to get from companies. What I want to suggest is that, whereas some of that amount which he receives from companies will be deducted from dividends when they are paid out, in the main, it must come out of the profits made last year by the various businesses, manufacturers and traders—mainly manufacturers—because income-tax is paid on last year's profits, so that for the first year he is virtually taking £700,000, £800,000 or £900,000—whatever the figure is—of money that would have been available as capital for use in these businesses, by the provisions of the Budget. I suggest that that is definitely disinvestment as a result of the Budget. Except in so far as it is represented by deductions from dividends, it will come in the first year out of the accumulated profits. In future years, if the rate is maintained at 7/6, it will become part of the costs of production and then be paid by the public.

A booklet was recently issued by Mr. F.G. Hall entitled "Inquiry into Irish Commercial and Industrial Profits" which showed that very few commercial concerns in Ireland have kept their capital structure intact since 1938. It appears from figures given by Mr. Hall that, as a result of high taxation and inflationary conditions since 1938, we have been using up some of the capital invested in industry. In spite of this, the Government proposes to take from trade and industry a sum which is in or about the net yield which it expects to get from income-tax in this Budget. It proposes to do this at a time when there is definitely a trade recession, a slump or whatever you like to call it. Senator O'Brien thinks that that is entirely temporary. Nobody hopes he is right more than I do, but I take a more serious view of the immediate effects than he does.

He referred to the relatively small number of direct payers of income-tax. The figure given by some Minister is, I think, 170,000; but I take a somewhat different view from Senator O'Brien with regard to that, because I think that is misleading. If we are to believe—and I think we can safely do so—the figures given by the various companies as the amount of the cost of the article represented by dividends and represented by taxation, it would appear that 11d. to 1/- in the £ of the sale cost is payable in income-tax, whereas, taking most of the companies whose reports I have read, the figure of profit is 3d. to 4d. in the £. It is quite obvious, therefore, that income-tax is a more important factor in the cost of production and prices than the profits distributed. I estimate—and I am pretty certain I am right—that one could safely say that, in respect of every 5/- of goods made by an Irish manufacturer, the public pays at least 3d., and quite possibly a slightly higher figure. If he buys the imported article, he only contributes to the income-tax of the country from which the article was imported, except in so far as there is a very small profit on the distribution. If he buys an Irish article, he helps to pay Irish income-tax to the extent of approximately 1/- in the £. Whether that could be regarded as a reason for buying Irish goods or not, I do not know, but the Minister will say that it should be, because he wants to get his income-tax.

There is a motion on the Order Paper asking for a commission of inquiry into income-tax, and I suppose that some day, some month or some year that motion will be debated. I do not propose to go into it now, except to say that the effect of corporation profits tax and income-tax on the cost of production is one of the matters which should be gone into by a commission and which cannot properly be discussed on a political basis.

There has been more debate on this Finance Bill and on the Budget than on any other that I can remember. That should be regarded as a healthy sign, and on the whole I think the discussion in the Dáil was a good thing, although it was, I think, spoiled to a considerable extent by Party bitterness and gibes. I think that nowadays the public are sick and tired of these and, in the main, attacks on political opponents frequently have a boomerang effect. So far as I am concerned, I am quite prepared to believe that the Minister sincerely thinks that his Budget is just the thing the country needed to bring about financial stability. It is perhaps too much to expect him to believe that I equally sincerely believe it was a tragedy that his predecessor was not left for one or two years to develop the financial policy on which he and his Government had embarked.

I think it is completely absurd to say, as Senator Kissane said, that they would not face up to their responsibilities. It may astonish Senators and the Minister to know that the previous Government did everything they possibly could so as to win the election. It may astonish them to learn that fact. To say now that they were afraid to face up to their responsibilities and tried to run away from them is a wrong statement, and has absolutely no relation to the facts.

I am certainly not going to discuss the motives of individual Ministers. It would be futile and useless to do so. However, I am convinced that the speeches of the Minister before the Budget and since then have contributed considerably to the present uneasiness, want of confidence, and to the trade depression. However, I believe that the uncertainty which exists at the present moment is a greater factor still. One meets people everywhere from all parts of the country who share the common belief that we are about to have a general election, and until that is over nobody knows what policy will be carried out. If we are to have a general election, I wish we could have it and get it over with at once. I am speaking now as a business man. I would far rather see the general line of policy which this Government has adopted carried out with a majority for two or three years, and given a trial or, alternatively, that the main lines of policy of Deputy McGilligan should be carried out for two or three years. If we have one policy this year and another policy next year, we will fall between two stools and, in effect, we will have no policy at all.

There is one other matter to which I will refer which was not referred to in the Budget speech. I understand that Senator Stanford intends to speak on this matter in more detail, so I only intend to refer to it very briefly. Some 30 years ago the British Government, under pressure to make economies, introduced what has been known as a super-cut. It applied manly to senior civil servants. This super-cut was recognised by the Irish Government as unjust and a circular was issued in June last year which entirely removed it as from the 15th January, 1951. If my information is correct, this was approved by the last Government as well as by the present Government. It had the effect of not only increasing the salaries of existing civil servants but it also increased pensions and the lump sum due to them when they retire. The senior civil servants who retired before January 15th, 1951, had their pensions reduced as a direct result of this super-cut. Now it seems to me that it is only right and just that their pensions should be increased from that date by an annual amount which would give them the sum which they lost because of the super-cut, which has now been abolished. I imagine that this would require legislation and that it could not be done simply by an administrative Order. I am rather disappointed that the Minister did not include a section in this Bill which would have given him the necessary powers.

I am afraid this matter cannot be explained further. It is a matter proper to the Appropriation Bill.

I will accept your decision.

I do not suppose anybody envies the Minister the position in which he finds himself. The Bill which is before the House to-day and the debates which have taken place on this instrument of destruction, as far as the revenue standards of the people are concerned has aroused more interest, as Senator Douglas has said, than any Budget which has been introduced since the State was established. I do not understand, and the country does not understand, why the Minister for Finance should have dealt this blow. I do not think that the Minister has succeeded in convincing even his own most ardent supporters that such an extreme step as this was necessary. However, the Minister has been preparing the way for a long time. He used the Central Bank Report as the jumping-off ground. Since then, however, one would imagine that he had ample time to contemplate the damage which his statement on that report has done to the commercial life of the country.

He has proceeded along the road, and now he has dealt the blow at the living standards of the people of the country. What emerges from all this, in my judgment, is that the Taoiseach is losing touch. Otherwise he would never have permitted his Minister for Finance to introduce such a Budget, especially as the great bulk of the people are still convinced that a much lesser imposition would have served his purpose.

There are many aspects of this Finance Bill one might choose to discuss. From my point of view, however, what I find most interesting is that part of the Minister's speech at column 1114, Volume 130 of the Official Debate in which he said:—

"This is an effect, I should emphasise, rather than a cause; it is an expression of a number of unfavourable and adverse forces that have been at work for some years past and to which it is necessary to refer. Amongst these I should place the failure of agricultural production to regain even the 1938 to 1939 level while in Western Europe generally it is now 10 per cent. greater than before the war. The lack of progress in agriculture in this country is undoubtedly exceptional and is difficult to understand.... Agricultural production in fact is the foundation of by far the greater part of our export trade. The level of agricultural production is, as I have said, lower than pre-war."

I welcome that declaration from the Minister. He may be surprised to hear that but I welcome his conversion to the importance of agriculture in the country's economy. However, what surprised me is his failure in the Finance Bill or in his statement upholding the Budget to show what was in his mind as to the line he intended to pursue to put agriculture in the position which it should hold to-day.

It is the duty of any Minister for Finance to get from our agricultural exports the wherewithal to enable us to balance our purchases. The Minister will recall that this is a favourite topic of mine in this House. On a number of occasions in the past I raised this issue when the balance of payments was not so unfavourable as it is to-day. I pointed out repeatedly that it was necessary to give to our agricultural industry the lifeblood necessary to enable it to grow strong and vigorous so that there could be produced from the land as much visible goods as would ensure the stability of the economy of the country as a whole.

I cannot say that I was listened to with a very sympathetic ear. How does the Minister himself feel now that he is compelled to make the statement that "agricultural production has not regained the pre-war level, while in Western Europe, generally, it is now 10 per cent. greater than before the war?" If the Minister were concerned with the strength of our economy, he would have attempted to look further back to see what the situation in the country really was. I think somebody said some time ago that we have made no progress in the output of agricultural production in 50 years. Taking the broad picture, such a statement would be essentially true. This is and will remain our greatest problem until we have got a Minister for Finance with an appreciation of the importance of tackling the problem and with enough courage and vision to do for agriculture what requires to be done for it. I do not think we have such a man in the person of the present Minister. He has not given any evidence of that sympathetic understanding which a Minister for Finance must display towards this great industry if it is to be put in a position to produce so that our balance of payments may be kept right.

I am approaching this problem from this angle because I believe it is fundamental to our progress in the future and because I want to suggest to the Minister that unless he does here what Ministers for Finance are doing in other countries for their greatest industry there will be continuous contraction and a lower standard of living instead of the development of an expanding economy which we all desire.

I have said that agricultural production has not increased in 50 years. Certainly since the State was established we have shown no real progress. What does the Minister say to that, because for 17 of the last 20 years he and his colleagues have been the Government of this country?

I have some figures here upon which we all should ponder and endeavour to see what they mean for us. In 1921, the total cattle population of the State was 4,400,000 odd. In 1936 it was 4,100,000 odd. In 1947, it was 3,900,000 odd, and in 1950 it was 4,300,000 odd. Actually, the figures were higher in 1921 than they were at any time since. It does not matter whether you break up the figures in respect of the cattle and take the figures in respect of milch cows, horses, sheep or pigs. All the figures reveal a higher live-stock population in 1921 than we had in any year since then.

In 1921, there were 1,200,000 odd milch cows; in 1947, 1,100,000 odd and in 1950, 1,200,000. The number of horses was much higher as anybody will realise. In 1921, we had over 3,000,000 sheep; in 1947, we had 2,000,000 and in 1950, we had 2,300,000; in 1921, we had 890,000 pigs; in 1946, we had 470,000; in 1947, we had 450,000 and in 1950, we had 640,000. Somebody will say to me: "Look at the tillage." These tillage figures are interesting and are of importance.

Are they quite relevant to this debate?

I hope so. I hope to relate them to the matter under discussion here, especially in relation to the problem confronting the country in regard to our balance of payments. In 1921, we had 1,800,000 acres of tillage; in 1947, we had 2,300,000 acres and in 1951, we had 1,700,000 acres. Is it not very interesting that, despite the much higher area under tillage in 1947, our live-stock population under all headings was much lower? That is an important point because it will be appreciated that it has been argued that the way to increase our exports and get greater production is to have a greater number of acres under the plough. That is the picture.

What is the alternative? Is it to import the feeding stuffs?

I will answer the Senator. The Senator asks whether the alternative is to import the feeding stuffs. My point is that in the years when we had the greatest area of land under the plough we had the lowest population in every type of live stock, so that it does appear, having regard to the plan that has been operated, that we have not been able to increase the number of our live stock. To the extent that our live-stock numbers fell our exports will fall, and the disequilibrium in the balance of payments will go against us. That is a vital factor to keep in mind.

The Minister for Finance has been in a Government for 17 out of 20 years and that is the position that confronts him and the country to-day. I do not think that that is anything to boast about. If the responsibility is to be passed round, will he take his fair share of that responsibility?

I know, of course, that, if a Minister for Finance is not particularly interested in agriculture and has not had adequate opportunity of making contact with it and keeping in touch with it, the only hope one has of a Cabinet is the presence therein of a Minister for Agriculture who understands his responsibilities and is both sufficiently competent and strong to put his case across. Here we have not got that and, obviously, agriculture must be given a back seat.

What the position is going to be in regard to agriculture in this country will, in my opinion, be determined by the policy of the Minister for Finance for the time being towards this industry Let us make certain of this fact. Senator O'Callaghan spoke of what he sees as he travels from Cork to Dublin. What he has said is true. He spoke of the waste which one sees in a journey from Cork to Dublin. Why should that be so? Senator O'Callaghan spoke about subsidising artificial manures. I think that is an excellent policy. For 17 out of 20 years the chance was there to do that and it was not done. Lime was required. Why were adequate supplies of lime not made available during all that period? It is true that much of the country bears the appearance of a cheerless waste. In my opinion it is not a situation which we as citizens of the world, can afford to permit to continue. The truth is that food supplies in the world are far short of human needs.

I have here a report from the United Nations' department of economic affairs. They say that the world is growing more food—9 per cent. more in 1950-51 than pre-war—but that the supply has to be shared among 13 per cent. more people. "The world," according to this report issued by the United Nations' department of economic affairs, "excluding the U.S.S.R., grew 3 per cent. more food crops in 1950-51 than in 1949-50. Meat production was up by 5 per cent. but the amount available per head of the population did not reach pre-war levels. Of all food crops the amount per head was 4 per cent. less than the period 1934-38. Of meat, there was 7 per cent. per head less. At the end of 1951, the outlook for the world's 1951-52 harvests indicates little improvement. An increase of 2 per cent. in bread grains and 3 per cent. in coarse grains is forecast but rye output is expected to fall off. In Europe, food supplies per head last year were almost 10 per cent. below the pre-war average." That is the position in regard to food production in the world.

We have in this country opportunities unequalled in any country in Europe. Anybody who has had an opportunity of seeing what other European countries have achieved will realise that they have developed their agriculture to a reasonably high state of perfection. Their potential productivity is practically reached in a number of European countries. We have not yet the remotest idea of what our potential production really is. That is one of our tragedies. Very little attempt is being made to educate our people. We have been dreadfully unfortunate. Every time we attempted to introduce this matter in a responsible way to the Minister for Finance in this House we have found that his approach is the approach of the obscurantist. He does not seem to make any attempt to look outside and see what others are doing. I want to indicate to this House, through the mouth of the Minister himself, the attitude which the Minister adopted in the past when I attempted to urge on him and the House the necessity for facing up to his responsibilities and giving the aid to agriculture which agriculture requires. I suggested that agricultural credits are essential to our rural development. As far back as the 15th March, 1939, that subject was debated in this House on the Central Fund Bill. At column 1223 of the Official Report of the Seanad of the 15th March, 1939, Volume 22, we read the following reply which Deputy MacEntee, the then Minister for Finance made to myself and to others. He said:—

"It is all very well to say: ‘Give the farmer money and let him produce the things that he can produce.' After all, he does not produce these goods for himself alone. He produces them for sale and if there is no ready market for these goods, then his increased production represents a dead loss to himself and, accordingly, in those circumstances, production may be foolish and may be harmful."

This is the man, remember, who deplored the fact that the static condition in agriculture has played a very great part in creating the disequilibrium in the balance of payments. He continued:—

"So far as I can see, the situation at the moment can only be resolved in one of three ways. There is either going to be financial collapse of one or other of those powers which are, to some extent, perhaps, responsible for the situation or there is going to to a European settlement or, war."

Senators will note what sort of a prophet he was:—

"If there is going to be a financial collapse or a settlement which would lead to the cessation of expenditure on armaments then it undoubtedly means that there is going to be a restriction on the British market and a contraction in purchasing power and, accordingly, on one or other of these hypotheses, the man who goes too rashly into production would be bound to lose."

Let me repeat that those sentiments were expressed in 1939 by the present Minister for Finance. He continued:—

"The only event in which he might win would be in the event of a European war, and what the Senator is asking the Government to do is to induce the Irish farmer to gamble on the prospect that there will be a European war. I do not think any Government is justified in taking that sort of speculative attitude towards a serious international situation."

That speech was made on the 15th March, 1939. Every Senator will easily recall how soon after that date the second world war broke out. The Minister for Finance was, on that date, speaking the mind of the Government.

The Senator is taking that completely out of its context.

I have read the whole paragraph. I can read much more of it if the Minister wishes.

The Minister always says that. Do not mind him.

It is important to get the facts from the Minister for Finance, if one can get them. On a later stage of that Bill, in reply to Senator Cummins, the Minister, Deputy MacEntee, made this statement, and I would stress that it was made by the gentleman who to-day deplores the lack of progress in agricultural production in this country. I quote from column 1321 of the Official Report of the Seanad Debates of the 22nd March, 1939. Deputy MacEntee, the then Minister for Finance, said:—

"We heard from Senator Cummins the hypothetical case of the dairy farmer in Limerick who had land sufficient to carry 20 cows. At the present moment he has only 14 cows, and the argument which the Senator advanced was that, supposing that man got an advance guaranteed by some agency— I assume an advance through a bank or through the Agricultural Credit Corporation—and was able to put an additional six cows on his land, would he not be better off? The Senator asked would he not be better off if he had 20 cows instead of 14. He might be, personally and individually, but what is the position so far as the dairying industry at the moment is concerned? We have been told that at the present moment the price which the farmer gets for the milk of those 14 cows scarcely pays him. In fact we are told that it is not a remunerative price at all."

This sounds terribly like what is being said to day.

"He is going to get an additional six milkers. That is, instead of the 14 unremunerative cows which he has at the moment, he is going to have an unremunerative herd of 20. It might be, of course, that, with the guaranteed price for butter, that farmer himself would be comparatively well-off. He is probably fairly well-off as it is with his 14 cattle, but what justification is there for the State stepping in and giving him, out of somebody else's pocket—out of the pocket of one of these 105,000 people who, we are told, are unemployed, or out of the pockets of other persons living in towns and cities— to enable him to get an additional herd of six cattle and to make the State give to him for the produce of these six head of cattle a remunerative price for him and an unremunerative price for the State?"

That is the sort of mind you had in the Department of Finance in 1939 and that was the sort of attitude which that Minister adopted to agriculture in those days. That is the same Minister who comes along now in 1952 and deplores the fact that agricultural production, which is the foundation of a great part of our export trade, is, in fact, a failure. We can make no progress while there is a mind like that directing the financial affairs of the State, none whatever.

Senator O'Brien indicated his view that capital investment, especially where it would provide us with goods for export, was absolutely essential. In 1928, I think, the Agricultural Credit Corporation was established in this country. About two years afterwards, I think, the Agricultural Mortgage Corporation was established in England. According to Dr. O'Donovan, who, until recently, was an official of the Minister's own Department, and who has since gone as a lecturer to University College, at the end of 1951 advances by the corporation were in the region of £1,500,000. I refer to his article in the Irish Times of Saturday, June 7. He said that the total amount of loans by the Agricultural Credit Corporation was £4,500,000.

In this country, according to our figures, we have approximately 11,000,000 acres of arable land, actually —and this is of interest too—in 1921 we had 11,880,000 arable acres and in 1950 we had 11,508,000. I do not know where the other 300,000 went, but apparently they are not classified as arable any longer. Perhaps they are some of the waste which Senator O'Callaghan sees on his way to Dublin. We have, therefore, some 11,500,000 arable acres; England and Wales have approximately double that—24,000,000 arable acres. They started their Agricultural Mortgage Corporation two years after we did, and in a two-years' shorter period English farmers were loaned £20,743,000. I assert that there is a much greater necessity for capital investment in Irish land if it is to produce than there there is in Britain.

While the Minister for Finance deplores the fact that agriculture is not rising to the needs of the nation or to its opportunities, the Minister for Agriculture in Britain a short time ago addressing a farmers' club in London and speaking to one of the largest audiences ever to attend, said that the present production was about 44 per cent. above pre-war. Although there had been virtually a standstill over the last couple of years he felt that by 1956 the present downward trend could be reversed and the net output raised to about 60 per cent. above pre-war. We are deploring the disequilibrium in the balance of payments and we have it from the mouth of the Minister himself that agriculture is making no progress. Is nobody in the Cabinet thinking of the means to be adopted to enable agriculture to progress? In 17 out of 20 years what contribution has the Government made to agriculture in this country? If it is static is there not a far greater responsibility at the door of the Cabinet than of the farmers in the country? Agriculture cannot develop in this State unless it gets the machinery required to do the job. What evidence do we see in this Finance Bill that there is appreciation of that fact on the part of the Minister or the Government? There are many things which we require such as agricultural education and research but nothing like that has been attempted. We have this point of view from Dr. O'Donovan and I think that his judgment on the situation could not be challenged by the Minister himself; under the heading: "Inadequate Credit" he says:—

"It is necessary, before making positive proposals, to adduce reasonable proof that the volume of credit which has been made available for agricultural purposes is inadequate.

Around 1939, the advances to farmers by the commercial banks were in the region of £12,000,000, and by the Agricultural Credit Corporation, about £1,000,000, making a total of £13,000,000 odd. Although no figures have been published in recent years relating to the banks, it is fairly certain that, when the second world war ended seven years ago, the total was no greater than in 1939.

At the end of 1951, advances by the corporation were in the region of £1,500,000, and it is probable that advances by the banks did not exceed £15,000,000. Agricultural prices generally are about three times the pre-war level, so that the volume of credit from financial sources has, in real terms, declined to well below one-half the level of ten years ago. Unless the volume of credit provided by the financial system for commerce and industry is to be regarded as excessive, the volume of credit for agriculture is altogether inadequate."

While that is the position regarding the machinery which the farmers of the country require to increase production, what is the position regarding industry? The Minister for Industry and Commerce and his colleagues very frequently cite the advances which have been made in industry but industry has got a credit instrument which I think was created some years after the Agricultural Credit Corporation. I think that the most recent report of the Industrial Credit Corporation revealed that industry in this country had been loaned £14,000,000 in a shorter period than that in which £4,500,000 had been loaned to agriculture. Confronted with a situation like that in a country which is completely underdeveloped, with soil so impoverished, with all the machinery necessary for increased production rising in price year after year, with the cost of fertilisers of all kinds also increasing year after year, how are we to put our agricultural industry in a position in which its output can compare with the output of the Six Counties, Britain, Holland or Denmark, unless it gets the instruments necessary to achieve that end? If the Minister deplores the backwardness of our agriculture to-day make no mistake but that it will remain backward until we face our responsibility and provide our farmers with the machinery necessary for production.

I do not propose to devote very much more time to a discussion of this aspect of Government policy, as evidenced by the Minister's speech on the Budget in the other House, but the fact remains that, while there was much criticism by him and his colleagues of the efforts of his predecessors in office for three and a half years, it was the work which these people did in office in that short period that has stimulated the interest of the farmers in their industry to an extent that none of us has experienced since the State was established. There is an alertness on the part of the farmers to-day. They have developed an attitude of mind in which they are beginning to realise that their industry requires stepping up, that it has to be given assistance, and if opportunities are provided for it similar to what farmers in other countries enjoy, the farmers of this country will be equal to their task.

The Minister may not be prepared to say so, but he must admit that, were it not for the 1948 Agreement entered into by his predecessors in office which raised the price of Irish livestock, cattle, sheep and pigs and brought them into closer relationship with prices in the Six Counties and in Britain, we would not earn anything like the £100,000,000 which apparently we are likely to earn in the coming year. If our prices were on the basis of those which apparently were acceptable to him and his colleagues while in office, the living standards of the people would be much lower than they are and the exporting capacity much lower than it is. I notice that on a number of occasions the Minister complained about certain defects in that agreement, but I have not noticed so far that any action has been taken by him and his colleagues to obliterate these defects. Perhaps he will tell us what he is doing about it.

There has been a great deal of talk about the repatriation of our sterling assets. Surely the Minister, when he takes the viewpoint that these must be held against future purchases and imports which we may not be able to pay for with our exports, should ponder on the question whether or not purchases abroad which could be invested in our soil would not be a better investment than leaving these assets in Britain in present circumstances. It is a very remarkable thing that we have a Minister for Finance in this country to-day who is happier to have our money under the control of the people who manage and handle investments in Britain than to have it here at home. If anybody here were to say of this country, of its present position and future outlook, what Mr. Churchill said of his country some nights ago, there would be many people scampering out of the country with their investments. He said:—

"Fifty million inhabitants of a small island, growing food for only 30,000,000 and dependent for the rest upon the exercise of their skill and genius, present a problem that has not been seen, or at least recorded before. In all history, there has never been a community so large, so complex, so sure of its way of life, poised at such a dizzy eminence and on so precarious a foundation."

Further on he said:—

"Our head is above water, but it is not enough to float. We have to swim and we have to swim successfully and swim against the stream."

That is where our money is.

An Leas-Chathaoirleach

From what is the Senator quoting?

It is not from the Irish Press. It is from some English paper —the Daily Mail, I think.

The Standard.

No, an English paper. Even if it were from The Standard, it would be more likely to be true than if it were a quotation from some of the other papers one could quote from. I do not think the Minister will deny that these words were uttered by Mr. Churchill. They are indicative of what Mr. Churchill thinks of the present economic position of Britain and the insecurity of her future. Whether it was the interview the Minister and the Minister for Industry and Commerce had with the British Minister of Finance before our Minister framed his Budget, I do not know, but I think it must have had something to do with the kind of document we are presented with here to-day. The person who makes a declaration contrary to the view that our savings are not better invested and more secure in our country is, in my judgment, enunciating a counsel of despair.

The Minister is very critical with regard to imports, some of which were purchased with Marshall Aid funds, and I would suggest here to Senator Kissane that the Senator should ask his own Minister how it was that in two and a half or nearly three years the inter-Party Government spent £18,000,000 of Marshall Aid funds, while in a year the present Minister spent £24,000,000 or £26,000,000.

The Senator does not understand what he is talking about.

No, he does not. He is a very stupid person. That must be the only excuse one can make for this Budget. In the present year we paid New Zealand £2,067,774 for butter. I wonder why did we do that? Perhaps somebody on the opposite side would give us the reason. That figure is taken from a statement with regard to our balance of trade for the first four months of the present year. Would the Minister cast his mind back to the argument he made in 1939 when we were urging that the farms of the country should be fully stocked up with dairy cows? I do not understand why we should have brought in such a quantity of New Zealand butter, but it was very interesting to note that there was nothing like the criticism of this New Zealand butter this year that there was of Danish butter last year. The propagandists were not anything like as active.

The butter was better.

The only difference was that it was brought in by Fianna Fáil. What I want to point out is that they brought in about £100,000,000 worth more than was necessary, and I want an answer from the Minister as to why his Government did that.

He did not have to send any of it back, like the Danish butter.

You may be trying to send a great deal of Irish butter out of the country, unless you have provision made for the future about which you have not told the public, and the sooner you tell them the better.

Irish butter was sent out and Danish butter bought instead of it.

Is that the Minister eaking?

Senator Quirke may know a great deal more about this transaction than I do.

Does the Senator not know the real reason? It is that we are going to have much more butter this year. Deputy Dillon's dead hand has been taken out of the dairying industry.

One of the misfortunes of this country is that we have such a man holding the responsible post of Minister for Finance. He tells people who understand all about the dairying industry and about agriculture that simply because there is a different Minister for Agriculture, the grass will grow better, the cows will give more milk and the sun will shine two months earlier.

That is what the Coalition Government were saying in 1948 after the winter of 1947.

You will want some wilier words than these to get this Budget across in North Mayo, Limerick and Waterford.


An Leas-Chathaoirleach

I must ask Senators to allow Senator Baxter to proceed with his speech without interruption.

May I ask the Senator a question?

An Leas-Chathaoirleach

You may, if the Senator will give way.

I will give way.

An Leas-Chathaoirleach

The Senator had better hold his question until Senator Baxter has finished his speech.

I challenge the Minister for Agriculture and his colleagues for making war on the dairying industry of this country. I said that in this House before during the discussion on the Milk Bill which was introduced here by the Minister for Agriculture. I pointed then to the fact, to which I have pointed to-day, that butter is being bought outside this country and that, according to the Minister for Finance, we are not able to provide for our export markets. The amount of butter which was imported into this country was quite unnecessary. There is sufficient butter in the City of Dublin to last until August, according to a reply given in the Dáil the other day. Side by side with that position we have the situation where our creameries cannot dispose of the butter which they manufactured in February, March and April. Are the Cabinet and is the Minister for Finance and his colleagues trying to create a crisis in the dairying industry? His speeches on the Central Bank Report created a crisis in the commercial life of this country. Credit was restricted. While the inter-Party Government held office credit was given by the banks for the purchase of goods outside the country to be held against a possible emergency.

I would remind Senators that the Fianna Fáil Party were as loud in their urgings that stockpiling should be done as the then Government were desirous of ensuring it. The people who now have these stocks in hand have had their credit restricted by the banks, with consequent suffering for the commercial community. Now our dairy farmers are to be up against the same problem. Simply because imported butter is in the country to-day many of our creameries are unable to push off their production for the months of February, March and April of this year. Creameries have gone to the banks to borrow on the strength of the stocks which they have available for cold storage, and the banks have refused to make them any advances. The position will arise where there will be more butter on the market than the market can consume. Then, when a fall comes in the price of butter, when a crisis is created in the dairying industry due to the fact that the people who are charged with the responsibility fail to show the way to the dairying industry, it will be easy to talk to the dairy farmers.

A very serious problem has arisen for a great many of the creameries up and down the country, who have not been able to secure the necessary credit over the years, and who, to-day, have been refused such credit against the butter which is available for cold storage. If that is the position with this category of creamery, what is in store for the poorer creameries with bank overdrafts? If creameries cannot borrow against the butter available for cold storage, how can they pay the milk suppliers? Will a crisis be created in the whole live-stock industry simply because the people who are charged with the responsibility to lead the way do not know where they stand?

I am quite satisfied that a Bill such as the one we are now discussing will seriously impair production, unless the country is given the opportunity to reveal its true feelings with regard to it. The Minister said in his speech that last year's Budget was unbalanced. He mentioned only one year in which the Budget was unbalanced. It is surprising that he did not make the statement that it was unbalanced every year that Deputy McGilligan was in charge. Will he tell us how it was that, before he left office, he and his colleague, the Minister for Finance, found it necessary to introduce a Supplementary Budget which was designed to levy taxation to the extent of £6,000,000, that his Government went to the country and were defeated on that issue, and that a new Government was formed who did not find it necessary to levy that £6,000,000 of taxation? The fact is that while the Coalition Government held office very considerable increases were given under all heads of social security. That was achieved——

By borrowed money.

——by good management, foresight and ability.

By borrowed money.

What borrowed money? It was achieved by the money borrowed from the Irish people.

From the American people.

The money was spent on housing.

It was spent on mouthorgans and on pop-corn machines.

The Minister for Finance thinks he should be taken seriously——

——but he ought not to be. We know that quite well, but, nevertheless, there may be some who will still take him seriously.

A lot of people take him seriously.

A lot of people?

An Leas-Chathaoirleach

The Senator should keep to the Finance Bill.

The Minister gave us a list of commodities which he said were purchased with Marshall Aid funds. He informed the House that an amount of that money was spent on particular commodities which were of no consequence whatever. The money which was borrowed was spent on housing and in a variety of ways to which none of the members of the Fianna Fáil Party objected. We are not objecting to the capital investment policy which is being coninued to-day. We are of the opinion that the housing programme, the drainage programme, the land project and the other projects should be continued. I think that the job done under the land project, and which will continue to be done, despite the left-handed compliments being paid to it by the Government and their supporters, is a magnificent one. If Senator Quirke, or anybody else, doubts the accuracy of that statement, I suggest that he should visit my county and ask his own supporters what they think of the scheme. A number of the people in my county have embraced the scheme and are very satisfied with its results.

I will be in Waterford this week-end.

As Senator Hayes has said, we were presented with a crisis at one stage. Some time afterwards we were told that it was only a problem. Now we do not know what to call the situation. As far as the Minister is concerned, he is imposing a burden upon the people which they do not want to accept. He may pretend to be a courageous and outspoken Minister for Finance ready to face unpopularity because he wants to do the country's duty. I do not think he is doing the country's duty nor do I think he is doing his own duty well. I think he had an opportunity, if there was a real crisis, of facing it in an entirely different way. He started with the Central Bank Report and he has gone along that dreary road ever since. I think this is a Budget which he will have cause to remember. I am convinced it is the last Budget he will ever get the chance to introduce.

Senator Baxter has demonstrated the truth of the old saying that figures can prove anything. He mentioned the number of cattle there was in the country in 1921 and said that it exceeded the number in 1947, the last year of the Fianna Fáil Government. He forgot to mention that the year 1921 was the year of the great slump in the cattle trade. It was a time when cattle were practically unsaleable. It was very handy for him to count the number of cattle for that particular year; 1947, was the year following the most disastrous winter of 1946. It, also, was a very handy year to take.

Senator Baxter is mistaken in regard to the creameries. That is a matter about which I know something. The creameries are in no difficulty in regard to the disposal of butter. Some years ago, the Government made arrangements by which the creameries would give over to the market board any surplus of butter they wished to dispose of at a fixed price. That arrangement continues to-day. The market committee does the cold storage, etc. I do not know what will happen when the rationing ceases.

The position will be the same.

The reason why surplus butter was imported from New Zealand was because there was a great shortage of butter at the time and nobody could foresee whether there would be any increase in the production of butter. In addition, the previous year was very disappointing. That was the reason why such a large quantity of butter had to be brought in. In fact, soon afterwards it would have been impossible to obtain butter from outside. In addition, I think the miracle Senator Baxter spoke of has actually happened. Since the change of Ministers the cows have actually milked more than they ever milked before.

This is a Bill to raise money to provide for the carrying-out of the various services. We all ask for this service and that service. We want the Government to do this and do that. We want the Government to provide this and provide that but when the bill has to be met we all complain. That is a common failing of human nature. The Budget was absolutely necessary. I read in the Irish Times about six months ago that the Government would have had no alternative in six months time but to bring in a Budget that would practically cause their overthrow. It is very clear and it should be very clear that no Government would bring in such a Budget if it did not feel it had no other alternative. It was the Government's duty to do so and I think it is very unfair that advantage should be taken of the Government's position in that respect. There has been too much propaganda against the Government.

Now, very clearly it is the time for the Government to set its house in order. There is comparative prosperity in the country owing to the rearmament programme in other countries. Prices are higher and employment is good. Now is the time to raise the money that is necessary instead of borrowing.

I think it is very unfair that such propaganda should be used against the Government. It is not in the spirit of democracy. It strikes at the roots of democracy. Such propaganda was also carried on against the Government in the case of the Constitution. We now realise how unfair, unwise and undemocratic that was. The same may be said to-day in reference to the Budget. During the term of office of the previous Government, I always made allowances for Ministers' difficulties. I gave them credit for good intentions. I think that should be the spirit in which every representative of the public should deal with this and similar emergencies.

There can be no doubt but that the Budget is absolutely necessary. There is one good thing about the Budget, it will bring home to the nation the dangers to which we are exposed. The size of budgets is continually growing from year to year. That state of affairs will continue no matter what Government is in power. Budgets will continue to expand with the expansion of different services, especially social services. The question is, where is it going to stop? What will be the position in regard to the size of budgets in ten or 20 years hence?

This is not a question for any particular Government. It should be the concern of all Parties. Is there any means of reducing the cost of Government administration? The Civil Service has increased a great deal in this country. It was taken over from the British and modelled more or less on the British Civil Service system. Since the Civil Service was taken over from the British, the number of civil servants must have grown immensely, especially during the war when so many extra civil servants were employed. To-day, with the general perplexity of modern life and with the various different social services we have to embark upon, the Civil Service must be growing to immense proportions. In the old days, perhaps, the Civil Service was not so great a burden because the salaries paid were low. To-day, it is realised that those who work for the Government should get a good salary or wage. Of course, a Government should be a good employer and should set a good example, but the increase in the Civil Service means that the cost which falls on the taxpayers will be very high.

It would be worth while for the Government, with the co-operation of all Parties, to see if there would be any possibility of reducing the cost of Government administration. It may be that some Departments are quite unnecessary, that some are overstaffed and that some could be done without. I do not say we should do anything of a revolutionary nature. Nobody would suggest that civil servants should be dismissed but a limit should be set and time allowed to bring about a reduction.

The main principle should be to try to get people to do for themselves what they expect the Government to do for them. Social services constitute one of the greatest burdens on the general taxpayer. At the same time there is no doubt that at the present time social services are very much needed. I think eventually it will be found necessary to restrict those services to really poor people. We have not been providing enough for those who really need them. The figures in respect of national health benefits in respect of sickness and unemployment proved this up to the present. I think we should provide sufficient for the poor and working classes in order to enable them to maintain themselves and their families during a time of necessity. By extending those services to people who do not really need them we shall ultimately impose an impossible burden on the country.

To do all these things it is necessary that the co-operation of all Parties should be obtained. We should realise that it is the duty of all Parties to co-operate. The co-operation of all Parties should be sought in regard to the question of production on the land. We have it from a high quarter that the decay in rural Ireland is continuing apace. We see it all around us. We must all agree that rural Ireland has been decaying for a number of years. There is no use in blaming any Government for that. The position was the same during the terms of office of the two Governments.

There are forces at work in rural Ireland beyond Government control. Without doubt, one of the main causes of decay in rural Ireland has been the shortage of capital. It would, therefore, be well for the Government to realise the situation and see what could be done. Devoting a large amount of capital to agriculture would, perhaps, have the desired result. At any rate, unless this tendency is checked it will eventually destroy the country.

I think few people will not agree with the sentiments expressed by Senator O'Dwyer that problems, such as the financial and economic problems that face any country to-day, should be approached, as far as possible, in a common party spirit. I am only sorry that Senator O'Dwyer was not able to get the Minister to appreciate his words of wisdom not merely to-day but for the past 12 months or so.

This Finance Bill and the Budget proposals which it embodies are merely the culmination of the campaign which has been carried on by the Minister for Finance and his colleagues in his Cabinet for the past 12 months—a deliberate campaign to try to discredit the Minister's predecessor in office, a campaign which, even to-day, has not ended and which the Minister endeavoured to further here in the Seanad.

The Finance Bill and the Budget proposals are going to press very heavily on all sections of the people, particularly the poorer sections to whom Senator O'Dwyer referred. In my opinion, the Budget has followed very slavishly the Budget proposals introduced in the British Parliament some time ago.

I wonder would the Minister even now disclose to the House what commitments were given by him to the British Chancellor of the Exchequer when he met him before this Budget was introduced? The points of similarity between the policy of the Fianna Fáil Government and the policy pursued by the Tory Government in England are so great that, when one takes into account the fact that the Minister for Finance was called to London to meet the British Chancellor of the Exchequer, one at least has fair grounds for suspicion.

On a point of order. If I were to make the statement which has been made by the Senator I would have been asked to withdraw from this House. I was not called to London. I would like to remind Senator O'Higgins that I am not bound to sit here and listen to that statement.

An Leas-Chathaoirleach

The Senator will withdraw the statement.

I will withdraw the statement that the Minister was called to London if that offends his sensibilities. However, I will deal with the Minister in another way. The Minister apparently invited himself to London to meet the British Chancellor of the Exchequer. Is it not right that a member of this House should ask for information as to what took place?

Again, on a point of order. The constitutional position is that I, as Minister for Finance, am responsible to Dáil Eireann, not to this House.

If the Minister wishes to adopt that attitude there is not very much we can do about it.

Mr. MacEntee rose.

I am not giving way to the Minister.

I am putting to you, Sir, that I object to Senator O'Higgins arrogating to himself rights which he does not possess under the Constitution.

The Senator is not pressing that?

No. I am not a member of this House very long but it is the first time that I saw a Minister coming here to insult the House and its members.

I am not insulting the House.

It is the first time I saw a Senator who took upon himself to insult a Minister.

No. He went to London to meet the Chancellor of the Exchequer and he sent the British Government a message assuring them of the support of the Fianna Fáil Government here in their financial policy. Will that be denied? At last we have the Minister silent.

The Minister will reply, I take it. The Senator can proceed with his speech.

The Budget proposals were introduced in England somewhat earlier than usual and the Irish Minister for Finance followed suit. That is merely one of the points of similarity. The British Chancellor of the Exchequer decided to reduce the travel allowance and the Irish Minister for Finance followed suit in very quick time. That is another point of similarity.

Who devalued the £ a few years ago? What did we do? Who took instructions then?

The British Chancellor of the Exchequer, too, had the policy of cutting the food subsidies and the Irish Minister for Finance adopted a similar policy, also in very quick time. I think I am justified in saying that there are certain points of similarity——

Indeed there are not.

——between the policy of the present Government and the policy pursued by the British Chancellor of the Exchequer. Is it unfair, then, to assume that when the Minister for Finance invited himself to London and invited the Minister for Industry and Commerce to accompany him there was some agreement that the policy to be pursued by the Fianna Fáil Government in this country would be on the same lines as that pursued by the British Government? I think that that is a fair assumption, and I think that it was a very wrong thing for the Minister to do because it is quite clear that the problems facing this country and the problems facing England are entirely different, and where the Minister made his most glaring mistake was to allow himself to be persuaded that the problems here were the same and must be met in the same way.

The Budget which the Minister has introduced has already placed very heavy burdens on many sections of the community. If the Budget is allowed to operate fully, if the people do not intervene, it will place very much greater burdens on all sections of the people, particularly on the poorer sections. The Minister and his colleagues and even, I think, some Senators have attempted to defend the Budget by blaming the Minister's predecessor and in particular his predecessor in the office of the Minister for Finance. I do not believe that the country has accepted that as an explanation and I do not think that there is any reason why the country or members of the Oireachtas should accept it. In contradiction of that defence of the Budget proposals and the general financial policy of the Government I should like to refer the House to two statements issued publicly by impartial observers who are neither Fine Gael, Labour, Clann na Poblachta nor Fianna Fáil in their politics. Let the House judge from these impartial statements if there is any truth in the attacks made by members of the present Government on their predecessors in office as far as financial and economic policy generally are concerned. I refer first of all to the Irish Independent of 2nd April, 1949, in which there will be found a pamphlet issued by the E.C.A. organisation in Dublin. I am quite sure that the Minister is familiar with its terms. It begins:—

"With the aid of substantial dollar imports Ireland's internal economy has made good progress since the war; both agricultural and industrial output are rising and the monetary and financial situation is sound."

That was in 1949. In 1951 the E.C.A. administrator gave a review which was published in the Irish papers in May. He deals with the suspension of E.C.A. aid as follows:—

"The suspension of E.C.A. Aid is the best possible recognition of the strides the Irish people have taken towards economic self-sufficiency under the impetus of the Marshall Plan.

With the dollars and technical assistance provided through E.C.A. help Ireland has accomplished agricultural and other economic reforms in three years that otherwise would have taken a generation to achieve.

The economic recovery of Ireland and the sterling area as a whole has progressed to a point where Ireland no longer needs outside dollar assistance to maintain a healthy economy."

Those were the comments of impartial observers who would not allow themselves to be influenced either by the speeches of our Minister for Finance or by the Government's arrangement with the British Chancellor of the Exchequer, and according to those statements after three and a half years of inter-Party Government Ireland's economic and financial position was sound and the outlook for the future was hopeful.

Then we had the change of Government and the present Minister for Finance, with his colleague the Minister for Industry and Commerce, set out to try to discredit their predecessors. They are reckless in doing that, reckless of the damage they might cause and, in fact, did cause to the economy of the country. I have asserted in this House before, and I do so again without any hesitation, that the trade slump and depreciation were created largely artificially by the speeches of Government Ministers, of whom the present Minister for Finance was the main culprit. I think that the defence of this Budget on the grounds that it was due to mismanagement by the inter-Party Government has no justification and no merit.

This Budget follows slavishly the headline set by the British Chancellor of the Exchequer, and it also follows the report of the Central Bank, which the Tánaiste publicly disowned in the other House of the Oireachtas. The main recommendations of the Central Bank in their report are embodied in the Budget proposals which the Minister has put before the Oireachtas. The policy quite clearly is based on the assumption that the people of the country are spending too much, eating too much and drinking too much.

I invite any supporter of the present Administration to ask that question in any constituency in the country, and I would ask him to tell us how many people he would find to agree with that statement. Quite clearly that is the whole policy behind this Budget and that was the view of the Central Bank. I wonder will the fourth principal recommendation in the Central Bank Report be implemented, in addition to the other recommendations, which were that food subsidies should be cut, that the land rehabilitation project should be cut, and that there should be a restriction of bank credit? The fourth recommendation was that there was to be definite restraint in wages policy.

There is a certain amount of speculation, particularly in trade union and employers' circles, as to what the effect of this Budget will be on wages. Naturally enough, those who are concerned for the welfare of the workers, trade union leaders and others, expect that, when the rise in the cost of living brought about by this Budget and which is going to be aggravated by it, comes into full force and effect, the Government will assist in having some adjustment in wages. I doubt if that is so. The Government so far, despite the fact that the Central Bank Report was publicly disowned by the Tánaiste, have followed all the main recommendations in that report. There is still another recommendation—that there is to be restraint in wage policy—and if I were to make any prophecy, it would be that the Minister intends to follow that recommendation as well. However, time alone will tell.

Not alone is this Budget, as it has been described, a brutal and cruel Budget, it is also in my opinion, a complete betrayal by the present Government of their election pledges, and in particular of those made by the Minister for Finance. During the election campaign and before it, Ministers in the present Government put themselves on record, not only as the originators of the system of food subsidies but as the people who could be trusted to maintain it. Speaking in the Dáil on 23rd November, 1950, at column 1309, the Tánaiste, who was then deputy leader of the Opposition, dealt with what Fianna Fáil Ministers when, in opposition, normally called the Government black market, the dual price system. He appealed to the then Minister to abolish that system as quickly as possible and said that he recognised that, if the system were abolished, there would be some increase in the amount which would have to be provided for food subsidies.

The case he was making at that time, just six months before he returned as a member of the Government, was that they wanted to see an end of the dual-price system, but, when it came to an end, it was going to end on the basis that food subsidies continued and that there would have to be increased provision in respect of the amounts payable in food subsidies. The particular quotation is:—

"I think this system of differential prices is undesirable. Not every Deputy shares that view, I know, but I would strongly urge Deputies that they should press upon the Government to get away from it as quickly as possible. If it does mean more money for subsidies to make tea freely available, to increase the supply of bread at the subsidised price, I see no objection to voting it here."

In that statement, the Tánaiste was quite clear as to what his intentions and the intentions of the Party he represented were in relation to this question of subsidies.

The Minister for External Affairs also went on record in Dáil Eireann very much to the same effect. Speaking on 7th June, 1950, at column 1347, he appealed for the abolition of rationing and said:—

"Ration books are a nuisance and should be done away with, if it all possible. If we did away with them, and if we could save on the administration costs, we would save some little thing towards the cost of any extra subsidies."

There again we had a speech by a person who is now a Minister on this question of subsidies, giving the intentions of the Party he represented, to the effect that subsidies would be maintained, that rationing would go and that there would be increased provision of money towards the maintenance of subsidies. That was before the general election. After the general election, members of the present Government solemnly put a declaration in every newspaper in the country of the policy they would implement if they got office by the votes of some Independent Deputies who at the time were in doubt as to which way they would vote——

Not a bit of it.

——one of the Deputies in question having gone on record in his election address as promising his constituents that, if elected by them, he would press for increased subsidies and foodstuffs. The Minister for Finance and his colleagues knew of that election address and of that statement. They knew that that vote was in doubt and consequently this famous 17-point programme was published and published obviously with the election addresses of the Independent Deputies to which I have referred in front of them. Point 15 in that programme—I am quoting from the Irish Times of 5th June, 1951—was to maintain subsidies to control the prices of essential foodstuffs. There we have a solemn pledge given after the election was over and published in all the newspapers and stated in the recital at the beginning to be based on election pledges. It is no wonder that the Deputy who pledged himself to seek an increase in food subsidies should feel that his viewpoint had been adequately covered and guaranteed by the Fianna Fáil Party when they published that statement. However, less than a year later, we have a Budget and a Finance Bill based on the proposal to slash food subsidies. That is why I say this Finance Bill and Budget are dishonest and a betrayal by the Government of their pledges to those who elected them, and in particular of those individuals in the Dáil who elected them in June of last year.

This Bill deals also with increases in the taxes on drink and tobacco. The Minister was at pains during the general election—he was then merely Deputy MacEntee—to assure his constituents that anyone who suggested that a Fianna Fáil Government would increase the price of these commodities was a liar.

I propose to quote now from the Irish Times of Wednesday, 16th May, 1951, which has reported a speech delivered at the Town Hall, Rathmines, on the 15th May, 1951, by the present Minister for Finance, then Deputy MacEntee. The following statement is attributed to him:—

"He referred to rumours being spread by a number of persons in the licensed trade who were saying that if Fianna Fáil was returned to Government, taxes imposed on drink in the Supplementary Budget of 1947 would be reimposed. There was no truth whatever in that."

Such was the statement made by the present Minister for Finance on the 15th May, 1951. In the same speech the Minister pleaded for clean politics in Ireland. He said:—

"The people were being asked to decide whether politics in Ireland were to be a dirty game played by confidence tricksters, who were prepared to promise anything to dupe the people into voting for them."

He assured his listeners on that occasion that if Fianna Fáil were returned to power the taxes on tobacco and drink imposed by the Supplementary Budget of 1947 would not be reimposed, that anybody who was spreading these rumours was completely wrong and that there was no truth whatever in such rumours. In that speech also the Minister boasted that it was the Fianna Fáil Government who had brought down the price of the 2 lb. loaf. He said that the prices of some commodities had risen, and he gave as examples, bacon, meat, milk, oatmeal and petrol. The Minister assured his listeners that if he and his colleagues formed a Government there would be no increase in the price of these commodities.

We must bear in mind the fact that he was a man who for a number of years held a responsible position in the Government of the country. When the election was over and when the Fianna Fáil Party had succeeded in getting a certain number of seats in the Dáil, they published a solemn declaration of policy in which they pledged themselves, if they were allowed to form a Government, to maintain food subsidies. The last time we had an opportunity of discussing the financial policy of the Government in this House I warned the Minister that he would have some difficulty with some of the Independent Deputies supporting him in the Dáil if he interfered with the food subsidies.

Will the Senator oblige me by answering one question?

An Leas-Chathaoirleach

The Senator must be allowed to make his speech.

The Senator is allowing me to put the question.

I will hear the question.

Would the Senator agree that, during the régime of the Coalition Government, the Fine Gael Party was steadfastly opposed to the retention of the food subsidies?

I have heard that statement, and I would like to make this point quite clear: during the period that the Fine Gael Party helped to form the Government, I was a member of the Fine Gael Party in the Dáil, I was a member of the Fine Gael Standing Committee and I was also a member of the Fine Gael National Executive. I can say, without fear of contradiction, that at no time in any of those bodies was the question of abolishing or interfering with food subsidies even mentioned. I want to nail that rumour. It can only have come from two sources—either from a private conversation which somebody heard, or else from a Cabinet meeting. Will Senator Hartnett be prepared to name the person who was so dishonourable as to talk about the proceedings of a Cabinet meeting, or will he name the person who was so dishonourable as to talk in public of private conversations? Such a rumour can only have originated in either of those two ways.

I could give the Senator some particulars.

An Leas-Chathaoirleach

I think the Senator should keep to the Finance Bill.

Does the Senator wish me to answer his queries now?

No. I presume the Senator will make his speech in his own good time.

Indeed, I will.

Was the Senator present at the Fine Gael Árd-Fheis in 1950? Did he hear the President of the Party saying that food subsidies must be cut?

No. The Minister for Finance is fond of accusing people of taking things out of their context. I would be very surprised to know that Senator Yeats is going to fall into that error. I make no apology for saying that it is Fine Gael's policy that food subsidies should go if they are no longer required. They are required now. There is no great difference between the position now and the position 12 months ago. Yet startling reasons are now given for the abolition of the food subsidies.

I will now quote an extract from a speech given by the Minister for Social Welfare in relation to food subsidies as reported in the Irish Press of 12th May, 1952. I will quote from this less verbose speech rather than from the relevant speech delivered by the Minister for Finance. The Minister for Social Welfare's explanation for reducing food subsidies is this:—

"The subsidies on bread, tea and sugar were introduced in 1947 when the prices of these commodities were high and when it was thought that a year or two the prices would be reduced.

Instead the prices of wheat, tea, and sugar were increased, and the prices of these foods were not going to go back to their 1947 level, so the Government was obliged to do away with subsidies."

In other words, food subsidies were introduced because the prices were high. Now, because prices are going higher, they are being taken off. If that is the reason why food subsidies are going, that reason existed in June, 1951. Why did the Fianna Fáil Party then publish their solemn declaration that they were going to maintain food subsidies? However, I do not want to delay the House on that question. I want to turn now to this disedifying Section 14 of the Bill where the Minister introduced the dishonourable bargain made by the Government with the dance-hall proprietors.

The five Dublin publicans. The name of O'Higgins is associated with that infamous meeting.

The Minister will not get away with that. The Minister has frequently tried to suggest that there is some similarity between the motives adopted by the present Government in relation to the dance tax and the policy announced by every Party in the inter-Party Government to do away with the taxes on beer and tobacco.

An Leas-Chathaoirleach

The Senator may resume his speech to-morrow.

Might I suggest that we should have some idea now as to what the programme will be to-morrow and next week? It has been more or less agreed that we should finish the discussion on the Second Stage of this Bill to-morrow and that the Minister should be allowed to reply not later than 9.30. p.m. Of course, if we finish this Bill sooner we will take the Committee Stage of the Tourist Bill. If not, we will take the remaining stages of the Tourist Bill on Thursday.

An Leas-Chathaoirleach

You mean Thursday week?

I suggest that we should endeavour to finish the Second Stage of this Bill early enough to-morrow to allow the Minister to get in at 9 p.m. rather than 9.30 p.m.

An Leas-Chathaoirleach

It is agreed then that we should meet at 3 o'clock to-morrow and then adjourn until Thursday week.

The Seanad adjourned at 10 p.m. until 3 p.m. on Thursday, 19th June, 1952.