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Seanad Éireann debate -
Wednesday, 27 Jun 1956

Vol. 46 No. 3

Finance Bill, 1956 (Certified Money Bill) — Second Stage.

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

Members of the House are aware that the Finance Bill offers the Seanad its main opportunity for discussing the economic and financial position of the country. The Bill is the legislative form in which the Budget proposals are framed. I do not think it is necessary for me, at this stage, to enter into any detailed repetition of the Budget's provisions, because I am sure all the members of the House have read the proceedings in the other House. Suffice it, therefore, for me merely to say at this stage that the proposals were framed on the basis that in our present circumstances it was desirable to look for the additional moneys that had to be found to taxes on expenditure rather than to taxes on income, and, in those taxes on expenditure, to have regard particularly to imports.

Senators will also recollect that, in addition to framing my proposals on that basis, I endeavoured to give certain assistance to production and to savings, both of which are at present of vital importance. The essentiality of increasing our production and of increasing our savings in order to facilitate that production need hardly be stressed.

As I said already, the Bill is the legislative end of the budgetary proposals and, in the circumstances, with your permission, Sir, I would propose not to make any further general remarks on those proposals other than what has already been said in other places, but merely to confine myself to pointing out the effect of the various sections. I shall be happy, of course, so far as I can, to deal at the conclusion of this debate with any points that may be raised by any member.

Section 1 of the Bill is the normal section which imposes income-tax and surtax for the current year. It is necessary under our law to re-enact this section every year.

In Section 2, I have given effect to a proposal to enable those people who unfortunately, because of their health, have to pay additional weighted life insurance premiums to obtain relief under the income-tax code in respect of the additional amount.

Section 3 is the section which grants the exemption from income-tax and surtax for the first £25 of savings interest in any one year. It excludes from assessment to tax the first £25 received by any person, or, in the case of married persons where naturally the husband and wife are jointly considered for the purposes of our income-tax code, the first £25 interest in the aggregate incomes arising from moneys in the Post Office Savings Bank, the Trustee Savings Banks or the commercial banks. Of course, savings certificates are already free from such tax.

Section 4 increases the tax-free allowance for a married couple from £300 to £310.

Section 5 makes provision to enable the allowance for an adopted child to be claimed in the year of birth where the child is adopted during that year.

Section 6 increases from £50 to £60 the deduction for a dependent relative.

Section 7 is an extension of the provision adopted in 1932 as an inducement towards investment in Irish industrial securities. We found that the effect of that section was somewhat narrow and, by broadening it in the way that has been done in this section of the Bill, we hope to avoid some of the subdivisions in shares that exist in respect of Irish industrial undertakings at the moment, and thereby to increase their marketability.

Part II of the Bill deals with customs and excise and covers Sections 8 to 20. These are the sections which deal mainly with the various taxes imposed by the Financial Resolutions passed on Budget day. I think the provisions are reasonably clear and it is hardly necessary, therefore, for me to make any specific reference to the individual sections. Perhaps, however, I should mention that Section 20 confirms the special import levies that were introduced in March. The members of the House are aware in respect of the Emergency Imposition of Duties Act, that such levies where imposed by Order under that Act, must be confirmed by Act of the Oireachtas at a later date.

Section 21 provides a relief from death duties to the extent of one-third in respect of certain Irish industrial shareholdings. The general principle is that shareholdings which are already entitled to the concessions under Section 7 of the Finance Act of 1932 in respect of income-tax would be entitled to the same remissions in respect of death duties. I hope that this will be of assistance to new Irish industrial undertakings, if they are considering public floatations, and that it will, at the same time, also go to increase the marketability and the creation of a fluid market in Irish industrial holdings to which I already referred on an earlier section.

The effect of Section 22 is to extend for a further period of three years the temporary exemption from corporation profits tax which certain public utility concerns have had up to this, particularly building societies and also the Agricultural Credit Corporation.

Part V of the Bill deals with initial allowances and therefore with industrial taxation. In the other House, I took the opportunity, and I wish again in this House to take the opportunity, of thanking those public-spirited people who served on the Committee on Industrial Taxation which was set up by my predecessor. The report is now available for the public to read. I hope that as many members as possible, if not all the members, of the Seanad will read and study carefully the recommendations and the implications of that report. I should, perhaps, take the same opportunity of mentioning the reference I made in the Dáil to the study we are making at the moment of this report. The recommendations of the Industrial Taxation Committee will be considered very fully by the Government. They will have our most earnest consideration.

In Part V of this Bill—notwithstanding the fact that I only received the report just before the Budget—I have already adopted one of the recommendations, that is, the provision of an initial allowance of 20 per cent. in respect of new plant and machinery obtained for the purposes of a business carrying on as a trade and being assessed as a trade. The purpose of the allowance is to grant an acceleration of what would otherwise be perhaps the wear and tear allowance and in that way to assist financially, by initial relief from tax in the early stages, firms in buying the new machinery which is essential if our Irish industries are to modernise and to increase their productivity. We hope that the provision in this Bill will act as an inducement and an incentive to them to go ahead with plans for modernisation.

I should also mention that another recommendation of the Industrial Taxation Committee was that the basic wear and tear rates allowable would be published. They are, of course, published in one of the appendices to the Taxation Committee's report. In addition to that, I want to make it clear that if further publication is desired or desirable in the future, we will be quite prepared to make such publication of any variations or amendments, or extensions of those basic rates.

I have said that the report of the committee is at present under examination. I would ask Senators to understand that its examination and the implications of that examination represent a weighty task, but, when that examination is completed, I will then turn to the question of a more general commission to examine our structure of taxation on income. That will not be a small task—quite the reverse. It will be a difficult task both from the complexity of the problem on the one hand and from the necessity, on the other hand, to see where the moneys have to come from for the purpose of any variation that may be suggested. I, therefore, want to make it quite clear that so far as I am concerned we could not possibly attempt the task of considering the problem of that general commission and the manner in which it would operate, until we have first been able to clear away the work arising from our consideration of the Industrial Taxation Committee's Report.

Part VI of the Bill deals with stamp duties. Sections 29 and 30 are specific stamp duty sections. The first is in respect of the duty which will be payable by the Racing Board this year. The Racing Board were free to recoup themselves from what I might term the betting public by raising both the amount retained from totalisator betting and the betting levy, if they so desired, but they have indicated that they prefer at this stage only to increase the retention percentage on totalisator betting.

Section 30 deals with the 25 per cent. rate of stamp duty for non-nationals which was imposed in the Finance Act (No. 2) of 1947. The purpose of the remission, of course, is to facilitate industrialists setting up here and thus providing both greater employment and increased production. Section 31 is ancillary to Section 30 in that regard.

Section 32 provides for the transfer of £500,000 from the Road Fund to the Capital Fund. I want to stress that that transfer is not for the purpose of balancing the current Budget, but is because the Government feel that to that extent there are more urgent capital works that should be financed rather than the type of main road improvement that otherwise would utilise this amount.

Section 33 is the normal section dealing with the method for paying off the annuity on capital services and Section 34 is a section bringing certain stocks of the E.S.B., C.I.E. and local authorities into line with State stocks in respect of their taxation provisions.

Those, very briefly, are the provisions of this Bill. I think it would be better if at this stage I did not burden the House with any more general review, but I will be glad to deal with any points that may arise during the course of the debate.

Ag éisteacht leis an Aire ag cur an ráiteas a bhí aige ós cóir an Tí, níor bhféidir liom gan dul siar ar an méid cainte a deineadh ar na daoine a bhí ann rómpu mar gheall ar a airde is a bhí cánacha na tíre seo. Bhí mise ag éisteacht leo agus iad ag tabhairt fén Rialtas eile mar gheall ar na cánacha seo agus chuathas sa deire thiar thall chomh fada is a rá go bhféadfaí laghdú mór a dhéanamh ar na cánacha sin ach cur chuige agus na daoine cearta a beith ann. Tuigimid anois nach raibh sa chaint sin a bhí ar siúl an uair sin ach ráiméis, seafóid, agus ní fheadar ar thuig na daoine a raibh an chaint ar siúl acu an cás, ar thuigeadar an scéal nó, má thuigeadar, ar chreideadar féin go bhféadfaí an oiread sin a bhí i gceist acu a chur chun críche, sé sin, cánacha na tíre a laghdú an oiread sin, 'sé sin, £10,000,000 ar dtús agus uaidh sin go dtí £20,000,000, agus mar sin de. Ach, fé mar a dúirt mé cheana anso ar ócáid eile, is mór an difríocht a bhíonn idir na ráiteasaí a dheineann daoine, agus iad ar aon taobh amháin den Tí, agus nuair a bhíonn siad ar an taobh eile. Tagann difríocht mhór annsin.

Tagann. Is fíor sin.

Agus tá sé tagaithe ar an ócáid seo. Is dócha go bhféadaimis a bheith ag cur síos ar chás na tíre maidir le eacnamaíocht fén mBillo seo, eacnamaíocht na tíre agus geilleagar na tíre agus an tslí 'na bhfuil na cánacha ag titim ar na tionscail atá anseo ach ní mian liomsa leathnú amach air sin ar an ocáid seo. Beidh caoi eile cinnte againn ar na rudaí sin. B'fhearr liom luí amach ar chúpla rud atá ag déanamh buartha do mhuintir na tíre fé láthair, siad san, na rudaí a bhí i gceist againn anso cheana—a airde is atá an costas maireachtála sa tír seo fé lathair agus an méid daoine atá ag fágáil na tíre fé láthair—an imirce—agus an lagdú atá tar éis teacht ar an líon daoine sa tír seo fé láthair. Sin iad na rudaí is mó atá ag déanamh buartha do mhuintir na tíre seo i láthair na huaire agus ní fheicim go bhfuil aon leigheas ag an Rialtas ar an scéal san ná aon beartas acu chun an scéal a leigheas. Caithimid bheith foighdeach, is dócha. Beart gan leigheas, foighid is fearr air, a deirtear, agus an cás atá anso tá sé gan leigheas do réir mar a chímíd ón míéifeacht atá ag baint leis an Rialtas fé láthair maidir leis na cúrsaí seo.

I do not want to repeat in English what I have already said in the Irish language, but there are a few points to which I have just merely referred and which I propose to dwell upon at greater length in English, so that I may be understood by everybody here.

As the Minister said, this Finance Bill is the result of the Budget proposals which came before the Dáil some time ago. It seems a long time ago now and one thing emerges from the provisions of this Finance Bill, that is that the Government of the day seem to have no remedy for the malaise that has overtaken the country within recent times. We have on other occasions referred to the high prices of commodities that people have to purchase in the shops, the high cost of living for which some of the Ministers, if not all, who now form the Government, pretended they had a remedy.

They say, of course, that they made no specific promises to remedy these social evils, but even if they never made a promise, the campaign which they carried on against their predecessors in office indicated a presupposition that, if they were returned to office, they would remedy all these things. So much has been said on previous occasions about the cost of living that I am not going to labour that subject this evening. Everybody knows—and nobody knows better than the housewife—that the cost of essential commodities in the shops to-day is much higher than it ever was before.

I pass on to this question of emigration. I mentioned it here on another occasion also when the Minister for Industry and Commerce presented the Supplies and Services Bill to this House. On that occasion I warned the Minister that the problem of emigration had been reaching major proportions and that, unless the Minister and the Government brought forward some concrete proposals to deal with the situation, this country would find itself facing something like a national crisis with regard to it.

We have had the recent census report and Senators will have seen the serious decline that has taken place in the population of this country. If that decline continues, if the Government allows it to continue and if they have no measures in mind to deal with it, then we will find ourselves faced with something like a national calamity. The young people will have fled from the land of their birth to seek employment elsewhere. Again, I remember, when this question of emigration was being referred to in the other House when the Fianna Fáil Government were in office, there were people at the opposite side of the House who pretended that the problem could be solved in a short space of time. There were also people at that side of the House in those days who pretended that the problem of unemployment could be solved within a short period of time. In fact, one speaker said that it could be solved overnight, that he saw no reason why every able-bodied person in this country could not be put into employment overnight.

It is a long time since that was said first.

I am not going to labour that point. It may not be strictly relevant. I am just referring to the complete absence of any plan on the part of the present Government to deal with these social problems to which I have reffered.

We hear a lot about strengthening the economy of the country. Even as late as yesterday in the Dáil, the Taoiseach, when replying to a question relating to emigration, said that the best way to grapple with the problem of emigration was to strengthen the economy of this country. Of course, everybody agrees with that, but it is one thing to say it and another thing to do it, and the feature that is noticeable about the present Government is that they are wonderful people for saying things, but we see nothing coming out of what they say. They indulge in these platitudes, but no action is taken. That is the way it is. How are they going to strengthen the economy of this country? What measures have they in train for that purpose? That is a question I want to ask here to-day and I should like to get an answer.

The first duty of this Government or any Government is to increase production from the land. We have said that over and over again, but, no matter how often we say it and emphasise it, it seems that nothing is to be done in that direction and no improvement is to be effected. The question is: have the Government any measures on foot now to do that all-important national task, increase production from the land by holding out the necessary incentives to those people engaged in agricultural pursuits? If they have, we have seen no evidence of it so far.

In fact, I think it could be said that what evidence there is points the other way, because recently we saw an attempt by the Government to discourage the farmers from producing that very essential commodity, wheat, and we do not see any attempt made to encourage the farmers to produce anything else in greater quantities either. Neither does there appear to be any sympathy for the dairy farmers in Government circles to-day. It is because of that that we have heard so much about the withholding of the report of the commission set up to inquire into milk costings and nobody can understand why there is such a delay in producing that report. This has been mentioned before also and I am not going to labour the point. I merely mention it as one of the indications that the Government have no co-ordinated plan to increase production from the land.

I hold that is the major problem, the fundamental problem in this country to-day. This is the only country in Europe that has not increased its agricultural production within recent years. When, may we ask, is the situation going to improve, or when will some measures be taken by the Government to improve it?

As has been already stated, elsewhere, instead of getting a reduction in taxation, we are now presented with a higher bill of taxation through this Finance Bill, and also the other measures which have been taken and which are outside the scope of this Bill. Instead of getting a reduction of £10,000,000 at least in taxation, as a Fine Gael spokesman once told us could have been achieved, we find that there is an increase of taxation in the neighbourhood of £10,000,000 when one takes into account the import levies and when one has regard to the Minister's raid on the Road Fund for the purpose of getting additional Government capital and to which I propose to refer later. I think the Minister is not justified in that raid on the Road Fund.

For the moment, I propose to confine myself to the increase in taxation and we find that, instead of having a minus sign as regards taxation, we have a plus sign. The increase in taxation is in the neighbourhood of £10,000,000, which is exactly the minimum amount which a Fine Gael speaker told the country the people could have been saved.

This is the appropriate time to inquire from the Minister whether the imposition of the import levies, which we discussed in this House a few months ago, will achieve the purpose for which they were intended. I doubt very much that they will, because so far as I can see, or so far as anyone else can see, the position in regard to the balance of payments is not much better than it was this time last year. There is still a very big problem to be solved in connection with the adverse balance of payments, and I am afraid that the Government will have to take more effective measures than they have taken to deal with this serious matter. Unless the problem is tackled now, it will be only a short time until the position becomes so serious that the country will be a debtor instead of a creditor nation. We will then find ourselves in the position that we will not be able to pay for imports of capital goods which will be necessary, as the Taoiseach said in the Dáil yesterday, to strengthen the economy of this country.

The import levies followed much the same pattern as the remedies to which the British Government had recourse when dealing with the situation there. They had to deal with a situation which in certain respects was similar to our own, but which in other respects was dissimilar. In Great Britain, the position was that there was full employment and over-capital development, while here we have serious unemployment and serious under-capital development. I suggest that the remedies that might be applicable to the situation in Britain would not necessarily be applicable here. That is what makes me doubtful about the efficacy of the measures taken by the Minister to deal with this inflationary position which confronts our nation at the present time.

There is something like a credit squeeze here also, as there is in Great Britain, and of course the Government here followed in line with Britain by increasing the bank rate. There are people in this country who believe that such an increase in the bank rate was not necessary at all and was not justified in the circumstances of our situation. People building houses and establishing plant and machinery for the promotion of industry want to get credit and it is almost impossible at the present time for them to get credit for the things they would like to do. That position vis-á-vis the rise in the bank rate and the credit squeeze generally should be re-examined by the Government in the light of the experience they have gained since they brought in these measures.

Before concluding, I should like to say a word about income-tax. There are others who will deal more fully with this question of an overhaul of the income-tax code in this country. There is no doubt that the income-tax code here is greatly in need of an overhaul, but I would not be at one with those who argue that the farmers of this country should be brought into the net. In this, I am probably anticipating something which others may have to say on this matter. I do not agree that the farmers should be brought into the income-tax net because the majority of the farmers in this country are not in a position to pay income-tax. There are those who believe and suggest that the farmers of this country are rolling in wealth, but the fact is that the majority of them are merely enjoying a comfortable existence. The farmers have good years and they have bad years, and they have to take one year with another, and therefore I do not agree with those who argue that the full incidence of income-tax should fall on the shoulders of the farmers. I submit that no case can be made for that argument.

This Finance Bill, as Senator Kissane has stated, gives an opportunity of discussing our problems, but I am afraid we have fallen into a method of discussing our problems which does not lead to a solution of those problems. The situation here is difficult, and if it is difficult, it is difficult for a number of reasons. Some of them are entirely external, outside ourselves and outside our own control; some of them are not so. Our politics, for example are entirely within our own control and they have an influence upon our economic and psychological situation and on our production and emigration problem. For my part, I should like to advert to-day to this aspect of our situation, that what we are suffering from is not entirely due to economics.

Before I come to that, may I say one word about the speech which we have just heard and about similar speeches, of which we have heard a great many? The Opposition speak as if they had never been in office. In the Dáil and here, they speak in a bland way like people who had never had a moment's experience of Government, who had never been called on to solve any problems, who had never done any propaganda, never made any promises; and who, if they could get going, would bring a new breath of life into governmental circles. That of course is not so. They speak also as if this situation were entirely new and had no history and as if their own sins of commission and omission during 20 years of Government had nothing whatever to do with the problems which we are facing.

Just perhaps more as a joke than seriously, when Senator Kissane was speaking of promises made in general elections, and of plans, I thought of all the plans I have seen printed at enormous expense by the Fianna Fáil organisation. Perhaps the Senator remembers the advertisements about more and more money, and why should it ever stop? Perhaps he remembers the advertisement asking us to set the wheels of industry going, by putting them into office, that we would bring back the emigrants to do the work, because there would be so much of it? The Party opposite were 20 years in office and during that period emigration continued steadily, and taxation continued to rise just as steadily; but, as the Senator said, perhaps very fairly, when one changes one's place in Parliament, one also changes one's mind and certainly one's mode of speech. Our emigration problem, which is one of our greatest problems and perhaps our greatest problem, is not new. The Irish have always wandered. There was substantial emigration in the seventeenth century and very great emigration in the eighteenth century, but from the point of view of our history now, we date the great gravity of our emigration problem from the great famine of just over 100 years ago, of 1847. Undoubtedly, that emigration has economic aspects, but it also has psychological aspects. A certain mental attitude is involved. To some extent, emigration is a fashion here. People leave Ireland for England, as they once left for America, from comparatively good jobs. Perhaps they are not a majority—I am not dealing with statistics and I could not give figures or percentages—but, in my own experience and in the experience of everybody here, numbers of people leave this country because they are not prepared to work here, people who go away to seek jobs elsewhere. They leave fairly good jobs here to go to other jobs elsewhere.

Perhaps instead of asking what advertisements were published in particular elections, it would do us all good on both sides of the House if we were to consider how far we have succeeded or how far we have failed in giving the people of this country a proper mentality about the country.

And why we have failed.

May I say to Senator Hickey at once that it is not because of the banks?

I did not say that.

I know the Senator did not say that, but I mention it, lest he might say it.

Surely one of the great causes of emigration at present is a low national morale. At one time the personality of Ireland was represented by a woman, an attractive personality, and we attracted all kinds of foreigners. We have certain attractions for them still, but the country has lost its attractiveness for young Irish people and perhaps the fault lies not in the English or in economics, but in ourselves.

At one time, our nationalism was directed against the English and to an endeavour to put them out. That nationalism was strong; it was active, vigorous and inspiring. It impelled people to sacrifices and risks, and in very large measure that nationalism of that type was successful, but, since the establishment in 1922 of the Irish State, our problem is different. Our psychological problem is different. We have to preach a gospel of positive nationalism and endeavour to inspire people to work and live in Ireland and for Ireland. It seems to me that, by and large, we have failed to accomplish that. Whatever may be the reason and wherever the blame may lie—and different people will lay the blame in different places—there has been a failure in the past 34 years to create the spirit which would make people wish to stay in Ireland and build up Ireland. That, I think, is one of the causes of our emigration problem.

I do not want to go into history, but perhaps it is that the State got off on the wrong foot, that we had a civil war and one of its worst consequences, greater than the loss of property or even of life, was the fact that it hit a deadly blow at the morale of our people. Sinn Féin broke into two parts then and when the one part governs, the other part does its best to thwart its efforts. That perhaps has something to do with the fact that young people do not find Ireland as attractive a place as we once thought it would be, if we had a Government of our own.

It has a lot to do with it.

It has a great deal to do with it, and we should perhaps examine our consciences on the question. It is one of the things to which we might advert. We might also advert to this question of our agricultural production. Senator Kissane tells us that this Government is doing nothing for agricultural production. I should like to remind him that the first thing that was done by Fianna Fáil, when it came into office, for agricultural production was to start an economic war. I do not want to go back to the history of that.

I do not think that you should go back to it, either.

The only active Minister of the Fianna Fáil Government was a man who believed in industry and who believed in the helter-skelter development of industry.

The truth about our position from the point of view of economics is that whatever we are going to spend in this Budget the money must be found by ourselves, from our own work in our own country. When you come down to brass tacks, our agricultural exports must pay for what we want, and no matter what tariffs are put on, we cannot avoid that inescapable fact. Production is an abstract noun. We must give up talking about production and ask if we can get any more work done. That is what it really amounts to. If we keep on doing less work for more money, then it is ultimately going to lead to bankruptcy, and perhaps the Budget will do a certain amount of good if it high-lights that fact, that there is no way now of soaking the rich, because we have arrived at the position that in this country, comparatively speaking, there are no rich. Even if they were twice, three or four times as numerous and as rich and you took all the riches from them, you would not solve any of the problems which the Minister is confronted with.

May I say one word on income-tax? Reform of income-tax has been heralded as the abolition of income-tax. I am one of the people belonging to the white collar class who has to pay his income-tax, and who unfortunately always had to pay income-tax, because his income was always known to the last farthing, and I have no sympathy with the people who evade income-tax. I notice that the people who call for an equitable readjustment of our income-tax code always mean by that that the person who is speaking will pay less income-tax.

Hear, hear!

Equitable readjustment of our income-tax code means that I, the speaker, will somehow or other pay less income-tax, and everybody who agrees with my view will pay less income-tax, too. Where the Minister for Finance is going to get the money, I do not know; but I do know that it is quite foolish to encourage people to think there can be some readjustment by the Minister for Finance whereby everybody will pay less, but when it is all added up the sum will be higher. That just is not so. We ought all of us to have had sufficient experience of Government and of public life to know that it is not so. It is also quite unrealistic to think that any Government can produce a plan. No Government was more fertile in the production of plans than the Government which my friend, Senator Kissane, supported. Even now, out of Government, they have plans. There was a plan just before Christmas, an elaborate plan produced with a great flourish of trumpets in Dublin, which did not say one word on agriculture, and which, by the way, has somehow or other disappeared from the map since before Christmas.

What I really rose to say—we can deal with other matters in Committee —was that what we need in all this matter is that we should, in a commonsense way, as people in a very great difficulty, a difficulty as great as any which confronted us during the war or during any war, endeavour to see how we can co-operate to find a solution for those great difficulties; and remember when we are discussing them that nobody can solve them but ourselves, and there is no machinery of any kind available from any source which will help us to solve them, except the efforts by our brains and by our hands which we can put into them.

In the first place, I should like to congratulate the Minister on the Budget which I would describe as a good nineteenth century Gladstonian Budget, in the sense that revenue and expenditure balance. From the ideal point of view, at a time of inflation that is really not enough, and most people agree who study these matters that, in an inflationary situation such as we are suffering from, you should have a Budget surplus. That would possibly be a counsel of perfection and too much to expect the Minister to do. Therefore I think we ought to be thankful for small mercies and that at least he has avoided a deficit. Therefore, I say that the Budget, as far as it goes, is a good Gladstonian Budget. I might say that, if it had been introduced into the House of Commons in the 70s, all the Liberals and orthodox economists of the time would have said that the Government was paying its way. But having said that, one has to say that the Budget does not contain very much to cure the more fundamental evils from which the country is suffering and which in modern times a Budget is expected, if not to cure, at least to help in curing.

Reference has already been made to the balance of payments. We have discussed that matter here fully before. Though it has not got any worse, it has not got any better. As long as it remains as it is, no one can deny that the country is suffering from inflation. This country is suffering from an inflation of its own. The sterling area and the United Kingdom in particular are suffering from inflation. We are suffering from inflation superimposed on the British inflation and the main task of an Irish Government in the financial field must be to cure our own inflation.

It has been said already this afternoon, and I have no doubt it will be said again—it has been said daily and become generally accepted, and the very fact that it has become generally accepted is in itself a good thing—that, in the long run, the cure for this country is an expansion of agricultural production. Everybody accepts that, and I do not wish to deal with agricultural problems in this debate. They are not really relevant to this discussion. But I would say this, that I think the time has come—and in this I am following Senator Hayes—that agriculture should as far as possible be taken out of Party politics.

I am speaking as a city man with no pretence to any firsthand knowledge of agricultural problems, but it has always surprised me when I hear these matters discussed by friends from the country and people with an alleged expert knowledge of the problems, that they do not seem to be able to agree at all amongst themselves. Until something in the nature of an agreed agricultural policy for this country, or at least the basis for an agreement amongst different Parties and different types of farmers, is reached, we will go on drifting as we are doing, with no increase in production, and not doing very much to secure it.

I do not want to mention agriculture again. Of course everybody knows that it is the main basis of our export trade, and that if it cannot be expanded, in the long run our balance of payments will get worse. But having said that, I do not think it is fair simply to say that agricultural production should be expanded. As I said in dealing with the import levies here a couple of months ago, it is very easy to talk about long period problems, but it is the essential duty of Governments to deal with short period problems. It will be the duty of the Government 20 or 30 years hence to deal with long period problems, but, as Keynes said in one of his most quoted statements, "In the long period, we are all dead". A Government lives for a few years, and in its few years term of office it is the essential duty of the Government and of the Minister for Finance in partticular in his Budget, not merely to issue platitudes or hopes that some day or other the balance of payments will be put right by a greater expansion in agricultural production, but to do something to mend the situation in the short period, because we all have to live in the short period and, as I said before, quoting Keynes, in the long period everybody will be dead, and it would not do us any good to know that in the long period, there may be some Utopia to come in the future.

If the immediate steps are not taken by the Government to deal with our short period problems, pending the expansion of agricultural production which we all hope will take place in the not too far distant future, the consequences for the country may be extremely serious. The inflation which is taking place may become worse, and, if inflation becomes worse, we may lose a great volume of our external assets and even be driven, as I said in the debate on the import levies, through no choice of our own, to devaluation of the currency. Anything in the nature of a reduction in confidence in the future of the currency or the credit of the country would bring about more unemployment and more emigration, and I do very seriously say to the Minister for Finance that unless steps are taken to reverse some of the present trends in the national statistics, very unpleasant consequences may emerge in the not too far distant future.

Therefore, lulling ourselves into feeling a false sense of security by talking about the great expansion in agricultural production which is going to take place at some distant date, when all the farmers and all the farming politicians and farming experts are agreed on what type of agriculture ought to be developed, when the Agricultural Institute has been set up and a generation of highly skilled farmers has been brought into being—as long as we are lulling our minds into that false sense of security, we are really in a rather dangerous situation, and one for which the present generation will be held responsible in the future.

Therefore, I suggest to the Minister that the annual Budget is a means now not merely of balancing revenue and expenditure—as it was, as I said, in Gladstonian times—but of helping, at any rate, to build up the health of the country and to reduce inflation, from which the country is undoubtedly suffering. I do not suggest for one moment that a budget can cure inflation. In modern times, inflation requires a large number of measures. It requires banking measures, credit measures, Budget measures and others. But, in every country to-day—and every country, almost, is struggling with inflation—the Budget plays a very important part in curing that disease which, if allowed to run without being cured, can prove fatal to a country's health.

One thing that can be done by a Government and by nobody else, that should be done by a Government and that is being done by the Governments of other countries—for instance, in the neighbouring island, Germany and other countries—is to reduce its own expenditure. I suggest that the most practical contribution which a Government can make to an anti-inflationary programme is a reduction in Government expenditure. I know it is very easy to talk that way and that it is very difficult for a Minister to do anything in regard to current expenditure. I know it is the easiest thing in the world for us to say that the current expenditure of the Government ought to be reduced and that it is the most difficult thing in the world for us to say where the reduction should take place. I am perfectly prepared to admit that; but in regard to capital expenditure, I suggest there is room for reduction, or at least a postponement of expenditure. A great deal of expenditure by the Government in modern times is of a capital and not of a current nature, and a great deal of capital expenditure can be postponed without any great harm to anyone.

This brings me back to a matter which I spoke about in this House many times before and which I am aware has been the subject of representations to the Minister by outside bodies and which was recommended in 1938 by the Banking Commission. I do not wish to refer back too much to the Banking Commission. When its report came out, it was the object of general decision. Everybody who signed the majority report, including the Minister's father and myself, was derided as a defeatist, alarmist, orthodox economist, banker—every term of abuse that was possible. However, the curious thing is that everybody now is talking Banking Commission talk. Everybody now is talking about the balance of payments; everybody now is talking about sterling assets; everybody now is talking about the necessity to increase production. Perhaps if they knew they were talking Banking Commission language, they might cease to talk such talk, but they are all talking that way.

One of the things the Banking Commission recommended and which I referred to here before was the setting up of an investment council. If the Minister will refer back to Chapter X of the commission's report, he will see that the commission was very strongly of the opinion that, even in those days, Government capital expenditure was running a bit fast and that the allocation of priorities on Government expenditure was a matter that should be approached in a rational, cool, detached and non-Party manner. A Government would like to build all the houses, all the hospitals, and all the schools needed in the country and we all hope that Governments will build all these things, but they cannot all be built in a day.

At a time of inflation, such as this, it is the clear duty of the Government to give a line to the community in seeing that the less urgent capital expenditure which can be postponed postponed. Its postponement will not be any harm, but will, in fact, be to the good. If the Government are really sincere in their desire to combat inflation, they will not be content with putting on additional taxes and import levies. They will do something by way of example to other people to show that they can spend less as well as forcing other people to spend less in their own private expenditure.

Therefore, I suggest to the Minister that a very careful selection of priorities in regard to Government expenditure is imperatively required. One way is the creation of an investment council, which was dealt with in the Banking Commission Report—not the Central Bank but a body somewhat analogous to the Central Bank. If the investment council had no merit other than this, I would regard it as merit from the political point of view. At least, it would take the onus or unpopularity for postponing certain things off the Minister's shoulders. From the point of view of the Minister and his Party, if he was able to say: "We would like to build a great many new edifices here and there—hospitals, schools, roads, this, that and the other —but we have been advised by these hard-boiled unpatriotic bankers, financiers and economists that we must not do so," he could put the responsibility on their shoulders. Having lived in this country for many years and enjoyed a great deal of abuse of that kind, my experience is that, although it is inconvenient and unpleasant, it is not fatal. The personnel of the investment council would survive it; and the Government would be able, so to speak, to escape the unpopularity of not doing things which public opinion would like them to do.

Having said that, I do not want to give the impression that I am in favour of less investment in the country. On the contrary, I am in favour of more, but the investment must not outrun current savings. Government expenditure in particular on investment must not outrun current savings and must not go to the point of absorbing too much of the current savings of the country. I am asking the Government to postpone investment. I am simply making the suggestion to the Minister for Finance that, in the short period, the Government should do something to reduce its own expenditure (1) as an example to other people; (2) because over-investment is a cause of inflation; and (3) to release resources—savings, such as they are—in the country for possibly a more desirable and more urgent type of investment.

I should like at this stage to refer to a paper read at a public meeting in Dublin which did not receive the publicity which, in my opinion, it deserved. It is a paper by the new Secretary of the Department of Finance who I am glad to see present this afternoon. It was read before the Statistical Society and is on Capital Formation, Saving and Economic Progress. In my opinion, this paper should be read by every Senator as a primer——

On a point of order. While I accept Senator O'Brien's bona fides, I suggest it would be improper in a debate on a Finance Bill to refer to the views expressed by any civil servant, even outside. While I hope the Senator will make such full use as he desires of any material that may be in such a document, I think it is wrong to refer either in a congratulatory or the reverse manner to any civil servant.

I fully accept the Minister's objections and admit that my reference may not have been parliamentary. I shall confine my remarks to a paper which was read before the Statistical and Social Inquiry Society of Ireland on 25th May last which I would recommend Senators to read and from which they would learn a great deal.

Can it be easily obtained?

I will send the Senator a copy, if he would like to see it.

I will withdraw my reference to the author of the paper.

Send us all a copy.

If I could get a guarantee that it would be read——

In my opinion, this paper is a very valuable primer for the study of the Irish economic situation. I am sorry to say that the general conclusions reached in the paper are not particularly optimistic regarding the present state of affairs. There is a certain amount of discussion going on in this country at the moment of a somewhat defeatist nature. I want to say at once that there is nothing in this paper to justify that, and I do not want to strike that note in my remarks here in the Budget debate. There is absolutely no need for anything in the nature of panic, of lack of confidence. The national credit is still essentially sound. At the same time, there is no justification for complacency; there is no justification for assuming that, because things are not getting better, they will do so without some very determined effort by the Government and by the country.

This paper emphasises three points. It emphasises that the investment that takes place in this country should be productive rather than social, should be for the production of goods and services rather than for the production of social amenities, however desirable they may be at a later stage in priorities. It also emphasises that preference should be given to production for export rather than production for the home market, that our balance of payments is unsatisfactory, admittedly, and that the more we can do to build up exports the better. The third point made in this paper is that investment should be as far as possible private rather than public, that investment by private companies and private individuals is more likely to stand up to the acid test of profit than investment by the State or by State corporations which can be supported in the long run by the taxpayer, if they make a deficit.

Therefore, this paper advocates investment, but not indiscriminate investment. It advocates wisely chosen investment. It says nothing about an investment council, but I suggest myself, as a footnote to the paper, that the best way to choose investment may be through an investment council. It suggests that investment must be productive, as apart from social; it must be for export, as apart from the home market, and it should be private rather than public, but, above all, the paper suggests—and I am coming on to deal with that in a moment, because I think it is essential to this discussion —that investment must not outrun current savings and that if investment does outrun current savings, it is doing more harm than good.

That was the point I was making earlier when I said that investment can be inflationary, that investment is not necessarily a good thing in itself. Therefore, the emphasis of the Budget, in my opinion, should be not so much on investment as on saving, because the encouragement of investment, apart from saving, may be itself encouraging something inflationary.

I should like to refer to the Committee of Inquiry into Taxation on Industry. I should like to refer to Reservation No. 5 and I want to quote from page 90. Some members of this committee, who agree with the findings generally, emphasise that investment which outruns savings may do more harm than good, that investment may be inflationary. Therefore, I am addressing my remarks this afternoon to the Minister, hoping that he will devote his attention to the encouragement of saving as the indispensable foundation of the necessary investment. On page 90, Reservation No. 5, it is stated:—

"In 1955 total capital requirements exceeded current savings by some £35,000,000 and the rate of national disinvestment now approaches the danger point.

If we seek to maintain a rate of economic expansion, or transformation, which requires more than the total of current savings, we must as an economy draw down our external assets or import foreign-owned capital. Our liquid external assets are the only guarantee we possess for the international value of the Irish pound.

This is one of the most serious limitations under which any programme of industrial expansion must continue to operate under present conditions. From the point of view of the individual industrialist it may be a matter of indifference whether the finance of a new enterprise involves disinvestment or not. But the Government is responsible for the welfare of the economy as a whole. It must take cognisance of the over-all picture and restrain the total demand for new capital (including its own demand) within such limits as will preserve the integrity of the Irish currency."

I think those remarks are very relevant to the present discussion.

This report and the paper to which I have already referred both indicate that private savings in this country are not adequate to the current investment needs. It it pointed out in the paper that the requirements of public authorities are absorbing the total personal savings in the community and that the only free savings which are not absorbed by public borrowing are the undistributed reserves of companies. The paper refers to this matter at length. It points out that the new type of industrial investment in this country will require a great deal of capital and that that capital can be largely obtained from the savings of existing companies. I do not want to quote at length. I am quoting from page eight of the paper. I am simply stating that the paper points out that the home market has been pretty well saturated industrially and that future investment must concentrate on the production of goods for export, that these industries will require more capital, more technical skill and a greater operating efficiency, so that the world and not a mere 3,000,000 people will be their potential market.

It says:—

"If this view is correct, tariff protection may have to give way to other stimuli, such as grants towards the initial capital cost of factories or towards technical training."

It goes on to point out that the rigid control of industrial profits, except where high protection makes it a necessary safeguard, would be inconsistent with the desire for maximum industrial development.

It says:—

"It is well to remember that in many countries undistributed profits are now the greatest source of savings, personal savings having dwindled under the impact of inflation and other influences to a small proportion of total savings."

I take it, in view of those observations, with which I agree, that there is a case, at any rate, a prima facie case, for reconsidering the taxation on undistributed profits. At the present moment, undistributed profits, which are a source of saving, are the subject of special taxation. This matter is dealt with in the Report on Taxation on Industry at Chapter IX, page 63. The report says:—

"The general proposition that undistributed profits should be relieved from tax is not new—we note that it was raised in the Dáil as far back as 1927. Having regard to the difficulties of raising capital from outside sources and current high rates of tax the matter is a very live issue for manufacturing companies under present circumstances.

Experience in Britain with the profits tax, however, has brought to light serious practical difficulties in determining precisely what are distributed profits and the necessity for complicated legislation to cover transactions between parent and subsidiary companies. It has also served to emphasise inequities between public and private companies.

The implications of the proposal, in so far as Irish manufacturing companies are concerned, may be seen from an examination of the figures in Table 28, paragraph 92. On the basis of an average 25 per cent. distribution the remaining 75 per cent. of profits would fall to be exempted from tax. The resultant drop in the total tax yield would be of such a substantial nature that we do not feel entitled to regard the claim as practicable.

In any event if a fundamental change of this nature in regard to the taxation of manufacturing companies were contemplated, it would appear to be desirable to have it fully examined in the wider context of company taxation generally."

The reduction of taxation on undistributed profits, while considered desirable by the author of the paper, has not been recommended by the Committee on Industrial Taxation, but at the same time it has not been turned down on its merits. It has been turned down simply because, in the opinion of the committee, the problem is such a large one it should be considered in a wider context.

One of the things which this committee has certainly done is to make clear to all, beyond any further question or doubt, the necessity for a full inquiry into the whole taxation on income. I do not propose to say anything about that matter this afternoon, because it is going to be fully inquired into. The Minister in his statement in the Dáil admitted that the income-tax code must be the subject of an inquiry and, therefore, I am not without hope that, when this wider inquiry takes place, some reduction in regard to taxation of undistributed profits may possibly come about.

I want to emphasise that the committee turned down the proposal, not on its merits, but because it thought it exceeded its terms of reference and that it was too large a proposal to make in the context of its inquiries. The commission did make one recommendation, however, which I am glad to see has been partially accepted by the Minister, that is, an increase in the initial allowances for new industrial plant and buildings. The Minister has not gone the whole length of following the full recommendation, but at least he has partially met the case and has granted initial allowances for new plant in the Budget. This will be welcomed by people who believe that private investment should be encouraged.

There is also another thing that should be welcomed in the Finance Bill and that is the further remission of income-tax and death duties in connection with certain types of Irish companies. These are two matters which will help investment and to that extent they should be welcomed.

These are small measures, but they are useful measures to encourage investment. Again, the Budget does something to encourage the necessary savings. Saving certificates have been made more attractive and the income-tax allowance on bank deposits, although a small matter, may possibly increase savings a little. The relief in relation to income-tax on insurance premiums is also a step in the right direction. On the Committee Stage of the Bill, I should like to refer to this matter again as I do not think the Minister has gone far enough in regard to it. However, in so far as he has gone, he has gone in the right direction.

There is one thing the Minister has not done which I advocated in the Seanad before. It is something which I think could and should be done, that is, an experiment such as the British Government is trying in the nature of premium bonds. For many years, I have advocated premium bonds in the Seanad, not by that name, but by lottery loan—something which would canalize the gambling instincts of the people into a socially desirable direction. If people are going to gamble, they might as well gamble in such a way as to benefit the Minister for Finance rather than bookmakers and private individuals.

I must say I am disappointed that another Government in a country which has a very much stricter nonconformist conscience regarding betting than ours should have led in this matter. I do not think we should be ashamed to follow them, if we think the experiment is likely to be a success. I should like the Minister to apply his mind to this question of increasing national savings by the issue of premium bonds.

The Budget in small ways does something to increase investment and saving, but they are only small things. Compared with the necessities of the national situation, what is being done in the Budget is rather insignificant. However, the Budget is a good one, as far as it goes. It balances revenue and expenditure. It is courageous, in the sense that it puts on additional taxation, a thing which no Government likes to do, but the underlying disequilibrium in this country requires something more than a courageous Gladstonian Budget. I do not expect that all the evils in the country could be cured in a Budget. I think there are some indications in the Budget that the Minister recognises the realities of the situation, but I suggest that this Budget needs to be followed by a great many complementary measures. It is good so far as it goes, but a great deal more requires to be done.

There is no need for panic; there is no need for disquietude; and there is no need for alarm and lack of confidence in the future of the country; but there is no justification for complacency, and I suggest that the greatest service the Government could do for the country would be to try, if they possibly could, to take these long term aspects of national problems out of party politics.

In introducing this Bill to the House, the Minister stated that it gave the first opportunity the House has had of considering Government policy in general as it has affected the country over the past 12 months. I do not propose to go into very much detail, except to ask Senators to bear with me for a few moments while we examine the important points made by the Minister when he introduced his Budget in the Dáil on 8th May. He said:—

"The final figures now available for our balance of payments show that we spent abroad last year £35,500,000 more than we earned. The increase of £30,000,000 in the deficit as compared with 1954 was the result of a substantial rise in imports, accompanied by a decline in exports, with scarcely any change in net invisible receipts. It was not until the second half of the year that the gap widened to any significant extent and, indeed, the first signs of serious strain appear only towards the end of the year, when the expected rise in imports failed to materialise."

Further on, he stated:—

"The deficit in the balance of payments in 1955 was financed almost entirely by the realisation of external assets by the commercial banks. This was in contrast with the experience of recent years when our external payments deficits were financed for the most part by an increase in foreign indebtedness. The loss of external assets by the commercial banks in 1955 was roughly equivalent to their total loss during the eight preceding years. The rate of loss of external resources represented by a balance of payments deficit of £35,500,000 could not be allowed to continue without risk of undermining our economic independence and our prospect of a sustained improvement in living standards."

He went on to say that steps had already been taken to rectify this position and that the seriousness of the position was due to the fact that this £35,000,000 was expended, in the main, on consumer goods. One need be little surprised at that being the state of affairs, when we have had over a period of years held out to the people of this country that all they need do was to wish for the moon and they could have it. The people were told that all that was necessary was to change the then Government and so bring about a state of affairs where they could go on a spending spree once more similar to that which had gone on under the previous Coalition.

To continue with the examination of the Minister's statements, we find that there was a drop in the volume of agricultural output. The increase in cattle stocks hold out a hope that the ground lost in regard to agricultural output will be recovered to some extent this year. There is a limit to the increase that can be expected, however, in this regard. The unemployment situation in agriculture was not satisfactory, for we find that in the year 1955, according to the Minister, there was a fall of 3,000 in the number of workers employed in the agricultural field. In 1955, for the first time in a good many years, the deposits in the commercial banks fell very considerably. In fact, the deposits in the banks fell by £13,200,000. Savings in 1955 estimated at £27,000,000 were £21,000,000 less than in 1954 and £30,000,000 less than in 1953. That is the picture that the Minister put before the Dáil when he introduced his Budget on 8th May. That, however, was not the full and complete picture because we had side by side with that situation a reduction in our tillage acreage to the extent of 80,000 acres and we still have an unemployment figure of between 65,000 and 75,000 people.

Since the Minister introduced his Budget on 8th May, we have had the report of the census of population, which has come as a shock to many people. It did not come as such a shock to those members of the Oireachtas living in rural Ireland, and particularly in the West, because they were aware from day to day that this emigration was taking place. When they reminded the Government of it in the Dáil and elsewhere and urged that steps should be taken to rectify the position. Senators and Deputies were told that there was no such increase in emigration. When speaking on the matter this afternoon, Senator Hayes suggested that the emigration at the present time was due to some extent to our low national morale. There may be something in that, but we have to examine what brought about that lowering of national morale. Could it not be attributed to the campaign carried on over the past few years when it was suggested to our young people that the livelihood they were getting in this country was not up to the standard that they should expect? Was that campaign not responsible for encouraging dissatisfaction and unrest among our young people and did it not contribute in some small way to the high figures of emigration which we have at the present time?

We have had that report of the Commission on Emigration for some months and there has been no indication yet from the Government as to whether they have considered the report and its proposals, and whether they intend giving effect to any of its recommendations. Is the position to be that the report will be pigeon-holed, as many other things have been in the past?

The Minister referred in his Budget statement to the steps taken in the special import levies to rectify the position in regard to the balance of payments. In connection with this whole matter of the balance of payments, there seems to be some deep mystery. The Taoiseach and the Minister for Finance have naturally and quite rightly informed the public of the facts. They put the position clearly before the people and have explained the position in regard to our external assets and what they mean to the people. In that way, they have tried to get the position understood by the people, but, on the other hand, we have one who was looked on in the early days of the formation of the present Government as financial adviser to the Government—a man who was going to work wonders in the matters of finance—stating, in the Dáil and elsewhere, that the position in regard to the balance of payments is not at all serious and it is not all as great a problem as the Minister for Finance and the Taoiseach seem to think. He seemed to suggest that the matter would rectify itself and that drastic steps were not necessary.

He never said that.

Other important Ministers have had the same approach to the matter. I think it is all wrong to have one section of the Cabinet trying to stress the importance and the urgency of a matter such as this and to have another section telling the people that the position is not bad at all, that the matter is one that will rectify itself and will not need any special remedies to put it right.

The Minister has taken certain steps to rectify the balance of payments, but according to his own statement made in this House on the Vote on Account, the only saving he will effect will be something in the region of £7,000,000. It is very easy to control imports and it is very easy to put commodities out of the reach of the people, but that, to my mind, is taking the line of least resistance. It is not the way we should approach the solution of this problem which we have here.

An examination of the position shows what has been taking place in the agricultural field over the past 12 months. We find a reduction of 80,000 acres in tillage and we find in the Minister's statement that 3,000 fewer people have been employed in agriculture in the last year. At the same time, we find that £13,000,000 was paid out for imports of wheat and barley and other feeding stuffs which the Irish farmers could grow. Some of that money was paid out in dollars. The expenditure of that money would not have been necessary, if our own farmers had been encouraged to produce these goods here, as they could do. How can we expect an increase in agricultural production when the first act of the Minister for Agriculture was to reduce the price of wheat, one of the very few items for which a guaranteed price was given to the farmers?

The Minister for Agriculture has from time to time talked about "My plan; one more cow," etc. In some cases he has urged more than one cow and has asked farmers with two cows to keep four. He recently told the small farmers of the West of Ireland with 20 and 30 acres of land that they could increase their output by a more lavish use of fertilisers, but what encouragement is he giving to the farmers to increase their production by the utilisation of more fertilisers? He has reduced their price for wheat and now proposes the increased use of fertilisers when, in fact, he has not taken any steps to ensure that the fertilisers will be available to the farmers at reasonable prices. While the income of the farmers has been reduced by £13,000,000, which was spent on the import of wheat and barley, the prices of fertilisers and other things necessary for increased production have been increased.

Of course it is hard to expect the Minister for Agriculture to approach this question with an open mind because of the many statements he has made in the past, particularly in relation to the growing of wheat and beet. It is significant that, in both terms of his occupation of the position of Minister for Agriculture, we have had a serious drop in the production of both of these crops. Both have meant the utilisation of some of our external assets about which we talk so much. If we are going to ask the farmer to give us more production, we must first get his confidence, and he must be assured that if he undertakes to answer the call he is not going to find himself in the position which the farmers found themselves in 1948.

We had advertisements issued then, not by the Department of Agriculture, advertisements which were so important that they bore the signature of the Minister for Agriculture himself, in order to make them the more impressive and the appeal contained in these advertisements was for increased production of oats, potatoes and barley. A considerable number of farmers, having studied the matter, came to the conclusion that this was Government policy and we had an increased output in these crops. But when it came to harvest time, there was great confusion and difficulty in finding markets for them, and I am sure that the farmers' representatives who are here, and particularly those from the areas which go in extensively for those crops, will bear me out in that.

The then Minister, finding himself in a very difficult position in failing to implement the promises to find a market for these commodities, took a holiday and left somebody else to solve the difficulties he had created, because the farmers took his advice. That can only happen, and will only happen, once, so far as the agricultural community is concerned and it will take more than appeals from the Minister for Agriculture for those farmers who produced these crops in 1948 to pay heed to a call for greater production at the present time.

So far as the census report in relation to emigration and in regard to the matters raised by Senator Hayes are concerned, if we relate the difficulties of the present position to the advice given to the Minister by Senator O'Brien, we will have to come to the conclusion that the question of emigration is one that is not going to be faced up to or one which an honest attempt to solve is to be made. If we are to stem the tide of emigration, we must create more employment and we must find at least 15,000 new jobs for young people each year. Some of the jobs will have to be found in industry and quite a number in agriculture, but we must give to those engaged in agriculture an incentive and gain their confidence, if we are going to ask them to go seriously into this question.

I do not want to dwell very long over the many promises that were made or the failure to fulfil these promises. Last year, when the Minister introduced the Finance Bill, he stated that it was the first instalment. This is the fourth instalment since this time last year. We had the second instalment when the Minister for Industry and Commerce brought the Tea Taxation Bill before us. We had another when the Minister brought in the special levies, as he called them, and we have had the Budget duties. As soon as we dispose of this instalment, another is on its way, which will enable the Minister for Posts and Telegraphs to play his part in the raising of additional taxation, if one wishes to put it that way.

Senator Hayes referred to promises made by Fianna Fáil in their early days in relation to finding employment for our people. I do not want to follow him right through the Civil War or the economic war, because I think it would detain us too long here. I would say this, and I have repeated it from this side of the House and the other, that any time Senators would like to discuss here or elsewhere the question of the Civil War and those responsible for it, or what led to it, or the economic war, then any of us will be pleased to enter into such a discussion or debate.

Fianna Fáil did make promises and the promises were kept. The people who made it difficult for Fianna Fáil to implement these promises and to arrive at the position that we had arrived at in 1939 are the people who would give better service now if they forgot their activities at that time. They would prefer that the public should not be reminded of their participation in the events of that period. Fianna Fáil, through its industrial policy, reopened many factories and industries which had been closed down in the previous ten years and found employment in new industries established by them between 1932 and 1939 for 100,000 Irish workers. The conditions we had then were more difficult than at present. The present Government has the benefit of a responsible Party in opposition who know and understand the difficulties of a Government and who are not, were not, and will not be, a party to inflicting for Party advantage, any damage on the national interest, a Party who were not prepared in the past, and are not now, to go into competition with any of the Parties combined, or any of them individually, in respect of promises that cannot be fulfilled, in order to get the support of the people.

These promises that were held out to our people are to a great extent, as I have already said, responsible for the difficulties the Minister and the country find themselves in at the present time. The people were promised that they were going to have a good time, because taxation was going to be reduced, not by £1,000,000, but by from £10,000,000 to £20,000,000. I have been wondering recently whether Deputy McGilligan, when he went into Radio Éireann to broadcast this statement of his on the eve of the election, had the wrong script, or whether it is that he meant the direct opposite of what he read out and promised to the people. He promised a reduction of £10,000,000, and it could be £20,000,000, but we have here to-day a Bill giving us an increase in taxation of £20,000,000. Therefore, the promise made of a reduction of £10,000,000 to £20,000,000 followed by the direct opposite, should cause the Government to apologise and excuse themselves to the people for not having kept their promises in relation to the reduction in the cost of living and the cost of Government. They should give some valid explanation.

Members here and in the other House have stated that the taxes the Minister imposed bore very lightly on the people, that they are not taxes on any food commodity. That is not the question. That was not the issue at the last general election at which the Government was elected, and I would put it this way, that the Minister and the Government have no mandate from the people to impose this taxation or to extract this money from them, when such action is the reverse of their promise to bring about a reduction of this amount.

We had criticism during that period I referred to of the rates of interest being paid by the then Government in the raising of a loan, but we now have a position in which not alone have the rates of interest been increased, but things have been made most difficult in the matter of credit for all sections of the community by the squeeze that has been put on. It may be necessary and it may be good, but it is the direct opposite to what the people were promised by the Parties who now form the Government.

Taking the Minister's statement, or his review of the national position to the Dáil, and re-examining it here this evening as we should, we must take into account certain matters which he did not refer to and to which I am sure many Senators have had their attention drawn in the course of the past few days in discussions in the Dáil and elsewhere. We have been priding ourselves over a number of years on the great strides made in the production of electrical power and its utilisation, and the provision being made to meet the demands of the future. In the past 12 months, it seems, we have reached the stage when there is a very steep decline in the demand for electric power—at least, that is the excuse given by the Minister for Industry and Commerce for the slowing down of many of the generating schemes that were planned to be built throughout the country. That is the excuse given by the Minister for Industry and Commerce in reply to a question in the Dáil in relation to the Bellacorick scheme in North Mayo. North Mayo does seem unfortunate in this regard, because this is the second scheme in 12 months that has been abandoned by the Government in that county. We had references made here to the abandonment this time last year of the grass meal plant there.

I should like to say in this connection that where any similar scheme of this kind has been undertaken in the country, where a Government calls together a group of responsible business people and asks them to give their time and ability to developing that project, whether it is that Government or a new one which, on the advice of officers of the Department, proposes to abandon that scheme, the very least that should be expected is that they would call together those people who were prepared to undertake the organisation and consult them as to their views. I am not referring entirely to the persons who were directors of the grass meal scheme, but to any group of people who are brought together by any Government to do a job of work in this connection. The very least that would be expected is that they should be given the Government's views, the reasons for their proposals, and that all the information available to the Department should be put at their disposal. If, after having digested and examined it, they were still convinced that they could make a success of the project, the Government should reconsider the position before acting in the manner in which they acted in relation to the Glenamoy scheme.

We are faced with a serious position in regard to the applications which have been sanctioned for an increase in the price of fuel, and particularly of coal. That will affect a great many industries, and all the people in the country. I should like the Minister to inquire of his colleague, the Minister for Industry and Commerce, what steps are being taken to ensure that we have a sufficient fuel supply to meet our requirements next winter, and particularly the requirements of the poor people who are in no position to purchase large quantities at a time.

Surely this is not relevant to the Finance Bill. On a point of order, surely the Finance Bill provides for a general debate on general economic policy, and not in relation to the provision of fuel supplies.

I do not want to deal with that, except to say that this matter is one of extreme national urgency.

And I have urged that it is not relevant.

An Leas-Chathaoirleach

I think the Senator is in order in dealing with this matter of the price of fuel.

Very good.

I was just going to say that we are here providing moneys to he expended by the Minister for Finance in the Government charged with the responsibility of developing our turf resources. I want to ask the Minister this question: Are the Government sufficiently aware of the position that existed in this country, and how much worse it could have been, had last winter been more severe than it was, wherein many of our large towns had not sufficient stocks of fuel to meet their demands and, in fact, had no stocks at all? Now, with the increase in the cost of imported coal, what steps are the Government taking to encourage our people to provide from our native resources the fuel that may be so urgently needed?

This question has a certain bearing on our external assets. We have to purchase our fuel from abroad. I understand from one of those people engaged in the importation of coal that we are now buying American coal from the British at a higher price than that at which they are purchasing it from the Americans. They are reselling it to this country. I am informed that the coal importers made several attempts to meet the Minister for Industry and Commerce to discuss this whole question of coal importation at ministerial level and that the request was not granted. If that is true, then it is a very serious state of affairs and the Minister for Finance, as the person responsible——

On a point of order. I do not think this is relevant. This is an individual commodity and what the Senator has to say in regard to it might be more relevant to the Appropriation Bill. I respectfully submit that, on the Finance Bill——

An Leas-Chathaoirleach

So long as Senator Hawkins does not deal with details of administration, he is in order. I can assure Senator Crosbie that the Chair is watching the debate closely.

He has just dealt with administration.

Very few matters have been raised in this House in the past few months that are as important as this matter or that will be as important by the time we come to discuss the Finance Bill this time next year.

The Minister has taken power in this Bill to raid the Road Fund of a sum of £500,000. When the Bill authorising an increase in motor taxation was before this House, I think the members opposite made very emphatic demands on the then Minister to give an undertaking that, if motor taxation was increased, the revenue derived from the increase would be devoted solely to the building up of our roads and would not be devoted to relieve any budgetary deficits that might occur later on. It was additional taxation on the users of motors and, no matter what the Minister or the members opposite may say about our main roads, we are encouraging tourists to visit us and the people we are inviting and encouraging to come here are not going to spend the whole of their time on the main roads. I am sure that the majority of the members of this House, particularly those from rural areas, will agree with me that people living in remote areas are entitled to consideration. They are motor users, too, and have made their contribution to this fund. Now, the Minister, in the circumstances that exist, is casting very greedy eyes on that fund and has taken £500,000 out of it. However, that does not end the raid that has been made, so far as moneys that should be spent on road building and improvements are concerned. There is also the matter of the non-provision of moneys from the National Development Fund for this purpose. The result of all this will be increased unemployment in certain areas. Many of them are areas in which there can be little or no increased production from agriculture. Many of them are areas where there is little or no other means of providing employment. The stage has now been reached that, in the most remote and congested areas of our country, our people will no longer be satisfied with partial employment, or with relief schemes that will give them employment only for a few months of the year. If we are to solve this problem, we shall have to take steps to ensure that the people in those areas who are ready and willing to work will be given continuous employment.

In many of the areas I have in mind, the making of new roads is of national importance. They are just as much a necessity as any other type of work. The taking of £500,000 from the Road Fund, together with the non-provision of the moneys from the National Development Fund for this work, will have a very serious adverse effect on those areas of Connemara in which there is very little alternative employment.

There is no use in lamenting emigration without making some serious attempt to solve it. If we have to decide which is the more important, the building up or even the maintenance of our external assets, or the stoppage of the flow of emigration, I should certainly choose the latter. As Senator Hayes said, the present form of emigration is not like the emigration in the old days. It is not now a question like that which faced those of our people who were forced to go to America while a foreign power ruled our country. The people who went in those days were determined to work as hard as possible, so that, one day, they would be able to return and help to build up the new nation which they hoped would be in being by that time. The young people who are now leaving Ireland to take jobs in Britain are disillusioned and dissatisfied and have very little, if any, determination to return home, unless circumstances abroad may force them to be glad to be able to come back. These young people are disillusioned and dissatisfied because virtually all the promises made by the present Coalition Government in the past three or four years have been forgotten. These young people realise that, now that they have brought about a change of Government and given the control of our affairs of State to the present Coalition, things have not turned out as they expected and as they were promised.

Consider the difficulties facing a young couple in this city who want to get married. Obstacles have been placed in their way so far as housing loans are concerned and it is not easy to get a house to rent at the right price. Even if they do succeed in getting married, the Government have taken steps to ensure that they will not have available to them even the benefits which were available to them until a few months ago. All that has been brought about by the type of campaign that has been carried on in this country since the year 1947 by those Parties now forming the present Coalition Government.

Senator Hayes said that the emigration position is serious and that all Parties must co-operate to find a solution of the problem. Before you can ask for co-operation and before co-operation can be given, it is important that a person should have some idea of what he is being asked to co-operate in. It is essential that one should know the policy of the Government in relation to the matters to which I have referred. We must only come to the conclusion that this Coalition Government have no policy. When you question some of the members of the Labour Party who were so eloquent during the past five or six years about this, that and the other, they make this excuse: "You must understand that this is not our Government. We are not the Government of the country. We would approach these problems in a different way, if we were the Government of the country." Other people, including the Fine Gael Party, say: "We cannot do all the things we would wish to do, the things which we know are right and which should be done because of the difficulties we are up against with the other partners in the inter-Party Government."

I do not wish to deal with the Bill at great length at this stage because it is a Bill that can be best dealt with in committee, but I would say once more that if an appeal is to be made for increased production, particularly agricultural production, there is one very essential step that must be taken by the Government, that is, they must get some person other than the present occupant of the post as Minister for Agriculture. The appeal for increased agricultural production must come from one who has not been prejudiced, as the Minister for Agriculture has been in the past, who has not deluded the farmers so much as that Minister has. An exhortation to the farmers to increase production if made by the present Minister for Agriculture would fall on deaf ears throughout the country, as it would in the areas I have referred to as a result of what happened there in 1948.

What the country requires at the present time is leadership. It would be too much, I am sure, to ask the Government to give an opportunity even now to the people to re-examine the position and to weigh up the promises that were made and the attempts that have been made to fulfil those promises. It would be too much to ask them to place the issue before the tribunal of the people, but that is the only way in which we can solve the difficult position in which we now find ourselves.

When one has to make a speech in Parliament, it is very much better to be on the Opposition side because such a very wide range of criticism is open to one. I always listen with interest to Senator Hawkins's speeches because he certainly is able to make a very good case and a very widespread case on every subject. I notice that not only the Opposition here but the Opposition in the Dáil are able to take advantage of their opposition standing to advocate diametrically different policies. Through Senator Hawkins's speech, we had criticism of the extravagance of the Government as regards finance, how they made a hash of everything, and, on the other hand, he was not content that the Government was spending half enough in a great many ways. It is, of course, the privilege of the Opposition to advocate a policy of spending and economy in the one speech. Senator Hawkins referred also to divisions in the Cabinet. He said that one half of the Cabinet were able to say one thing and the other half were able to say another thing, so that whatever way it turned out, they were going to back the horse each way, which a lady once thought was win or lose.

That attitude is a little disappointing in a situation such as we are in at present, which is not, as we all know, the making of this Government alone. The financial situation in this country, to which Senator Professor O'Brien referred, is one of long standing and one of long making, in which every Government and every Minister of every Government has had some responsibility. I was glad to see that in the debate in the other House Deputies, notably Deputy Lemass and Deputy MacEntee, did admit that a lot of the troubles that we are dealing with in our country were built up over a long period of time and that we should get together now and try to make constructive suggestions as to what we should do in this situation.

Senator O'Brien's speech, as usual, was something really useful in a discussion on a Finance Bill. I had certain constructive suggestions to make here to-day, but Senator O'Brien has already made them in a much better way than I could. However, there are some things he said that I could supplement and there are one or two additional points which I should like to make which might be useful as constructive suggestions.

I was sorry that Senator O'Brien stopped short when he came to his ideas on general income-tax. He said that as the Minister has promised a commission on the question of general income-tax, following the Committee on Industrial Taxation, he thought it would not be right to go further with his suggestions. I think that was the very reason why he should have gone further and should have given us the benefit of his suggestions which would be available to the commission when it is formed. I do not know whether being a Senator precludes him from being a member of the committee, but perhaps he will be a member of the committee and so will be able to give his advice at first hand.

I do not propose to say very much on the Budget, but I think we can say that the Budget was so designed as to put the weight of taxation on the least necessary forms of spending. Naturally, certain people were hurt and certain people had to be taxed but I think that taxation was placed where it would be least felt.

The Finance Bill corresponds with the annual general meeting of a company at which a review is given by the chairman of the company of the year's business. In this case, the chairman of the company is the Minister for Finance. Looking over the past year, the Government can show a lot of very creditable achievements. Certainly, there has been plenty of hard work and good work done by the several Ministers. I would particularly point to the work of the Minister for Health who has established order out of chaos in the health services and in the handling of the health services, and has re-established peace and harmony amongst the doctors in their relationships with the Government, and so on. If this Government had done nothing else but put that matter in order, they would have done something big.

I do not want to go through all the Ministries. I propose to confine my-self to one or two particular matters. If this is the annual review for the shareholders, in this case the tax-payers and citizens, the thing that would be outstanding in the chairman's speech would be that, although the Government had done a great many things this year, the outstanding fact that is apparent is that we are short of capital in this country, very short. We are short of capital for Government expenditure and for Government capital investment and we are most alarmingly short of capital in private enterprise; in fact, it is absolutely starved. It is not an exaggeration to say that there is hardly a company in this country that would exist, if it were not for the banks. The banks are always being attacked, but the fact is that anybody who knows anything about companies in this country knows that practically every company has a big bank overdraft. The banking system was not originally designed for long-term capital loans of that nature. Yet, the banks are financing most of the industries in this country to-day, especially the new ones. I know of hardly any company that is not working on an overdraft—an overdraft that should really be in the form of capital rather than in the form of a bank overdraft. If we are to carry on the State and fulfil the obligations of the Government to the citizens, if we are to carry on our industrial economy and our private enterprise economy and our State sponsored industries, if we are to get the production necessary to finance our imports and also supply the needs of our people and give a high standard of living, it is absolutely essential that something be done to build up home capital and, if necessary, bring in capital from outside. I am certain that we could not build up enough home capital at any time in the foreseeable future from within sufficient to meet our needs here.

We will have to design our taxation system in such a way as to make it possible and profitable for people to build up savings. We should ensure that those supplying capital should be properly rewarded and safeguarded. If there is a proper system of rewarding people who save, whether that reward takes the form of an adequate dividend on their savings or in some other way, outside capital will come in, too. Perhaps, extra incentives might be added and maybe capital could be brought in from outside from sources which are not usually thought about.

The social and economic welfare of the country depends on the financial strength of the economy—a simple fact which is frequently overlooked in our national life. There is too much concentration on the expenditure side. There is always talk about more expenditure. Everybody wants more spent, but there is very little attention paid to building up the money to finance all this expenditure. Even in our legislation, too frequently is it the case that that section of the community who spend are catered for, to the detriment of those who save. Indeed, those who save are penalised and looked upon as an inexhaustible source of wealth and savings. I feel the situation in which it is the wise ones who spend and the foolish ones who save must be changed. It has been unprofitable to save in the past few years, owing to the depreciation in the value of money.

Up to now, we have had a campaign of exhortation to save. Mere exhortation to save is not enough. We must induce saving by offering incentives. We know that the method of exhortation has been tried. Politicians, businessmen, heads of chambers of commerce, bishops and priests have exhorted the people to save, but we know from the savings returns at present that there are not adequate savings being made at present under the system of saving by exhortation.

I will quote from a pamphlet compiled by the Associated Chambers of Commerce which was sent to the Minister for Finance. In the summary at page 16 of this booklet, it states:—

"There has been a serious decrease in savings, which were inadequate to meet the cost of domestic investment in the past five years. A total amount of £113.2 million of foreign assets were repatriated to make up the deficit."

At page 17 of the summary, it says:—

"In the past five years an inadequate amount has been invested in risk capital."

Again, it says:—

"Taxation at present levels makes it almost impossible to accumulate capital out of retained profits."

I should like to suggest—Senator O'Brien has already done so—that what is needed in this country is a radical change in our whole taxation system. In that connection, I am pushing an open door, because the Minister for Finance has already indicated in his proposals to set up this committee that he feels something really unusual and different must be done, if we are to enable our Irish business people to build up capital and if we are to attract capital from outside.

Instead of saying that something must be done, as everybody does about everything, I propose to make certain proposals. In the first place, I suggest that some exceptional and imaginative steps should be taken to create savings and capital. As regards the ordinary individual, there should be no discrimination between earned and unearned income. Unearned income is merely savings and there should be no discrimination. I would also suggest that there should be a reduction, if not complete abolition, of death duties. It is nothing short of tragic that one's whole life savings are dissipated in one year when they go into the ordinary revenue of the Minister for Finance. That is nothing but madness in a private enterprise economy. In regard to industry and commerce, there should either be a low tax or no tax at all on undistributed profits. That is not a new idea. We heard to-day that such a suggestion was made as far back as 1927.

As regards foreign capital, such remissions of income-tax as apply to the citizens at home would naturally appeal of themselves to capital abroad. Incidentally I believe that the 25 per cent. penal duty imposed on the purchase of estates by foreigners was a wrong thing to have done. The most important thing we could do would be to amend the law and abolish the death duties. It would be the greatest incentive for rich people, apart from industrialists, to come here.

I know there is a certain antagonism towards what are called foreigners coming to live here, but other countries go very much out of their way to attract rich people. I may be permitted to mention the name of one such person, Mr. Chester Beatty. If we had 30 or 40 Chester Beattys in Ireland, we would be very well off. It would be a very good thing to invite such people here. They would be very good citizens.

We spend a lot of money trying to invite tourists to this country and I think our tourist trade brings in something like £30,000,000 annually, but we could have permanent tourists in the form of these millionaires. I can assure the House that the idea is not so far-fetched. I have a letter from a solicitor who asked me to put this point and I should like to read what he says.

An Leas-Chathaoirleach

The Senator may be asked for the reference.

It is a reference I have in my hand.

An Leas-Chathaoirleach

The Senator will make it available to the House.

Yes. He says:—

"You will remember the statistics in 1953 when it was found that there were 40 millionaires domiciled in Jersey. This was clearly for taxation and death duty purposes. I would say that without question every one of them would be living and spending their money here if the death duties were gone, to say nothing of the taxation."

He goes on to say:—

"Other countries scratch their heads daily to find ways and means of getting in money instead of doing everything they can to keep it out."

With that I agree, and I think it is not such a very far-fetched suggestion as one would think.

The Swiss have done this in a very big way. Switzerland, as I said last year, is very much a country for the Swiss. The Swiss are probably the most comfortable living people in Europe. In following a system of this nature, they bring people in there who bring money, with the result that it is a country of wealth and security for money. We could do the same thing here without surrendering in any way our dignity or anything else to out-siders.

We hear Ministers of State at all times and of all Parties berating businessmen and industrialists for not having up-to-date machinery and exhorting them to install the latest and the best they can find. I think the State itself and each Government here has been using the most out-of-date machinery for years, namely, the present income-tax system. That system was taken over from the British in 1922 and it has outlived its usefulness, and it would be for the benefit of the State itself, in the long run, if a more up-to-date system was adopted. I think it is a system which has been responsible to a great extent for the whole economic situation.

I have referred to this matter before and there are those who will think or say that I am making a case for the employers and the industrialists. They will say that the employers and the industrialists are well off and they are trying to get something more now. Despite that, the case I am making is the case for the whole national economy; it is a case in respect of which we should really get down to the whole question of creating a system of providing the wherewithal for all our expenditures on things such as health services. I suggest that that could be done in the way I propose. I hope this commission when it is set up will not merely fiddle around with the existing system of taxation, but will really go into the whole question in a big way and perhaps produce a completely new taxation system here that will give such revenue as is required and will distribute the taxation with greater fairness and in a more equitable way over every section of the community.

We have all got a copy of Deputy MacBride's proposal. I think he was wise in not making any concrete proposals, but at least he made a suggestion that we should all come together on certain things. I think that would be a good thing. I do not think, however, that there is much to be gained by suggesting that all Parties should come together on all things and that we should really have one big Party. That is not practical, but I do think that we could all come together when something arises of national importance as in the case of an emergency. In an emergency, when people join the Army, they all march together irrespective of whether the Minister for Defence at the time is Fianna Fáil or Fine Gael. I feel that the same thing could apply when national problems arise and we could all work together on some constructive suggestions.

I should like to see in this debate more constructive suggestions than we have had coming from the Opposition. They can discuss and criticise things as they have a right to do, but, I think, on the question of the finances of the country and on the present position, they should not be content with merely scoring political points and going back over the years, as they have done in this case, as far as 1922. To discuss things in that way is a waste of time when we are dealing with national problems.

In any discussions on the taxation system, there should be as little delay as possible, and, if anything is to be done, it should be done quickly. If we are going to do anything, we should do it at once. We should see to it that this commission, when it begins its work, will not take years to produce its report. This is an important matter and we should get on with it without delay. I would suggest to the Minister that he has enough information and experience in his own Department to enable him at least to make some alteration in the existing income-tax code.

There are just one or two things arising out of this Bill and the Minister's Budget statement to which I would like to refer. I should like, in the first instance, to say that I was pleased to hear the Minister announce in his Budget statement that the Government intended to introduce legislation to increase the pensions of those who are at present suffering from the high cost of living, as indeed are all of us who are dependent on a fixed income. Though the Minister in his statement did not refer specially to the particular classes of pensioners for whom the legislation is to be brought in, I do hope that, when that legislation is introduced, the Minister will keep in his mind the teacher pensioners who retired prior to 1950. I do not want to go into detail on these cases because they are well known to the Minister and to a great many people to whom they have made their case. I do feel, however, that these pensioners have been very unfairly treated. The facts are that, in 1950, the Government of the day decided to treat teacher pensioners in the same way as pensioners of other public and local services. It was then decided that, in addition to the ordinary pension, they would get the lump sum, based on the years of service. When it was decided to do that, it was provided that the new arrangement would apply only to those in the service on 1st January, 1950, and the fact was that some of the men who retired on 1st January, 1950, got the lump sum amounting to anything from £300 to £600. The men who retired the day before that got nothing, even though the lump sum was given in respect of actual previous service.

I hope the Minister will, between this and the time he introduces the legistlation, look into the cases of these people. He knows the facts and I am sure he recognises the fairness of their claim. In fact, the principle was acknowledged by the previous Government to the extent that an instalment—I think about one-third— was given some years ago—that is one-third of the lump sum. I hope the present Government will agree to give these people the balance. They are of course very few now—they have retired for six or seven years—and I really think that their claim should be recognised.

The second point I want to mention is in connection with Part I of the Bill and deals with the position of building societies. The building society movement in this country, in its latest development especially, is comparatively new, although in Britain it has been a strong movement for over 100 years. Under the British régime, there were some small societies here, confined in the main to a particular class. In the last 20 years, it has grown to its present size. Prior to 20 years ago, the total assets of the movement were not more than £1,000,000. Now they are over £13,000,000. These assets consist almost entirely of mortgages on house property, in consideration of loans given by the building society to enable people to build houses and for the purchase of their own homes; people who in the ordinary way would not be entitled to have their houses built by the local authorities but who were in need of assistance.

There is, I know, a good deal of misconception in the public mind about what exactly building societies are. Building societies do not build houses and perhaps sometimes they are confused with what are known as utility societies. The building society is in fact a co-operative body. A number of people come together and pool their savings. I should like to stress that it is the savings of people which constitute the society. As a result of their investment, they get a percentage return of 3, 3½ or 3¾ per cent., as the case may be. This money is then lent out to borrowers to enable them to build their houses, at a slightly higher percentage. It is the margin between the interest paid to the investor and what is charged to the borrower that enables the society to carry on its work, to have an appropriate staff and to cover the cost of the administration. It is this margin that enables the societies to carry on their work, to build up reserves and to meet the heavy claims made upon them by the Revenue Commissioners.

It is on that point that I wish to dwell, because I think that the claim which is made is one on which they are entitled to some relief. This is a movement which in its essence is an inducement to savings and to thrift and by enabling people to purchase or build their own houses and to own them, it is carrying on a good national and social work.

To show what has been done, there is the case of one building society operating here which has, in the past nine years, issued over £6,500,000 to about 6,800 people, for building purposes. The average advance was something under £1,000. One would think that a movement of that kind should get all possible encouragement from the Government. It is because of the assistance which the British Government gave to building societies, from the very beginning, that they have grown to be the power for good which they are now recognised to be in that country.

What is the maximum interest they charge for money?

That depends on the circumstances of the loan. There are many circumstances which enter into each individual application, which is granted on its merits.

From the very beginning, both in England and in this country, these societies have paid their dividends or interest, as the case may be, free of income-tax; but it must not be assumed that no income-tax is payable, as a result of their operations, to the Revenue Commissioners. The society itself, and not the individual who gets the dividend, pays the income-tax. That has always been the arrangement and there are good and sound reasons for it. It is recognised that many of the people who invest in building societies, perhaps the majority, would not be liable for income-tax at all. If the society, in paying its dividends to the investor, stopped the tax at source the income-tax authorities would be flooded out with applications for repayment of the tax thus stopped. The income-tax authorities would then have to investigate the applications, which would be an inconvenient and a costly procedure. The arrangement was thus made—I suppose when the societies were originally established—that there would be an inquiry and that an average, as it were, would be struck from the then standard rate of income-tax. Naturally, there were quite a number of people who would not have to pay taxes at all, and, because of that, a composite rate was established.

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

Before we adjourned, I was referring to the position of the building societies movement in this country. I pointed out that this was a movement which encouraged people to save their money and to use their savings to enable people to provide their own homes, and, as such, was doing a work of great national and social importance, one whose economy affected the whole country, and as such was and is entitled to receive all possible assistance and encouragement from the State. These societies complain that they do not receive that assistance to the extent to which they believe they are entitled. I was pointing out that, although they pay their dividends free of income-tax, still income-tax is paid on account of those dividends, but it is paid in one lump sum, by the society, to the great convenience of the revenue authorities, and at a saving of the very great cost which would be incurred by the revenue authorities if they had to examine in detail the case of each investor, many of whom—in fact, in most societies, the majority—would not be obliged to pay income-tax at all.

From the beginning almost, there was an arrangement between the Revenue Commissioners and the building societies on a rate which would be a composite rate, supposed to be an average of what would have been paid generally over the whole body of investors, some of whom pay nothing at all, some at the half rate, and some at the full rate. This average was fixed and called the composite rate, and up to five years ago, it was fixed at two-fifths of the standard rate. For instance, if the standard rate was 5/-, the income-tax would be 2/- on account of every £ of interest they paid to their investors. Five years ago, however, the revenue authorities doubled that composite rate, with the result that four-fifths of the standard rate is now paid on every £ of interest issued to investors—in other words 6/- in every £ of interest paid.

I want to deal with the matter only in a general way now, because I will deal further with the details on Committee Stage, I hope. The complaint is that, in calculating this new composite rate, factors are taken into account which should not be taken into account at all. For instance, quite a significant number of people living in Britain invest their money in those building societies. They do that for various reasons. They may have Irish associations. Some of them may be emigrants, anxious to have a nest-egg when they come home to enable them to build a house. But whatever the reason, the fact is that they invest their money in those societies. If they invested their money in an ordinary industrial business like the Gas Company, or in Dublin Corporation stock or something like that, the State here would not be entitled to take any income-tax from them as a result of that investment, but, in essence, the State does get 6/- in the £ for every £ of interest paid out to them, and the building societies hold that the State in this way gets money from the building societies which it is not entitled to get.

That is one of their complaints. I am also raising this now because of the provision made in Part I of the Bill, the concession given to people to invest their money in the Post Office or in commercial banks. The Minister is to be congratulated on giving this concession. It is a very valuable concession indeed, because in this way a person can have £1,000 in the Post Office, where the rate is 2½ per cent., and he is not asked or expected to pay any income-tax in respect of the produce of that £1,000. He will get £25 at 2½ per cent. on £1,000 and is not asked to pay any income-tax on that £25. If his deposit is in the commercial banks, then, because the rate is lower in the banks, it might possibly be that he has up to £1,500 or £1,700 in the bank on deposit and that it produces only £25, and he does not pay any income-tax on it. There is no similar privilege given to the building societies.

This was raised in the Dáil by Deputy Lemass, and the Minister in his reply used the argument that, in the case of the Post Office and the banks, the benefit goes to the individual, and in this case it would go to the societies. I respectfully submit that there is no material substance in that argument. The society is a co-operative body and is nothing apart from its members. The benefit goes to the members of the society, and, by having that privilege or an equivalent privilege, the society would be enabled to lay up reserves which are used for one purpose only, that is, to lend money to people who want to build their own houses. Quite recently, approaches were made to these societies to come to the assistance of the local authorities. They will not, however, be in a position to do that— especially now when they will be placed in a relatively worsened position compared with the Post Office Savings Bank and trustee banks and commercial banks in the matter of looking for savings because of this privilege that has been given. As a result, their work will be hampered considerably.

The building societies are anxious that the Minister will look into this matter and see the justice of their appeal for a lessening of the demand which is made on them in the matter of tax. They say the rate is inflated and that, in that way, the State is getting income-tax which they should not get. They say the privilege accorded to other savings bodies should be granted to them and that— especially in calculating the rate— allowance should be made for people sending investments from other countries. I trust the Minister will look into the points I have briefly raised now. I can deal with them at a later stage, perhaps, if the occasion arises.

Twelve months ago, speaking in this House on the Finance Bill, the present Minister for Finance said, as reported at column 89 of Volume 45:—

"The first essential before there can be any improvement in business or any increase in business activity, and therefore in national economic activity, is that there should be confidence in the Government."

He then continued:—

"One will find now that there is confidence in this Government, confidence because there is a feeling abroad in the country that the Government knows where it is going ..."

A year has passed since that boast was made. We now find a deficit of £35,000,000 in our balance of payments, which is an increase of £30,000,000 in 12 months. This deficit was financed almost entirely, as the Minister has already stated and as was referred to by Senator Hawkins, by the realisation of external assets by the commercial banks which was equivalent to practically their total loss for the preceding eight years. Furthermore, there was a fall last year in the volume of agricultural output, as well as a reduction of 3,000 of those engaged in agriculture as against an increase of 500 in the previous year.

It is also recorded that the number on the unemployment register has increased by 3,863 since 16th June of last year—in contrast with a fall of 11,500, from 96.2 thousand to 64.8 thousand, in the last year of the previous Government, that is, up to May, 1954.

There has also been a substantial increase in the cost of living. The price index figure has risen by 7 points in the past 12 months in contrast, again, with a fall of two points in the last year of Fianna Fáil Government when it was down to 124 points. The increased figure now stands at 134 points. Judging by the applications which are now pending before the Prices Commission, and the increased cost of coal, in my opinion, there will be a further increase.

The savings of the community have been severely depleted. Deposits within the State, as Senator Hawkins mentioned, have fallen by £13.2 million and advances on investments have risen by £18.2 million. In the other House, the Minister pointed out that there does not appear to have been any increase in the volume of national production in 1955. Surely this, in itself, is a serious admission of failure, particularly when he states that personal consumption has risen by 7 per cent.—in a year in which overall production has not been raised at all. That is set out at Volume 157, column 27, of the Dáil Debates.

With regard to savings, the Minister states—as reported at the same column —that the total savings were £21,000,000 less in 1954 and £30,000,000 less than in 1953. It is obvious that, unless there is a substantial increase in personal savings in the present year, the expenditure on the national programme cannot fully be met. The Minister has already stated that we will require at least double the savings, if we are to meet our full national development programme for the current year.

In this connection, I feel that, in this year, when our economic position has become so serious and when the Government realise that maximum production from agriculture is so imperative, the Minister's proposals in his capital Budget for only four and two-third millions for agricultural development, out of a total of £26,750,000, is unrealistic and is failing to face up squarely to the facts. We cannot expect to have any real increase in living standards, unless we have an increased production from the land by increasing the soil fertility, by agricultural education and research, by improved marketing through cooperative organisation and better credit facilities for the small farmer.

We should not ever underestimate the importance of the small farming community in the national economic position, because it was on these holdings that many of the best of our people were reared. Because the small farmer gets such a slow return for his work and so little out of the national income, and because he must take such risks with the weather, disease, live stock, crops, variations in market prices, in addition to the monotony and drudgery of life on his small holding, emigration has reached dreadful proportions in those areas and it is for that reason that demands for housing accommodation in the cities have become so great. The Government realise that the extraordinary demand for credit for housing accommodation is required, in the first instance, in Dublin and Cork. The small farmers are the least organised section of the community and, consequently, they face steadily rising prices, while they are required to sell a fair amount of their produce in a highly competitive world market. It is necessary, therefore, that output from small farms should be increased if the State is to survive.

The rising figures of emigration are appalling. When we consider that, in the past five years, 200,000 of our people have left, and when we advert to the fact that this is practically the total population of the three Ulster counties within the State, we can realise what the drain of the flower and youth of our manhood must mean to the nation eventually.

Incidentally, I should like to mention that the northern counties where the farms are small, Leitrim, Donegal, Roscommon, Cavan, Monaghan and Sligo, in that order, are the counties in which the emigration figure is greatest. The population of the three Ulster counties is down by 17,500. I should like to take this opportunity of appealing to the Minister to see the urgent necessity of capital development, both in industry and agriculture, in these counties and the importance of dieselisation of the railways in the northern counties as an essential step towards that development.

Donegal, for instance, has not benefited much from the Undeveloped Areas Act, possibly because of its remoteness from urban areas, and the resultant high freight charges and because of the lack of local capital. Every effort, therefore, should be made to retain the existing industries in that county. The Minister must appreciate the valuable exports to the hard currency areas from the cottage industries in Donegal, for instance, tweed, linens and gloves and the earnings of that county from the tourist traffic from Northern Ireland and the emigrants' remittances. Emigration, as we all know, is ended the more quickly we face up to it and a Government runs away from it at its peril.

This Government, in my opinion, has waited too long to face up to its responsibilities and has been responsible for lulling the public into complacency as far as external assets were concerned and in regard to future economic potentialities. It is obvious that increased production is essential to sustain socially desirable objectives and that in the past few years far too great a percentage of our external assets has been repatriated to make up for the deficit in our savings. As already stated, the Minister is now up against the problem that it will be necessary to save twice as much as was saved last year, if the State capital programme is to be implemented. With unemployment growing, agricultural output falling, the young and middle-aged fleeing from the shores of the country, the raiding of the Road Fund to the extent of £500,000 will certainly reduce employment in the rural areas.

Unemployment is far away from the 98,000 that it was in 1953.

The employment represented by Road Fund grants is required to supplement the income of those living on uneconomic holdings and if, apart from the £500,000, there is to be a reduction of another £790,000 which was formerly expended out of the National Development Fund, having regard to the increased cost of wages which has taken place in the past 12 months, owing to the increased cost of living, the amount of employment available in these areas will be seriously depleted.

I should like to refer to Section 3 of the Bill and to ask the Minister to consider that it should apply to Government loans, as this would encourage the community, particularly small investors, to invest more in those loans. It is only fair when one considers that national loans have depreciated from 8 to 9 per cent. in the past 12 months and that money values have also been reduced.

We are, evidently, again at the crossroads in finance and banking affairs. Twenty-five years ago, we had a bitter experience of unemployment and a surplus of goods and services because of a shortage of money. To-day, our worry is said to be prosperity because of the expansion of credit. I have listened to all the speeches this afternoon to get enlightenment as to what is wrong. Even Senator Hayes asked what was wrong that we were not doing better than we are doing. I put the question to him: why is it that we are not doing better? I expected a more definite reply than the one I got.

Every Senator is anxious to solve the problems that confront us. Senator Hayes was anxious to get the cooperation of every member of the House. In 1919, the democratic programme of the first Dáil Éireann was passed by all the members of the House. Senator Hayes referred to it and said that the Sinn Féin Party split and that, because of that split, things have turned out as they have for the country. I agree with him. Most of those who sanctioned that democratic programme in 1919 and who were prepared to carry it out are still with us. Is it extraordinary to ask that these people who sanctioned that democratic programme of the first Dáil Éireann in 1919 should sit down together in conference, with a view to carrying out that democratic programme?

For the benefit of the House, I will quote one or two passages from it:—

"...we declare that the nation's sovereignty extends not only to all men and women of the nation, but to all its material possessions, the nation's soil and all its resources, all the wealth and all the wealth-producing processes within the nation, ...that all rights to private property must be subordinated to the public right and welfare.

It shall be the duty of the Republic to adopt all measures necessary for the recreation and invigoration of our industries, and to ensure their being developed on the most beneficial and progressive cooperative and industrial lines."

I suggest that we should keep those two passages in mind and examine what we have been doing since that date. I submit that the democratic programme of 1919, supported and agreed to by the persons who constituted the Sinn Féin Party at that time, is the very thing which will bring prosperity and security to our people. Were we to adopt it and try to work it out, our people would enter an era of prosperity and security which will never come otherwise.

I suggest that talking about what this Government did and what that Government did not will get us nowhere. There is need for responsible men on both sides of the House to come together to do something that should have been done long before now. I listened to Senator O'Brien and, like Senator McGuire, my only regret is that Senator O'Brien was not more definite. One of the things he said to the Minister was that we might be driven to the devaluation of the pound and that many unpleasant results might flow in a short time.

I know the ability of the Minister and that of many members on both sides of the House, but will any of them contradict me when I say we are in a very perilous condition at the moment by reason of the country with which our monetary system is linked up? According to the English papers, a potential Minister for Finance stated that the pound would not be saved by certain economies that were being effected and that the pound was never shakier than it was during the past ten days.

Do we not admit that England to-day is the greatest debtor country in the world? Is it safe for us to have our money linked up with the greatest debtor country in the world? The situation is one that should not be looked upon with complacency. All I regret is that there was no statement from any member on any side of the House, even from the Minister, as to what was wrong from the financial point of view. I think Senator McGuire said the strength of our economy lay in the financial structure. Have we a sound financial structure to-day? We have not, and we must face the unpleasant task of dealing with that matter. The prerequisite of this Minister or of any Minister, or of the Government or any Government, in dealing effectively with the affairs of this country is to have control of our money and credit. We cannot deny that. We saw the Proclamation which Messrs. de Valera, Cosgrave and other men signed their names to, the Proclamation that was necessary to safeguard the sovereignty of the nation. What sovereignty have we?

I have to send a subscription—I do it voluntarily—for a paper in America. Before I can send that subscription to America, I have to sign two blue papers—one for the Minister for Finance to get his permission and the other for the Bank of England. I cannot transfer the amount of my subscription for this paper, without the consent of the Bank of England. Is that not true?

I will not interrupt the Deputy. I will wait and refer to it later on.

The Minister may cover up with all kinds of nice phrases, but that is the position. I now want to refer to some of the statements made in connection with the income-tax code. I do not doubt Senator McGuire's statement for one moment when he speaks about the need for protecting industrialists and people engaged in industry. However, when I read some of our official documents, I am very far from agreeing that there is any such need for protecting them at the moment.

I thought the Senator was going to develop the matter of the forms. Does the Senator mean one form in duplicate?

Two blue forms.

In case there might be any misunderstanding, neither of those forms under any circumstances goes out of this country. One is retained by the bank and the other in Finance.

Where does the bank one go to? Does it not mean that I have to get permission from somebody?

From me and not from anybody outside the country.

Did the Bank of England not get a Bill passed to ensure that nobody could transfer sterling into dollars without permission?

This matter cannot be decided by way of question and answer.

Was there not a similar regulation brought in by ourselves?

The Bank of England is our boss all the time.

The Senator will excuse me if I say that I am not in agreement with him.

I will not disagree with the Minister, but he has not convinced me. We are in the clutches of the Bank of England. So long as our pound is tied up with sterling, we know where the bank is.

We have heard complaints with regard to the question of income-tax and even Senator O'Connell complained about building societies. I was looking at the Revenue Commissioners' report, which is an important document, and when I came to the matter of insurance companies, I found that there are 51 syndicates of Lloyds who hold licences to transact insurance business in this country, and not one of them need return any particulars as to its assessment for income-tax in this country.

There are 36 foreign companies doing all classes of business, embracing life, fire, engineering and mechanically propelled vehicle insurance. Two of those 36 foreign insurance companies hold licences to transact fire, glass, accident and public utility insurance in this country and two hold licences to transact in this country insurance in connection with mechanically propelled vehicles. These are the only people who have to make any return to the Revenue Commissioners for assessment of income-tax on their profits.

What do we find on the other side of the picture? All the other foreign companies are not paying income-tax, because their headquarters are outside the country. We are told, of course, that there is a reciprocal arrangement. I know where the balance lies, but here is the important point. The amount of premiums collected by foreign insurance companies in 1953 was £9,393,875 and the amount of premiums collected by foreign insurance companies in 1954 was £10,033,703. A sum of £77,699,005 was collected in the 11 years by foreign insurance companies doing business here.

Are we serious when we start talking about changing the income-tax code here? There is need for immediate legislation to see that all this is changed. The £77,000,000 odd collected in premiums over the past 11 years does not include insurance in respect of shipping, marine craft or aircraft. We can well imagine what the amount of premiums would be to cover these three items.

Let us examine the position in regard to taxes on profits, income-tax and sur-tax. I am anxious to see the income-tax code changed. It is long overdue. Looking up the Revenue Commissioners' report, we find that in 1949-50 the taxable profits were £21,653,000; in 1950-51, they were £23,843,000; in 1951-52, they were £26,507,000; in 1952-53, they were £27,786,000; in 1953-54, they were £26,129,000 and in 1954-55, they were, according to the latest figures available to me, £31,792,000. The net tax payable on that sum of £31,792,248 was only £3,165,545.

I should like each member of the House to know that, in 1947-48, taxable profits were £18,975,174 and the net tax payable through the operation of the excess profits tax was £5,438,749, while in 1954-55, taxable profits were £31,792,248 and the tax payable was only £3,165,545. That was the position, although in the year 1954-55, taxable profits were £12,835,000 more than in 1947-48.

Some Senators might ask how that could come about, but here is the story. In 1947-48, the Fianna Fáil Government removed the excess profits tax. This action amounted to giving a present of some £3,000,000 to the manufacturers and industrialists at the expense of the community. Since then, I have always advocated that this excess profits tax should be reimposed. I am advocating it now to Senators and I am also asking the Minister now to reimpose it. You have there a definite £3,000,000 or £4,000,000 which you can collect. That concession was given at a time when the country can only pay 34/- to old age pensioners and to widows and 18/- to able-bodied men who have to go to the labour exchange. That is a position which cannot be allowed to continue. We are all too complacent about our obligations to these people and that is why I ask that we go back to a consideration of these things, instead of trying to score political points by talking about what happened in 1921 or 1922.

Another important point which I should like to stress here is the question of financing the interest on borrowing for the working of the Government. I find that we paid £10,600,000 for interest on national debt. These are interest moneys only and take no consideration whatever of sinking fund. The amount of interest on municipal and county council undertakings, excluding overdraft interestand as far as Cork Corporation are concerned, they paid £56,000 in interest on overdraft last year—was something in the neighbourhood of £6,135,000. The interest on borrowings for harbour services was £114,356; for E.S.B. the charges last year were £2,225,513; and paid in respect of borrowings from the banks and Exchequer bills in 1954 was a sum of £152,723. Paid on public issue of stock by the Government in 1954 was a sum of £4,423,072 and paid on land bonds was interest amounting to £1,210,000, and paid in 1955 on bank overdraft for Grain Importers Limited, was a sum of £78,255. That makes a total for those eight institutions of £24,349,928.

Who is prepared to stand over that? That is not a right thing to have in our economy. If we are to govern this country and help the people as they should be helped with useful services, then we will have to turn that money to the account of the nation. I was looking at the figures the other day and I could quote them for the other semi-State organisations. The payments in these respects amount to between £150,000 and £190,000. The State, which is, in effect, the ordinary working person has to provide the money to pay that interest.

Turning to the Statistical Abstract, we find that there were 47,463 persons drawing home assistance. There are 23,700 others drawing other forms of assistance; there are 167,012 persons in receipt of old age and blind pensions and unemployment assistance is being paid at the rate of 12/- in the rural areas to 18/- in the cities to 27,793 persons and the number of people on the live register for 1954, was 61,551. Then we have the average of children going to school at 473,000.

I say that we are being too complacent about all these matters and that this country is not being run as it should be run. Let us not continue to deceive ourselves and others, because God never meant this world to see hungry men, women and children. We should get back to the programme of the first Dáil of 1919 and try to put the country on a proper footing.

Senator McGuire made the suggestion that we should bring millionaires in here. I would say that wherever you have millionaires, there are paupers. You cannot have millionaires, unless you have paupers. If we are to depend on millionaires to build up this country, then God help us.

You have them in Jersey.

I have confidence in this country and in the people of the country and I do not like to hear remarks such as those made by Senator Kissane that we will have calamity in the country.

I will go further and say that I read the speeches on the Budget and it shocked me to find some of the statements which were made during that Budget debate in the Dáil. I am referring particularly to the speech made by the former Minister for Finance, Deputy MacEntee, when he was threatening the people that Post Office savings were not even safe because of certain elements in the present Government who wanted to bulldoze the banks into bankruptcy. Somebody made reference to attacks on the banks. I have never attacked the banks or the bankers, but the system. Some of these statements were made to create fear and this little country is suffering very badly from politicians trying to put fear into the hearts of the people, so that they might do the wrong thing and do it for the aims of the politicians.

I will quote from the statement made by Deputy MacEntee in Volume 157 of 9th May, 1956. He said:—

"People are not investing anything like they did in insurance policies. All these things are occurring now. Why? Because the rumour has it in Dublin—I give it for what it is worth—that certain members of the Government have threatened to bulldoze the banks into bankruptcy, if they do not meet the Government's demands for increased accommodation at every turn. Other Ministers are bringing pressure to bear on the insurance companies. There is widespread apprehension about the position of the funds in the Post Office."

These are the things which more than anything else are responsible for the fact that people are not going to put their money into loans.

Then he goes on to tell us that there are certain people preparing the way for other people who are prepared to take over. All I have to say, and I say it without prejudice to any Party, is that any decent Party should repudiate that statement. I think it is a terrible thing to make such a statement over the bodies of our heroes. It is treachery to the country. I suggest that, with the tradition of the Fianna Fáil Party, they should exert themselves and disclaim any responsibility for it.

All that I have heard this afternoon is not dealing with the situation at all. I claim, and I am positive about it, that the only people who should control the credit and currency of the people are the elected Government of the people. Nobody else can assume that right. The findings of the Banking Commission of 1938 and 1939, both in the majority reports and in the minority reports, are as important to-day as then, with regard to remedial measures. We are not doing our duty if we fail to bring people with trained minds to the aid of the country to-day.

Speaking as a member of Cork Corporation, I can say that we asked for £1.500,000 to build houses. The Minister sanctioned the request, but the banks refused it. We have both the land and the sites available, but, because those who are in control of the issue of credit refused to give us the money, we cannot build the houses. When I hear statements here about what happened in the past, I think of a statement made by the former Taoiseach who said that this country could support 17,000,000 people. He made that statement in 1934 and said that they could give the people a better standard of living than they ever had before. That was nearly 32 years ago and we have a lower population to-day than we had then.

Senator Hayes asks what is wrong. I am asking the question: Why are we are not making progress? It is because we are not in control of our own credit. The sooner we get down to that position, the sooner can we make advances. Our Governments have been borrowing from the banks the credit of the country which belongs to the people and not to the banks, who were charging interest on it.

I suggest that we stop Party politics and get down to reality, and I am making my appeal to those who are with us to-day and to those who were with us in 1919.

To-day, as always happens when a Finance Bill is being discussed, we have had the views of different Senators. As usual, it is a sort of field-day for financial experts. When they start to express their views, people like myself wonder if they should talk at all.

I am only talking common sense.

But we are all giving our views for what they are worth and everybody's opinions should be listened to, irrespective of whether he has any financial experience or not. All should try to pool their ideas in an effort to improve the financial situation. It is something I should like to do myself. On the rare occasions on which we can debate Government policy and steal the thunder of the other House by capturing the newspaper headlines, it is right that we should do our best to help the Minister for Finance in his and the Government's very serious predicament.

We know that the Budget is a very unpopular one. Any Minister for Finance who imposes taxation immediately becomes unpopular, whether he imposes it on luxury or on essential goods. People will have to buy one type or another of those goods and, in doing so, will have to pay higher prices. The blame will always be put on the Minister for Finance. There was no choice for the Minister. When he floated a loan it was not a success. There were various reasons given for that. One section say that there was no confidence in the Government or in the Department of Finance, and another section say that the money was not available in the country.

In a small country such as this, with a small population, it is pretty difficult for people, irrespective of how much they have, to find something like £20,000,000 in savings every year. Our potential and our wealth is not great enough to do that and our agricultural and industrial output is not sufficient to enable the ordinary citizens to bring together that amount of money and have it withdrawn from circulation, even though it may find its way back again through Government projects and works. However, with the failure of the two last national loans, the Minister for Finance had no option but to balance his Budget, which meant, of course, extra taxation, and to put extra taxation on a country and people already overtaxed, and on whom, as the ex-Taoiseach, Deputy de Valera, said, taxation had reached its very maximum. We know ourselves, and the Minister knows, that taxation was high enough without any more. Still, in order to keep the services of the country going, taxation had to be found somewhere.

Personally, while I do not like to see it going on, I feel that it was better to impose it where it has been imposed, on such things as tobacco and cigarettes, disagreeable and unpopular as it may be, than on foodstuffs of any description, because while foodstuffs are essential—we cannot do without our bread and butter—even though we may find it very hard, we could do without cigarettes and tobacco, if we have to make a choice. While taxation on things like that is unpopular, it was one of the few steps the Minister could take.

While agreeing that taxation had to be imposed, I must say that it is the duty of the Government to see that the money so obtained from taxation is not wasted foolishly or squandered in a haphazard manner. With all due respect to the present Government, there are quite a few things about which I find myself in agreement with a man with much more experience than I have in financial affairs, Senator O'Brien, that some of the projects that are being carried out should be left over for better times. For instance, money—I do not know how much, but quite a substantial sum—is being expended on runways for Army jet planes and ideas of that sort. I think that anybody with common sense must realise that instead of spending over £500,000 on projects like that, for the few jet planes we are capable of purchasing, that money would be much more valuable if it were devoted to housing, small as it might be for that purpose, or to something of that nature.

Many people think that only essential schemes should be carried out when there is deterioration in public finances as there is at the present time, and that non-essentials should be left over for better days. Each local authority and each member of it seems to have only one idea in mind, that is to outbid one another in popularity in the amount of work they can get done in their own localities. Housing schemes at all times are essential, but other schemes like water and sewerage schemes are not nearly as essential, and are creating a huge bill for every local authority in Ireland. All these things have to be financed from the Central Fund. We see the figures given here by Senator Hickey, that on 31st of March, 1938, the total borrowings for the local authorities were £27,771,000, the interest being £1,850,000. In March, 1955, the total borrowings were £104,900,000 and the interest, £6,135,000.

We are going very deeply with regard to local authorities, in spending money unnecessarily. Take the smallest little village where there may not be half a dozen houses, and there is no likelihood of half a dozen houses more raising their heads, applying to the local authorities through their local councillor for a water and sewerage scheme. A scheme is prepared by architects, who always err, if they err, on the side of plentifulness, and a scheme is submitted. I know of one case in Mayo where the cost per head to the people living in the town was something in the region of £304. That is an extraordinary thing.

These are matters that county councils go ahead with, and from the central authority a certain amount of help must come in the way of repayment of loan, and so on. The Minister would be quite justified, if he were seeking any reduction in Government extravagance, if he were to take a run around the county councils and the different local authorities and explain to the members: "I do not want you to shelve these things for good and for all, but to leave them in a state of abeyance,"—which is a very popular word over the past few years here with regard to different policies that are being put before the people—"and leave them over for a few years until we get over the hurdle of finance before us at the present time."

As well as that, the average citizen, who heretofore did not take any great interest in the affairs of the State other than to go about his work and to draw his week's pay, or to do his week's work on the farm and wait for whatever money was to come in, can see when he examines the last census report that the population of this country is 60,000 or 65,000 less, and, at the same time, we have 4,000 officials more. Any man or woman with any sense or intelligence must come to only one conclusion, that this country has become top heavy with officialdom, whether that officialdom is concentrated here in the central offices in Dublin or distributed throughout the local authorities all over Ireland. We have heard a slight effort to argue that many of the officials were there, because of expansion of the land project and of forestry. There is no doubt whatever that these schemes have expanded really well, but, despite that, the amount of employment they are giving does not necessitate an increase in the number of administrative officials by something in the region of 4,000, when there is a decrease in population of over 60,000 people. The figures are there as plain to be seen by the average man in the street as by any member of this House or of Dáil Éireann, the Minister or anyone in his Department.

If the Minister is serious about trying to bring about a saving in the present crisis, he will have every cooperation and help from the people, but if he persists in allowing things to carry on, with people piled on in nonproductive employment, and expects people who are in productive employment to keep that extra load on their backs, I can assure him that he is making a very great mistake. I did notice that in the Dáil the Minister for Finance pointed out that he would make an effort to reorganise the administration of the Civil Service. I hope sincerely that he will do this, because it is well overdue, and it is well time that some more easily applied series of laws or Civil Service administration should be introduced, if it is possible. If it is not possible, he must admit his failure.

Then, to go right from the top down to the very bottom, and taking the chance of being very unpopular in the county I come from and in other counties, there is what is called unemployment assistance—a nice new name given to what was termed, in the old days, the dole. That, all over the country, is being blackguarded in the most blackguardly manner by people who are in receipt of it. We know there are genuine recipients of unemployment assistance. We know there are people who offer themselves for work and cannot get it and who, through no fault of their own, have to avail of unemployment assistance. They would willingly, if they got work, leave down their unemployment assistance cards and take up their spades and shovels, and go into employment at 24 hours' notice, or even at 12 hours' notice. They are that type.

However, there is another section of the community in the county and province I come from who do not want work, who are not anxious to work, but who are anxious to be paid for their idleness. By a series of clever manoeuvres, insurance stamps, and so forth, as well as being the owners of small holdings of land which are registered in the names of their fathers or grandfathers, they succeed in evading any queries by the social welfare officers and manage to qualify themselves for anything from £1 to £3 a week unemployment assistance. That may happen even though, at the same time, the county council, building contractors, the land project people or any of the Government projects may genuinely be seeking men. I can assure this House that that type of individual exists in County Mayo. They cannot find time to go out and work on Government schemes, but still they can find time to go out one day every week and draw their unemployment assistance, or "the dole," as it was formerly called. I should like the Minister for Finance to make a very strict examination, both at the top and at the bottom, in this connection. I assure him he will be able to find plenty of places in which he can save money and still not hurt anybody, either at the top or at the bottom, who is a deserving or a justifiable case.

While not knowing a lot about the balance of payments, we all know that when we are buying more than we are selling, there is something wrong. If that happens even in the smallest home, then things are not running well. As the old woman said: "When your outlay exceeds your income, your upkeep will be your downfall." That is what is happening in this country at present. Our upkeep, seemingly, will be our downfall. There are things which we must import. There are machinery of all types, oil, and the necessary things to make the machines work. This country is becoming mechanised in every type of work, but it is an advantage. We have labour-saving devices not so much to get rid of labour as to make the work easier and men can tend the machines to do the work rather than have to do it themselves. The amount of machinery manufactured here is very small and, of necessity, we must have these imports. The non-essential commodities whose importation the Minister tried to curb by the imposition of levies some time ago can wait and need not be bought, if the people so decide. However, we must produce and sell more, and, if we do not, we shall be on the rocks. That is definitely a financial system that even the smallest schoolboy understands as well as the best financier.

We wonder if, with the different industries which we have, we can produce more and, if we can, we wonder if we can have a market abroad for our surplus manufactures. I have no doubt that our industries are doing their best to produce for export and I have no doubt that production for export is the aim of most industrialists. We come back, however, to the fact that agricultural production is the only thing from which we can ever hope to get any increased income from abroad. To raise agricultural production has been the aim and object of every Government we have had since we got freedom for this part of the country, but whether or not we have succeeded it is very hard to know. We give fair play all round. We admit that the present Minister for Agriculture, by his effort to make productive 1,000,000 acres of land through the land project which has been in operation over the past five odd years, has done a great thing so far as increasing production is concerned. However, last year, we had extraordinarily high prices for store cattle, fat cattle and live stock of all descriptions and then there was a huge drop this year when cattle are down by as much as £2 and £3 per cwt. That has had a serious effect on the farmers' economy. We would want a great deal more cattle in order to realise the figure for our exports which we got for exported cattle last year.

There is only one way to increase production and that is to increase the output of every acre and to increase the amount of money that can be got from every acre. If an acre is capable of producing only £10 worth of goods per year, as Senator Walsh has said, where are the small farmers whose acreages are small and how can they ever be of any assistance to the State when they are merely eking out a meagre or a beggarly existence? If production can be doubled, trebled or quadrupled, it will have the valuable result of raising the standard of living not alone of the farming community concerned but of the State.

We farmers know that the production of store cattle is the lowest form per acre, whether per statute acre or per Irish acre, which will pay the farmer. Next in lowness to store cattle comes the rearing of sheep. Next to that is tillage. However, the dairying industry—the production of milk from the land and the dairy cows—gives more per acre than anything else. We may have a very heavy crop of wheat or barley and we may get a good price for it—wheat in particular, for which the price is guaranteed—but the price is not guaranteed for potatoes, oats, or any other root crops. We must realise that, if farmers want to produce more per acre, dairying is the industry which will give highest results, particularly from live stock, at the same time giving this country more cows.

The slogan of "one more cow, one more sow and one more acre under the plough" is very good indeed if the people are encouraged to produce more cows, sows, and so on, by firm and guaranteed prices. At the moment, there are only two agricultural products in respect of which we have guaranteed prices—grade A bacon and milk. There is a price of 235/- per cwt. for grade A bacon and a price of 1/6 per gallon for 3.5 butter fat tested milk. These two things work hand in hand. Pigs cannot be produced profitably at less than 235/- per cwt. for grade A bacon when one takes into consideration the fact that grade A pigs can drop as low as 50 per cent. of the actual amount produced and that, instead of 235/-, a farmer may get only 200/- or 185/-, as the case may be, unless the raw material for producing bacon is of the cheapest possible price.

The Minister for Agriculture said the farmers should try to have for the foundation of cheap foodstuffs barley which they can grow at home and skim milk which they can also have as a by-product of their milk when the creameries have been supplied. These are two essential commodities that the farmer should try to produce. He would then be able to send bacon to the market which would be profitable to himself, which would help our export trade and which would generally raise the standard of living of everybody all round. The question then arises: If every farmer, or if the big majority of farmers, decided to go into the dairying business, what would be the position?

Already we have a surplus of milk. For the local milk suppliers in Dublin City, Cork and the other cities, there is a surplus of milk. The intake to the creameries has increased. If the small farmers in the West set out to increase the output per acre by intensive dairying and pig production, a very serious problem will be added to those already facing the Government. Butter has to be subsidised. It takes 20 pints of milk to make one lb. of butter and 20 pints, on the 3.5 test, cost 3/9 and a lb. of butter can be purchased over the shop counter for 3/9. The amount of the subsidy to the butter industry would be very considerably increased.

Suppose we reach the stage at which we can export butter, we will be exporting subsidised butter and, in the words of the Minister for Agriculture, we will be paying the English to eat our butter. Whether that is wise policy or not, I do not know. I have debated this matter over the past few months with intelligent people and I have met people who argued that, no matter to what extent we increase exports, even though they have to be subsidised, it is a paying proposition and rewards the farmer by giving a satisfactory price for his product, that he will then be more fit to meet the taxation demanded and to contribute to the Exchequer, that there will be less grousing and that we will be increasing the export of a commodity for which there is a ready market at a certain price. I do not know.

I am sorry that I have offered very few suggestions of any value to the Minister. We are in a competitive market with regard to cattle and beef. I have here an editorial from the Irish Independent of Wednesday, January 11th, 1956, headed “The Happy Farmers”. It relates to the United States of America and says:—

"President Eisenhower has at last tackled the problem of the surplus stocks of farm produce that have been built up in the United States. The problem has to be faced some time, but it is courageous to do so in an election year. Moreover, the President proposes to use policies that were ridiculed by the Republicans when used by Roosevelt in the years of the New Deal.

The stocks have piled up as the result of highly favourable guaranteed prices paid for commodities such as wheat, cotton and dairy products. In future, the President suggests, the farmers will be paid for not producing these things. The point is, as the cynic will notice, that the farmers will be paid one way or the other—either for producing or for not producing. From now on a new institution, the Soil Bank, will pay them the value of the produce of the land that they take out of cultivation. If this appears curious, it should be remembered that just 20 years ago the farmers were paid so much per head for every pig that they did not rear. Further a new Conservation Reserve will take land out of cultivation and afforest it."

Consider the United States, with its great wealth, paying farmers to get rid of the surplus stocks they have built up, not to produce more. It makes us realise that there are vast stocks piled up in the United States. That is a matter that we in Ireland will have to consider. We are feeling the effects already of the imports of Argentine meat into England and the dumping of American foodstuffs all over the Continent where we might be able to get an output for some of our surplus cattle. We used to have a market for the heavy and rougher type of cattle on the Continent. When the United States decide to dump foodstuffs all over the world, farmers here will get a taste of what that means.

Farmers cannot be expected to produce, unless they are paid. The farming community cannot be expected to produce one more cow and one more sow, unless they are paid to do so. While farmers have great respect for the guaranteed price of 235/- a cwt. live weight for grade A pigs, they have much more respect for the ministerial Order allowing live pigs to be exported. There would be no 260/- per cwt. paid by factories at the present time for pigs and bacon but for the effort to try to break once and for all the powers given to exporters to allow live pigs out of the country.

There are many problems confronting the country and the Minister. The very popular Minister for Finance has become slightly unpopular all over the country. I believe his intentions are for the general good. I will support the present Budget, even though it is unpopular. If the Minister had introduced a Budget reducing taxation, reducing the tax on cigarettes, beer and petrol, we on this side of the House would be shouting about the great part we had played in instructing and advising the Minister for Finance. When he is forced to bring in an unpopular Budget, I will stand by his shoulder just as I would have if he had brought in a popular Budget.

The relations between labour and employers could be better. Nobody likes to see the chase of wages after prices. I was glad to learn that a deputation of trade union leaders interviewed members of the Government recently. That is a good thing. Whether in agriculture or in industry, I should like labour to give of its best for one year at least. Even though everything may not be as satisfactory as the workers would like it to be and even though they feel that a demand for increased wages would be justified, they should realise that their employers are in a difficult position also. If there could be better and happier relations between employers and employees, between organised labour and organised employers, a great deal could be achieved.

Increased agricultural production would help a great deal, but increased agricultural production will come with guaranteed prices. It is no great encouragement to agriculturists that the Milk Costings Commission has not produced its report, although it has been sitting for four years. Four years have elapsed and 44 different promises have been made that the report will be available at such and such a time. The members of the Creamery Suppliers' Association will be quite content to get this report, whether it is good, bad or indifferent, in order to find out the cost of producing milk. It does not redound to the commission's credit that they have taken four years and are still not in a position to supply it. I do not know whether that is due to downright stubbornness on their part. I can assure the Minister that if there is any more of that type of work and if the farming community are at the same time asked to bend their backs any more, they certainly will not do it. They are now wise to the fact that if they produce half as much, they will come out as well in the long run, even though to do so would be the worst possible thing for the nation's economy. If the farming community are given guarantees, they will produce. I have listened to the financial experts and those who are not financial experts and it seems to me that it is left to the farming community to take us out of the rut we are in at the present time.

In offering my congratulations to the Minister on producing a good Budget, under very difficult circumstances, I should like to make just a few remarks. As has been already said, this annual debate of ours on the Finance Bill takes the form really of the annual general meeting of a company, when the Minister for Finance in his capacity as managing director comes along and renders us an account of the past year's trading and his proposals for the year to come, but it differs in this way, I think, from the ordinary company meeting—that we here are responsible to a people and a country. I think that in these circumstances from time to time on the occasion of the annual Finance Bill we are justified in holding a review of our progress over a longer period than perhaps just the preceding year. That does not mean that I have any intention of going back, as has already been done, on past quarrels of a political nature that have taken place throughout the year, but I do think we are justified in making at least an economic review of our progress over the past 34 years.

There is one thing that, to my mind, is very striking during that period. We have had, of course, a number of different Governments during those 34 years. They had one common policy: their industrial policy or, if you prefer to call it, their policy for the industrial expansion of this country since the time we became an independent State of our own has been virtually the same. Both big political Parties and the other Parties who have taken part in Government in this country believed from the word "Go" in industrial expansion and a policy of protection. The only difference that ever existed was the question of the tempo of the movement, whether it should be rather slow and careful or whether it should be rather rapid and perhaps less choosy.

But I for one have no intention at all at any time of not giving full credit to the Governments I did not support for the very useful work they carried out in this field. The policy of tariff protection which started with the original Government was not only carried on by the first Fianna Fáil Government but has been carried on by the two Coalition Governments formed since.

It is very interesting to watch the overall effect on our national economy of those 34 years of industrial expansion. During that period, a great deal of money, a great deal of human effort, of thought and energy has been put into the problem of industrial expansion, the resurrection of old industries and the foundation and formation of new industries. These industries have served a very useful purpose and I do not think any member of this House would say anything to the contrary.

When we come to the overall economic picture, what do we find? We find that, at the end of the 34 years, our exports, the production by which we live—in fact, the production by which we find the money to buy goods and services which we cannot produce ourselves—are still dependent on the old traditional exports of this country. There have, of course, been honourable exceptions in the industrial world. Some of the old established industries have staged a come—back in the export world and some of the new industries have proved very useful in the export world, but taking the overall picture by and large, it is still the traditional exports founded on agricultural exports we are living on.

That, to my mind, should bring us to think about a review of our policy. I do not mean we should relax our efforts or the energy we put into our industrial programme, but perhaps we should consider whether or not the time has not come when we should consider putting more effort into the agricultural end of our economy.

When we come to consider that question, perhaps we should also consider whether our agricultural policies over the past 34 years have been those best fitted to cope with the situation which exists and which apparently is likely to exist for some time to come, a situation in which we must live on our agricultural exports. I am not a farmer or an agriculturist, and, therefore. I personally cannot offer any solutions or concrete suggestions for that, but I, and I think many members of this House, who, like myself, are townsmen, city people, would be very interested to hear such suggestions and to hear this problem discussed by the farming members of this community.

It was for that reason that I listened with great interest to a very courageous speech, indeed, by Senator Commons. It is sometimes said that the onlooker sees most of the game. I think one of the questions which might be examined by those members of the House and the Government who know all about farming and farming problems is whether or not our policy of land division has been on the whole a sound one. In saying that, I am not making an attack on the broad question of division of land, but more on the question as to whether what we have done in the field of land division and acquisition has been of the greatest and most profitable nature, or otherwise. I have an uneasy feeling that perhaps, when we have divided land, and given land to landless men, and so on, we have not done it in the right manner.

I have a definitely uneasy feeling as to whether the holdings the Land Commission have been distributing over the past number of years have been economic or otherwise. I am not in a position to answer that question myself, but I do think it calls for consideration whether these smallholdings the Land Commission have created over the past number of years, are, in fact, economical and are calculated to increase our agricultural production or have they, on the other hand, been one of the reasons for the failure of our agricultural production to increase? In short, are or are not these holdings economic?

Coming to the question of taxation, I should like to take this opportunity of welcoming the 20 per cent. depreciation allowance on plant and machinery which the Minister has allowed this year. Of course it is inevitable in a discussion on the Budget to refer to the question of income-tax. I have been rather amused, if slightly gratified, at the number of people who have in recent months come to be severe critics of income-tax as such, and our income-tax code in particular. I am making no Party political point when I say that the conversion of the ex-Minister for Industry and Commerce to this point of view has caused me considerable amusement, because I remember, away back in 1928 and 1929 or thereabouts, when a fellow citizen of my own evolved a policy for the abolition of income-tax.

That gentleman eventually joined the political Party of which Deputy Lemass is a member and subsequently he rose to the rank of Parliamentary Secretary in that Party. He was the late Mr. Hugo Flynn, who was an honoured citizen of Cork. He preached the abolition of income-tax, or at least its reformation, but all through the long period in which he was an honoured and distinguished member of the Fianna Fáil Party, nobody listened to him.

A good many of us from time to time have been preaching and pleading for at least a reformation of the income-tax code in this country, and again nobody listened to us. It is therefore a great pleasure to many of us to learn that the Minister is to set up a commission to inquire into our taxation system. Within the past few days, a distinguished visiting American businessman whom I met in the West of Ireland and who had been reading the newspaper discussions on this subject here said to me: "Are you ever going to reform your taxation code" and he added: "It's a little archaic, is it not?" I think that is a pretty fair description of what the situation has been.

At one time, of course, income-tax was a very popular tax with certain sections of the community, because in the earlier days the income-tax net was not as widespread as it is now. At that time, among certain sections of the community, it was always known as a popular tax, because it was a tax which the other fellow paid. Now that the net is more widespread, a greater number of people are suffering from the iniquities, or, should I say, from the inequities, of the code as it exists.

One of the things that have always struck me as being peculiar in this country has been the conservatism with which successive Governments, during the 34 years we have been an independent State, have retained this archaic code. After all, we did not evolve the income-tax code. We spent bitter years fighting to get the British out of this country and this code was a code evolved in Britain, possibly to suit their economic conditions, but not necessarily suited to our economic conditions. Notwithstanding the fact that we fought bitterly to get the British out of the country, we have retained this archaic code of taxation which they had evolved.

I should like to point out to the Minister, however, though I think he already realises it, that the present taxation code has now, in effect, become a tax in restraint of production. I myself have heard very many industrialists, of whom I have asked why it is that there has not been a greater drive in the export of industrial products from this country by industrialists themselves, invariably give the answer: "As long as we are making a comfortable living, there comes a point in our taxation system where we cease to work for ourselves and we are commencing to work for the Government, and why should we kill ourselves in order to hand money over to the Revenue Commissioners?" Do not make any mistake: that argument not only applies to the employer and the industrialist but also to the employee. You will find all over the country to-day tradesmen and skilled workers who will refuse to work overtime because they realise the money that they would so earn will be taken by the Revenue Commissioners in the form of income-tax. I think I am not exaggerating the situation when I say that income-tax to-day, the whole taxation system, has become a tax in restraint of production.

I should like to appeal to the Minister, on this question of income-tax, to introduce a pay-as-you-earn system. This appeal has been made before and I have heard it made in this House to predecessors of the present Minister. It has always been refused and I can never understand why. I have an uneasy suspicion that it is going to be refused again. What I do wish to make quite clear is that I do not think the Minister in not introducing this system, is being fair either to the wage earner or his employer. He is not being fair to the wage earner because it leaves a temptation open to him not to pay his income-tax immediately, and, before he knows where he is, he is in difficulties and in arrears. It is certainly not fair to throw the onus of collection on to his employer. After all, we all contribute our share of taxation in this country and in doing so, we contribute to the upkeep of the Revenue Commissioners and their servants. I must say that I very much resent being made to do the work of a body of officials who are already being paid for that work.

To illustrate the difficulties which the non-existence of a pay-as-you-earn system can bring about, I will tell of one instance of which I heard recently. A businessman told a friend of mine that his key employee, a man on whom his whole business centred, had got himself into arrears with the income-tax authorities and owed a sum of roughly £50. The income-tax authorities sent him several threatening letters and eventually wrote to his employer. His employer approached this individual and said to him: "Look here, you are in trouble with the income-tax authorities. They have come to me, and, under the law, I must do something about it." Whereupon, the employee replied: "If you deduct a single 1/- from my wages, you can take a week's notice. I am clearing out."

The employer was very perturbed about losing this employee. He discussed the matter with a friend and said that he felt so strongly about it that he was inclined to pay the money himself. His friend told him that that would be a very unwise thing to do as it would have a snowball effect. "The Revenue Commissioners will consider that you have given this man a bonus of £50 this year and there will be income-tax on it next year. If you pay it again next year, it will be considered another bonus and the snowball will continue," the friend told him.

I think that, taking all these points into consideration, there is a very strong case for the introduction of a pay-as-you-earn system and that is an income-tax reform that need not await the report of any investigation commission.

Senators have talked about reductions in Government expenditure, but many of them, particularly on the other side of the House, while they have asked for such reductions, have immediately produced suggestions that would call for increased Government expenditure. Senator O'Brien and Senator Commons suggested the postponement for a time of the less essential capital schemes of the Government. That probably would be a very wise policy and perhaps a policy not as unpopular as the Minister or his colleagues might be inclined to think it would be. I am inclined to think it would be rather a popular policy.

Senator O'Brien suggested premium bonds and I think he was very wise. Might I add this to his suggestion to the Minister, that, when British premium bonds come on the market, there is every likelihood of Irish money being invested in Mr. McMillan's lottery bonds, if we have not got premium bonds of our own here? I think it would be far better if those of our fellow countrymen who feel like having a gamble should be encouraged to gamble at home and let the Minister have the benefit of their money, on the chance that they may or may not ultimately draw £1,000. I think that is a matter which is worth consideration.

Before I conclude, I want to say that, not being a financier, I cannot follow Senator Hickey into the realms of high finance.

It is not high finance at all; it is just common sense.

I would make this suggestion to my old friend, Senator Hickey, that, before he finally commits himself irretrievably to the democratic programme of the 1919 Dáil on the question of private property, he should take the trouble to read The Rights of Man, by the great Catholic philosopher, Jacques Maritain.

He could also read Dr. Coffey, of Maynooth College. It would be just as advantageous.

In this debate, we are dealing with the specific matters contained in this Bill and also with the general review of the country's economic condition given by the Minister in his Budget statement. So far as the Bill itself is concerned, it is right to say that this is undoubtedly the most severe Budget the Irish people have ever had to endure, since this State was first established. The Budget of 1952 was regarded as severe, and was undoubtedly severe, but in this Budget there is an attempt made by the Minister to secure at least £13,000,000 more than was secured from the taxpayer in 1952, and that is a considerable sum.

It was interesting to note that, in his statement to-day explaining the Bill, the Minister stepped rather lightly and quickly over those sections which provide for increased taxation on cigarettes, tobacco, petrol, dances and soft drinks. Those were dismissed by him with a very brief comment, but I think it is right to say that if some other Government were introducing proposals of this nature, the Minister's comments on those increased imposts would be more lengthy and probably more severe. There is no doubt whatever, as Senator Commons pointed out very rightly, that those imposts will press very heavily on a very considerable section of the people.

There is no use telling us that people can do without cigarettes and tobacco. Possibly they can, and probably there are other things that people could do without, but once people have become accustomed to those small luxuries, they are not likely to change their habits or their manner of living overnight, and it is very difficult for the ordinary working man to do without a smoke, if he has been accustomed to it for years. Thus the impact of those taxes is as heavy as if they were imposed upon something regarded as more essential.

In the same way, the tax on petrol will press very heavily on large sections of the people, and appeals have been made to the Minister to give some relief to those people who depend for their livelihood upon the use of their cars—people such as travellers, insurance agents, doctors and other people of that kind who must travel a very large mileage in order to perform their ordinary work. No concession has so far been granted to those people. It is also true to say that the imposts on petrol must inevitably affect costs of other commodities. While there is a considerable number of heavy lorries powered by diesel oil, there is also a very large number designed for petrol consumption, and also passenger vehicles. In the same way, the hackney driver, whose grievances were very much sympathised with some years ago, is severely hit by this increased tax.

Some people will say, however, that there has not been quite as big an outcry against these increases as there was in 1952, when similar imposts were put on the people. That may be due to the fact that we have in this country at the moment a more responsible and more restrained Opposition. We have a political Opposition at the moment who are prepared to be responsible with the Government and not to exploit the Government's real difficulties to the limit. If we wanted to be unreasonable, we would probably be describing this Budget as an attack upon the total abstainer, who, while he does not drink, does enjoy his cigarette or his tobacco, his occasional drives in his family car, and who does enjoy now and again a drink of lemonade. All these little vices of the total abstainer are severely hit in this Budget. But, as I said, we who are part of the political Opposition at the moment do feel that the Government have difficulties to overcome. We may not agree that the methods adopted in this Budget are the proper methods to deal with those difficulties, but we do not deny that they are there.

I think it was Senator McGuire who said that there are very considerable advantages in belonging to an Opposition. That may be, but the members of the Government and the Parties associated with them were in a very great panic and in a very great hurry to get out of the position of being in opposition. They were very anxious for governmental power and for ministerial office, so it is a little soon to begin to complain that the burdens of office are pressing heavily upon them.

Senator Hayes said that politics have a big influence on economic affairs. There is no doubt that to a very considerable extent that is true. There is also no doubt that to a very considerable extent the difficulties the Government and the country are facing to-day have been brought about by the politics or the policies adopted by the Parties constituting the Government. This State never was in an absolutely secure financial or economic position since the termination of the war. The Fianna Fáil Government pointed out in 1947 that considerable difficulties lay ahead. They were ridiculed for making that statement and they were ridiculed even more strongly in 1949 and 1950 when, due to Marshall Aid and other factors, economic conditions eased to a certain extent. The leaders of the Fianna Fáil Party were ridiculed for warning the people in 1947 that the position was not too safe.

Looking back now over the period of ten years, I think everybody on all sides of the House will admit that the political leaders of this country did not sufficiently stress the precarious nature of our economic position, the gravity of that position and the need for the most energetic measures to get the country into a sound financial and economic condition. It is true, as everybody knows, that never in the history of this State since it was established did we fail to have a deficit in our external balance of trade, except during the years of the world war. A nation that has, almost every normal year, a deficit in its balance of payments and which, most years, has a large deficit in its balance of trade cannot claim to be in a very strong economic position. In 1947, the leaders of the Fianna Fáil Party realised the dangers inherent in that situation and they warned the people how necessary it was to make a big effort in order to overcome those economic and financial problems. The proof that the Ministers at that time and the leaders of Fianna Fáil were right in their approach to the country's trading and economic position is revealed by the fact that, when Fianna Fáil came back into power in 1951, a deficit of £61,000,000 occurred as a result of the policy that had been pursued by their predecessors. By wise and prudent measures, they brought that deficit down to £5,000,000 in 1954. It rose again to £35,000,000 last year.

No nation of Ireland's size or resources can afford a loss of £35,000,000 each year for any period of time without eventually becoming bankrupt. It is significant that, in an article which appears in The Statist— which, I think, is an impartial journal and objective in its approach to matters of this kind—there is a description of this country's affairs as being on the verge of collapse last year. I noticed that that article was reproduced in the Irish Press last Saturday and I rather wondered why it did not appear in the Independent. However, I was pleased to see that it appeared in an even fuller form in the Independent on the following Monday. It was given under the heading “Ireland Near Collapse Last Year.”

The extract from The Statist goes on:—

"The drop in agricultural output, the £24,000,000 increase in imports, the £5,000,000 decrease in the value of exports, the continued high rate of personal spending were the main factors which last year combined to bring Ireland close to the verge of a major economic collapse."

That statement is given very great prominence in one of the chief Government papers and that, in itself, should be a sufficient warning to the Government that the present position is extremely serious. I think it is a sufficient refutation for those members of the Government who expressed complacency in regard to the existing situation—people like the Minister for Defence and other members of the Government who seem, by their speeches, to make light of the present position. Do they, I wonder, accept the view so clearly stated there that Ireland was near collapse last year? Has anything happened since then to avert that danger? Has anything happened to take this country away to any extent from the edge of the precipice?

It is true that certain measures were introduced by the Minister limiting imports to some extent, but have any significant measures been taken by the Government to increase exports? Is it not true that, last year, the value of our agricultural exports fell by £9,000,000? Furthermore, the value of imports of an agricultural nature last year rose by £9,000,000. These two things make a net decrease in our agricultural exports of £18,000,000. That is the history of last year. We went down and the Minister in his Budget statement was quite right in referring to the reduction in the volume of agricultural output.

In his reference to that reduction, where there should have been a substantial increase, he was not maliciously trying to puncture the self-inflated ego of a ministerial colleague, and neither was he trying to administer a kick, however well-deserved, to the most boastful of his colleagues. He was, I believe, as a responsible Minister, drawing attention to a problem which is there, which has to be faced and which is not being faced by the present Minister for Agriculture.

I read carefully the statement of the Minister introducing the Budget in the Dáil. I also read very recently the statement made by the former Minister for Finance when introducing the Budget in 1952. I was struck by the remarkable similarity of the two statements. It is clear that the present Minister for Finance has observed and taken note of the same dangers and difficulties as his predecessor noted in 1952. I will quote one brief extract from the statement of the Minister for Finance in 1952:—

"How are we to get out of our difficulties? The road back to a healthy economy is by way of increased saving, increased home production and, for the time being, reduced imports of consumer goods."

Is there any difference between that statement and the statements made by the present Minister for Finance? The only difference in the whole position is that the present Minister for Finance is not being misrepresented or misconstrued to the same extent as his predecessor was. When his predecessor spoke of the need for a reduction in imports of consumer goods, he was accused of saying that the Irish people were eating too much. Nobody makes that charge against the present Minister and I do not think anybody will. We maintain that there must be a real effort, not merely words or what I once described as patronising patter, but active measures, to get an increased output from agriculture and industry, particularly from agriculture.

For anybody who has respect for democratic Government, for collective responsibility of Government, it was distressing to see the statement of the Minister for Finance that agricultural output had reduced controverted by the Minister for Agriculture. It was an extraordinary spectacle to see the Minister for Agriculture actually repudiating governmental statistics.

He did not. I was talking about gross output. He was talking about net output. Both statistics are completely correct.

That may be, but how then do we explain his attack on the statistics, on the manner in which they are prepared?

He did not attack the manner in which they are prepared.

I shall be forced to quote.

I should be obliged if the Senator would, because the Minister did not do that. What he did was to criticise the system under which we had not taken into account any changes in live-stock population and were only taking into account cattle actually sold off the land. That is not an attack on the officials.

Is it not true that over the years the officials of the Statistics Office have, in a most painstaking way, endeavoured to discover what is the real and actual agricultural output? If they thought that the inclusion of figures which the Minister suggested would make their report more accurate, they would undoubtedly have included them. They have not done so.

Will all this question not arise on the motion, No. 8, in the Senator's name?

I know it will and I intended to be very brief in regard to this matter, but, as the Minister interrupted to controvert, I feel I must substantiate what I have said. I did not intend to go deeply into the subject, knowing that there will be a further discussion on agricultural output.

I was merely trying politely to explain to the Senator what the matters at issue were.

I am indebted.

That can all be thrashed out on the motion also. There is no reason why it should not be.

I quote from a speech made by the Minister for Agriculture on the 16th May, column 477, Volume 157, No. 4 of the Official Report:—

"I am told there has been a 2 per cent. decline in the volume of agricultural production. Will any rational citizen of this State tell me who weighed the volume of agricultural production in this country at 2 per cent.? Did they weigh the cow? Did they determine how many bonhams every gravid sow in Ireland was going to have? Did they weigh the corn? Did they weigh the grass? Did they measure the quality of the soil? Did they examine the stock on the land? And having made their calculation, how did they do it with such exact precision that they can tell us that the total volume of agricultural output in this country was 2 per cent. less than it was last year?"

If that is not derision and ridicule of the whole machinery of collecting statistics, I do not know what it is.

Quite. Derision of the machinery is not the same as an attack on officials, which is what the Senator suggested. It is the suggestion of an attack on officials to which I objected.

I am sorry. I did not intend that. It is an attack on the system. Why should we have such a position? Even if the Minister for Agriculture was right and, instead of a 2 per cent. reduction we had a 2 per cent. increase, would it make any material difference? Is not the thing that is really wrong the fact that there is not a substantial increase in the volume of agricultural output? I would not be concerned very much about quarrelling over small points of 1 or 2 per cent., but it is a very serious thing that, while every country in Europe has increased the volume of its agricultural output very substantially, there has been no increase here. That is the important point. Unless there is a very imaginative, drastic, if you like, approach to this question, it will not be solved in our time. However, there is a motion down dealing with that matter that will come up for consideration.

Why did you not think of all that when Fianna Fáil were in power?

I thought of all those things before Fianna Fáil were in power. I thought of them when the Cumann na nGaedheal Government was in power, when they were importing bacon from China, Poland and other countries, and I was at that time advocating as well as I knew how a better system of agriculture and I will continue to do so, regardless of what Government is in power. There was one thing in regard to this matter that Fianna Fáil did during the last year——

Surely there is something wrong with our system if we have a motion down in Senator Cogan's name, on agricultural production, and if he anticipates that motion by talking at considerable length on this Bill on agricultural production. Surely he does not expect to have it both ways—to discuss the matter now and to make another speech later on the motion. I put it to the House that it is anticipating the subject matter of the motion and the Senator cannot do that.

Might I say by way of explanation that I had concluded as far as agriculture was concerned, when Senators L'Estrange and Hayes interrupted?

I did not interrupt the Senator. I merely made a point of order. I am only trying to keep Deputy Cogan right. It is a very difficult task.

An Leas-Chathaoirleach

It is the function of the Chair to keep the Senator right.

I am entitled to make a suggestion to the Chair, am I not?

Those who would keep others right would need to be right themselves to begin with. There is, as we all know, a fairly drastic credit restriction in the provision of loans by our banks. From what I can find out, it applies also to the Agricultural Credit Corporation. That may be brought about perhaps also by the pressure of the banks. While it may be necessary to restrict credit, with a view to curbing the purchase of nonessential goods, I think a very definite distinction should be made in regard to loans for the development of production.

The former Minister for Agriculture freed credit to a considerable extent. He brought in schemes which increased credit facilities through the Department of Agriculture. Those have been scrapped. I hope that, realising the importance of increased production, the Minister will take steps to see that any farmer who wants credit to purchase additional cows or increase production will not be restricted in any way, and in the same way that any manufacturer who wants to purchase plant or to build additional accommodation for a new factory will also have credit freely available to him. While the credit squeeze may be utilised to curb over-consumption, it should not be utilised to curb production, because, if that is done, no useful results will be achieved.

Last year, as we all remember, the Minister for Finance was very optimistic in regard to the future of the country. If his statement last year is compared with that of this year, it will be found that there is a very marked contrast. Last year, he was enjoying the benefits of previous good Government. Now he has come up against the effects of his own administration and they are rather disastrous. I remember hearing a Minister of the present Government saying, when a loan was being sought in this country in 1952 at a rate of interest of 5 per cent., that the most abandoned republic in Central America can borrow money at less than 5 per cent.

At that time. That is the important thing.

It seems that since then the Minister and his associates have succeeded in dragging this country down below the level of the most abandoned republic in Central America.

Are we not all affected by what happens in the rest of the world?

The present Government have been unable to borrow money at 5 per cent. I think that is an appalling situation. It is a situation that is going to react upon various sections of the community. We have seen its reaction in regard to the action taken by the Minister in this Budget to withdraw £500,000 from the Road Fund and divert it to other purposes—to purposes that, as far as I can see, would have been financed out of the loan at 5 per cent. if it had been a success. So we have the position of money lawfully belonging to the roads and properly earmarked and pledged to be utilised for the construction of roads being diverted to other purposes.

The Senator uses only one part of the argument to suit himself. Why does he not quote the whole thing?

I wish Senator L'Estrange would grow up, but as there is very little time between now and 10 o'clock, I am afraid he will not have time to grow up to-night. There are people who claim that the Government is justified in taking this money away from the construction of roads. I do not hold that view. I think that money was urgently needed for the reconstruction of the hundreds and thousands of miles of county roads which have never been given a dust-free surface. There are tens of thousands of miles of such roads all over the country which reach out into the remote country districts. They are vital links for the people who live in the rural areas and their improvement would be a step towards making agriculture more efficient and in raising the standard of living of the people who have to live in remote rural areas.

It is unpleasant for the man living on a farm in a remote rural area to have to travel upon an exceptionally bad road to the nearest market town or to church on Sunday. It think it would be one of the most useful methods of employing public money to reconstruct those county roads and it would also have a substantial effect in relieving unemployment and giving employment to those people to whom Senator Commons referred who are living on unemployment assistance. Such people would be far better off if they were employed to reconstruct the rural roads.

I am in substantial agreement with those who said that income-tax is in many ways an unfair system of taxation, and not only unfair but restrictive, particularly as far as income-tax is concerned in regard to industrial output. Any man who is prepared to put his money into the building of a factory or into the provision of employment in industry should be, if possible, completely exempt from income-tax.

We heard in this debate—it was also referred to in the Dáil—the charge that farmers do not pay any substantial amount of income-tax and that they are, as it were, getting away with murder in regard to that form of taxation, but anyone who gives the matter serious consideration—I am glad the Minister took up the point—will see that our system of rating on land has the same effect as if the farmers were liable to income-tax. The large farmer who, in the ordinary course of events, does not give a sufficient amount of employment to enable him to avail fully of the employment allowance does pay a very considerable amount in the form of rates. If we take the rate at the minimum at which it is in most counties, namely 30/- in the £, we find that the man with a valuation of £100 pays £150. The man with the same standard of living and income residing in the city would not be called upon to pay that amount, generally speaking.

The attack which was made on the farmers in regard to this matter was entirely unjustified, and I was rather surprised to see that that attack was led by a Deputy who only very recently was supported by all Parties in the Coalition in a recent election, and secured his election. One of the first things he did when he was elected was to launch this attack on the farming community, and to charge them with being defaulters, so far as taxation was concerned. That is something which we should not accept, and I think it is something which should be avoided if we are to secure the best that can be secured from agriculture.

I think it will be admitted that the handling of our economic and financial affairs over the last ten years has not been as good as it should be. Fianna Fáil did their best in the short period when they were last in office, and, notwithstanding the fact that they had a very limited measure of support in the Dáil, they did well. I think that it was particularly wrong for any Party or group of Parties to have launched the attacks that were launched upon that policy of Fianna Fáil—attacks which The Statist has pointed out, brought the country almost to the verge of bankruptcy.

I want to ask the Minister what are the Government's intentions in regard to the capital development programme? Are they now in a secret and underhand way seeking to negative or slow down such works?

I know that 12 months ago plans for the erection of a county hospital were sanctioned for Carlow, and so far no decision can be got from the Department of Local Government to proceed with the work. Neither can any explanation be secured as to why it is being held up by the Department. It would seem that some effort is being made in a secret or underhand way to close down on that type of capital development.

In the same way, a loan was applied for by the Carlow County Council under the Small Dwellings Acts. The loan was for £50,000 and the application was made last February. Since then, no reply has been received from the Department or the Minister to that application. That is something which I believe should be dealt with. If it has been decided to close down on these works, then it should not be done in a secret or underhand way. It should be done openly and courageously and an explanation should be given as to why it is being done. It should be done in a manner that is fair to every county. At the present time the local officials do not know where they stand. They keep on writing to the Department for money which they are told has been sanctioned, but which they cannot obtain.

It seems to me that the serious economic situation in which we find ourselves is due partly to conditions existing in other countries that find themselves in a like predicament, and partly to a heritage from the past. If this is a correct assessment of the situation, then the causes of our difficulties were not within the control of the Minister, and personally he has my sympathy in being called upon to deal with them.

If he was faced with the position where consumption was out-running production, and where savings were inadequate, there seem to me to have been two courses open to the Minister —either to budget for a surplus of revenue over expenditure by increasing the rates of direct taxation, so creating forced savings and a corresponding reduction in the purchasing power, or to impose taxation which would have the effect of reducing the consumption of certain classes of goods. I am glad to see that he adopted the latter course.

The total revenue expenditure in this country for this year is £112,000,000 which is equivalent to approximately £37 per head of the population. That is a formidable figure for a small country which is naturally devoid of raw materials. The Minister, when speaking in the Dáil on the Financial Resolutions, pointed out that it was exceedingly difficult to pick out individual items which could be substantially reduced. On the other hand, the cost of some of them, when compared with expenditure in Britain for the same purpose, looks to be on the high side, if related to the comparative wealth of both countries. For example, the total cost of social insurance, social services, social assistance, and health amounts to £30,000,000, or £10 per head of the population. In England where the wealth and national income is twice as great as ours, the expenditure for these services is £7 10s. per head. It seems, therefore, that we are spending relatively more on these services than the British are.

I do not suggest for a moment that social services are not highly desirable, nor do I suggest that, even were it possible, that expenditure on them should be curtailed, but I do suggest that their cost has outrun our productive capacity, and until such time as this has caught up with them, expenditure on them should not be increased.

The Minister has stressed the necessity for adequate saving, so far as the individual is concerned. Personally, I think there is no incentive for a part of our community to provide an income, even though small, when unemployed. A pension in old age, free treatment in the case of illness, and to an extent provision of subsidised housing have removed certain of the fundamental reasons for saving. In the case of those who are better endowed with this world's goods taxation abstracts a considerable portion of their income and, I think, inflation is a direct deterrent.

The report of the Committee of Inquiry into Taxation on Industry has a considerable bearing on corporate savings. On the first page of the report an abstract from the address made by Deputy MacEntee, then Minister for Finance, to the first meeting of the committee is quoted in which he stated:—

"The needs of the Exchequer cannot be ignored, for, if they are, the public services may suffer. Regard must be had also to the extent to which the burden of other classes of taxpayers will be increased as, in general, concessions in favour of one class of taxpayer operate in their early stages at least to shift the cost to other shoulders."

This, to my mind, placed a severe restriction on the recommendations of that committee.

Though I had hoped for more, if the Minister adopts all the recommendations of the committee, it will give a measure, but, in my opinion, an inadequate measure, of relief, and it is satisfactory that in the Finance Bill provision is made to grant an initial allowance of 20 per cent. on new plant, for the relief of industry. It is satisfactory that in the current Finance Bill he has made a start by creating initial allowances. I think it is admitted that the only solution of our difficulties lies in an increase both in production and in productivity. To achieve this, capital is needed and to provide capital, savings are required.

I suggest that, in the case of industry, provided adequate profits are earned, and the inroads of taxation are not excessive, these two steps can be merged into one and that once established, industries should be in a position not only to replace their plant, when this becomes necessary, but also to provide out of retained profits sufficient for reasonable expansion. From personal experience, I know that, in planning for extensions to be paid for out of retained profits, managements will be far more enterprising and will be prepared to accept risks which they would not contemplate, were the necessary funds raised by an issue of additional capital. To encourage savings of this nature, I would suggest to the Minister that corporation profits tax should be levied only on that portion of the profits distributed by way of dividends.

It is difficult to point to items of current expenditure where any substantial reduction can be made, but I feel that some of the capital expenditure contemplated might be postponed. Apart from the physical difficulty of raising the necessary funds by issues of stock to the public, or in other ways, I think that part of our economic—or, rather, balance of payment—difficulties arises from the fact that when capital expenditure is made which is not immediately reproductive, it has the effect of placing purchasing power in the hands of the public without increasing the supply of goods, thereby having an inflationary effect.

When introducing the Budget, the Minister said that the capital Budget included £7.95 million for housing and £1.95 million for hospitals. The Government's capital expenditure on housing in the past ten years amounts to £80,000,000. It is obviously desirable that good houses and good hospitals should be provided and nobody will question the fact. What I do question is whether we can at present afford the strain imposed on our balance of payments.

Various Senators have criticised the abstraction of £500,000 from the Road Fund. Personally I feel that the proposed expenditure of £5,000,000 on the roads is unnecessarily great. Undoubtedly the straightening and widening of roads is, from the motorists' point of view, of great advantage, but whether the time it saves to agricultural and industrial transport yields an adequate return in terms of production seems to me to be open to question.

I am afraid that I have repeated a great many things which Senator O'Brien has said, but the only excuse I can give is that it is because he is an economist and I am a banker.

The Minister in introducing this Bill said that he was imposing taxes on expenditure rather than on income and that he was providing assistance to production and encouraging savings. That is a most heartening statement made by any Minister for Finance because heretofore taxes were imposed in such a violent manner upon income that no money was left for productive re-investment. Many people have asked here to-day what is wrong with our economy. I have been posing that question to myself and seeing if I could answer it in a very simple way. I believe that the solution is not as complex as some people suggest, though its application is going to be extremely difficult. We are not investing sufficient money in self-sustaining investments.

We have Senators on the opposite side of the House, including Senator Cogan, criticising the Government for all our ills and suggesting that we build a new hospital in Carlow at a cost of £500,000 and spend a further £1,000,000 on the by-roads of this country. In just a small point of detail, the Minister for Local Government did change the emphasis of expenditure on roads from the main roads to the by-roads; but while Senators hold that you can improve the position in this country by spending money on hospitals and on by-roads, we are not going to make any progress.

I believe this country is basically sound in its economy. We are one of the few countries in the world which is a creditor nation. We still have a considerable amount of external assets and I hope that nobody will propose that we should repatriate them, except to repatriate them for self-sustaining investment at home, investment that will help us to export goods and bring in a far greater net income to the country than if they were invested abroad.

I think it was Senator Cogan who said that we were on the verge of bankruptcy. That is careless talk. Whatever our political differences may be, I believe that we will all have to get down to the problem of solving these matters. I think we should look at the affairs of the nation more in the way in which we would look at the affairs of our own households. Senator Commons put it very well when he said that if our expenditure goes up too much, it will be our downfall.

The Seanad adjourned at 10 p.m. until 3 p.m. on Thursday, June 28, 1956.

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