I am grateful to the Seanad for enabling me to fulfil another engagement later on this evening and I am particularly grateful to those Senators who cut short their contributions. Because of that reason, Senator Stanford put, very tersely, three questions to me. I should like to deal with them first. He asked us whether we had considered the possibility of there being oil in this country. The Minister for Industry and Commerce the other day indicated, when he was introducing his Estimate, that there were certain proposals to explore the possibility of finding oil and natural gas here being examined at the moment in his Department. I know rather more about it than was indicated but I think that the House will agree that it would be wrong for me at this stage to give any further indication than that. With Senator Stanford I sincerely hope that those possibilities will become a reality. If, perchance, oil was found the task of the Minister for Finance would become a relatively easy one. He also mentioned existing custom duties on musical instruments. That was one of the McKenna duties imposed in 1916, or thereabouts. It is not a very great amount in total and is a duty which some Minister for Finance might consider, or which I might consider, changing favourably at a time when reductions of taxation are possible. It would be all wrong, no matter how trifling such a tax was, that there should be any question of remission against the pattern in which we framed our Budget this year.
He also asked if anyone here drew bonds in the new British scheme would he be liable for taxation here on the benefit of the premium that he would receive. Speaking in my personal capacity—I have, for the moment, left the profession in which, as a lawyer, I would be in a position to advise Senator Stanford on that brief—I would not think it quite correct for a Minister to endeavour to give an explanation of the law. I am afraid I will have to ask him, and the House, to excuse me from giving such an explanation because we have not had a full opportunity of examining the details, which were only announced the other day, of the British scheme.
As I am mentioning premium bonds, I will refer to the suggestion made by Senator Professor O'Brien that we should utilise a similar scheme in relation to the provision of capital here. We are, of course, in a slightly different position from the British. We have here the Hospitals' Sweeps which contribute (a) to the revenue by reason of the stamp duty on their proceeds and (b) very substantially indeed to the provision of hospital facilities. Were it not for the assistance towards the Hospitals' Fund from the proceeds of the sweeps, it is easy for all of us to see what the position would be and the enormous cost that would have to be met from the revenue.
The benefit which the Exchequer receives from the Hospitals' Sweeps is a real one and we would want to be very sure before taking up a scheme, or instituting a scheme, of premium bonds that we would not merely be effecting a transfer of funds and that we were in fact getting new funds.
Various Senators referred to matters with which perhaps I might deal more completely on the Committee Stage and I would ask the House to excuse me if I do not refer to some of the detailed matters which we can discuss on the other stage of the Bill next week. The Second Stage of the Finance Bill, I would suggest, is more the time for discussing broad general principles rather than the detailed implementation of those principles.
Members on every side of the House, I thought, as far as I could follow the discussion, agreed with me that our fundamental trouble at the moment is that we should get increased production. If we do not achieve increased production both in agriculture and in industry then we have no hope of maintaining, much less of improving, our present standard of living.
Certain Senators suggested that we should concentrate more on production for export. I think that, if we concentrate on raising the level of total production, it will have the effect that more will be available for export and that it is better that we should concentrate in that way on production as a whole rather than that we should try to develop it selectively for export. When I say that, however, I do not want to be taken as suggesting that there must not be a vigorous drive for export markets. There must be, and particularly by those people in every walk of life who have the home market successfully reserved for themselves. There is a duty on them, because of the circumstances by which the home market is reserved for them, to follow up their real obligation of coming out and doing their utmost to find and secure export markets and so ease our difficulties.
Agriculture, of course, is the main basis on which we can increase production as a whole. Senator O'Callaghan suggested that those engaged in agriculture were not of a mind to do so. I do not agree with him. I have the utmost faith in the farmers of Ireland. I firmly believe that if the difficulties of the situation are brought home to them, and if the way is pointed out to them in which they can assist, then they will do their utmost in every respect to meet the difficulties with which we are all faced.
Incidentally, I may add in parenthesis that the Senator referred to Goleen. I am afraid I cannot "off the cuff" answer him as to whether what he said is correct. I have been in Goleen only once, more than five or six years ago, and therefore I am unable to tell him whether the statements to which he referred were correct or otherwise. I have no doubt that if he would have a discussion with the Senator from West Cork in this Assembly, he would be able to test the accuracy of the statement as regards the numbers of children, etc. It is very unfortunate indeed that many statements are made, not in this House, that are without foundation and are taken up and are quoted outside this country as being the gospel truth, when in fact they are completely without any foundation.
There was a reference made by Senator O'Callaghan and other Senators to wheat. Let us be quite clear on what the position is in respect of wheat. I have referred to it on many occasions before, but I should like to lay stress on it as it has been mentioned here in connection with the general agricultural production. We use approximately 450,000 tons of dried wheat every year. Those who are in a position to assess these matters—I frankly accept that I am not—suggest that it is impossible to make bread from native wheat, that is, machine bread, except on the basis that we mix with it sufficient hard wheats and dried wheats from abroad. That means that our native wheat harvest should be fixed at approximately 300,000 tons a year. That is the amount of wheat, by and large, that was obtained last year. The reason that more wheat was imported last year was not any drop below the required 300,000 tons, but that in the previous year we had, unfortunately, dreadful harvest weather and the native grain was, through no fault of the farmer or anyone else, in such a condition that it was necessary to dilute it to a greater extent than normal with imported wheat. On that occasion, more native wheat was carried forward from the previous year than would otherwise have been the case.
I mentioned that 300,000 tons were the approximate amount of dried native wheat that would be required. That was a formal decision of the last Government, a decision of which I approve. As I say, in the season just passed, it was the approximate amount that was obtained. It is therefore untrue to suggest that any action of the present Government or any action whatever depressed the amount of native wheat below the figure which it was determined by the previous Government could usefully be utilised. There is no sense in endeavouring to increase agricultural production merely by switching from one crop to another. We want to ensure that the total production is increased.
Senator Cogan mentioned that the Minister for Agriculture and I seem to differ violently in our estimation of the total output, but it is entirely a matter of which way you look at the question. When I was speaking, I was referring to gross output and when the Minister for Agriculture was speaking, he was referring to net output, allowing for the changes of live stock. There was no question of any differences whatever such as the Senator has suggested. However, as he did mention it, it might be as well if we looked at the facts in relation to the volume of gross agricultural output, even allowing for the changes in live stock. If these changes in live stock are included in the volume of gross agricultural output, we find that in 1955, it rose by 3.3 per cent. The other method did not allow anything for additional stock on the land that is held on the land to carry forward on 1st of January. That additional stock will come in, or, I should say, will go out, this year, and it will come to hand in our statistics for 1956, but we had in terms of trade in relation to sales of agricultural products a drop as compared with last year. It is on account of that movement in the terms of trade that our exports in the first five months of this year have not been up to the peak of last year. I only mention that so as to make it clear that the prospects in respect of our agricultural exports this year are not a matter for complacency, but they are nevertheless not as unsatisfactory as one might otherwise believe, or as certain Senators ask us to accept. We must definitely increase our total agricultural production. We must ensure that we get that additional production and not merely get production of one type at the expense of another.
Senator Commons, in what I must frankly describe as a most comprehensive and courageous speech, made it clear that, in his view, one of the ways of doing this would be to increase the pig population—to increase pig production. I agree that not merely is it one of the ways, but I think it is the way in which there could be most quickly achieved an expanded output in agriculture. The arrangements the Minister for Agriculture, on behalf of the Government, announced recently, by virtue of which we are going to guarantee a floor price for Grade A pigs will, I believe, materially assist towards this end. Up to this, it has aways been the feeling—it was more than a feeling: it was a fact—that, when pig prices were good, farmers rushed into pig production and that, immediately they rushed in, the prices fell and they went out of production. There was all the time this ebb and flow in pig production. The floor that is now being put under the price for Grade A pigs should, I think, enable people to plan their production in a much more satisfactory way and give them the confidence they need.
I stressed that it was for Grade A pigs, and one of the reasons I stressed that particularly is that it is, perhaps, on feeding barley and skim milk that Grade A pigs can best be fed. There is no market now for the old type of bacon that used to be popular—the oily, fat, greasy type. That was produced satisfactorily enough on yellow meal, maize, but the public taste has changed entirely to a different type. With skim milk, feeding barley is the best means of producing the pig now suited to the public taste and to be classified as Grade A. With the new varieties of feeding barley that are available, it is possible, and it should be encouraged everywhere, that people will do their utmost throughout the country, no matter in what part of the country they are, to go in in a much bigger way for pig production based on growing their own requirements of feeding barley and feeding it to their own stock with skim milk. That is one of the quickest ways in which we can expand our agricultural production.
Other Senators, when they were speaking on the question of production, seemed to suggest that it would be possible to arrive at a system in which agriculture would be taken out of politics. Senator O'Brien was the first person to suggest that. He followed it by saying that, whenever he discussed the subject, he heard so many policies that he was somewhat confused and that, therefore, he wanted people to sit down and produce one policy. But the very reason people cannot sit down and produce one policy is that they have different views. There is no use talking about taking a thing out of politics to get an agreed view, when the fact remains that different people have different policies with regard to the subject. In every walk of life, it is easy enough to get agreement, if the other people come to our way of thinking, but when it comes to asking each of us individually to accept agreement on any problem, on the basis of going over to the other fellow's point of view, the solution does not seem quite so pleasant.
One of the reasons why it may be difficult to do as the Senator suggested, and as others suggested, is that there are fundamental differences in the approach to agricultural policy between the present Government, for example, and the Opposition. While I accept unreservedly that all political Parties should and, I am sure, would, co-operate for the betterment of the common good in achieving an increase in agricultural production, which we all accept as being so necessary, nevertheless I think that there might be such a difference in the method of approach to that increase that we would find that, in endeavouring to get a unified policy in that respect, we were in fact achieving no policy at all.
The appropriate method seems to me to be for the Government of the day to take advice, to take help, and to take assistance from those and to co-operate with those who are engaged in agriculture throughout the country; and having ascertained views in that respect and with the special knowledge that any Government must have about circumstances, particularly in regard to export markets and so forth, then to endeavour to frame proposals best suited to the facts as they see them and best suited to the circumstances of the time. Co-operation and harmony and advice, both from the Government and to the Government, by the various farmer organisations is the keynote upon which this Government proposes to push forward its agricultural policy.
Before I go to the general discussion there was on finance itself, I might just perhaps mention one or two other matters. Certain Senators mentioned the question of income-tax and many on one side said a valedictory prayer to it. Other Senators on the other side were not prepared to take leave of it so gracefully. I do not know whether the people who are talking of the abolition of income-tax are thinking purely in terms of the abolition of personal income-tax, as apart from corporate income-tax. Income-tax and surtax, corporate and personal, cover approximately £25,000,000 out of our total tax revenue of approximately £90,000,000. It is a very large proportion, and if people are thinking in terms of the abolition of that, they would want to do an awful lot of thinking also in terms of what is going to be the substitute. Certainly there are things that could be substituted— turnover taxes, sales taxes and so forth—but they would have to be on such a wide variety of things and at such a rate that they would, I am afraid, frighten the people who proposed them, if they were thinking in terms of total tax.
I think myself that they are only considering it from the point of view of personal taxation, as apart from corporate taxation. We are not the only country in which there is this somewhat strident controversy going on in relation to income-tax. I happened to pick up a magazine from America the other day and I found there exactly the same arguments being advanced on both sides—perhaps even more stridently and more vociferously than they are being put here. Similar discussions have appeared from time to time in England. But I have obtained a long list and, as far as I know, income taxation of some sort or another is in existence in almost every country in the world. I obtained a list of the countries in which some type of income taxation was in existence, but the list is so long that I am not going to weary the Seanad by reading it out.
However, that does not mean that I accept that the system is perfect. I do not. It is because I feel that the system may require variation and may require examination that I indicated I was prepared to consider what type of commission it would be best to set up to examine the matter, what type of examination would be the best, and what would be the most suitable terms of reference, when I had concluded my examination of the report of the Committee on Industrial Taxation. Senator Murphy asked me why I would not do it at once. The reason is very simple. The examination of the implications of the report of the Committee on Industrial Taxation will take some considerable time.
Senator Murphy appreciates that the provision of the data for a new commission would require a great deal of work. There will have to be a good deal of research work, too, before one can finally determine the exact terms of reference and the best manner of completing this examination. Quite frankly, there are not sufficient skilled personnel available in the Revenue Commissioners to enable that examination to proceed contemporaneously with the examination of the Industrial Taxation Committee's Report and, at the same time, to be able to carry on the ordinary and very onerous duties the Revenue Commissioners and their staff have to carry out. It is a question of dealing with things in an orderly way, and the orderly way surely is to conclude the work on the report of the commission that has just come to hand rather than to leave that undone and start something else first. We shall conclude what has been reported on first and, when we have concluded our examination of it and its implications, then we will move on to the other problem.
I am gratified and flattered by the number of people who say now that this general examination of our income-tax code is long overdue. I am gratified and flattered by the implication that I am tackling something long overdue, but it would be very bad economy, and a very bad headline to set, to tackle that before we had completed the other task that was initiated by my predecessor.
In regard to the economic situation in general, Senator Walsh, I noted yesterday, said that I had delayed far too long in dealing with that situation. Other Senators on that side of the House complained violently about the method by which I had dealt with it, and that I had been much too severe. Senator Hawkins, I think, particularly took that line. It would be very much easier for the country to understand where Senators on the other side of the House stood if they would deal with the matter with a united voice. One says I waited too long, the other says that I was too severe. Let us take the first criticism first. I certainly mentioned in the other House but I cannot remember whether I mentioned it before in this House, that we might make a comparison with what Deputy MacEntee as Minister for Finance suggested was his problem in 1951. He did not take the line I took. He took the line of waiting until the annual Budget and doing nothing whatsoever about it until the annual Budget, though in his case—I am not going to comment on whether that course was right or wrong—the problem then was even worse than the problem with which I had to contend last March. I took the view that it was not desirable that the annual Budget alone should be the only occasion on which one should introduce measures, fiscal or otherwise, for the purpose of dealing with a particular economic situation that might arise.
The present manner in which the economy moves in any country is such that it is so fluid that you cannot merely deal with it from Budget to Budget. It is not a problem that calls only for annual treatment. There are problems with which in every country whoever is entrusted with the task of being Minister for Finance must grapple almost from day to day, and it would be, I suggest, quite wrong to adopt the same method that was adopted by my predecessor, of merely waiting until the Budget to do it. On the contrary, I stepped in much earlier than he did, and took the measures I did take in March.
Senator Professor O'Brien, speaking of the Budget, termed it a good Gladstonian Budget. I am not exactly clear on all the implications that he intended by that. There are two implications which I could draw from it. I will, however, suggest this, that, as I have said a second ago, the Budget is not the only occasion upon which it might be desirable to deal with economic trends. I think Gladstone would have thought it was the only occasion, and to that extent I am afraid the suggestion is more Gladstonian than the Budget itself.
It is right, however, that we should appreciate that while it is not the only occasion, it is the occasion upon which the framework should be set, and that the Budget itself should not be out of pattern with the general framework one expects throughout the financial year or one has visualised as the result of economic events in the previous financial year. I think I can say that this Budget is in that general framework, putting its stress on expenditure and on imports in so far as taxation is concerned and, in so far as the other side of it is concerned, endeavouring to do something, albeit small, for production and for savings. I do not suggest at all, however, that any Budget a Minister might bring in should be free from criticism. It could not. The circumstances in which we are here are obviously circumstances in which the margin available to alter the economy and shape it is very narrow indeed. The Senator's suggestion was that I should have budgeted for a very heavy surplus on current account. I think the Senator, however, was perhaps not quite fair when he made that criticism without, at the same time, making it clear that the transference of the proceeds raised by the special import levy to capital account would, to that extent, have had somewhat the same effect. Whether additional sums should have been taken out of current revenue and transferred to the capital account with the additional taxation that that would involve is a matter about which we could have discussions for a very long time indeed. It depends on many things. It depends on the trend particularly of savings during the coming year. It depends on the trend in relation to total production. But, as I say, it would be a matter for discussion over a longer period than is available to us this evening.
I do stress in that connection as heavily as I can that in the present day the one thing we must always remember is that the economic situation will require changes to be dealt with more quickly than in the past, and that there must be greater flexibility by those in charge of the economy of any country in dealing with and reshaping financial policy. I hope that my mind, as time goes on, will not be as rigid as perhaps others were in the last century.
I want to say this in relation to the speech made by Senator Hickey and, to a minor degree, by other Senators: no monetary, no banking, no credit systems can, of themselves, create an economic Utopia, and, by suggesting that all our problems arise from monetary, or banking, or credit systems, we are diverting the attention of the people from the real problem, which is production. It must be towards that problem of production that we bend our energies, our minds, our efforts. I do not think it is right for Senator Hickey—I know him for a long time as a sincere man and one who believes in what he says—to suggest as he suggested, in all good faith, I have no doubt, that we were transmitting through exchange control personal applications to the Bank of England. It is not true.
The difficulties that may lie ahead in the financial field are difficulties that can be overcome, if the people appreciate those difficulties, and make up their minds they are going to do their part towards overcoming them. The first basis upon which they can be overcome is that we ensure there will be adequate savings to carry out a productive capital programme. If there are not adequate savings in the community, then, no matter who is in Government—whether it is the present Government, the Government that was there before us or the Governments that will be there in future—it will not be possible to do the things we would like to do to ensure the proper development of our country.
It is, to some extent, an unfortunate vicious circle that the underdeveloped countries must necessarily find it more difficult to set aside savings towards their capital development than the developed countries, but, if they do not do so, then they fall further and further behind in the economic race. We must first of all endeavour to convince our own people that we are determined to do what lies in our power to prevent depression in the purchasing power of our money. We must do that to ensure that there will be an atmosphere in which our people will think it worth while to save.
We must, at the same time, make it clear that those who save are not putting aside from current consumption portion of their means for sterilisation purposes but for the purpose of being able to get productive investment in the country that will inure to the benefit of the country as a whole and to everyone in it at a future date. We must make it clear to our people that savings will be used in such a way as will assist production; that these savings will be utilised to the fullest extent, to the whole extent, here in Ireland in building up our resources.
We must also make it clear to them that if they are not prepared to assist in that building up, we will not be able to do any of the things that we should do and that all of us might consider desirable. That is the first fundamental that our people must realise at the present time. I have no doubt that when it is brought home to them that the development of our country depends on the proper productive use of savings and that sufficient savings should be made available to put through the capital programme of the State, everyone on all sides and in every part of the country, without distinction of class or creed, will come together for one common purpose—to try and ensure that we develop to the fullest extent such resources as we have in Ireland to-day.
