Seanad Éireann debate -
Wednesday, 4 Jul 1956

Vol. 46 No. 5

Gaeltacht Ministry. - Finance Bill, 1956 (Certified Money Bill)—Committee Stage (Resumed) and Final Stages.

Question again proposed: "That Section 20 stand part of the Bill."

Mr. Hawkins

This section is the section which confirms the Orders made under the special import levy. The Minister, in replying to a question put to him by Senator Cogan, said that the time since the levies were put on has been rather short, and that it would not be possible to gauge whether or not they were achieving the purpose for which they were put on. That may be so, but we have seen from statements published that the position has not improved considerably since the levies were put on. However, I suppose we will have to wait for the full period of the financial year before we are in a position to judge their justification or not.

That, however, is not the matter that brought me to my feet. When important decisions such as these have to be made—and we have seen now over the past 12 years, or over a period of years, that any action that a Government takes has many ramifications and is likely to lead to so many dislocations, some serious and others not so serious—careful consideration is required and such consideration is necessary when steps are taken to impose levies, to make restrictions or remove assistance, by way of subsidies or otherwise. We have had experience over the past 12 months, first in relation to the removal of the subsidy on biscuits, but I will not go into that.

An Cathaoirleach

No, the Senator may not; it is not in order.

Mr. Hawkins

We have had the position of the restrictions in relation to cars and car parts which have had very serious repercussions for a number of employees in this industry. We have seen, within a very short time— I should say, within a few weeks—of the order being made, the Minister for Industry and Commerce compelled to amend it. I do not altogether find fault with that, I think it is better when you find you have made a mistake and that something you have done is having an undesirable effect, to take steps to rectify the position, rather than let it continue, in case that action might be wrongly interpreted; but it does bring us to the necessity for very careful consideration and I doubt if that consideration was given in the case in the making of a number of these Orders.

We have had three or four of them amended in a very short time when their bad effects were noticed. Probably these effects would not have been as serious as they were if the ultimate modification of the Order had been made at first. When you take steps to curtail the importation of certain commodities, you are bound to affect people engaged in production and distribution. Therefore it is a very serious matter and the difficulty with questions of this kind, particularly when they relate to persons who are qualified in particular trades or handicrafts, as the people in the motor industry are—or in the building trade, as we saw at another time—is that these people will not be satisfied with going to the labour exchanges for doles, no matter how attractive they may be.

They are people who were in receipt of good remuneration over a period of years, and, immediately any small slump occurs, even for a short time, they at once take the next boat across the water, particularly because of the conditions that exist over there, and if possible try to get employment there. It is because of these facts that we should be very slow to make Orders, and then only when they are absolutely essential, and after having given careful consideration to their ultimate effects, particularly as we have being crying out over the years for persons with technical training. When we take any steps that will upset people of that sort in their employment and create a feeling that they have not got permanency, then we will lose these people. Their loss at this time is one that should be carefully considered.

We recognise that something had to be done, and whether the results will be achieved in this way or not, I do say that, before we take any steps which may curtail employment in any field, we should try to assure ourselves that we have given the matter every consideration. It is only in cases of national necessity that we should take such steps, no matter what inducement there may be to the Minister for Finance or to the Department of Finance from the point of view of getting in revenue. Getting a large sum of money into the revenue pool should not be the chief consideration. The chief consideration should be what effect it will have on our people, and particularly on keeping people in employment here, instead of creating a position of rising unemployment.

Professor Hayes

These special duties were not imposed for the purpose of creating revenue. The Minister made it quite clear when he said they were being imposed as a deterrent and the revenue is to be put into a special fund for capital expenditure and not to be used as part of the current revenue. Before the Minister was attacked for not moving quickly and now he is attacked for moving quickly. When he does do something, he is bound to be wrong and told that he moved too quickly without sufficient consideration.

One of the results of imposing a blanket Order of this kind is that there are cases which have not been adverted to and perhaps which are very small in their own way, but which are serious to the people concerned. There are two matters which I happen to be interested in. One is the imposition of duties on works of art coming into the country. I think that is very undesirable and should be avoided. There is no duty on the works of artists going into Britain. The amount coming here is very small and the amount coming from the Six Counties is very small, and there may be no danger of retaliation. All the same, there should be exemption, and if possible the free interchange of matters of that kind which have a cultural value, as well as having a considerable financial value.

The other point is that the imposition of tax on foreign newspapers has had a rather unusual effect on one rather enterprising newsagent who happens to be living near me. He was stocking French, Italian, Spanish and German newspapers and journals and built up a special trade. I think he was the only person in the State who had such an extensive stock. It is very valuable from several points of view. We should get, as much as possible, the European angle upon things rather than the purely British and, secondly, from the point of view of students his shop was very valuable indeed in supplying examples of journalism in modern languages which are generally studied at universities. He had built up a very special trade in this matter, getting a very considerable amount of books, newspapers and periodicals. He had a good business for which he worked very hard and, apart from his business concern, he was doing excellent cultural work. Under these duties, these papers now cost more. In fact, they cost more to the extent that it may be cheaper to order them direct from the publisher. If that were done, a certain amount of Irish work and Irish profit would be cut out.

It is one of my hobbies, here, to study the way in which Ministers resemble one another, no matter what their Party may be. Every Minister for Finance will tell you that once you make an Order and begin to exempt certain things you find that first you exempt A, then you exempt B, then C and then your Order is undermined. However, in relation to imports of foreign papers, there is one loophole. You can get an educational paper in free of duty. It is very difficult to determine, for example, that Le Figaro, a Paris newspaper, is educational! It is not. At the same time, it is a high-class French journal and the kind of person who wants to read it should be able to get it. It is an advantage to us that that kind of paper and similar papers from Italy, Germany and Spain, should come in. I suggest that, if at all possible, the tax on non-English language papers and the tax on works of art should be removed. These are the two points I happen to be interested in myself from various angles. If possible, these taxes should be removed.

Professor Stanford

I support what Senator Hayes has just said on the subject of taxes on works of art. I had intended to make the point if he had not made it. It seems to me very regrettable that paintings, sculptures, and so forth, should be taxed in this way. It is regrettable for one reason in that it breaks a unity which does exist in our country. The artists of Ireland work fairly closely together and in harmony with one another. We are now imposing a stronger barrier between the two. There has been a good deal of outcry in at least one of the national newspapers on this subject. I appeal to the Minister to make a special exception in the case of works of art. It may seem perhaps over-specious pleading but I suggest to him as Minister for Finance and not as Minister for Fine Arts, that a way to prevent inflation is to encourage people to spend money on works of this kind. They are not consumer goods. If anything, they gain in value, if carefully chosen. I suggest to him that he is not preventing inflation in any way or really doing much to restore the balance of payments by taxing these works of art in this way. I strongly support Senator Hayes's appeal.

Mr. Sweetman

So far as the comments made by Senator Hawkins are concerned, Senator Hayes has dealt with some of them and dealt with them very effectively. I was criticised from the Senator's side of the House for not moving quickly or stringently enough and now he says I should not move too quickly or be so stringent. If works of art are being brought in here for a non-profit exhibition then, even though they are sold at such an exhibition within the country, they still are not chargeable with the levy. I can appreciate anxieties in that respect, but, in a situation of the difficulty that has arisen, it is very difficult indeed if not impossible to take steps to rectify the situation without affecting some interests: in fact, it is quite impossible, I am afraid, to do so.

So far as the papers Senator Hayes mentioned are concerned, there is an exemption for daily newspapers not having a circulation of more than 1,000 within this State. I should be very surprised indeed if more than 1,000 copies of Le Figaro were sold here. That was put in for the purpose of enabling what one might call perhaps student-reading of that type of foreign newspaper that would be desirable.

The levy is bound to cause some inconvenience, if nothing more, but the balance of payments situation which we found after the publication of the February trade returns was such that I am afraid that inconvenience was unavoidable.

I trust the House will forgive me if I go to register my vote in the Lower House. I shall be back as quickly as possible.

Mr. Burke

I wish to refer to the duty on the import of newsprint. I should like to ask if the Minister would consider a similar concession in respect of small papers which are published within the State. They have to pay this 5 per cent. duty. I understand that the levy was originally imposed because of the enormous consumption of newsprint here, but it has had a very bad effect on weekly papers and periodicals and technical and scientific journals. There are a few of these types in this country and I think we should not discourage them by this levy. It is quite possible that the Minister might frame a scheme whereby, say, the first 100 tons of newsprint might be allowed free of duty. That would mean that most of the smaller papers and periodicals would be free of duty. Maybe the Minister's secretaries would bring this matter to his attention. The position is very serious for a number of these smaller papers by reason of the imposition of this duty. If it cannot be considered this year, maybe we might have a concession in this respect next year.

About two or three months ago I read that the president, I think, of the provincial newspapers in Britain said he feared that most of these small papers would be driven out of existence by high wages and the cost of capital re-equipment. We have the same trouble here in the provincial papers. The 5 per cent. duty will make the position worse for many of these small papers and periodicals.

Professor Hayes

Part of the point made by the Senator is met by the terms of the Order which includes periodicals which are trade, craft, trade union, scientific, religious or educational. I take it that the Senator is thinking of other small papers and I will see that his point is brought to the Minister's attention.

Mr. Crosbie

I think Senator Burke is referring to publications printed within the State and which, as such, do not get any relief under the levy. As the Senator said—quite rightly, I think—the Minister revived this levy. It was a duty that was originally imposed by a previous Minister for Finance and was suspended in actual operation as at that time it was felt it imposed an unnecessary burden on publishers in this country and did not give a worth-while tax revenue. There was, of course, at the time of this original imposition, a great difference in the world price of newsprint. When the duty was first imposed, the world price of newsprint was in the neighbourhood of £10 to £12 a ton and, of course, a levy of 5 per cent. on the total importation of newsprint into Ireland at that time would not give a very worth-while revenue. It was for that, reason, I think, that the then Minister for Finance, who originally imposed this duty, subsequently suspended its operation.

From the revenue point of view to-day, of course, the picture is a very different one, because the current price of newsprint is between £58 and £60 per ton. Naturally enough, the 5 per cent. duty on that gives a rather different revenue yield. I would support Senator Burke, however, on this question, if it were a matter of the balance of payments position which caused the Minister to revive this levy on newsprint, and if it was for the purpose of curtailing or checking the extravagant use of imported newspapers. Apart from the revenue yield, I feel that the Minister might find other ways in which to curtail the newsprint users. For instance, during the war and for some years after the war, there was a system of newsprint rationing. During the war, of course, it was purely a rationing system, but in the years immediately subsequent to the war, the newspapers, at the request of the then Minister for Supplies, the Minister for Industry and Commerce and the Minister for Finance, imposed on themselves certain restrictions in newsprint user.

I feel that perhaps if those of us who are, so to speak, in the trade had been consulted about this and if the Minister's objective was to restrict newsprint user rather than obtain revenue, we could probably have helped him by imposing on ourselves a form of rationing to restrict the user of newsprint. We could have instituted greater economies by reinstituting the old system which we used voluntarily for quite a number of years after the war by not taking returns from news agents. We could possibly have come to an agreement to curtail the size of our publications and in that way might have helped him to achieve his objective of reducing the user of imported newsprint in this country and, at the same time, have avoided the financial hardships that this duty must, of necessity, impose on smaller publications and smaller printing concerns throughout the country. That is the type of publication to which Senator Burke has referred.

Question put and agreed to.

SECTION 21.

Question proposed: "That Section 21 stand part of the Bill."

Mr. Burke

On this section, I want to make one brief observation similar to that which I made on Section 7. This section applies apparently only to public companies and it is only large companies which will get any benefit.

Mr. Cox

It occurred to me to mention that the Minister might consider the wording of sub-section (1) of this section. Sub-section (1) says: "So long as Section 7 of the Finance Act of 1932 would apply." I think that means to say as long as a certificate is granted by the Minister under that section, so long as that is in force, because presumably the section refers to the relevant point of the certificate being in force. I just wish to draw the Minister's attention to that section, because there is an implication that the person concerned must himself be living in the country, whereas Section 7 of the Finance Act contains the implication of citizenship. Perhaps the Minister might consider that matter.

Mr. Crosbie

Senator Burke has just made a very definite statement about this section and I would ask the Minister to clarify it. Senator Burke said that the shares, stocks and securities referred to in this section are only those appertaining to public companies. In other words, it is the shares and securities which are on the open stock market. Am I to take it from the Minister that that is correct and that the relief granted under this section by way of death duties does not apply to the ordinary Irish business companies who have not got a public issue of their shares?

Mr. Sweetman

So far as the point raised by Senator Crosbie is concerned, this section deals only with such public companies as have made public issues or public offers for sale. The reason for the necessity of restricting the operation of the section to that type of company is, of course, obvious. Otherwise, it would be quite impossible to administer, and it was companies of that type that it was originally intended to provide for in the section. The section in the earlier part of this Bill, so far as income-tax is concerned, provided primarily for these shares.

So far as death duties are concerned, it has two aims, first, in so far as past issues are concerned, to make them more marketable, to provide that there will be a stream of purchasers, of people who are thinking of having to render their final account and who, on that basis, are setting their house in order. That will mean that there will be a demand for shares of the type in question. Secondly, so far as inducement in the future is concerned, I hope that if public issues are made, it will in the same way add some inducement and act as an incentive to people to apply for shares in public companies and thereby enable the proper financing of public companies to be made, rather than that they should rely permanently on bank credit. This, I hope, will ease the situation in which they can get ultimately into the appropriate type of equity share capital.

So far as I understand the point raised by Senator Cox—and I have some little difficulty, the Senator will appreciate, in that respect—not having heard the whole of his remarks—it is that this section refers to a person being domiciled. The reason is this: the liability for income-tax is determined by residence and if the Senator looks at Section 7 of the Finance Act, 1932, he will find that it commences, "Where an individual who is resident in Saorstát Éireann and is not resident elsewhere...." Income-tax depends on residence. If the concession were given without advertence to residence, then the concession would be available to somebody, for example, resident in Great Britain and, under the double taxation agreement, the effect of that would be that the benefit of a section like this would go, not to the individual himself, but to the British Exchequer. That was why the income-tax end of the concession was restricted to residence.

So far as death duties are concerned, there the basis of determination of liability is not residence but domicile, and, as for income-tax, so for death duties: if we did not provide that the concession was to apply solely to persons domiciled in this country, the effect of it could very well be, under the double taxation agreement, that the benefit would go to the British Exchequer rather than to the estate of the deceased person.

Mr. Crosbie

While paying full tribute to the very great service which the Minister is rendering under this section, as regards both death duties and income-tax, I still must express disappointment that as far as death duties are concerned he is confining the concessions to public companies, because I do feel that the great bulk of commercial and, indeed, industrial, enterprise and the backbone of commercial enterprise in this country, is the old-established family business. There is no inducement being given under this section to people to reinvest their earnings or profits in these old-established family businesses. There is now an inducement being given, and a very proper inducement, to invest in Irish industries through public companies, but I maintain that these old businesses, which are the backbone of commercial enterprise in this country, are equally deserving of consideration. It is a pity that no inducement is being held out to these people who are engaged in such family enterprises of one nature or another to plough back their earnings and profits and expand their businesses further.

Mr. Burke

I want to support Senator Crosbie in the plea he has made and I ask the Minister for Finance to examine it. When a project is mooted for the establishment of an industry in a country town, it usually means that three or four people get together and form a private company. Very often there is 100 per cent. Irish capital, 100 per cent. Irish directorate and 100 per cent. Irish labour involved. Is not the type of employment given in that type of industry the type that we should encourage? While I want to give the Minister all credit for introducing this section, I ask him to examine it and to consider that this country generally has small industries. This is a small country and with a population of 3,000,000 that will be the type and pattern of industry rather than the big public company.

I wish again to stress the great social and economic benefits and the great amount of stability that will accure to our whole economy by making this section wider in its application in the way in which Senator Crosbie has indicated.

Question put and agreed to.

SECTION 22.

Question proposed: "That Section 22 stand part of the Bill."

Mr. Guinness

When speaking on the Second Reading, I suggested that the corporation profits tax should be levied only on that part of the company's profits distributed by way of dividends, the object being to encourage the conservation of profits which companies have earned, so that they would be able to extend and replace their plant and equipment as it became necessary. I recognise that no alteration can be made this year, but I should like to ask the Minister to bear that in mind.

Mr. Sweetman

There have been suggestions from time to time that the corporation profits tax should be utilised in rather the same manner as the profits tax is utilised in Britain, for the purpose of stressing economically the balance either against distributed profits and in favour of undistributed profits or equalising them more, as the case might be. Frankly, when I was considering the proposals for the Budget this year, initially, I was doing so before the Industrial Taxation Committee's report came to hand, and I did anticipate at the time that there might be some wider examination of this problem in that report than in fact proved to be the case. The Industrial Taxation Committee did touch on this subject in referring to the question of taxes being remitted for pure export purposes and, as the members of the House are no doubt aware, ultimately advised against that. That committee, not having dealt with the problem raised by Senator Guinness in any very great detail, having only just touched on it in the respect I have mentioned, it will be a matter for us to consider at a later stage.

There are points that could be made in favour of the point of view raised by Senator Guinness, and there are points that could be raised against it. The argument in favour has been put up by the Senator and is clear enough. It would assist companies in a policy of consolidating and building up reserves. There is a matter to balance against that, that is, whether, in our peculiar circumstances, we have as yet sufficient experience of industrial profit-making to be able to ensure that there will be the interest in future issues and the interest in the capitalisation of future industry, if there is not sufficient play given in the interval to corporation profits tax being subdivided as between distributed and undistributed profits.

Apart from that, apart from the actual policy involved, there would also be the question of a substantial change in the yield, if the rates of tax on distributed profits were left as they are and the tax on undistributed profits reduced. I am not quite clear whether the Senator was advocating dealing with it in that way, or whether he was thinking of it from the overall angle that whatever sum it was decided to provide from corporation profits tax should be provided more by a tax on the distributed profits rather than upon undistributed profits. The members of the House will find the exact reference in the Report of the Committee on Industrial Taxation at paragraph 170 on page 64. In that paragraph, the committee appreciated that it was part of a wider field and one which, perhaps, should be examined in the future, either departmentally by the Minister for Finance or, perhaps, by the commission to which I have already made reference.

Mr. Burke

I have only one observation to make in regard to corporation profits tax. It sometimes causes hardship to a company. In connection with corporation profits tax, there is no tax paid on the first £2,500, and in the case of a company losing £7,500 one year and making £5,000 the next, they pay corporation profits tax on £2,500 in the second year, although they made a considerable loss over the two years.

Question put and agreed to.

SECTION 23

Question proposed: "That Section 23 stand part of the Bill."

Professor O'Brien

Section 23 provides for the initial allowances. This, I take it, is based on the report of the committee inquiring into industrial taxation. While it is good as far as it goes, I do not think it goes far enough. The committee as a whole recommend initial allowances in regard to buildings, as well as in regard to plant. They also recommend an additional allowance in regard to wear and tear.

The Minister has not gone as far as the committee and I want to draw particular attention to one of the reservations to the report of the committee—Reservation No. 6 by Mr. Patrick Lynch, in which he advocates a rather more radical change in the depreciation allowances than is recommended by the committee itself. I do not propose to read the whole of this reservation. I refer the Seanad to page 92 of the report where it will be found.

The main point about it is that the present depreciation allowances are conventional and arbitrary. They are laid down by a series of judgments by the Revenue Commissioners which on the whole are satisfactory, but, at the same time, they are rather rigid, rather inflexible and certainly do not always correspond to the real life of the capital which is being depreciated. The point in this reservation by Mr. Lynch is that if we really sincerely desire to increase industrial investment, we should relate the depreciation to the real life of the asset, and that business people should be allowed to state themselves the rate of wear and tear at which the depreciation should be reckoned. The matter is argued in the reservation and I do not propose to read it.

The main point is that, at a time of rapid change in technology, business people may be very slow to install new machinery, especially of an experimental kind if the depreciation is written over a long conventional period which has no relation to its real life, and that they should be allowed to shorten the life of the depreciation period in such a way as to write it off quickly, if it was not a success. That would make the depreciation allowances more realistic than they are and would remove an element of arbitrariness, conventionality and unreality from the tax system.

There is another point about it which is not made in the reservation— I think it is relevant—and that is that at a period of rapidly rising prices, if the period of depreciation could be shortened, as it would be, not in every case but in many cases, the great difficulty of deciding between cost value and replacement value would be partially eliminated. The great difficulty between cost value and replacement value in regard to capital assets largely arises owing to the length of depreciation period. If the depreciation period were shortened, the difference between the two would become less and, therefore, the problem of solving this practical difficulty might possibly become less. I just want to draw the attention of the House to this reservation, so that it will not pass unnoticed in the discussion here and in the further discussion which I know will take place in the future on this question of depreciation.

Mr. Burke

I have an observation to make on line 28 in Section 23. It says "new machinery and new plant." In the past, I think the depreciation allowances were given on all plant and machinery installed. I should like to ask the Minister to examine the position obtaining here. I know of a firm which is at the moment negotiating the purchase of a second-hand stove-enamelling plant. The reason they are buying this second-hand plant is that someone who has a very much larger business is selling the plant. The plant is not being imported. There must be any number of cases where small factories in Ireland are buying plant from factories in Britain which have 20 times the output.

A friend of mine recently bought a bottle-washing plant which is a wonderful machine in perfect condition. It was in some big bottling factory in England that wished to install a machine having four or five times the output of the older machine. The machine could be bought at one-fifth the cost of a new machine, but it would get no initial allowance here according to this section. If people can pick up capital machinery that fits the purpose in Ireland at one-fifth the cost of new machinery, is that not the type of intelligent operation in regard to industry that should be encouraged here?

I ask the Minister to consider the question of new plant and new machinery. He should strike out the word "new" in each instance. I do not think he would be doing any harm and neither do I think there would be any juggling. I do not think there was any in the past. An inventory is kept of the machinery and an account submitted to the Revenue Commissioners. I do not see how there could be any loss to the revenue. Certainly it would be an advantage to the country to encourage industrialists to buy plant and machinery at a cheap rate, either in Britain or other countries.

Mr. O'Donnell

I want to say that the Federation of Irish Manufacturers have for many years been advocating initial allowances. The only allowance covered by this is in respect of goods purchased at 6th April last. You would be a long time as Minister, and we would be a long time members of the Seanad, before you see an allowance on articles purchased since 6th April, because it is far too recent. We felt that if the Minister could possibly make the date ten or 20 years old, it could help us a bit. I must say, that having listened to Senator O'Brien mentioning Mr. Lynch's suggestion, I entirely agree with him on it. While we were glad to see an initial allowance made by the Minister, and it is very welcome, it is far too recent a date. We do not see any claim whatsoever for a long time while it is for goods or machinery purchased since 6th April of this year.

Mr. Sweetman

The purpose of this section is to act as an incentive, an inducement, to industrialists so to modernise and equip their industries that industry in Ireland will be enabled to take its proper place and produce goods efficiently. If I were, for example, to go back before the commencement of this financial year, I would be doing away completely with the incentive. There would be no incentive in giving to an industrialist a concession of this sort when he had already bought his machinery. The purpose is to induce people, by giving them this acceleration of wear and tear, to purchase new machinery, to modernise, and, with that modernisation, to be able to produce their goods more efficiently. Representations were made to me that we should go back beyond 6th April last, for different periods. If one went back at all, there would be no reason why one would not go right back, say, to 1922, but to do so would be to give an uncovenanted benefit, and completely destroy the incentive intentions of the section.

Senator O'Brien mentioned the fact that I did not deal with other recommendations in the taxation committee's report. That is quite true. I received the report only a very short time indeed before the date fixed for the Budget, and it was far from possible to have all the implications of the many recommendations involved in it fully and completely examined in that time. I should have thought, frankly, that far from there being criticism that I had not implemented all the recommendations this year, there would have been commendation on the fact that I had moved so quickly in respect of one of the main recommendations included in the committee's report.

As I have said already, other recommendations will be examined home, and when we have seen the full implications of them, we will be in a better position to judge.

I should, perhaps, also mention, when speaking of the date of implementation, that, in Britain, what the Chancellor did was to announce that he was going to introduce an initial allowance in 1944, but he did not bring it in in his Finance Bill until 1945. This made it operative from the date of its announcement. I am doing announcement and legislative enactment in the same year, which is the same in practice but more speedy in operation than what was adopted in Britain ten or 11 years ago.

I differ entirely, I am afraid, from Senator Burke. I want to see the most modern machinery that can be got being obtained for this country. I want to make certain that every inducement and assistance is given to people who are prepared to purchase the most modern machinery. I appreciate that at times it may happen that second-hand machinery may be obtained that is good and is suitable for the purpose, but I think it would be entirely wrong that I should stress the possibility of purchasing second-hand machinery to that extent by including second-hand machinery in this section. We must face the fact that there have been cases here, a good many cases, where people have got second-hand machinery. We had it sometimes that people came over as a subsidiary of another firm and the establishment of the Irish factory was availed of for the purpose of off-loading out-of-date machinery. I do not think we should do anything in any way at all that would open the possibility of that being done, while, at the same time, securing a tax advantage. I feel very strongly indeed that what we want in this case is to give the maximum incentive towards the provision of the most modern machinery that can be obtained.

People can still obtain other machinery, if they wish, but if they do that, they do not get this accelerated allowance. The purpose of the accelerated allowance, as provided in the section, is to assist people who want to get the most modern new machinery to get it by means of providing a quick write-off for them when they get it.

I can assure Senator O'Donnell that in respect of this section there will be very substantial amounts indeed writen-off from tax revenue next year. It will operate in the assessment year 1957-58, because industry is assessed under Schedule D on the profits of the preceding year, and there will be a very considerable concession arising in respect of this concession in the 1957-58 revenue accounts.

Mr. Hawkins

While I agree thoroughly with the Minister's point of view in this matter, there are still one or two questions which need clarification. Quite recently, we had applications to various countries seeking the establishment of industries here. We have seen in the public Press, and heard, that there are possibilities of the transfer of some industries from the Continent. These industries, I understand, are taking up roots completely from their former places and being transferred here. Whether we could classify the machinery as second-hand, or it would come, by stretching the definition, as new, to benefit under these proposals, gives rise to a question which should receive consideration, because it is possibly one of the questions that will come up in the near future.

I have in mind now an industry proposed to be established in our own city, and while we are anxious to give every facility and concession and encouragement, that question should be clarified, that we have not encouraged and held out all the potentialities that are here to those people who have made a decision to take up their plant and transfer their business entirely to this country. It would not be a question of putting over any third-rate machinery. It would be a question of taking up the most modern machines and transferring them here. In matters of that kind, there should be more broadening of this definition, so that cases such as that would be provided for.

Mr. Sweetman

It would be very difficult to do it administratively like that.

Question put and agreed to.

Sections 24 to 29, inclusive, agreed to.

SECTION 30.

Question proposed: "That Section 30 stand part of the Bill."

Mr. Hawkins

This section provides a concession for persons who propose to set up or buy industrial sites for industries. We had a few years ago a great outcry against foreigners coming here and steps were taken whereby a 25 per cent. stamp duty was imposed in cases of that kind. Recently we have had a new kind of raid, as it were, that is the acquiring of business premises. I wonder whether this concession will also apply to the acquisition of business premises by outsiders.

Mr. Cox

I should like to congratulate the Minister on this section, because I have had experience myself of the great difficulty which arises in the establishment of new industries with people having to pay this heavy rate of stamp duty. I should like to ask the Minister whether he has considered two other points which arise: one is the imposition on a company of the liability for stamp duty at 25 per cent., if it subsequently advances in a mortgage or a debenture in respect of capital commitments outside this country. I can quite see that the reason why that section was thought of was to deal with one particular way of dodging the stamp duty but on the other hand, it has had the effect, in a number of cases, of preventing companies from obtaining finance which otherwise they might be able to obtain. It cannot be done on this Bill, but I think it is a matter which should be looked into.

I should also like to mention—I think the Minister is already aware of this—the possibility that arises that when a company which has obtained exemption originally on the grounds that it is lawfully carrying on a business under the Control of Manufactures Act, ceases temporarily, the full value of the stamp duty would come back. I think these are two points under the Finance Act 1947 which could be looked into. I am very glad to see the advances that have been made to relieve the effects of the tax in two cases, in particular the case of new industries.

Professor O'Brien

The whole legislation is very complicated and there is a great deal of legislation by reference to sections in other Acts which I am afraid I have not read. As far as I can understand it, it seems that people are going to pay what is practically a penal tax, if they come to this country to buy agricultural land. They will be exempt from this tax, provided they have not got more than five acres or carry on business other than agriculture. Everybody is agreed about one thing in this country, and it is about the only thing on which we are all agreed, that is, that a great improvement in agricultural methods is absolutely necessary from the point of view of our balance of payments. As that is so, it seems to me to be a retrograde step to prevent outside people from coming and conducting agricultural operations here. I know that they are not prevented, but there is simply a penal tax on them.

In the history of Ireland, there were many cases where farming has been improved by immigrants, who have shown us improved methods and processes; and demonstration is much more telling than mere preaching. I should like to know how far this penal tax is consistent with the Government's policy of improving agricultural production.

Mr. Sweetman

This is an extremely technical section, I agree. I think in relation to the points raised by Senator Cox the case of a company purchasing property and then at a subsequent date obtaining finance by mortgage to carry out its operations is now dealt with in sub-section (2) of the section. I take it the Senator is referring to the type of case covered by Section 26 of the Finance Act, 1949. Sub-section (2) of this section amends that provision. So far as the other point mentioned by him is concerned, I am not quite clear as to exactly what he means. Is he making the case that it is in relation to the Control of Manufactures Act exemption in Section 13 of the Finance Act, 1947, the point is, or is it the date of the conveyance, or perhaps some other point that I have not quite got that is involved?

It is a somewhat technical section. I used to know a great deal more about this section when I was on the poachers' side but now I am on the gamekeepers' side. If there is a point in relation to it which does not seem to have been met by sub-section (2), I certainly will look at it during the course of the year.

Senator O'Brien made a point, and Senator Hawkins touched on the same thing, that if we want agriculturists or industrialists to come here and assist us in developing our potential industrial output, it is only proper we should limit this penal stamp duty in so far as they are concerned. It is inevitable in these days that when new industries are being set up the technical know-how has to be taught to our own people. People just would not come here unless they were enabled to make a home here and to have their own premises. We met that difficulty in several industries. That is why we made the remission here in respect of the type of premises they would be occupying. The whole question of whether it is right in any country that there should be a monopoly of lands reserved to the citizens of the country is a very much wider one than merely the matters covered by this section. As members of the House are aware, certain countries have a provision that only citizens of that country can own land. That is because land is different from a factory. Land is limited in amount. Agricultural land in this country is limited in amount. So far as a factory is concerned, a person can erect a factory if he cannot get an existing building. Therefore, there is not the same monopoly criterion for it as there is in relation to agricultural land.

The other point as regards user, that was raised by Senator Hawkins, would depend entirely on whether the purpose in question came within the definition of an industry.

Question put and agreed to.

Section 31 agreed to.

SECTION 32.

Question proposed: "That Section 32 stand part of the Bill."

Mr. Kissane

In my opinion, this section is one of the most objectionable sections of the Bill, if not the most objectionable. It is tantamount to depriving the local authorities of £500,000 which they would require to keep the roads in proper repair. In recent times, local authorities have been put to the pin of their collar to make provision for all the local services for which they are responsible, including the upkeep of the roads. Now we find this move by the Minister for Finance and the Government to deprive the local authorities of no less a sum than £500,000.

I consider that a reprehensible step. The net result will be that next year the local rates will be higher, I am afraid, than they are even this year because it is incumbent on local authorities to keep the roads under their charge in a proper state of maintenance. If they do not, if they find they have not the necessary finances to keep the roads in a proper state of repair and if, through financial stringency, they neglect to do so, the loss to the local authorities and to the people of the country will be much more than is represented here by this figure of £500,000: it will be twice as much, because, when the roads are allowed to fall into a condition of disrepair, everybody knows it takes a lot to bring them back again. Therefore, I would urge the Minister to reconsider this section. It is a step in the wrong direction.

At the present time, there seems to be a tendency on the part of the Government to shift the burden as much as possible to the local authorities. Not merely is that the case now, but the local authorities are being deprived of the finances to which they are justly entitled as a result of this section. I, for one, object to this section and I ask the Minister to reconsider it.

Mr. Sweetman

Perhaps I might intervene to clarify the effect of this section. First of all, in relation to roads, there are four different types of work that can be done (1) main road improvement (2) main road maintenance, (3) county road improvement and (4) county road maintenance.

The argument Senator Kissane has just put forward that, if we do not spend this money on upkeep of our roads, it will mean they will deteriorate and that, following such deterioration, we will in fact lose more in the future and have to expend more in the future would be a valid argument if the transfer from this fund in any way affected the amount that went for the maintenance of roads to local authorities. The position up to this has been that, in relation to main roads, the local authorities have obtained always from the Road Fund a fixed proportion of their maintenance costs. That situation remains unchanged by this section. There is no question that the effect of this section will reduce the Road Fund to a level at which it will not be possible for local authorities to obtain the same amount for main road maintenance or, to be more strictly accurate, the same percentage proportion of main road maintenance as they had always received.

I say "proportionate main road maintenance" because people might feel that, with costs rising, they might be restricted to a certain amount. They have always got a percentage of the main road maintenance from the Road Fund and they will continue to get that percentage, the same percentage that has always operated, of their total expenditure on main road maintenance. There never has been any question under any Government of county councils, local authorities of any sort, getting from the Road Fund any grants for county road maintenance. That has never been done since the State was set up.

In relation to maintenance on both sides, therefore, the position is not going to be changed one iota by this section. It is not a valid argument to suggest in any shape or form that the effect of this section means that we shall be spending less on the upkeep or maintenance of our roads, main or county. Neither is it correct to suggest that by this section we are transferring to the local authorities any proportion of main or county road upkeep or maintenance that was formerly borne by the central authority.

So far as the question of improvements to roads is concerned, that is, bringing them up to a higher standard, there is a considerable difference of opinion between the two sides of the House. During the past two years we have stepped up substantially the amount we have allocated for county road improvements because we felt it was desirable to press ahead with that type of improvement rather than that the stress should be continued always in favour of the main roads. The amount, in fact, that is allocated this year for county road improvement is £700,000 more than it was in the last allocation made by our predecessors in office. So far as main road improvements are concerned, that is, main road new work, it is in our view unchallengable that, where we have, as we have at the present time, a shortage of the capital that can be provided for essential work without recourse to inflationary methods, there are other types of productive enterprise which deserve capital more than what I described in the other House as "the polishing of main roads".

It is only in respect of main road improvements or new works on main roads that there will be any restrictions at all. That does not affect the type of work the local authorities have been engaged in, heretofore. It is to the type of work on our main roads, which at the present time when capital is both scarce and dear could well be deferred for a few years, that the restrictions apply.

I want to make it quite clear, in case there might be anybody who does not fully understand the position, that there is no question of a raid on the fund for use for the purpose of balancing the Budget. It is being used for capital purposes because we believe that there are other capital constructive purposes of a higher priority at the present time than the type of arterial, main, trunk road work and improvements that would otherwise be done. With some of this money, part of which accrues because of the buoyancy of the fund at the moment, these other works of a more urgent nature can be undertaken. Nobody can tell until the end of the financial year what the full resources of the fund will be. I stress again that it is merely in respect of main road improvement work and of that work only that there will be any restriction arising out of this section of the Bill. So far as that type of work is concerned, I have no hesitation in recommending that there are very many much more urgent types of capital works which could well be provided for the benefit of the community as a whole.

Mr. Hawkins

The question in relation to this section is one of principle. When a couple of years ago we had a Bill going through this and the other House providing for an increase in motor taxation, the then Minister for Local Government put forward the reasons, for that increase in taxation. At that time, on behalf of the then Government, he gave a solemn pledge to the members of both Houses and through them, to the people who had to find the tax—the motor users—that that money would be used for their benefit. When that Bill was going through the Houses of the Oireachtas, the members comprising the present Government were the persons who were most vocal in their demand that that pledge should be given by the Minister, that all the additional moneys collected in the increased tax would be utilised in giving a better service to the users of motor transport and that it should not be utilised in the manner in which the Minister now proposes to use it.

It would have been very easy for the then Minister to have said he was going to create this fund by increasing taxation on motors and that, when he had collected it from the people, he was going to use it for other capital expenditure. I am sure each and every one of us could then have put forward our own pet schemes. I, for instance, could have suggested that the money should be used in the provision of housing or some other essential work, but the guarantee was given, and the money was extracted for the sole purpose of improving the roads and removing dangerous corners, thereby giving a greater service to the people contributing the money.

It is all very plausible on the part of the Minister to say that the county roads are going to be maintained and that other roads will be maintained, too. We all know that the county councils in dealing with roads have prepared their plans over a number of years and have put them into operation as the finance became available. A number of county councils, the Galway County Council among them, had made such plans for road improvement. The Galway County Council had made great headway in that regard and had hoped to speed up the work when the extra money was available to them. For such works, it was necessary that there should be the most up-to-date machinery, and in expectation that they would get the moneys from this motor taxation fund, the county councils had been going ahead with their works and had purchased that machinery. Now they find that they will get less out of that fund in proportion to their share of the £500,000 which the Minister is taking out of it. The machinery which they had been using in excavation work in connection with the construction and reconstruction of roads must now lie idle, until such time as the Minister and the Government change their minds on this matter.

There is not much use in the Minister saying that the same amount of money is being made available for the upkeep of roads and the improvement of roads as last year. There have been in the interval increases in wages and the cost of improvement, and the same amount of money will give less employment this year than last year.

There is another matter in connection with the moneys being expended on roads to which I would like to draw the attention of the Minister. Last year, a sum of £790,000 was made available for road works under various county councils out of the National Development Fund. As far as I know, there is no provision of a like sum this year. That, with the £500,000, brings us to a figure of £1,290,000 less being made available to local authorities for improvement, maintenance and other essential road work.

We come then to consider the areas that are hardest hit in relation to this matter and we find that in reply to a parliamentary question in the Dáil, the Minister for Local Government gave a table of sums expended on the road service in the various counties. In the past two years, there was a sum made available in certain areas for the improvement of roads servicing the E.S.B. turf generating stations. Curiously enough, there is no provision being made for this service this year to any of the councils in whose areas these generating stations are being established. There is no provision being made this year for schemes for the improvement of roads in Fíor-Ghaeltacht areas. It does seem rather peculiar that on the very day on which the new Department for the Gaeltacht is set up, this announcement is made, through the Minister for Local Government, in relation to the roads in these areas.

Having regard to the guarantees given by the former Minister, this raiding of the Road Fund is unjust. The Minister should reconsider the matter and should apply the money to the purpose for which it was collected. He should also make available a sum of £790,000 as was provided last year out of the National Development Fund.

Mr. Cogan

I should like to congratulate the Minister on the skill which he has shown in befogging the issue before the House at the moment, that is, should we extract from the Road Fund the sum of £500,000 and apply it to other purposes? Before we decide on that question, we have to decide what the Road Fund is. It is a sum of money collected from users of motor vehicles in the form of road tax. That money goes into one common fund. It is available for both county and main roads. If £500,000 is extracted from that fund, it is no answer to say that it is extracted only from the main road section of the fund. There is no such segregation. The fund is a common fund for main and county roads, with the exception, of course, of the 40 per cent. grant for maintenance. As far as improvement is concerned, all of the fund other than that 40 per cent. for the maintenance of main roads, could be applied to county roads. There is no question whatever about that.

Wicklow County Council passed a resolution early last year asking that all the moneys made available to us by way of grant from the Road Fund should be used exclusively on county roads and that no grant be made available for main roads, that we were satisfied with the 40 per cent. maintenance grant for main roads.

Mr. Burke

You were following the Minister for Local Government.

Mr. Cogan

Yes.

Mr. Burke

A good example.

Mr. Cogan

Yes, both under the present Government and under the Fianna Fáil Government. Remember in 1952, when the legislation was introduced increasing the tax on certain types of road vehicles there were strong protests from the then Opposition, and there were demands that the increased revenue secured as a result of the increased taxation should be used exclusively for county roads. The Minister at that time, Deputy Smith, gave an assurance that, as far as possible, the money would be applied to county roads and, in 1953, and in the provisions for 1954, the grants for county roads were increased proportionately higher than the grants for main roads. So that the trend towards the diversion of the Road Fund to county roads did not begin with the formation of the present Government or the appointment of the present Minister; it has been going on for some years and it is an absolutely justifiable trend, having regard to the figures which were produced in reply to a parliamentary question only last week.

There are 9,600 miles of main road and 39,500 miles of county roads. Of the 9,600 miles of main roads, 8,900 miles have been tarred and resurfaced. Of the 39,500 miles of county roads, only 8,200 miles have been tarred and resurfaced. There are, therefore, 700 miles of main roads awaiting tarring and resurfacing and 31,300 miles of county roads awaiting tarring and resurfacing and those 31,300 miles are in a primitive condition, with waterbound surfaces, and represent an urgent problem demanding immediate attention. They comprise roads leading to the rural areas, roads leading to farmers' houses. They are practically all remote country roads. They urgently require attention and the money is there for the purpose, or would be there if this £500,000 was not unjustifiably extracted from the fund. That £500,000 would reconstruct a very considerable mileage, if applied each year.

As Senator Hawkins has pointed out, there is an important principle involved. When the increased taxation was imposed, there were protests from the then Opposition Parties, and the then Minister gave an assurance that the money would be applied exclusively to road reconstruction, that he would not tolerate, as long as he was Minister, any raids on the Road Fund. The increase in taxation on motor vehicles was strongly criticised and had to be defended by the then Government. The very strong defence by the then Government was that the money extracted from the road users would be used exclusively for their benefit, inasmuch as it would be used exclusively for the improvement of road surfaces.

The case was made that the owner of a lorry or van who had to pay a higher tax would be compensated by having a better road surface on which to run his vehicle. If it is worked out in pounds, shillings and pence, the probability is that, if that pledge was honoured, the road user would gain because we all know the wear and tear on tyres, springs and cars generally involved in having to drive over unsurfaced roads, so that from every point of view this raid on the fund which should be the property of the road users is entirely unjustifiable.

There is no use in the Minister saying that the Road Fund is not being raided to meet current expenditure, that it is being raided to meet capital expenditure. There is no merit whatever in that. It does not matter for what purpose the fund is raided. It could be raided for any deserving purpose such as for old age pensions or for anything else, but that is not the question. This levy was imposed for a certain specific purpose, and, in justice to those who pay the levy, it should be utilised for that purpose.

The work of reconstructing the roads is a work of urgent national importance. It is linked up with the question of making agriculture more productive. If we do not provide the farmer with good roads, we will not help him to get the best out of his land. The House should strongly recommend to the Minister that this section should be dropped.

Mr. Burke

I think the Government were very wise last year in voting £500,000 extra to the county roads. I am surprised that Senator Cogan did not know that before he stood up to debate the question. If there is not the improvement in agriculture that we would like, one of the reasons is that people living miles in from the county roads are unable to get lorries in to remove their stock and produce. They are unable to make use of modern machinery.

I think it was a most wise and prudent step to put that extra £500,000 to the county roads. When we drive to Dublin and other parts of the country we see good agricultural land taken away in order to build autobahns. That is the purpose for which the land is taken away. That was the principle enshrined here about 1944 or 1945 when those opposite sent out a team of experts to America to tell us how to build roads like the Americans. I will not go into the question of the number of people killed on these roads, as we will get an opportunity of dealing with that matter at a later stage.

It is to the credit of the Government that they spent the money as they did. The Road Fund has been most buoyant and the duty of the Government is to use the money collected in the best way for the common good. If the money can be spent better for some other purpose, it is all to the good, but the most important principle which should guide the Government is to ensure that the money will be spent to the best advantage of our economy. If we are spending too much money on the roads, it is much better that some of it should be utilised for really productive purposes.

Roads are an amenity; they are not truly productive assets. They are an amenity and the people who would give us the most production are the farmers. People who speed along the roads at 70 and 80 miles an hour are not going to increase production. Rather will they increase the pleasure speeding craze. I am surprised that the Minister was criticised for doing the prudent and just thing in relation to this matter.

Mr. L'Estrange

In discussing this question, I think we should remember that our roads are as good as, if not better than, the roads in any other country of similar size and wealth in Europe to-day. When we are speaking about our main roads, I want to say that in 1952 or 1953, we got £35,000 in grants from the central authority to spend on the roads in Westmeath. We sent a deputation to the Department and the instructions we got were that we were to spend £30,000 on main roads and only £5,000 on county roads.

We disagreed entirely in County Westmeath with that procedure and with the instructions we got from the Department because we believed at that time that in County Westmeath, we had good main roads and that our county roads were in a deplorable condition. We sent a resolution, passed unanimously by the Westmeath County Council, to the Department but the Department refused to agree to our proposition that we spend £30,000 of the £35,000 on county roads and only £5,000 on the main roads.

We sent up a deputation and we were again refused. That was in 1952. Then we had to start a scheme and the scheme was that we were to spend £9,000 per mile on widening and straightening a road between Mullingar and Kilbeggan which before that was good enough for any motorist. Where there were little dips in the road, we were to build them in and where there were hills, we were told to level them at a cost of over £9,000 per mile.

I believe that is a sheer waste of money, especially in a small country like this. We are not a great empire and we cannot afford to spend money like that. In my opinion, it is far better for us to stop this squandermania on main roads. The same thing has taken place on the Dublin-Naas road. It has been proved that there have been more accidents on that road since it was improved than there were before it was improved. The same thing has been proved in Germany and in other continental countries. I should like to remind Deputy Cogan that it was Fianna Fáil who started to raid the Road Fund. They raided it for eight or ten years. I believe it is better to use the money from the Road Fund and spend it on projects such as the land rehabilitation scheme, projects under the Local Authorities (Works) Act, forestry, drainage or any scheme that will give value and help to increase production in the country.

Mr. Bergin

I am very disheartened by the speakers I heard since I came in. My mind is borne back to one of the first speeches on this whole question made by Senator Michael Hayes in which he reminded the House that an awful lot of our difficulties in Ireland were psychological and sprang from the fact that the old Sinn Féin Party had split in two, leaving us with Fine Gael and Fianna Fáil. Fortunately for me, I belong to a Party that is no offshoot of either of these Parties, but which was there at the same time as Sinn Féin and is the same Party still.

The reason I say that is that I was amazed, when Senator Cogan was making what I thought was a reasoned enough speech, to hear Deputy Burke chip in with the old political catchcry of "you were following our Minister then." Senator Burke wanted to get for Fine Gael some credit. Senator L'Estrange followed on the same lines. If Senator L'Estrange were in the Opposition and a Fianna Fáil Minister had not done as this Minister had done, Senator L'Estrange would never mention the dips filled in or the hills levelled in County Westmeath. The people of this nation are getting completely fed up with this codology. I think it is time the Parties examined questions on their merits and not on the basis of the old fight that has continued down to the present day between the splintered parts of the Sinn Féin Party. If they would become more realistic, as we in the Labour Party are used to being realistic——

An Leas-Chathaoirleach

Will the Senator now come to the section?

Mr. Bergin

This question of taking £500,000 from the Road Fund and applying it to different works is the question to which we should apply ourselves to-night, as to whether or not it is be used for purposes as good as possible, and, when we have to make up our minds to work within a limited figure, is it good that we should spend the available money on main roads, or apply it to some productive project? I have here a quotation from Deputy Lemass, who is, I suppose, the leading member, or one of the leading men, in the Fianna Fáil Party, from the Official Report on June 5, 1956, in Volume 157, column 1425. He said:—

"As regards roads outside Dublin, I think it is true to say that the great majority of our main roads are quite good enough for the traffic on them at the present time."

I agree with him, and I agree that, seeing that our roads are now good enough, we should think of the future, if the position was that we had sufficient money to make our roads perfect for all they were likely to carry—our main roads will have to carry more and faster traffic in the future, and we should plan for that and give all the necessary money if we could afford to do it. But as far as I can read—and I am reading both Opposition and Government speeches—there is a general recognition that we have not money to spend on future projects, that we have an immediate problem to settle. Senators should be trying to think themselves into the mind of a Minister for Finance who is faced with a capital project of a productive nature as an alternative to roads to carry future traffic. I think the Minister was completely justified. I know that Senator Cogan at our county council meetings in the future may quote this against me, if we run into the position of increasing unemployment on the roads. Carlow is not a county that will, maybe, have a corresponding increase in employment in other spheres. I do, however, say that roads are not the type of scheme we should spend our money on at the moment. Each one of us should ask himself the honest question: is it better to keep on improving our roads for traffic they may have to carry in 20, 30 or 50 years' time, or is it more important, in the present state of world affairs, to put this £500,000 into the development of electricity, of our mineral resources, or into agriculture?

Mr. Walsh

The Minister has referred to the buoyancy of the Road Fund, but I understand that the increased tax on petrol and the levies on motor vehicles were imposed in order to reduce the consumption of petrol and the number of cars imported. I assume, therefore, that there will be fewer vehicles on the road for the current year, and that there will be a corresponding reduction in the amount of tax paid, and consequently in the amount of revenue going into the Road Fund. Apart from the fact that there is to be a reduction of £500,000 in the allocations from this fund, there is also to be a reduction of £790,000 from the National Development Fund, which was a supplementary grant payable to local authorities towards the end of the financial year, in previous years. That means that the amount to be spent on the roads for the current year will be approximately £1,300,000 less this year.

I should like to refer to the fact that in my own county, in consequence of the increase in roadworkers' wages by 15/- in three instalments, our county engineer informed us that the amount of the allocation would have to be increased by £47,000 in a year to employ the same amount of labour. The amount the Central Fund put up was two-thirds, and the amount provided by the local authority in previous years was one-third. Our amount was, therefore, £16,000 and that £16,000 was provided in the estimates for the current year, but the grants from the Department of Local Government were not increased. Consequently, there will definitely be a considerable reduction in the amount of employment which local authorities can provide on the roads this year.

If, as I said, there is to be a further reduction of £790,000 for the whole country, that will decrease still further the amount of employment available. It is to be expected that the present administrative staff and the present supervisory staff will be retained, and the amount of machinery held by the local authority will also be retained, and consequently those who will suffer will be the ordinary road workers. For those in the congested districts, casual employment outside their uneconomic holdings is necessary in order to keep body and soul together and to maintain those smallholders and their families, and the only alternative for them is emigration. If, therefore, this raid is proceeded with, it is inevitable that for the coming year emigration figures will be increased still further.

I have never been made aware of the capital fund to which this £500,000 is to be devoted. We are aware that £27,660,000 is to be spent on capital purposes for the current year, but the Minister has never indicated what capital fund this £500,000 is to be devoted to. Consequently, unless you can get an equivalent amount of employment in the rural areas to the amount of money being taken from the Road Fund, this will be a very serious imposition on those parts of the country. When you consider also that the amount provided for employment under minor employment schemes and the rural improvement schemes is not to be increased, despite the increases in the wages, it must mean that those people will have fewer weeks' work, and consequently the two together will have a very serious effect in the areas with which I am particularly familiar.

A great deal of discussion has taken place on the fact that this money is not required for main roads, but there are still 700 miles of main roads in the country which have not yet been tarred. Those roads may not be in the Midlands or convenient to Dublin. The farther out one goes from the large cities, the worse is the condition of the main roads. If the ratepayer is now to take the place of the local authority in spending more money on roads, when one considers that already rates are three times what they were pre-war, and that the bottle of Guinness is 10½d. as against 6d. pre-war, then I feel the ratepayer is being mulcted.

Mr. S.T. Ruane

As a member of a local body, I should like to say that I fully appreciate the wisdom of the Minister in transferring this £500,000 from the Road Fund to the Capital Fund and that feeling in the matter is by no means confined to myself. I have discussed it with several people and they are in thorough agreement with the Minister's action. They have described it as a wise and praiseworthy action.

For several years, works of alleged improvement have been carried out on the main roads at a huge cost and in many cases these works were absolutely unnecessary. Hills were cut through at a cost of thousands of pounds, hollows were filled in, for the purpose of making roads safer, and dangerous bends were cut. As I stated on the Second Reading, this seemed to make the roads more dangerous. Many of the accidents which have occurred lately have occurred on the straight parts of the roads and were due to speeding on the straight and smooth stretches. If the corners which were cut had been left there, speeding would certainly not take place as people negotiated them, and many accidents would not have occurred.

If the Government have diverted £500,000 from the main roads which are certainly in good condition and can make do as they are for several years, they have been very generous in the provision for county roads, which, as Senator Burke pointed out, are used by the majority of the rate-payers who have to subsidise a lot of this work on main road improvement and maintenance. I know of no people who object to the diversion of this £500,000, but some overseers and gangers in soft jobs, who would certainly not lose their employment as a result of this class of work being stopped or being put on the long finger until a more suitable time arrived. They could be put on county road work.

Ample employment is given on the county roads and will be given for a considerable time because in many cases they are not fit to carry the traffic which passes over them. In so far as machinery is concerned, I think it can be kept in use preparing material for those county roads, the maintenance and upkeep of which will improve them and for which the Government has made very generous provision this year and next year.

Mr. Cogan

I want to assure Senator Bergin that anything that he has said in this House will not be used against him at any meeting of the Carlow County Council. I do not believe in hitting below the belt. I prefer to lose in fair fight rather than to win on a foul.

I am rather amused by the efforts being made by so many Senators on the Government side to pretend that this £500,000 is being taken from the main roads and not from the county roads. We all know that the money is there in one big fund and if it is taken out of the fund it is taken from all the roads. The county roads are in a most urgent need of repair and it is from the county fund that the——

Mr. Burke

That is not right.

Mr. Cogan

It is from the Road Fund that this deduction is being made. The fund is a common one. I have already pointed out that there are 31,000 miles of county roads urgently demanding reconstruction and repair, and, if £500,000 is being taken, it is being taken from the work of reconstructing those 31,000 miles of county roads.

The section itself reads:—

"The sum of £500,000 shall be transferred and paid from the Road Fund..."

not from the main road fund,

"...to the Capital Fund at such time or times in the financial year ending on the 31st day of March, 1957, and in such manner as the Minister for Finance shall direct."

Knowing that we have 30,000 miles of almost impassable roads, Senators get up and calmly applaud the wisdom of the Minister in taking from the road users that £500,000 which should be used to put surfaces on the county roads which are now wearing out tyres, breaking springs in the cars of the motorists who are paying increased taxation. We all talk about the buoyancy of the revenue. Why is the revenue in the Road Fund buoyant? It is buoyant for two reasons: the volume of traffic has increased and the rates of taxation in many cases were increased some years ago. Since that is so and since the purpose of the Road Fund is to provide for the maintenance and construction of roads, then there is no justification for this raid on the Road Fund.

Senator L'Estrange, who is usually original in his ideas, said that Fianna Fáil raided the Road Fund on a number of occasions and that they were right in raiding it.

Mr. L'Estrange

I did not say they were right.

Mr. Burke

He did not.

Mr. Cogan

It is the first time I heard him say Fianna Fáil were right.

Mr. L'Estrange

I did not say they were right then.

Mr. Cogan

We will have to wait for the Official Report.

Mr. L'Estrange

Did you think they were right?

Mr. Cogan

Senator Bergin said it was not right to suggest that, in resurfacing roads, we are making roads for the future. We are making roads for the present day and we are fulfilling an urgent need because these roads should certainly be reconstructed.

The previous Government utilised a larger portion of the Road Fund for county roads by increasing the allowance for them. Some years ago, there was no free grant for county roads at all. It is only of recent development. It is a development brought about by the means of modern travel and it is a development which is very rightly proceeding.

Senator Burke said I was not aware-that the allocation to the county roads had been increased. I was so aware. He may not have been aware that it was increased in the years previous——

Mr. Burke

You did not give that impression.

Mr. Cogan

Senator Burke did not give the House the impression that he was aware that the Fianna Fáil Government in the last year in which they were in office also increased the grant to county roads. I agree with Senator Bergin that it does not serve any useful purpose on either side of the House to try to make Party capital out of these matters. What serves a useful purpose is to bring home to the minds of all Senators that something is being done under this section that is entirely wrong from a national point of view, from the point of view of justice and fair play to road users, and from every point of view. No matter what Government might be in power, that section would still be wrong.

Mr. Bergin

I should like to reply to some of Senator Cogan's observations. He implied that he has not read the Book of Estimates at all. He implies we are taking £500,000 out of the amount allocated to the county roads. He knows that that is not so. He knows that this year we shall have as much to spend on county roads as last year and that last year we had more than in any other year. I am disappointed that Senator Cogan should make points that are not altogether correct.

I agree that the present need is to improve our county roads—not to make them into the same type of road as our main roads where there are long straight stretches but to make them suitable for the traffic that travels over them. In my county, the major portion of our traffic would be of an agricultural nature. The vehicles would be carrying beet to the factory and wheat and barley to the mills. That is slow traffic which does not need the big straight roads such as the Dublin-Naas road or the road to Cork. Our present programme in relation to county roads will give us suitable county roads. I think that if Senator Cogan at a Carlow County Council meeting had to decide whether we should continue improving roads such as the Cork road or whether we should carry out some other work of national development, he would decide to spend it otherwise than on the roads.

Mr. Commons

There would be an argument favourable to what Senator Cogan said if at any time there was a regulation that a percentage of the money devoted to roads should go to the main or county roads as the case might be. As that has never been the case, then it is up to the Government to do what they wish with the amount of money that is there in one big sum. If my memory serves me correctly, free grants for county roads were first introduced by the late Deputy T.J. Murphy when he was Minister for Local Government. That step was acclaimed all over the country and was welcomed by every member of every local authority, though not perhaps so much by the engineering staffs who preferred to stick to the main roads and make them wider. However, the Minister of the day gave himself over to the popular demands of both Deputies and councillors and made free grants available for county roads. I would go further in my desire to compliment the Minister and the Government in regard to this £500,000 because there are increased grants towards county roads. The amount of employment which will be given will entail merely the shifting of the men from the main roads over to the county roads because the sum total of grants in every county will be the same as or greater than last year.

Had the Government taken three-quarters of the entire Road Fund at the present time when the demand for money is as it is and devoted it to something that would increase production, I think it would be the duty of this House to support them. Roads are important but they are just luxuries. We had seven or eight years of war during which the roads deteriorated. Still the people got by and nobody was very much put out. We had heavy traffic on some of our county and main roads and still the roads held up. At present, we are faced with a financial emergency. I think that if the Government devoted this money to land improvement, or to some project which would increase production within 12 months, we would be in favour of it and allow the other scheme of road making to wait for a few years. Senator Cogan pleads ignorance of knowledge that the grant for county roads has been increased——

Mr. Cogan

I did not say that. I said it had been increased prior to the advent of this Coalition Government.

Mr. Commons

It is only a switch from one section of the roads to another.

Parliamentary Secretary to the Government (Mr. O'Donovan)

Senator Walsh asked a question as to what was this Capital Fund. It was set up under this year's Central Fund Act, Section 4. The purpose of the Capital Fund to which is being paid special levies imposed under the Central Fund Act and to which will be paid also this year the sum of £500,000 is set out in Section 4, sub-section (4) of the Act. The fund is to be applied for any purpose for or towards the cost of which public moneys may be provided and which are conducive to the development or improvement of capital resources.

Mr. Kissane

That is very vague.

Mr. O'Donovan

It may be vague compared with the difference between main and county roads, but it is not that vague. I think we all know the purpose to which the money is being put. I think Senator Bergin put it well when he asked whether it is wiser to use the money in this way or for the purposes for which the Road Fund moneys are used. I agree with Senator Bergin that it is wiser to use the money in this way.

As regards county and main roads, I would say that Senator Cogan was trying to prove that black was white when he suggested that this money was taken from the county roads. This Government made £500,000 extra available last year and are making an additional £200,000 extra available this year for county roads; that represents £700,000 more than in 1953-54. Accordingly, wherever this money comes from it certainly does not come from the county roads.

Mr. Cogan

On that point, I think I should explain where the money comes from. It comes from the road users, from the users of motor vehicles. They pay into the fund. If the fund has grown—as it certainly has grown— during the past couple of years it has grown because the road traffic has increased and because taxation has increased. There is no credit due to the Government because more money was made available last year than the year before. As a matter of fact, expenditure out of this fund has been stepped up each year for a number of years back and has been stepped up because the fund itself was going up. Up to the present year, the entire 100 per cent. of the fund went to the maintenance and construction of the roads.

Now a change is being made by which £500,000 is being taken out of the Road Fund under this section. If that money were not taken out of the fund it would be spent on the roads— it does not matter at the moment whether it would be spent on main or on county roads, but we may take it, in view of the general feeling throughout the country, that it would be used on the county roads. It would be necessary to use it on the county roads because the cost of construction has increased enormously over the last couple of years. The cost of construction, even of county roads, has increased considerably, so that we would need an additional grant from the Road Fund in order to carry out the prepared programme of county road reconstruction. At the present rate of construction, it will take at least ten years, or even longer, to get the county roads which are now in a very unfit condition into a condition suitable for the needs of modern traffic.

Mr. Hickey

It is very distressing to listen to all the talk there has been about this £500,000.

Mr. Kissane

It is a lot of money.

Mr. Hickey

It is a lot of money, but it is nothing compared with the £6,600,000 which is being spent in paying the interest on the moneys necessary to enable our public bodies to carry on their work.

Question put and agreed to.

Sections 3 to 7 inclusive agreed to.

First and Second Schedules agreed to.

Title agreed to.

Bill reported without recommendation, received for final consideration and ordered to be returned to the Dail.