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Seanad Éireann debate -
Wednesday, 21 Mar 1962

Vol. 55 No. 3

Central Fund Bill, 1962 (Certified Money Bill) — Second Stage

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

The Central Fund Bill, 1962, has for its main purpose the giving of statutory authority to the Vote on Account for 1962-63 recently passed by Dáil Éireann. The Vote on Account amounts to £49.34 million and Section 2 of the Bill authorises an issue of that amount from the Central Fund. The Bill is also required to authorise an issue from the Fund in respect of Supplementary Estimates voted in the current year and not covered in the Appropriation Act, 1961. These Supplementary Estimates amount to some £12 million and the corresponding issue from the Central Fund is authorised by Section 1 of the Bill.

Section 3 empowers the Minister to borrow up to some £61.34 million which is the total of the Vote on Account and the Supplementary Estimates referred to.

In 1962/63 expenditure of £148.4 million is proposed on the Supply Services, being an increase of £16.66 million on the total of the current year's estimates volume. £123.7 million is for current services and £24.7 million for capital; expenditure on current items is up by £12.96 million and that on capital services by £3.7 million.

Of the total increase of £16.66 million, however, amounts aggregating £1¾ million do not represent net increased burdens on the Exchequer.

First, additional broadcasting licence fees which will be collected and paid into the Exchequer as miscellaneous non-tax revenue will offset the additional £550,000 provided in the Vote for Posts and Telegraphs for transfer to the Broadcasting Authority on foot of net receipts from these licences. Second, a reduction of £600,000 in Central Fund charges will arise from the transfer to the Vote for Agricultural Grants of the sum formerly borne on the Fund. This reduction will counterbalance £600,000 of the increase on the Agricultural Grants Vote. Third, retention in the Exchequer of the revenue which was formerly paid into the Local Taxation Account will offset the increase of £600,000 in Supply Services expenditure arising from the arrangements for compensating local authorities and departmental votes for the cessation of payments from the Account. The new arrangements with regard to the Agricultural Grant and the Local Taxation Account are in the nature of reform and simplification of the accounts. They bring no profit to the Exchequer. Legislative authority is required for these proposals.

An itemised list of the increases and decreases on the Supply Services as compared with the original 1961-62 Estimates has already been circulated to Senators with the Estimates volume I do not propose to go into this in detail but will relate my comment to the broader divisions of expenditure within the Supply Services.

Remuneration accounts for a very large proportion of the State's expenditure. The provisions under this head made in the various Supply Services estimates total approximately £51½ million. Increases in remuneration account altogether for £5¼ million of the additional expenditure in the coming year. This £5¼ million is made up as follows:—

£ million

Civil Service including industrial staff






Garda Síochána


Health authority staffs


The amount under the heading of teachers does not include provision to cover the awards recently made to secondary and vocational teachers.

Regarding remuneration, it should be remembered that the rates of public service pay are largely determined, under conciliation and arbitration procedures, by the rates in other employment. Although constant efforts are being made to increase productivity through improved organisation and methods, the general advance in wage and salary rates cannot but affect remuneration charges in the public service, unless the services themselves were to be curtailed.

The social welfare and health services at £36.6 million, including remuneration, constitute the largest single category of expenditure in the Book of Estimates and account for 30 per cent. of the total of current Supply Services expenditure proposed for 1962/63. The provision represents an increase of £1.7 million over what was originally provided for this year. The increase arises partly from the cessation of the former payment of £314,000 from the Local Taxation Account to the Vote for Health; partly, from having to provide for a full year for the extensions of social welfare benefits provided in the last Budget, but mainly—£1.16 million —from the heavier outlay arising from the State contribution of 50 per cent to health services expenditure by local authorities. About half of this additional £1.16 million results from the rising costs of health services generally and half from pay increases for local authority staffs.

The next largest category of expenditure is agriculture at £28.5 million. The corresponding figure this time last year was £24.4 million but this did not include the £600,000 provided in the Central Fund Services for the Agricultural Grant. When adjustment is made for this, the increase on last year's original provision is reduced from £4.1 million to £3.5 million, Large elements of expenditure on agriculture are, of course, classified as voted capital. These include expenditure on bovine tuberculosis eradication, farm buildings and water supplies, the phosphatic fertiliser subsidy and the land project. If these elements are excluded and the non-capital content in both years compared, it is seen that the proposed expenditure in 1962/63 is £2.2 million more than was originally provided this year.

I must advert, however, to the large supplementary provision for agriculture which was made by Dáil Éireann last December. This supplementary estimate provided an additional £10.3 million, of which £5 million was for export payments in respect of fat cattle and carcase beef. This has no counterpart in next year's estimate, apart from a residual provision of £200,000, because the scheme, having fulfilled its purpose, is being terminated at the end of the present month. The remaining £5 million or so of the supplementary estimate was also exceptional. It provided for losses on the 1960 wheat crop and for additional support for butter and bacon prices in special circumstances.

I may say that £16.8 million of the total proposed expenditure of £28.5 million on agriculture in the coming year is directed either to stimulating production or towards reducing farmers' costs. These items will attract about £1½ million more than was originally provided in 1961/62 and include such services as the fertiliser subsidies, arterial drainage, land and farm buildings improvement and grants in relief of rates.

Another major item I might mention is the outlay on bovine tuberculosis eradication. The cost of that scheme in 1962/63, exclusive of staff costs and the fat cattle guarantee payments, on which I have already commented, is estimated at a net figure of £5.8 million, an increase of £1.3 million on the sum provided this year. The 1962/63 provision allows for the introduction of special measures in the six southern counties for the speeding up of eradication.

For the coming year a total provision of £19 million has been made available for Education. This figure, which does not include the cost of recent awards to secondary and vocational teachers, is some £3 million more than last year's figure and, excluding capital items, it represents 15 per cent of total current expenditure. I have also excluded teachers' pensions as these are better classified with public service pensions generally. In the main, the increased provision for education next year reflects the additional charges arising from the national teachers' pay award, capitation grants, and increments and allowances. Increased grants are also proposed for all the constituent colleges of the National University and for Trinity College so as to enable teaching facilities to be improved and staff salaries to be raised. A capital sum of £520,000 is provided towards the cost in 1962/63 of building the new science block at Belfield for University College, Dublin.

The Estimate for Posts and Telegraphs amounts to nearly £13 million. This is reduced to £10.6 million if Post Office pensions and annuities to repay telephone capital advances are excluded as being more appropriate for classification as public service pensions and debt service charges, respectively. This sum of £10.6 million represents an increase of £1.7 million over the figure for this year but £550,000 of it is attributable to the grant to Radio Éireann on foot of licence receipts which, as I have already said, will be counterbalanced by additional non-tax revenue from these licences. The increase of £1.2 million which remains when this item is excluded arises almost entirely from increases in the remuneration of the various staffs providing the postal, telephone and telegraph services. The rising costs of these services will, as already announced, necessitate certain increase in charges in order to restore financial balance.

It is estimated that, excluding pensions, £13.85 million will be spent directly on the Army and Garda Síochána in the coming year, or £1.6 million more than this year's original estimate. Pay awards account for nearly £1 million of the increase while approximately £400,000 extra is being made available for the purchase of Army stores and defensive equipment.

Expenditure aimed at the promotion of industry shows a further substantial increase for the coming year. At £3.35 million, it is £950,000 more than was originally provided this year and £350,000 higher than this year's revised figure. £½ million of the increase will go to An Foras Tionscal and £50,000 to the Shannon Free Airport Development Company.

Public service pensions will cost £6.7 million in 1962/63. The increase of £300,000 which this figure represents is occasioned by higher levels of retirement pay and is but another reflection of the effect on public expenditure of pay awards. There is likewise an increase of £300,000 approximately in the amount provided for tourism. This represents 50 per cent. more than the provision made for this year.

Debt service charges falling on the Supply Services will amount to £5.8 million in 1962-63 or about half a million more than this year. The increase arises mainly under the State contribution to the loan charges of local authorities in respect of housing and sanitary services and from the servicing of telephone capital expenditure. The bulk of debt service is, of course, a Central Fund charge, but a large part of it is generated by Supply Service expenditure on the voted capital services. These services now account for approximately £25 million of Supply Services expenditure. The annuity necessary to redeem the borrowing on foot of next year's outlay and the various supplementary provisions of this year will, alone, add £1½ million to the debt service charge to be borne by taxation.

Excluding remuneration, which, as I have said, is integrated in the cost of various services, the ten categories of expenditure to which I have referred account for £125.5 million or 84.6 per cent. of the £148.37 million on the face of the Estimates Volume. They account between them for £12¾ million of the net increase of £14.9 million in next year's proposed expenditure. To recapitulate briefly the respective increases are:—

£ million





Social Services, including Health


Posts and Telegraphs


Army and Garda Síochána


Industrial Promotion


Debt Service




Public Service Pensions


These are the main features of the 1962-63 Estimates and I would ask the approval of an Seanad for the Central Fund Bill.

This Bill opens very large areas for discussion. In fact, as you know, we can cover the whole field of government but instead of roving over a large number of subjects, I propose to confine myself to a few general remarks. I should like to preface my remarks on this Bill by a few thoughts on parliamentary criticism and I hope that this will not seem either too unctuous or too obvious. The problem in politics is to balance constructive criticism with national co-operation in the solution of our problems. We are all trying to do our best for Ireland, so it is important that in carrying out our democratic system of Government and Opposition we do not injure our common heritage. We do not want to injure the State by unnecessary or unfair criticism. Mere destructive criticism is quite useless. Indeed, it can be dangerous but constructive criticism and, where possible, practical suggestions about Government action or Government policy are to be expected from a politically mature parliament. Our system was never intended to create conflict and disorder but rather to operate as smoothly as possible the highly complicated machinery of government. It would seem that all of us concerned in our Parliament have a high responsibility to the State in our Parliamentary activities. It was very satisfactory for us all, I am sure, who saw a recent broadcast on Telefís Éireann, a feature on EEC, when the Taoiseach, Deputy Dillon and Deputy Corish all spoke with such dignity and such unity on a matter which was of common and national importance.

The system of State housekeeping which has been built up here is, in fact, I am sorry to say, in violation of that which governs individual citizens and private business operations. The State spends first and collects the necessary funds afterwards. Income is arbitrarily adjusted to expenditure, whereas the citizen in his private life or business can spend only according to his income; otherwise he goes bankrupt. I know that the standard answer to Opposition criticism is to ask: "what expenditure do the Opposition propose to cut out?" but in my submission this is no real answer. The fact is that it is for the Government to manage the finances of the State in accordance with the ability of the citizens to pay. It is for the Government to decide what can be afforded having regard to the desirability of the proposed expenditure. This is a responsibility which political parties face when they offer themselves for election as the Government of the nation, a responsibility which they definitely undertake when they are elected as Government and that applies to any party that is elected. That is not a responsibility which can be shirked nor can the Government blame the Opposition for their shortcomings. This applies to any Government. I am talking in the abstract but it applies to this Government as to any other. In private life one cannot have everything one would like to have. One is limited by the extent of one's income. A question the Government should ask themselves is whether they are going to accede to popular demands of a vote catching nature which increase the cost of Government or whether they will have regard to the already heavy burden which citizens have to bear and against which an increasing volume of protest is building up all over the country. The time must come—indeed, a lot of people feel the time has come —when the Government must have the strength of character to say "No" to things we cannot afford.

I know the Minister may reply by saying that the Fine Gael Party even now are asking for more expenditure. Every Opposition ask and will go on asking for more expenditure and at present this is true in connection with pensions. Our Party are asking at present for increased pensions for people affected by the rise in the cost of living and the depreciation in the value of money. But it is for the Government to be able to afford this. Following my original statement that constructive criticism should be made and constructive suggestions if possible, my own suggestion is that I do not think this pensions proposition is, in fact, unreasonable and that it can be offset by changing the health system. I make no bones about it. We have a most expensive Health Act which is far too expensive and is not giving value for money. Pruning could be done there which would compensate for the claims of the pensioners. The advent of more taxes and higher local government rates is already creating an atmosphere of apprehension and tension in trade and commercial life. There is no end to the demands of the tax gatherers. Can we go on indefinitely building up State expenditure at the present rate, sinking capital in ventures which give a loss or which do not give an adequate return on capital invested? We cannot risk projects of a purely political impetus where vote seeking outweighs economic value. It is not enough for the Government merely to defend increases in public expenditure. I should like to hear what steps are being taken to ensure that every penny spent, every penny of expenditure, is justified, that full value is received for the money spent and that there is positive action to offset the increased expenditure in some way.

At a time when business people are being exhorted to efficiency and to prepare for the free trade competition which we are now about to face whether we go into the Common Market or not, higher cost of government can be a major impediment to confidence and selling competitively in a general market. Even small private business today are paying anything up to 40 per cent. of their profits in taxation. This is a very heavy burden on efficiency, costs and our ability to sell our goods both at home and abroad. At present everybody is being urged to greater productivity—and quite rightly so—but I should like to ask what productive efforts are being made by the Government in its own sphere of operation?

Can it be said that its machinery is efficient or economic? The Minister in introducing the Bill and in the Dáil said that productivity improvements are constantly being sought through better organisation in the operation of Government Departments. I for one am very glad to hear that but I should like to hear from the Minister what actual steps are being taken to make the machinery of State more efficient and less wastefully bureaucratic. As costs rise more and more it is imperative to be more efficient. That is what everybody has to do in business nowadays. I do not like quoting the Dáil debates, I think we should make our own speeches here, but Deputy Cosgrave did mention that there was an increase of something like 500 in the number of civil servants, apparently over the year. This is at a time when the population has not grown any bigger and the business community is not any more numerous. Even if we have more business people here they are not in full operation.

In that case it seems to me that this is not evidence of any success in achieving productivity in the State service. Anybody from outside can look at the enormous amount of form filling, papers and files. In my own business in the past few years we have consulted people on this question of productivity. Productivity really means getting a greater return from what you are paying out and we found we could cut out an immense amount of paper work even in a small business employing, say, 300 people. We found we had duplication of all kinds. Anybody who deals with the Civil Service can see the fantastic amounts of paper-work which surely could be cut down. A lot of people could be done without if this were achieved. Nearly every day I have occasion to fill in a form in connection with the custom authorities and on 25 lines I have got to write my initials 27 or 28 times and sign the paper twice or three times. Surely a document could be produced that would obviate that? If I had to do it 10 or 20 times a day, it would be maddening.

I seriously suggest that if this question were gone into we could have a considerable saving in the bureaucratic machine. I should also like to ask the Minister if computers could be used in the Civil Service. Are there some in operation at present? If not, it should be possible to eliminate quite a lot of expense by installing them. Not only that, but there is room for inquiring into expenditure generally in order to ascertain how public moneys are being applied. It is true that the Comptroller and Auditor General examines expenditure but his function is to verify the accuracy of what is spent and not the efficiency of the expenditure. I do not mean only to inquire into expenditure in the Civil Service. There are plenty of schemes which have come under Government control and under Government impetus for years past and I am sure many of these would be found to be over-expensive and wasteful, but once embarked upon they are there and they can easily remain there.

In every business one has all the time and at all levels and in all departments to find out if one is getting value for money spent and it is surprising that every time one does this one can eliminate something which has grown up but which has now lost its usefulness. In the many items mentioned by the Minister as being responsible for the large increase in his Estimates considerable responsibility is attributed to the eight round increase in wages. Some Opposition speakers blamed the removal of the food subsidies for the eight round of wage increases but in the interests of accuracy I do not think this is altogether true. Undoubtedly, the removal of the food subsidies was a major factor in the seventh round of wage increases, but I would say the Government's responsibility in the eight round stemmed from the picture of prosperity painted for the general election and in which the trade unions felt they should participate. I am not blaming the Government for going before the country in the last election and telling the people how prosperous the country was. Unfortunately, it had boomerang repercussions. I am not making a political point but an industrial point. The unions have said it. I have seen it in letters and I have one before my mind at present in which a certain group of workers have actually used the phrase that they wanted to participate in the prosperity in which everybody has been participating in the eight round of wage increases, which is only on the table at the moment.

There was also the fact that there was an element of responsibility on the Government because they allowed a State monopolistic body to set off the round with a settlement which was made without regard to the effects on the economy generally and private enterprise in particular. That settlement was set off at a figure with which, of course, the workers were delighted, and quite rightly so, but which was much too high and which set the ante at a very high figure and out of all proportion to any money increase given previously in England or Ireland. What is not generally realised is that the eight round did not place its justification in the cost of living but upon the standard of living. The unions made no bones about this. It was not based upon the cost of living. It was tied to nothing and that is quite visible from the figure that eventually came out.

I am not complaining about that. The lesson to be learnt is that when something goes wrong and when something goes slightly off balance you should use it as a headline to do the right thing in the future and I am glad to see that the trade unions with the Federation of Employers, and with the blessing of the Government, are getting together to see if they can make out a line of country for the future which will be sensible and where we can all work together and afford what we pay out in wages and salaries. I refer to the forthcoming conference, the national employer-labour conference, which we hope to stage very shortly. The fact to be faced is that we must either cut expenditure or raise the national income sufficiently to carry our improving standard of living. These are the alternatives. In any business if you do not increase your business you must cut down your expenditure. If you want to increase expenditure, you must increase your business, and income. That applies both to business and to the nation. You will not achieve this aim of increasing national income either by working less or by working less hard. Wages and salary increases are highly desirable but they must be earned and the shorter hours and the more holidays campaign is untimely, premature and irresponsible. While we all wish to see increased salaries and wages paid, and our energy should be directed to achieving just this very thing, however, it is manifestly irresponsible that higher wages should be demanded at the same time as shorter hours and longer holidays.

I am all for giving a man higher wages for doing more work and giving bigger and better wages for more efficient working but, in the present state of our economy, when we are about to face competition in the open market of the EEC, our workers and many of our people generally want to work less and to get more money. It really is beyond my comprehension how any sensible thinking person can justify that proposition.

There may well be places and cases where people are still working too long hours and where people do not get holidays or enough holidays. However, where people are not working very hard and getting reasonable holidays, there is not a case for asking for more time off, for less work and at the same time more money. There is no magic formula by which that ridiculous proposition can be sustained except the obvious way of devaluing money, thereby making it less useful and at the same time making it impossible for people such as pensioners and persons on fixed incomes to live.

I was walking across Molesworth Street yesterday. I met a lady whom I used to know many years ago. She is now in her seventies. She was very neatly and nicely dressed as she always used to be. I asked her how she was getting on. She is living in Monkstown, I think. She told me she comes into town about once a month only and I asked her why. I think she had been working in a bank or in some similar occupation when she was younger. She said there was no pension scheme in her time with the result that her money is becoming less and less valuable and she has just a few rents which her father left her from houses. Incidentally, this is the kind of person who is called a "landlord." She said she is now able to come into town less and less frequently and that she can only look at things but cannot buy them. These are the kind of people hurt by the demand for more money and more wages for less work. By such actions we are merely depreciating the value of our money and we are not gearing ourselves for the great effort we have to make if we are to face the draught of open competition without protection.

Our whole national effort should now be directed to economic advancement and the raising of the national income. In order to do this, it is important to use all the forces and resources available, working in co-operation with one another. In recent times the degree of Government consultation with vocational and representative groups of citizens has increased enormously. I welcome that trend. It is a sensible and democratic policy in comparison with what we had in the past, namely, over-reliance on Government Departments acting sometimes with little practical experience in many of the matters with which they were dealing

This co-operation, I am glad to say, seems to be growing with trade associations, professional associations and the trade unions. That is the manner in which I feel Government should operate—everybody working and helping each other. This new approach is welcome. It is one which is characteristic of a true Christian democracy as distinct from a totalitarian autocracy.

Far from taking away from the importance and dignity of the Civil Service, co-operation and consultation with appropriate groups of citizens bring both together in a harmonious and personal relationship. I would say that between trade associations today and vocational groups including trade unions, there was never such a good relationship with the Civil Service officials.

Years ago, I had the unhappy experience of actually being almost thrown out of the Department of Industry and Commerce on the question of tariffs. At that time one was hardly allowed to open one's mouth to the officials in control of that operation at the particular time. Now, Secretaries of Departments and their officials are mixing and working with the citizens. One sees them at social functions as well as at business conferences. It is very good. It is a feature I welcome.

I come now to the drive for productivity. In this commendable drive, there has to be an extensive examination of different situations. In the manufacturing sphere, a committee has been set up know as the CIO, Committee on Industrial Organisation, to see what should be done to enable Irish industry to be prepared for the Common Market. There is another committee dealing with productivity called the Productivity Committee. These are both under Government auspices. As well as that, you have existing bodies such as Chambers of Commerce and the Federated Union of Employers dealing with industrial relations, and the Irish Management Institute.

There is a danger in the setting up of some of these new committees. It must very carefully be watched that they do not overlap and interfere with one another. If there is overlapping and interference, there is a grave danger that these committees will do more harm than good. They can set up conflicts of personalities and interests. There is a tendency very often when a committee is given a roving commission of that kind, so to speak, to poke their noses into things beyond what they are asked to do and to interfere with something which is being better done by somebody else already. It is most noticeable in the body with which I am associated, the Federated Union of Employers, which is the expert body on industrial relations.

For some reason or other, there is hardly a society or federation in the country that do not think they are experts on industrial relations or that do not have some people in their associations who think they are experts and think they should interfere with this particular subject, which is dynamite. Anybody acting individually in the sphere of industrial relations can upset the whole atmosphere and create conditions embarrassing to employers, not excluding Government employers, semi-State employers and even the trade unions themselves. The trade unions, any more than we, are not very fond of people acting too individually.

In connection with the bodies being set up at present, has any estimate been made of the costs being incurred by the activities of these new committees? Very often, by seeing what a thing is costing, attention is drawn to what we are getting for the money and what they are doing. There is a danger, on the other hand, that they may try to do more than they are supposed to do in order to earn the money.

I hope that co-operation and coordination between all the elements of the community will succeed in preparing us for what we all want in the future, namely, a prosperous and successful entry into the new trading era when we will either be in the Common Market, where we shall have to face open competition, or outside the Common Market when we shall have to face even more open competition.

The subject matter of this debate is rather narrow. It is limited to Government expenditure and Government expenditure as a whole. I take it that we are concerned in this debate with the total Estimates for the year and not with the individual items in the Estimates, which would take us very far afield. The debate is also concerned with expenditure apart from revenue. Later on, in July of this year, we will be debating the Budget in which case taxation and revenue will be the main subjects of the debate. The amount of taxation which we will have to face in the year is very largely—in fact, entirely—determined by the amount of expenditure decided today.

There is a very striking contrast between the State and the individual in this matter. The individual's expenditure is limited by his income, but in the case of public authorities and the State, their income is determined by their expenditure. In the case of the individual, unless he is very improvident and living beyond his means, he will make some sort of a budget as to what his income will be, and he will try to cut his cloth according to that measure.

In the case of the State and the public authorities, the first decision is how much the Government will spend and then how the money will be raised. Therefore, this division between revenue and expenditure is really fictitious. We are laying the foundation for the Budget today because the Budget will decide how revenue will be raised. The amount of revenue raised will depend on expenditure, and expenditure depends on the decision of the Dáil and Seanad in regard to the Estimates. Those are the matters we are debating this evening.

Looking at the trend of expenditure, there is no question at all that public expenditure has risen. That is not peculiar to this country. It is a world-wide tendency today. Over a long period there has been a trend for public expenditure in every country to rise in relation to national income as a result of some political forces, as a result of the growth of nationalisation, of increases in public and semi-public utilities. It is also a reflection of the growth of the social conscience. People are appalled nowadays at the spectacle of poverty, ill health and illiteracy and, therefore, in every country in the world more and more is being spent on the relief of those evils, on the operation of nationalised industries and public utilities of one kind or another. Therefore, this country is in no way an exception.

Public expenditure is rising all over the world in every country and, as the Taoiseach said at column 1194 during the debate in the Dáil:

The key question which the Government and the Dáil have to consider is not whether these extensions in Government services are desirable—there is no question of their desirability—but whether we can afford them. Because of the economic expansion which we have experienced in recent years, we can now afford a higher level of Government services than we could have afforded previously, and as long as that economic growth continues, so also will the scope of these services expand in line with the rate of growth.

Therefore, it seems relevant in this discussion to consider what is the probable trend in the rate of growth because of the possibility of public expenditure increasing. As the Taoiseach very properly said, expenditure is limited by the rise in the growth of the national income.

That involves casting our eyes back over the year which is coming to an end now, and casting our eyes forward to the coming financial year to which these Estimates apply. Looking backwards I think we could very shortly summarise 1961 as a year in which national income increased by five per cent. Investment and employment other than in agriculture increased quite substantially. Industrial output increased by nine per cent.; the population was stable; the rate of emigration was not greater than new employment in the industrial field. The balance of payments was not unsatisfactory. It is expected to show a deficit of about £5,000,000 on current account but there was an inward flow of reserves. The external assets in the banking system were substantially increased, with the result that the balance of payments is not such as would give rise to any anxiety.

As Senator McGuire said, the one disquieting element is the rise in wages and the rise in costs. The eighth round of wage increases does seem to have exceeded the increase in productivity of the average worker. Therefore, I do not think it is unfair to say that some evidence of cost inflation has begun to appear in the system. By cost inflation I mean a rise in prices caused by a rise in costs. Government expenditure has been rising more rapidly than national income. National income has risen by about five per cent., and Government expenditure has risen by more than that, and that brings about what the economists in their despised jargon call a demand inflation: an increase in prices caused by an increased demand.

Therefore, I think it is not unfair to say that most people would agree with me that, looking back over 1961, there is evidence of two types of inflation, cost inflation as a result of the increases of the wage level and demand inflation caused partly by increases in incomes and partly by increases in Government expenditure. Those two types of inflation mutually act and react upon each other and, therefore, I do not think it is unfair to say—I may be incorrect; I speak subject to correction and I am only expressing my opinion—that in 1961 there were exhibited in this country some symptoms of inflation, partly cost and partly demand.

I should like to examine shortly the reason for the growth of public expenditure. I think it can be divided into two classes. In the first place it is the result of a rise in the cost of existing services, and secondly it is the result of increases in services. That is an important distinction. The extent to which the increase in public expenditure reflects the increase in the cost of the existing services is to some extent unavoidable, and the extent to which it represents an increase in the number and type of services is less unavoidable.

As the Minister said in the Dáil, the increases in expenditure, both in the present year and in the coming year to which these Estimates apply, is a result of increases in remuneration. In other words, it reflects the eighth round wage increases to which I have referred. At column 1060 of the Dáil Debates the Minister referred to the additional expenditure of £5.24 millions caused by the increase in salaries and wages. Undoubtedly, that is a reflection of the general rise in salaries and wages throughout the country. No one could express disagreement with the Minister, even from the lowest practical point of view, apart from ethical considerations, when he said that remuneration given to public servants must move in the same direction as in private business.

At the bottom of column 1060 the Minister said:

The rates of public service remuneration are largely determined, under conciliation and arbitration procedures, by the rates in outside employment. Although productivity improvements are constantly being sought through better organisation and methods, remuneration charges in the public services cannot but be affected by the general increase in wage and salary rates, unless the public services themselves were to be curtailed.

That is unquestionable. There is no question at all that the rise in wages and salaries in the public service reflects the general rise in wages and salaries in the country generally. Having said that, I think we must say this on the other side, that although the Government are to some extent the victims of rising wages, they are to some extent responsible for them. In certain cases in this country the rises have been started in the public service. It is a two-way operation. There has been a raising of the level in private service which has been translated into the public service, but there has also been a raising of the level of wages and salaries in some public utilities which has been translated into private industry at the same time. In other words, there is a reciprocal relation between the public and the private sectors. Rises in costs in the private sector are, as the Minister said, undoubtedly reflected in the public sector, but rises in the public sector are equally reflected in the private sector.

The trouble in that case is that rises in the public sector may be tolerable, whereas rising costs in the private sector are not tolerable and cannot be passed on. In discussing this question of the raising of labour costs, one must draw a distinction between industries that can pass on rising costs and industries which cannot do so. Amongst industries that can pass on rising costs, in the first place, are the protected industries, protected in the home market. In the second place, we have a number of public services of all kinds—essential public services for which the public have to pay—and increases in those services can be passed on. That can be done by way of increased charges, as we see all around us, such as increased postal charges, or—which is a less desirable thing—they can be passed on by increased taxes. The protected industries and public services are able to make the consumers or the taxpayers, or in some cases, both, pay increased costs.

Industries which are trying to export, which are not protected and which have to meet competition from outside, are not in this happy position. Therefore, they find themselves faced with the danger that if costs rise in the protected industries and the public services, they may find themselves going to the wall. This is a very real danger today. It must be remembered that the field of public employment is growing all the time, and on that, I should like to refer to a British White Paper dealing with public expenditure, known as the Plowden Report from the name of the Chairman, which pointed out that "as a consequence of these changes in public expenditure, the public sector of the economy in Great Britain now employs about one quarter of the total labour force". I do not know exactly the figure for Ireland, but whatever it is, it is rising and it is considerable. Therefore if there is a substantial rise in remuneration in this considerable sector, obviously there will be demands for equivalent rises in the private sector and apart from protected industries which now are becoming less and less important in this country, these increases in remuneration may not be able to be met.

The Government, therefore, have a duty. It is perfectly true, and I agree with the Minister on this, that to some extent the Government are caught up in a tendency from which they cannot escape, but at the same time, they themselves are to some extent responsible for setting higher targets. Certainly at a time like this, when we are faced with the new competition in Europe, the Government have a very grave responsibility, indeed, to hold down costs in the public services. By holding down costs, I do not necessarily mean reducing money wages. As Senator McGuire has stated, real costs of production depend on a great many other things, such as mechanisation, automation, scientific management and intelligent use of existing resources. For the Minister to plead that the rise in the Estimates is the result of rising salaries and wages which reflect rises in salaries and wages in the private sector is only a half-truth. It is not untrue, but it is only a half-truth, because the rise in the private sector is, to some extent at any rate, a reflection of the rise in the public sector for which the Minister or some of the public utilities which the Government to a greater or a lesser extent control are— I do not like to say to be blamed—the people at whose door responsibility must be laid.

So much for the rise in the Estimates caused by increases in the cost of existing services. Another factor increasing the Estimates is, of course, the increase in the number of services. Here again, I do not want to appear critical of the Government because these rises in public expenditure, as I have said already, are a reflection of social progress, of the emphasis which has been placed more and more on social services and on public utilities and therefore a sign of social progress. As the Taoiseach said, again quoting from column 1194, it is a function of the Government.

to try to keep the rate of expansion of the services provided by the Government in line with the expansion of national resources, as well as to use the machinery of taxation to level out inequalities and to ensure the equitable distribution of the benefits of economic expansion among all elements comprising our national community.

That is perfectly true, but at the same time it must be remembered that, if public expenditure increases more rapidly than national income and if there are Budget deficits or near-deficits at a time like this, the Government are adding more fuel to the inflationary fire which we have already noted, because, as I tried to point out earlier, there are inflationary symptoms in the economy. If the Government by well-meaning but ill-judged increases in public services at a time like this increase public expenditure, they are adding fuel to the fire.

The difficulty in this debate is that anybody who criticises any new proposed services is looked upon or classed as being unsympathetic to advances in social services, and there is practically no claim that can be made for increased Government expenditure that cannot be very ably defended in debate, but at the same time, it is the duty of the Government to resist these demands if they outrun the capacity of the country to afford them. As I said already, quoting the Taoiseach, it is the unpopular duty of the Government to resist these schemes.

There are two main justifications put forward for these increases in expenditure. One is that, in the widest sense, they are social services, and the increase in expenditure in this country is largely due to this according to the Minister. I quote him from column 1061 of the Dáil Debates in which he said:

By far the largest category of expenditure is that comprising the social welfare and health services. These two items combined account for £36.6 million or 30 per cent. of the total of Supply Services.

Then, in column 1063, he says:

The next most important grouping of State expenditure is education.

Health, social welfare and education are all social services of which everybody will approve. Nobody would be so obscurantist or so old-fashioned today as to say that these are not a perfectly proper subject for public expenditure.

The next justification invariably put forward is that any increase in public expenditure would appreciably increase national productivity and on that I want to quote again from the Minister, column 1063 in the debate in the Dáil, where he justified £28 million expenditure on agriculture if it is directed either towards reducing farmers' costs or stimulating production. At column 1064 he said that grants for the promotion of industry continued to comprise a large and expanding element of expenditure. He said that for tourism, and industry with potentialities of rapid expansion, another million pounds would be available. In other words, the expenditure could be justified on the grounds of increasing production in agriculture, increasing production in industry and increasing production in the tourist trade. This is all perfectly true.

There is this to be said about the expenditure on the social services. It does not in itself make a demand on the national resources. It is of a redistributive kind. There is a plus and a minus. It does not make the demand on the national resources that such things, for example, as the Army and Navy do and we are lucky in this country to be saved large expenditure on defence for that reason. The greater part of the expenditure on social services is redistributive and there is a minus and plus which balance out. That expenditure is not exhaustive, it does not make a claim on the resources of the country. It merely shifts an amount of wealth into what the Government judge—rightly no doubt—to be productive or socially desirable uses.

The point I am coming to is this. Although this expenditure is redistributive mainly and though it has social justification—such things as health, education and the relief of poverty— and though it may be productive in the long run, in the short run it does involve the necessity for more taxation and puts up the Budget. That is what we have to face because this debate is on public finances in general and economic policy. From the public finance point of view, unless the national income expands very rapidly, increases in expenditure, however well justified on social or productive grounds, do lead to demands for additional levies and the shape of the Budget is being decided in these debates. If additional revenue is derived from indirect taxation we have more costs to face; the cost of living rises; the trade unions are on the warpath again; we have the ninth round of wage increases. If it is met from direct taxation on savings, enterprise and incentive are discouraged. The business people, the saving classes, find more of their income taken in meeting current Government expenditure. The Taoiseach has already stated in the Dáil debate that the rate of savings in this country is one of the lowest in Europe. "The percentage of our total national income which is saved for investment in future development is one of the lowest in Europe." An increase in direct taxation will lower it still more. So that, if this additional expenditure leads to a demand for additional revenue, it has to be met, assuming the Budget is balanced which I would assume, by increased indirect taxation and a ninth round or by direct taxation which reduces incentive for saving which according to the Taoiseach is already unduly low.

Therefore, I think we are entitled to warn the Minister of certain dangerous trends shown in this Vote on Account. Government expenditure seems to be increasing more rapidly than national income and though each individual item may be justified, taken in isolation, the total shown in the Book of Estimates is rather large and, as I said at the very beginning, this debate is concerned with the total, not with individual Estimates. We do not debate Estimates in this House; we debate only the total. The total shown in the Book of Estimates does suggest that Government expenditure is rising more rapidly than national income. Therefore, the trend is for expenditure to outrun current income which will inevitably call for an increase in taxation in the future.

So far I have been looking back, it is the backward look, at 1961. Now let us look forward to 1962, the year to which these Estimates refer. Again, I am expressing only my personal opinions, but they are opinions based on a good deal of study and research.

The balance of payments this year will not be as satisfactory as last year. That can be safely predicted. Agricultural exports will not be maintained because last year agricultural exports were largely maintained by running down of stocks. The inflation which is undoubtedly present in the system, in so far as it is a cost inflation, will make exports more expensive and less competitive and in so far as it is a demand inflation will call for additional imports. Therefore, it is reasonable to predict a deficit in the current year. The balance of payments in 1962 will be less satisfactory than in 1961.

As Senator McGuire stated, this country is exceptionally sensitive to external influences. It is probably the most open economy in the world. Every wind that blows in the outside world can have effects here. From the point of view of external markets the outlook is not unsatisfactory, if it were not for the complications regarding the Common Market situation. The future demand in Great Britain seems to be a rising one. Continental production is rising. There is no sign of a recession in the United States of America. Therefore, the external market position seems to be reasonably satisfactory. But there is no getting away from the fact that the prospect of Ireland either being admitted or not being admitted into the Common Market generates an atmosphere of considerable uncertainty and nothing is worse for business than uncertainty. If business people knew their fate one way or another they could take decisions but many business people now are completely baffled by the prospects. The result is that there is a running down of stocks. People are not making long-period production decisions regarding either working capital or fixed investment.

Therefore, the country is facing a position of great uncertainty with regard to its export markets, in spite of the fact, as I said, that the business condition in the main markets is itself satisfactory. We are entering into a position of great obscurity and there are certain questions which the Seanad is entitled to ask the Minister to apply his mind to. Is the national income in 1962 going to rise as rapidly as in 1961? I want to make a very clear distinction between the money income and the real income. Possibly the money income will rise, because when a country is in inflation money income rises quite rapidly. This is one of the symptoms. Will the real income, in terms of gross national product, apart from money value, rise in 1962 as rapidly as in 1961? I am asking that question. I do not attempt to answer it. Will the balance of payments in 1962 be as satisfactory as it was in 1961 to this extent, that although there was a deficit in 1961 it does not call, in my humble opinion, for anything in the way of a drastic correction: because the reserves increased, and the inward flow of funds more than neutralised the deficit in the balance of payments? Have we any reason to believe 1962 will be equally good? That is a question that must be faced by the Minister.

On the purely public financial side, which is what we are debating here, will the revenue continue to be as buoyant as it was? The financial year now closing has been very lucky for the Minister. Revenue has been very buoyant in view of all the uncertainties regarding production and the balance of payments. Can that buoyancy be expected to last? Will the amount of saving and investment keep up? The Taoiseach has already stated it is altogether too low. Will it increase or sink to a lower level? These are some of the questions which the Minister for Finance must ask himself and must attempt to answer when he produces Estimates showing an increase of 10 per cent. for the present financial year.

What I am suggesting is that the background is one which does not justify large increases in Government expenditure, that the prospect, as far as we can judge, of production and the balance of payments is one that calls for extreme caution in regard to public finances and in that I include not only current but also capital expenditure. The capital expenditure must be pruned quite as carefully as current expenditure because capital expenditure, although it may be met out of borrowing, does involve taxation in the future. I should like to refer to a valuable paper entitled: "Trends in Public Expenditure" published in the February issue of the British Bulletin for Industry which is very relevant to this debate. I am quoting from that now. It says:

Investment expenditure in so far as it creates new buildings, etc., tends to increase current expenditure in the future in the maintenance and staffing of new buildings.

I am sorry to have to weary the Minister with a subject on which I have harped year after year. It is of such importance that it should be repeated. Just as I have said in regard to current expenditure, that although the fact that it is productive may justify it, it does not avoid future taxation, in the same way the fact that a great deal of public investment is productive does not mean that it does not involve future taxation because a great deal of public expenditure of a capital kind may be productive only in the long run. Such things as school buildings, agricultural colleges, arterial drainage, are all things which, in the long run, will be productive but in the short run the debt service has to be met. As I have told the Minister at other times in other Senates—I hope it will be new to the new Senators because I feel ashamed repeating it— the distinction between productive and unproductive capital expenditure by the Government is not the same as that between the self-liquidating and dead-weight debt. If capital expenditure is not productive in the long run it has no justification at all but even the most productive capital expenditure may involve the Government in considerable dead-weight debt, in which case the charges in relation to the Central Fund will also increase.

In reply to a Parliamentary Question on Thursday the Minister stated that the debt service for the current year had risen from last year from £20 millions to £22 millions, or 10 per cent., the same increase as in the Estimates, and twice the increase in the national income. That is not a healthy situation. The national debt service must be very carefully watched for two reasons. As I have said over and over again in these debates, interest rates are not going to fall. If the Minister has the idea that he is going to be able to borrow at less than about 6 per cent. in the next few years he is nursing an illusion. Interest rates are keeping up. Secondly, although the population is stable and seems to have ceased to fall, the per capita burden of interest rates has not eased as it has in countries with a rising population. Therefore, the incurring of the dead-weight debt should be approached with great hesitation.

The only expenditure properly relevant to this debate, I agree, is the Supply Services but I think I am entitled to warn the Minister that expenditure below the line and expenditure on voted Capital Services can in the long run have just as evil effects on the public finances as increases in Supply Services. I know it is very easy for us to talk the way I have been talking and to advocate economy in public services. If one is asked on what services one would economise it is very difficult to give a satisfactory reply. Once a service has entered into the pattern of the Estimates it is very difficult to cut it out. If one looks at the British public finances for the past ten years one sees a very notable dip in the proportion of the national income taken in public services. That is the aftermath of the war, disarmament and reduction in defence expenditure. We have nothing of that kind. There is no large section such as Defence in a period after the war which can distinctly be cut. Therefore, I entirely agree with the Minister that it is very easy for us to advocate reducing the Estimates but very difficult to point to what should be reduced. The moral to be drawn from that is this. The Estimates of tomorrow result from the decisions of today. It is when decisions are made in regard to public expenditure that the future expenditure is decided. That, I entirely agree with. Once a decision has been made, once there is an increase in the social services, it cannot in practice be dropped. Therefore, if there is one lesson that should be learned and followed by Ministers for Finance today it is the necessity for planning public expenditure well ahead in relation to the problem of national resources.

Again, I refer to the report of the Plowden Committee on the Control of Public Expenditure, where the following opinion is expressed:—

Regular surveys should be made of public expenditure as a whole, over a period of years ahead, and in relation to prospective resources; decisions involving substantial future expenditure should be taken in the light of these surveys.

On page 8 of the same Report we read:

The other side of the survey is the prospective development of income or economic resources. This is susceptible to prediction five years ahead only within broad limits. Moreover, public expenditure will itself be affected by the rate of economic growth; and the rate of economic growth will be affected by the size and nature of public expenditure. Nevertheless, we think that it should be possible to form worthwhile judgments about whether a certain prospective size and pattern of public expenditure is likely to stimulate or to retard the growth of gross national product, and is likely to outrun the prospective resources available to finance it.

I draw the Minister's attention to that passage which I think should be learned and digested and practised in every Department of Finance.

In the long run, everything depends on the growth of the economy itself. If the national product continues to grow at the rate at which it has been growing for two or three years, the considerable expansion in public expenditure can be tolerated. It is just like the case of an individual man. If his income grows, he can afford things he could not afford earlier. As he becomes richer, he can afford things he could not afford when he was less rich.

As I said already, when we come to deal with the State, we have to draw this vital distinction between an increase in money income and an increase in real wealth. If a man's money income is increasing, except in a period of gross inflation, he is becoming better off. In the case of a nation, if the money income is increasing, whereas the net product is not increasing, the country is not becoming better off. It is simply running into inflation. We have already noted some signs of inflation in this country. If that inflation is not corrected, the Government may find it necessary, in carrying out an approved national policy, to damp down growth in the country by putting on brakes, monetary or fiscal controls that will curb the expansion of the economy and cut down the inflation to which I have already referred.

A slowing down of that kind, a brake of that kind may produce very undesirable consequences. It may produce symptoms of deflation, causing unemployment and in this country emigration as well as depression in the national income. Therefore, it should be avoided if possible. The way to avoid it, of course, is to prevent the necessity for it arising. The way to prevent the necessity for it arising is to curb inflation early.

One never picks up a discussion on economic questions today without reading that there is a conflict within stability and growth and that if the money income of the community grows too rapidly, instability appears in the currency, in the exchanges, and in order to restore stability the growth has to be retarded, held back, which, as I said, may produce extremely undesirable consequences such as redundancy, unemployment and in this country emigration.

In the long run, of course, there is no conflict between stability and growth. No country can grow healthily unless it has monetary and financial stability. Therefore, it behoves the Government, the guardian of the national finances, to preserve stability, because if they fail to do so, they may have to check growth in order to restore stability. In that case, the check on growth is a result of earlier unwisdom in the field of public finance.

To discuss all the measures necessary for a Government to preserve stability in the national finances would involve lengthening this speech which is already far too long. However, I would refer the Minister again to the important publication from which I quote, Bulletin for Industry, February, 1962, in which the British Treasury expresses these views which I commend to the Minister's attention:

In its measures to strengthen control over public expenditure the Government are applying the following criteria:

(1) insistence on value for money by working to secure maximum efficiency in use of public funds;

That, as Senator McGuire said and as I said earlier, is about efficiency in productivity in the public service.

(2) determination of the relative importance of different classes of spending at different times;

That is, priorities.

(3) allowance of special priority to classes of expenditure which will foster economic growth and improve Britain's efficiency and competitive power.

That is particularly true today on the eve of the new events in Europe.

(4) examination of public expenditure as a whole, over a period of years ahead, to see that it is planned in proper relationship to prospective resources.

If the Minister would observe these four counsels of perfection, he certainly would be deserving of the applause and approval of the Seanad in future years.

In this general debate on the financial policy of the State, Senators have a choice, I think, of three ways of approaching it. They can approach it as statesmen, taking a detached and general view, such as, if I may say so, Senator O'Brien has just taken. We have listened to him with the greatest of interest. One can always admire the width and profundity of his outlook. The second approach that the Senator can adopt is that of a Party politician, attacking the Government at all costs and on all counts. The third approach is to speak as a vocational representative. That is probably the humblest role of all, but it is the one which I propose to adopt this evening. I propose to talk on the Vote for Education.

I am afraid we cannot go into the merits or demerits of the particular Votes.

I take it that we cannot go into the precise details of the Estimates. Government policy on education, as is quite clear from the statement before us, is one of expansion. A notable feature of the general policy is the marked increase towards universities. That is a matter of wisdom, I consider, and of generosity, and I commend the Government for it. I am speaking especially from the point of view of Dublin University. The members of that college and the graduates of that college are pleased and more than pleased with this gesture of confidence on the part of the Government as displayed in these increased grants.

This is not simply a matter for the Vote for the Department of Education because much of the Vote has gone towards our historic buildings. Our historic buildings are part of the historical inheritance of the whole country. They are at the disposal of the whole country while they are in that college. Although some people think otherwise, I can assure them that they are there for Ireland as a whole and in general. I can also assure the Minister, to use Senator O'Brien's phrase, that we will do our utmost to see that he gets "value for the money"—value in terms of service to the whole of Ireland.

I should like to refer also to the generous grants towards the library fund of Trinity College. I think everyone who has seen it and other buildings of the kind throughout Europe or the world will realise that this is one of our most precious possessions—the main room is so magnificent in proportion, and the collections of books are so rich and various in scope. The Government once again have shown that they are determined to preserve our historical inheritance. All such things can bind a country together, although they can also divide it. They can bind it together, and in that sense of a common historical inheritance we in Trinity College would like to play our part in uniting the country and in preserving the history of the country. I could say a great deal more on these topics but I shall not do so, and I appreciate your indulgence, Sir, so far.

I should like to mention another example of the fact that the present Government are — and, indeed, previous Governments were—determined to see that what is good in our Irish history will be preserved. It may seem a small thing to the House, but I think if Senators reflect on it for a moment they will think differently. Members of the House may remember that some months ago—this will come under the Vote for the Office of Public Works—during the progress of excavations in Dublin Castle there were found some very remarkable archaeological relics going back to the 11th century or, perhaps, earlier.

Here I think it should go on the records of the House that very great credit is due to the excavator from the Office of Public Works who did that excavation. Under very great difficulties he worked fast, carefully, and accurately, and produced this most interesting memorial of Irish history going back, perhaps, to the time of the Norsemen in Dublin. Another Government—I do not say an Irish Government—in another country might say: "That is all very well but we are putting up a block of buildings there. The designs are passed and the money is voted. The relics will have to be covered up, and the building will have to go ahead."

I think it is greatly to the credit of the Minister that he made a different decision. He decided that that site would be preserved not only for the citizens of Dublin but for the visitors who will find it full of historic interest. That site will now be preserved in perpetuity by this generous policy at a time when Governments are trying to save as much money as possible, and at a time when some people say that too much money is being spent on building. The Government said: "We are going to spend this money. It will be a confounded nuisance to change our plans and get extra money voted, but we will do it." I should like to thank the Minister on behalf of everyone interested in the history of the country for that decision. It will remain there as a permanent memorial to enlightened Government policy.

The next matter on which I wish to speak is rather a contrast to what I have just been saying. Last August we sanctioned something like £300,000 for local authority university scholarships. That, again, was a mark of increased interest in education. During the course of the debate a member of the House pointed out to the Minister for Education that there were certain anomalies in the granting of university scholarships by some local authorities. I have before me—I received it today—the University Scholarship Scheme of the Dublin Corporation. An anomaly to which I referred on that occasion, when the Minister implied that he would look into it, is still flagrantly there. In fact there is a flagrant injustice in this publication by the Corporation authorities in relation to this scheme which is now being partly paid for by public moneys from the public Exchequer, I understand. No citizen of Dublin can go to Trinity College, Dublin under a Dublin Corporation scholarship. I appeal to the fairness and justice of the House. A very large share of the rates of the city is paid by members of the minority, if you include the firms and households of members of the religious minority. Yet not a single citizen of Dublin can get a university scholarship to Dublin University. That would not come under our scope or our control were it not for the Bill——

The Minister for Education is not responsible for the affairs of Dublin Corporation.

Am I right in thinking that the Minister for Education or the Minister for Finance is responsible for the spending of public moneys of this kind granted to local authorities?

If the scheme is one provided by Dublin Corporation, obviously the Minister is not responsible for it.

The Minister pays for some of the scholarships. The Minister for Education undertook last August in this House to look into the anomalies and to do the best he could to persuade the local authorities to remove them. I simply want to urge the Minister for Finance to urge the Minister for Education to go further in looking into these anomalies. I say it is a flagrant injustice—and I do not believe a single member of the House would say otherwise—that people who pay a large share of the rates of the city should not be allowed to go to the University of their choice. I appreciate your indulgence, Sir, in allowing me to ventilate that matter.

My last point is a small one in compass, but it is a matter of great importance to the country. There has been a very large increase in the Vote to Bord Fáilte. I simply want to say that is completely justified. I have travelled up and down the country a good deal in the past year or so, and wherever I go I see marked improvements in the looks of places and in the amenities. Last St. Patrick's Day I was in Greystones and it was astonishing to see the changes that have been made there in the past year or so. I think that this is due to Bord Fáilte. They have a forward-looking policy. They are looking at the country as a whole, not just districts here and there, and these increases are very thoroughly justified. In general, though, I share some of the apprehensions voiced by Senator O'Brien, I believe the Minister is wise in this policy of more spending and that besides being wise he has been generous in many of the grants he proposes to give.

Listening to Senator O'Brien speaking, I was reminded of a professor telling one of his pupils that he had been a bit reckless with his money and should be more careful for the future. My line, I am afraid, must be completely different. My approach to the Minister's problem is that the Minister tends to be far too careful and far too conservative in his approach as Minister for Finance in this Government.

I thought it useful to look at what I said in this debate in March of last year when the Central Fund Bill was before the House. At that time I was taking the line of expressing the concern of the Labour Party and the trade union movement at the state of the economy. I criticised what I regarded as the unwarranted air of optimism by Government supporters, and I suggested that the Government had failed by their own test, the test laid down by the Taoiseach, namely, of providing gainful employment in this country. My theme could usefully be similar on this occasion.

It would be relevant to make reference to the question of employment. The mark and assessment of the merits of a Government always advocated by Fianna Fáil are whether or not the Government can provide gainful employment for Irishmen in this country. I find looking back over the years that the peak in employment was in 1955. At that time there were 455,000 employed in agriculture and 726,000 in non-agricultural work. The last year for which official figures are available is 1960, and they show that 413,000 were employed in agriculture and 699,000 in non-agriculture—an overall drop of 69,000 in those five years. It is true that the estimates for 1961 show a slightly better figure. The estimates are that in agriculture for 1961 there were 410,000, a drop of 3,000 as compared to the previous year, and in nonagricultural work 709,000, an increase of 10,000, but still leaving the picture that from the peak of employment in 1955 down to the estimated figures for 1961 there has been a drop in employment of 62,000 persons.

The improvement last year, which is welcome, was at the estimated rate of 7,000 people more in employment. It is good to see that the trend has been reversed but I am entitled to make this comment, that at that rate of improvement it would take us another nine years before we got back to the level of employment which existed in 1955—another nine years which we will not have. That is ignoring the question of the rate of unemployment in this country, which is now about six per cent. and which is the highest in Western Europe, and ignoring the natural increase in population, so that even at best the efforts of the Government in what they termed a very successful year with a buoyant economy, employment over all has been increased by 7,000. At that rate of gain it would take us nine years before we got back to the 1955 level.

Senator Professor O'Brien said that he thought we had reached stability in regard to population, but I am afraid I cannot agree with him. The figure used by the Minister in reply to the debate in the Dáil was that the net outward movement of passengers last year was 27,000, and I think the estimated natural increase in the population in the same year was about 25,000. In other words, the population last year dropped again by another 2,000. Granted that is not a very big figure. I do not mind speakers from the opposite benches getting up to say that the trend is much better than it was five or six years ago. It is a very welcome trend, but there is still that drop in population and I hope it will be quickly reversed.

It might be said that in our difficulties we are creeping forward. We are making some progress, but I am satisfied that in the light of these difficulties such creeping forward is not sufficient and is not good enough. There is far too much complacency. There is no real sense of appreciation of the position facing the country and no real dynamic effort to tackle the problems of providing employment for our own people in our country. We have not another nine favourable years before us in which to get back to the 1955 position. The most recent years have certainly been favourable to the Government. The balance of payments has been good. We have not run into difficulties in that respect. There has been no international crisis which would upset the applecart and create difficulties here and things generally have been fairly favourable for the Government. They have been lucky in that respect, but we have not the possibility of more favourable years before us in which we can creep further in order to provide more employment in this country.

I referred last year to what I thought was a failure over decades to provide enterprises to take up the slack in the economy here. I suggested that in this country we have shown a particular aptitude to exploit successfully public organisations or enterprises. We have the strange contradiction that we had in the debate here last year, Fianna Fáil and Fine Gael arguing the point as to who started certain public enterprises.

There was a dispute about who started the Sugar Company. Still those two Parties, those two conservative Parties, become very coy and apologetic in other circumstances when reference is made to the large sector of this economy taken up by public enterprise. It is the view of the Labour Party and of the trade union movement —it has been traditionally their view— that we have not in this country had enough State participation in promoting development, participation which in the system here would not alone have been justifiable but could, indeed, have been regarded as essential. My fear is that in some way we have missed the boat, that there will no longer be opportunities, as there were in the past, for a native Government to participate in enterprise to advance employment here. Fianna Fáil have had most of 30 years of government. I feel that too often probably Governments have been dominated by older, safer, conservative Ministers. It seems to have lost its dynamism, perhaps due to the war, but that is the position. The Fianna Fáil Party and successive Governments had that opportunity in the past 30 years and I do not think they successfully exploited it. In the inevitable progression towards free trade I do not think we will have the opportunities for active State participation in promoting employment and industry as were available in the past three decades.

Let me turn for a moment to the money being asked for in this Bill and Book of Estimates. The increase— and great play was made of it in the Dáil—is £16½ million approximately. The Minister has—as I think is customary for all Ministers at this time of the year—made a very gloomy forecast of the Budget, warning us of dark consequences, et cetera. It is true that some £5 million of the increase in the Estimates is due to pay adjustments related largely to the effect of the eighth round of increases. Thanks to the effects of PAYE which the trade unions advocated and supported for years, the Minister has readily available to him an immediate income. I suggest that PAYE will immediately bring in probably most of the £5 million required to pay the increases in remuneration to State employees. I was recently looking at the figures paid by notional people on set incomes and relating that to the eighth round. You get some surprising results. I am sure the Minister is probably aware of this anyway. A person on an income of £1,000 per annum up to now, a single person, if he is affected by the eighth round might get an increase of 15 per cent.

Is the Senator referring to taxation rather than expenditure?

I am certainly not advocating more taxation.

Acting Chairman

I would ask him not to discuss taxation.

I am discussing it in relation to the whole economic position.

Acting Chairman

I hope the Senator will confine his discussion to expenditure.

We are dealing with expenditure involved in increased remuneration to State employees and I am making the point that it is largely recovered by the effect of PAYE on increased wages resulting from the eighth round but I will be very brief. A person——

Acting Chairman

Excuse me, you will not be very brief if you propose to discuss taxation. If you do not mind you will concentrate on expenditure.

Right. We have been discussing the possible inflationary effect of the eighth round. I do not think there is too big a risk in that round because of the existence of PAYE which is immediately anti-inflationary. It means that the income resulting from the eighth round is immediately largely siphoned off before it gets into the worker's pocket at all. You have that situation and by reason of that the amount being siphoned off is proportionately much greater than the actual increase. Take a man whose wages are increased by 15 per cent. He was on £1,000 per annum and he goes to £1,150. If he were a single man his rate of income tax——

Acting Chairman

I must insist that the Senator concentrates on expenditure.

That is what I am trying to do. If you will just let me finish my point I might make it clear. It is increased by 22 per cent. If he is a married man with two children, the rate of tax which is siphoned off in an anti-inflationary way——

Acting Chairman

You will appreciate that a good many people wish to speak on this Bill. If we intrude on the subject of the Finance Bill, we will simply have repetition next July so I would ask the Senator to avoid discussing taxation or its effects.

But it is so long to wait for the Finance Bill. That is the end of the year.

Acting Chairman

I am afraid we cannot consider that.

I think I have made my point that PAYE and the fact that it is in existence is a very anti-inflationary measure and will enable the Minister to recover the increased costs of the eighth round to the employees of the State.

The Taoiseach, speaking to this debate in the Dáil, made reference to the various rounds of increases and was good enough to say of the seven previous rounds at column 1199, volume 193:

Over the whole period from the end of the war up to the eighth round of wage increases the improvement in wages was not out of line with what was justified by rising productivity.

Strangely enough, that is what the trade unions had been saying all the time and we welcome very much this acknowledgment by the Taoiseach, even though it is somewhat belated. He goes on to criticise the eighth round and I can understand his concern, but let me make the point that from estimates already prepared—I think Senator O'Brien made a passing reference to this—productivity in 1961 is up by 5 per cent. I hope that the increase in productivity will continue and not alone that the trend will continue but that it will rise, because, again, the Taoiseach, speaking in the same debate, had some very sound things to say about the question of productivity. What he said was admirable and we can all subscribe to it and it bears repetition here. He says at column 1200:

It is the only means by which increases in wages can be made possible, without consequences in prices or in employment, but——

I want to underline this——

—improving productivity is a function of management; it is largely a matter of giving workers better machines, organising their work more efficiently or securing the maximum utilisation of capital equipment.

That is quite true and is accepted and acknowledged by the trade union movement. I might say, too, that the trade union movement is increasingly welcoming efforts to improve productivity and many of the more progressive trade unions would now feel somewhat worried if they found an employer who was not making efforts to improve productivity. They welcome it, provided arrangements are made for proper consultations and provided things are done by agreement.

The Minister is a very large employer and I wonder would it be appropriate to direct his attention to what the Taoiseach was saying about managerial responsibility, that it is, in fact, the responsibility of the Minister to improve productivity in the Civil Service. He said efforts are being made, but, quite frankly, many of us think that possibly there is not sufficient drive about it. I am always advocating that we should look every so often at the way we are doing things. The way we are doing things might have been sensible twelve months or ten years ago. That same method might no longer be sensible or economic because of change in costs. That is why productivity examinations should be a continuing process. It is very hard for people—I find this myself—who are doing a job to look critically at the way they do it. It is often a very useful exercise to get somebody from outside to have a look at the way things are done and to make suggestions. Sometimes the suggestions are daft, and sometimes they make sense. It is just a question of a fresh mind looking at the way things are done to see if they can be done more efficiently and if productivity can be improved.

I hope the effects of the eighth round can be largely absorbed by the increase in productivity that has taken place, and by further improvements in the coming year. We have no evidence that the increased costs in the Civil Service are going to be met to any appreciable extent by improved productivity. Perhaps, things are being done most efficiently at the moment and nobody could see a more efficient way of doing things. Maybe so, but if I were dealing with an employer and found there were no changes resulting from increased costs, that no more mechanisation was being introduced, I would be afraid and I would regard it as my responsibility to say to that employer: "What are you doing about trying to absorb the increased costs? What efforts are being made?"

I am not saying, and nobody should try to misinterpret me, that employees in the public service are not working hard. As the Taoiseach rightly said in that debate, it is not a question of working hard. It is a question of working more effectively, and the responsibility lies with the management, with good management and good supervision. When I see a group of workers hanging about and obviously trying to dodge the time, trying to find excuses until it comes to lunch time or the afternoon break, I feel very vexed, not because they are doing that but vexed at the management and the supervision which produces that result.

None of us chases after work. None of us goes along and says: "I have not enough work to do, give me more work." None of us does that but all of us are very much happier and get what I call job satisfaction if things are so arranged that the work-load is proper and we feel we are usefully doing something. I think that particularly in the local services management and supervision are not what they should be. Productivity could be improved and I am not talking about dismissing workers. I am talking about arranging things so that you get far more job satisfaction out of your work and are fa rmore usefully employed.

Senator McGuire said he thought the claims pursued by the trade unions for a shorter working week were irresponsible. I think he said something to the effect that workers should not be looking for reduced working hours when not working hard in the longer hours.

I remember dealing with a problem myself where I argued that in certain larger offices the hours could be reduced by one hour per day without any increase in staff and without any drop in efficiency provided things were better arranged and provided the staff were given the opportunity of cooperating. I am glad to say that I proved that point in some half dozen or ten offices employing between them some 400 employees and where, in fact, hours were reduced by one hour per day without any increase in staff or without any drop in efficiency. That happened simply because the hours were already too long. Eight hours for sitting at a desk working at routine repetitive work was, I suggested, too long and could be successfully reduced to seven hours by giving the staff the opportunity of organising their work better and getting away an hour earlier, and they did it. That is the answer largely to this notion that it is irresponsible to look for a reduction in the working week. It is not. It brings more pressure on management to accept their responsibility of increasing productivity, of so arranging things that the workers can be better and more usefully employed.

May I go back for a moment to this question of the eighth round and its effect on the Estimates and the economy generally? I shall be very brief on this. I have already referred to the increase in productivity in 1961 and the hope for increase in 1962. I hope there will be concentration on efforts to increase productivity rather than any approach to meet the position by increasing prices. I think that road would lead to disaster to this economy, namely, passing on too lightly or too quickly increases brought about by improvements in wages and improvements in conditions of service. In some circumstances I know there is really no alternative but I think that for any money offered there should be an increasing drive to improve productivity. The trade unions at present are anxious, from what I know of the position, to co-operate in improving productivity. I would ask that employers would avail of that cooperation rather than take what would immediately be regarded as the easy way out of increasing their charges.

As I understand it, this Central Fund Bill is a Bill which proposes to give authority to the Minister for Finance to expend money in anticipation of the Budget and the Finance Bill which will be introduced in the Dáil in the near future. The basis of this Central Fund Bill is the Book of Estimates, which was circulated to each Senator a short time ago.

I further understand that this Bill affords the Seanad an opportunity of discussing Government policy in general in the light of the proposed expenditure for the coming twelve months. This Book of Estimates constitutes a record. It is a record in the sense that it is the highest bill that has been presented to the Irish taxpayer since the foundation of the State. It is a record, too, in another sense, in that it constitutes the steepest increase in public expenditure in any one year since the foundation of the State.

These two records would not, in themselves, be evidence on which to charge the Government with failure to carry out their duty, would not in themselves be evidence on which to indict the policy of the Government as a complete failure.

The Book of Estimates presented to the country represents an increase of £17 million. If it were presented to the country in the light or in the background of an increasing population, of a state of affairs where emigration did not exist and, above all, in the light of a thickly-populated contented and prosperous countryside, then it might be justified. However, I suggest that this monstrous bill is presented to the House and to the country at a time when our population is falling, when fewer people are being called upon to pay this much-increased demand, when emigration goes on steadily, when there is wholesale flight from rural Ireland, when the farming community—let this be said again as it cannot be said too often—who constitute the backbone of our economy are completely dissatisfied, are up in arms and have risen up in arms and when we have a highly inefficient, very costly and unwanted health system.

If I may be permitted to deal with these items separately, I shall do so. There have been many discussions as to whether the population has or has not fallen, as to whether emigration is on the decrease or on the increase. The only accurate material available to me is the last census. There is no use in arguing a case on figures that are not yet available in the hope that those figures will prove what you want them to prove.

Between 1956 and 1961, the last five years covered by statistics, the population decreased by 84,000. Between 1951 and 1956, the population decreased by approximately 62,000. Between 1946 and 1951, the population increased and it increased for the first time since, as far as I know, the year 1881. If you look down the Table given in the Statistical Abstract, you will find that, in the period 1946 to 1951, there is a plus, the only plus in the Table, and the present Government had no control over this State for practically the whole of that period. Before leaving the subject of population, I think I am entitled to discuss it.

We are concentrating on the expenditure aspects of the Estimates. I think details of population are hardly in order.

I am trying to discuss the capacity of the country to bear this expenditure.

Acting Chairman

Perhaps, if the Senator would give a broad picture, it would be better now. I think the Senator would thus facilitate the debate.

Without going into figures, I think I am entitled to discuss population in a general way. I come from a town which tops the poll, so to speak, in a fall in population in all Ireland, the town of Cavan. I come from what is left of our effective jurisdiction of the Province of Ulster, where the fall in population has been the highest—a bad example I venture to suggest. Therefore, I say that fewer people are being called upon by this Government to pay the increased bill of expenditure.

So far as I can ascertain, more people have emigrated in the five year period from 1956 to 1961 than at any time in any five years in the history of the State since 1881. That can be borne out and proved. Therefore, again I say that at a time when the Government have failed to arrest the problem of emigration or the decline in population, they are calling upon the country to pay £17,000,000 more than last year.

I do not think people are emigrating because they suffer from wanderlust as some people say, or because they like to go abroad. I know of a tenant who has been paying a rent of over 12/- a week for the past 12 months while the family are in England. They are working in England, and in order to keep a home in Ireland—although it is locked up—they are paying rent to the local authorities in order to keep a home here to return to. That is not the act of a man who has emigrated because he does not like Ireland, or because he wants to go abroad. It is the act and the attitude of a man who is being driven out of the country by sheer necessity.

The questions of a fall in population and emigration are serious problems but in my respectful opinion by far the most serious problem facing the economy of the country at the moment is the flight from the land and the disappearance of the small farmer and the not so small farmer. Again I repeat—and it cannot be repeated too often—that the cornerstone and the foundation of our economy is a rural economy, an agricultural economy, an economy based on the family farm. The most disastrous aspect of the situation at the moment is the disappearance of the small farmer, the flight from the land, and the callous indifference and complacent resignation of the Government Party to those facts.

I might blame the Government from time to time for this, that and the other thing, but I admire them at all times for having a very good propaganda machine. For the past few months I have heard sources, which are usually well informed of what is going on in Government circles, saying that the flight from the land is not confined to Ireland, that it is a cycle that goes on all over the world, and that it is happening everywhere. When I heard that, I said that those people were suffering from depression and that it was only their own point of view but in the course of a Dáil debate on the Vote on Account I heard Deputy Booth, who is a responsible and a respected member of the Government Party, saying that the flight from the land was not peculiar to Ireland, and that it was nothing more nor less than the output of efficient machinery replacing man power. I think he went on to say that as a city man he would shudder at the thought of having to bring up a family and live on a farm himself.

Does that represent Government policy? Does that represent Government thought on this cancer which is eating into the very foundations of the country? Does Deputy Booth think or do the Government think that it is only the workers who are disappearing? He seems to think that. I would invite him to come down to Cavan, Monaghan and the neighbouring counties, and he will find that it is not only the farm workers who are disappearing, but the farmer with 40 acres who is bailing out and clearing off to England. People who used to be considered quite substantial farmers are now delighted to get a job as a lorry driver, a porter in a hotel, or any job away from the farm. I often wonder are those people being encouraged to adopt that attitude, and is this loose talk of the Government Party that is going on all over the country calculated to encourage people to get away from the basic economy of our country. It was bad enough to hear Deputy Booth——

Acting Chairman

The Senator will understand that Deputy Booth cannot reply to him. He should confine himself to general policy.

I shall go right on to someone who can reply. It was bad enough to hear members of the rank and file of the Government Party saying that, but in his concluding remarks on the debate the Minister repeated it. He repeated that it was a world trend, and at column 1626 of the Official Report of the debate of 14th March he said:

There was some talk about people leaving the land. We were blamed for making the excuses that that is going on in every country, and so it is. These figures have been quoted so often that I do not want to bother the House with them again. Every country is having that experience and even-

Mark the word "even"- in agricultural countries like Holland and Denmark, there is fairly—

Mark "fairly"—

substantial increase in the number of people leaving the land.

There you have what I thought was an irresponsible attitude on the part of a member of the Government Party backed up, corroborated and accepted by the Minister for Finance. I feel that when he said that the Minister had his tongue in his cheek because he said "...even in agricultural countries..."

What is wrong with stating facts?

Does the Minister approve of wholesale emigration?

I do not. I did not say I did.

Does he approve—

I only gave the facts. I did not say I approved of them.

Has he any policy to cure it?

There is no use in ignorant talk like that.

Has he any policy to cure it? That is what I want to hear.

A Senator

He is only an amateur.

The Senator is entitled to speak. He is entitled to ask what Government policy is. He is entitled to quote figures on emigration and the population. There is no doubt about that.

What is wrong in stating facts?

The Senator is misquoting Government policy.

The Minister can interrupt but the Senator must be allowed to make his speech. We will see that he is.

Acting Chairman

This can all happen only by permission of the Chair. Senators will have an opportunity of replying in extenso. The present speaker should now continue.

The other side have been silent so far.

Even thought I may be an amateur, some of the hardy warriors on the other side of the House seem to be getting annoyed. I want to ask is this wholesale flight from the land Government policy. Have they any policy? The only policy they have is that it is going on everywhere else—America is even mentioned— but in most of these other countries people can turn to industry as they have raw materials of their own from which to manufacture but here we have no such raw materials and we are tied to agriculture because that is the way the country was created. Again I ask is the only answer, the only policy of the Government on this subject, that it is going on everywhere else? If that is the only policy it is not a policy. It is like the policy of the businessman who made a complete and utter failure of his own business and then religiously reads the Gazeite each week in the hope that he will find consolation by finding some of his friends also bankrupt and going out of business. That is a very poor outlook.

This huge bill is being introduced at a time when the farmers are up in arms and rightly up in arms. Some controversy has been going on as to whether or not the Taoiseach chastised the farmers. I do not propose to quote him. One would have to read his entire speech, but I do not think it is unfair to say that the Taoiseach's attitude was very critical of the farmers.

In what way? Mention one point.

I will mention one point. He said the farmers were being led by an irresponsible organisation, an organisation which had become irresponsible.

Well, go on.

If they are marching behind an irresponsible organisation it means they are irresponsible. The Taoiseach also said that in the first half of the decade just ended the farmers were so prosperous and made so much money that it took the past five years for the other elements of the community to catch up.

I would like you to read that. That is very much twisted. Read what he said.

It might take a minute or two but I will read it.

He did not say they were very well off at all.

I am quoting from column 1199 of the 8th March:

The general pattern revealed by our records is, however, that from the period from 1948 to 1961 farming incomes per head improved more rapidly during the first half of that period and non-farm incomes caught up in the second half.

That is a fact.

I invite the Taoiseach to go down the country and put that in his manifesto for the next election. When he goes on a tour of the rural constituencies and says that, I will not blame the farmers if they ask him—I may be pardoned for going back a little—how long it took farmers following the 1932-38 period to catch up on the incomes of the rest of the people.

When asked by Deputy Corish in the concluding sections of the debate on the Vote on Account why agriculture was not progressing better than it was and why there was not a better return for the money which was being put into it, the Minister for Finance said that what was wrong was the marketing, that everything was all right until it came to the marketing operation. Now in my opinion that was a worthwhile admission of the Minister but it was a most shocking indictment of Government policy and of the Government which had charge for approximately 23 of the 30 years. I think that is a fairly accurate statement. They set out at the very beginning of that period to look for markets. They come now at the end of that period and say the farmer is down and out and he is as bad as he is because the marketing system is wrong. I remember before 1957 the present Minister for Transport and Power talked in the Dáil and in the country frequently on agriculture. I think it is fair to say that he had then the most wonderful schemes imaginable for marketing farm produce if only the present Government were put back into power. After they were put back into power a sum of £250,000 was voted to enable them to seek markets throughout the world. In response to a question recently it transpired that out of that £250,000 the Government in their search for markets had spent the comparatively paltry sum of £23,000. In my respectful submission this is the greatest indictment of Government policy that has ever come before either of these Houses and coming out of the mouth of the Minister for Finance——

You have said that twice.

It means that during the past five years the Minister for Agriculture at home must have been doing nothing to find markets and that at the same time the Minister for External Affairs was going round making bad friends with people who would naturally be some of our best customer. However, that is a matter of external affairs with which other people are better qualified to deal.

If not much more so.

I would like to hear the interruptions.

That is complimentary.

You hear a lot of talk about the Common Market.

Acting Chairman

References to the Common Market may be allowed only in so far as they are related to Government expenditure.

As a result of Government policy—just one point—

Acting Chairman

Government expenditure.

With respect, I think it is in order. We are not equipped to go into the Common Market. The agriculture community is not equipped because the Government so misused the money at their disposal that the Irish farmer is not in as good a position as he should be to compete with other farmers in the world. That can hardly be denied. Over the last 30 years, I think it was during the two terms when Deputy Dillon was Minister for Agriculture that anything of a worthwhile nature was done for the farmers of the country.

That is good.

It is all right to laugh. If that is not so why was the income of the farmers, according to the Taoiseach, better in the first three years of the present decade?

Debate adjourned.
The Seanad adjourned at 10 p.m. until 3 p.m. on Thursday, March 22nd, 1962.