The Minister, in opening this debate, said the conjunction of the three Bills which we are discussing covered such a wide range that their introduction provided the opportunity for a comprehensive discussion on the economic and financial situation. Accordingly, I propose to take advantage of this and to speak about our present situation. My colleague, Senator Garret FitzGerald, in a very comprehensive speech, made an economic survey of the factors which had produced the present situation and of the possible course of action. My intention is to survey briefly the situation, to speak of the present position in regard to the Second Programme and then, rather than present broad views, to consider one particular aspect of the problem in detail. I propose to take the problem of manpower policy, to relate it to some of our present difficulties, and to indicate what I consider should be the direction of the decision which the Government must make quickly in regard to this most important subject.
The present position of our economy, if we look at the four most important elements, is as follows: firstly, our growth, which has been steady for a number of years, has faltered, not by much, but by something; secondly, in spite of the hopes expressed in the Second Programme, employment in the country is virtually static; thirdly, prices are running out of control; and fourthly, the balance of payments is under severe strain.
We have before us the Finance Bill and in that Bill is the legislative embodiment of the Budget which is itself the main instrument of economic policy at the present time. The Budget, of course, is not discussed in this House and this is the first opportunity we have to discuss what was in the Minister's Budget speech. I think it is unfortunate that at a time when the economy needs some control and needs some changes of direction in order to ensure that economic progress can proceed we have a Finance Bill before us today which seems to be more concerned with death duties on the middle classes and middle class householders rather than with such matters as a root-and-branch reform of taxation which might promote incentives and recover momentum in economic growth.
When we are looking at the Finance Bill and the Budget Statement of the Minister, of which it is legislative embodiment and which is now before us for the first time, our first reaction and our obvious comment must be on how out of date the Minister's Budget Statement is. Here we are discussing the Budget Statement for the first time and we find that in less than three months this vital statement, which was to indicate the direction in which the country should steer for a whole 12 months, is completely out of date and rendered obsolete by the speech made two months after the Budget Statement by the Taoiseach in Dáil Éireann. This is a serious thing for us at present and a serious thing for the future. If Budget Statements are out of date in two months there is something wrong. We have now reached a position where the main instrument of economic policy, which is to guide the economy for 12 months, has slipped so quickly out of date.
I do not want to dwell too long on that but I want to point out the complete contrast between some of the statements in the Budget and some of the statements made by the Taoiseach. I quote first from the Budget Statement —a statement which indicates the prospect for the year ahead—of the Minister for Finance on the 11th May, 1965, at column 963 of the Official Report. Dealing with the balance of payments which last year reached a figure of £31 million the Minister says
On the other hand, a smaller rise in imports is expected, leaving the balance of payments deficit at much the same level.
So, in his main financial speech of the year the Minister for Finance tells us he expects a balance of payments deficit of £31 million or thereabouts, of the same order as it was last year. I accept unreservedly that the Minister was not attempting to deceive the Dáil when he made that statement, but I do say it shows a dangerous lack of knowledge on the way the economy is going when we put that statement against the statement made by the Taoiseach when speaking two months later on the 13th July in the Dáil when introducing the Estimate for his Department. What the Taoiseach has to say in contrast to the estimate of the Minister for Finance on our balance of payments position is as follows:
Even if the situation does not get any worse than it is now, there seems likely to be in this year a situation in which the external payments deficit will be not less than £50 million, and it may be higher.
So determined was the Taoiseach to put over his point of view that a page later we find him repeating this:
Assuming there is no further worsening of our situation in the second half of this year—I must say quite frankly this is by no means certain —and assuming also a rise in our net invisible receipts this year of about £7 million—this can be presented only as an estimate but it is a well-informed estimate—our external deficit will, as I have said, be not less than £50 million and this may prove to be an optimistic forecast. There are indications that the trade gap could widen further before the position is rectified.
It seems to me that we have here a failure in economic planning. We have an estimate given on the most important financial occasion of the year, of £31 million or thereabouts and then we find two months later the estimate is £50 million. There is a failure here not only in economic planning but a failure in ability to forecast the trends of the 12 months following the Budget Statement. This is in a way symptomatic of the reliance the Government has placed almost since the beginning on what they like to term economic programming. They like to term it economic programming in contrast to economic planning which is, as Senator Garret FitzGerald pointed out, a much more disciplined thing. This situation which has arisen of a change within two months in regard to a most vital economic index is in keeping with the Government's attitude in economic forecasts and then keeping their fingers crossed and hoping these forecasts will be fulfilled.
It may be said that some of the difficulties which make the change between the statement of the Minister for Finance in May and the Taoiseach's statement in July could not have been anticipated. I think that not only should these difficulties have been anticipated but that they could have been anticipated. A great deal of the failure either to avoid what happened, or if it could not be avoided, to foresee what might happen and to react promptly to the difficulties, springs from deficiencies in the Second Programme both as drawn up and as published by the Government and, more particularly, from deficiencies in the manner of execution of the Programme.
Lest it be thought that this is an exercise in hindsight, saying now that the Programme has not worked out as it should, I want not merely to comment on what is apparent to everybody now but to go back and recall what I said in this House 16 months ago in a comprehensive review of the Second Programme and to recall comments I made then which have become of greater interest in view of the course of events since I made those comments. In the course of the speech which I made on the Second Programme on that occasion, I reviewed the outcome of the First Programme by way of preface to my remarks. I quote from volume 57, No. 9 of the Official Report of 18th March, 1964:
If we look at this First Programme in order to find a guide to the reliability of the forecasts in the Second Programme I fear we must conclude that the targets in the Second Programme will only be realised if similarly helpful circumstances arise.
Of course the situation is that circumstances have been becoming less favourable than they were during the First Programme. I think the Government were deluded by the success of the First Programme into thinking that they could automatically count on success in the Second Programme also, without taking further precautions.
We must recall the objectives of the Second Programme. There are three main objectives: firstly, a 50 per cent growth between 1960 and 1970; secondly, a reduction in emigration to 10,000 by 1970, which is equivalent to an increase in employment of 78,000, between 1960 and 1970; and thirdly, the paying of special attention to human investment. The situation now is that whereas the progress of the Programme to date has been relatively satisfactory in regard to the growth target but it has been far from satisfactory in regard to the employment target. The position is that, if we were to expect the normal progress between 1960 and 1970 in regard to the employment target of 78,000 new jobs, we would expect that something of the order of 30,000 of these 78,000 new jobs would have to be provided by the end of 1964. What is the position in regard to that objective? The position is that of these 30,000 new jobs— which would be the figure we would expect if steady progress had been made towards this objective—only 4,000 have so far been provided. Accordingly, in regard to this employment target of the Second Programme there is a very serious lag.
This point is clearly and graphically borne out in the Central Bank report which has just been issued. On page 52 of that report, there is a diagram which shows the projected growth in total employment and the actual growth. It is clear to anybody who looks at this report that there is a most disturbing contrast between what was hoped for and what has been attained. When we look at this particular figure in the report, we can see a clear failure to get off the ground in this respect. One would think that this was the plotting of the hopes of a man who attempted to fly by strapping feathers to his arms and the results of such attempts which were made around the turn of the century. There is a quite melancholy difference between what was hoped for in this respect and what has been achieved. This is not something which is marginal; it is something which is embedded in the Second Programme and is necessary if our economic progress is to show any gain at all and, particularly, if it is to show any gain at all in social terms.
Of course there is no doubt that implicit also in the employment target —and I dealt with this at length when speaking 16 months ago—unemployment should be reduced to 3½ per cent by 1970. This is part of the calculations which were made in the Second Programme, part of the data put into the computer to see if the Programme was a feasible one and to ascertain whether all parts were consistent with one another. What has been the progress in this regard? The situation is that in 1964 our unemployment figure was 5.7 per cent which was less than the bad year of 1963 but was still no reduction on the figure for 1961 and 1962. Unemployment in 1964 was 5.7 per cent—the same as in 1961—and yet the aim of the Programme is to reduce this figure to 3½ per cent by 1970. In this respect also there has been failure and a lag in progress. It is not a question of not going as quickly as was planned; there seems to be a stagnation or a stickiness here in regard to employment. There seems to be a threshold at this level of unemployment across which we are unable to travel in spite of the incentives and all the other elements of the Second Programme for Economic Expansion. This is another point which I commented on in speaking of the Second Programme and I shall confine myself to the points I raised then. I might, in retrospect, say that on that occasion 16 months ago, I expressed the opinion, which is on record, that—looking at the Programme as drafted—I did not think the employment target would be reached. Unfortunately it looks now as if I was only too right in my pessimism in this regard.
A further point I mentioned at some length on that occasion 16 months ago was the position of the banking system and also the position of our external reserves and the operation of the banking system under this Second Programme. Again, I should like to remind the House of what I said on that occasion. I spoke of the financial operations which were involved and were implicit in the Programme, as drafted. I concluded as follows and I quote from the same volume at column 715:
Assuming that all this had to be handled through the commercial banks there would be a sum involved of £366 million and to finance this would require a capital inflow into this country over the decade of something of the order of £37 million per year. If we look at what has been happening in recent years in regard to capital inflow, we find very severe fluctuations but an average of about £24 million is coming in and I do not see any real sign of upward trend.
In his reply to the debate on that occasion, the Minister's predecessor did not think very much of my anxieties in this regard when he said, and I quote from volume 57, No. 10, column 885:
There has been a substantial inflow of foreign capital for some years past and there is no reason to believe that it will suddenly come to an end.
Of course, I had not suggested that the capital inflow would come completely to an end but I had suggested that a prudent basis for planning would be to allow only for a capital inflow of what had been the average over a number of years and that average was £24 million. That is what I said 16 months ago.
I now turn to what the Taoiseach said when speaking on this question of external reserves and capital inflow a few weeks ago in the Dáil:
Last year and in earlier years our external payments deficit was financed to a large extent by a capital inflow, and the net external reserves of our banking system rose last year by £5.2 million as they also rose in 1963 and 1962. This widening of our trade gap has taken place at a time when this capital inflow is already slackening. Our estimate is that it may run this year at a level of about £25 million as compared with £36 million in 1964.
It might be thought gratifying for me to find that in this critical year for our economy, the estimate now made by the Taoiseach of a capital inflow of £25 million stands in very close relation to the £24 million which I had suggested as a basis for prudent planning. I do not feel gratified. It is unfortunate that our capital inflow has slackened but it is still more unfortunate that the Government did not plan on the basis of the slackening which was a reasonable thing to foresee two years ago, and even more reasonable to foresee six or twelve months ago.
The final point to which I want to refer, and which I put forward in criticism of the Second Programme when I spoke on it on that occasion, is what I would refer to as the question of controls. In this respect, I am not referring at all to the question of controls in the sense of price control; in other words controls which restrict the liberty of individuals or groups in the community: I refer to control in the more technical sense of controls to ensure the stability of the Programme. I said, again talking 16 months ago, that I thought this was a vital problem in regard to the Second Programme and that one of the great deficiencies of the Second Programme was that while we have been presented with a Programme that was undoubtedly feasible, there did not seem to be any proper provision for coping with the problem of deviation from the predicted path. Again, I would quote what I said on that occasion, as reported at columns 717/8 of the Official Report, volume 57, No. 9:
Finally, I should like to bring up the question of control. We have here what is described as a Programme for Economic Expansion but it seems to me rather a prediction based on certain assumptions and that before it could be dignified with the name “Programme” it would have to indicate in some way the measures which are to be taken if it shows signs of missing any of the targets which are mentioned. It may be that this has been done in the drawing up of the programme and it may be the Minister feels he should not reveal what these studies have shown. It would allay my anxiety to some extent if the Minister were to state categorically that there has been an examination of the steps that would be taken and taken rapidly if these targets are not being reached. We know the perennial troubles which arise in this country. We know what will happen if our prices get out of control here at home, that we shall suffer in regard to our exports. This is something which can be seen and fairly well evaluated by means of the trade statistics which are available monthly and within a month. I should like to ask the Minister what are the sort of steps which would be taken. The failure to describe the procedure whereby this machine is to be controlled makes me rather doubtful of its ability to ride even a minor storm. Even elementary programming should include an analysis of possible deviations from the intended path and an examination of possible corrective measures.
I think that the failure to have a system of adaptation, some sort of self-correcting mechanism for rapidly dealing with deviations from the Programme, was the great failure of the Government in drawing up the Second Programme. Senator Garret FitzGerald underlined this in his speech here yesterday evening when he said that the Government had failed to take note of what was obviously a serious growth in a few months at the beginning of this year in the numbers of imported cars. Here was something which, quite clearly, could be seen from the trade statistics yet the Budget, which is supposed to be the great instrument of economic policy, ignored these increases and took no notice of that situation.
We have in the economic programme a very old-fashioned type of machine which does not seem to have the feed-back mechanism or the controlling governors which are essential in the operation of such an economic system. I think the Government are very definitely at fault and the reason why I have gone back to quote what was said on that occasion is to underline the fact that these are defects which should have been foreseen, that these are defects in the Second Programme which were pointed out at the time and of which I think more notice should have been taken.
The second great deficiency in the Programme, and again one which was pointed out not only in this House but elsewhere, is the failure, despite efforts in that direction, to get the complete involvement with the Programme of those who are concerned with the individual decisions down through the economy. This indeed is the subject of comment in the Report on Economic Planning recently issued by the National Industrial and Economic Council. I shall not weary the House now by quoting from it but Senators can read there for themselves the concern of the NIEC with the fact that the decision-making and the involvement in the plan have not gone down into the economy to the individual decision-makers at lower levels. This involvement of everybody in the plan, which was the great source of strength in French economic planning, is something, again, on which I think there has been a failure.
Here we find ourselves with this particular programme which has been operating for the past eighteen months. When we look at it, we find ourselves with the situation that growth has been satisfactory so far; that employment has been static and that prices have been out of control. When we look at this situation, I think we have got to ask ourselves several questions. There are many objectives of economic policy and it is extremely difficult to harmonise them all. I should like to confine my discussion on this point to what I think will be agreed are the three main objectives of economic policy and to discuss the way in which these have been harmonised up to now and perhaps could be harmonised more fully in the future.
I think we can take it that the three main objectives of economic policy are: (1) economic growth or a rise in the standard of living; (2) full employment, at whatever level we may define as that particular term, and (3) stable prices. Can these three objectives be harmonised? Can these three objectives of public policy be achieved simultaneously? The Second Programme is undoubtedly based on the assumption that they can. I think we should look at that assumption for a moment. If we look at it, the conclusion we shall come to is that these three objectives can be achieved simultaneously but only if certain precautions are taken, only if certain elements of planning are given proper prominence.
I suggest that the reason why, in the past few years, we have not achieved these three objectives simultaneously— we have achieved only one—is the fact that our planning has not been thorough enough, either in its preparation or in its execution. The Government have taken the attitude that in order to have economic progress we must have increased taxation. Indeed, in his political speeches for the past two years, whether in the House or in the country, the Taoiseach has attempted to make a political issue of whether the people are prepared to contribute the extra taxation to pay for this. As soon as we think in terms like this, I think a very serious question arises. We must ask ourselves what is the effect of increasing this burden of taxation.
There was a very famous study of this particular problem which was published in the Economic Journal, 1945, by the very eminent economist, Colin Clark, entitled Public Finance and Changes in the Value of Money. On that occasion he examined what had happened in the inter-war years in various countries. He came to the conclusion, on the figures available, that there seemed the clear indication that once the taxation of a country exceeded 25 per cent of its national income, certain forces were set in operation. During the inter-war years the result of these particular forces was that there was a general rise in prices, not immediately but within two to three years. Many people think the results of this study apply to the inter-war years only and that in the post-war years we have managed to solve many of the problems the economists and politicians were not able to solve in the inter-war years. The situation has not changed. Indeed, we have had a situation in which practically every country in western Europe had taxation going above this limit suggested by Colin Clark. It is interesting therefore to look at a small paper written by the same author in February, 1964 when he published as Hobart Paper No. 26, a small essay on “Taxmanship”. In this essay, Clark examined what had been the experience of Governments between 1953 and 1963. Again, the result of his examination was that there appeared to be a very definite relationship between a higher burden of taxation and a more rapid rate of increase in prices. I shall summarise the results of this particular study. When Colin Clark compared the increase in prices—the average percentage rise per year between 1953 and 1963—with the burden of taxation in the starting year, 1953, for the different groups of countries, he found as follows: When the taxation was less than 25 per cent of the national income, prices rose on average by 1.0 per cent per year; when the taxation burden was between 28 per cent and 34 per cent, the average rise for these countries was 2.7 per cent per year; when the burden of taxation, that is, total taxation over national income, was between 34 per cent and 40 per cent, the rise in prices was 3.3 per cent per year; and when the burden was over 40 per cent, the average rise was 3.7 per cent per year.
I do not want to suggest for a moment that this is conclusive evidence that the raising of taxation inevitably produces inflation and a rise in prices; but I think it is a very severe warning that the experence of post-war Europe has been that this is what has occurred. It may not be inevitable, but whatever was necessary to prevent it was not done in the countries of post-war Europe. If we wish to increase our burden of taxation, as I believe we must—I do not dispute what the Government seek to do in that regard—if we want to increase it temporarily in order to spark off true economic growth, certain things must be done. There have been omissions in regard to this. If we want to move towards higher rates of taxation, we are certainly going to move into a situation in which price control will be very much more difficult.
The history of this country in the past two or three years is a vindication of the empirical results which Colin Clark has published. What has been our situation in recent years? Our situation, unlike that of other European countries who have had to choose between full employment and stable prices, is that we have had neither. We have had growth in the past few years, but we have neither had full employment in any sense of the word nor have we had stable prices. There is no need for me to go over the facts of the situation in regard to prices but merely to recall that, even if we define full employment as the three and a half per cent unemployment to be attained by 1970—which is not full employment in the sense in which it would be used in any other European country—we are failing to move towards this particular figure.
We find ourselves in the position then that while we are getting growth, while we are taking certain measures in order to promote growth, if we look at these three objectives, in respect of which most European countries are achieving two out of three of them, we are barely achieving one. This calls for an examination of what is deficient in our programme and what must be done. I do not think there is any single simple solution. I do not think there is any one thing which we can point to as being something which ought to have been done and was not and is responsible for this situation.
There are many things which could be done. For example, one thing which must be examined in this country is a root-and-branch reform of our taxation system—a reform of our whole taxation structure in order to produce a system that will reward efficiency but will penalise as sharply as possible inflated costs and heavy overheads. I referred during the discussion on the Finance Bill last year to certain suggestions made by Professor Nevin in regard to this problem. I do not propose to discuss this in any detail today.
Another alternative is to intensify sharply the promotion of technological and managerial improvements by financial incentives, by education and by other means. This, too, is something which we could well tackle.
There is a third way in which we can seek to harmonise our three economic objectives, that is, through the promotion of an active, integrated and unified manpower policy. I propose to devote the remainder of what I have to say today to this problem of a manpower policy, not because I believe it is the sole solution to this problem of getting growth, employment and stability of prices but because I believe that without it, without an absolutely first-class manpower policy, we have not a hope in the world of achieving these three objectives at the one time.
I said I think we have a real need for a manpower policy. It is interesting that a manpower policy, or lack of a manpower policy, arises in the context of all three Bills before the House. The Finance Bill, which brings into effect the Budget, is before the House today. In this country at present, the Minister in his Budget Statement deals with both a current and a capital Budget. We can all remember the time when the annual Budget Statement dealt with the current Budget only. Deputy McGilligan introduced the idea of formulating a capital Budget as well as a current Budget. That practice was discontinued for some years when Fianna Fáil returned to office but it is now an essential part of the standard practice in the production of the Budget. Therefore, when the Minister gets up to speak about the state of the economy on Budget day and to indicate what should be done, he talks in terms not only of current expenditure but in terms of capital expenditure as well. I hope the day will not be too long delayed when the Minister's Budget Statement will contain three elements: a current Budget, a capital Budget and a manpower Budget. I believe that the day the Minister for Finance stands up in Dáil Éireann and produces a manpower Budget, however tentative it may be, as part of his speech on the state of the economy and as to how the Government intend to direct the economy during the coming year, we will have made a significant advance, as significant an advance as was made when we moved from a purely current Budget to one which was current and capital as well. This central problem of manpower resources, both the available resources and their proposed deployment, is something that cannot be ignored if we are to adopt either economic programming or economic planning.
The question of manpower policy arises also in the text of the Appropriation Bill which we have before us. This is the appropriate place where I should acknowledge my pleasure at the fact that the Government, following the general election, did appoint a Parliamentary Secretary to take charge of manpower policy. This, indeed, was an earnest that the Government realised to some extent how essential such a policy was. My fear is that they may not realise to the full extent the necessity for a manpower policy, the scope which is needed in a manpower policy and, above all, the fact that manpower policy must be a unified thing. So the most important thing which I will have to say in the course of my speech will be concerned with the administration of manpower policy. This is the key point. Of course, if we want to discuss how manpower policy could be organised, it is necessary to be absolutely clear on what it is and what its particular scope is. Of course, manpower policy is highly relevant to the Prices Bill which is before us today because it is generally agreed among all European countries that one of the great reasons for price rises in recent years has been the lack of equilibrium in the labour market. Here we are attempting to deal with a situation which has been produced by many factors, but a prime one among them has been, here as elsewhere, a lack of an active manpower policy.
I have spoken both inside and outside this House on the question of manpower policy and I have no apology to make for returning to the subject again at this particular time. Instead, the only apology I would offer is an apology on behalf of the Government that they have not carried their intentions in regard to manpower policy further and more quickly than they have. I want particularly to speak about manpower policy at this particular time because I think the Government will have to make certain very critical decisions in regard to manpower policy within the next few months. There has been a report by an inter-Departmental committee on the organisation of manpower policy and this report contains so many misapprehensions about the true nature and the essential functions of manpower policy that it is highly necessary that I should speak and, if necessary, with apologies to the Seanad, speak at length on this point because otherwise I would be failing in my public duty.
It can be fairly said that to omit manpower policy as a key element from the Second Programme was a blunder of the first order and I should like to say, as I have said in this House before, that every month's delay in making good that blunder is putting the Second Programme and the achievement of its objectives further into jeopardy. The position is that in Part II of the Second Programme which was published only 12 months ago there is virtually nothing beyond the listing of manpower policy as a good thing, as something which should be carried into effect as we moved towards full employment, and very little realisation that unless we bring manpower policy in straight away, we may never move towards full employment at all.
Lest it should be thought that I am being unduly prejudiced in this regard, it is only right that I should quote here what the Parliamentary Secretary to the Minister for Industry and Commerce had to say in a recent address which he made to the Institute of Personnel Management on 8th July and a large portion of which he afterwards repeated in the debate in the Dáil. What I should like to quote is what the Parliamentary Secretary had to say in regard to the Second Programme for Economic Expansion on manpower policy. What he had to say shows clearly that he quite realised the deficiencies of the Second Programme and quite realised what needs to be done. I was very happy when reading this to realise the extent to which the Parliamentary Secretary, since he had assumed office, had made himself master of the essentials but I fear that this may not be true of all his colleagues and it may not be sufficiently appreciated by the Members of the House here.
In his speech on 8th July the Parliamentary Secretary said:
It is easy to be critical now of the concept which permeated the above outline of the evolution of an official manpower policy in the Second Programme for Economic Expansion, that is to say, that the creation of industrial employment would have to take priority over rather than be the objective of what were apparently considered to be the more sophisticated and leisurely elements of a manpower policy.
This is very true. It is easy to be critical now but we must remember that when I am critical now of the Second Programme and when the Parliamentary Secretary was critical of it in this speech of his, we are not talking of a document that was years old; we are talking of a document that was produced in July 1964. Only 12 months ago, Part II of the Second Programme was produced and what it said about manpower policy was indeed pitiful and showed complete failure to appreciate the essential importance of this key element in economic planning. Action has got to be taken now. I do not think that there is any doubt that action is going to be taken but this action has got to be of the right kind and, above all, this action has got to be unified and not piecemeal: the manpower policy which has to be produced, if it is to be effective in curing such difficulties as have arisen and to prevent further difficulties arising, must be a policy which is a policy of integration and not a policy of co-ordination merely.
I have been talking for quite some time now about manpower policy and I am sure some of my hearers are rather curious as to what I am talking about, so I should like to turn to the question of what manpower policy is, what can it do, how can it do it and how can it best be organised to do that particular job. I think I can do no better in this respect than to quote from the Report on Manpower Policy by the National Industrial and Economic Council which was published about a year ago. I quote from paragraph 6 on page 7:
Most Western countries' economic policy nowadays has at least three objects—full employment, a rising standard of living and reasonable stability in the value of money. These aims are difficult to achieve simultaneously. The order in which they are listed seems generally to reflect the priorities accorded to them. Increases in price level are often accepted as the lesser evil in order to avoid a policy which may lower the level of employment. The increasing emphasis being placed on the importance of an integrated manpower policy in economic discussion is a result of the desire to reconcile all three aims.
This Report goes on to discuss the various ways in which this can be done and I recommend it to the Members of the House who may be interested in this particular topic. It shows a complete appreciation of the key importance of manpower policy. It is important to realise that this was published at the same time as the Second Programme was being published, Part II of which failed so lamentably to see the importance of this same thing.
It must be emphasised straight away that manpower policy is not the same thing as a full employment policy. A full employment policy is concerned with achieving an overall balance between jobs and workers at a high level of employment. It is concerned with the question of the effective demand in the economy, the question of the proper size and the proper timing of public works. This is the full employment policy which aims at overall balance. Manpower policy is concerned rather with matching jobs and workers in more detail, matching jobs and workers in all regions in the country, matching jobs and workers in regard to all types of skill which are available in the work force. It is an attempt to see that not only is the average right but that there is the proper adjustment between jobs and workers in all parts of the economy, to see that everyone has, or as many people as possible have a job appropriate to their skill and to see also that they have a skill that is appropriate to their job.
How can we go about this very difficult problem? It is not just a question of seeing that there is enough work but seeing that there is enough of the right type of work in the right place at the right time, of seeing that when the jobs are available, the right type of people are available in the right place with the right skill to do these jobs. If we were dealing with a relatively static economy, the equilibrium between these factors could be maintained largely by free market forces. If we had an economy in which there was not great change occurring, in which there was no great economic change or no great technological change, then we might perhaps leave to the market forces this adjustment of equilibrium. From the point of view of social policy, this might not be the best thing to do, and I do not think it would, but there would be no economic argument to add to the social argument, no economic argument as to why we should take special care, as to why we should make special plans in order to see that the right person was in the right job.
In a changing economy, however, there is no doubt that the market forces would be completely inadequate even from an economic point of view, apart from their social consequences. Of course, we here are in a changing economy. We have been under notice for some time to prepare for free trade conditions but even were we not in the process of change by virtue of a reversal of our previous economic policy, by reason of the removal of what we might call some of the institutional features of our economy, even if we did not have this problem, we would still be in a process of change because any country which is keeping up with the rest of the world is taking part in the extremely rapid technological change which is such a feature of the present time. For both these reasons, we face substantial structural unemployment in this country in all sectors, and we face problems of redundancy which will be of a substantial order. These problems cannot be left to market forces. They cannot be left to uncoordinated attempts to solve this problem here and that problem there. These problems cannot be solved without a substantial manpower policy, without a unified manpower policy.
If we are to have this local matching, this local equilibrium in every area and in every skill, then we must have planning to do it. This thing must be done by positive action. That is why it was a blunder of the first order that this was not an integral part and a key part of the Second Programme for Economic Expansion. To say that we want an active policy, to say we want active planning in this regard is not to say we want anything like complete and absolute direction of labour. That is something which would be at variance with our traditions, which would not be acceptable and which certainly is not necessary to solve this problem. What we want to do is to plan, to produce a comprehensive, integrated policy that will help to do this work because we must be absolutely clear on the point that the market mechanism will be completely unable to do it. As I think will be clear to most people, even if we were prepared to accept the social cost of leaving this to the free play of economic forces, the economic forces themselves would not be able to do the job. They would not do it quickly enough or efficiently enough and they might not even reach a true equilibrium at all. Due to the fact that there would be a lack of information available to individuals making local decisions in a free market economy, the decisions of those individuals would not be made on the basis of real costs and real prices; and also due to the fact that our economy is a distorted one, as indeed most economies are at the present day, we have institutional rigidities which mean that even if there were complete information about costs and prices involved in these economic decisions, these costs and prices would not be the real costs and prices and, accordingly, the equilibrium which would be reached might well be, and probably would be a false equilibrium. Even if the market forces were able to act under these deficiencies, the achievement of the equilibrium would be far too slow, far too long, far too painful and costly in economic as well as in social terms.
A manpower policy, therefore, is necessary. Active planning is necessary. Positive planning is necessary. However, this action should be one which would aid the market mechanism rather than cause it to be scrapped and replaced. It is possible to develop a manpower policy which can aid these market forces rather than cause them to be scrapped. Our planning can be liberal planning rather than authoritarian and no one need have any fears in this regard. It is possible for us to develop a manpower policy which will be in accordance with our traditions and which will also, in my view, be economically more efficient than more authoritarian planning. If our planning is to be liberal rather than authoritarian and if it is to avoid the errors of socialist planning—not perhaps in the sense which Senator Sheehy Skeffington mentioned yesterday but in the sense of socialist planning as understood in Eastern Europe—that desire is absolutely no excuse why the planning should be half-hearted in its inspiration or why it should be half-baked in its execution.
