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Seanad Éireann debate -
Friday, 1 Jul 1966

Vol. 61 No. 14

Finance Bill, 1966 (Certified Money Bill): Second Stage (Resumed)

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

Last night, I was dealing, briefly, with a rather curious statement by Senator Rooney about what he called the artificial and temporary prosperity created in 1964 by the Government. I was pointing out that this so-called artificial and temporary period of prosperity had already lasted six years. There were, I thought, slightly doubting comments from Senator FitzGerald, amongst others, so I should like to quote a statement by the OECD, a completely independent source outside this country, as a result of reviewing the progress of our economy during the period I was dealing with. On page 9 of the June, 1964, OECD Observer, we read:

The five years 1959 to 1963 witnessed the fastest growth in twentieth century Irish history. An economy that had been growing at the rate of only one per cent a year suddenly began to expand at an average rate of more than four per cent. At the same time unemployment fell and fewer people were forced to seek jobs abroad. Even more important, there was a remarkable transformation of public attitudes towards growth. Whereas in 1959 many people considered a two per cent growth rate too ambitious, today it would be difficult to persuade the public that the growth target for the next five years should be anything less than what has been achieved during the last five. Chief credit for this achievement is given by OECD's Economic and Development Review Committee to Ireland's first Programme for Economic Expansion, launched in 1959.

That quotation, I think, reflects fairly accurately the change which has come about since the expansion programme began in the general economic outlook for this country. The important thing, I think, about the recent difficulties that have affected the economy is that growth has, in fact, continued. Last year was, I think, generally accepted to be a disappointing year. Growth was slowed down. Many difficulties arose, but, at the same time, the estimates are that there was a rise in national income during 1965 of 2½ per cent. That is below what we had hoped but, ten years ago, if there had been a year with a growth rate of 2½ per cent, this would have been regarded as almost a miracle.

Over the ten years or so, up to 1958, the average growth rate was less than one per cent. Therefore, even in our present difficulties, I think we should accept that, at the present time, this country is making progress which, only a few years ago, would have been regarded as altogether unattainable. There is no comparison between the present situation and the crisis which arose in 1956. I do not want to try to make political propaganda at the expense of Fine Gael or of any other Party, but I think it is useful to make some brief comparison between the position now and the position that obtained then, in order to show how very different matters are.

We had the situation that between March, 1956, and March, 1957, industrial production dropped something like 7½ per cent—an enormous drop— with a consequent fall in employment in industry. When the change of Government came in 1957, the output of industry was well below the level of 1953. The country was simply going bankrupt. We had a rate of emigration around 60,000 a year. In January, 1956, the level of unemployment rose to around 97,000. In 12 months, it was an increase of 24,000. The national income was falling. None of these things exists today. We have some increase in unemployment but industrial production is still increasing, if slowly, and there is no reason to believe that the coming months should not see a continuing rise in the rate of increase.

The present Government, when faced with difficulties, did not panic, did not run away. They settled in to take the necessary steps to ensure that the difficulties would affect the country as little as possible and that they would be solved as soon as possible. They took the least measures needed. It is possible to say we now are in the position that the crisis has been essentially solved. There are difficulties, and I do not know when the Government will feel it is possible to do something to lighten the present credit squeeze, but it is perfectly obvious that within the next few months, there will be a big change in the general economic outlook.

In each of the past ten months, there has been an improvement in our external trade as compared with last year. There has been an improvement of something like £21 million in our adverse trade balance. During the past 12 months, our actual balance of payments deficit has been reduced from £42 million to £21 million. Senator FitzGerald said the estimate this year —he said this early in the year—was that during 1966 we should be able to reduce the deficit to £28 million. We have done considerably better than that and it would appear that the prospects are there may be some further improvement in the months to come.

It is obvious that imports will increase to some extent but the prospects are that our exports will go up. The Free Trade Agreement will mean that certain sections of industry will be able to expand their exports, particularly of man-made fibres and so on. I was rather surprised to hear Senator O'Quigley make this statement—I wrote down what he said: "I do not know of anything substantial the Government have done to help industries to meet the problems of the new free trade area". I do not know where the Senator has been during the past few years that he has not heard of the large-scale adaptation programme of the Government.

The latest figures I have—there may be later ones—are for last December. They show that 590 firms, under the Government's scheme of grants and loans for adaptation, had plans under way to meet the competition of free trade conditions. The total capital involved in these plans was more than £55 million. It is an enormous sum and I do not know what Senator O'Quigley calls "substantial". These firms comprise the majority of the larger firms in each sector of industry and the general picture is one of widespread investment in plant and equipment to enable Irish industries to deal with the problems of free trade. The scheme has now been extended to next year.

The immediate prospects in this year is that industrial exports are likely to increase. There is a considerable amount of capital in the country and we may expect a considerable increase at some stage in the next few months or early next year in cattle exports. These will be helped by the reduction of the waiting period under the Free Trade Agreement which comes into force today. There is also the prospect of the removal of the British import surcharge at the end of November which will be another encouragement to our exporters. These factors make it very clear that our main balance of payments problem is pretty nearly solved. In dealing with our difficulties, the Government have been able to avoid anything like the economic chaos which occurred on two previous occasions during the past 15 years. We had the appalling crises of 1951 and 1956-57. In both cases the Government of the day panicked and did not take sufficient steps in time. It was left to Fianna Fáil to try to remedy matters at a time when the economy was stagnant.

We heard a lot of remarks from Fine Gael Senators about foreign borrowing and they seemed to indicate that, to their minds, it is a sign of national bankruptcy to borrow money abroad. I cannot follow that argument. Both the First and Second Programmes for Economic Expansion set out quite definitely that in order to finance the heavy increase anticipated by the Government in capital expenditure, it might well become necessary to rely to some extent on foreign borrowing. At the time I do not think anybody denied the obvious possibility that the need might arise; yet when the Government embark on a small amount of borrowing, people seem to think it is a sign of national bankruptcy. In recent months a number of countries have borrowed on the international money market. Australia, Austria, Belgium, Denmark, Norway, Japan and New Zealand are among them. Are they bankrupt?

It comes very ill from Senators and Deputies to complain about foreign borrowing when they themselves, when in office, borrowed no less than £40 million by way of Marshall Aid. Not that I object to that at all, but the awful thought strikes one that of that £40 million, what, anywhere in the country, is there to show for it? I do not know. The money was borrowed and it was spent; yet to this day there does not appear to be any visible sign of what it was spent on. At the time it was being spent we had the most appalling financial crisis. There is a certain need for those who complain about present foreign borrowing to reconsider their thinking.

We have the problem each year at Budget time, when increased taxation is required, that Senators complain about increased taxes but never suggest what items of expenditure could be cut, though they constantly call during the year for more expenditure. When it comes along, they are never prepared to vote for it. A clear case of that arose this year in the Dáil. We had the second Budget, a very simple document designed to raise money for two purposes—an increase in the price of milk and certain subsidies for agriculture, all of which had been called for over and over again, and the other to pay the £1 a week to civil servants. Yet members of the Opposition voted against this taxation required for these purposes. That was a clear case of expenditure which everybody agreed was necessary, which had been called for for months by members of the Opposition and yet when the Government brought in a measure to provide for those increases, there was an outcry and they voted against the expenditure. We have this constantly. We have another example—Senator Murphy, who is not here at the moment, said yesterday that, in his view, the amount of direct taxation should be increased; in other words, income tax should be increased rather than indirect taxation. When income tax was increased this year, who voted against it? The Labour Deputies who called for direct taxation. There is no sort of consistency in this.

This Finance Bill marks the end of the Government's fight to deal with the financial difficulties of the past year or so. We have clear indications that from now on the economy will continue to prosper in the way it did from 1958 onwards. This Finance Bill is the last step needed to set the economy of the country aright. The Minister is to be congratulated on bringing in a Bill which is sound, designed to deal with the needs of the country and does not go any further than is needed. While taxation is never popular, at the same time, there is no doubt at all that by this time next year, or much earlier, it will be clearly evident that this and the other steps the Government have taken have succeeded in putting the country again on the road ahead.

Senator Yeats. in company with Senator Dolan—who was the Front Bench nominee to reply to Senator FitzGerald in his interjections on this measure—together with the Minister for Finance, have gone back to 1956, to the Marshall Aid moneys and have made statements about the expenditure of these moneys which I want to dispose of very quickly. I listened to the Minister for Finance replying in the other House and he made assertions in relation to the borrowing of the Marshall Aid moneys to which I want to refer. He alleged that the Government of that time acted improperly in securing those moneys and expending them.

I shall remark that the Leader of his Party at that time did not oppose the American loan, did not claim at the time it was secured that it was a wrong thing to have done. But we have had a succession of statements and allegations by leading members of the Fianna Fáil Party, propaganda which appears to be unending, on the expenditure of the £40 million which was secured at that time and, let us say, in distinct contrast to the failure of the present Government to secure a loan from the American Government. The Government at that time secured £40 million and how was it expended? One would infer from the statement of the Minister for Finance that that money was spent by the inter-Party Government. Even Senator Yeats, in the hearing of the House this morning, wanted to know how the money was expended.

I shall remark that the Leader of his going into research to set out clearly the items on which this money was spent but I do recall some of them, and I challenge anybody to criticise the expenditure of the Marshall Aid moneys on the Land Project. Today, Senator Yeats, in company, I am sure, with his colleagues, glories in the fact that we have a high cattle population in the country. The people who did their damnedest in the history of the State to destroy that industry now glory in the advantage it is to us that we have a cattle population to export to Britain, having gloried at one time in the fact that that market was dead and gone, and even thanked God for the fact.

I want to return to this question— and I want to quote Deputy MacEntee, as Minister for Finance, on 20th May, 1952, in response to a question—no doubt inspired by a fellow member of the Fianna Fáil Party—who asked Deputy MacEntee to report to the Dáil the amount of Exchequer borrowings in the period specified. The period, I may mention, was from 15th June, 1951, the date on which the Fianna Fáil Government took over from the inter-Party Government, to the 31st December, 1951. Deputy MacEntee, the then Minister for Finance, said £30.4 million was borrowed for Exchequer purposes during that period and was obtained as follows: from the American Loan Counterpart Fund £22.5 million, so that in a period of three years the inter-Party Government spent on capital schemes the sum of £17.5 million. Within six months of coming into office, the Fianna Fáil Government blew £22½ million. The entire residue of the Marshall Aid moneys was blown by a Fianna Fáil Government within six months of their accession to office, having criticised the Government which preceded them for having obtained the moneys in the first instance. Would it not have been the honest thing to have returned the balance of those moneys, having been so critical in the first instance of the fact that they had been secured?

To pay your debts!

I allege that that money was spent in that period of six months, the entire balance of the Marshall Aid moneys to the amount of £22½ million, and that that completely contradicts the allegations being made by the Government Party that it was the inter-Party Government who spent these moneys. Here we had careful husbanding of the moneys for capital purposes, such as the Land Project and rural electrification. I remind Senator Yeats that it was in those years, following the neglect of his Party to extend rural electrification for several years when it could have been done at very much less cost, that it fell to the lot of another Government to provide throughout the State that rural electrification network we all glory in as being of such value to our community.

That was not the only scheme of capital work. There was an extension of telephone services, forestry, and many other worthwhile projects to which this money was devoted. We glory in the fact, and since Senator Yeats has asked what we have to show for the expenditure of those moneys, I might add that we have all the income which flows to the national benefit from the investment of these and other moneys by different Governments in these capital schemes which we all support.

Senator Yeats again refers to the present situation and describes the period we have gone through as that of a crisis. We have heard it described as one of difficulty and various other descriptions, all playing it down when it suited the political purposes of the Party in office, but he says and claims that the crisis is now drawing to an end.

I did not use that word.

The Senator, in my hearing, described it as a crisis. At any rate, an imbalance in our external trade of £30 million in 1956 was described by the present Leader of the Fianna Fáil Government as a crisis, so that an imbalance of £50 million now might also be described as a crisis. He claims that his Government have succeeded somewhat in resolving these difficulties. If they have, what have they done? They have resolved difficulties of their own making quite different from the 1956 situation.

I can recall the 1956 situation as well as anybody else. This country, at that time, was struck both in imports and in exports. At the same time, a situation arose which fortunately never arose in the history of this State before—and let us hope never will again —in which there was an increased cost of imports due to the Suez crisis. There was the fact that we had to stockpile, not knowing what the international situation might be in a matter of six months. We had circumstances in which the Leader of the Government at the time had to call in the leading correspondents and the editors of the various newspapers, take them into his confidence and tell them that we were going to stockpile because nobody could tell what the outcome would be of that international crisis. At the same time, the Argentinians dumped cheap meat in Britain and this caused the collapse of the price of cattle going into Britain. We are quite aware of those occurrences. They were dealt with in a manner of which there was very little understanding by the Party then in Opposition and now in Government. Indeed, I must say that the action taken then by the Government at that time resolved our difficulties then.

I know full well that the action taken at that time had political consequences and I know there were members of the Senator's Party in many local authorities throughout the country who availed of that situation in which international events were used to remove the Party then in power from office. The main item picked out at that time for criticism and condemnation by the Party now in office was the imposition of the Special Import Levies. According to the people now in Government, this was the worst deed ever done against the people of the country by a responsible Government. I sat at the Government table and I recall distinctly that the Minister for Finance at the time explained the reason for introducing the Special Import Levies. He informed his colleagues that any money which came from those special levies would not be devoted to current expenditure. Every single penny that was to come from them was to go to support the capital programme of the Government, to protect it in the specially difficult circumstances of that time. Above all, it was a weapon which was to be used for the specific purpose of correcting the imbalance in our payments. Moreover, as soon as its job was done, the Government would do away with those levies.

The Fianna Fáil Party, then in Opposition, said that those levies would have a serious impact on the economy. If that were so, why have they, since they came into office, embodied them in the permanent tax structure? They are still there. The Budget this year, which has been supported by Government members, ensures that certain revenue will be secured from these import levies which were supposed to do a corrective job at that particular time.

Senator Yeats claims that some undefined actions of the Government have been responsible for an easement of the crisis. He is like somebody who stole a considerable sum of money and claimed a reward from the original owner, the unfortunate man from whom it was stolen in the first place. The Senator is claiming reward from those from whom the money was taken in the first place. That is the only simile I can use to describe the credit being claimed for the Government. Last evening the Senator was referred to factors which brought about this unfortunate crisis, which were outside the control of the Government and which could not be anticipated. He referred to the weather as one factor and the imposition of the British surcharge as another. Despite this, a senior member of his Party, Deputy MacEntee, left his Party, the Government and the country in no doubt when he referred to the soothsayers, and in company with the Minister for Transport and Power, they are vying with each other for the responsibility for warning the country about the inflation which was developing during that period.

I will say this about the Leader of the Government Party. There is no doubt in the wide world that he foresaw the consequences of the trend of economic events over the past few years in as much as, despite the assertive assurance he gave to the other House that there would be no general election until June, 1966, he went to the country before the storm broke and the general election took place in March, 1965. Instead of abiding by what is regarded as the cardinal aim of the Government, that is, to stay in office, despite the will of the people who had elected them, and despite what misfortune might come if he stayed to complete his term of office, he took his drive to the Park and surrendered office in March of last year.

We have seen what has happened this year when the Government wanted to avoid facing the electrorate. The local elections were postponed last year on the basis that they could not be held in the same year as a general election. This year, despite the fact that so many Departments are at their wits end to find money to pay what is legitimately owing to people in grants for houses and other things, instead of saving money by having the local elections with the Presidential election, the Government again postponed the local elections. If the local elections were held on the same day as the Presidential election, this would have saved a certain amount of money. In recent weeks we have elected chairmen and vice-chairmen throughout the country without any proper mandate as their time had long since expired. Consequently, I allege that this Government have been actuated by political motives in the various actions they have taken.

Before the Presidential election, some reliefs were given which we were informed had no political significance. Those were like manna from heaven immediately before the people went into the polling booths. Senator O'Kennedy spoke last night and I was very taken by the content of his remarks. I found myself in agreement with most of what he said. He paid tribute to the Government for having initiated certain measures over the past year and to the fact that those measures were closely examined in this House. This House has met for longer periods this year than for very many years. I pay tribute for that to the members of this House on all sides. We on this side of the House claim that the reason we have had lengthy sittings is partly that the members here have closely examined proposals that have come up from the Lower House.

Measures were recited by Senator O'Kennedy as being of such benefit to our people—the Social Welfare (Occupational Injuries) Bill, the Housing Bill and other measures. I agree they are beneficial but the extraordinary factor in relation to them is that negligible State contribution is required for their administration. To administer them, any costs incurred will be incurred not by the Government but by sections of our people.

The Senator was exaggerating when he claimed in relation to the Housing Bill that there were increased housing grants being made available. I can recall from a close examination of the Housing Bill that in no instance was there provision for more grants. I agree that from the point of view of a clean-in-up process, it was an admirable Bill, but it did not include any provision to meet the increased costs of building houses today. At any rate, I do agree with the Senator that this House has over the past year performed useful work relative to the enactment of this additional legislation.

The Budget this year increased central Government expenditure by six per cent, from £211 million to £223.5 million. That has been further increased by another 3½ per cent in document No. 2. This represents 27 per cent of our national output being taken in taxation, and this has risen by 15 per cent faster than the Government envisaged.

We mention the Second Programme for Economic Expansion. I know this has become practically a dirty word in recent times. I happened to be on a deputation the other day to a Minister and I am sure the unfortunate leader of the deputation thought he was on the Government side when he drew the attention of the Minister to the fact that what he wanted was enshrined in the Second Programme for Economic Expansion. The Minister literally winced.

Imagine that.

At any rate, the Government who claim they can plan ahead seem to be incapable of planning for a period of 90 days. We have submissions from bodies who are interested in the national housekeeping to the effect that our budgetary consideration should extend even longer than the traditional 12 months period, but we are now in the position that we have had a Budget introduced this year, in the earliest period of the year since Budgets were introduced in this State, because of the simple fact that there was nothing in the coffers and an emergency Budget introduced at this period in order to meet at least some of the demands on the Minister's desk.

We are entitled to examine the whole question of taxation and its mighty impact on all of our people today. It has been alleged in the past, although I must say not so very much of late, that the purpose of Budgets and the financial enactments of a Government are to ease the burden on those of our people who are least well off, to transfer, as it were, from the more affluent sections of our people a proportion of their income to ease the lot of those among us who are dependent on State support for even a reasonably normal life.

I contend that legislation relative to taxation is very far from meeting this principle. Senator Murphy and other Senators have referred to this. The manner in which taxation is now extracted does not at all mean that the money secured by this taxation is transferred to the pockets or the purses of those of our people who one would expect should be the beneficiaries of the particular taxation. I give a simple example. Three years ago we were informed positively by a Fianna Fáil Minister for Finance that we had reached the limit in the taxation of simple luxuries, that beer, tobacco and cigarettes had been exhausted as revenue-producing agents and that this novel idea of the turnover tax had to be introduced as the other system had reached the point of diminishing returns.

Now, even after the turnover tax, there is not a Budget since then that has not imposed additional taxation on simple luxuries. It seems to me that pride is taken in the fact that workers get an increase in wages. The sooner we stop talking about the monetary increases given to social welfare recipients or to workers, whether civil servants or those employed in industry or agriculture, or in any other way of life and start talking about the real income they obtain, the sooner we will get down to realities.

I can see no point in increasing the cost of production. Occasionally Ministers break out and say that this is a factor vital to our whole economy— the necessity to keep down costs of production. I can see no point in increasing these production costs by way of increased reward to those engaged in those industries unless the increases awarded to them are left to them.

What care has been exercised by the Minister in bringing in this taxation to ensure that the weaker sections of our people, as far as it was administratively possible for him to do it, were protected. Let me give a case. Deputies McGilligan and Sweetman, when they were Ministers for Finance, excluded in every instance hardpressed tobacco from taxation. The present Minister for Finance has failed to do this. What is the impact on our road workers and the old age pensioners? We have all seen the old man standing on the roadside or at the crossroads, or meeting his pals at a street corner, while he puffs his pipe. He will not go in for any fancy-cut tobacco; he depends on the old plug. He will have a knife in his hand cutting away and spends a lot of time cutting the tobacco and stuffing it into his pipe. That is the way he spends his day. But, in consequence of this second Budget this year he has to pay 10d per plug more for this tobacco.

The example was there, but the Minister failed to take the example of his predecessors and exclude hard tobacco from this tax. There was no administrative difficulty in doing this. It had always been the practice, but it has been changed and, so, the unfortunate old person, who may be perhaps an inmate of one of our county hospitals and can no longer live among his people, who gets his miserable few pence back for his simple luxury, is required to pay 10d more for his tobacco to meet the Government's financial crisis situation.

We have been informed very vehemently by the Taoiseach that we have the most effective and brilliant Cabinet in Europe. I am sure his Ministers in the Cabinet have gone to pains in putting their requirements before him to ensure the proper administration of their Departments for the 12 months period, and that they were careful to provide the right figures. Yet, we find the Minister for Social Welfare £100,000 wrong in 90 days and no satisfactory explanation given. Why has this happened in relation to a figure of £100,000?

It was a deliberate adjustment upwards.

And it was not anticipated at the time of the Minister's first Estimate.

We did not think to do it initially but we decided to do it afterwards.

You did not think of doing it in May.

It was an upward adjustment in respect of certain social welfare recipients.

I do not want to be told the confidences which transpired at the Government table, but did the Minister for Social Welfare fail to anticipate this upward adjustment when informing the Government of his needs? At any rate, if any Minister cannot anticipate for 90 days what will be required to administer his Department, how can it be alleged that this is an effective Ministry? This was a substantial omission and because it was made and because the adjustment was introduced within such a short period, no matter how deserving it may be, it is impossible to examine the annual accounts. If it was not anticipated 90 days before the introduction of the last Budget, we can contend there are half a dozen other Departments which will have supplementary presentations to make to the Oireachtas in the months to come because when assisting the Minister to prepare his Budget, they did not anticipate their full requirements.

This last Budget was incorrectly described as a mini-Budget. We have had all these mini-Budgets before. There was hardly a week in which one did not read in one's newspaper or hear on the radio or television that another mini-Budget was being introduced—increased bus fares, increased railway charges, increased transport charges, all of which have been recurring over the past four or five years and by reason of which the Minister has succeeded in passing back on to the consumers supports given by the Government. In that regard some of his colleagues have been most active and successful. The Minister for Posts and Telegraphs is now insisting on payment in advance by telephone subscribers.

After the introduction in March of what was an unusually early Budget, this £5½ million was presented to the workers and consumers and people generally in built-up areas as being something designed to help the farmers. The farmers again were presented as the niggers in the woodpile. Let us assume that the Minister for Agriculture had been so absorbed in other activities that he failed to bring to the attention of his colleagues the fact that weather conditions had such an appalling effect on the farmers that it was absolutely vital that they should be provided with some relief at Budget time. That must have been apparent to the Government but they took no action at Budget time and they persuaded the strong farmers' organisations that it was impossible for the Government to come to the aid of the agricultural community in the Budget. Despite that, however, they were quickly brought down to ground level by means which I do not altogether support. They were brought to see the light in relation to the needs of the farming community and in this mini-Budget, so described, the farming community have received 2/6d per week on average. As I say, this was presented to the people of the cities as being not the fault of the Government but as being due to the terrible farmers going on the rampage again and that it was absolutely essential that their requirements should be met. The awards were made known before the Presidential election but the method by which it was intended to find the money was not so clearly indicated until the people had voted in the election. Then it was announced that there would be an increase of 3d a lb. on butter. The increase in the price of milk should have been provided long before now and I sincerely believe it could have been provided without increasing the price of butter. I know the Minister is looking at me but the fact is that one of the greatest rackets this country has experienced for many years was the way in which the money was spent on the calved heifer subsidy scheme. Every day farmers are telling me what has transpired. They themselves and their neighbours have availed of it. If we wanted numbers or statistics, we have got them but the country is paying a price for them.

The cattle are there but what type of cattle are they? Ask anybody in the cattle trade what type of livestock is being presented at the marts and at the fairs? They have been developed on farms as a result of this subsidy. How many small farmers who always worked hard, who were industrious, but were limited in the numbers of stock they could carry, were not already up to the capacity they could carry and did not benefit from this scheme? Of course you had the shark, the man who is always on the make, the man already with the money. This was the man who jumped in, who gained and prospered in consequence.

I am not saying that everybody who availed of the scheme was a shark. Very many people did avail of it and are using the opportunity presented to them by the scheme to increase their herds and their output. No doubt the intention was all right, but in practice the amount of money being expended upon it would bear examination in relation to the high proportion of it that went into the pockets of people who had no intention of permanently increasing their herds. There is a man who lives not very far from where I live who drew several hundred pounds from the scheme and today is buying milk. He has not even a milch cow to supply his family needs. If that money had been applied to increasing milk prices, particularly for those delivering smaller amounts to the creameries, there would have been no need to inflict the increase of 3d per lb. on the mothers of young children.

In the course of the Presidential election campaign when I was canvassing, I spoke to one woman at her halldoor and in three minutes I learned more commonsense from her than I have heard for a long time before. She told me that her husband earned £8 5s a week, that they had five children and that they used one pound of butter a day. That is 35/- a week for butter alone, out of £8 5s, and leaving out bread, clothes, schoolbooks and such other things as rent and rates and fuel. Therefore we must take cognisance of the effect this is having on the cost of living and the fact that this essential commodity is so expensive. One assumes that the people who get the benefit of the increase are not themselves taxpayers or consumers of butter. The increased price for milk should have been awarded without the country undergoing the difficulties that arose.

This £5½ million also includes the award to various sections of the Civil Service. This too, should have been anticipated by the Minister and the Government when preparing the Budget. In regard to the financial difficulties of the country, the fact is that a very grave error was made by the Fianna Fáil Government in introducing the turnover tax. At the time it was introduced it cannot be said that there was not fair warning from the other Parties with regard to the consequences of the introduction of such a tax. The Minister has, I know, asserted that it is an increase of only three per cent in the cost of living, but it has disrupted the entire economy. I am in a position possibly to feel stronger about this than many others because it cost me several hundred pounds travelling 6,000 miles to vote against the tax.

At the time of its introduction, it was alleged by the then Minister for Finance that those who were affected from the point of view of dislocation and added expense in business as a result of having to keep so many records, involving both time and trouble, were at liberty to reward themselves. There is no doubt that that was successful in combatting the opposition to the tax on the part of traders; the 2½ per cent became 3 per cent and 3½ per cent and there is nothing that will shut a mouth as quickly as being adequately compensated for one's silence. The business community withdrew what we regarded as their very reasonable opposition to the tax in double quick time, once they realised the opportunities presented to them.

It was argued at the time that the tax should be a selective tax and one which would not affect the simple things of life. We were told by the Minister for Finance at the time that it would be administratively impossible to make it a selective tax. Opposition speakers in the other House regarded the imposition of the five per cent sales tax as something new. It is not something new. Apparently they forgot the first imposition was, in fact, selective. I will give an example. When I go into my wife's pharmacy four or five times a week I see two stands. On one there are baby foods; they are subject to tax. On the other, there is cat and dog food; it is exempt. The turnover tax was a selective tax.

(Longford): Animal food was included and it is most unfair of the Senator to paint such a picture. The Senator is not fooling me and he is not fooling the public.

There is no doubt the discriminating cat and the discriminating dog were looked after.

(Longford): The Senator is destroying what would otherwise be a good speech by that sort of thing.

I have not yet painted the full picture with regard to selectivity in the turnover tax. There is no doubt in the world that the spiralling that has occurred since the imposition of that tax could all have been avoided, not alone in relation to animal food but in relation to all food, clothing, medicines, fuel, and so on, had they been exempted from the impact of that tax three years ago, as they are being exempted this year in relation to the five per cent increase. We are entitled to ask the Government how it was possible for them in 1966 to do what they found administratively impossible in 1963.

We had, of course, the 12 per cent increase in wages. That was designed to purchase the electorate in Cork city and Kildare. Here we find the roots of many of the troubles which have since flourished. I happened to travel with an employer who had excellent relations with the unions and he told me that in this there were the seeds of trouble in as much as a Government and a political Party were claiming the entire credit for this increase in wages. The Government claimed it and the Government got the credit and that was gratefully recorded in the ballot boxes of Cork and Kildare. The entire credit that should have been due to the trade unions was filched from them, the trade unions which had been trying over a long period to get better conditions for their members. All the credit was taken from these hardworking men and women and transferred to a political Party.

Hear, hear.

It was that that sowed the seeds of a great deal of the labour troubles since then.

Quite right.

Deputy Corish always denies that. Senator Murphy agrees with it obviously.

It was done by the trade unions but the Government claimed the credit. The electorate in Cork came along and asked: "What about our increase? The 12 per cent is from the Government. What about the trade unions getting us an increase?"

And no thanks to the trade union officials. What use was it contending that the trade unions had been working effectively for this increase, as Deputy Corish said, when a political Party, with all the weight of the Party machine behind it, claimed the credit? No one had a hope of combating that kind of propaganda.

Why this level of taxation at this particular time? I could keep the House another hour, but I have no intention of doing so, even if the agreement permitted me.

The Senator will understand there is agreement to allow the Minister in at 12.15 p.m.

Yes. The Taoiseach at one time was very strong in announcing his belief that economies could be effected at a time when expenditure was no more than £100 million. One of the economies he suggested was the amalgamation of some of the Ministries. The present Minister for Health was very forceful in arguing that there was no point in having separate Ministries when they could be amalgamated. The Taoiseach has now nailed his colours to the mast. It is not his intention to amalgamate Health and Social Welfare and he will retain Transport and Power. I am glad the Minister for Social Welfare and the Minister for Lands will not have to take on any new duties because it would be a great mistake to give them so much work to do that they could not make speeches.

That is a matter of administration and it is not for this Bill.

He is talking about policy.

Quite so. It is very important these two gentlemen should be left on the loose as far as the Fine Gael Party are concerned. The Taoiseach has now announced his need for an expansion in the number of Ministries——

We will be debating that next week. Give someone else a chance.

The Taoiseach contends that Ministers, instead of looking after their Department, should get out as much as possible to lecture the people and get through to the people by every medium of communication possible in order to tell the people how they operate. There are some Ministers who appear to spend more time in dress suits than they do in pyjamas. Mark you, if they went down the country and got away from the atmosphere of the after-dinner speeches with the after-dinner cigars— I had a little experience of that atmosphere and I regarded it as hideously artificial—and met the people in the local pub, or outside the creamery waiting to deliver the milk, or when they come out from Mass on Sunday, they would absorb more sound commonsense in relation to the condition of the country than they will ever hear at these dinners at which the people one meets want to get something out of one—these people vie with each other to throw as many dinners as they can in the hope that suitable rewards will follow—and they will learn more than they would ever learn in the exalted atmosphere of the high pressure luncheon on the kind of occasion on which Ministers have been spending so many of their evenings in years past.

It would not be safe for them to do that.

I realise the limitations there are on the debate. I should like to refer to the impact of taxation on motorists and all the other people who have been so badly hit by the exactions of the current Budget. I should like to refer to the fact that so little of this money is being devoted to the unfortunate people who are least well off and that we are very quick to levy taxation early in the year but it is many months before the unfortunate old age pensioner, widow or unemployed person can get the increased benefits to which these taxes are supposed to be devoted. It is time this House had an opportunity of discussing the economic position of the country. We regret that the circumstances as presented in the documents before us do not augur any better for the future of the people in every class of our society.

(Longford): I have listened to many debates on Finance Bills.

On a point of order, Sir, is Senator O'Reilly replying for the Minister?

(Longford): That is not a point of order.

In fair play, Sir, only one Labour Senator has been called in this debate and another was just offering.

In fair play also, of the ten hours debate, we have only taken one hour so far.

You did not offer at all the first day.

Senator O'Reilly. I would ask the Senator to have regard to the time available.

(Longford): I shall, Sir. I shall not deliberately try to prevent other people from speaking by filibustering. As I was saying, I think I heard more debates on Finance Bills than most other people in this House.

What about Senator Dr. Ryan?

(Longford): Sometimes it makes me a bit sad that we do not have a better debate on the Finance Bill. It is one of the few chances this House has of having an objective debate on such matters. Since there is no Question Time in this House as there is in the Dáil, Senators often feel frustrated because of their inability to raise particular matters about which they are concerned. Hence the debate on the Finance Bill should be a constructive debate which would give scope to Senators to express their views on many matters. For many years I listened with attention to the contribution made to the debate on the Finance Bill by Professor O'Brien, who was until recently a Member of this House. It does not matter on what side a man sits in this House, he can give a worthwhile contribution. I am vain enough to think that I learned something from listening to men like Professor O'Brien. I agree also that in the past we have had some rather flowery talk on Finance Bills. I can recollect that on one occasion I referred to one annual contribution as “the echo of Kilbeggan Fair”. That particular Senator has been demoted to the other House. I am inclined to think that, by and large, the debate on this measure has improved but there is room for further improvement.

If parliamentary government is to improve in this country, there must be more objective criticism of Government policy instead of one person saying: "Is maith an Bille é" and another replying "Ní hea" from the other side. I am in a difficulty in that to some degree the people on the other side have not measured up to the standard of objective criticism I would like. Therefore, I feel I have some duty to be objectively critical myself.

Can we now come to the subject matter of the Bill?

(Longford): After that lecture, if I were to express a view as to what is really wrong in this country, I would be inclined to sum it up by saying we are inclined to overpay ourselves for the little we do and that all the difficulties we seem to run into, which seem to recur like a schoolroom decimal, flow from that fact. If that is true, we are bound to run into economic difficulties of one sort or another, resulting in failure to balance our payments. This will be fatal for our economy unless we recognise it in time.

It appears to me we want more and more for less and less. That is the difficulty the Government, the Minister and all of us here, no matter on what side we sit, must face up to. This applies to farmers and to workers, whether they be members of trade unions or not. There are many people in this country who because of the failure of trade unionism are not protected by trade unions. It applies to self-employed people, shopkeepers, tradesmen, people working on their own account. They are a large and valuable section of the community. Unfortunately, they do not seem to have many people to speak for them in this House or in the other House. They are the silent section of our society. Probably it is just as well. It is not possible for me to say all I should like on this subject, in view of the fact that I have indicated to the Chair I shall try to be reasonably brief.

Continue next Sunday.

(Longford): You can continue in Roscommon.

Keep it for last Mass.

(Longford): I do not interrupt Senator McQuillan when he is speaking and it is not right of him to start off on a barrage of interruptions.

I do not intend to disrupt the Senator's speech. I apologise.

(Longford): The unfortunate thing is that when difficulties do arise, we are very much inclined as a people and in our Parliament to try to pin the blame on the people in power. The purpose of the Opposition is to criticise objectively instead of indulging in frothy speeches which do not add up to much in the end.

There is too much pressurising of the Government by organised groups in our society. It may be the farmers one day, the trade unions another day, dentists another day, lawyers another day, and businessmen another day. To me they are all trade unions, pressure groups. If the situation is to develop that those who can shout the loudest can get most of the national cake, then the people who are less able to make their case will get the rough end of the stick. If I have any criticism of the Minister, it would be that he has not resisted more firmly pressure from well-organised sections of our society, because the success of well-organised sections is bound to militate against the less well-organised sections.

With the complex system of government by parliamentary democracy, if organised groups were to grow in power to a point where Governments had to compromise between one group and another, then I would think we were on a very dangerous road which would ultimately result in parliamentary democracy breaking down. It might take 25 or 50 years to do that, but it would ultimately break down. That is a warning I should like to give to the Minister. A government must have power and must use their power effectively.

In regard to the present industrial strife, I was very sad to hear Senator Murphy, who on many occasions can make worthwhile contributions to this House, state in a rather intemperate manner that the federation of employers—and I do not know who they are—led by the Government—that is the implication it conveyed to me— was responsible for fomenting industrial war in this country. It made me sad to hear the Senator say that.

It makes me sad, too.

(Longford): I do not believe it is so. I know enough history to realise that it has often happened that when people start a war, on the international level or on world level, they were very anxious to prove it was the other side started that strife. Such statements as that by Senator Murphy are bound to poison whatever goodwill is left in the relationships between employers, trade unions and workers. This country will continue to have financial and other difficulties if there is not more harmony, commonsense and a better attitude to work.

Apart from the matter of wage structures in our economy, working hours have become a prominent issue, and hence there is the idea brought into this country of a 40-hour week. It may appear to be a good idea from the narrow trade union standpoint but I am convinced—and I cannot be regarded as a capitalist, as no small farmer can be—that if trade unionists do not show a sense of responsibility equated to their growing power, then they will ultimately defeat the very purpose they intend to achieve. I would not like to see that happen. I am well aware of the efforts that were made by great people in this country to build up the trade union movement so that it could adequately and properly defend people's rights. Therefore, I would not like to see it destroyed by the growth of power used irresponsibly. Power is a thing that can be abused by a government or by a political Party. It can be abused by any group of people. It is not confined to trade unions.

Is it the Offences Against the State Act the Senator is talking about?

(Longford): We must discourage professional agitation. There are people in this House who will engage in professional agitation for agitation's sake. That sort of approach will not solve any economic problems for the nation, nor will it solve many problems for workers who belong to trade unions. If there is to be progress in that regard it will only be by trade unions becoming more conscious of their responsibilities to themselves and to the whole community and not by having an abuse of power which inflicts hardship on the whole country and particularly on categories of self-employed persons and workers in other trade unions. If there is not some harmony in trade unionism, it will defeat itself. I give that as what I hope people may regard as a solemn warning. It is my view, which I am entitled to express.

Not on this Bill.

By arrangement, the Minister is due to conclude.

(Longford): I regret I have not time to finish. I have said some of the things I thought it desirable to say and I am hoping that some of the advice I have given will be taken seriously, because what I say I mean. It is not a popular thing to say. I feel sincerely on these matters. I fear that the growth of this abuse of power will ultimately bring about a situation where there will be the work lord, which will be as big a menace to workers as landlordism was to farmers. If trade unions become work lords, a situation will arise such as the Irish people had to deal with in the past. I hope that pattern will not develop. I know the Minister wants to come in and I shall end on that note. I do not like to see a development of worklordship in this country.

There are many Senators who have had not an opportunity to speak. Could I ask that those offering and waiting for the past three days might get in on the No. 2 Bill?

Acting Chairman

The House has already agreed that discussion on the No. 2 Bill would be permitted together with the discussion on the Finance Bill. Consequently, what the Senator suggests cannot be permitted.

There must be six Senators here who have not had an opportunity of getting in, even though they have been waiting three days.

We appreciate that an agreement was made but, in view of the number of people who have not been able to speak because of the misjudgement of the time required, Senator McDonald is wondering whether it could be arranged that those concerned could make their contributions on the No. 2 Bill.

Acting Chairman

It is not a matter for the Chair to decide. The Chair is only interpreting what the House has decided. It was arranged that the debate would cover both Bills and terminate at this time. It is regrettable that some Senators have been precluded from participating in the debate but this time limitation was agreed upon.

We appreciate that.

Acting Chairman

The scope of the debate was also agreed upon, permitting discussion on the contents of the Second Bill.

May I respectfully suggest that the scope of the debate left it so wide that Senators had so much to talk about that not nearly enough time was allowed for the debate?

Acting Chairman

Unfortunately, that is a problem I cannot cope with. The matter revolves more on the termination of the current discussion.

We had complete agreement about the timing of the debate by all sides of the House.

It is a pity a mistake was made on both sides.

I certainly do not want to embarrass the Chair, least of all the Minister, in upsetting at this stage the agreement that was made but I think it grossly unfair to a number of Senators. I am thinking of my own Party. We have had only one speaker on this Bill. Whatever the cause, that is the fact.

Nobody offered from the Labour benches.

I offered.


Acting Chairman

One at a time. Let us dispose of this question.

The point I want to make is that, in fairness to the other Senators. Senator McDonald's suggestion should at least be given serious consideration on the next sitting day.

My suggestion covers those Members offering in this debate—not to leave it open.

Would Senator McDonald exclude those offering on the next occasion? Many of those Senators offering now were not offering during the past few days when the Bill was under discussion. At what stage do you draw the line?

An agreement was reached and it is difficult to propose that it should be upset. In view of the number of Senators on all sides who have not been able to contribute and the fact that the other Bill would give an opportunity, if the House would agree to treat it as such, would the Acting Chairman be prepared to consider this matter, without committing himself at this moment, as to whether that agreement could be made?

We had complete agreement on this matter but I am sure we would be prepared to consider the question raised.

We shall leave it, then.

I was going to make a brief interjection on a special issue. Could I substitute a question to the Minister now? I want to introduce the question of the treatment of retired State servants.

Acting Chairman

The Senator could ask that question at the conclusion of the Minister's speech.

Could I not ask him now to say whether he has any message of hope for these people or can he hold out any prospect that that matter will be dealt with in the near future?

Acting Chairman

Has the Senator made his point?

It is just in the form of a question.

Acting Chairman

Very good. The Minister, to conclude.

I sympathise with those Senators who are willing to contribute to this debate and did not have the opportunity by reason of the arrangement made and, as far as I am concerned, I would not be averse from a suitable arrangement being come to on Finance No. 2 Bill and, for that reason, I may perhaps shorten my reply so that I can keep some powder for the next day.

In any event, there were some specific points raised that I had intended to deal with but I could deal with them more effectively, perhaps, in Committee—for example, the reference to the imposition of estate duty on certain types of insurance policies. I think I can do that more effectively in Committee because, as the Seanad is aware, there is a section extending the easement that was given last year to estates inherited by widows and dependants.

I shall try to be very brief. I had the experience in the Dáil the other evening, having been limited in time, of having gone over my time because I did not keep to my notes. I will stick to them as far as I can today so as to ensure that I will cover as many points as possible.

I should like to say at the start that I find myself in this difficulty when I am addressing remarks to a Senator who has been transposed to the Chair in the meantime that I never know whether to address him in the first person or the third person. I just want to say, in reference to your suggestion, as to what happened in a certain pharmacy in the town of Bandon as regards the sale of animal feeding stuffs which were in packaged form, that there is a specific regulation which includes these commodities in the turnover tax, which I will read for the benefit of the House:

Sales of animal feeding stuffs or animal medicines which are packaged, sold or otherwise designated as feeding for dogs, cats, cage-birds or other domestic pets shall not be exempted activities.

That leaves it liable to turnover tax.

There is another thing I want to say because I anticipate that it is possible it will be raised in the course of the Committee Stage and certainly was raised in the Committee Stage of the Finance Bill in the Dáil, not only this year, but for a number of years. I refer to income tax relief for persons who incur unusually heavy medical expenses either for themselves or for their dependants. The Commission on Income Taxation recommended in its Seventh Report that any taxpayer who incurs expense on himself, or any dependant, arising out of disability or illness which is serious and likely to be permanent, should be allowed the vouched expenses in excess of £50 a year per person, and up to a maximum of £300 a year per person. The Second White Paper on Direct Taxation published by the Government stated that the possibility would be examined of framing a scheme which would be administratively practicable and, at the same time, would effectively confine the relief to cases of the kind contemplated in the recommendation. It has not, however, been found possible so far to frame such a scheme, and amendments that were put forward in the Dáil sought to make such a system or scheme workable.

I have a lot of sympathy with the point of view put forward, and I am therefore setting up a working party to bring consideration of the matter to finality, and to submit a scheme of relief to me in the autumn. I would propose, subject to the general financial position, to introduce a system of relief, if it is practical, based on the working party's recommendations at Budget time next year. I thought I should like to have that out of the way in case there was any reference to it on Committee Stage, and in order to save the time of Senators who might want to draft amendments, if they are so inclined. However, that does not preclude them from doing so. I am just mentioning it in advance.

With regard to the references to the European Economic Community and our desire to become a member of the Community in due time. I should like to say that continuing contact with the EEC is maintained through our mission in Brussels. This contact is supplemented through the activities of our missions in the various capitals of the member countries, in addition to those already made at ministerial level. The next such meeting is scheduled to take place in the autumn.

At no stage have the Government been remiss about keeping before the EEC our interest in membership. This interest is being constantly stressed and has been re-emphasised by our Embassies in recent months following the more positive approach adopted by the British on the question of membership of the Community. I have never held the view that we would automatically get into the Community. I always realised that we would have to negotiate our membership, and that the negotiations would be pretty hard. We have plenty of experience of the efforts of the British during their negotiations which were cut short over two years ago. We know exactly what is involved. We know it is not going to be easy to negotiate membership, and that it will not be easy to negotiate terms that will suit us as members of the community.

In regard to the general economic situation, the indications now are that the temporary difficulties which interrupted the smooth growth of the economy have been left behind, and the prospects for the economic future are hopeful. There has been a notable improvement in the balance of payments, and the import excess for the first five months of this year showed an increase in excess of £20,000 over the corresponding period last year. Exports were £9.3 million or nearly 12 per cent greater than for the first five months of 1966. This improvement occurred even though exports of live cattle have not so far made any substantial contribution.

Further increases in exports generally can be expected with the coming into effect today of the Anglo-Irish Free Trade Agreement and the ending of the British shipping strike. The absolute certainty of the removal of the British surcharge later in this year will also give further impetus to our exports. Coinciding with this improvement there has been a marked rise in the external assets of the banking system and departmental funds. These were almost £21 million greater in April, 1966, than at the same time last year.

Industrial production has certainly been sluggish in the early part of the year, and statistics for the quarter ending March of this year show that the volume of production in transportable goods, and the output of manufacturing industries did not greatly exceed the level for the same period of last year. However, there were certain reasons including stoppages in production for one reason or another and many serious strikes took place, but there is reason to believe that the industrial sector will considerably improve its performance later in the year.

With regard to economic policy, action has been taken to control certain unfavourable trends in the economy which should prove very helpful to economic progress. We now intend to work steadily ahead without allowing demand to outrun our resources. Forecasting has never been an easy business and never will be, but experience has shown that great care must be exercised when the question comes up of modifying action in economic management policy. However, the general economic conditions would now appear to be favourable for the gradual release of more reserves for productive purposes.

Senator FitzGerald referred to the proposed review of the Civil Service organisation. He seemed to express some impatience because something has not been done more quickly. If he refers to my Budget statement in March, he will see that I said I proposed to do this over the next few months. In fact, I had in mind certain possible members for this body who would not be available until some time in the autumn, perhaps. I am now at the point of inviting representatives of business and the professions, and persons who have served in the public service, whether in the Civil Service or in State bodies, and who would now be available for such a purpose. It will be open to this group to offer any constructive suggestions and it will be possible for them to employ consultants, if they think that desirable.

The Senator also referred to the desirability of the wider use of statisticians in our services. He made some reference to the ratio of statisticians in the British Civil Service which I thought was rather on the high side, but, however, I am not in a position to doubt his figures. All I can say is that a great obstacle to improving our statistical service is the difficulty we found in getting qualified statisticians. Fortunately the last competition which was held threw up a very satisfactory response and it has now been decided to increase the staffing of the CSO. My Department are in touch with them to ensure that a reasonable increase in staffing will be made available.

I followed with interest what the Senator had to say about capital expenditure and I agreed with much of what he had to say. I listened to his diagnosis of what he thought was the origin of our difficulties. It is surprising that he thinks it necessary for me at this stage to give an explanation of what those difficulties are, and he said that since I had not done so, he would do it for me. He obviously forgets, or does not regard the contents of the White Paper on Public Capital Expenditure published last October as a sufficient appraisal of the difficulties which ensued and the type of vigilance which I regard as necessary for the future.

The paper did identify the three principal reasons responsible: resources lacked the past rate of expansion in the capital programme; money incomes, instead of rising year by year in line with the real improvement in national output, overshot this limit and, thirdly, bank credit expanded faster than the growth of bank resources even though these had been enlarged by fairly unusual capital inflow. The paper explained that the excessive demand generated in these ways was responsible for raising the prices and increasing the balance of payments deficit beyond the figure the voluntary inflow of capital could finance. The risk that demand might become excessive was specifically envisaged in the Second Programme and it was a risk taken deliberately in the conviction that all available resources would be used to promote the fastest possible rate of progress in output and employment. The October White Paper pointed out that only experience could show what level of resources could be counted upon and how fast could money incomes, credit and capital expenditure expand without creating excessive pressure. Senator FitzGerald is gifted, as many of us are, with hindsight and it is relatively easy to give a post factum appraisal of what should have been done.

While he may distinguish between a plan and a programme, whether it is plan or programme, it must be based on certain assumptions and unless these are realised—and they cannot always be—there will obviously have to be a review or re-appraisal of the plan or programme. The former Minister for Finance, Senator Dr. Ryan, apart altogether from the Second Programme did envisage in his Budget speech in 1964 that there would be need of a re-appraisal and pointed out the inherent danger of excessive income increases by reference to production and the contingency of balance of payments difficulties and he did say, even then in 1964, that corrective measures would have to be taken.

Various other matters which the Senator mentioned as being desirable have already been referred to and dealt with, I think, reasonably adequately in a variety of Government publications. For example, we have already initiated action in regard to the analysis of public capital investment and there is close forward planning now of public capital expenditure in the mid-term and a system of short-term review and control of short-term expenditure has been introduced.

I agree with the Senator that it is not sufficient to look at the figures for the amount spent from year to year; it is necessary to go into the physical buildup of what those year-to-year capital moneys cover because, as has happened, unless the full extent of what is happening is known, it will not be possible to be sure that the availability of capital in subsequent years will be sufficient to cover the rate of activity that work now in progress could easily generate. This review will cover local authority building expenditure and on that subject we are fully alive to the need to avoid a downturn in activity in coming months.

I might point out that variations in activity that have occurred, occurred at a peak. There is no question of a disastrous decline as some people would have us believe. Building activity and capital expenditure on it, whether on local authority or SDA housing, does not all happen in one year. It goes on from year to year, and while accounts have to be made up to 31st March each year, that does not mean that there will not be a continuing flow of capital to cover works that have been started in an early part of one year so as to complete them in the next year or the year after that. The State does not finish its activities on 31st March each year. As has been said on a number of occasions, more money than ever is being provided for housing activities this year. That implies that at least a similar amount of money—more if possible—will be made available to cover the spill-over in the coming year or in ensuing years.

In past years new building starts were not deferred simply because the total expenditure on the schemes was not provided for in a particular year. New commitments are possible, taking one year with another, and the position regarding new starts is being carefully examined at present by officials of the Department of Local Government and of my own Department. It is the intention and purpose of this review to maintain stability as far as possible and maintain activity at the highest permissible level.

It is, of course, necessary in planning for the smoother and steadier growth of the building and construction industry that there should be adequate statistical information on matters such as building staffs, work in the pipeline and other stages of building activity. The Department of Finance has had under examination what information would be most relevant and how it could best be obtained. We know of the efforts of the National Building Advisory Council to get this kind of statistical information and of the reasonably successful efforts of the field-officers they employ to get information on the spot. It is not very easy to get all the information one requires and the Advisory Council found particular difficulty in getting information even from building organisations and individual builders who would have a particular interest in the result of the examination of the information available. Therefore, recently the Government decided to set up an interdepartmental committee under the chairmanship of a representative of the Central Statistics Office to deal with this matter. This committee will consult representatives of the building industry in carrying out its inquiries. The question of introducing a regulator for the building sector perhaps along the Swedish lines requires detailed information but information is being sought on the Swedish Investment Reserve System and is being studied at present in the Department of Finance.

Senator FitzGerald referred to what he described as the disappointing answer he received as a member of a Press corps which interviewed the Taoiseach after the publication of the Second Programme of Economic Expansion. I do not know what kind of question was put, or in what circumstances, but I have had my own experience of these Press conferences and consultations. It often happens that the full import of a question is not grasped by the person being questioned and the answer may not be the full answer to the question. But I do not think the Taoiseach ever envisaged that there would not be a continuous review of the Second Programme. The review of the targets of the Second Programme is on the way and the result will be published as soon as the work is completed. I hope this will be possible towards the end of this year. I recognise that it is desirable that progress should be assessed from time to time by reference to all the targets covered by the Second Programme and this is being borne in mind in the review of the programme.

It must be recognised, however, that numerical targets do not constitute a rigid framework that can and must be adhered to in all circumstances. While the targets must be realistic and mutually consistent, they depend to a very large degree for their achievement on the assessment of attitudes to the requirements and the willing acceptance by all social groups of the changes which they imply. This acceptance and the evolution of the appropriate attitudes is therefore of as much importance in assessing our progress as the statistical measurement of growth, output, consumption and all these other more readily available figures.

As regards the publication of a monetary programme which would examine the monetary implications of the Second Programme itself, the review of the Programme now under way will be set in the usual national accounting framework and, in fact, the different objectives in monetary terms, as in the past. It is possible, however, the Senator had in mind a programme that would consider credit and financial availabilities. Preliminary consideration has been given in my Department to doing this. The field is a difficult one, requiring considerable investigation. It is not possible to be sure, as yet, that a comprehensive and systematic programme on the lines the Senator seems to envisage can be drawn up. However, I can assure the Senator that the matter is under active consideration and review.

In future, regular and annual progress reports, as distinct from the special review now being carried out. Will the various targets be shown and progress related to them? Our progress reports to date have not done this in relation to most of the targets of the programme.

The review is being actively undertaken, particularly by the Economic Branch in my Department. I have not been kept informed from day to day of the exact details of the review. I should imagine that this is very likely a subject matter in comment and reference by the reviewing people. If they have not it under their consideration, I shall bring it to their attention that it is desirable it should be done.

Regularly, in the future?

Yes. Some other questions of a detailed nature were raised in regard to what action was being taken on this and that. I was asked for so much detail that I was surprised the Senator did not ask me the date of my last confession. I suppose the Senator realises that it is not possible to deal with all these points here and at what might be considered comparatively short notice. A number of his points were on issues concerning the nature and administration of fiscal legislation, that is, paragraphs 48, 60 and 62 of the NIEC Report. I think paragraph 60 referred to control of profits and paragraph 62 referred to control of professional earnings. The Revenue Commissioners have examined these in detail and submitted a lengthy report on them. The proposals and views of the Revenue Commissioners are now being considered in my Department. There is an interdepartmental consideration of other matters raised in the NIEC Report but this is not yet completed. It is not possible, therefore, to say, as yet, what the Government decisions on these matters will be. However, as I understand it, the NIEC propose to go back again to a discussion on an incomes policy later this year. I hope, then, to be able to present them with a detailed statement of the action being taken and the progress made to date on all the recommendations in Report No. 11 of the NIEC.

There are a number of other points. I do not think it fair that I should reply only to Senator Garret FitzGerald.

He gave the Minister enough to do, anyway.

I was rather annoyed, I must admit, by some of Senator Quinlan's remarks. In his professional way, he referred to the solution of trade disputes—why people should not ring up on the phone and ask what their attitude is and the other people would ring back and say: "We do not agree with that" and accept something else. I have a good many years' experience of industrial disputes. I realise that attitudes are taken up by people. They are only human beings and it is not very easy for them to depart from them. Naturally, they want to make the best bargain they can.

I was annoyed by the assertion that the Government are doing nothing about industrial relations. Senator Murphy and other members of the trade union will know that during his presidency of ICTU, I had negotiations with him not only on the question of reviewing industrial legislation but of reviewing trade union legislation. I do not think he will deny that this has to be a slow process. I brought it to the point that, at the election of last year, I was able to announce in broad outline the industrial relations legislation proposals. The present Minister has brought these proposals a bit farther and a Bill has now been introduced in the Dáil and is likely to be circulated during the summer recess. That surely gives the lie to the suggestion that the Government have been doing nothing about industrial relations. I refer to this because these matters are published in the newspapers and people begin to believe them. I do not know if this refutation will be published. Nevertheless, I think it necessary to make it.

The Senator also said that the Government are doing nothing to help in the solution of the bank strike. The Government have been in close touch with the Labour Court and the Chief Conciliation Officer of the Labour Court who has been the main Government instrument in trying to bring about a settlement in this strike. If Senator Quinlan employed a specialist to operate on his child, it is hardly likely that he would make the incision himself. We employ specialists in the Labour Court, who are better able to handle the matters than many do-gooders, as trade unionists refer to interveners in strikes. Not only are the Government in touch but, in fact, they initiated the last intervention by the Chief Conciliation Officer of the Labour Court.

Reference was made to Ministers' attendance at functions: I know it is not germane to a serious debate on the economic affairs of the country. Most Ministers are invited to perhaps four times as many functions as they attend. I, for one, share the Senator's antipathy to attending many of these functions. One does not always receive the adulation at these functions which the Senator suggests. At most of the functions I attend I get a good haranguing about Government policy and how it affects the particular organisation which is my host: I do not know whether or not that is good manners but it is common practice nowadays.

(Longford): They make the Minister sing for his supper.

I do not want to go back to the Dáil debate again but the Senator raised the matter and referred to some speech I made when replying to the debate on Resolution No. 3. I think that what I have to say on this will refer also to Senator FitzGerald's suggestion that the Government ought to know what will happen next year and the year after. I wonder how well the Government in 1954 to 1957 knew what would happen in 1956? I want to refer in particular to the suggestions by members of the Fine Gael Party that the country is teetering on the brink of bankruptcy, that we are going "bust" and all these extravagant and what I might call malicious statements, to an extent. That overtook the Government in 1956 and the Government of that year had that difficulty more seriously, I suggest, than the Government of today.

I was referring in the Dáil, before the closure stopped me on Wednesday night, to the fact that the £20 million five per cent National Savings Bond issue they floated in that year failed miserably. Only a little more than £8 million was subscribed by the public. That was a sign of lack of confidence, surely, in the Government. It also was a sign of lack of availability of savings and of capital generally. Later on that year, a £12 million National Loan was floated at 5½ per cent. That, too, failed, not as miserably as the first issue but about 25 per cent had to be taken up by the Government and the other underwriters. The Government had to go so far as to sell sterling securities to make up their share. Worse still, the full proceeds of that loan were used to pay off outstanding Exchequer bills. The external reserves of Departmental funds were liquidated in that year by nearly half, from £32 million down to £17 million and the banks had to provide, at the expense of sterling reserves, about a quarter of the Exchequer capital requirements.

On 8th May, 1956, Deputy Sweetman had to say:

In 1955, for the first time in many years, the deposits within the State of the commercial banks fell.

They fell by £13 million. It is no wonder the Government of the day were frantically looking for money. They tried to, but the fact is they could not get a penny abroad. One State company was able to get £500,000 but the Government themselves failed miserably and I have Departmental accounts to say they tried. I know they tried.

Now they decry the efforts of this Government to get capital abroad to be used to top up our own resources for our capital development programme. This was envisaged clearly in the Second Programme in which it was stated clearly that capital would be sought abroad, whether in the form of voluntary inflow or by direct borrowing by the Government. As Senator Yeats said, it is not only respectable but is regarded as desirable practice by modern, progressive countries to do this. Senator Yeats instanced Denmark, Norway, Austria, Japan among those nations. Even the United States of America have created a situation whereby the capital inflow to their country is created.

The suggestion has been made that we tried and failed to get a loan from the American Government. We never sought a loan from the American Government. We initiated the necessary procedure for the raising of a loan in the Euro-Dollar market. These Euro-Dollars are dollar surpluses held in Europe, in many cases by non-Americans and in some cases with American interests in them. The American Government, realising they had their own capital difficulties, decided to get their big national companies after this pool. At the time we applied, there was tremendous pressure on the Euro-Dollar market and we were advised not to proceed. I may say we were in good company in holding back because no less an organisation than the European Coal and Steel Community were in the market for a Euro-Dollar loan at the time and they, on advice, held back and have not come forward.

Since then, there has been tremendous pressure on the Euro-Dollar market. Germany, itself, has commitments undischarged to that market. We raised £5 million from the Bank of Nova Scotia. That was part of the £10 million we envisaged we might reasonably require this year to supplement our own resources from voluntary savings, national loans and the sums provided by the banks. Arrangements are in train for the filling of our capital programme requirements to ensure that the level of capital development we now have set ourselves will be maintained during the year. We believe that is possible and, as a result of the better climate in industrial relations and the improvement generally in the economic situation, I believe we are moving again steadily forward and that our economy will begin to pick up and soon get back to the satisfactory rate of progress we enjoyed up to last year—four per cent to 4½ per cent on gross national product.

Question put.
The Seanad divided: Tá, 19 9; Níl, 9.

  • Boland, Gerald.
  • Brennan, John J.
  • Brosnahan, Seán.
  • Fitzsimons, Patrick.
  • Honan, Dermot P.
  • McGowan, Patrick.
  • Martin, James J.
  • Ó Conalláin, Dónall.
  • Ó Donnabháin, Seán.
  • O'Kennedy, Michael.
  • Browne, Seán.
  • Eachthéirn, Cáit Uí.
  • Farrell, Joseph.
  • O'Reilly, Patrick (Longford).
  • Ryan, James
  • Ryan, William.
  • Sheldon, William A.W.
  • Teehan, Patrick J.
  • Yeats, Michael.


  • Conlan, John F.
  • Crowley, Patrick.
  • Davidson, Mary F.
  • FitzGerald, Garret M.D.
  • Fitzgerald, John.
  • McDonald, Charles.
  • McQuillan, Jack.
  • Malone, Patrick.
  • Murphy, Dominick F.
Tellers : Tá, Senators Browne and Farrell; Níl, Senators Murphy and McQuillan.
Question declared carried.
Committee Stage ordered for Tuesday, 5th July, 1966.