Then there may be some misunderstanding. My point is that the law requires the Revenue Commissioners to act in a certain way and that that law should be amended. It is a matter in relation to which an amendment may be required. However, I will not pursue it but I should like the Minister when he is concluding to let me know whether, in fact, the Revenue Commissioners are required to act in this way by law or merely by practice.
One other point I should like to refer to which was referred to in the Dáil relates to the procedure in relation to double taxation treaties. The reply given to Deputy Sweetman in respect of the Canadian Treaty was that a certain mistake had been made in the procedure which held up publication here. However, I wish to emphasise that the same thing happened in relation to our double taxation treaty with Denmark. Some of the contents of that treaty were published in Denmark but when I and other people attempted to find out what held up the publication here of our side of the treaty I was informed that no information could be given, though the people of Denmark were told of the contents of the treaty in so far as it referred to their country. I should like the Minister to ensure that the practice will be discontinued through which this country is at a disadvantage, through which foreign investors here are deprived of information in regard to the reliefs they will get because of the holding up of information in regard to a treaty of double taxation. I should like to reinforce what Deputy Sweetman said, by pointing out that this Canadian matter is not an isolated incident. It shows up as a normal practice which the relevant Department insist on pursuing. Those then are just some points of detail I should like to make arising out of the Budget and the Bill before us. Of course, the Bill is more than simply a means of raising taxation for financial purposes. It should be designed to influence the economy in the appropriate direction as well as to alleviate social hardship. We have to review it in that light also as well as seeing it as the taxation measure.
The first question we have to ask ourselves is what is the economic situation at the moment and what course of action is required from the Government, whether the Government measure up to the economic situation. The Minister has referred in his remarks to industrial production statistics for the first quarter of this year which he says are encouraging. They are encouraging in that the growth of output which they show is somewhat higher than experienced for a year or 18 months back but I suggest to the Minister that a careful analysis of them shows that the picture is not as encouraging as might appear at first sight because the growth of output which we have secured in this period is very narrowly based.
Only one third of industry has contributed to this increase in output. In more than two thirds of industry there is either no significant output or a decrease. The whole of this increase is accounted for by one third of industry, by a few industries which are engaged in the export trade, whose exports are expanding. They are few enough because only one fifth of our exports have expanded significantly in the first quarter of this year. That small sector has contributed to an increase in industrial output in certain industries and then we have had a mild recovery in the building industry, from the very depressed conditions of last year, which has helped the structural clay product industry and the cement industry. You had also an increase in the output of fertilisers, demand for which is strong at present. Outside those areas, in the other two thirds of industrial output, there is not an increase. There is no sign of any general recovery in the economy as far as industrial output is concerned.
In the agricultural sector the picture is as it has been for years now. The Minister knows—he did not refer to it in his speech, he glossed over this point—that the breeding stock in the case of cattle is slightly down on last year and in the case of pigs and sheep it is substantially down. Even allowing for an increase in the acreage under crops and cereals, there is every indication that the agricultural output this year will be stagnant at best and at the worst will show a decline. Agricultural output over the past six years has been stagnant. The prospect there is not a very encouraging one.
This is the general picture—one of selective growth in industry and stagnation in agriculture which is confirmed by the trend of retail sales which showed an increase of only five per cent in the first four months of this year. As prices are up by four per cent that indicates very little growth of demand in the country. This is also confirmed by the banks' figures which show that the economy is in a state of depression to such an extent that even though credit now available, the liquidity of the system having recovered from the shock administered to it by mis-management of the economy by the Government in 1964 and 1965, even though the money is now available, enterpreneurs are so lacking in confidence in the future of the country at this point, after the mis-management of the last couple of years, that they are not taking up the credit and we are now in the absurd position, after the credit stringencies of the last couple of years, of having a surplus of credit.
The figures for April show that credit was then running 8½ per cent ahead of last year, when the Central Bank would have been glad to see an increase of 10 per cent. We cannot make direct comparisons with the month of May because the banks were shut by a strike in May last year but it looks as if this increase in credit compared to what it would have been in May last year may have been only about 7½ per cent. This indicates a tapering off of the growth rate, as far as I can judge, although this interpretation is slightly speculative, for I can only estimate what the credit picture would have been in May last year. The tendency here seems to be towards a slowing down in the growth of credit at a time when the Central Bank would welcome an expansion of credit as indeed the economy needs. This clearly reflects a lack of confidence on the part of entrepreneurs who are not prepared to invest at the moment in the future because they are not sure what the future will bring. Their confidence has been shaken by the events of last year.
Another sign of the extent to which the economy is still deflated and of its failure to pull out of the difficulties of the last couple of years can be found in our import figures. For the three months March to May our imports were up by only £3 million or three per cent while our exports were up by £13 million or 24 per cent. This may be said to be encouraging, a reduction of £10 million in our import excess, causing our external deficit to drop to perhaps £10 million in the 12 months ended May, but we do not need to have our external deficit reduced by that amount. This indicates a sluggishness in the economy and a lack of domestic demand at a time when we could afford a faster growth than that.
There is, therefore, considerable evidence that the economy has not recovered from the shock of the last couple of years and that further action may be required to reflate it and to secure expansion. It is true there is some evidence in the other direction, but on the whole the picture is a fairly gloomy one. It looks as if the Government may have to take further action in the next few months to encourage a growth of demand in order to try to secure some genuine recovery in the economy in the 12 months ahead. A problem here is that the economy has been over-deflated. This is a persistent mistake of our Governments. It has been made three times in the last couple of years by Governments here.
First of all, in 1952 it was made by a Fianna Fáil Government, in that severe deflation which led to unemployment marches in Dublin, —a deflation from which the economy never adequately recovered in the years that followed. We moved from that deflation into an inflation in 1955 without ever securing any genuine improvement in output. Then in 1956 under the inter-Party Government again the economy was deflated after the crisis of that year and in retrospect we can see how excessively severe measures were taken as a result of 1952. Now, looking back we can see—there were signs of this at the time—that the deflation of 1965 was also unduly severe.
Our economy is not resilient. If we get ourselves into inflationary difficulties and are forced to deflate, as Governments have been forced to do on those three occasions over the last 15 years, the economy does not readily recover. It takes a lot of pushing to get it off the ground. It is more serious in Ireland to have inflation followed by deflation than in most countries. Indeed, we have spent eight of the last 16 years effectively in a state of deflation with our economy bouncing along the bottom, showing little buoyancy and not recovering as it should do from those temporary difficulties.
Every country is liable to get into inflationary difficulties from time to time. Some of those difficulties in the past 15 years have been outside our control as was certainly true of the Korean war crisis in 1951, for example. Inevitably there are times when you have to deflate the economy but in Ireland, because our economy has so little buoyancy, it is more important than in other countries that we should avoid the necessity for this. Where the economy has to be deflated unnecessarily because of an unnecessary crisis provoked by mis-management of the economy rather than by external events this is a very serious blow in this country, a blow from which we take a long time to recover.
That is the position we are in today. That the crisis of 1965 was unnecessary is quite evident, and the Government have not ever attempted seriously to defend the contrary thesis, although there have been occasional references to the effects of the import levy and to the situation of the British economy but those excuses are so unconvincing that the Government have not even attempted to put them across in a convincing way. The fact is that the NIEC Report Number 11 shows conclusively that there were three reasons for the crisis of 1965. In respect of two of these, responsibility lies fairly and squarely with the public authorities and they could also be said to have some degree of responsibility for the third. The third cause, the one for which the Government are not by any means wholly responsible was, in fact, the increase in wages, the round of wages which occurred at the beginning of 1964. The scale of this increase, however, is something for which the Government must take some responsibility because the fact that it was a 12 per cent increase and not an eight per cent increase goes back to the terrible blunder made in 1961 by the repeated Government interference with the ESB dispute which pushed up the increase at that time to 17 per cent for the ESB workers and leading to the 12 per cent general round of that year, a round repeated again in 1964.
The primary burden of responsibility for the scale of those two wage rounds which set our economy on an inflationary course must fall on the Government's shoulders, and indeed, on the Taoiseach's shoulders for he was personally responsible for those interventions in the ESB dispute which were so mistaken and so dangerous as to be damaging. The wage round of 1964 was appropriate in its timing, and I would not fault the Government for having encouraged the round at that time but their failure to make any attempt to control the amount of the round which was on an excessive scale did cause problems. Personally, I do not think this was a principal cause of our difficulties in 1965. The very fact that our difficulties only occurred eighteen months after that round, suggests that other forces must have been at work. I think the wage round was contributory, but by itself, had our affairs generally been better managed in other respects, it would not have caused serious difficulties. Other mistakes on top of that caused very serious difficulties.
The other two reasons given by the NIEC were, of course, the excessive rise in capital Government expenditure—and it is clear precisely who is responsible for that—and the failure to control the growth of credit, and it is equally clear who is responsible for that. These are matters which fall within the ambit of the public authority, the Department of Finance and the Central Bank. These two reasons for our difficulties in that period are ones for which the Government must accept responsibility.
It is a pity the Government have not fairly and squarely accepted responsibility for these difficulties. This, of course, is always difficult. Indeed, no Government of any kind will readily say—we made a mistake. I am quite sure even if there were a change of Government that those on this side of the House would have difficulty in making this admission at times too. There are times, however, when it is important to make that admission, and unless the Government in a case like this admit that a mistake was made, it is impossible to restore confidence, for example in the business community, that the mistake will be avoided again.
So long as the Government persist in saying that no mistake was made in 1965, that they were in no way responsible and that the events of that year were not their responsibility, inevitably the feeling persists among people not engaged in politics that the Government do not understand the position, that if they cannot admit what the NIEC report says, and do not understand and accept it, they simply are not competent to manage an economy. There is inevitably the feeling that the country left in their charge is liable to fall into difficulties again.
The fact is that the mistakes made in 1965 were mistakes for which the Government must be blamed, as the Government in office. That mistakes were made is understandable because of the complexity of the situation, and because of the problems then facing the Government. But unless the Government come out and say distinctly—yes, we made a mess of things on that occasion because we did not understand fully the workings of the economy in the face of a situation which we never faced before; we now understand what went wrong; we will make perfectly sure it will not happen again; we have taken measures to control the growth of Government policy on capital expenditure so as to ensure that it will not happen again; we have introduced control of credit on a voluntary basis with the Central Bank; all these measures we have taken to retrieve the mistakes made so as to ensure against a repetition—unless they say this plainly they will not restore confidence, and what we need more than anything else now is the restoration of confidence.
We are in the position that there is nothing to prevent this country expanding again, at least on the industrial side, and even on the agricultural side if something could be done to change the Government's policies. There is nothing to prevent the agricultural economy also from expanding. The money is there; credit is available in the banks. The only thing that prevents this expansion is lack of confidence, the unwillingness of people to borrow money and risk their own credit and make the necessary effort to expand our economy, because they fear the same mistakes will be made again. A Government that do not agree they made mistakes are liable to make the same mistakes again. Therefore, the Government would do the country a service, and would not do themselves damage, if they came out a bit more clearly about the position and stopped trying to put forward the weak defence that external events affected the position.
I would readily say that the crisis of 1952, when the present Government were in office, was one which was provoked by the Korean War difficulties rather than by domestic mismanagement, but on this occasion I could not make the same concession because external events have had only minimal effect. They have, of course, had some effect. It would have been much nicer to have had a buoyant British economy throughout this period. It would have been much nicer not to have had the British import levy, but owing to the effective steps taken by the Government in regard to the import levy, with the introduction of special marketing grants, it did not do so much damage, in fact.
While the British economy is not buoyant at the moment, nevertheless it must be accepted that we got through difficult periods of stagnation in the British economy before without our economy coming to a full stop. Thus in 1962, as the Minister will recall, the British economy was stagnant. But this did not mean that our economy came to a stop, for things were better managed then. These excuses just do not wash. What happened in 1965 was due to mistakes that we made. There may have been difficulties, and the mistakes made may have been understandable and explicable in the peculiar circumstances of the time, but unless that is admitted, unless the people are told that those mistakes will not be repeated, that the financial problems are now understood and that they will be guarded against in future, we shall not get the restoration in confidence that will enable us with the resources now before us to expand our economy rapidly again during the next 12 months.
One lesson which we must learn, and I hope it has been learned, is the need for closer co-operation between the Central Bank and the Government. One of the problems that arose in 1964-65 was that the Central Bank, lacking legal power to control credit, felt itself unable to intervene in the excessive expansion of credit until the situation had got so bad that the Bank's intervention had to be accepted. Here, I think, Fine Gael can claim credit, without resorting to a pun, for having pointed the way. In the election policy of April, 1964, before the crisis hit us, before it was admitted by the Government that there was a crisis, Fine Gael put forward in their Just Society policy a case for giving the Central Bank legal power to control credit. We said that without that power the Central Bank would be inhibited in dealing with the situation. It is fair to say that those responsible for that policy did not realise how immediately relevant it was as they wrote those words, how true it was that the very situation they said would arise in the future was arising at that point of time.
Because the Central Bank could not in fact tell the banks to restrain credit it had to rely on moral suasion, and because it felt that moral suasion would not be effective until the banks felt themselves in difficulties the Bank had to postpone action until May, 1965, when the situation had reached critical proportions. Now, in retrospect, the Bank should have acted sooner. It made a mistake in waiting so long. The Bank was perhaps trying to be a bit clever, waiting until the banks were in real difficulties when they would welcome an intervention. In the event, rightly or wrongly, that is the course of action the Bank adopted. Some of the difficulties are due to the failure to take action in time because of the policy of waiting until things were in a real mess in the hope that intervention would be welcomed on a voluntary basis and the Bank would be able to take steps to control credit, even though it lacked the legal power to do so.
At the same time as all that happened, the Central Bank and the Government seem to have been in a state of misunderstanding vis-à-vis each other. It is difficult to see on what grounds we were forced to borrow money abroad in 1965. There was a period in the middle of the year when it appeared that we were facing external payments difficulties and this might have excused foreign borrowing but, in fact, those difficulties were of their nature temporary.
The crisis of 1965 was not primarily an external payments crisis but an internal financial crisis because of the Government's inflationary policies. Because of the desire of the Central Bank to ensure that this would not be repeated and because of the Bank's desire to ensure that the Government, as well as the commercial banks, would learn a lesson, the Central Bank adopted an excessively restrictive line on credit at that time and the Government, therefore, felt forced to borrow abroad. This was nonsensical.
I recall, as a journalist, sending a story on this to a very well-known financial journal explaining what was happening here. One of the leading people in that journal telephoned me and asked me if we had gone mad; how could the Government in face of the situation that existed in the country at that time, have to borrow abroad; why was it not possible to raise money domestically, as would have been the case in any other country? This man was prepared even to fly across here and examine this extraordinary position though, in fact, he was diverted to Hong Kong or somewhere like that in connection with other events that occurred. This crisis was obviously due to some extraordinary misunderstanding between the Government and the Central Bank, so that instead of raising the money locally in co-operation with the Central Bank the Government were forced to borrow abroad. In any other country the money would have been raised domestically.
I hope, therefore, that out of this period some lessons have been learned, that co-operation between the Department of Finance and the Central Bank will be closer in future, that this misunderstanding will not arise again, that there will be some confidence between them, that co-operation between the Central Bank and the commercial banks will also be closer, and that we shall not face a repetition of this kind of crisis, partly caused by confusion, misunderstanding, and through bluffs and double bluffs being carried on between these different financial institutions and the Department of Finance.
The question before us now is what action should we take to get us out of our present difficulties. The Central Bank's decision to expand the availability of credit has proved inadequate. The credit is there but has not been taken up. Something more is needed. This type of action on credit is clearly adequate in this country to deflate the economy, by restricting credit. Indeed, our economy is extraordinarily sensitive to credit restrictions. That is clear but, when it comes to reflating the economy, something more than the provision of credit is required. Credit is in fact something of a one-way weapon; a good way of deflating but an inadequate way of reflating. Therefore, something more is needed now than a policy of expansion of credit. What is needed is some form of action by the Government to encourage economic expansion. That is what the Budget should have been doing. To some extent, the Budget did this. It was not a deflationary Budget; it was a Budget which did in fact, by adopting a fairly optimistic view as to the future of revenue and by increasing expenditure in certain areas, tend, if anything, to reflate the economy in some degree. Nevertheless, it is arguable that the form this increased expenditure took was inappropriate to our needs.
If one examines the condition of the Irish economy in the spring of this year, one thing stands out more than anything else—the total stagnation of agricultural output. One thing is clear beyond anything else, that Government policy should be directed and should give priority to the expansion to agricultural output. The Budget certainly dealt with agriculture; it provided a significant sum for agriculture. This was influenced, no doubt, by electoral considerations as well as others, but the Government did provide a significant sum for this purpose. Where, I think, the Minister must be faulted—and this may be more the fault of the Minister for Agriculture and the advice he gave the Minister for Finance than of the Minister for Finance himself—is in the manner in which this money was given. A very large proportion of it took the form of provisions of various kinds, meeting social needs—certainly increases and provisions which we can welcome in terms of the social needs which they satisfy, but which were given in a form which tended not to increase output but, if anything, to reduce it. If these social provisions had been accompanied by measures designed to offer incentives to increasing output, so as to offset any depressing effects they might have on farmers' willingness to increase output, then we could have welcomed them. But such measures, in isolation, and with so little in the Budget to encourage the expansion of output of any product, except milk, force us to consider that the Budget, on the agricultural side, was not a balanced Budget, not a well thought out Budget, not directed to the country's needs. Additional money was pumped into the economy but not in a way to encourage the expansion of output in the area where it is most needed. The agricultural provisions of the Budget are as unhappy and unfortunate in their general pattern and layout as the other provisions in the Budget are happy and well thought out. Already, earlier, I welcomed a number of provisions in the Budget which seemed to me to be helpful, useful and desirable. It is only when we come into the agricultural area that one sees a different hand at work, a different outlook. There is no sign here of new thinking, new ideas, but only the same old ideas turned out again; the same old provisions offering nothing which would encourage the expansion of output in the sector of the economy where output has been totally stagnant for seven years.
When I say that output has been totally stagnant for seven years, I am prepared to document that statement. The Minister will know that in the new Table which has appeared for the first time in National Income Expenditure, the value of agricultural output, in constant prices—making due allowance for price changes, in 1958 prices, was £144.1 million in 1960 and £145 million in 1965, an increase of less than one per cent in five years in the value of agricultural output, allowing for price changes. Since then, the official estimate of the increase in agricultural output last year, in 1966 (the figure provided in the Department of Finance Progress Report which I have here), is an increase of two-thirds of one per cent last year in output and I have already said the prospects for this year are distinctly gloomy, with very little likelihood of an increase in output, with cattle breeding stock down, and breeding stock in sheep and pigs very much down. Even allowing for some increase in output of crops and cereals, agricultural output can scarcely increase much this year.
Thus, between 1960 and 1967 it is clear that agricultural output has been totally stagnant. I should like the Minister to give us a short list of other countries in the world in respect of which that situation is true. In the same period—between 1960 and 1967 —the numbers on the land must have fallen from 383,000 to something like 310,000, assuming that this year—as in other recent years—the decline in the numbers on the land is at least 10,000. That will have been a fall of 73,000, or one-fifth, in the numbers on the land in seven years. Now we must face the fact that no matter what policies are adopted, the number of people on the land is liable to fall. This is true here as it is everywhere else but it is not true that they need to fall at the rate at which they have been falling in this country. I should again like a short list of countries where the agricultural population has fallen by one-fifth in the last seven years. I think the Minister would have difficulty in producing the names of very many. This reflects simply the fact that output has been totally stagnant.
There has been here an appalling failure and we require a radical review of policy; not the same old mixture doled out in the Budget, with an increased dose to cover the local elections and NFA pressure. The only new element in our agricultural policy we have now is this feud with the NFA, as a result of which the Minister is busy dashing between the Dáil and Seanad, with Bill after Bill, to nail down the NFA, when he should be directing his attention to the increase of output and to trying to retrieve the errors of policy from which we have suffered for so long. This, I think, is what could be described as the Achilles Heel of the Government. It is clear now, from the evidence of activity we have had from the present Minister, that the Taoiseach made a serious blunder in appointing him Minister for Agriculture. We are aware of the Minister's qualities but they are not the type of qualities required for this post at this time, where we need a man of imagination and flexibility, two words not frequently used in connection with the present Minister for Agriculture. The problem is intractable; it can be tackled only with political courage. Departmental policies are strongly held—as the Minister for Finance himself knows from his experience in that Department. Nevertheless, a lot more could be done with imagination, with flexibility, by somebody concerned above all to retrieve the situation, to bring us out of this stagnation and concerned to do something constructive instead of directing his attention all the time towards a feud with one organisation. Unless some change in policy is made here and almost certainly this involves the necessity for a change of Minister, the Taoiseach will regret this in the next couple of years and will find himself facing a very unsatisfactory situation at the time of the next general election.
Let us look at the individual targets for agricultural output; targets set by the Department of Agriculture themselves in 1964; not by anybody else; not by the NFA; not by the Department of Finance, but by the Department of Agriculture which, in 1964, decided that with the policies which they then were operating and with any change of policy then contemplated, they would be able to expand agricultural output by 3.8 per cent every year. They set targets for the growth of output of each product published in the Appendix at the end of the Second Programme, Part II. The only target in respect of which progress has been more rapid than was set out in the Programme is in respect of horses. For some reason which I do not understand, horse output—which is of negligible importance in relation to other forms of output in agriculture —has run well ahead of the target. But the rest of the picture is utterly depressing. The output of cattle last year was just about on target but this year, with the reduction of breeding stock, it will almost certainly fall behind target. For the rest, in 1966, the output of sheep was 23 per cent below the target for that year; the output of pigs was 13 per cent down; the output of wool 18 per cent down; the output of eggs 11 per cent down; the output of wheat 41½ per cent down; the output of oats 33 per cent down; the output of barley 8 per cent down; the output of sugar beet 35 per cent down and the output of potatoes 12 per cent down. The output for potatoes, 12 per cent. The output for turf, 20 per cent. I have not got the accurate figure here for milk. I think it was 7 per cent below target but it may be slightly more, perhaps 9 per cent. This is the record of the Government with their own policies and their own targets. Nobody forced these targets on the Government: nobody told the Government what their policies should be. The Government decided that with their present policies that they had in 1964 and any changes they then contemplated they would achieve a growth in agricultural output and they set targets very proudly. They made a lot of it. They told us all about it in the general election campaign of 1965 and it was too soon for anybody to see that the targets were not being attained. Since then what have they been doing about it? Nothing. I have read all the documents the Government have produced on this subject and the only target I have ever seen referred to in the agricultural sector since 1964 is the cattle target to which reference has been made in a hand-out in connection with the Estimate for the Department of Agriculture and Fisheries. No other figure is ever referred to. These targets were set in 1964 with great éclat and since then there has not been a word about them. The Government are so ashamed of them they are not prepared to mention them.
Let us get these things straight. What are these targets for? The purpose of a system of economic planning and of targets is to force people to state clearly what their policies are and what results they expect so that when these policies work out favourably they can be continued and when they do not they can be reviewed. In this case it is perfectly evident that above all other targets in the Second Programme the agriculture targets showed disastrous results. Either the Department of Agriculture and Fisheries in 1964 were totally irresponsible in stating that these increases in output would occur or, alternatively, if they were acting responsibly, then they are now obliged to reconsider the policy which, it must now be admitted, was a complete failure. I know that sometimes the excuse is made that, of course, the targets were related to our joining the EEC. This is certainly true to a point but, in fact, as we know the speed of change is so slow in the agricultural sector that even had we joined EEC the effects of this would not have been very great by 1970. Indeed had these targets taken full account of the ultimate effects of EEC membership and had it been assumed that the benefits would have been reached by 1970, the growth rate would almost certainly have been well over 3.8 per cent.
In any event, even if failure to achieve membership of EEC had any effect on the target growth rates, the fact remains that we have utter stagnation. Are the Government to tell us that unless we join EEC Irish agriculture must stagnate and nothing whatever can be done about it? I think that the whole system of economic planning has not been understood by the Government. They represented it by targets. They looked very cheerful, 4 per cent growth rate, 50 per cent increase in national output in ten years. They were good political gimmicks at the time and, without realising the implications of what they were doing, they adopted them, committed themselves to them, but there was no realisation that the purpose of this exercise is to create new pressures on policies, to ensure that people if they adopt policies which do not produce results which they think ought to come from them will be forced to reconsider them. This was not realised and it is quite evident today that after three years of complete failure in the agricultural sphere there is no inclination on the part of the Government or Minister to notice this, to refer to it or to change these policies or to take any action to remedy the situation.
The Government must face their responsibilities in this matter. Do they want to face the next election with the Second Programme in ruins around them, the targets of which are already badly shaping? They just accept the need for a total review of agricultural policies. Admittedly, there are external constraints. Until we join the EEC we are going to live under certain difficulties. The Minister here today 18 months ago told us with great enthusiasm about the enormous benefits to agriculture the Anglo-Irish Free Trade Agreement would bring. These exaggerations were not taken too seriously by anyone but some people did expect some benefits which did not accrue. I did not think they would be very great but they should have been rather greater than they have been to date. Even in this situation with an unsatisfactory Anglo-Irish Free Trade Agreement and without membership of EEC, it must be possible to achieve a somewhat better result than we have achieved so far. It could be achieved if the Government were prepared to change their attitude. This has been done in other areas. I do not want to dwell all the time on failures.
In other areas we have had successes. In other areas, in other Departments and State bodies responsible for the policies concerned, we have had considerable success. The growth of our tourist industry is a case in point. There we look like attaining and, indeed, exceeding the Second Programme target because of the extraordinarily skilful and energetic way in which Bord Fáilte have undertaken its work in promoting tourism, in securing the creation of facilities to bring tourists to this country and in the development of hotels, which reminds me that I should have welcomed in the Minister's speech at the outset the provisions he has made for hotel grants. In that area we are achieving or likely to achieve the target of the Second Programme because the policies have been carefully conceived, because the Government—to be precise Bord Fáilte advising the Government—have thought out the problems, have seen the need for publicity to attract people here, have seen the need for extra car ferries and aircraft to bring them and extra hotels to put them up when they are here, the need for offices throughout the country to help people get hotel accommodation. All these have been foreseen, planned and provided. This is an area in which the relevant State body and the relevant Government Department deserve all credit for the success.
In other areas the same thing is true. We had serious problems in our fishing industry in which, I do not think, we will attain the Second Programme target but we are securing the beginnings of growth in this sector. If the Minister would relent on the provision of capital for fishing, I feel we could make very great progress because the State body tackling its problems energetically, with a fresh mind, not tied down to ancient policies, willing to take a fresh look at the problem, has succeeded in reversing a very damaging downward trend and in setting this industry off in a good direction, although to reap the full benefits in that case a very big increase in the financial provision at present made would be required. I would ask the Minister to look particularly at that question, preferably between now and the next Stage but certainly in the next Budget. The provision of the capital programme for fishing is quite inadequate in relation to potential gains. There are few areas where additional investment would now reap such a return because we have now reached the stage where, with sound policies and good administration, we have started to get growth in the fishing industry. These are two areas—tourism in one case and fishing in the other—in which a failure was followed by a review of policies and now success.
The same thing is possible in agricultural policy if the Government had the courage to review their existing policies—first of all, to assess the return they are getting from all the various grants they provide. I do not know how many grants there are. I have failed to count them accurately and successfully. There must be something like 100 grants. No attempt was made to review this until now. I am assured by the Minister for Agriculture and Fisheries that such a review is now in progress. I hope the Minister for Finance will ask for details of it and hurry it up and that he will then drastically review the present system increasing provision where the provision is yielding return in output and cutting it out where it is not. There are a lot of deadwood policies which need to be cut out and replaced by schemes tied to planned increases of output with the necessary building backed by State finance.
I think there is also a need to review the role of the Department of Agriculture and Fisheries. It is significant that the areas in which we have had success have been areas where State bodies have been responsible for the policies concerned. Such bodies are able to act flexibly, are willing to review their policies if they are mistaken, are flexible and are not tied down by a long tradition as in the case of the Department of Agriculture and Fisheries and by an inflexible Minister. I think that we might well consider transforming the Department of Agriculture and Fisheries into a high powered policy Department, transferring the administration of these schemes, as has been suggested by Fine Gael, to a rural development authority with local offices working closely with local farming organisations to administer the schemes and to give the assistance to farmers who are prepared to work for the authority, to prepare plans for increased output and show themselves able and willing to achieve increases in output.
Nearer home to the Minister who is here today, I should like to ask him what the position is as regards the targets for public finance. How is it that after three years of the Second Programme he has never in any speech that I am aware of referred to the targets of the Second Programme for public finance? He has never told us whether we are achieving or overachieving the targets. He has never reviewed the position. Does he know how we stand? Does he get regular reports for his own perusal as to the trend of public expenditure as against the targets? If he does, why is he not giving them to the public, why is he not comparing the present position with what was planned in the Programme? If he is getting regular reports why is he not publishing them and talking about them?
I do not know whether it is that the Government are embarrassed because some of the targets are not being achieved or that the the Government do not understand what economic planning is all about. In any event, to get words of wisdom or even of foolishness from the Government about the Second Programme has become almost impossible.
I should like to ask the Minister for his explanation as to why the percentage of the national output absorbed by taxation has been rising at three times the rate planned in the Programme. I have offered my own explanation, put forward in another place, where I have commented on it. If a Government sets out in a public document that they will increase the burden of taxation by .35 per cent annually, to rise during a period of seven years from 23.7 per cent to 26.2 per cent by 1970, and if a Government then proceeds to increase the burden at three times that rate, the public are entitled to some explanation, to some reference to it.
Instead, they get nothing more than a total, embarrassed silence. My own explanation of it—and I should be glad if the Minister would comment on it, if he has bothered to get the necessary information to do so—is that it is due to two things. Firstly, the Second Programme made no provision for the status increases given in the public service, amounting to £10 million. The Government justify those increases, but those justified increases, which when they were asked for were met because they were justified, had never been thought of by the Department, never been provided for in the Second Programme. Thus, two-thirds of the explanation for this rise in taxation is due to that situation. The other matter contributing to the increase is that the national economic growth has levelled off and fallen far behind the planned rate of growth and the lower level of national output does not yield the figure provided for in the Second Programme.
If I am wrong in this explanation I shall welcome correction by the Minister and I should like him to provide us with figures showing us precisely how and why taxation has risen by three times the rate planned in the Second Programme.
Another feature of the Programme, which I criticised at the time, is that it made no provision for an expansion of the share of social welfare transfer payments. The Government were then contemplating an economic programme for seven years ahead in which social welfare provisions would rise no faster than the national output—in fact they proposed that they would lag slightly behind it. That was their plan but in practice the Government have not adhered to it. Social welfare provisions have increased faster, partly because of the Fine Gael 1965 election campaign. No provision was made for that in the Second Programme. No provision was made for any increase in the share of transfer payments because the Government had not and have not any social programme. Since they came into office, apart from one small change in relation to retirement benefits, there has not been any new development, no review apart from the small sums of 2/6d or 5/- each year added to social welfare payments.
The only thing we have had are two statements. One of them was by the former Taoiseach who, in the 1965 campaign, said that it would be very difficult to produced a social programme. This statement came from a Government which produced a complex economic programme or had it produced for them. The second thing is that the Government say they have transferred the job of producing a social programme to the Economic and Social Research Institute. This, of course, if true, would be simply an abdication of responsibility by the Government. All they have done in fact is to seek the data they need and which they have not got, to seek that basic data from the Institute so that a programme of social reform might be provided, for to have left the job of drawing up a social programme to an institute of that kind would be an abdication from responsibility by the Government.
The Government have had ten years to produce a social programme but, in fact, they have not managed even to extract from their records the necessary information to enable a review to be carried out. I do not think the Department of Social Welfare employ anyone with the expertise to do this work. Such a record of failure during ten years in office is something of which no Government can be proud. Indeed, I am surprised at it because I would have thought that in commonsense any Government would, even purely as a defence mechanism alone, have instituted some studies, instructed them to have been carried out, and would have endeavoured to have had the necessary data made available to them to carry out some reforms. They may say that the money is not available for these reforms. If so, if the money is not available, that is a further condemnation of a Government who have had ten years in which to work out policies.
In the references I have made to the various targets in the fields of public finance and agriculture I have said that we have had no information as to where we stand. What we have had is a promise last year that we would have a mid-term review of the Second Programme at the beginning of this year. The beginning of this year arrived and we were told we would have the review in the middle of the year. We are now past the middle of the year and where is the review? This is a ludicrous position to be in. We have had in the Second Programme a picture of our economic possibilities and this was a worthwhile exercise, although containing weaknesses at certain points because the Government did not examine it closely enough. Since its issue, however, the Programme has been dropped like a hot cake, and promises of a review have been repeatedly postponed, obviously with the hope that we would reach 1970 without anybody bothering to ask any awkward questions.
I am asking them now. I am asking why the mid-term review has not been made available. Reports on the economy to which I have referred earlier are produced each year. In the one I have here there are no references to the targets of the Programme. This document is in exactly the same form as it might have been ten years ago or four years ago. It is a document that could have been produced in a country that has never heard of economic planning.
The Government have failed in two ways, firstly in relation to the short-term management of the economy, they made serious mistakes in 1964-65 which they should admit and endeavour to avoid in the future. Secondly, they should have formulated a mid-term review of the Programme to examine its success or otherwise. I know a review of policies is embarrassing to the Government for to change a policy is to make an admission of a mistake. But the Government have responsibilities—that is what they are there for —to run the country successfully and they have no right to refuse to review policies even though such a review might involve unpopular action.
A large part of our difficulties arise from the fact that all Parties press all the time for demagogic popular policies which are damaging to the growth of national economy. The responsibility for this is widely shared. I do not place it entirely on the Government but the Government are responsible as no one else is for resisting those pressures and for implementing policies which, though they may be unpopular at the time, would secure economic growth and lay the foundation of long term prosperity and which would indeed probably lay the foundation of long term popularity for the Party which had the courage to administer such a policy.
It is not easy to cut out policies which have not been successful in producing economic growth, which are wasting the country's money, and which are popular, because policies which hand out money are always popular, but this is what the Government has to do. The responsibility for this is shared. It lies not solely on the Government. I would accept that there is responsibility also on the Opposition to refrain from demagogic pressures and to refrain from demagogic criticism as far as possible. I am sure that on our side we, too, have failed in this respect but the primary responsibility lies with the Government. It is they who have to give the lead. If they give the lead and the Opposition do not follow the Opposition can be legitimately criticised for not doing so. But the lead must come from the Government.
This is the lesson of the NIEC report on full employment, the popular version of which, incidentally, if I may make the point, should never have been published without a question mark in the title. The whole purpose of this report was to put to the people that if we seriously want full employment it will require changes in policy that people will not readily accept and that if they are not prepared to accept them we can forget about full employment. It is Full Employment?—with a question mark. Do we want full employment? Can we get full employment?
What did the Government do? They published, the Department of Finance published, a very useful summary of this document headed "Full Employment." full stop, as if this was a plan for full employment although throughout the document the NIEC reiterated again and again that there was no plan for full employment. It was rather a challenge directed at the community as a whole, at its leaders, in politics, religion and other walks of life, a challenge as to whether they seriously believe in full employment and whether they are prepared to do the unpopular things necessary to secure full employment. To publish that without a question mark was either to misconstrue the purpose of the document, showing no understanding of what it was about or else to play for popularity in a matter far too serious to be reduced to that level.
This NIEC report is, above all, a challenge to politics and politicians of all Parties and, amongst politicians, above all, the Government. I do not think our people will accept indefinitely the failure to mobilise our resources for economic expansion and full employment. They may vote in the short term for the Party which adopt and persist in popular policies regardless of their damage to the possibility of growth and expansion of employment. In the long run, however, people will resent the failures of politicians and the failures of the Government to do their duty in this respect, to stand up to those demagogic pressures, to do the unpopular thing, to cut out the deadwood expenditure and to concentrate expenditure on areas where it can produce returns. If we fail to do that, if this Government fail to do it and if the Opposition Parties fail to press them to do it, we will have failed to make democracy work in this country.
We will, by so doing, have endangered the fabric of our society. Our people have an option, an option which they are all too willing to take. If they do not like it here, they can go elsewhere. If we fail to create in this country the kind of society we could have, which our people want but are not always willing to pay for or to support by their votes, if we are not prepared to give the lead in creating such a society, there will not eventually be any society. The fabric of our society was badly shaken in the 1950s when at one stage the percentage of our people leaving the country was the equivalent of 85 per cent of our school leavers each year. It is all too easy to fall back into that situation if we allow the situation to drift as we have been doing in the last couple of years. Either we make democracy work or we can opt out of the situation. Either we accept our responsibilities or there will not be any responsibilities left to accept.
