This Bill is brought before the Dáil to give effect to a proposal which was outlined some months ago. It is necessary, owing to the state in which we find ourselves financially, that a great reduction shall be made in expenditure. That reduction it will be very difficult to effect in full. There is no way of avoiding it, however. We cannot afford to increase taxation in this country. As a matter of fact, even if we did increase taxation, we would not save, say, people like Old Age Pensioners from whatever hardship this cut will involve. Increased taxation would undoubtedly mean an increase in expenditure. An increase in taxation, moreover, would have its result in increasing unemployment, and in further handicapping every industry in this country. Deputies have to bear in mind that at present taxation is on a distinctly higher level here than in Great Britain or the Six Counties. We cannot, if we have any prudence at all, contemplate any increase in taxation.
The only thing left for us is to effect whatever cuts we can effect. The whole question of economy is continually before us. Nothing that has occurred since the proposal to cut the old-age pensions was first mentioned to the Dáil has in any way eased the situaiton. People feel easier in their minds and feel more confident as to the future in consequence of the success of the National Loan. The Loan and the way in which it was subscribed proved that our credit is good at the moment. But our credit could not continue good if we do not balance the Budget. If we follow the example of the man who when in difficulties, through over-expenditure of some sort or bad conduct of his business, succeeded in getting accommodation and then as a result of getting that accommodation felt so easy in his mind that he did not bother to improve his position in any way, it would be a very serious matter. We have been able to borrow, but unless we show that we are in a position to pay, that we are not going to put ourselves in a position of having to borrow to pay our interest, then we will not easily be able to borrow in the future. If we do not take any steps that may be necessary and possible, no matter how difficult and unpopular it may be, the result would eventually be that we would be faced with the necessity which the Government of another country has had to face—that is to say an increase of 20 per cent. or 50 per cent, of our taxation all round. If we had to have drastic increases in taxation it would do more harm to everybody concerned than the economies proposed.
In considering the question of the old-age pensions we must realise that the thing that matters is really purchasing power. It would not serve the old age pensioners to continue their pensions at the present money level and follow a course that would reduce very seriously the purchasing power of the money given them. It would be quite possible for us to adopt a course of inflation by which it would be easy enough to pay 10s. a week. The 10s. a week that we would pay in such circumstances would not be anything like the value of the 9s. a week in the present circumstances to the old age pensioners. We decided on a cut of 1s. because the cost of living figure was 180. That means that the value of the new pension of 9s. a week is equal to the pre-war pension of 5s. a week. There has been some fluctuation in the cost of living figure since then, but that fluctuation is largely due to seasonable circumstances which we have no reason to contemplate will mean that the cost of living is going to be above 180 per cent. As a matter of fact every advice that we can get is that the cost of living will go down considerably below 180. If it does not go down and if it cannot be brought down below 180, it is going to be a very serious thing for this country. As the Minister for Agriculture has pointed out, the main industry of the country is selling its products at something like 30 or 40 per cent. above pre-war prices and it has to purchase at a cost of 180 or more above pre-war. If those costs cannot be brought down it will be a very serious thing indeed to the country. We believe that they can be brought down and that they will come down, and consideration of means to bring them down is going on. Many obstacles have intervened to prevent the cost coming down, but we believe that it can be brought down in some substantial measure.
The old age pension was fixed at 10s. when the cost of living was really between 110 and 120 above pre-war. While the Committee which recommended the increase to 10s. was sitting the cost of living was between 105 per cent. and 110 per cent. above pre-war. By the time the report had been printed the cost of living had risen to 120 per cent. above pre-war. Subsequently it went very much higher than that, but the old age pension remained at 10s. a week. As a matter of fact, the cut which has been proposed will actually leave the old age pensioners a great deal better off, from the point of view of purchasing power, than they were for a very considerable period after the pension was increased to 10s. We are far from desiring to inflict any hardship. We do not desire, moreover, to follow the cost of living down in the matter of old age pensions. That is, we do not contemplate cutting the old age pension another shilling if, say, the cost of living falls to 160. The British Committee which recommended the 10s. pension contemplated that ultimately the cost of living would go down below the figure at which it was when the pension was fixed. The Committee, at any rate, whatever the British Government may have done, contemplated that with the fall in the cost of living the value of the 10s. would increase, and that thereby the old age pension would increase in reality. That is, that the purchasing power, the value of the pension to the pensioner, would increase and would be allowed to increase. We would desire ourselves that the value of the pension should be allowed to increase, and that we should not make cuts as the cost of living went down. We would not propose to make a cut now if it were not for the dire financial necessity under which we labour.
We have other proposals in the Bill in regard to the scale of means. Those proposals were put in because we desired not to make further cuts in the maximum pension. We have not figures at the present time showing the means of the people who are receiving the maximum pension, but investigations that have been carried out show that a considerable number of those in receipt of the maximum pension have private means exceeding 7s. per week. We believe that by effecting a further reduction in the pension of those whose private means exceed 7s. per week, we will be able to save about another £200,000. Our view is that getting in this way £500,000 from this particular service we have got all that we are entitled to take or look for. It has been pointed out to us that at present pensioners over the Border are receiving 10s. a week, and that we propose to cut the pensioners on our side of the Border to 9s. a week. We regret that. It is not our intention to widen that disparity further than the single shilling. We believe that, whatever other things we may have to do to affect Budget equilibrium, we should not take more out of this particular service than we will get by the shilling cut and by the alteration in the means scale. It will be a matter of difficulty.
It is very easy to say you should get £200,000 or £300,000 here or there, but when you come to effect any economies you find it is not such an easy thing at all, and that it requires a good deal of effort to get any economy actually carried into effect. We are hindered in certain particular ways through the Treaty, and also in other respects, because you have to carry your economies through in such a way as not to cause serious discontent or serious loss of efficiency in the service. I do not mind mere verbal discontent, or an expression of the discontent which you are bound to have whenever any salaries or wages are cut, but real discontent is a serious matter. It will be, I know, an exceedingly difficult thing to arrive at Budget equilibrium, because there are always demands for fresh expenditure. These arise out of old promises, as in the case of the resigned and dismissed R.I.C. They also arise out of more recent circumstances. For instance, there is the Army Pensions Act which has come into operation by which a considerable sum will have to be spent on pensions to those who were disabled and wounded. While you are effecting economies you cannot avoid undertaking from time to time certain new heads of expenditure. In the matter of education for instance, you have certain increases pledged to the secondary teachers. I would like the Dáil to realise the extreme difficulty there will be in effecting a reduction of recurrent expenditure to anything approaching a sum of £3,000,000 per annum. That £3,000,000 per annum would suffice to balance the Budget only if we had an Army costing not more than £2,000,000 per annum. Of course, we cannot have that next year. We cannot have a balanced Budget in the year beginning the 1st April next, as there will, in addition to the Army, be other nonrecurring expenditure, such as compensation payments, which will still be going on. I feel that it is absolutely essential for the future of this country that in the following financial year there should be a balanced Budget when all the outgoings should be paid out of income, and that no borrowing should take place other than, perhaps, borrowing for capital expenditure. If we were doing works of drainage or reclamation, it would be legitimate to borrow. In the year after the next financial year we must have no borrowing for expenditure under ordinary heads. We cannot examine a measure like this simply from the point of view of the old age pensioners and their circumstances. While we cannot afford to neglect this element we cannot act on it entirely, and we cannot have regard to this merely from the point of view of the case that some person with a gift for emotional oratory may put up. We have hard facts to face. We have a definite responsibility, and it is our duty to carry the country through the present financial danger and stress, and put it safely on its feet. For my part, I would be quite willing to acknowledge, if we were out of the difficulties we are in, and if we were in a position to undertake any increase in expenditure, that it is to such a service as this I would like to make the first restoration, if restoration was possible. Meantime, we have to do the necessary thing. By making this cut I believe that we are not actually taking anything at all from the pensioners that would not come off them as a result of our neglect to carry out the economies that are contemplated. I believe the immediate result, following any reluctance to take whatever steps may be necessary to balance the Budget, would be a certain tightening of the purse against us when we came to borrow, which would, of necessity, mean increased taxation and a raising of the cost of living on these old people to an extent that might be greater than the 1s. cut. The members of the Dáil who have already discussed this Bill and voted on it, at any rate on the major proposition in it, understand the matter sufficiently so that I think I need not labour it.
With regard to the changes in the scale of means, my feeling is that the people whose case is hardest, when you come to make any cuts, are old persons who have no private means whatever, or practically no means, and who exist, or try to exist, on the pension alone. Their case is one on which we must experience a certain feeling of difficulty in deciding to make the change contemplated. However, when we come to deal with those who have a weekly income of 7s., 8s. or 9s., or more, their case is not nearly so hard. It is not proposed, as a result of this change in the scale of means, that there should be any reduction in the rate of pension below the maximum to persons having means not exceeding 7s. a week. Under the scale, a man or woman having 8s. a week, it is contemplated, will get a pension of 8s. If such a person has 9s. weekly, then the pension will be 7s. We feel that the reduction will not bear hardly on the old people. It will mean such a further saving to the Exchequer as will enable us to put out of our minds the question of further cuts in pensions, unless there is some reduction in the cost of living, which nobody contemplates, and which will very clearly indicate that the whole matter was one that might be taken up again. It enables us to say that there would be no question of a further cut of 1s. if the cost of living figure were to go down to 160, and there would be no question of increasing further than the 1s. contemplated the disparity which will exist between the rate of pension of those on the two sides of the Border. The Bill contains certain other changes with regard to the transfer of property.