The Minister for Finance, in introducing this Budget, at the outset of his speech, saw fit to describe the capital position of this country, and suggested that something like £115,000,000 was the amount of the National Debt. One would be at a loss to understand the reason for introducing this figure at the outset of the speech were it not that when one considered the remainder of his speech he was forced to the conclusion that the figure was simply introduced as a blind to persuade the people of the necessity for the grossly exorbitant imposition which he has placed on them in the Budget. To arrive at this figure, £115,000,000, the Minister has seen fit to describe as the contingent liability of this country £74,000,000 in respect of land annuities or land guarantee payable under Land Acts prior to the Act of 1923, and some £24,000,000 which is attributable to land bonds payable under the Land Act of 1923. Later he blandly told us that the only assets which this country has to answer this contingent liability of £100,000,000 is a national revenue of some £25,000,000. I must congratulate the Minister for Finance on his methods of accountancy and book-keeping. Probably few of us on these benches aspire to the position of Minister for Finance, but if it is a necessary qualification to make ourselves proficient in this new method of accountancy and book-keeping, then I fear we would all grossly fail, because it would appear to be somewhat elementary that an asset which this country has and which counterbalances any contingent liability in respect of this land guarantee under the Acts prior to 1923, or the land bonds which were payable under the Act of 1923, is the land itself, which the annuities are charged upon and which would appear to be security for it. It may be that the Minister thinks the land of this country of no value and accordingly dismissed it by saying that the only assets we have are £25,000,000 of taxable revenue. If that is his view, then it is certainly rather peculiar on his part when regarding the land of this country as of no value to impose an abnormal liability by this Budget, which, to a large extent at any rate must be ultimately borne by the land and those interested in working the land.
I must congratulate the Minister in the first instance for the jovial manner he adopted here when introducing this Budget. I represent the same constituents as the Minister, and I am sure they will feel greatly relieved when, considering all the blisters imposed upon them in the way of increased income tax and other impositions, they know that the Minister was in light heart when he announced them to the Dáil. I thought at first that probably his light heart was simply to make easy for the taxpayers the increased impositions which he placed upon them, but perhaps it is due to another motive, or another thought on his part because, if rumour be correct, he is not to participate with the ordinary taxpayer in paying increased income tax which in ordinary events would be payable by him for the remuneration he has received, and will receive, in thinking out the imposition which is placed on the taxpayer. Consider this Budget in any light you wish. I understand that the policy of the Government as announced prior to the elections was that the chief requirement of this country was the cutting down of expenditure—in other words, setting a headline as to what was the taxable capacity of this country. In the Budget which they have introduced, apparently they have entirely departed from any consideration as to what is the taxable capacity of the country. It is undoubtedly sound economics to consider and fix for oneself a particular point beyond which in imposing taxation on the people that taxation will be nonproductive, will lead to unemployment and in general will be to the detriment of the people.
The Minister for Finance and the Minister for Industry and Commerce held out to us great hopes of industrial revival. What steps have been taken in this Budget to promote industrial revival? In the first instance, we have a cutting down of the amount of profits in respect of which Corporation Tax will be imposed, and increased the Income Tax from 3/6 to 5/- in the £. I suggest to the Minister that these impositions in themselves, so far from encouraging industry and the promotion of companies in this country, will have the very opposite effect, and that the net result will be to stifle industry and to make it more necessary to have increased capital, while holding out no encouragement whatsoever to the people who invest that capital. In itself, that will hit the big body of people in this country. It will hit the poor to whom special reference has been made in this House. There are a number of other impositions which will, perhaps, hit the poor a great deal more.
We have been told that the articles in the Schedule of Financial Resolution No. 7 will produce about £910,000 this year. A big proportion of that will be borne by the working people and by the poor. The tax of 4d. on tea will be borne, to a large extent, by the working people, by farmers, and by the poor. It is all very well for the Minister for Finance to say, "Oh, that is well counterbalanced by the remission of the ½d. a lb. on sugar." I think most Deputies are aware that throughout the country tea is in no sense a luxury. It is a necessity for most people. What probably is not realised is that the connoisseurs and judges of tea are not people residing in good circumstances in the city of Dublin, but the people to whom it is, in a large measure, a food. They are the people in the country districts. It is these people who pay by far the bigger prices for their tea. The most expensive teas are purchased by them, and it is on these people especially that the increased imposition of 4d. per lb. will be a heavy burden.
[An Leas-Cheann Comhairle took the Chair.]
In this Budget the Minister has started out absolutely regardless of the taxable capacity of the country. He told the people, and members of the Government told the people before the election and used it as one of their strongest arguments for getting office, that they would straight away reduce expenditure here by two million pounds, without whittling down in any way the general services for the benefit of the people. What has been the result? The fact is that instead of any reduction by two million pounds there is to be an increase of something like five million pounds, nearly four millions of which is to be raised this year by the direct or indirect taxation of the people. We were told that at the end of eight months we would find much better conditions, much less unemployment. That is mere talk. The facts will prove that, at the end of that period, so far from there being any general improvement in the way of employment—I do not refer to the temporary measure of relief—things will be a great deal worse, because industry is being stifled and the general body of the people are going to pay much more in cost of living. They are being indirectly taxed to an extent which they cannot bear in present circumstances.
There is a matter in the Budget with which I would like to deal. The Minister told us that he proposed to effect a saving of a quarter of a million pounds by a reduction of the salaries of civil servants and of local officials. He has been careful not to tell the House the method by which he proposes to obtain the reduction. I gathered from his speech that, though there might be mere talk with civil servants or with local officials, the Government have determined to effect that reduction.
Apparently, if the civil servants and local officials do not agree, there is going to be some class of compulsory power taken. Before this House is asked to vote upon the Budget, the proposed method of securing the cut, and the amount of the cut, should be made clear, because we are all interested in seeing that the Civil Service which, I think, it will be admitted on all sides of the House, is a loyal and efficient body, is not treated in any way to its detriment. I quite appreciate the reluctance of the Minister for Finance to state clearly to the House the method by which he proposes to deal with the Civil Service. It is proposed to secure the seven Labour votes in support of this Budget. If that Labour Party which, on the eve of the election, distributed handbills outside the various Government offices stating that they were the one Party in the State which had the interests of the civil servants at heart, and which was prepared to stand by them, is not going to act up to the statements in that handbill and the promises on which they solicited the votes of the civil servants, they should ask for a very clear and explicit explanation from the Minister for Finance as to the method in which he proposes to deal with the Civil Service. I find on the handbill which was distributed: "The Civil Service needs the protection of the Labour Party. The Labour Party needs the votes of the Civil Service." If the Civil Service is depending to-day on the support and protection of the Labour Party, that support is sadly lacking. Not alone that, but the Government Party sought the votes, not only of civil servants but of their friends, on the undertaking that they would not interfere in any way with the Civil Service without arbitration. It was stated, on their behalf, that no step would be taken with regard to the Civil Service without consultation and without arbitration. Is there going to be arbitration on this cut in the Civil Service? We are entitled to information on that and we ask for it. I took it from the speech of the Minister for Finance that, after a talk with the civil servants, he hopes to secure their concurrence and consent and that, if he does not, the cut is going to come nevertheless.
What is the justification for interference with the basic salaries of the Civil Service? It may not be generally known that as between the year 1921 and to-day the civil servant has suffered a reduction of about 28 per cent. of his salary. The civil servant who in the year 1921 was paid £748 a year is to-day paid £537 a year—a reduction of 28 per cent. The civil servant, just the same as any other member of the community, has to bear the increased taxation imposed by this Budget. What case can be made out, or what case exists, for imposing a double burden on the civil servants? They are only one of the professional classes of the country. What is the case for compelling them to make a double contribution to the Exchequer? Take a specific case to illustrate the position of the civil servant after this Budget shall have passed. Compare the position of a married civil servant with four children drawing a salary of £425, with that of a married man outside with the same number of children and drawing £425 from National Loan as unearned increment. Both the £425 paid the civil servant and the £425 dividend from the National Loan come from the State. With income tax at 5/- in the £, if the children's allowance were left as last year, the civil servant would pay £5 income tax and the private individual, doing no work, would pay an income tax of £10 7s. 6d. With the new allowances for children, the civil servant will pay no income tax and the private individual will pay no income tax. So far as income tax is concerned, they are on an equal basis. But if there is to be a cut in the salary of the civil servant, what will be their comparative positions?
We have no information as to the basis of the cut in the salaries but we will take it at £15 on a salary of £425 a year. What is going to be the position? The civil servant will suffer a cut of £15 on his £425 salary. He will gain £5 in income tax as compared with last year and his net loss will be £10. There will be no deduction from the private individual and his net gain will be £10 7s. 6d. In other words, as between the two individuals the civil servant, because he is doing work for the State, is going to suffer a loss of £10 while the man drawing unearned income from National Loan will gain £10 7s. 6d. What case can be made for that? I ask the Minister to make a case for it. I suggest no case can be made and the net effect of attempting to interfere with civil servants by cutting down their salaries—and you have undoubtedly, a loyal and efficient Civil Service—will be to impair the general efficiency of the service.
It will affect the yield of revenue within the country; it will affect the country generally by depriving the civil servant of his power of purchasing. The civil servant has a basic salary plus the cost of living bonus. Apparently you are going to interfere with his basic salary. That civil servant may have entered into an agreement to purchase a house. He probably has to pay a sum of money by way of insurance and he has to pay for the education and the maintenance of his children. All these commitments are made upon the basis of the basic salary plus the cost of living bonus. You are going to deprive him to a large extent in relation to those commitments. You will certainly interfere seriously with them.
This question of eating-in on the salaries of civil servants goes a great deal further. There are large numbers of civil servants who are transferred officers from the Government of Great Britain. Under Article 10 of the Treaty and Article 8 of the Supplemental Agreement which was made the basis of the Civil Service (Transferred Officers) Act of 1929, these civil servants have complete security of tenure and have been given this right, that if there be any interference whatsoever with their position, including any interference with or cutting down of the salaries payable to them in respect of their offices, they can voluntarily retire and claim their terms under Article 10 of the Treaty.
The position in regard to the body of civil servants serving here at the moment is that they came over voluntarily to the Government of the Irish Free State; they came over to give their services here in the ordinary way until, under Civil Service regulations, they would be compelled to retire at 65 or 60 years as the case may be. If there be any interference with their basic salary, that is a breach of the contract with them, a contract which they have with the Government here by virtue of their Treaty rights. What would be the effect of that on the general efficiency of the Civil Service? You would have practically every senior man in the different branches of the service taking his Article 10 rights and going out. If the Minister says "Well, I am not going to give them Article 10 rights," we know where we are. That may be the reason for attempting to repeal certain provisions of the Treaty so far as they have legislative effect in this country. The fact remains that if the Minister attempts to impose any compulsory cut on the civil service the effect will be that he will lose to a large extent the general body of the service, most of the senior men, and he will seriously decrease the efficiency of the service.
I would like to ask a question with regard to local officials. It is proposed apparently to cut in a similar way the salaries payable to the officials of local bodies. How is that going to be done? Is it to be done by leaving it to the local authorities to agree with the officials as to what would be a proper salary in the future, or is the Minister for Local Government going to act on the powers he has under Section 15 of the Local Government (Temporary Provisions) Act of 1923, and fix arbitrarily by sealed order the salary payable in future to any county secretary, county surveyor or other officers of local authorities? If he is, the same arguments which apply to the Civil Service apply to this other reduction. The Minister is going to impair the efficiency of local bodies.
Local bodies to a large extent depend upon the good work done by the officials. The members come together once a week or once a fortnight, but the main work is carried on by the executive officers of that local authority. If it is proposed to make local officers disgruntled, the effect will be serious. Most of the county secretaries appointed by local bodies during the last four of five years were appointed at inclusive salaries—at very much reduced salaries compared with what was formerly paid to county council secretaries and grand jury officials. The salaries paid to freshly appointed local officers have been on the basis of the capacity of the local authority and the country to pay. These inclusive salaries have been accepted as a definite and final figure by these various officers. Much more will be the air of resentment at any attempt to cut down these salaries and the general efficiency of local government in this country will be seriously affected if this intended cut is carried out.
In March last in England the position with regard to the Civil Service was investigated by the Sir George May Committee on national expenditure. What was the report of that Committee with regard to the Civil Service? "Civil servants' remuneration should reflect what may be described as the long term trend both in wage levels and in the economic condition of the country. We regard it as undesirable that the conditions of civil servants when under review should be related too closely to factors of a temporary or passing character. The State which does not raise its general scales of pay in prosperous times should, having regard to immediate conditions, take a long view when times are not so good."
Does the Minister for Finance say that the paying capacity of this country is down once and for all? He does not. He tells us we have a dreary year in front of us, but at the end of that year, and with his foresight and the foresight of the Minister for Industry and Commerce, we are to have happy hamlets and villages and smiling children. The state of depression is a temporary thing, apparently. If it is temporary—and the Minister indicates it is—then there is no justification for any cut in the basic salary of a civil servant or a local officer. If the Minister attempts in any way to cut the basic salary of civil servants or local officers he will rue the day because, in my opinion, it will bring about disastrous results in the general efficiency of the existing system of local government in the country, and it will seriously affect the revenue yield which the Minister expects during the coming year.