At the date of last year's Budget I should have been well content with a total revenue from taxation and otherwise of £30,191,500, but as in fact £31,034,710 poured in to us, I cannot be blamed if I find the retrospect over the past 12 months a not unagreeable one from the Exchequer Standpoint. Moreover, this result having followed the substantial tax remissions granted last year, I must claim that it is explainable only on the basis of a general increase in prosperity. This view is strengthened by the fact that in general the returns from the duties and taxes greatly surpassed our expectations. Thus, tobacco duties gave £4,422,000 against an estimate of £4,240,000; the beer duties produced £3,219,000, the highest for a number of years; motor cars and parts, £270,000; entertainments duty, £288,000, and betting duty, £194,000. Estimates were likewise exceeded by yields in respect of the duties on mineral hydrocarbon oils, matches, wheat and table waters.
In the aggregate, all the duties I have mentioned brought in £10,021,000 as against the Budget Estimate of £9,416,000. In 1935-36 they were responsible for £9,358,000. The sugar duties, from which we expected £696,000, actually gave £741,000; while the spirit duties at £2,359,000 exceeded the Estimate by £39,000. The stamp duties, and taxes on profits, property, and income, excluding excess profits duty, accounted for £7,905,000, that is £107,000 more than in the preceding year. Finally, the motor vehicle duties brought in £1,079,000.
With the possible exception of the wheat duty, all the duties and taxes with which up to this point I have been dealing are barometric in their character. Their yield rises when times are good or on the up-grade and falls when the contrary conditions prevail. For the year 1936-37, their yield was £22,105,000 as compared with £21,422,000 for 1935-36, and £20,149,000 for 1934-35. There is every reason to believe that they will be increasingly fruitful this year.
That expectation, however, does not apply to those duties which are designed to be highly protective in their effect. Yields from many of these did not differ substantially from the Estimate. With others the Estimate has not even been reached. This was the case with duties on boots and shoes, bottles, buttons, clocks and watches, sheet and plate glass, daily newspapers, knitted fabric, and tomatoes. Altogether these were estimated to bring in £225,000. Actually they brought in only £188,000. Excluding the duty on sheet and plate glass, those protective duties which I have mentioned brought in £259,000 for 1935-36, and in the year before that £305,000.
On the other side of the account, our outgoings for the Central Fund and Supply Services totalled £31,227,688. The House understands that this amount included certain capital outlays, such as the final instalment of £196,758 for the repayment of the Dáil Eireann External Loan, £100,000 being that part of the cost of the industrial alcohol factories which I am charging to borrowing, and £48,609 for property losses compensation. It also includes the sum of £312,453, which was the amount paid up on the further 499,925 £1 shares in the Industrial Credit Company taken up on behalf of the Government during the year. Nor need we forget that in framing the Budget last year I undertook if necessary to borrow one-half of the total sum actually expended on export bounties and subsidies. Including the amount provisionally reserved under this head, the expenditures which, if necessary, may be charged to borrowing amount in all to £1,637,501. If we adjust the gross figure for expenditure accordingly, the Budget for 1936-37 shows a surplus of £1,444,523.
Some may demur at certain of the expenditures, which I have classified as capital, being included amongst the amounts to be deducted from outgoings before a balance is struck, but to my mind there is only one item to which conceivably exception may be taken. I refer to the figure in respect of export bounties and subsidies. The House, I hope, will bear with me while I venture to outline my views on this particular matter.
Let me begin by saying that if in normal conditions of trade the Dáil, as settle policy, decided to subsidise our exports, it would have the unescapable obligation of providing out of current revenue the whole cost thereof. But if there arose a situation which was clearly abnormal, which interfered so greatly with the normal course of trade that in order to safeguard the productive capacity of the community, both now and in the future, extraordinary steps had to be taken; then the Government, so as to avoid the imposition of unreasonable immediate burdens, might seek to leave some part of these special measures to be defrayed later. Upon this principle I think there can be no doubt that we are justified in budgeting to defray, if necessary, some part of the cost of the export bounties and subsidies otherwise than out of revenue.
At the same time I believe that the House in general feels that the share of the burden passed on to our successors should not be unduly heavy. I think that was the point of view expressed last year by Deputy Bennett—the reference is vol. 62, col. 396, of the Official Report—when he said:—
"I might say to the Minister that the farmer does not want any portion of his relief to be a burden on posterity."
But if the propriety of the course which I have always been prepared to adopt in regard to the bounties is questioned, it can only be by those who have forgotten that the farmers and taxpayers of to-day have equitable rights in this matter also. It must be remembered that when we propose to borrow part of the Vote for these bounties and subsidies, we have standing against such borrowings certain Exchequer assets; to wit, the funded land annuity arrears. The Exchequer became entitled to these arrears by reason of the payments, totalling £4,010,847, which it made to the Guarantee Fund during the years 1932 to 1935 in respect of the funded arrears. This valuable asset has been created by present-day taxpayers. If to relieve them it is mortgaged, the future generation will, at least, not be any worse off than if it had never existed.
Naturally our right in this matter ought to be exercised with prudence and economy; for it is not by what we ourselves enjoy but by the opportunities and resources which we leave to our successors that our hopes for the nation will be realised. I have always acted upon that view. Accordingly, it will be found that, taking one year with another, our right to borrow for export bounties and subsidies has not been availed of at all—even though to 31st March last the total amount thus paid was no less than £10,585,000. Moreover, I may say that borrowing for them was wholly obviated last year. And that applies also to our total expenditure under the Vote for employment schemes.
We may, however, appraise the Budget of 1936-37 by even more rigid standards. Making provision out of revenue for the whole cost of the export bounties and subsidies, and for the whole cost of the employment schemes programme also; but borrowing £48,609 for property losses compensation £312,453 invested in the Industrial Credit Company, £100,000 out of £140,000 expended on the new industrial alcohol factories, and the final instalment of £196,758 paid in repayment of the Dáil Eireann External Loan, the year closed with a clear surplus of £464,842, a figure which not even the most rigidly orthodox or conservative can question or quibble at.
Before I come to consider the prospect for the present year it may not be inopportune, bearing in mind that the present Administration has just completed half a decade in office, to review some of the changes and developments which have taken place during that period in our public finances. While being as informative as I may, I shall endeavour to be as brief as possible.
Last year I informed the House that at the 31st March of that year our direct Exchequer obligations amounted to £55,356,678. At the corresponding date this year they were £59,520,612, according to the following details:—
FUNDED AND UNFUNDED DEBT:
£ |
|
Second National Loan |
6,161,088 |
Third National Loan |
5,621,034 |
Fourth National Loan |
5,802,578 |
Conversion Loan |
6,939,000 |
5% Compensation Stock |
5,750 |
3½% Compensation Stock |
21,606 |
Savings Certificates (Principal and Interest) |
10,552,000 |
Exchequer Bills |
500,000 |
OTHER CAPITAL LIABILITIES:
£ |
|
Under Telephone Capital Acts, 1924/1936 |
915,556 |
Under Land Acts, 1923 to 1936—Advances for Costs Fund and State Contribution to Price (including 50-55%, of tenant purchasers' liability for Land Bond Advances charged on Public Funds under Land Act, 1933) |
14,883,000 |
Compensation Annuity under Damage to Property (Compensation) (Amendment) Act, 1926 |
4,519,000 |
Teachers' Pensions (Net Liability assumed by the Exchequer) |
3,600,000 |
In this connection, regard must also be had to the capital value (£58,625) of certain annuities which are in dispute.
We have to set against the liabilities certain balances amounting to £4,814,615, the details of which are:—
£ |
|
Exchequer balance at bank |
2,058,051 |
National loans sinking funds unapplied |
40,355 |
3½ per cent. Compensation Stock Sinking Fund unapplied |
10,279 |
Savings Certificates (Interest Charge Equalisation) Fund |
2,705,930 |
as well as certain Exchequer advances and shareholdings to the value of £31,779,311, as follows:—
£ |
|
Unemployment Fund |
16,000 |
Shannon Electricity Scheme Fund |
5,994,130 |
Electricity Supply Board |
4,894,570 |
Road Fund |
1,114,055 |
Local Loans Fund |
13,559,195 |
Guarantee Fund |
4,010,847 |
Purchase of creameries |
575,000 |
Advances to Agricultural Credit Societies |
18,879 |
Shares of Agricultural Credit Corporation |
292,118 |
Shares of Industrial Credit Company |
804,517 |
Shares of Cómhlucht Siúicre Eireann, Teo. |
500,000 |
Our balances, advances and shareholdings amount, therefore, in the aggregate to £36,593,926, and were we to take only these into account our actual net dead-weight debt at 31st March last would appear to be £22,926,686. The corresponding figure for 31st March, 1936, was £23,854,343, and at 31st March, 1932, was £22,373,502.
To make the position plain, however, it is necessary to make certain adjustments in that figure. But first, I should like to direct attention to the special significance of several of the items which appear on one or other side of the account, or which indeed no longer appear there.
The Dáil Eireann External Loan is the first of these. The Dáil will remember that in 1932 the then unredeemed balance of this loan was taken into account as a liability of £1,000,000 at the then prevailing rate on the dollar sterling exchange. The repayment of the loan, so far as the Exchequer is concerned in it, was completed by the 31st March last and, subject to minor adjustments, all our commitments to subscribers in regard to it have been liquidated for the aggregate sum of £537,000.
With regard to our liabilities arising out of public issues, it will be noted that the First National Loan, of which £8,020,280 was still in issue in March, 1932, has been replaced by £6,939,000 of 4 per cent. Conversion Loan, issued in December, 1935. The price of this loan at the close of the last financial year was £110½ per £100 stock, at which it gave a return of £3 7s. 9d. per cent. per annum, assuming that the loan will be repaid in 1957. On the other hand, towards the end of January, 1932, the quotation for the First National Loan was usually about £100½ with a yield to redemption of about £5 1s. 9d. per cent. per annum.
Then we have the Second National Loan which was issued in 1927 on terms which, to the earliest redemption date, gave a yield equivalent to £5 4s. 3d. per cent. per annum. At 31st March last the price of this loan was £113¼ per £100 stock as compared with £101¼ in January, 1932, and £97 at the date of issue; while the net yield to earliest redemption date was then £3 14s. 6d. per cent. per annum against £4 19s. 9d. in January, 1932, and £5 4s. 3d. at date of issue.
In the case of the Third National Loan, which was issued at the price of £93½ per £100 of 4½ per cent. stock, the price latterly has been about £110. This gives a yield to 1953 of £3 14s. 0d. per cent. per annum, as against £5 3s. 6d. at the end of January, 1932, when the stock could be bought at a discount of £8 per cent.
The Fourth National Loan bears interest at 3½ per cent. and was issued in December, 1933, at the price of £98 per £100 stock. Its price at the end of the financial year was £102 which, assuming redemption in 1961, gives £3 8s. 3d. per cent., while at that date the British 3½ per cent. Conversion Loan, the nearest corresponding issue, on the same assumption would yield £3 8s. 6d.
It is of particular interest to note that in January, 1932, the average yield to be got by holders of our loans was £5 1s. 6d. per cent. per annum. By the end of May, 1932, this average had fallen to £4 13s. 6d. The average yield, however, from the nearest corresponding British Government issues about that time was lower still at £4 4s. 0d. At the 31st March last the loans which have been issued under the auspices of the present Government, the 4 per cent. Conversion Loan and the 3½ per cent. Fourth National Loan, gave on the average to their present probable redemption dates about £3 8s. 0d. per cent. per annum; while the two most nearly corresponding British issues gave an average of £3 8s. 3d. These figures prove beyond denial that the State's credit has not declined during the lifetime of the present Government.
The next important item in the Schedule of State Debt is Savings Certificates (principal and interest). Under this heading our liabilities have increased from £8,151,000 to £10,552,000 in the course of the five years subsequent to March, 1932.
But it should be noted that the sums debited against us in this regard cover the principal of the certificates in issue and the interest accrued thereon to the 31st March last. Off-setting the interest charge, however, we had at that date in Savings Certificates (Interest Charge Equalisation) Fund cash, gilt-edged securities and accrued interest to the amount of £2,706,000. At the corresponding date in 1932 the figure was £696,000. As the history of the Savings Certificates (Interest Charge Equalisation) Fund is a matter of some public interest I should like to recount it briefly.
The fund was first established by the Finance Act, 1929, in order to provide for the State's liability in respect of interest accruing on certificates; and certain payments were made to it between 1929 and 1932. These, however, far from covered the accruing interest and, at the close of the financial year 1931-32, the uncovered liability therefore amounted to £425,000. In the 1932 Budget provision was made for this, together with such further interest as was estimated to accrue during 1932-33. Furthermore, we have been careful since to provide fully for our liability under this head. Thus, in the five years since March, 1932, after providing £687,000 for interest accrued on certificates repaid during that period, we have put aside to the credit of the Interest Charge Equalisation Fund £1,653,000, which, with the interest earned thereon, brought the total assets of the fund at the 31st March last up, as I have said, to £2,706,000.
We have sometimes been twitted with the fact that in latter years the value of the new Savings Certificates sold has not greatly exceeded repayments. I propose to put some facts before the House in relation to that matter, and shall begin by pointing out that almost two-thirds of the certificates encashed over the past five years belonged to the first issue, which was on sale from June, 1923, to February, 1931. The maturity period for this particular issue was originally fixed at five years, during which compound interest was earned at £5 4s. 7d. per cent. per annum. In June, 1928, this period was extended to ten years, and the rate of compound interest increased to £5 6s. 2d. per cent. per annum. The maturity period was again extended, this time to 20 years, in 1933, but the average rate of interest allowed over the second ten-year period was only £3 6s. 1d. per cent. per annum. Now, as there is no fund from which to pay off these certificates on maturity, we have had since 1932 to find, in addition to the interest charges, £1,684,000 for repayment of principal of certificates which were issued between 1923 and February, 1931. In those circumstances it is little wonder that the amount of the new certificates issued did not greatly exceed the amount of the certificates repaid.
Raising money by means of Savings Certificates is not favoured by the Exchequer, as the rate paid for money on the certificate terms is usually uneconomical, and the incidental expenses of securing subscriptions for the certificates and managing the issue are very high, while, as the holders are entitled to repayment virtually on demand, the money is held by the Exchequer practically at call. For the reasons, and because it is not in the public interest to allow an uncovered capital liability of this kind to attain such proportions as might in unforeseen circumstances create difficulties for the Exchequer, I have of deliberate policy endeavoured to keep our commitments in respect of Savings Certificates within reasonable limits. With this in view, I withdrew in May, 1933, the issue then current, which over the ten years to maturity yielded £4 2s. 9d. per cent. per annum, and replaced it by the present issue, which pays on the average only £3 1s. 5d. per cent. per annum over 12 years. Furthermore, I drastically restricted the maximum amount which might be invested in the certificates by any one holder. This restriction and the reduction in the rate of interest have had the desired effect, and while there has been some increase in our capital liabilities under this head since the 31st March, 1932, the figure for them is still under 8,000,000 mark; which, in present circumstances, I regard as satisfactory.
Before passing finally from this item of the Savings Certificates perhaps I should inform the Dáil that, at the 31st March last, the amount due to depositors in the Post Office Savings Bank was estimated at £7,810,000, as against £3,750,000 at the 31st March, 1932; while as between November, 1931, and November, 1936, the deposits of the Trustee Savings Banks here rose from £1,266,000 to £1,912,000. Moreover, in 1931-32, the aggregate figure for Savings Certificates and deposits in the Savings Banks was £13,167,000, while for 1936-37 it was £20,274,000. Thus over the past five years the savings of the petty capitalist, the small farmer, and thrifty worker, the small shopkeeper and the like, have increased by 54 per cent.
We have now to consider the Exchequer's liability under the Land Acts, 1923-1933. It will be noted that it has risen from £2,397,000 in 1932 to £14,883,000. In the main the increase is due to the reduction in the land annuities granted under the Land Acts of 1933 and 1936; by which tenant purchasers were relieved of capital obligations amounting to £12,228,000, a corresponding liability being imposed on the State instead. But for that transaction our net deadweight debt, so far from showing an increase of £553,000 as compared with 1931-32, would show a reduction of £11,675,000, and stand at only £10,699,000 or less than £3 12s. per head of population.
At this stage I must refer to other consequences of the 1933 Land Act, which as well as granting a reduction in the annuities payable under the 1923 and subsequent Acts, granted a like reduction in those payable under previous Acts. By the grant of this concession the Exchequer has lost an annual income of £1,480,000; but purchasers under the old Land Acts have been relieved of capital burdens amounting to £38,000,000.
The Act of 1933 also legalised the moratorium which had been granted in respect of certain land annuity gales accruing due in 1932 and 1933 and extended it to cover a period of three years in all. Normally the land annuities thus permitted to remain unpaid, would have been debited against the agricultural and other local taxation grants; and these would have been sequestrated for the general purposes of the Exchequer accordingly. Wherefore, the local ratepayers would have received little or nothing in 1932 and 1933 to mitigate the cost of the local services.
Now we must also note that the default in payments under the Land Acts had been increasing at an accelerating rate prior to 1932 and 1933. At the clearance of the Guarantee Fund in February, 1930, this default amounted to £498,000; but at the corresponding dates in 1931 and 1932 it had risen to £546,000 and £808,000, respectively. Nor, in view of the continuance of the world-wide depression in agriculture, and failing the enactment of the 1933 Act, could it have been expected that the accumulated default would have been less than £1,100,000 in February, 1933, and £1,450,000 a year later. Accordingly, therefore, even if the moratorium had not been granted, an amount equivalent to the accumulated arrears would have been impounded in the Guarantee Fund during the two last-mentioned years, and correspondingly a reduction in the grants-in-relief issued to the local authorities would have been made.
Thanks to the Government, these statutory reductions, whether on account of the moratorium or otherwise, did not take place. Special Exchequer provisions amounting to £1,616,000 in 1932-33, and to £1,844,847 in 1933-34, were made, so as to enable the local taxation grants to be released in those years; while, in addition, special advances totalling £550,000 were made to the local authorities during 1934-35 on the security of the funded land annuity arrears which had accrued up to and including the May-June gale, 1933.
It will be clear, therefore, that the local authorities in effect lost nothing by the provisions of the Land Act of 1933. Instead, they benefited substantially; for the special payments and advances made by the Exchequer to relieve their position amounted to £4,011,000. Moreover, since about 95 per cent. of the Exchequer grants in relief of local taxation which are hypothecated to the Guarantee Fund, is devoted to the direct relief of rates on agricultural land, the agricultural community naturally received practically the full benefit of these special payments.
It is not with this special aspect of the matter that, at this moment, I am particularly concerned, but with the fact that by the payment of £4,011,000 into the Guarantee Fund the Exchequer has secured a good title to an equivalent amount of the funded annuity arrears. So long as the campaign to prevent the payment of annuities constituted a serious menace, and so long as the Exchequer's rights in the Guarantee Fund were the subject of legal challenge, I hesitated to bring these funded arrears into account. Now, however, that there can be no longer any doubt as to the validity of the charge, or as to the ability and determination of the State, acting, of course, for the whole community, to collect the annuities, they cannot but be accounted a sound and well-secured asset, with which to the value of £4,011,000 I have credited the assets accordingly.
Before I go on to mention the position of the Local Loans Fund I should like to call the attention of the Dáil to the very substantial increase recorded in our advances to the Electricity Supply Board and the Shannon Electricity Fund since March, 1932. In that year these amounted all told to £8,785,000; by 31st March last they had increased to £10,889,000. In view of the present satisfactory financial position of the board there need be no hesitation in valuing these advances at par.
It is worthy of note that the sums advanced to the national electricity undertaking last year amounted to £408,000, that is £88,000 more than the amount by which the Exchequer balance was reduced over the same period. Indeed the Exchequer issues to meet capital expenditure during last year, including the additional investment in the Industrial Credit Company, and for the redemption of debt, including the repayment of Savings Certificates and the Dáil Eireann External Loan, together with the payments for Property Losses Compensation and to the sinking funds for the Conversion and National Loans, exceeded the aggregate amount raised by the creation of debt, and derived from the repayment of advances, by £1,124,000.
The House will note that the figure for advances to the Local Loans Fund, up to 31st March last, stands at £13,559,195, as against £2,536,237 for the corresponding date in 1932. Last year I detailed the inter-relation between the old Local Loans, the present fund, and the Exchequer. It is unnecessary for me to repeat what I said then; but in accordance therewith, I propose, as last year, to take the Local Loans figure for 31st March, 1932, as £9,071,902; the figure for 31st March, 1937, as £13,559,195, which it is, and to write up by £6,192,665 the Exchequer obligations at the end of 1931-32, making them £44,878,000.
I wish now to refer to the State's shareholding in the Industrial Credit Company, which was established under the Industrial Credit Act, 1933. This concern has a nominal capital of £5,000,000, in respect of which 1,000,000 ordinary shares of £1 each have been issued. The State's holding consists of 492,064 fully paid up shares, and 499,925 more on which 12/6 per share has been paid, the total value being £804,517, which is the figure credited under this head in the list of Exchequer assets.
The Industrial Credit Company has been very successful since it commenced business. Up to the 15th December last it had carried through capital issues amounting to £3,968,000; while at the 31st October last, after less than three years' activity, its declared net profits amounted to £77,900. No dividend has so far been paid, but out of profits the preliminary expenses of the company, amounting to £13,335, have been written off, £20,000 has been transferred to investment reserve and £25,000 to reserve for contingencies, while £11,330 has been carried forward to the current year's account. All of which reflects the company's very satisfactory position.
In connection with the more general question of industrial finance the Dáil may be interested to know that since the enactment of the Industrial Credit Act in July, 1933, the capital issues offered to the Dublin market, other than those sponsored by the Credit Company, amounted to a net cash total of £2,454,000, bringing the aggregate of capital issues for industrial and commercial purposes, made in Dublin since the passing of the Act, up to £6,422,000. In the three years which preceded that the public issues offered to the Dublin market by companies amounted to only £15,750. These figures go far to substantiate our claim that we have succeeded in creating a capital market in Dublin for Irish industrial and commercial issues.
Another asset to which I should like to refer is our holding in Comhlucht Siuicre Eireann, Teoranta. Comhlucht Siuicre Eireann, Teoranta, as is well known, owns and operates four sugar factories. One of these it purchased as a going concern from the old subsidised undertaking known as the Irish Sugar Manufacturing Company, Limited, the vast majority of the shares in which were held abroad; the three other factories, admittedly among the most efficient in Europe, it has erected since its inception. The operations of the company have so affected the national economy that, whereas in the year 1932 the total imports of sugar into the Saorstát amounted to 86,000 tons, as against a native production of only 23,000, in the year 1936 the positions were reversed, for we made 85,000 tons and imported only 27,000.
The unsatisfactory position of the sugar industry in other countries has created its own difficulties for our industry, since it has resulted in the offering of excess sugar production at cut prices wherever a market could be found for it. In consequence, world sugar prices have been so depressed that, in order to protect our market against uneconomic competition, we have had to concede a larger margin of protection, that is to say, 16/4 per cwt., than was originally contemplated. With the rise in the world price of sugar, however, the need for so large a tariff will disappear, and the protective duty can be adjusted accordingly. I may, perhaps, point out here that if, in addition to the 27,000 tons of sugar which was imported last year, we had also imported, at the prevailing world prices and present rate of customs duty, the whole of the 85,000 tons made in our own factories, we should have secured about £1,400,000 more for the Exchequer, without causing any increase in price to the consumer. The whole of this £1,400,000, with the exception of about £95,000 representing dividends and debenture charges, goes to the benefit of the beet growers and those engaged in the factories and ancillary industries.
Our holding in the sugar company consists of 500,000 ordinary shares of £1 each, on which dividends at the rate of 5 per cent. per annum have been paid for the past two years, and it represents practically the whole of the equity of the concern. In addition to the ordinary shares there are also 500,000 6 per cent. £1 preference shares, and £1,000,000 has been raised by the issue of 4 per cent. debenture stock. It will be clear that the financing of this £2,000,000 undertaking has been prudent and economical. The total of the debenture and preference charges ranking in priority to the ordinary capital only amounts to £70,000 per annum, so that the earning power of our investment being reasonably assured, it is valued at par.
The Dáil will note that this year there appears among the Exchequer liabilities for the first time a figure of £3,600,000 in respect of national school teachers' pensions, being the additional liability assumed by the State in respect of such pensions, and uncovered by assets transferred, or by increased teachers' contributions, or otherwise. The liability in question has arisen in this wise. In July, 1928, an actuarial valuation of the National School Teachers' Pension Fund as at the 31st December, 1926, disclosed a net deficiency of over £4,000,000; from which, in conjunction with other facts, it is reasonable to infer that the fund was insolvent when taken over from the British in 1922. As such a deficiency, if unregarded, must increase at compound interest, the capital assets of the fund would ultimately have been liquidated; in which event teachers would have had to content themselves with the bare and meagre pensions that the fund's contributory income would have sufficed to finance.
The position, therefore, of the teachers in this regard was very grave in 1926, and graver still in 1928, when the true position of the fund was made known. It was a matter which brooked no deferment, for each day made the position worse both for the teachers and the Exchequer. While it is not for me to blame the different interests for what took place, or did not take place, between 1928 and 1932, the fact is that a problem which could have been more easily dealt with in 1928 was left in aggravated from for us, in a much less favourable time, to face.
When, in these circumstances, we came to examine the position, we saw that if the future pensions of the vast body of the national teachers were to be made secure, the old scheme which had so hopelessly broken down must be superseded by a new one, and, naturally, the financial structure of this new scheme must have regard to the new benefits and advantages which it conferred upon the teachers.
It has also to take into account the changed circumstances of the times, not merely from the viewpoint of the teachers, but also from that of the general body of taxpayers who could not upon any ground of equity or justifiable expediency be called upon to shoulder the whole burden of making good the deficiency. Proceeding on this basis a new pensions scheme for national teachers was established with effect as from 1st April, 1934. It gave the national teachers absolute security for their pensions together with certain other benefits and easements. Against these concessions the salary scales have been revised, and the assets of the insolvent fund taken over. These latter consist of securities, yielding approximately £50,000 per annum, together with a statutory annual charge on the Church Temporalities Fund of £26,598. As the assets of the fund have been conserved, the annual income arising therefrom is appropriated yearly in aid of the charge for teachers' pensions, which it is estimated will reach a total of £560,000 per annum in due course.
To meet this charge there will be available ultimately:—(1) the annual income of £76,000 from assets of the old Pensions Fund; (2) the estimated ultimate annual saving of £226,000 due to the revision of the salary scales; and (3) the estimated ultimate annual saving of £108,000 of State grants which would have become payable had the fund been continued on the old basis. All told, however, these will come to only £410,000, and the difference between that figure and £560,000 per annum, has been taken as one of the elements in computing our new capital liability for national teachers' pensions.
I must now point out how the Exchequer has been affected by the operation of the wise and generous provisions of the Housing Act, 1932, with which I dealt very fully last year. Up to the 31st March last the Local Loans Fund had advanced to local authorities for the purposes of the 1932 Housing Act a sum of £5,560,000, of which £2,885,000 was for urban housing and £2,675,000 for rural housing. But, of the amount thus advanced, the State has assumed direct and immediate responsibility for £3,200,000, i.e., 58 per cent. of the whole liability. The amount credited to the Exchequer assets in respect of the Local Loans Fund is, accordingly, for this reason to be written down by that £3,200,000.
Account must be taken also of the moneys raised for housing independently of the Local Loans Fund. So far as can be ascertained, the amount thus borrowed and actually expended on housing to the 31st March last was £3,160,000. The State is wholly responsible for loan charges on this sum to the extent of 52 per cent.; and the Exchequer obligations accordingly must be written up by £1,640,000.
The final balance may now be struck. It places the Exchequer liabilities at £61,161,000, with off-setting assets at £33,394,000, and the net State debt at the 31st March last at £27,767,000.
The figures for 1931-32, after adjustment in respect of the local loans, were: liabilities, £44,878,000; assets, £22,848,000; and net debt, £22,030,000. It will be seen, therefore, that the net State debt has increased by £5,737,000 since March, 1932.
Attempts have been made to confuse the public mind as to the true cause of the increase in the State debt. The fact that in the greater part it has been occasioned by the State's acceptance of direct responsibility for half the burden of the annuities, has been ignored; as has also the fact that it is in another part due to the generous help which the State has given to the local authorities in connection with housing. I have no doubt that in similar fashion those who criticise the Government will endeavour to suppress the further fact that the writing-up of the Exchequer liabilities by £3,600,000 this year has been due to the additional responsibility which the State has accepted for national teachers' pensions.
It is clear in regard to all these matters that they represent only a transfer of burdens within the community; and that there has been no worsening of the position of the community as a whole. And this was particularly the position last year and in the years before when I detailed the position of the debt in relation to housing, and as it had been affected by the 1933 Land Act. Notwithstanding, however, attempts were made last year, by misusing the figure which I gave for the net State debt, to prove that our finances had been maladministered and that the community as a whole was much worse off in consequence. Indeed, as is reported in vol. 62, col. 232, of the Official Debates, it was said of us, that we were
"emulating the example of any fool who wins a sweepstake and proceeds to go on a drunken spree"
—and again, that we were
"deliberately living from day to day without any regard for the future solvency of this country."
In order to dispose of such suggestions, once and for all, and to show how unfounded and irresponsible they are, I have prepared the following account covering the financial transactions and cash operations of the Exchequer from the 1st April, 1932, to the 31st of last month:—
Between 31st March, 1932, and 31st March, 1937, there was:—
(1) RAISED FOR THE PURPOSES OF THE EXCHEQUER: |
|
By short term Exchequer Bills, which, all but £500,000, was subsequently paid off |
£5,500,000 |
,, Savings Certificates |
3,546,000 |
,, Fourth National Loan |
5,880,000 |
,, 4% Conversion Loan |
187,644 |
,, Ways and Means Advances |
400,000 |
,, Advances to meet Capital Expenditure under Telephone Capital Acts |
337,000 |
15,850,644 |
|
(2) SECURED BY TRANSFER OF UNAPPLIED SINKING FUND OF FIRST NATIONAL LOAN |
1,003,882 |
(3) RECEIVED FROM REPAYMENT OF ADVANCES: |
|
Under the Shannon Electricity Act, 1925 |
132,450 |
Under the Unemployment Insurance Acts, Road Fund (Advances) Act, Land Act, 1923, etc., etc. |
1,401,378 |
£18,388,354 |
As against these operations, the Government during the same five years has:—
£ |
|
(1) Set aside for Sinking Funds |
2,731,493 |
(2) Paid off: |
|
Exchequer Bills |
6,000,000 |
Savings Certificates |
2,706,000 |
Ways and Means Advances |
400,000 |
Dáil Eireann External Loan |
537,000 |
Dáil Eireann Internal Loan |
26,000 |
(3) Provided by way of Grants-in-Aid and Advances to Local Loans Fund |
4,737,000 |
(4) Advanced in cash to the Guarantee Fund |
4,010,847 |
(5) Paid for: |
|
(a) Shares in Comhlucht Siuicre Éireann, Teoranta |
500,000 |
(b) Shares in the Industrial Credit Company |
804,517 |
(6) Issued to meet Capital Expenditure under: |
|
(a) Telephone Capital Acts |
337,000 |
(b) Shannon Electricity and Electricity (Supply) Acts |
2,235,835 |
(c) Miscellaneous Heads, as Barrow Drainage, Purchase of Land for Afforestation, Industrial Alcohol Plant |
295,182 |
(7) Issued as Repayable Advances under Coinage Act, Unemployment Insurance Act, Land Act, 1923, and Road Fund (Advances) Act, 1926 |
1,443,264 |
and |
|
(8) Paid for Property Losses Compensation |
234,957 |
TOTAL |
£26,999,095 |
It will be seen that the debit side of this account includes every item of our borrowings. On the other side, however, in order to put the statement beyond question, I have omitted certain items which might have been credited to the present Administration, as, for instance, the sum of £112,000, which was provided to enable the Dairy Disposals Board to reduce its overdraft in respect of losses incurred from 1928 to 1931. But even leaving this and other items out of account, it is clear that over the whole five years of our administration, the Exchequer repayments and capital investments and advances exceed the Exchequer receipts from borrowing, repayment of capital, etc., by no less than £8,610,000. These figures give no support to the foolish contention that this Government has been prodigal or reckless in its administration of the nation's finances. On the contrary, they prove that by prudent management our assets have been not only conserved, but even enlarged.
Let me return again to a consideration of the net State debt, and refer to the items which have occasioned the increase therein.
First, we have the reduction granted in 1933 on the land annuities payable under the 1923 and subsequent Acts, which is responsible for an increase approximately of £12,228,000. If this reduction had been granted ten years earlier, when the 1923 Land Act was passed by the Dáil, there would have accrued to the tenant-purchasers under that Act, by way of savings on their land annuity payments over that ten years, no less than £1,550,000. Here we may note that in the period from February, 1923—under the agreement signed in that month—to March, 1932, no less than £26,803,000 was paid to the British Government in respect of the old land annuities—as much as would more than twice redeem the additional capital liability imposed on the Exchequer by the reduction in the 1923 land annuities.
Then the housing campaign has been responsible for a net increase of £4,840,000 in the net debt since 1932. If this campaign had begun even in 1926, and had been prosecuted with vigour and zeal, the housing problem would have been practically solved by now. True, the net State debt might have been increased in the process, even by so much as £10,000,000. But if, in the period from 1923 to 1932, by retaining our slums we avoided increasing the State debt, we also contrived to hand over to Great Britain, in respect of Local Loans, from which housing is now so largely financed, no less than £5,871,000. If we had this sum now to add to the £11,000,000 which had been raised for housing by taxation and loans over the past five years, the financial aspect of that problem would be a simple one to-day.
The third item in the account is the Teachers' Pensions, in regard to which we have accepted commitments equivalent to a capital liability of £3,600,000. If this liability had been assumed prior to 31st March, 1932, the obligations of the Exchequer at that date must have been written up by about £3,600,000, in which case the net State debt would have stood then at £25,630,000 as compared with £27,767,000 at 31st March last. Those who may be concerned at the growth in our net State debt under this and other heads, will, however, find no consolation in the fact that between 1922 and 1932 £12,204,000 left our Exchequer for the repayment of R.I.C. pensions.