The Budget statement has been made and this Bill is the instrument whereby the policy laid down in that statement is to be carried into effect. The Budget statement was remarkable in many ways, first, as the statement of a man who had learned by bitter experience some things he did not know when he first became Minister for Finance in this State, and it ended with a paragraph which I do not think has attracted sufficient public attention, but which I believe deserves very careful perusal by everybody who is concerned with the future of this country. In column 1999, volume 75, No. 16 of the Parliamentary Debates, the Minister is reported as saying:
"Stringent and straitened as our position is, I believe that we can endure it so long as peace is maintained. If a widespread war comes, however, our difficulties will be intensified beyond measure. I speak now only of the reaction of such a disaster upon our finances. But there I know that with a much diminished real income, we shall be called upon to shoulder vastly increased public burdens. Moreover, the problem in that regard will be aggravated by the fact that existing sources of revenue will rapidly dry up. The stamp duties are a case in point. And it will no longer be possible to get so large a part of our requirement by customs duties upon imported goods, for we may take it that our imports will be drastically cut down. We shall have to tax what we can and where we can. Taxes upon home-produced commodities will, I feel, be greatly increased; as will the standard rates of income-tax and surtax; while all the allowances which at present mitigate the full impact of these latter upon the taxpayer will be drastically reduced."
That is the statement, at the end of seven years of Fianna Fáil control of our finances, and that statement may be fairly paraphrased in this way: There is impending a danger to Ireland which our Government have no power whatever to control. If that danger should eventuate, we are irretrievably ruined. We have laid nothing by; we have no nest-egg for a rainy day; we are barely living from hand to mouth. If the fortuitous results of a third party's act, over which we have no control at all, eventuate, we are faced with immediate ruin.
Now, I ask the House to compare that attitude, at the end of seven years of Fianna Fáil administration, with the attitude of the same Minister at the end of ten years of Mr. Cosgrave's administration. At the end of ten years of Mr. Cosgrave's administration the present Minister for Finance embarked upon an economic war which, he admitted, was going to put an unprecedented strain on the resources of our people. But he was able to come into this House and say: "Revenue is buoyant, money is circulating freely; everything looks well, and nobody is suffering unduly." That was his story, and it was true, that during the first four years of that disastrous struggle, when the people of this country were losing immense sums of money, the revenue actually was rising. Ample resources were spoken of by the Minister. Where were those resources? Where did he get them? He got them from the reserves that were built up by his predecessor. Although his predecessor began with nothing except a civil war, which imposed immense expenditure upon the Exchequer, his predecessor handed over the country to him with reserves adequate to finance five years of an economic war.
He, at the end of seven years of his administration, offers his country, or to anybody who may succeed him, stringent and straitened circumstances, the danger of which, according to himself, may be intensified beyond measure by the action of certain peoples, and by certain circumstances which we cannot control. Faced by that prospect, the Minister tells us that we may be forced into having to tax what we can and where we can, without regard to whether those taxes hit the rich, the poor, or the middle classes. Is not that a comparison which speaks volumes in regard to the two Administrations? It ought to bring home to the Deputies of this House the lesson, which there is still time for this country to learn, that a responsible Government, in addition to financing the day-to-day requirements of our people, is under a heavy obligation to make provision for reserves against contingencies that they cannot control in the future.
I have said on many occasions that, if the Government continues to pursue the policy it has been pursuing, this country will go bankrupt. I repeat that now. I say that if a country finds itself in a position in which there are no resources left, and if it finds that, by the action of a third party, it can be launched into irretrievable disaster, we are, in effect, bankrupt, because we have not got the reserves that a solvent institution should have. As things are, it seems to me, that if we do survive we only survive by grace of those who spare us the crisis which we ought to be able to meet out of our own resources and reserves without being under any obligation to anybody for sparing us from that test.
According to the Minister's own admission, we are able to continue to-day only on the suffrance of certain Continental countries which keep the peace. If these countries should break the peace, according to the Minister, we must tax where we can and how we can and, in that case, the disaster —which, in his judgment, is irremediable—is upon us, and that what will come upon us then he is not now in a position to foretell. The comparisons between that statement and the statement the Minister was prepared to make at the commencement of the economic war crisis, in the conditions that existed just after Deputy Cosgrave left office, deserve consideraation by those who are learning the elements of finance, and, in that category, I have no hesitation in including the Minister. I have said on many occasions, and Deputies on these benches here have pointed out repeatedly, that the level of taxation in this country was rising steadily and had become intolerable. When that case was made many a person, who felt that the logic of the case was unanswerable, still was constrained to ask: "Where is the money coming from? It is all very well to say that the taxes are too high, but they get the money." The answer is fairly simple. The money was coming from the savings that we had made in the years that went before. The difference between us and Fianna Fáil is that, four years ago, we foresaw that if you went on living on those savings, while you were earning nothing to add to your savings, your reserves one day would come to an end; and, four years ago, we said that if you continue until your reserves come to an end, that will mean bankruptcy—national bankruptcy. Fianna Fáil, on the other hand, said that as long as we have money let us spend it. On the one hand, you had the unpopularity of being conservative, economical, niggardly, as it was called, and, on the other hand, so far as Fianna Fáil was concerned, you had the popularity of being an off-hand spender and a slap-dash dispenser of your neighbours' goods. However, that so-called niggardly, saving, and economical Government handed over a solvent Exchequer to its successor, and that successor—that generous, off-handed, slap-dash Government—offers to its successor a straitened Exchequer which, in the stringent circumstances which now obtain, is constrained to tax where it can and how it can. I say, therefore, Sir, that when the present Minister for Finance must end his Budget speech with the words I have just quoted, the State in which he is a Minister is, in effect, bankrupt.
A great many people in this country forget when they are thinking of the burden of taxation, that, under modern practice, the burden of taxation as borne under the Budget, bears little true relation to the burden of taxation that the people are carrying actually. What we have got to consider, when we are considering the economic condition of the people of this country, is the actual taxable capacity of our people, and not the revenue apparently produced by the Budget taxes. Now, the taxable capacity of our people represents a certain sum which is the limit of what our people can find, and it consists, not only of the taxes raised by the Finance Act, but also of the indirect taxes which the people are called upon to pay—such as the indirect taxes on bread, flour, butter, bacon, petrol. All these are taxed also, and when they have been estimated accurately, or as accurately as they can be, you must then turn to the taxes on such articles as clothes and boots and on the one hundred and one other things which are being produced behind protective tariffs, the extra cost of each one of which constitutes a drain upon the taxable capacity of our people. On the Minister's own admission, in his Budget speech, we have reached a point where the sum of all these impositions has exhausted the taxable capacity of our people, and he says, in effect, that if any untoward event should take place, as a result of action taken by certain other countries, we will have no place to turn to, no nest to raid, and no emergency sources which we can tax temporarily. According to the Minister, in his statement, we are all out now producing the last taxable farthing that can be yielded from our peoples' taxable capacity, and we stand in danger of a crisis also that will require substantial additional expenditure.
Now, the Minister for Industry and Commerce, speaking on the 29th May, 1939—column 262, volume 75, No. 2 Official Debates, said:—
"...I am sure they (Deputies) will agree with me that in the forefront of our immediate plans we must put proposals for the reduction of unemployment; that we must give those proposals priority over proposals for any other purpose—the reduction of unemployment must be our primary objective, getting consideration before any other objective whatever."
Add to that, the problem of housing in the City of Dublin, and add to that the problem of citizens of this city who are living in verminous rooms and who are sleeping in rooms disturbed as, I think, Deputy Tom Kelly said, by vermin falling on to their beds, whose children, as Deputy Tom Kelly described them in this House, are put to bed with clothes tied about thier faces to prevent them being eaten by vermin at night: add to that the inadequacy of our social services to meet the more urgent needs of the married poor about whom the Government Party are quite as solicitous as we are, and ask yourselves, where are we going to get the money to meet their needs?
We have three methods of getting it. We can borrow it; we can save it or we can print it. Can we borrow it? We can borrow it only if we can find someone to lend it. Now, it is important for this House to understand this; that those who have money to lend do not read the speeches that are made in this House. They go to the Revenue Accounts, and they examine the economic state of the country from the official returns. The economic statements, or the economic arguments, advanced in this House weigh little with them. They are skilled financiers, and their job is the examination of national accounts with a view to determining the solvency of any State which seeks money on the public money market. It is true, as was stated before the Banking Commission, that if some silly fool gets up and advocates riot and civil commotion, that may injure the credit of a country, because the prospect of civil commotion always injures the credit of a country, but even a dispassionate examination of the financial state of a country does not influence the judgment of financiers. They make their own decisions. They reach their own conclusions from their own researches. I put it to the Minister for Finance now, that that Budget statement being a true picture of our financial condition, where are we going to borrow for additional purposes when we owe £5,000,000 sterling in floating debt at the present moment which will have to be funded somehow or other pretty soon?
When that transaction is carried through, where can we hope to borrow? Does not the Minister know as well as I know, that when he finds himself in the position that he cannot borrow there will be found those who will want him to print. Does not the Minister know that if we do print the first reaction of printing will be very acceptable to the bulk of the people. It is only when the damage of uncontrolled inflation is well under way that the true consequences of that course of action will be become manifest, and it will then be too late to stop it. To bring any democracy within the reach of the strong temptation to inflate by printing currency is one of the greatest crimes that a Minister for Finance can commit, because he draws them into a temptation the dangers of which are absolutely impossible to explain in theory to the mass of the voting public —the full dangers of which the voting public can never learn except by experience. It would destroy the entire economic fabric of this State and make it impossible for any combination afterwards to re-establish our position. Is it not true that the longer you go on spending more than the national income permits, the harder it is to effect the savings that are necessary to restore stability? Who knows that better than the Minister for Finance? Remember, that saving to restore stability does not necessarily mean doing without many of the desirable things that we have. It may very well mean acquiring more, because one of the most evil aspects of the improvident administration of our national finances is not the waste in itself but the wicked improvidence with which money is spent on unnecessary things, while urgent necessary services remain unprovided for.
I have never hesitated to say in public, as an advocate of economic orthodoxy, that we ought to be able to provide in this country for our people family allowances. I hope I have always had that sense of responsibility to add that it could do no good to any section of the community, recipients or otherwise, if they were not provided out of annual revenue: that to borrow one penny for those services would be to ruin the pretended beneficiary. But I have no hesitation in advocating that, and at the same time advocating expenditure within our national income. We are spending at this minute £2,800,000 on the wheat scheme, £1,000,000 a year on the beet scheme, an indeterminate sum on the alcohol scheme, on the Roscrea meat meal scheme, on the peat scheme and on a hundred and one other futile schemes, including innumerable tariffs which are raising the cost of the people's commodities without any corresponding benefit to the community.
None of these things appears in the Revenue Accounts at all, but all of them are a burden on the taxable capacity of our people. Now, whether you trench upon the taxable capacity of the people in the Budget or outside the Budget, the ultimate results are the same, and all these things, including the tariffs, constitute a burden on the taxable capacity of our people, which, if it was not there, would enable us to get revenue to furnish services which would abolish very great evils: evils so great that they are a menace to the stability of the State, and enable us to institute services which might very easily stimulate the productive capacity of our fundamental industry, and substantially increase the national income as a whole. Instead of being in a vicious circle of increasing expenditure and increasing deficits, if we could only turn the wheel and get into an ascending spiral of increasing public services with increasing national income, we would then be on the right road. But the Minister knows as well as I know that at this moment we are in a descending spiral of diminishing income and an increasing burden. He realises just as vividly as I do that we are getting to the danger point, but in public finance you cannot afford to get to the danger point because if you do no action by democratic politicians will get the country out. Everyone knows that if we reached financial crises such as they had in Newfoundland, we would have civil commotion in this country. If you got civil commotion arising out of an excessive tax burden, the economic fabric of the State could not be maintained, and you would be in the vicious circle at once that while the remedy for the situation was to be found in economy, the civil commotion would demand extra expense.
In endeavouring to restore order you would throw your finance into more wild confusion, until eventually you would be in a state of absolute chaos. Out of that there is no redemption by democratic method, and you are then in the hands of a dictatorship either of an individual in this State, which would be bad, or—what would be infinitely worse—of an outside individual. That would reopen for this country an endless period of ruin and desolation which I am simply horrified to contemplate.
If we can get it the other way, if we can get the national income, the combined produce of our people's profitable production increasing, and deliberately declare that it is our intention to establish in this country a system under which we would not have millionaires on the one hand and paupers on the other, if we deliberately adopt the Irish way of running Ireland and resolve to be all well-off together or all poor together, if we deliberately recognise that the first charge upon the national income is the equation of a minimum standard of comfort for every honest citizen in this State, and a distribution of the remaining balance as a reward for enterprise, I think the Minister could then come before the House with a very formidable tax bill, if he was in a position to say "The national income is rising." I admit that my proposals constitute a certain measure of income distribution. I do not deny that; it is the Irish way, and so long as we can get the national income in the upgrade we have no reason to be afraid of it. I think the Minister would get a hearty welcome. But that is not what is happening. Your productive capacity is going down. You are putting burdens on the people that are reducing many of them to destitution and misery, and you are doing that when the national revenues will not meet the essential services, and when there is the menace of civil commotion, and the problems it represents, not to the Minister for Finance but to the Government and to any Parliament that is sitting in this country.
I do not believe in getting up and preaching panic, but I do not conceal the fact that I am alarmed. I consider that our economic state at the present moment is truly alarming, and I believe the Minister agrees with me, although he does not consider it politic to say so. I want to emphasise again that no useful purpose is served by holding your tongue when you see danger ahead. If we are to have democratic institutions in this country, the right thing to do when you foresee danger is to say so, and to ask the Government to take appropriate measures to avert it. If we once create the impression at home or abroad that when we get scared we run for cover, throw our hands up in despair and say: "Let's be merry while we may, disaster is inevitable," then we sacrifice all right to confidence, and justify those who decry parliamentary institutions. The whole value of Parliament in the counsels of the nation is that those who foresee danger have the right to say so, to give their reasons and to advocate remedies. It is up to Parliament then to determine whether those who sound the note of warning are right or wrong. I submit that every warning we have given to date has been amply justified. The only trouble is that we have seen too far ahead, because in the ranks of our Party we have experienced financial administrators who saw the logical conclusions of the things that were being done. I believe the Minister now agrees with us, though I do not think he did four or five years ago. What is the remedy? The first remedy is to increase the profitable production of our people. A lot of people leave out the word "profitable." They think that, if you can raise production on any terms, you are serving the interests of the State. That is nonsense. Subsidised production in this country, far from being a source of wealth, is a luxury we cannot afford.