When Deputy Cosgrave has some experience of being in a left wing Party he will know that left wing Parties get all the hard knocks and all the ha'pence. I do not know whether he intended by that criticism of the Labour Party to show that we were to the left thinking on any specific policy, or whether we were bound by that very policy. I can assure Deputy Cosgrave that the Labour Party has an independent line of economic thinking.
It takes some time, perhaps, for this to become plain to people, but plain it does become as time goes on. I think, that, on these economic questions in particular, such as we have to face on this Vote on Account, the difference between the Labour Party and the Fianna Fáil is quite distinct. Deputy Norton, when he was speaking, did quite a service to the country in showing how, when relating our present problems to the question of this Vote on Account, it may be unreal to talk about the disbursement of the £50,000,000 that is required—unless we consider the possibility of ever raising that amount—if our economy is going through a crisis and if we are going to face an emergency within an emergency. Unless emergency measures of a different type and order to those previously adopted are taken now, it will be quite a question as to whether we can maintain national government on the basis and to the extent which is foreshadowed in this Vote on Account. It may be that some would wish isolation upon us, but we cannot be divorced from current European history or current European economy, and it is only with this as a background that we can properly discuss the subjects to be considered under this Vote on Account: fuel, food production and the cost of living. These will become, as time goes on, of ever greater importance and all the subsidiary questions which have engaged our attention here in the Dáil will, I think, fade into the background when we come up against the stark realities of these things and what they really mean.
As Deputy Norton said, this Vote on Account shows a desire on the part of the State to collect £50,000,000 out of the pockets of the taxpayers, with an additional £7,000,000 in local taxation. The enormity of the sacrifice demanded of the people in order to carry on the functions of government—the good functions as well as the bad functions—can only be properly appreciated when it is related to the national income of the people. Now, as everyone knows, the figures for our national income are very difficult to assess accurately, but for many years it has been taken by most economists that our national income ranges in the order of £150,000,000: in the order of £1 per week per head of the population working, not working, dependent and independent. There have been attempts made to estimate what it would be at the present time with the inflationary tendency that is observable in Irish economics. It has been variously estimated, according as we value the £, but it certainly could not be considered at the present day to be much higher than £200,000,000. It may be £175,000,000. It is not very important, because the rise in the national income is due mainly to fluctuations in money values and does not represent, I think, any real increase in the national income.
The importance of agriculture has been often stressed here. We could not expect that there would be any real increase in our national income when we consider that the volume of agricultural output, taking 1929-30 as the basis, at 100, was rated at 89 in 1942-43, and that the total volume declined by 7.7 per cent. in 1942-43 compared with the previous year. If there is a shrinkage in that large sphere of our economy, it is very unlikely that there would be any real increase in the national income. Our national income is undoubtedly low and it is on that account that the burden to be imposed upon the citizenry of the State appears so heavy.
Deputy Bennett and others have asserted that we have reached the ceiling as regards social services. They have expressed their view that we could not afford any further development of our social services, but the real point of the matter is that, though the taxes are admittedly high in comparison with our present national income, they are not high in relation to taxes in other countries where the national income is higher. New Zealand was instanced as a country which had a national income much higher than Ireland's and, as I said before, I think we will hear a great deal more about New Zealand as time goes on. New Zealand has the highest national income in the world, according to some economists. It has been rated as high as £180 per head of the population, considerably more than three times our national income per head of the population. It is quite obvious, therefore, that if we could raise the standard of productivity in this country and thereby raise the national income, the burden of taxation would not be so onerous as it would appear to be at present. To translate it into ordinary figures, at the present time, out of every £3 of income, the State proposes to take £1 but, if we were able to increase that income, perhaps not exactly by three times, which would bring it up to the New Zealand figure, but by some other proportion, we would relatively reduce the proportion taken from the national income to pay for social services and for functions of Government.
Instead of its being 33? per cent. of the national income, by increasing productivity—and there is every possibility of doing so—it could be reduced to 20 per cent., 15 per cent. and, perhaps, to 12½ per cent., according to the degree to which we increase productivity. Productivity must be developed, particularly in regard to foodstuffs, fuel and essentials of life.
We must have a national policy, particularly in this crisis, which will enable us to increase productivity. It may be said by the pessimists that, cut off from the world, without outside sources of supply, without the possibility of receiving what we should normally get from other countries, this is not a time to change our policy, this is not a time to tinker with economics. Certainly, it is not a time to tinker with economics, but it is a time to make a drastic change. It is a time to revalue things in the light of a new world, a world which may at the beginning be adverse in its relations with us. These things, it appears to me, can be done. They can be done by industrial and agricultural reorganisation. They can be done by gearing up the community to a higher level than has ever been thought possible in this country. It does not matter that this country is an old country with hundreds of years of tradition. It does not matter that we have settled ways of life and that we are conservative by nature. If the crisis demands it, if we are faced with no way to live other than by changing our economy, then change that economy we must, in order to survive. That is where the Labour Party differ fundamentally from the Fianna Fáil Party, whether we are the left wing of it or not. We see, and are prepared to advocate, that fundamental changes should be made in order to preserve our nationhood, our State and the lives and well-being of the common people of the country.
If the change is not easy in a crisis, experience of history tells us that it will come violently. If you want it to come smoothly, if you want to reorganise your economy and your production, if you want to take measures to face a situation such as we have never faced before, one of the best ways of doing it and one of the ways that causes the least trouble in transition is undoubtedly by using finance as an instrument in making the change.
I had occasion once before to differentiate between national financial policy in this country and the national financial policy in New Zealand and the Minister for Industry and Commerce characterised my statement at that time as nonsense.
"Deputy Connolly," he said, "was talking nonsense when he said that the fact that social services operating in New Zealand are more attractive than those prevailing here is not due to a higher output per head or a greater national income or to any other material cause, but due solely to the fact that the Labour Government in New Zealand have got views about finance which are in our view unorthodox. This is nonsense. So far as I know, the views of the New Zealand Government in relation to finance are not different from ours."
I propose now to show very simply and very briefly that the views of the New Zealand Labour Government are far different from ours. Actually, of course, the Minister in that case was not dealing fairly with the argument that was put up because I had shown, and I think it cannot be refuted, that the high level of social services in New Zealand had not been achieved until they had instituted a period of full employment, and that the question of full employment was linked up with the increase in the level of productivity, adequate wages, distribution of the extra volume of wealth and consequent easing of the burden of taxation, and that these things had to be linked to the question of finance.
The Minister told us that we had much the same financial view as that held by the Labour Government in New Zealand. But he must have forgotten all about the Central Bank Act, and he must have forgotten all about the Currency Act. In the Reserve Bank of New Zealand (Amendment) Act of 1936 the general functions of the Reserve Bank are set forth in the following words:—
"It shall be the general function of the Reserve Bank within the limits of its powers to give effect to the monetary policy of the Government as communicated to it from time to time by the Minister of Finance. For this purpose and to the end that the economic and social welfare of New Zealand may be promoted and maintained the bank shall regulate and control credit and currency in New Zealand, the transfer of moneys to and from New Zealand and the disposal of moneys that are derived from the sale of any New Zealand products and for the time being are held overseas."
That is fundamentally different from the functions of our Central Bank Act. I do not need to go into that; it has been dealt with very fully in this House. But, in contradistinction to the powers held by the Reserve Bank there, the function of the Central Bank Act here, I think, is more or less to maintain our parity with sterling. Deputy Norton dealt so fully with that aspect, there is no need to pursue it to show that we have tied up our economic life to the economic life of Great Britain, that we will rise if it rises and that we will fall if it falls.
Whether the isolationism that is wished upon us will have any effect upon our financial relations remains to be seen, but the present crisis rightly shows how parlous is the condition of any country, particularly a small country, which ties up its financial destinies to those of a great Power which, in the natural course of its State policy, may have to infringe upon the powers of the small country; may have to take action against its economy, its very national life. I am not suggesting that in this crisis we would need to go even as far as they have gone in New Zealand in order to achieve a financial and economic transformation. I think it is quite possible, in the situation in which we find ourselves and with the economic traditions we have in this country, to leave the commercial banks to their own commercial functions. It is not our intention to, and we do not advocate, as far as the Labour Party is concerned, any repudiation or expropriation in relation to the banks, but we do say: "If you want to organise the economy of the country, if you want to make a reality out of the campaign to raise foodstuffs for our people during the coming crisis, if you want to organise fuel economy and organise the nation as it should be organised to meet the crisis, you will have to make finance here an instrument of the people's will and not allow finance to be an instrument for imposing the bankers' will upon the people."
That is the extent of the unorthodoxy of the Labour Party in regard to finance. We have complained again and again of the fact that, instead of having a planned economy such as we advocate, a policy of full employment which would enable us to raise the level of productivity, provide more food, provide better social services, we have not any considered policy on the part of Fianna Fáil. The Government do the best they can from day to day, month to month, or even year to year, but they have no long-term policy. They have been in office a sufficiently long time to show whether there is a long-term policy. We still spend something like £7,000,000 on certain services which are related to the existence of poverty in one form or another in this country. As I stated in another debate, the amount might be £9,000,000, if you take certain services into consideration.
Undoubtedly, if we had a planned economy for the period during which Fianna Fáil has been in office, we could have taken, as they have taken in other countries, steps to eliminate unemployment as the source of all the poverty that exists, and we would be able to do without these social services on the scale so bitterly complained of by Deputy Bennett and others of his Party. It is not to be taken that the Labour Party are against these social services. These social services are absolutely necessary in the present state of the country. I stated that the money can be found, and that it is possible to have better social services, if they are required, by eliminating unemployment and the conditions that flow from it. It is quite easy to see that, even without any great increase in productivity —and there must be an increase in productivity when you put an extra 70,000 men to work—you will have that money available to reduce the taxation in other spheres and the burden will be less heavy. You will have it both ways, by increasing the national income and decreasing what will become unnecessary social services, such as the odd million that you expend on unemployment assistance and insurance.
The policy that we advocate in order to raise the productivity which would be related to a financial reorganisation would do away with many of the causes of widespread distress. It would also affect favourably the level of wages and it would reduce the cost of living. All these things are related and in any country such as this, where you have a large mass of unemployment, I think that, with the best wish in the world, a Government which works within the confines of the present system would be bound to have a rise in the cost of living, bound to have unsatisfactory wage rates and wage scales, and bound to have the economic chaos that presents itself to us to-day. We can contrast the wage rates in this country—very unfavourably contrast them—with those in England.
There are some very startling figures, if we were to go into them, all of which show what can be done in a country where full employment is forced upon the people, or upon the State, as a result of the necessity of war. We want to force a policy of full employment as a policy of peace, but in England, which is an example that we might take, we read, in the Financial Times of the 7th March of this year, that there was a general rise in wages of no less than 76 per cent., during the five years from October, 1938, to October, 1943, and that the effect of this rise in wages was only to reduce the purchasing power of the £ by 4/-, whereas in this country, where we have no policy of full employment, the purchasing power of the £ has fallen by 7/6, while wages, we are informed, have increased by only 3/- to the £ in this country, that the purchasing power has fallen by more than double the rise in the rate of wages generally.
Now, in reference to the cost of living, I think that nothing is so instructive, or that nothing drives the argument home so well, as to consider a group of figures which appeared in The Economist of the 11th March, and I think that it would be well for every Deputy in this House to study those figures. These are the cost-of-living index figures for three countries: our own country, Éire, our next-door neighbour, Great Britain, and New Zealand—a country which is administered by a Labour Government with a policy of full employment and with financial concepts very different from our own. Here are the startling figures. If we take it that in August, 1929, the base with regard to the three countries concerned, was 100; in September, 1939, on the outbreak of the war, the cost of living in Éire was slightly higher, it was 101. In Great Britain it was slightly lower, at 96, and in New Zealand it amounted to 98. Those are the figures for the three countries that I have mentioned, as they existed in September, 1939. Now, in September, 1943, after four years of war, what is the situation? In Éire the cost-of-living figure has gone up from 101 to 161; in Great Britain it has gone up from 96 to 121, and, in New Zealand, it has gone up from 98 to 112.
Relating these figures as a percentage increase, as between 1939 and 1943, our cost-of-living figure has gone up by 59.5 per cent., whereas the cost-of-living figure in Great Britain has gone up by only 26 per cent., and the cost-of-living figure in New Zealand has gone up by only 14.3 per cent. These are the figures that actually matter when it comes to determining the purchasing value of the £.
A lot of people have talked loosely about the £ being worth only this or that, or about whether 1/- is worth 6d. or not, but these figures, when translated into purchasing value, mean that 20/-, in monetary value, will now only purchase, in this country, what 12/6 would have purchased in 1939. That is the true measure and the true value of the £. Again, we have heard a very cold and careful analysis by Deputy McGilligan of the position of different types of firms in this country, and what they have done with their profits. Now, these profits have a direct relationship to the cost of living in this country, and I should like to draw the attention of the House, following on Deputy McGilligan's analysis, to the contrast between Irish capitalism, under a form of neutrality, and English capitalism, carrying on during a period of war. There are very significant figures in this connection, and I should like to quote the figures given by The Economist and the Financial Times. To summarise their view upon the situation, it is that the margin of profit in Great Britain, so far as it shows an improvement, is infinitesimal. The Financial Times says that the index of profits, taking 1938 as a base—100— actually dropped to 95½ at one time in 1941, and that for the third quarter of 1943 it was reckoned at 104. Now, this is an extensive review of British firms engaged in the most profitable form of industry during times of war: the production of instruments of destruction and death. Contrast that increase of, roughly, 4 per cent. which, of course, is related to the high incidence of taxation and the extraordinarily high incidence of excess profits taxation, and so on, with what Deputy McGilligan has referred to—firms in Ireland, working on a smaller turnover, and working under peace-time conditions, and yet being able to pay 34 per cent. in dividends.
Of course, I suppose we may presume that they were able to do that by using all the usual methods of financial dodgery known to financial experts, but there is something rotten in the State of Denmark, under the present Minister for Finance, if there can be such an outrageous difference between the profit-making capacity of firms in Ireland, engaged in peaceful pursuits, as contrasted with the profit-making capacity of English firms which are engaged in the most profitable enterprise of all times—the production of war materials designed for destruction and death.
It is often asked: what is the Government's remedy for the situation? But it appears to me that the Government have not yet examined the situation in its serious import in a way which would lead them to believe there is any necessity for a remedy. They know as well as we know that there is poverty, unemployment and an increase in the incidence of diseases like rickets and tuberculosis and all the social diseases; they know that we labour under very heavy handicaps as a nation; but a realisation of the position has evidently not yet got under their skin sufficiently to make them realise that they must do something to end the situation. I give them every credit for honesty of purpose and it is certainly possible to defend them, if you like, by saying that they are doing what they consider best in the circumstances, but the best is not good enough, because they have not yet realised the seriousness of the situation. It may take this emergency within an emergency to bring them up against the stark reality of things. It may take the development of this emergency to make them realise that there is a great deal more in the philosophy of economics and politics than they have yet dreamed of, that they can and will have to take risks in the domains of finance and economics which they never anticipated they would have to take.
They have, to my mind, continually tinkered with the whole problem, but even though they may tinker with wages and hours, an end will soon be reached of the capacity of any Government, within the present system, to tinker with the system. They will find that circumstances will force them to depart absolutely and once and for all from the policy of laissez faire. They will have to leave the pre-war world and come into the open post-war world which is rapidly shaping itself around us. They will have to have a new conception of money and they will have to give up the phobias about inflation and the dangers of tinkering with our monetary policy. I agree, and always have agreed, that there is great danger in tinkering with monetary policy or anything else. You must go at it in a courageous manner and you must take advice which has proved practical in other countries. You must base your monetary policy, your national policy and your social policy upon the possibility of full employment in this country.
I know that money policy is a matter of political high explosive and that it is as likely to lead to the disintegration of the Parties following it as to the disintegration of a political enemy, but I would stress that, in this changing world, explosives and high explosives are instruments of social well-being in many cases. We must use these instruments to effect changes in the thoughts of our Government. We must get the Government and the Minister for Finance to do dangerous thinking in the matter of finance. We must get the Minister to apply his mind to these things and only in that way will he be able to correlate all the different domains of our economy. He will find that it is a good democratic policy to ease the burdens of the farmers. It is as good a democratic policy as the Labour policy to do so, but he will find that it is only possible to do so by a new orientation in finance. There is a golden age of government wherein it should attempt to make fundamental changes that are necessary to its administrative continuance in office. That is a thought well worth bearing in mind, particularly as this crisis looms before us and particularly as we see the growing burdens of taxation in relation to our national income.
Deputy McGilligan talked about the middle class and the burdens they bore. The working classes have always borne the burden of taxation, direct as well as indirect. They are used to pulling in their belts and to bearing these burdens to a greater extent than ever the middle class were, but if we read history, we will see that very often this increasing incidence of taxation has been one of the motive powers of revolution. In France, particularly, the increasing cost of government and the crushing burden of taxation upon the fixed incomes of the middle class drove the middle class into revolutionary action, upsetting Governments and régimes, and from 1830 to 1870 brought about quite a chaotic state of things. We may not have come to that stage yet, but it is undoubtedly a danger signal that our taxation should have increased to such an extent and should impose such a heavy burden upon the middle class. The middle class will undoubtedly become dangerous thinkers, and my advice to the Government is that if they want to save the situation, if they are in earnest about saving the country and about having the interests of the people at heart, they should do the dangerous thinking first and base their policy upon this dangerous thinking in these dangerous times.
