Vol. 97 No. 23
Tairgim:—
Go ndeontar suim ná raghaidh thar £55,757 chun slánuithe na suime is gá chun íoctha an mhuirir a thiocfas chun bheith iníoctha i rith na bliana dar críoch an 31ú lá de Mhárta, 1946, chun Tuarastal agus Costas Oifig an Aire Airgeadais, maraon le hOifig an Phághmháistir Ghenerálta.
There is a slight increase in this Vote, of about £4,669, which is due largely to the changes in the cost of living bonus and increments.
Four months ago, on the Central Fund Bill, I raised a question with the former Minister for Finance, who undertook then to have it examined in his Department. That question was in regard to the effect on the cost of building in Dublin of the rates paid for loans from the banks. The Department of Finance is the machinery on which we have to depend here to advise and inform us and to examine for us the things that are affecting the cost of capital expenditure carried out by local authorities or by the Government. When we dealt with the Central Fund Bill, I raised the question of the undesirability of the Minister permitting the Bank of Ireland to lend money to the Dublin Corporation at as high a rate as 3¼ per cent. for the purpose of house-building. I drew the Minister's attention to some of the facts brought to light in the Report of the Inquiry into the Housing of the Working Classes of the City of Dublin and the position in which the Dublin Corporation found itself in January, 1939, when the Bank of Ireland refused to underwrite a loan of £2,000,000 and then, after publicly declaring they would not underwrite this loan, they to some extent sabotaged the credit of the Dublin Corporation when in April, 1939, they agreed to underwrite a loan of 4 per cent. at 96 for £1,500,000, the money costing actually about 4.1 per cent.
In the circumstances, a reflection had been thrown on the credit of the Dublin Corporation by the Banks' Standing Committee at that particular time and the banks had to take up £650,000 worth of the loan. I indicated the effect on the banking system of that. If the whole of that loan had been taken up by the citizens, the effect on the banking system would have been that £8,800 would have been lost. When the banking system subsequently took up the £650,000, they were actually making a profit of £18,200 a year for the time the loan was due. Therefore, in the complete swing-over, the banking system benefited to the extent of £27,000 on a transaction that it refused to carry out originally and benefited to that extent at the expense of the Dublin Corporation which they did not think was credit-worthy originally.
Because of the importance of the matter, I have brought the facts as they appear to me down to a simple statement. If, on the one hand, the Dublin Corporation were to borrow £1,000,000 from the public, what would the effect of that be on the banking system, it being taken that one-third of the money so borrowed had to be exported and the banking system to be affected by the securities they would have to sell for the purpose of paying for the goods that were imported from outside? Then, on the other hand, what would be the effect on the banking system of the banks lending £1,000,000 to the Dublin Corporation? The Minister did not exactly accept, or rather threw doubt on, the figures I put before him at that particular time, but in response to a request made to him he indicated, in columns 1368 and 1369 of the discussion which took place here on the 14th March, 1945, that he would have the matter examined.
I indicated at that particular time that, if the £1,000,000 was loaned to the Dublin Corporation by the people, the effect on the banking system would be a net loss of £3,333 per annum and that, on the other hand, at the rates at which the banks then lent £1,000,000—that is, comparatively recently, in 1942 or 1943—the banks actually profited to the extent of £19,166 per year. My argument was that, when money in substantial amounts for purposes such as this was borrowed from the banks, the banks should not be paid a rate as high as the rate that would be paid to normal lenders from among the public to the Government.
However, I understood it was arranged that figures presented to the Minister showing the effect of an isolated transaction were to be examined by the Department of Finance and that he was to let us have the result of that examination, so that we might know to what extent we were wrong in our estimate as to what exactly was happening, or in our actual handling of the figures. The importance of the Department of Finance facing up to that question now appears to be greater and greater because, unless we are guided as to the principles upon which the money will be borrowed and the rate to be paid to the public and to the banks, together with the period of time over which borrowing for such purposes as housing will extend, and unless these things are examined immediately, we will be all bogged in arguments for which we will not have any foundation. We want to be able to help one another by criticism and we want to know where we are going.
To show how important such an examination is, I would like to direct the Minister's attention to the report I have already referred to, the report following the Inquiry into the Housing of the Working Classes of the City of Dublin. On page 220 of that report it is stated:—
"We assume the adoption of a building programme of 2,300 dwellings per annum for 20 years, on capital borrowed at 3 per cent. for a 60-year repayment period, and we estimate the financial effects to be as under."
Later on, on page 225, the report says:—
"The total capital expenditure involved would, therefore, be... for 20 years, ... £22,135,000."
Later on it says that the State subsidy, according to certain calculations, would be a total figure of £12,270,000. The total capital expenditure for 20 years in the City of Dublin, building the number of houses I indicated, would be £22,135,000, of which £12,270,000 would be the State subsidy.
For the past 20 years the policy of the Department of Finance and the Department of Local Government has been that moneys borrowed for housing were borrowed for a period of 35 years. If we are now to change the period of borrowing from 35 to 60 years, we ought to examine what exactly the effect will be. I should like to draw the Minister's attention to the tables that deal with these matters under which, for every £100 borrowed for 35 years at 3 per cent.— that is the figure taken by the report here—the capital and interest will be paid off by an annuity payment of £4 13s. 1d. for the 35 years. But if it is borrowed for 60 years the annuity payment will be £3 12s. 3¼d. That will wipe off the interest and principal of the £100. When we calculate the amount of the payment for 35 years— £4 13s. 1d.—we find that in the total paying off of the loan, £162 17s. 11d. will have been paid. The total amount of the payment for interest over the 35 years will be £62 17s. 11d. When we consider the paying off over 60 years of £100 borrowed at 3 per cent., we find that the annual payment of £3 12s. 3¼d. amounts to £220 8s. 6¼d., the total interest payment being £120 8s. 6¼d. as against an interest payment of £62 17s. 11d. where the loan is over 35 years. For every £100 borrowed for 60 years as against 35 years, there has to be paid, in excess interest payments alone, £57 10s. 7¼d. more than would have to be paid if the loan was for 35 years.
When we apply that to a capital expenditure of £22,135,000, we find that as regards this money for house building in Dublin City, over a period of 20 years, if it is borrowed for a period of 60 years instead of the normal period of house borrowing adopted in the last 20 years, there will be paid excessively in interest alone a sum of £12,726,000. The State, according to the suggestions made, will be asked to pay a subsidy of £12,270,000 and the effect of extending the borrowing from 35 to 60 years will mean that an additional amount equal to that huge subsidy paid by the State will have to be paid by somebody, either by an additional payment from the State or an additional payment from the local authority or out of the pockets of the people who are paying rents.
That is a grave enough figure to warrant that we would have guidance not only on the question of the rates at which we are going to pay interest for these capital purposes, but the period over which the money will be borrowed. The situation becomes more serious when we realise that the report in which these assumptions are made —and they appear to give a certain amount of approval to that report— was prepared by the principal officers of some Departments of State, the principal officer of the Local Government Department and a principal officer of the Department of Finance sitting on the Committee.
Let us consider the enormous amount of money that is planned to be spent on arterial drainage and roads and other matters, and the £20,000,000 odd for housing is increased to £100,000,000 for various purposes. Then the importance of the matter becomes greater and greater. We may all have our theories and add up our figures and consider what it means in one way or another, but the Department of Finance is the machinery we have to depend on here to prepare our arguments. It is the Department we have to depend on to keep us straight and we all require to be kept straight in matters so grave as this. I ask the Minister how the inquiries that his predecessor, on March 14th, stated would be carried out have proceeded, and in what way does he propose to publish what he has to say about them? The figures and facts were given in detail then, as well as the effect on the banking system of borrowing by Dublin Corporation direct or from the general public of £1,000,000. There is one other matter to which I wish to draw the Minister's attention. When the Taoiseach was replying on July 6th to the debate on his Estimate, referring to the purchase of goods from non-sterling countries he said, according to the Official Debates, column 2088:—
"As a matter of fact, if Deputies look at this table again—that is, a table given at Question Time in reply to Deputy McGilligan—they will see that from countries other than Britain, as well as from Britain itself, we have got a considerable amount—a considerable amount of goods—They will find that we have got tens of millions of pounds worth of goods from countries other than those in the sterling area. Their sterling, as far as we are concerned, has been negotiable, and to that extent we have been able to avail of sterling in order to get in some of our supplies. There is no indication at the present moment, anyhow, that we will not be able to use our sterling assets to buy in the capital goods that we require, and the goods that we require will be mainly capital goods. It is not a currency question, a monetary question or a financial question that is preventing us at the present time from getting in the goods that we require. What is preventing us is that the goods are not available. They are not for sale or purchase."
That statement by the Taoiseach has created a certain amount of difficulty and misunderstanding for a large number of traders in the City of Dublin, who were looking for currency for the purpose of getting in textiles and other goods from Switzerland and other countries. I understand they were allowed a certain amount of currency in November last, and were told that they could not expect any more currency until May of this year. Although some tens of thousands of pounds worth of goods are waiting to their order in other countries they have not been able to get the currency they expected they would get in May. They have not been able to get any information as to why the currency is not available, or when it would be available. They are not able to reconcile the statement made by the Taoiseach on Friday week to the effect that it is not a currency question is preventing them from getting goods, but that the goods are not available. But there are cases where goods are available, where it is understood currency would be made available in the last couple of months. I ask the Minister to say whether there is any special priority in the Department of Finance, or in any of the other Departments, which would prevent currency being made available for one class of goods, while awaiting the opportunity to get other classes of goods. The Minister will understand how difficult it is for a person with goods on order to be kept waiting for currency to enable him to get them and then to read the statement made by the Taoiseach.
These are matters on which I should like to hear the Minister, and particularly that he would explain how the Department of Finance is going to examine the questions that have been raised. Perhaps he will also occupy himself with certain capitalisation problems, so that we may thoroughly understand what is possible and, in particular, what the Government is doing. I should also like to know whether in view of the necessity of better ordering the availability of capital for local authorities for the increased work thrown on them, it is the intention to centralise borrowing for local authorities or to leave the Dublin Corporation, the Cork Corporation and the county councils to fend for themselves as they have been doing.
I want to raise on this Estimate matters concerning the Civil Service and the attitude of the Department of Finance towards it. The first matter relates to the establishment of an arbitration board for adjudicating on disputes that necessarily arise from time to time between staff organisations and the Department of Finance. Anybody who has to deal with the Department of Finance knows that it is easy to have a dispute with that Department, because it is a rather hard-hearted Department and very reluctant to listen to cases based on reason and justice alone. I am sorry to say that while Governments change the Department of Finance is the one unchangeable factor in this country. It just runs the same under one government as another and shows the same disinclination to reasonable demands under the Fianna Fáil Government that it showed under Cumann na nGaedheal. It is obvious where you have set circumstances like that, that you have a staff with grievances, agitating for the establishment of an arbitration board as something highly desirable in the Civil Service, and which feels that it is not getting a fair deal for the claims which are presented from time to time on its behalf. The Minister knows perfectly well that the demand for arbitration for settling disputes in the Civil Service goes back long before 1932. Efforts were then made to persuade the Cumann na nGaedheal Government to establish such an arbitration board. The Minister for Finance in that Government offered for an arbitration board a spurious counterfeit, masquerading as a representative council which was spurned by a large section of the staff.
But while the staff were agitating prior to 1932 for the establishment of an arbitration board, it suddenly got very strong and very influential support from the Fianna Fáil Party, which was then in opposition. That Party told the staff organisations and the country generally that if it were returned to office one of the first things it would do would be to establish an arbitration board for the Civil Service, as it felt that the Civil Service was not being fairly dealt with and had to fight to have its grievances heard. Similar conditions still operate. In 1932 the Civil Service organisations issued a questionnaire to candidates at the election. One of these was addressed to the predecessor of the present Minister for Finance, then Deputy MacEntee. He was asked this simple question: "Are you prepared, if elected, to press for the setting up of machinery which will provide for the settlement of matters in dispute between the Minister for Finance and the Civil Service by an impartial tribunal, subject to the overriding authority of the Oireachtas?" To that, Deputy MacEntee replied "Yes". In order to emphasise that "yes" he went on to say: "The Fianna Fáil Party has already indicated that it is prepared to investigate grievances, particularly in the lower ranks of the Civil Service, and to provide for the purpose of settling disputes an impartial tribunal."
What is the date of that?
That was in reply to a questionnaire which was issued to the then Deputy MacEntee, who subsequently became first Minister for Finance in the Fianna Fáil Government.
What date was that?
The questionnaire was issued on the 8th February, 1932.
That would not have anything to do with this Finance Estimate.
It has nothing to do with the present Minister for Finance, but it has something to do with the policy of this Government, which we can discuss now. I take it that we can discuss that now. In any case, if Deputy MacEntee's assurance in the matter were not sufficient, we have that of the Taoiseach, who went to the Town Hall, Rathmines, and there declared that he believed it was only right that there should be an arbitration board for the Civil Service to deal with matters between the service and the Executive. We would be prepared, he said, to agree that an arbitration board be set up. These were two very definite promises made at the time by Deputy MacEntee, who became first Minister for Finance in the Fianna Fáil Government, and repeated by the Taoiseach, who is still Taoiseach. I put it to the present Finance Minister that that is the background from which his Government must look at the question of arbitration in the Civil Service. The background is one in which definite promises were made by the Government to set up an arbitration tribunal to adjudicate disputes that might arise between the Department of Finance or the Executive, on the one hand, and the staff organisations, on the other hand. We have had many discussions in this House since then on the question of the establishment of an arbitration board, and various views have been expressed on the question. At one time, certain proposals were formulated by the Government, purporting to establish an arbitration board, but nobody with even the most perfunctory notion of arbitration could discover in the proposals so formulated anything which resembled arbitration, as popularly and industrially understood.
Recently, however, we had a speech by the Minister for Industry and Commerce which indicated that his mind, at least, was converging on the establishment of arbitration machinery to avoid industrial disputes and to avoid the friction which sometimes arises in industry, which often crystallises itself either in strike action or in industrial lock-outs. The Minister then intimated that he was considering the question of establishing arbitration and conciliation machinery of a character which, he thought, might obviate those disputes, which would be calculated to lessen their consequences to the community. The Minister, I think, indicated that it was the desire of the Government to provide machinery of that character and said that he was examining the matter at the moment. I think that he went so far as to say that he hoped shortly to be able to formulate a scheme which will be the subject of discussion between representatives of the employers and the trade unions. If the Minister is to do that— and I look with an open mind on his proposals—the Government will find itself in a much better position in its efforts to induce others to take to suitable arbitration machinery and to rely on that machinery as a method of settling disputes if it can show that it has itself faith in arbitration and conciliatory machinery, that it has introduced such machinery and that it has given satisfaction not merely to itself —it would be easy for the Government to introduce machinery which would please itself—but to the other party to the dispute. So far, however, the only example we have got from the Government in respect of arbitration has been a very bad example, indeed.
One of the Minister's predecessors produced what was described as a draft scheme of arbitration. I described it—not inaptly, I think— not as a draft scheme but as a daft scheme of arbitration. Nobody could be got to look at the thing, it was so repulsive and objectionable when compared with what the Minister promised in 1932—impartial arbitration for the settling of disputes. In the scheme produced by the Minister for Finance, to whom I have referred, there were certain novel features which had a very interesting ring of comedy about them when one considers the purpose for which arbitration machinery is designed. It was provided that there was to be a permanent veto over a wide category of subjects. These subjects could never be the subject of arbitration. In other words, the Minister listed a number of matters and said: "You can never go to arbitration on these matters. I am not going to permit these matters to be discussed by an arbitration board." One would imagine, then, that the Minister had provided himself with all the safeguards he would require. Not at all. After cataloguing a number of subjects which could not be discussed by an arbitration board at all, he provided that, before staffs could go to arbitration, they would have to get the sanction of the Minister, who was the other party to the dispute. Fancy one person having a dispute with another and the person aggrieved having to get the sanction of the other person—the defendant—before he could ask a judge to adjudicate on the merits of the dispute. The Minister for Finance wanted to say: "Before you go to arbitration even on the subjects on which I allow arbitration, you must get my permission and you cannot go to arbitration on any particular matter unless I agree to allow you to do so." Whenever the defendant permitted the plaintiff to take action, he could take it, but if the defendant said: "I do not propose to allow you to take me into court," the plaintiff had no remedy. That is the rôle in which the Minister for Finance of the day posed when he was presenting this scheme.
Novelty did not end there. The Minister said: "A chairman has to be appointed for this board". He recognised that a chairman would be necessary for the arbitration board and, with that disarming democracy of his, he proposed to appoint the chairman himself. Not satisfied with that, he said: "I want to be free to be represented at the arbitration proceedings by anybody I like"—that is to say, the Department of Finance was to be represented by a person of his choice—but to the staff organisations he said: "I am going to prevent you from being represented by anybody you like; you will be represented only by somebody I like". With all these restrictions and handicaps, the board was supposed to hear the case and to make an award. One would imagine that, with all these safeguards, the Minister would, at least, allow the award to be published. Not at all. The Minister provided in his scheme that the award of the board could not be published and he also provided— and this was the crowing piece of humour of the whole affair—that he should have a veto on the award of the arbitration board. Here was the Government's scheme of arbitration— a permanent veto over a great many things which were not to be subject to arbitration, then a preliminary veto on the matters which could go to arbitration, Governmental appointment of the chairman, Governmental proscription of the right of the staff to be represented by persons of its own choosing, non-publication of the award of the tribunal and veto over the findings of the tribunal, if they did not please the Government. That was the novel scheme of arbitration proposed. It was a very different scheme from that which was promised in 1932. I think that the present Minister will realise that that was a palpably unjust scheme of arbitration, that it was a fraud and that anybody who accepted a scheme of that kind would place on their self-respect and on their rights a very low valuation, indeed. It is to the credit of the intelligence and self-respect of the Civil Service that it would have nothing to do with that scheme.
The staff in this matter are asking for no special concessions or no special privileges. They are not asking for any new orientation of arbitration. They are asking for a very simple scheme, what in other spheres of activity is generally recognised as a scheme of arbitration. The staff desire a scheme in which, in the first instance, there will be broad agreement on the matters which may be referred to arbitration. They want agreement between the official side and the staff side as to who shall be the chairman of the board, the desire being to secure an impartial chairman. Thirdly, they concede the right of the Department of Finance to be represented at the arbitration proceedings by any person the Department desires and the staff equally claims the right to be represented by anybody they select. Fourthly, the staff are prepared to bind themselves to accept the awards of the tribunal, whether good or bad, subject to the overriding authority of this Oireachtas. Would the Minister say there is anything unreasonable in a claim of that kind, a claim which accepts the broad generally understood features of arbitration? That is the claim which the staff have repeatedly made in respect of arbitration. I think the Minister will have to recognise that the scheme which they suggest is an eminently reasonable one and that on its merits alone it should be accepted.
There are other considerations which ought to induce the Government to accept a scheme of this nature. One is the fact that if the Government shows by its own example that it can make arbitration work in a manner that will give satisfaction to both sides, then it will be better equipped to approach trade unions on the one hand and employers on the other hand, with this example to demonstrate to all that arbitration is a suitable piece of machinery for the settlement of disputes in industrial affairs. Apart from the fact that it should put its own house in order on the subject of arbitration, before it proceeds to advise other people to accept arbitration for the settlement of industrial disputes, I think in respect of the civil servants, the establishment of an arbitration board which will provide the service with a reasonable method of having its claims adjudicated upon by an impartial tribunal, the chairman being a person in whom the staff on the one hand and the Department on the other will have implicit confidence is a matter of vital importance nationally. I am sure the Minister recognises that a contented Civil Service is a vital national asset. If you wish to get a contented and efficient Civil Service, you cannot get it by creating a feeling amongst the staff that their reasonable claims will be met by an unsympathetic attitude. If you are going to have a contented and efficient Civil Service, the staff ought to feel that, in the event of disputes with the Department of Finance or any other Department, or in the case of disagreement on claims which may be submitted, these claims can be submitted to an independent tribunal which can be relied upon to pass an impartial judgment on the merits of the claims and that the Department of Finance will bind itself to implement its awards subject all the time to the fact that this Oireachtas will have an overriding authority over any such awards and will be the guardian of the public interest as regards the implementation of the awards.
I should also like to hear from the Minister for Finance whether, on the merits of the case alone, or whether, in conjunction with the intentions of the Department of Industry and Commerce regarding arbitration generally, it is intended now that the emergency is over—and there was a promise to revive this matter when the emergency was over—to give further consideration to the question of producing a satisfactory scheme at this stage, a scheme which will be acceptable to both sides, a scheme which will be given a fair trial, a scheme which will be operated by the staff in the desire to make it acceptable and satisfactory. If the Minister can assure the service that he contemplates moving in that direction, I feel sure that his efforts in the matter will be warmly received. If he offers a genuine scheme of arbitration on the basis I have just indicated, I feel sure it would be warmly welcomed. So far as the Department of Finance and the Government are concerned, they will have the satisfaction of knowing that in future they can always feel that there is a suitable impartial tribunal available for the adjudication of these disputes.
There is another matter which I wish to raise, and which has been the subject of representations to the Department of Finance. In the Post Office Department, there is a grade known as engineering labourers. The term "labourers" was, of course, tagged on to justify the payment to these people of low rates of wages for the semiskilled work which they do. Up to 1926 these engineering labourers were paid on the basis of a basic wage and a cost-of-living bonus, but for some reason which has not yet been explained to anybody, not even to the people affected, and without any request whatever from them, the Post Office Department decided it would abolish the basic wage and cost-of-living bonus and pay them a consolidated wage. After long cogitation they decided to pay a consolidated rate of 54/- a week. That was done without any request whatever from the staff. I take it, however, that those examining the matter at the time assumed that the payment of a wage of 54/- a week was based upon a continuance of the then existing price levels, and that that rate of remuneration bore a relationship to the rate which would be operative if the people concerned were paid on the basis of a basic wage and cost-of-living bonus.
Whatever the intention of the Post Office Department, or whatever the economic or fiscal theories of those responsible for the arrangement may have been, the fact remains that, since 1939, this method of paying a consolidated rate of wages has become hopelessly distorted. The result is that the officers affected are now getting a very bad deal under the arrangement for which they did not ask and which, for some reason, was imposed upon them by the Department. Since 1939 prices have risen by 70 per cent. The only compensation the persons concerned have received for the rise of 70 per cent. in the cost of living since 1939 has been emergency bonuses at intervals which now amount in all to 11/- per week. If a person were in receipt of 54/- a week in 1939 and prices have gone up in the meantime by 70 per cent., an increase of 11/- per week does not compensate him for the increase in the cost of living. Quite clearly, such a paltry increase is altogether inadequate to offset a rise in prices of over 70 per cent.
In 1940, however, the Minister for Finance decided he would stablise the remuneration of all those who are paid on the basis of a basic wage and a cost-of-living bonus, on the basis of an index figure of 85. From July, 1940, up to December, 1944, the remuneration of civil servants was stabilised on the basis of an index figure of 85, and the only increases they got during that period were emergency bonuses amounting in all to a maximum of 11/- per week. Towards the end of last year, the Department of Finance, however, realised that it was unfair to stabilise the remuneration of civil servants from July, 1940, when it had not stabilised the remuneration of workers in private industry until May, 1941 and decided, after many representations had been made to it, that, as from 1st January, 1945, it would calculate the remuneration of civil servants on the basis of an index figure of 110, that figure being the figure which was operative in May, 1941, when the remuneration of outside workers was stabilised through the medium of Emergency Powers No. 83 Order; so that, as from 1st January last, those who are paid a basic wage and cost-of-living bonus had their remuneration increased by the difference between a bonus calculated on a figure of 85 and a bonus calculated on a figure of 110.
The engineering labourers, however, the folk who had this consolidated scheme thrust on them in 1926, a scheme for which they had not asked, got no increase whatever under the cost-of-living bonus increase as from 1st January, with the result that they are now in a very much worse position than they would have been if their basic wage and bonus had not been interfered with in 1926, and in a much worse position than are those whose basic wage has a cost-of-living bonus arrangement applied to it at present. In 1926, there was a certain relationship between engineering labourers and the other classes with whom they worked. A certain wage relationship existed between labourers and skilled workmen, classes 1 and 2, which continued up to 1939, but that whole relationship has now been seriously disturbed by reason of the fact that those whose remuneration is based on a basic wage and a cost-of-living bonus have got, as from 1st January, a rate of remuneration which has not been applied to engineering labourers who had the same basic wage and bonus arrangement up to 1926 when, without any request by them, they were taken off that basis.
The work which labourers in the engineering branch do, such as the erection of poles and spinning of wires and the general constructional work associated with that branch of the Post Office, has a high technical value, and on its successful and efficient discharge depends the maintenance of an efficient telephone service. The persons concerned, however, are paid much less than ordinary builders' labourers and much less than ordinary corporation labourers, and, on the merits of their work alone, they are entitled to a higher rate of remuneration than they are getting to-day; but, even apart from their undeniable claim in that respect, there is another aspect of the question. It is that if they were taken off the basic wage and bonus arrangement in 1926 without any request by them and if other grades in the service to whom they had a wage relationship up to 1939 have got an increase as from 1st January, in all equity the Department of Finance ought to recognise that the labourers in the engineering branch should get the equivalent of the bonus increase granted to other grades as from 1st of January last.
The claim made is an extremely reasonable claim. Not a very large number of persons in the entire Civil Service are concerned, and I should be glad if the Minister will look into it, with a view to arranging that the engineering labourers concerned and those others who may be affected in other Departments will be granted an equivalent increase in remuneration to that applied to those other grades of the service whose remuneration is based on a basic wage and bonus.
During the discussion on the Finance Estimates on previous occasions, I, with other Deputies, raised the question of the provision of an increase in pensions for officers who retired from the service after long and faithful service to the community at a time when the cost of living was much lower than it is to-day. The House may be interested to know that in 1931, 1932 and 1933, and since, a large number of officers retired from the service when the cost-of-living index figure was as low as 50 and 55. Their pensions were based on a cost-of-living bonus, but many of these officers are still alive and although their pensions were based on an index figure of 50, 55 or 60 when they retired, they are now living in circumstances in which the cost of living is not 50 or 60, but 195. Having regard to the fact that they were pensioned under low salaries and that the index figure which applied to their basic wages was low, it needs very little imagination to picture the plight of these officers trying to exist to-day on very low rates of pension when the cost-of-living index figure is 195.
Do the pensions not go up and down with the bonus?
No, because there is such a thing in the Department, the British Treasury practice—although I think that even the British have since felt ashamed of the arrangement— known as the overriding maximum. The overriding maximum in its relation to pensions provided that your pension is based on the cost-of-living index figure in the quarter immediately preceding the quarter in which you retire and provides further that, while, if the index figure falls, you can go down and down as often and as far as you like, you can never go above the index figure which operated when you retired. In other words, if you retired when the index figure was 50 and it subsequently fell to 5, you could go down to 5, but if it went up to 195, you could never go above 50.
That is the grievance from which these officers are suffering to-day. I feel sure that the Minister will scarcely attempt to defend pensions in existing circumstances which were related to price levels in 1931, 1932 and 1933 and the subsequent years of depression. We are living now in 1945 and these officers are in a position in which their pensions represent a hopelessly inadequate allowance for their maintenance, and the maintenance of those dependent on them, in return for the very valuable and prolonged service which they gave to the State. So far, Ministers for Finance have turned a hard and stony heart to the demands of these people for an increase in their pensions. But I feel sure that now the Minister for Finance will have to recognise in his own heart that he can no longer justify with holding an increase in pensions from those lowly paid pensioners. They are trying to exist on pensions as low as £1 per week at a time when the cost of living is more than 70 per cent. above even the figure for 1939. In Great Britain and Northern Ireland, where the increase in the cost of living since 1939 was less than half what it was here, the Governments there have granted increased pensions up to 30 per cent. Our cost of living since 1939 has risen by over 70 per cent., while the British increase is something like 30 per cent. or 35 per cent. The British have given an increase of 30 per cent. With the cost of living twice as high as that in Britain, we cannot see our way to grant any increase, notwithstanding the statement by the Minister's predecessors that there was plenty of work in this country for every worth-while scheme. Surely one of the most worth-while schemes in the State to-day is to extend by means of a reasonable pension some fair recognition to those who have served the State for upwards of 40 years—40 years of physical and intellectual perfection. I would appeal, therefore, to the Minister for Finance to recognise that there is a claim here which is well worthy of examination, that its merits are outstanding, and I think if he reflects on the conditions of those trying to live in 1945 on pensions related to the price levels of 15 years ago he will have no hesitation in recognising that a strong claim exists for increased pensions, and that those increases should be granted.
There is another aspect of this pension question, and it is one which has arisen especially in the last four years. In July, 1940, the cost-of-living bonus was stabilised on the basis of an index figure of 85. Every person, therefore, who retired between July, 1940, and December, 1944, had his pension and lump sum calculated on the basis of an index figure of 85. The Government, however, as I indicated earlier, realised that it was unjust to have stabilised Civil Service remuneration earlier than the stabilisation applied to outside industry, that is, May, 1941. It recognised towards the end of last year that that injustice should be put right, and decided, instead of keeping the wages stabilised on the basis of an index figure of 85, to adjust the wages on the basis of an index figure of 110 as from 1st January last. Not only did they adjust the existing wages and existing salaries on the basis of an index figure of 110 but they carried out a similar adjustment in respect of annual pensions which were awarded since July, 1940. In other words, they said to any person who retired between July, 1940, and December, 1944: "We will increase your annual pension as from 1st January on the basis of an index figure of 110 instead of on the basis of an index figure of 85." But they refused to adjust the lump sum payments which were made to pensioned officers who retired between July, 1940, and December, 1944. They said: "In respect of the lump sum we will not make any adjustment whatever", even though the lump was as much portion of the pension as the annual payment, and, as a matter of fact, is enjoyed by officers only on the understanding that they surrender portion of their annual payment, which is now based on an index figure of 110, in order to get the lump sum on retiring.
I think a very serious hardship has been imposed on those officers by reason of the attitude of the Department of Finance in that respect, and I think there has been a wanton disregard by the Department of the contract which was entered into with them. Any man who is now retiring at the age of 65 entered the service prior to 1909. When he entered the service prior to 1909 his pension was calculated on the basis of one-sixtieth of his salary and emoluments for each year of service. But in 1909 a new Act was introduced, and those who were under the previous Act elected to come under the 1909 Act. By electing to come under the 1909 Act, they had to agree that instead of taking a sixtieth for each year of service they would get only an eightieth for each year of service. They took the eightieth instead of the sixtieth on the understanding that they would get a lump sum on retiring. What they did, in effect, was they purchased a lump sum on retirement by sacrificing a fourth of the annual pension which they would ultimately receive on retiring. I think it is clear from what I have said that the lump sum was part of the pension provided for such officers on retirement, and that the logical consequence of that is that it should carry the same rate of bonus as applied to the annual pensions on retirement.
Let us take one anomaly which has arisen in connection with the Department's attitude on this matter, and it will illustrate the injustice and hardship imposed. Let us take two persons who entered the service in 1910. One elected to take a pension based on one-sixtieth for each year of service, while the other elected to take a pension based on one-eightieth, plus a lump sum on retirement. If the pensions of those two persons are examined it will be found that, after serving for 45 years, the person who had his pension calculated under the Act of 1859—that is, one-sixtieth for each year of service —would have an annual pension of £237, whereas the person whose pension was calculated under the 1909 Act —that is one-eightieth for each year of service, plus a lump sum—would have £178. In fact, therefore, he sacrificed £59 per annum in order to purchase a lump sum on retirement. But he now discovers that, whilst he thought at one stage that the lump sum was as much part of his pension as the annual payment, the lump sum has been treated entirely differently from the annual payment. Therefore, what the Department of Finance has done is this: It has said to men who purchased a lump sum by sacrificing portion of their annual pension:—"We will apply an index figure of 110 to your annual pension, that is, to three-fourths of your normal pension, but we will apply an index figure of 85 to the other 25 per cent of your pension".
I think the Minister ought to recognise that this whole matter of the annual pension and the lump sum is one, that it hangs indissolubly together, and that one portion of it is as much entitled to have an index figure of 110 applied to it as the other portion. The Government has recognised that, as from 1st January, all pensions should be based on an index figure of 110, and that salaries related to the cost-of-living agreement should be similarly calculated. The only portion to which they have declined to apply the 110 calculation is the lump sum. There are not so many officers involved. A definite contract was made with them. The cost of conceding the claim from the Government's resources is relatively negligible, and I would suggest to the Minister that he ought to take an early opportunity of re-examining the matter, which, as I said, has considerable merit in it. I hope that examination will convince the Minister for Finance that there is a good case here. He ought to meet that case by applying to the lump sums which were granted from July, 1940, until December, 1944, bonus based on the adjusted index figure of 110 instead of on the index figure of 85, which the Government has recognised was an unfair figure to apply to pensions or remuneration as from 1st January.
Further consideration of Vote No. 5 postponed.
