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Dáil Éireann díospóireacht -
Thursday, 4 May 1950

Vol. 120 No. 12

Committee on Finance. - Motion No. 5—General (Resumed).

I think it is true to say that the financial statement delivered here yesterday by the Minister for Finance has aroused only a ripple of public interest. That is a fact which is more to be deplored by critics of the statement than by the Minister. It was, perhaps, one of the most important statements of that kind ever made to the Dáil. Certainly, in my view, it is likely to have more far-reaching consequences than many of the financial statements of earlier years. The reason why there was no public interest in it is, of course, because the statement expressed little more concerning the manner in which the Government propose to handle the problem caused by the spectacular rise in the cost of the public services than was already known. I should like to congratulate the Minister for Finance upon the astuteness with which he has handled the political problems involved for him. The announcement of his intention to borrow instead of to tax for the Budget deficiency so far in advance of the Budget statement has had the effect of diverting attention from the course of Government policy which the rise in the cost of the public services revealed. If that announcement had been withheld, as a more orthodox Minister for Finance might have withheld it, until the Budget statement, if the full rise in the cost of the public services had been revealed without intimation of the method the Government intended to use to cope with it, then public fear of a possible heavy increase in taxation would have concentrated attention and discussion upon the failure of the Government's economic policy, or the Minister for Finance's surrender of the principles to which he gave expression on his election, and the subsequent announcement of the decision to meet the increased cost not by higher taxes but by resort to the money-lenders, would have had the sensational flavour which the Minister for Finance was so anxious to avoid. We give the Minister full marks for his cleverness in meeting his political problem.

I think the Government as a whole, however, are entitled to share in our commendation on that score. The long-range battle which has been proceeding between the Minister for Finance and the Minister for External Affairs — it is, I think, a sham battle; at any rate, nobody is getting hurt in it — has also served the purpose of diverting public opinion from the essential facts of the Budget position and the critical nature of the Government's decision in relation to it. It has, incidentally, served the secondary purpose of diverting attention from the personal failure of the Minister for Finance. The attempt at misrepresentation of the character of the Government's decision, the references to "national investment" or, where that was inappropriate, to "social investment" or, where that was inadequate, the Taoiseach's delightful expression "expenditure on human improvement"——

I am glad the Deputy likes it.

It was a masterpiece.

Thank you very much. I take that at its true value.

All these phrases have been uttered and reiterated for the purpose of diverting public attention from one fact — that the cost of government services has risen in an extraordinary manner and has risen under the guidance of the Minister who, in his first public speech to this Dáil as Minister, stated that economy and retrenchment were to be the keynotes of his policy.

And there has been no increase in taxation.

Miracles have been worked.

Twenty-two millions.

The Taoiseach by that intervention is trying to do precisely what he had in mind in the speech he made in Clonmel, namely, to divert public attention——

To focus it.

——from the fact that the cost of government has so far outrun the rise in tax revenue that the Government has decided to let expenditure rip. They have given up the effort to cover expenditure by tax revenue and have reached the easy decision to let the cost fall upon the shoulders of posterity who——

They cannot protest.

——cannot protest. They are not represented in this Dáil and they will have no votes at the next elections.

Would the Deputy not put it that the country can now afford to pay for good government?

We are going to inquire, from certain information which we got from the Minister for Finance, exactly what the country can afford. Let me, however, once again put the problem in simple terms — the terms which were revealed to the House and the electorate when the Book of Estimates was published. The cost of public services this year is estimated at £78,000,000. Last year these services were estimated to cost £65,500,000. That is the first and most important fact. In addition, Central Fund services, which previously cost £8,000,000, are now going to cost £9,000,000 — the additional £1,000,000 being consequential upon the borrowing which the Government has already undertaken. It is needed to pay interest and sinking fund charges on these loans. Against that total bill of £87,000,000 for supply and Central Fund services, revenue, as estimated by the Minister for Finance, will bring in £75,000,000, leaving a deficiency of £12,000,000. The Minister told us during the debate upon the Vote on Account that he examined the Estimates for the various Departments. He said he did so for the purpose of ascertaining what sub-heads in each departmental Estimate represented items for which he could justify borrowing and he discovered, as a result of that search of the Estimates, such items which, providentially, amounted to the exact figure of the deficiency.

A strange coincidence.

That, as Deputy Aiken has remarked here, was a coincidence. I wonder how many Deputies on the benches opposite really think it was a coincidence. Are there not a few of them who have a deep suspicion that the Minister merely decided to borrow for the deficiency, whatever it was; that he selected items from the various sub-heads amounting in the aggregate to the same sum, and then set about the more difficult task of producing arguments to justify that course as a policy? We know now what the arguments are. Some of them are a capital investment — they may yield no interest to the Exchequer, but they have been classified as such. Some are a social investment — whatever that exactly means — and some are just "plans for human improvement", a term that would cover anything from the maintenance of a Borstal institute to a ministerial joy-ride in Europe.

Let me say America, where the Minister for Agriculture, on his own admission, wasted a month. Is there any Deputy opposite who does not suspect that if the Revenue Commissioners had estimated that the yield of tax returns this year would be £1,000,000, £2,000,000 or £3,000,000 less than £75,000,000 the Minister would not have gone back again over the Book of Estimates and have found a few more items amounting to £1,000,000, £2,000,000 or £3,000,000 for which he could justify borrowing on the same grounds? Is there any Deputy opposite who suspects that if the Revenue Commissioners had been in the fortunate position of being able to tell the Minister for Finance that the tax revenue would be £1,000,000, £2,000,000 or £3,000,000 more, the scope of State capital expenditure on these items would be contracted by that amount?

I want to discuss this matter very seriously on the basis of two points. Can it be done at all? What will be the economic consequences of attempting it? The Government are going to borrow this year, in accordance with the proposals of the Minister for Finance, some sum in excess of £30,000,000. It will be at least £31,000,000 and possibly more. It is obvious that that cannot be done by any methods, even the methods suggested by the Minister for Finance, without serious consequences. It is a question in my mind whether it can be done at all by any method, but we know that the effort is going to be made; we know that the Minister for Finance has, in fact, now no alternative but to proceed along the road he has mapped out, regardless of the consequences.

He knows there will be risks. So far as the records of the House are concerned, he will be able to point to them and show that he realised the risks he was incurring and that he warned the House, although those who heard him read the statement did not notice any emphasis on the warning, that the programme set out for the Dáil, the policy which he outlined for the Government, could not be carried out at all unless certain conditions were fulfilled. On page 40 of his statement he mentions the risks in the technical terms which he used throughout his whole statement, technical terms which we have to translate into terms which the people will understand. He refers to the risk of inflation. I suppose most Deputies understand the term, but for the ordinary member of the public inflation is something you do with a balloon. What the Minister means is that the course he is now going to follow will occasion a risk that prices will rise. I am now quoting his words as they appear on page 40 of his statement:—

"Apart from increasing the burden on the taxpayer, an unduly rapid rate of increase in the State debt may have other undesirable consequences which it must and will be the aim of the Government to avoid."

One is the risk of inflation. The second — and I hope that Deputies who have made it their business in this House to establish themselves as the custodians of the social conditions of the workers will note the nature of the gamble they are being asked to undertake — is the further risk of a lowering of living standards, the level of consumption, the amount of food that our people may eat, the amount of clothing they may be able to buy; in fact, all the things that make up the standard of living may be reduced by reason of this departure in financial policy upon which the Government has decided. The contraction of normal development, the dislocation of employment, the denial of opportunities of new employment which may be occasioned also by this departure in financial policy—all these risks are there, according to the statement of the Minister for Finance.

The Government may proceed with this policy and find that it can be done; but if, on the Minister's own assumption, circumstances arise in which the policy cannot be followed at all, then the risks are greater still, because they include the risk of a complete economic collapse which it might take generations to recover from. We know, however, that the Minister for Finance has committed himself to this policy of borrowing in order to defray the cost of certain supply services. If he finds that he cannot proceed with it, either because of its effect upon prices or upon the standard of living, or its effect upon normal private investment, or for any other cause to which he referred, he will have to trim his policy. What part of it will he trim?

These supply services which are to be financed by borrowing will be carried through. It is the normal and beneficial capital investment to which no reference appears in the Book of Estimates at all that will have to be curtailed and restricted and we will be left in this position that we will be creating mainly dead-weight debt and not, by reason of any capital expenditure undertaken, adding one iota in a direct sense to the national income.

We got figures yesterday in relation to the national income. According to an estimate, which we were warned was provisional and subject to revision, the national income, valued in devalued pounds, in 1949, was £350,000,000. The Minister for Finance made some adjustments and alterations to that figure; he added on customs and excise duties, subtracted subsidies and then added some figure which represents an estimate for expenditure upon depreciation. He added in the trade deficit for good measure and got a total of £405,000,000 which, he said, represented the pool from which all expenditure of any kind undertaken by the Irish people was made last year.

Let me protest here against the inexplicable and inexcusable delay in producing from the Central Statistics Office estimates of national income and expenditure, equivalent to those published for the years prior to 1945. There can be no rational explanation offered for that delay. Before I ceased to be Minister for Industry and Commerce and in charge of the statistical office the office had reached a stage in preparing estimates for subsequent years which would have permitted the publication of figures. However, their objection to publication of them at that time was mainly on the ground of professional pride. The unexplained items which they were anxious to break down into more understandable parts were, in their view, unduly high, and, while I agreed to postponement of publication while they made that effort to interpret the statistics available to them, I did not contemplate that three years later we would still be with only a rough, provisional estimate, subject to revision for the national income in last year. I make that complaint all the more emphatically because the Minister gave us yesterday an estimate of the expenditure of our people last year upon consumption goods which I find myself unable to relate to any corresponding figure published in respect of earlier years. However, we will take the Minister's figure.

In last year, according to him, the people of this country had from all sources, including the liquidation of external assets, £405,000,000 to spend and of that £405,000,000 they spent £354,000,000 on consumption goods, on food and clothing and so forth, leaving a balance of £51,000,000 which the Minister described as gross investment, that is to say, the total expenditure upon new capital undertakings, upon additions to stock and including the increased value of work in progress. I want the House to note that figure of £51,000,000.

During the course of the debate upon the Vote on Account I suggested to the Minister for Finance that this capital programme which he had outlined could not be undertaken, that there was not available from the savings of our people for investment in Government loans the amount of money that he proposes to borrow. He assured the House that not merely was the amount of money available for investment substantially higher than the figure he gave but that it had been for years past of the order of £70,000,000 a year and he added—I am quoting from column 2513, Volume 119, No. 19 of the Dáil Debates:—

"There has been no appreciable change, no change for the worse, in the finances of the country."

Now, either that figure was wrong and the Minister based his financial proposals for this year upon a wrong figure or else there has been revealed, since that figure was prepared, a change for the worse in the finances of the country.

The cost of living has risen more rapidly than the national income and the amount that is available for investment purposes of all kinds is now substantially less than it was "for years past." The likelihood that the Minister based his decision and secured the assent of his colleagues to that decision on a wrong figure cannot be ruled out. The tactics of members of the Government have always been to overcome the immediate difficulty of parliamentary debate by any device, including the device of giving the Dáil inaccurate information, and to leave the resulting problem to be dealt with when it arises. However, having been challenged, the Minister in his Budget statement gave us a figure. The total amount in 1949 available from all sources for new investment of all kinds was £51,000,000, half of which came from the current savings of the people and the other half, in the form of a deficit on external trade, through the realisation of external assets. Now the half which represents the savings of our people represents all the savings available, including all the profits of every business concern that were not distributed.

During the Vote on Account debate I referred the Minister to a statement of the Central Bank in respect of the year 1948 that in that year the amount of new capital known to the bank to have been raised from the public did not exceed £16,000,000, of which by far the greater proportion was subscribed to public loans. When I suggested in the course of that debate that the current savings of our people available for Government investment or for private investment, for capital formation of any kind, did not exceed £24,000,000 or £25,000,000, the Minister for Finance scoffed at the suggestion. As he himself told the House yesterday, if private capital outlay is to be maintained then the amount which the State is proposing to invest this year, whether it be invested in productive enterprise or in the Budget deficit, can be secured only in one of two ways, either by a reduction of the level of consumption of our people, leading to greater saving, or by enlarging the trade deficit, leading to the repatriation of external assets. The Minister admitted that there was no gain in promoting increased State investment at the expense of private investment. Most of us would regard that as a disadvantage, but it is clear that if he attempts to draw off from the amount available for investment this year any sum approaching half the total amount he intends to borrow, not merely will he stifle normal private enterprise but he will force this country into a position in which all private enterprise will cease and in which any new development in industry or agriculture must inevitably proceed under State auspices.

I have said already that the Government, in ignorance, are leading the country into a form of cockeyed Socialism, and I, for one, believe that more beneficial results will be secured if the Government goes avowedly for a Socialist policy, controlling all forms of economic activity, controlling all investment and taking all the responsibility for the economic consequences of its acts.

Do you believe all that rubbish?

I do. I, as a rule, do not say here what I do not believe.

Just the same as the Irish Press.

The Minister for Finance has doubts himself as to whether this policy which he has adopted, whether on his own initiative or that of some of his colleagues is not known, can be carried through. He stated at page 48 of this document:—

"...the State investment programme can be carried through, without causing inflation or restricting the amount of capital available for private enterprise, if output is expanded, if resources are withdrawn from consumption by increased savings, and any deficiency in the resources so set aside for investment is made good by external disinvestment in the form of imports of goods."

Now, I want Deputies who support this policy, whether out of Party loyalty or because they understand it, to note particularly that paragraph in the Minister's statement. This programme can be carried through only if output expands, if there is a reduction in consumption and increased savings by our people and if we have a considerable increase in the import of goods. The Minister for Finance could have put that statement the other way round. He could have said that in order to carry through this programme it is necessary to secure an increase in output, a reduction in consumption leading to increased savings and a substantial increase in the import of goods.

On the same page he also suggested that there was another essential condition to the fulfilment of his programme — the need, he said, to avoid increases in income not related to output.

"An expansion in consumption generated by increases in money incomes would deplete the resources available for investment and have inflationary consequences."

So not merely are we to work harder and to increase output in order to fufil this programme, not merely are we to consume less so that we can lend increased savings to the State, not merely must we reconcile ourselves to a substantial increase in the import of goods but we must have also something akin to a voluntary standstill of wages. I am not saying it; it is the Minister for Finance who said that yesterday. Did many of the Deputies sitting opposite to me now note these phrases in the Minister's statement? Did they appreciate their significance? The statements are there on the record. They cannot deny in future that the Minister did not warn them of the implications of the policy that he is asking them to approve. Thirty-one millions are to be borrowed. In order to make it possible for the State to borrow that £31,000,000 we have to endure these consequences. There is, of course, an alternative open to the Minister. There are other sources from which he can get money, other sources which, if he applies to them, will involve us in still greater risks. He does not, he assures us, intend to use these alternative methods except in a limited degree. Of this £31,000,000 to be borrowed, the cost of the land rehabilitation scheme, the local authorities' works scheme, harbours development and the mineral exploration scheme is to be defrayed out of the American Loan Counterpart Fund. On the 31st March there was £13,000,000 available in that fund. More will accrue to it during the year. If the Minister's undertaking to the Dáil yesterday is of any value, he is going to utilise that fund for this borrowing programme only to the extent this year of £5,120,000. He could, of course, utilise all the fund. He recognises, however, that it would have precisely the same effect on employment, prices and trade as if he ordered printing presses and printed notes to that value. Therefore, he is not going to have recourse to it to the full extent. Only in the limited measure outlined by him is he proposing to utilise that fund.

Similarly he is going to liquidate certain securities held by various social welfare funds entrusted to his care. The liquidation of these securities would have precisely the same inflationary effect as the utilisation of the American Loan Counterpart Fund. In addition, he hopes to get £5,000,000 through the Post Office Savings Bank, and he has, as I understand it, about £2,000,000 available for investment under various heads which will be utilised in connection with this borrowing programme. He proposes to get the balance, whatever the balance may be, from current savings by a national loan. Unless the balance is substantially less than the figures given by the Minister would indicate he cannot do it. I know he explained the fact that the 1949 loan of £12,000,000 attracted subscriptions from the public only to the extent of £7,500,000 on the ground that he asked the banks not to support it. If I understand the statement he made here yesterday, he is not going to attempt to fill this year's national loan with bank aid either; he is going genuinely to attract the amount of money he requires out of public savings. It will be interesting to see whether he can do it or not. Inevitably, if he tries it the consequences to which I have referred must follow. We have only got a limited amount of money available here for investment purposes of any kind. An effort by the State to draw that money into the Exchequer to finance various State schemes means that it cannot be utilised for the more normal type of development upon which most of us would prefer to rely for an improvement in economic conditions——

Would it be used for that purpose?

By far the largest part of it is used for that purpose. All the undistributed profits of business mainly represent new investments in the business in which they arose and in a country such as ours, where most business enterprises are on a comparatively small scale, the expansion of industrial activity must mainly come from the extension of the activities of these enterprises following the reinvestment of earned profits. That type of development may be regarded as undesirable by some of the pale pinks of this country who do not understand the implication of their own viewpoints but of this I am certain: that we shall get more rapid development, and development over a far wider field in industry, by encouraging and assisting private enterprise than by any limitation of development to State activities. I have no apology to make for the fact that in my time as Minister, I promoted numerous industrial projects under State auspices. I have always defended the doing of that on the ground that, in our circumstances, there were many forms of industrial development that were unlikely to be undertaken or undertaken in a reasonable time by private concerns and that if we wanted to make progress in these fields, we had to do it through State organisations. Despite attacks upon the organisations that we established in accordance with that policy by Deputies on the opposite benches, I was pleased to note that the Minister for Finance was compelled to admit yesterday that they were on the whole successful and successful even on the narrow basis of returning to the Exchequer an amount of money equivalent to the charges undertaken by the Exchequer in financing them.

Nobody here is raising any objection to State investment on any scale on undertakings to increase the national income. All the £19,000,000 of investment of that kind which the State, we are told, may undertake next year, will, in the main, be undertaken on projects that we initiated. So far as the electricity generating programme is concerned, I for one, am not satisfied that the plans of the Electricity Supply Board go far enough. We have never, for years past, been in the position in which we could see the stage at which the output of the electricity would be equivalent to the demand for it. I do not believe that, even when the five new stations now in construction are completed, we will have reached that position. The increase in the demand for electricity is growing far more rapidly than the activities of the Electricity Supply Board in planning new generating capacity.

I cannot understand why the machine turf programme is being delayed, if, in fact, it is being delayed by the non-enactment of the legislation which is on the Order Paper. That Bill, which is on the Order Paper, was ready for introduction in the end of 1947. It could have been submitted to the Dáil in its present form, because it has not been altered by a word, in March, 1948. It was, in fact, introduced here last autumn, but it has never got a Second Reading. It may be that, by some temporary arrangement, Bord na Móna is being facilitated in proceeding with its plans as if the legislation had been passed, but, clearly, it would have been a far more regular procedure, if that is the case, to get the Bill passed through the House. It will be an unopposed Bill, and so the necessary financial arrangements of the board could have been put on a formal basis.

The housing expenditure which is to be undertaken will be in accordance with the terms of the 1948 Housing Act. Telephone development, arterial drainage or any work of that kind which the Government want to undertake, provided it is well planned, will be supported by Deputies on this side of the House. (Deputies: Hear, hear.) When in March, 1948, the Minister for Finance came to this House with the announcement of the first loan floated by the present Government I told him then that, so far as we were concerned, for every well-planned project of national development he could rely on our support and on our support in raising money. We object to borrowing for a Budget deficit. We object to borrowing for purposes that in the past were financed out of revenue because we believe that by doing so you risk the progress of these normal development schemes, because you will restrict the progress of private enterprise and because you are taking these unnecessary risks with the people's standard of living and the level of employment.

Let me be clear in this regard, that in so far as there are set out in the Book of Estimates particulars of the various sub-heads for which the Minister for Finance proposes to borrow in this year, I would not contend that the whole charge represented by these sub-heads should be met out of tax revenue. We borrowed for the Transition Development Fund. The Minister decided last year to wind up that fund, but he has changed his mind, and he proposes to allocate a further £2,000,000 to that fund in this year. Borrowing for that fund initially was fully justified. It was established on the assumption that building prices would reach a peak in the year or two after the war and then fall again, and in so far as it was undesirable either that housing authorities should postpone their activities until the fall in prices occurred or that houses built during that period should cost more either to the local authorities or their tenants than houses built subsequently, it was desired that the peak should be removed by the making of exceptional contributions from the Exchequer. If that fall in prices has not occurred or is not anticipated, if, in fact, the height to which building costs rose in those peak years was not a peak but the normal level for the future, then if it is necessary to increase the measure of State aid to local authorities undertaking housing, it becomes less justifiable to borrow for that purpose, because that aid will have to be continued year after year so long as the housing programme is continued.

I suspect that Ministers realise fully the lack of justification in their policy because they are at such pains to misrepresent it. So far as we are concerned, you cannot go fast enough with the housing programme. We do not think you are going fast enough. We do not think that the assurance that housing activities would not be impeded by financial difficulties has worked out in precisely that way. We think there are impediments to housing output which the Government are capable of removing but which they are disinclined to tackle.

In so far as the £14,000,000 which is to be spent on housing next year represents an investment in housing, we are agreeable to it being met by borrowing. Nine million pounds of that £14,000,000 will represent advances from the Local Loans Fund to local authorities. The Local Loans Fund has always been fed by the proceeds of Government borrowing, and it is legitimate to continue on that course. I will raise a question mark concerning the expenditure from the Transition Development Fund. I think that borrowing for the purpose of that outlay is justifiable only on the assumption that was made originally, that a reduction of building costs was to be anticipated next year or the year after. Borrowing for ordinary housing grants cannot be justified on any ground. What are these housing grants? They are subsidies for rents; they are moneys given out to local authorities on the one hand, or to private individuals on the other, to enable them to get dwellings at a price or at a rent that is less than the economic price or economic rent. It is a social welfare scheme. It is as much a contribution from the general community to the standard of living of the individuals who benefit under it as is the children's allowances scheme. There is just as much justification for borrowing to pay children's allowances as there is for borrowing to pay these rent subsidies.

Furthermore, there is nothing abnormal about the payment. It is to be assumed that this housing programme will continue year after year, as long as most members of the present Dáil will live, and that year after year money to that amount or to a larger amount will have to be voted against the cost of these grants. Borrowing for that purpose is improvident finance, and I submit that the only reason why the Government decided upon it was that they were anxious to find some means of avoiding the increase in taxation which the rising costs of other Departments of State would have necessitated.

I want to raise also the proposal to borrow the entire cost of the land rehabilitation scheme. I did not oppose vigorously that proposal when it was first announced to the Dáil a year or so ago. I have no objection in principle to the State borrowing to meet expenditure which can reasonably be expected to result in an expansion of national production and, consequently, in State revenue. But does any Deputy here believe that expenditure under the land rehabilitation scheme is adding to the capital value of the land benefited or to the productive capacity of the land in direct relationship to the total expenditure? Do Deputies believe that?

A Deputy

Yes.

Are Deputies trying to tell me that the market value of the land after the money has been spent on it will increase by the amount of the expenditure? Why should we borrow for the administrative expenses involved in the scheme? Are the civil servants who are administering it a capital investment or a human improvement arrangement? Is there any reason why that part of the cost should be borrowed? The same thing applies to the Local Authorities (Works) Scheme. Some proportion of that expenditure might be met by borrowing, just as in the past a proportion of the outlay on forestry was met, but only a part, not the whole. I have not got the information which would enable me to arrive at a personal calculation as to what proportion of the capital expenditure could justifiably be regarded as an investment of the kind described by the Minister for Finance, but I am satisfied that the whole of it cannot be justified.

You said none a moment ago.

I did not. I am not responsible for what the Deputy understands; I am responsible for enough. In the past these kinds of charge on the public purse were defrayed out of tax revenue. That may have been a form of finance which imposed burdens on our people at the time when the expenditure was being undertaken, but that is the time the burden should be imposed.

What is the proposition of the Government? We are going to spend under these various heads £12,000,000 this year. We are going to recover that £12,000,000 at the rate of £650,000 per year over 30 years. Next year, presumably, if the Minister is still determined to avoid increased taxation, a much higher deficit in the Budget will involve still higher borrowing and another imposition of £650,000 or a larger sum per year over 30 years, and so on for every year so long as this policy is followed. In ten or 15 years' time there is going to be a Minister for Finance forced to allocate out of the public revenue millions of pounds every year, millions that he would wish to spend on the improvement of social welfare services or in some other manner beneficial to the people who are paying the money, to pay for the benefits that we will be enjoying this year. That will be known, no doubt, as the McGilligan legacy. In 30 years' time they will still be paying and the McGilligan legacy will then be joined in Irish folklore with the curse of Cromwell.

That is not the only additional charge upon revenue which will follow from this policy because, over and above the £650,000 per year which this year's expenditure will impose and the expanding charges which next year's expenditure will impose, we are undertaking a capital liability for other purposes involving interest and sinking fund payments of probably not less that £1,000,000 per year. We are proposing to do that again next year. Therefore, as the years pass, an increasing proportion of the State revenue must be appropriated to the financing of these capital liabilities, meeting the obligations involved in the increase in the dead-weight State debt which the Government are asking us to undertake this year.

As I have said, posterity cannot object because they are not here to object, but some of us should look further ahead than the next election. Is it not obvious to everybody that the real reason why this policy has been adopted is because it is a popular policy — I admit it is a popular policy — that it will be an easier task for Deputies opposite to convince the people of the country that they need not pay now; that they can leave the job of paying to somebody else later on; that it will be for us to convince them that it would be in their interest to pay now. They will have the easy task. It is only later people will realise how they are going to pay, when unemployment begins to mount, when prices begin to rise, when the necessary curtailment of the standard of living is experienced, and no doubt Deputies think they will be able then to find some method of blaming Fianna Fáil for that also.

I have said that there are circumstances in which the State would be justified in not attempting to meet the whole of its expenditure out of current revenue. I think that that course is practicable and desirable and has successfully been applied in countries like Sweden during periods of trade depression, during periods when there was a deflationary fall in prices, during periods when the total outlay of the community on consumption goods was inadequate to take up the entire current output. But do these conditions exist now? The Minister warned us that the conditions which exist here are the reverse. Is he not telling us that we are still facing the danger of active inflation and is it not precisely in the teeth of this warning he is recommending us to follow a course which is the reverse of what good policy would indicate? Our situation is not so fundamentally different from that of Great Britain. The British Chancellor of the Exchequer did not go to the British Parliament and say: "We can borrow and spend this year and let those who come after us pay." On the contrary, he impressed on the House of Commons the necessity for budgeting for what he called a genuine surplus and he produced above the line, to use the Minister's phrase, a surplus almost equivalent to the whole of his expenditure below the line.

Great Britain is a debtor nation; we are a creditor nation.

That is the difference? How does it involve the issue which is raised here, the spending of money which is not earned? If there is the danger of inflation to which the Minister referred, he should be budgeting for a surplus and trying to draw off excess purchasing power, to draw it into the Exchequer, and thus check the rise in prices which will otherwise occur. Instead of that, he is like a doctor applying the wrong remedy, who tells a postman suffering from bunions that he should take more exercise or a D.T. patient that he needs a stimulant. That is the advice we are getting from the quack who is now put in charge of the national finances.

I have asked why we have to undertake these risks and to face these probable consequences of the Government policy. The sole reason is because the Minister for Finance failed in his attempt to apply the policy of economy and retrenchment which he announced when he was elected. That is the sole reason. If he had been successful in finding economies, if he had tried to apply his policy of retrenchment, this situation would not arise. Remember this: in the year 1947 Deputy Aiken brought a Budget here based upon Estimates for Supply Services totalling £52,000,000. A spokesman of the Fine Gael Party greeted that Budget with the statement that expenditure at that level imposed an intolerable burden on the people. Later in that year, when food prices began to rise and the Government decided to check the rise by introducing the policy of subsidies, there was a second Budget.

Under that second Budget, expenditure on supply services rose to £58,000,000. Did the Deputies opposite not make that the main plank of their election platforms? Did they not argue against Fianna Fáil on the ground that taxation at that level was more than the country could bear—that expenditure on that scale was beyond our means? Was an assurance not given by the present Minister for Finance that expenditure would be reduced below £58,000,000, even to the extent of £10,000,000? Very well. He came here himself, as Minister for Finance, in 1948 with a Book of Estimates which he repudiated. He told the House — and Deputies here remember what he said — that these Estimates had been prepared by his predecessors; that he had no responsibility for them and that his sole concern was to examine them to see how they could be reduced. They amounted to £65,000,000. "Prodigious", "prodigal", "extravagant"—these were the three adjectives the Minister used to describe expenditure on that scale. Does any Deputy remember the typical McGilliganesque use of these terms? He said that it was preposterous that he, as Minister for Finance, should be asked to inflict upon the country the burdens involved in an expenditure upon public services amounting to £65,000,000. He would reduce them by £6,000,000 in a year. Did he? He came back in 1949 with Estimates for the public services amounting to £70,000,000. He did not, it is true, completely forswear the policy of economy then. He still paid lip service to it. He again professed to be engaged in seeking possibilities of savings. He comes back this year with Estimates totalling £78,000,000 — and the policy of economy completely in the discard. He is now glorying in the expanded expenditure of the Government and advancing as a policy what previously he represented as a catastrophe.

And why have we got to handle this problem? It is because his failure is disastrous to the whole economic future of the country; because he and his colleagues lack the moral courage to go to the Dáil or the people and say: "Yes, we failed to check expenditure" or "We decided our policy was wrong and that the right policy was to increase expenditure, to provide new services. You cannot get higher expenditure on new services unless you pay for them and we think it is desirable you should have them and should pay for them." That is the course we took — I grant you that it was not popular — when we went to the country in 1947 and said: "We think food prices should be subsidised and that the cost of living should be stabilised at its then level." We said that in order to do it, we wanted more money and that we proposed, therefore, increasing the tax on beer and tobacco. We understood fully that we were giving a stick to our political opponents but we thought it was the right policy and we were prepared to take the consequences of it.

The idea that you can lead people to believe you can get something for nothing will bring the whole country into the bog of bankruptcy — the Minister for Finance will remember that phrase. This Government has not reduced taxation. The rates of tax upon beer and tobacco were reduced — that is true — but the yield of taxation is increasing. I grant the Minister all the satisfaction which he is entitled to feel because he came into office when the country was emerging from wartime to normal conditions; when supplies were improving; when trade was reviving. Taxation at the old rates began to bring in more money. The petrol tax yielded only half the amount it is yielding now but then there was only half the amount of petrol available. Revenue from customs duty has expanded by £4,000,000 or £5,000,000 because there are more goods upon which duty can be charged.

Income-tax is yielding more because there has been a devaluation of money and wages are, therefore, rising and workers are now paying income-tax who never paid it before. Because of the expansion of the yield of revenue, the Minister got in last year, or expects to get in this year, £9,000,000 over and above the amount collected in 1947 even though the rates on taxes in force have not been increased. But this increase in expenditure has not ended. The reason the Minister decided on this policy of borrowing for a Budget deficit in this year is because he knows that the problem he will have to face next year will considerably eclipse this year's problem. Can we get an assurance from the Minister that the rise in expenditure will stop? We will get no such assurance, I am certain. He has taken off the controls. He has said to his colleagues: "I am not going to fall out with you just because you want to spend money. The more money you spend the more I shall have to borrow, but, so long as there is any money left in the country to borrow, go ahead". He knows that next year the rise in expenditure will be greater still. The reason why he has adopted this new financial departure now is because he thinks it could be easier to convince the country that it is a new policy on this occasion than it would be next year, when his failure to fulfil his preelection pledges and post-election undertakings to economise will be more glaringly obvious.

Social services will have to be met next year.

And I suppose it is a "human improvement" to be met by borrowing. The fact is that the country and its future economic development is being sacrificed to the political interests of Fine Gael.

I wonder now.

Exactly. The whole of this policy was decided upon so that it would be possible for them to carry along with them to the Division Lobby the fellow-travellers who are now interrupting.

That is what you think.

That is why you are standing over there now.

We are here — and I am not denying it. And I will say this also to the Deputy: so long as he keeps on refusing to vote for increased taxation of any kind, there will be no increased taxation — and for quite a while that is going to be a popular policy. But some time unemployed workers in County Wexford, facing rapidly increasing prices and a disintegrated economic organisation, are going to realise that their condition is the Deputy's responsibility because he had refused to face up to the obligations of his position in this year and thereby they will hold him to account.

Will they send for you to reimpose the wages standstill Order?

During the war there was a wages standstill Order imposed in almost every country, including countries with Socialist Governments, because that was considered to be the best arrangement that would protect the interests of the workers. We revoked our standstill Order before any other country in Europe.

But profits were made here of a kind that were not made in any other country.

The Deputy may make a cross-roads speech if he likes, but I have tried to put before the House a serious warning that even though the course the Government are pursuing may seem to be a popular one, ultimately it will be disastrous to the country. If Deputies face up to their duties as public representatives and decide to follow the right course, whether it is popular or not, whether it gets them votes or loses them votes, they will vote with us against the proposal which the Minister for Finance has put to the House.

Is the country doomed after two years?

The last point made by Deputy Lemass was that this policy was being supported because it was politically popular. I would like to point out to the Deputy that, in so far as some of us on this side of the House are concerned, this is not a new policy. It is a policy which we advocated, not because we believed it was popular, but because we believed it was the right one, and we supported that policy before we ever came into this House. It is not a new policy so far as the Clann na Poblachta Party are concerned.

I feel a certain amount of sympathy with Deputy Lemass and other Deputies opposite. Deputy Lemass quite obviously finds himself in a rather difficult position. He expected that after two years of inter-Party Government, with Deputy McGilligan as Minister for Finance, he would be able, to put it colloquially, to go to town on Deputy McGilligan. Deputy McGilligan, as Minister for Finance, is the man about whom the most horrifying warnings and admonitions were addressed by Deputy Lemass to those of us who sit on this side of the House. In 1948 Deputy Lemass, more in sorrow than in anger, shook an admonitory finger at us in Clann na Poblachta and warned us of the terrible character who is now Minister for Finance, the man with the mania for retrenchment, the man who made a fetish of economy for economy's sake.

That is what he said himself.

He warned us to such an extent that some of the more naïve and innocent of us had our night's sleep disturbed by pictures of Deputy McGilligan with redskin feathers sticking out of his head, chasing through the Estimates with a tomahawk, Great Chief Who-Would-Skin-His-Grandmother-for-a-Halfpenny. That was the picture painted for us by Deputy Lemass in 1948. I have the most complete sympathy with the Deputy in now having to come to the House, make a complete about face and attack Deputy McGilligan, Minister for Finance, for a policy which, according to Deputy Lemass, lacks that caution and conservatism which he has now elevated into the position almost of a deity.

Yesterday Deputy Aiken described the Budget as a rake's progress. We on these benches welcome it as progress. We believe the ideas enshrined in the new departure in our budgetary system are progressive ideas suited to our particular situation. I would like to ascertain from Deputies opposite, if I may, just what their attitude is. I listened with attention to Deputy Lemass and Deputy Aiken and I am still not quite clear as to what the Opposition attitude is. Are we to take it that they desire the cutting down of the recently increased expenditure on old age pensions? Are we to take it that they are opposed to the land rehabilitation scheme and the expenditure which it is proposed to make under it? Do they think that it is proposed to spend an undue amount on afforestation? Are they apprehensive that the Government's hospitalisation policy is being too rapidly and too vigorously pursued? Are they worried that the Government, which they warned the people was opposed to the development of our turf resources, is now going ahead too boldly with plans for further turf development?

These are questions we are entitled to put to Deputy Lemass and his colleagues. These are questions which, even if we did not put them, the people of the country would.

Mr. de Valera

And they have been answered.

I am not fitted to answer for Deputy de Valera's Party. I suggest that when the Deputy is speaking he should underline the answers that he states are already given, because, in my abysmal ignorance, I do not know the answers, not even after listening to Deputy Lemass and Deputy Aiken. If I thought I knew the answers before, I am now convinced I was wrong.

The whole effect of the diatribe that we heard from Deputy Lemass would lead one to believe — I hope I will be corrected if I am wrong — that Deputies opposite were opposed to expenditure on these projects. However, Deputy de Valera has indicated that he will make his Party's attitude clear.

Mr. de Valera

It was made quite clear in Deputy Lemass's speech.

I am sure that the Deputy will have some regard for those of us with feeble intelligence and he will underline the answers.

Mr. de Valera

The main point is to pay for things as you go along, the things that you enjoy.

Am I to take it from that interjection that where development is of such a nature that it is not possible to meet it out of current revenue, then development must be put to one side and we must forget about it? We cannot do that.

Mr. de Valera

And the answer to that was given, too.

The Deputy will have ample opportunity to answer all these questions. I am not quarrelling with the Deputy's interruptions, but he will have ample opportunity of answering. Am I right in assuming that the questions are awkward and embarrassing for Deputy de Valera?

Mr. de Valera

Not at all. I would not have answered if they were.

That is perfectly true, anyway.

Acting-Chairman

Deputy Lehane.

The case appears to be made that capital development which cannot be undertaken out of current expenditure can never be undertaken at all. Deputy Lemass did qualify that and say there was a certain percentage of proposed capital development which he thought could properly be financed by borrowing. He did, by implication, suggest that there was another portion which could not and should not be financed by borrowing.

Our approach to this matter is that this country is under-developed. It suffered in the past from under-investment. As a result of that, we have had men and money both leaving the country. In the very nature of things, we are making up a time lag. We are forced into the position that we must do in two or three years that which, had our history been a normal one, would have been achieved by a process of evolution over a period of 50 years. We have heard all the fears and all the phobias and all the apprehensions aired here to-day. Consider for a moment what the position would be if we now had a state of emergency such as existed between 1939 and 1946. Would not this Dáil willingly agree to the raising of money by any normal method in order to defend the neutrality of our country?

In so far as Clann na Poblachta is concerned there is a state of persistent war, a war which must be waged against poverty, against unemployment, and against emigration. If the pundits of orthodox financial methods, the conservative spokesmen of the old order and the old idea say: "You cannot adopt these methods even to combat unemployment, emigration or poverty; they are unorthodox," then I am perfectly prepared to retort: "Orthodoxy be damned; let us do our job in so far as we can at any rate to eradicate these evils from our midst." Those of us who remember the Party opposite in its earlier days when some of us had considerable faith in it never thought that we would see the day when Deputy Seán Lemass would be the evangelist of financial orthodoxy, much less that we would see him worried at the spectacle of Deputy McGilligan, as Minister for Finance, adopting a line of action too revolutionary for Deputy Seán Lemass.

Unprofitable — not revolutionary !

Deputy Lemass was quite obviously trying to persuade the House and the people that there was some real objection to the proposals put forward here. I suggest to him that in his heart of hearts he knows there is only one thing wrong with the proposals, that is, that their successful implementation will mean the end of Fianna Fáil as a Party. Deputy Lemass was sitting behind his busted flush trying to do as well as he could in the circumstances, but in this particular instance we on this side of the House are holding four aces.

Holding six cards — that is the trouble.

Deputy Lemass spoke in a gloomy, pessimistic strain of what was in store for the country as a result of the Government's decision to adopt the double-budgetary system. He seems to forget that as recently as on the occasion of the Vote on Account, when some of us referred to this as a rather new and startling departure but one which we welcomed, we were told that there was nothing new about this, that it had been done for years and that we were talking through our hats. We were told that by the Deputies sitting behind Deputy Lemass.

A man can take a glass of whiskey every day for a year, but once he starts taking a barrel a day that is something revolutionary.

Deputy Lemass appears to forget that in the summer of 1947 he indulged in gloomy prognostications when he made his famous austerity speech. I will refer the Deputy to the exact date later. He overlooks the fact that his gloomy prognostications then came to nothing. Admittedly, the Deputy's forecast then may have been based on the fact that the Deputy was of the opinion that he would continue in office and his calculations may have been upset because of the fact that there was a change of Government. In so far as the majority of the people are concerned, if they were now asked to judge on the question as to whether his forecast in the summer of 1947 was inaccurate, they would be quite satisfied to say that it was.

A point was made that expenditure has increased. Great play was made on that by Deputy Lemass. Expenditure has increased. The point Deputy Lemass overlooks is that taxation has not increased. Due to the policy pursued by the Government, the country is more prosperous, the national income is rising, the amount of money upon which the Government can call has increased. Deputy Lemass overlooks all these things. I put it to him while he was speaking that the country is now in a position to pay for better government. I will make him a present of the fact that it is not cheaper government. It is better government. It is not cut-price government.

The suggestion was made that the Minister was borrowing merely to pay for a deficit in the supply services. I may be obtuse and I may be stupid, but I certainly could not understand from the Deputy one intelligent argument in support of that assertion. There is no attempt to cloak the items upon which it is proposed to make this capital expenditure. The only concrete criticism made by the Deputy on any item was that directed to the £1.7 million for housing grants. He referred to that as an expenditure which would go on from year to year. He overlooked, in the first place, that that is an expenditure not merely to subsidise rent or to subsidise prices; it is an expenditure necessary to give people an incentive to build their own houses. In so far as the point which he made that this is an expenditure which will recur from year to year is concerned, if he gives that even a minute's consideration he will know it is not so because, while there will be the normal replacement necessary, you will not have the amount of building which we have at the moment.

One thing for which the Minister, I think, should be commended was his acceptance of the principle that

"it is the primary responsibility of the Government to promote the continued and efficient use of the national resources in men and materials."

I commend the statement also in which he went on to say that

"the State is expected not only to maintain the essential liberties of its citizens but to take an active part in securing conditions favourable to their material well-being ... to ensure that there is adequate capital investment to develop the national economy and to provide ample opportunities for productive employment."

Mind you, these are very significant statements coming from the Minister for Finance about whom we were warned by Deputies opposite that we would have to beware of him, that we would have to look out for him when he went round with his axe or his tomahawk — I am not quite sure which — looking for projects dear to our hearts and to our policy, for the purpose of lopping them off, cutting them down and dispensing with them altogether.

You have him on a string now.

You see, what is annoying the Deputy is his forecast that this Government would not last six weeks. Then it was going to last only six months.

Mr. de Valera

We thought you had some principles.

Yesterday it was Deputy McGilligan who had no principles; now it appears we have no principles. What is really annoying the Deputy is that this Government has found it possible to work together on a basis of reasoned discussion.

Mr. de Valera

What about your promises to the electorate?

The Deputy himself is the father and mother of broken promises.

There has been found on this side of the House a willingness to see another point of view, a point of view perhaps from which one may differ very radically, but an acceptance of the fact that it is our job to pull together as well as we can for the good of the country. Let me say that I think it is a pity from the point of view of the country that the suggestion made by the Leader of Clann na Poblachta, when this Dáil first assembled, that an all-Party Goverment be set up, was not accepted by Fianna Fáil, but they made their bed and now they can lie on it.

Mr. de Valera

We much prefer it.

Mind you, they are going to lie a while on it.

Mr. de Valera

Wait until the people get a chance.

Deputy de Valera's interjection reminds me of a comment which I think I am entitled to make. I was amazed at the doleful approach of Deputy Lemass to this Budget from the point of view of his own Party, because the concluding note upon which Deputy Lemass sat down was that this was a dishonest Budget, but that it was a politically popular one. I think I dealt with that suggestion at the outset. We do not support a Budget because it is politically popular. We advocated the double budgetary system before Clann na Poblachta ever had a representative in Dáil Éireann.

There are one or two minor matters upon which I should like to compliment the Minister, one in regard to which I attempted on several occasions to exert pressure upon him. That is in reference to the question of authors' royalties and their liability to United States tax in respect of sales in that country. I understand from the Minister's statement yesterday that as soon as the convention is ratified by the United States Government these royalties will be no longer liable to double taxation. Am I right in that?

At least the anomalous position which existed has now been remedied. The Minister in the course of his statement referred to the fact that he did not like the idea of discriminatory taxes. I am very glad that the Minister was not in a position to follow his inclination because he would have to meet a lot of very severe criticism, from Clann na Poblachta at any rate, if he had attempted to reduce the 25 per cent. tax. It is essential that that should be retained.

The Minister referred also to the proposal to make additional grants to university institutions. In that connection I should like to make one comment to the Minister and to underline it as strongly as possible. If the Minister proposes to make any additional grants to University College, Dublin, I, for one, will oppose them until such time as they alter their policy with regard to the question of Irish for the entrance scholarship examination. They are out of step with the nation. They are pursuing a policy hostile to the language. I merely mention it inasmuch as the Minister referred to it in the course of his speech. I mention it now as one matter upon which I shall be opposed to him unless the university authorities reconsider their decision with regard to an Irish version of the papers for the entrance scholarship examination.

A budget should be an indication of the economic and social policy of the Government. I think it is safe to say that this Budget complies with that obligation. It discloses an economic and social policy whereunder the care of those sections of the community least well able to take care of themselves is a primary consideration of the Government. It discloses a policy of developing and making productive our national resources. It discloses a policy of belief in the future of this nation, belief in the future of the Irish people. For that reason I compliment the Minister on his statement and I shall support the Resolutions.

I am always interested in listening to Deputy Lehane speak on all the matters debated in this House. I am interested because I take it that when he leads off for Clann na Poblachta, he is to a certain extent acting as the spokesman of their policy at the moment, whatever it may be. I have a clear recollection of the full comprehensive policy of Clann na Poblachta, as announced before they came in here as a Party, with specific reference to certain matters under discussion to-day. Deputy Lehane, in concluding, paid a tribute and compliments to the Minister for what he considered the active manner in which the development of our national resources was going to take place, as exemplified by the Budget.

One of the items to which the Clann na Poblachta Party, and Deputy Lehane in particular, has a very strong commitment is reafforestation. From the Budget statement, and from the Forestry Estimate which is still before the House, it is quite clear that afforestation, as envisaged and announced by Clann na Poblachta — they committed themselves to putting it into effect— is only a pipe dream that will never be realised, even to the extent of 1 per cent. of what Clann na Poblachta promised. Does Deputy Lehane remember that, under his reafforestation scheme, we would not only have sufficient timber to meet the demands of our own country, but would actually have a sufficiency of timber over to enable us to make all the industrial alcohol that we wanted to propel our motor cars?

I never said that.

If the Deputy consults his election literature he will see that he did.

Not the reference to alcohol.

Do you not remember saying that from the surplus timber available we would be able to get sufficient industrial alcohol for the running of many industrial projects? We are now down to 25,000 acres a year for reafforestation. That is the aim as regards the acquisition of land, and the money provision in the Budget and in the Estimate is measured to that acreage.

Give us time.

They were going to acquire millions of acres for this purpose, but we are down now to a target of 25,000 acres, with the proviso "if it ever can be reached." When the Minister introduced the Budget yesterday, I came to the conclusion that it was, to a great extent, becoming a waste of time of the House to have a Budget introduced at all. We have reached the stage now where the Government has concluded that taxation, in their opinion, from the point of view of direct taxation and possibly indirect taxation, had reached the maximum which they would care to impose on the people, while expenditure has gone far in excess of what they promised it would ever reach, and since it would be impossible, without complete disruption, to get a balanced Budget to meet this excess of increased expenditure, the present attitude is: "Leave taxation as it is; whatever we are short let us borrow it." In this year the total commitments to be met by borrowing reach over £31,000,000. In other words, it is a confession that Government expenditure has now gone beyond the capacity of the taxpayer to meet by direct or indirect taxation. That is what the present Budget conveys.

I heard and read in the Budget statement — I cannot understand what is at the back of it — that the Minister to encourage and increase consumption of tobacco was leaving the tax on tobacco as it is, but was removing the imperial preference in order to direct the consumption of tobacco to American tobacco. I wonder is that not just a device to ensure that some or more of the Marshall Aid money will be used up and brought into our Counterpart Fund for the purpose of using it as an extra amount to be borrowed from the Marshall Aid fund. I cannot understand why there should be any change in that or why it should be suggested that there was a hope that increased consumption of tobacco would help the particular device that is being adopted. It clearly shows to me that the position is this: that the present Government want every penny of that Marshall Aid money used up. We all know that the only way it can be used up is by spending it in the States on goods or commodities of whatever kind they may be, though we were led to believe that Marshall Aid would be used almost exclusively for the purpose of bringing machinery and other items into this country to improve our productive capacity, and so help us to contribute to the delivery of additional supplies to European countries in those commodities which we might be able to export.

But now there is a change in Europe and there will be less need there for certain of our commodities, as shown by the drop in prices. The immediate concern would appear to be to make sure that goods will be purchased in America, irrespective of what purpose they are going to be used for, so long as the money is spent and the equivalent in sterling is put into the Counterpart Fund. The result of that will be that when the Minister needs an additional £5,000,000 he will be able to issue a State loan and take out that money. Now, in addition to the goods purchased by Marshall Aid, a great number of them will be taxable on arrival here and so that will help to keep the revenue buoyant, as it is called. That may have practical results from the point of view of the Exchequer in the present year, but we have to remember that Marshall Aid ends in 1952. What are we to do then? The year 1952 is not so far away. I have heard some Deputies in cross-talk in the House saying: "What do we care if there is a burden on posterity"? But 1952 will be here in our time and there will be a very drastic change in the repercussions on our economy when Marshall Aid ceases, apart from the fact that the repayment of Marshall Aid money will then become due.

It also appears to me rather a strange form of economy which we are developing in connection with the purchase of feeding-stuffs, such as maize, in large consignments to feed our live stock and, as has been announced, to walk the live stock off the land for export for sterling. I tried to examine the minds of the people responsible for the framing of this Budget. I wonder whether there may not be at the back of the mind of the Minister for Finance the idea that we are going to have another devaluation of sterling. In that event, the amount we will owe will assume a different aspect. If we are faced with another devaluation or a series of devaluations, the amount we borrow now will have to be repaid in the form of the currency which will succeed the present currency.

Deputy Lemass has tried to draw attention to the attitude of the members of the Government Parties when discussing Fianna Fáil Budgets. Our expenditure, large then, according to them, was said to be a vice. Now they are spending far more millions than we ever anticipated spending and they are trying to suggest that what was with us a vice is now with them a virtue, and, because it is a virtue, it should be indulged in to an extravagant extent. Fianna Fáil had a definite policy in its approach to State finance. Fianna Fáil recognised that after the emergency there would be certain disturbing factors outside, over the repercussions of which here we could have little or no control. Therefore, we devised the food subsidies and we coupled with the food subsidies what was very much objected to by Labour, a standstill Order with regard to wages. The object was to see that the vast majority of our people who would be affected by lack of control or particular actions of the Government would not suffer in their ordinary lives. The idea was to protect them against increases in the cost of living and to take steps to see that, as far as the internal situation was concerned, our own acts would not contribute towards an increase in the cost of living. It was reduced down to the simple formula of keeping essential foodstuffs pegged at a certain maximum price and making sure that there was a fair and even distribution of them. One of the main planks in the platform of all the Parties in opposition to Fianna Fáil was a cry against the rise in the cost of living and a demand for a reduction. Clann na Poblachta, not one of whom is in the House at the moment, promised a 30 per cent. reduction in the cost of living.

Are you blind?

I apologise to Deputy McQuillan. I always credited Clann na Poblachta with his membership. I am glad that there is one member of Clann na Poblachta here. Does Deputy McQuillan or Clann na Poblachta deny that according to their posters and literature, the cost of living was to be reduced by 30 per cent? That figure was given as if it had been actually calculated and was going to be put into effect.

There were also posters in 1932 about bringing back all the emigrants.

I remember the poster. I do not think he remembers it; he probably heard about it.

I saw the posters.

The cost of living since the advent of the present Government has increased Whether it has increased more than 30 per cent. is a matter for people to judge for themselves. Every single item of food and clothing has increased in price since the change of Government.

And wages.

I am coming to that. The Deputy has just come into the House and did not hear me refer to the standstill Order on wages. Wages are increasing in order to catch up with the increase in the cost of living. There will be a spiral of wage increases, as is evidenced by the demands now going round which will follow one after the other, at the specified amounts of 11/- and 11/- and 11/-. Wages will increase, but the increase in wages will not bring back to the people the standard of living we would like them to have. Wages only mean something when they can regulate a standard of living. The cost of living has begun to spiral.

The Government are making savings on the subsidies. The arrangement made in the last two years to remove the subsidy from certain types of food, a matter to which I referred on the Vote on Account, is not having a very welcome reception from the public. Persons using subsidised flour have to use grey flour. Persons who want white flour have to pay an unsubsidised price for it. But the person who is below a certain level has no choice. He gets a certain amount of grey bread and grey flour at the subsidy price. The whole idea is to reduce the State contribution towards subsidies which is further aggravating the situation in connection with the cost of living.

I do not know to what extent controls will be reintroduced. In the last few days the Minister for Agriculture indicated that he was aware of the price of potatoes in Dublin at this time of the year. I do not know to what extent he will be able to control that and bring potatoes back to the normal price. There may be a reason for the increased price which will be explained, but so far as the public are concerned the answer will be: "We are now paying 3/- a stone for potatoes." It is no help to them to be told about the future benefits which will accrue as a result of this excess expenditure of the Government and the increased borrowing. Deputy Lemass pointed out a very important item. Every year, at the rate we are going, we are clapping on to the backs of the people an increased charge of approximately over £1,000,000 to meet the service of State debt by way of interest and reduction of the State debt itself. Ultimately, our liability by way of interest will far outweigh, in the matter of hardship in the shape of taxation, any benefits that will accrue from an unwise and imprudent approach to State financing.

The Minister — and I hear support for it from his benches — has decided that he is going to regard some of the State contributions, hitherto regarded as a liability to taxation for the purpose of subsidising houses, as a capital expenditure. I do not think that is wise. While it should be our aim to build in the cities and towns of our country all the houses our people need as fast as possible, at as economic a price as possible and with as great an amount of subsidy as possible, I do not think it is wise to set the headline that the subsidy is to be regarded as a capital expenditure, and to be met by borrowings. The subsidy in connection with housing is not solely a State matter. Local authorities subsidise housing out of the rates. If we are to take this as a headline as to the proper way to deal with it, then the City of Dublin should in the future remove from the rates the charge that is on the rates by way of the contributions the rates give to the subsidisation of artisans' dwellings and borrow a sum of money for it and put the repayment of those moneys on the future ratepayers. Is that a wise thing to do? Would it not be a wrong thing to do? Yet that is what is being done here. To the extent that a change has been made from what was done in the past, to that extent the Minister is not doing a wise thing. The more houses of that type we build the greater the liability to be met in the future. At a certain period of time the local authorities, combined together, will be the landlords of a very considerable number of houses. If we approach this matter lightly, if we are going to regard this provision of houses entirely as a capital expenditure, we might ultimately be faced with a demand to regard them as such for all time, and it would be reflected by the occupants in their liabilities to the local authorities for the use of the houses. I shall not go any further than that. The first year the Minister for Finance took office, as Deputy Lemass says, he walked into this House with the Book of Estimates in his hand and said:—

"I am not responsible for this child. It is an illegitimate as far as I am concerned, but I will do the best I can for it and with it"—

and he proceeded to destroy certain belongings of the child. He slashed out of existence Aer Línte. I should not be surprised to learn that most of the Deputies who constitute the Government Parties regretted that event, and would probably be better pleased if Aer Línte were in existence to-day, giving all the employment which it would give and bringing all the prestige it would bring to the country.

The Deputy wants Aer Línte but he does not want houses.

We do want houses. I say, however, that where the present Government estimates that so much of our national income is due to tourist traffic, then anything related to tourist traffic should be nursed and kept healthy — and one of the mainsprings of tourist traffic in this country, as modern life is developing, is air transport. If we had our own air transport system not only would we have additional employment in this country, not only would we be able to compete with the rest of the world in the flying of these craft but we would also have an income in respect of bringing passengers who constitute our tourist visitors to this country — an income not only in sterling but also in hard currency. I believe that very many members of the Government group realise to-day that it was an unwise act——

Income would not show a profit.

Is the Deputy suggesting that all the Government expenditure and capital expenditure that is going to be indulged in now is going to show a profit — except in the form in which Deputy Lemass referred to it?

In the national interest, yes.

The Deputy wants it both ways. Where we had done something which we believed would ultimately have shown a profit in every way, he wants to have it that only those things which would have a profit from his point of view would be regarded. We are not talking to-day any more in respect of State investments in State-sponsored or State-controlled schemes that will be reproductive in returning to the State not only the money but also the interest on the capital invested. We are now accepting in this House the investment of borrowed money by the State that need not necessarily be reproductive or need not even be repaid. If we compare that with the attitude of mind when Aer Línte was put out of existence, we see a complete change. I believe, and I believe Deputy Rooney would be the first to agree, that if we were to re-establish Aer Línte he would be very happy about it.

We do not want any more Constellations.

I do not know whether the Deputy ever flew in one or not.

Well, I did.

It must have been nice.

It was very nice, very safe, very secure, very fast, and these machines were used by people coming to this country and leaving it.

This conversation is irrelevant.

In the first year of the administration of the inter-Party Government a realisation of assets took place. The Constellations were sold. They were purchased in dollars but they were sold for sterling. A great amount of tourist board property in the shape of hotels was realised. Only recently, the Minister announced in the Seanad that we are going to change our coinage. We are going to call in all the silver coinage and replace it by nickel. When he was pressed for an answer he estimated that the State would benefit——

We cannot discuss now a measure that is going through the Oireachtas. It is going through one House at the moment.

I understood it was finished.

It has not come here at all.

I understood the Minister to say in the Seanad that he hoped there would accrue to the Exchequer a profit of £1,000,000.

The Minister was dealing with the Bill in the Seanad.

Then I will deal with it on another occasion. The expression was used that when the inter-Party Government took office they took over an Exchequer and national assets after the very bottom-scrapings of the barrel had been taken out. It is a strange thing that, into this empty barrel, the barrel which had been scraped out to the very last, the Minister can now put his arms and bring out State expenditure and State borrowing up to £107,000,000 this year, and there is no suggestion that this is the final bit that is in the barrel, but that there will be a lot more poured out of it in succeeding years on this new basis of finance.

And there will be good government.

I see the fledgling has gone back to his original roost. I thought the Deputy had left that roost and was sitting on another bench. I think the inter-Party Government is really misleading and fooling itself if it thinks the public do not understand what is happening. I noticed yesterday in the Evening Herald the big headline “£2,000,000 a week Government Expenditure” and under that an article which suggested that the whole of Ireland was so interested in this Budget that the gallery was packed out and Leinster House was a place of bustle and hustle. Everybody here knows that the gallery was never before so empty as it was yesterday. Not one of us had to go to a colleague to beg a ticket for the gallery; there were tickets available galore yesterday.

In other years the gallery was packed for the Budget because the people were interested. Yesterday the people were not interested for the simple reason, as Deputy Lemass said, that they had been made aware in advance of what was going to happen. They knew there was going to be no change in taxation and that whatever was short would be borrowed. But there is apprehension in the minds of taxpayers as to how soon they will be called upon to pay increased taxation to meet the cost of borrowing and the repayment. If you approach national expenditure from the point of view that you have to collect what is non-reproductive in the shape of expenditure, or where something has become normal in expenditure, then you are very careful that you will not go beyond what is reasonable and possible.

People are interested in seeing to what extent extensions in social services are going to take place, what benefits will go to people below a certain amount, and to what extent the people who have will contribute to the have-nots. People are disillusioned and disturbed because the cost of government in the matter of administration has not gone down, but has gone up considerably. We remember the surplus number of civil servants who were going to be cleared out. In yesterday's Budget there was a statement that not much has been accomplished in that respect, but there are efficiency experts going around trying to spot who is in the service doing nothing and trying to get rid of those people or else find something for them to do.

The net Government expenditure has gone up instead of down. The Civil Service has not gone down. It will continue to go up, and the man who has to pay for it all realises that if we are to carry on government as we understand it to-day he will have to pay the piper some time and he recognises that that might be fairly soon. I suggest it will not be a matter for posterity. I say this matter will have to be re examined as soon as possible after 1952, when Marshall Aid will disappear and when we have to paddle our own canoe out of our own resources.

As regards land reclamation, I agree it is a good thing to spend money trying to reclaim and put into production land which is not now producing — that is, if it can be done. I do not agree that we should exaggerate the possibilities of doing so and the results that may be achieved. At the moment one of our difficulties is that surplus agricultural commodities which we have for export are not being sold at an economic price. We cannot get from our customers what we would regard as an economic price. If we are going to increase production of the very articles which we have to sell uneconomically, are we not conversely going to do something which will cost somebody something ultimately? We cannot have it both ways. We cannot indicate to possible customers that we want an economic price which is higher than they are offering, and at the same time tell them we are going to double our production of the same article, notwithstanding the uneconomic price. If we do that they will come to the conclusion that what we call an uneconomic price is, in fact, an economic price and they will offer us less. That is an ordinary, simple approach to the situation as I see it.

In connection with land reclamation, there is talk about £40,000,000 being spent. There is no time limit put to the spending of the £40,000,000. It might be ten or 20 years ahead. There was a suggestion that it would be done in ten years. Land reclamation is to be done in a variety of ways. Individuals are to contribute towards the improvement of their land in this way. Some of them to-day are finding out that it is not making their land more valuable, and that it will not be worth the cost in the sense that such land can be purchased in the open market. I move to report progress.

Progress reported; the Committee to sit again.
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