Léim ar aghaidh chuig an bpríomhábhar

Dáil Éireann díospóireacht -
Tuesday, 23 May 1950

Vol. 121 No. 3

Finance Bill, 1950—Second Stage.

I move that the Bill be now read a Second Time. Most of the matters with which the Bill deals have already been discussed on the Financial Statement during a debate which ran for several days in this House. As these are now included in a series of sections which incorporate the matters I mentioned, I do not think there is anything completely new in the text of the Bill. The first section, which corresponds to Financial Resolution No. 1, is the usual section providing for the charge of income-tax and surtax for the current tax year and for the continuance of previous enactments in relation to those taxes.

Section 2 is a relieving section introduced to bring up to date the existing exemption from income-tax in respect of wounds and disability pensions and gratuities granted under the Army Pensions Acts.

Section 3 is also a relieving section. Its purpose is to extend the existing exemption from income-tax of certain allowances to widows of persons killed in the 1916 Rising, so as to include increases in those allowances granted under the Army Pensions (Increase) Act, 1949.

Section 4 is again a relieving section. It is designed to exempt from income-tax allowances payable to relatives of signatories to the Proclamation of Easter Week, 1916, and also the annuity payable under the Griffith Settlement Act, 1923. There seems to have been some confusion in regard to this matter. At an early stage allowances other than that made under the Griffith Settlement Act were exempted from the payment of income-tax. Later, income-tax was taken in the usual way, the reason given, I understand, being that, as the payment under the Griffith Settlement Act was not exempted, it was better to have them all on the same footing. It is now agreed that they should be all on the same footing.

Section 5 provides that the preferential rates of customs duty applicable under the provisions of Section 15 of the Finance Act, 1949, to unmanufactured tobacco grown in, and consigned from, a part of the British Commonwealth of Nations shall cease to apply as from the 31st July, 1950, except in relation to unmanufactured tobacco in a bonded warehouse on that date and unmanufactured tobacco shown to the satisfaction of the Revenue Commissioners to have been purchased before that date for the purpose of being imported into the State.

Section 6 includes special extra conditions of relief in connection with certain entertainments. Under sub-section (4) of Section 10 of the Finance Act, 1943, relief was provided from the payment of entertainments duty in the case of entertainments promoted for educational, philanthropic or charitable purposes, with the provision that the expenses were not to exceed 30 per cent. of the takings. Many representations have been made on the matter and on investigation they have proved to be well-founded. It is not very often possible to keep the expenses as low as 30 per cent. of the takings, so that the provision for relief was not, in fact, having the effect intended. Section 6 provides that the expenses limit of 30 per cent. will be increased to 50 per cent. with effect as from the 1st August.

Section 7 is to relieve from entertainments duty payments for admission to exhibitions of amateur wrestling promoted by the Irish Amateur Wrestling Association or by a club affiliated to, or under the direct control of, that association. Most of the games of an amateur type conducted under amateur auspices have been exempted from time to time from entertainments duty, but for some reason wrestling was left out. My attention was directed to that and there is no reason why it should not be included.

Sub-section (1) of Section 8 provides that, on and after the 6th July, a person authorised to conduct auctions by virtue of an auctioneer's licence or an auction permit, granted under the provisions of the Auctioneers and House Agents Act, 1947, may act as an appraiser without being licensed under the Appraisers Licences Act, 1806. It was really intended that that should be the case, but licences under the Auctioneers and House Agents Act are often taken out for a company and it is then not possible for the exemption really to go down to people who are called appraisers or people who get auction permits. There is a consequential sub-section which repeals as from the 6th July, 1950, Section 7 of the Appraisers Licences Act, 1806, which provides that all persons duly licensed to act as auctioneers may act as appraisers without being licensed as such under the Act. It is consequential on the passing of the auctioneers and house agents' legislation and the provision I am now making.

Section 9 gives power to the Minister for Finance to make regulations to adapt and modify the laws relating to customs and excise in relation to the special circumstances of air traffic and to give full effect to the provisions of the Chicago Convention on International Civil Aviation in so far as they relate to customs matters.

I am passing over Section 10 for the moment. I shall discuss it in connection with the conventions which are referred to in Schedules I and II.

Section 11 extends for a further period of three years the exemption from corporation profits tax afforded to certain public utility concerns, etc., which expired on the 31st December, 1949. Under the section railway companies will continue to enjoy exemption from the tax.

Again, I am passing over the sections which are contained in Part V and which deal with the conventions that are scheduled.

Section 16 secures with retrospective effect that last year's legislation increasing the stamp duty in respect of fines or premiums on leases shall not apply in the case of leases by a local authority under the Housing of the Working Classes Acts or the Labourers Acts or in the case of a lease by a society registered under the Industrial and Provident Societies Acts and made in accordance with a scheme for the provision of houses for its members.

Section 17 corresponds to Financial Resolution No. 4 passed on Budget day. It is designed to overcome a particular method which lawyers' ingenuity has discovered of breaking through the 5 per cent. tax. There was a legal evasion of the duty. I explained the necessity for this provision in my Budget statement. If I am requested to do so, I can go through it again. This has not been made retrospective but as from the date of the Budget speech.

Section 18 enacts that stamp duty shall not be chargeable on any receipt for payment of a pension under the Old Age Pensions Acts.

Section 19 embodies machinery to allow assurance companies to compound for stamp duty on industrial assurance policies. I referred in my Budget speech to these proposed arrangements for composition, which have been asked for by companies. It would seem, therefore, only fair to grant it.

I do not think the provisions of Section 20 were referred to during the discussion on the Budget. They are of a purely administrative character and do not raise issues of policy. It is intended to effect an amendment of Section 49 of the Finance Act of 1941. The Foreign Exchange Account was established by Section 49 of the Finance Act, 1941, following the making of Orders by the Government under the Emergency Powers Act, which obliged Irish residents to sell to the Minister for Finance certain specified currencies, mainly United States and Canadian dollars, which they then held or might acquire in future. Advances were made from the Exchequer to the Account to put it in funds to buy these currencies which, when purchased, were to be held for credit of the Account or to be re-sold to banks to meet essential foreign exchange needs. The proceeds of such sales of currency from the Account were to be paid into the Account and used either to purchase more currency or to repay the advances to the Exchequer. One or two slight flaws have been found in Section 49 of the Finance Act of 1941. This section is designed to remedy one or two of these points—it is not exactly right to say that the points were left uncovered, but the section was drawn in an extremely rigid way, and there was some doubt as to whether the provisions were elastic enough in certain respects.

Section 49 of the Act of 1941 made no provision for the investment of balances of foreign exchange held for credit of the Account. These balances are now almost exclusively United States dollars. In view of the importance of earning dollars, it has become necessary to invest any portion of such balances as are not likely to be immediately required for use in financing new transactions.

The main purpose of Section 20, sub-section (2), is to give the Minister power to invest foreign exchange held for the credit of the Account, but he is restricted to two types of investment, either interest-bearing deposit with a bank or Government securities of the country in which such exchange is held.

The rest is pretty definitely consequential, and I do not think any special point arises on it.

I am passing over Section 22 for the moment but I shall come back to it again.

Section 23 is the section which provides for the transfer of £300,000 from the Road Fund to the Exchequer for the purpose of meeting general charges falling on the Central Fund. When the Finance (No. 2) Act, 1947, was being enacted it was indicated that the proceeds of the increases in taxation on private motor vehicles provided for in it would not be available for roads expenditure but would be devoted towards meeting the cost of food subsidies. The additional revenue at the time was estimated at £300,000 for a full year. Since then there has been a considerable increase in the number of private vehicles taxed, so that the receipts from the increases in taxation would now be considerably more than £300,000 a year. This means that the Road Fund gains to the extent of some £100,000 to £150,000 not taken by the Exchequer.

Section 24 is the customary provision placing under the "care and management" of the Revenue Commissioners all taxes imposed by this year's Finance Act.

Section 25 is the usual provision in the Finance Act covering the "short title", "construction" and commencement of the Act.

There are two conventions scheduled to this legislation. They are extremely technical and detailed. The sections that refer to them are, first of all, Section 10, which refers to death duties, and the whole of Part V from Section 12 to Section 15 inclusive. Up to the time of the making of the convention a person in this country in receipt of United States income would, in the ordinary course, receive that income subject to deduction at the source of 30 per cent. United States tax. That is what the United States describe as a "withholding tax". It is charged on non-resident aliens who receive income from the United States.

As far as Irish residents are concerned, the convention will, in regard to certain classes of United States income, provide complete exemption from United States tax and, in regard to other classes of income from the United States, will secure that the rate of the United States tax is reduced. Where the income bears United States tax and is subject also to Irish tax, relief from the double tax will be granted in this country by means of a "credit" against Irish tax in respect of United States tax. Under the convention, interest is dealt with in Article 7. Patents and copyright royalties are dealt with in Article 8. Life annuities and pensions (other than Government pensions) are dealt with in Article 12. Any of these, arising in one of the countries to a resident in the other, will be exempted from the tax of the farmer country.

Residents in this country in receipt of United States income have hitherto received from the United States only £70 out of every £100 of the income. The balance, £30, has been deducted in respect of United States withholding tax. That is the tax on non-resident aliens who receive income from the United States. When the convention comes into force, the United States tax will no longer be deducted from the income of the classes referred to and the full amount of the income will be available for transmission here.

Authors in this country will find Article 8 of considerable interest. This article deals with exemptions in respect of copyright royalties. Irish authors have for a long time been complaining of the double taxation charged on royalties arising from sale of their works in the United States. The royalties have been subject to United States withholding tax, in the first instance, and to Irish tax in addition. For example, on a royalty of £100 a deduction of £30 has been made in respect of United States tax and, when Irish income-tax was subsequently charged, the author might be left with a net royalty of about £50. Under the convention, Irish authors will receive their United States royalties in full, without any deduction of United States tax. The income will, of course, be still subject to tax here.

An individual who is a resident of Ireland will, on the coming into force of the convention, be exempt from United States tax for personal, including professional, services performed within the United States if he is present in the United States for not more than six months during the tax year and the services are performed on behalf of a person resident here. That would cover an actor sent to the United States by an Irish theatre.

One feature of this convention is the reciprocal exempting provisions for shipping and aircraft profits. In Article 18 there are reciprocal exemptions from tax in the case of visiting professors, students and business apprentices. The students and apprentices are covered in Article 19. In Article 10 Government salaries and pensions are to be taxable in the paying country and exempt in the other.

As regards Irish residents the convention will, as to the classes of United States income already mentioned, provide complete exemption from United States tax and will, as to other classes of income from the United States, provide that the rate of United States tax will be decreased. Where the Irish resident receives income which bears United States tax and which is subject also to tax in Ireland, the convention will give relief from the burden of the two taxes by providing that a credit may be granted against the Irish tax in respect of the United States tax. There is a credit system of relief, and this was one of the solutions recommended by a group of experts who studied the general problem of double taxation under the aegis of the League of Nations. It is the method most in use in modern tax conventions.

United States income coming to Ireland comes largely in the shape of dividends. Hitherto the Irish recipient of a United States dividend got it under deduction of 30 per cent. withholding tax. In addition to that, he has had to pay, without double taxation relief, Irish tax on the dividend which already has been diminished by tax in the United States. The convention will bring substantial relief to such persons. In the first place, the withholding tax is to be reduced by one-half, that is, to 15 per cent. That is to be found in Article 6. When the Irish shareholder's liability to tax in this country is being computed he will in future be allowed double taxation relief by way of a credit in respect of the 15 per cent. tax in the United States. United States withholding tax on mineral royalties arising in the United States to Irish residents is likewise to be eased from 30 per cent. to 15 per cent. and double taxation relief may be similarly allowed. The convention is reciprocal and it brings relief to a person in the United States with income from Ireland as well as to a person here drawing income from the United States.

There is also a convention for the avoidance of double taxation on the estates of deceased persons. The liability to double taxation, as between the two countries, on the estates of deceased persons arises, firstly, where the person was domiciled in Ireland and had possessions in the United States at his death or, secondly, where the person was domiciled in or was a citizen of the United States and had possessions in Ireland at his death. Under the convention, where there is double taxation of this kind, the home country, the country in which the deceased was domiciled, will allow against its own tax a credit in respect of tax paid in the other country on possessions deemed in accordance with the convention to be situated there. The home country may also, irrespective of domicile, be the United States in the case of a United States citizen.

The broad result of the relief will be that, instead of the deceased's estate having to pay estate tax both in Ireland and in the United States, only the higher of the two taxes will be payable. Many Irish people who go to the United States return to Ireland in later years and die domiciled here. These people, having been accustomed to keeping their money in the United States banks, often leave it there even after their return to Ireland. Under the law as it existed prior to the convention, money so kept would be treated as an asset situated in the United States at the deceased's death. The convention contains a special code for determining the situation of certain classes of property and, among other things, it enacts that debts due to the deceased, which includes money in bank, are to be deemed to be situated where the deceased was domiciled at his death. Therefore, money in the bank is deemed to be in Ireland for death duty purposes if the deceased dies domiciled there. In such a case the United States will charge no estate tax on the money. The person entitled to the money on the death will, under the convention, receive it undiminished by United States estate tax.

The same position arises in the case of a policy of insurance taken out on his life with a United States company by a person who dies domiciled in this country. The convention secures that money received under a life insurance policy is to be deemed to be situated where the deceased was domiciled. If he dies domiciled in Ireland, the money will be deemed to be situated here and the United States will charge no estate tax on it. The person becoming entitled to the money on the death will receive it free from United States estate tax. If the deceased is a United States citizen and retains his citizenship of that country, the United States would charge estate tax on the asset, whether it is money in a United States bank or money received under a life insurance policy with a United States company. The United States, in that event, would allow Irish death duty on the asset as a credit against United States estate tax on it.

The conventions are very long, very detailed and highly technical. If Deputies have any difficulty with any part, after reading what I have read, I would be glad to make the matter more clear. Deputies may desire to put questions to me. Should they do so, I shall be in a position to reply to the precise points put to me. I have left over Section 22.

Before the Minister leaves the conventions, could he say how this affects the Exchequer receipts generally, on balance?

I would not like to say it too loudly, but I think it will be of benefit to the people of this country. Deputies should not ask me to forecast amounts.

Section 22 is called the Capital Services Redemption Account. It will be noticed that after certain definitions have been set out, there is to be established an account called the Capital Services Redemption Account. Sub-section (3) of Section 22 provides a sum of £655,432 to redeem borrowing and interest thereon in respect of capital services. This is to be charged annually in the Central Fund, commencing with the financial year ending on 31st March, 1951. The annuity will be paid into a redemption account in half-yearly equal instalments.

There is a proviso in sub-section (5). In order to avoid two charges on the Central Fund for the same interest, provision has to be made for the payment out of the redemption account of interest on the public debt to an extent not greater than the interest portion—£423,979—of the annuity. The balance will be provided in any of the ways set out in sub-section (6).

Sub-section (9) provides for the rendering of an annual audited statement of transactions on the redemption account and the laying of the statement before each House of the Oireachtas.

The general purpose of the section is to give effect to the Government's decision which I announced on the Vote on Account and repeated in the Budget statement on 3rd May, that borrowings for voted capital services will be amortised over a period of years, so that they will involve no permanent addition to the public debt. In the course of the Budget statement, I said:—

"The Central Fund Services Estimate shows an increase of £1,166,000 over the actual issues for 1949-50 providing for the service of public debt which this year includes an annuity of £665,000 to redeem in full, over a 30-year period, the £12,113,680 of voted capital services which are being financed by borrowing."

When the Government came to the decision to bring into the Finance Bill of this year the obligation to lodge this sum of money in this special account, they were fully aware of a certain number of items. The first was that the actual amount borrowed on foot of capital services might not reach the total of £12,113,000 odd which is set out on the face of the Estimate. The second was that, in any event, these borrowings would be incurred only gradually over the year, and the third was that, quite clearly, arising certainly out of No. 2, and with added force if what I have said at No. 1 is found to be true, the interest and sinking fund payable in 1950-51 would, therefore, be very much less than a full year's charge.

There was also the further fact that, without any special provision, interest on borrowings for capital services would, under the Central Fund Act and Appropriation Act, be charged on the Central Fund, as would also any sinking fund attached to long-term borrowings by way of National Loan. The decision was taken that the full charge of £655,000 odd should be made this year as evidence of a complete acceptance of the obligation to discharge capital service borrowings out of revenue over a 30-year period and of a determination to secure that result. At a 3½ per cent. interest rate, the annual provision, interest and sinking fund, required to redeem £12,113,000 odd over 30 years is £665,432.

This section charges an annuity of this amount on the Central Fund for 30 years, beginning with the present financial year. Every year, so long as borrowings are incurred for voted capital services, a similar charge will have to be raised and successive Finance Bills will present an opportunity of adjusting, for the 29 following years, the annuity fixed in the first year, if, by reference to actual borrowings in the first year, the annuity proves to have been fixed either too high or too low. To receive these annual charges on the Central Fund for the redemption of borrowings for capital services, this special account, the capital services redemption account, has been established under the control of the Minister for Finance. The annuities will be paid into this account in the half-yearly instalments provided for in sub-section (4).

This year's annuity of £655,000 odd consists, as to £423,979, of interest and as to the balance, £231,453, of sinking fund. It could have been arranged that only the sinking fund would have been specially charged on the Central Fund and paid into this account, as the interest would have automatically become a charge on the Central Fund. It was decided, however, to have a clear demonstration that full provision for the writing-off of the capital services borrowings was being made to pay both interest and sinking fund into a redemption account. In order to avoid two charges on the Central Fund for the same interest, provision has to be made for the payment out of the redemption account of interest on the public debt to an extent not greater than the interest portion, £423,979, of the annuity. That is the reason for sub-section (5).

The balance of the annuity has to be applied in such a way as to eliminate £12,113,680 of the principal liability in respect of the public debt over a period of 30 years. This result can be achieved in a variety of ways, the basic condition being that the sinking fund is applied so as to earn 3½ per cent. on average over the period and thus eventually offset or redeem the £12,113,680 of public debt. The sinking fund can be used with equal effect either to pay off existing public debt or to avoid raising new debt from the public, assuming that the interest charged in either case is around 3½ per cent. It is therefore provided in sub-section (6) that the portion of the annuity not used to defray interest on the public debt shall be applied towards paying off existing or future debt—as at (a) to (d) of the sub-section—or—as at (e) —be invested in Irish Government or British Government securities, the proceeds of sale or disposal of these investments, as well as the income derived from them, being applied towards paying off the public debt.

Sub-section (9) provides for the rendering of an annual audited statement of transactions on the redemption account and the laying of such statement before both Houses of the Oireachtas.

I am glad that the negotiations with the American Government have reached a stage at which the convention has been signed which we have here in this Finance Bill. I do not think I could agree with the Minister that, from a narrow Exchequer point of view, these agreements will be of benefit to the Exchequer. My recollection is that when this matter was first taken up the feeling was that we might lose a little from the Exchequer under agreements such as this, but that, in the long run, they would be of great benefit to the country.

I am afraid I took the Deputy's question too casually. The Deputy was making a distinction between the Exchequer and individual nationals. I think he is probably right—individual nationals will certainly gain.

I think that, on the whole, even if the Exchequer does lose a little, it will pay the community in the long run. The Minister, in his opening statement, said that the general broad issues affecting this Finance Bill were debated in full on the Budget statement and on the usual Financial Resolution which follows the Budget; but if anybody reads the Minister's speech at the conclusion of that debate, he will notice that the Minister avoided the main issues raised during that debate. We have the Minister's evasion of the main issues, followed by the statement of the Minister for Industry and Commerce in Kilkenny on Saturday last that to attempt to stem the flow of money for housing, for hospitals and for agriculture is to oppose and delay these great national schemes. There has been no attempt on the part of the Fianna Fáil Party to delay or oppose the developments which are provided for in various ways by this Budget. As a matter of fact, we can claim, I think, that we taught the Fine Gael Party at least, and some of the other Parties forming the Government, that it was possible to develop this country, to develop our industries and to build houses, and that it was time the cardinal principle of the Fine Gael Party when in office up to 1932 should be left behind. The present Minister for Education laid it down, in regard to the building of houses, that houses could not be built until wages and prices of materials fell to such a point that houses could be built and let at an economic rent. We did not hold by that particular principle. We were strenuously opposed to the laissez faire policy of Fine Gael when they were in office from 1922 to 1932, which resulted in the closing down of at least 100 factories all over the country. Fianna Fáil has always stood for, and always will stand for, I hope, a progressive policy of economic development. In order to have that policy on a healthy system, it has to be accompanied by a healthy system of Government financing.

The Minister has not explained to the House or to the country why it is that, at the end of two years, he has completely repudiated the stand he took in his 1948 Budget. In his 1948 Budget statement he was delighted that the country had not a great debt. He said we were fortunate in not having a very big public debt. That was only two years ago. What has happened in the meantime? If the Minister has changed his mind on this matter, and if there is some good reason for rejoicing in a big public debt, he should let the people of the country in on his secret. In 1948 he was delighted that we had a low public debt. Now he is starting off on a campaign to have a relatively huge public debt. I am quite prepared to admit that our public debt is smaller than the debts of comparable countries, but the Minister rejoiced that it was smaller and now he seems to be on a fair way to making it much higher, and is asking us all to be delighted about it. I want to know, and I think the Minister should tell us, why it is that we should be delighted at the prospect of paying, at the end of this year, twice the sum that we paid at the end of 1947-48 for the service of public debt.

The clause in the Finance Bill about the servicing of the public debt is largely window-dressing. We would have to service the public debt in any event without this particular section in the Bill. The whole question is whether it is right that we should, in the present year, when the Minister himself admits that there is inflationary pressure around, start off with borrowing for voted capital expenditure usually contained in the Estimates for Supply Services; whether we should start off and borrow for these projects, not one of which will return a single penny directly to the Exchequer to meet the payment for the service of public debt.

It is a good thing to have more and better schools. We proved that we believe in that. Even when the Minister was denouncing the height of our Budget expenditure, over the years, we provided out of taxation the wherewithal to improve the disastrously low standard of schools that was left to us in 1932 and, indeed, that was left to the previous Government in 1922. We were prepared to go ahead with the building of schools. We were prepared to spend money on land reclamation. We proved that we were prepared to do it when we had to collect in taxation in our last year of office a sum of something like £427,000 for that purpose.

The Minister for Agriculture intervened in the Budget debate and, having described in very emotional language the sufferings of people who are subject to certain diseases, asked us, who would recoil from borrowing in order to spend money to prevent the recurrence of such diseases? The Minister for Agriculture and the Minister for Finance recoiled from taxation for the last couple of years to do certain works which they are now starting off to do out of borrowing. It did not become a necessary or desirable piece of work to drain the land when we could borrow money to do it. The land was there. The necessity to drain it was there but the Minister for Agriculture, at the bidding of the Minister for Finance, in May, 1948, definitely decided that he would not go ahead with the land improvement scheme, for which Fianna Fáil had made provision.

The Minister for Agriculture at that time stated that he would be delighted to spend a great deal of money on land reclamation provided he could get Marshall Aid. We should be as careful of the moneys that we borrow under Marshall Aid as we are of any other Exchequer receipt. If the Government have money to spend, they have very carefully to consider whether or not the community is likely to benefit to a greater extent from spending that money on one activity as against another.

We know that land drainage is, in a great number of cases, more a social service than an economic investment. The Minister for Finance should be just as careful as to the manner in which borrowed moneys are invested in land reclamation as he would be had he the rather unpopular job of raising the money for that purpose through taxation. There is a tendency to treat money that is borrowed as of less value than money that has to be raised by taxation. The normal person who has to work for a week in order to get his weekly wage is very much more careful of the expenditure of that particular money than he would be if he had facilities for borrowing from week to week. Borrowing of that kind tends to reduce responsibility. A Government's real income, comparable to the weekly wage of a workman, is what a Government is prepared to tax; that is the work that gives the entitlement to spend. They are not entitled to spend the income of future generations or of next year's taxpayers with the same freedom as they are entitled to spend the money which they face the political unpopularity of collecting.

If the Minister in his sudden conversion to this type of finance claims that we are entitled to borrow £12,000,000 because certain capital works will be carried out, he could on the same plea borrow many times £12,000,000 on credit of the capital development which was carried out during the past 20 or 30 years without borrowing. If the Minister could borrow a number of million pounds for new schools in this year he can borrow on the couple of million pounds' worth of new schools provided over the past number of years, and so on with every other item of capital, whether buildings or land, which the State owns or which the State gave grants to provide. If the Minister wants to proceed on that line to justify borrowing he can borrow the total value of the country and of all the lands, the buildings and the material within the country.

The Minister will have to face this problem and discuss it openly and talk in a straight and honest fashion to the people about it. If there is an inflationary situation here—and all the authorities, including the Minister himself, have indicated that there is—the Minister knows that by spending borrowed money he is circulating an additional quantity of purchasing power throughout the country which will add to the inflationary pressure. When we were proposing, back in 1947-48, to spend borrowed money on telephone exchanges and such like projects the Minister denounced our expenditure of borrowed money on such proposals because it would add to the stream of purchasing power in circulation without creating an equivalent amount of consumable goods. In column 2274 of Volume 104 of the Dáil Debates, the Minister said:—

"Surely it is realised that to pour more money out through the country, without adding to the stock of consumable goods in the country, means inflation?"

What additional supply of consumable goods are we to get from the expenditure of this £12,000,000? We cannot eat new schools; we cannot eat new houses; we cannot eat the bulldozers upon which the Minister for Agriculture is spending money. What type of consumable goods will be increased by the expenditure of the £12,000,000 which the Minister proposes to borrow in the Supply Services? I challenge the Minister to name one item in that £12,000,000 which will add to our stock of immediately consumable goods.

The Minister went on in the column to which I have referred:—

"We can build roads until the country is riddled with straight, terraced roads. Do we add to production? Only very remotely, very indirectly. We hear of telephone extensions, putting this country on a par with Sweden, one of the greatest telephone-using nations in the world. What do we want it for? How much money is to be spent on telephone extensions? Will it get any more consumer goods produced in the country? The money we spent on airports and the money we propose to spend will not bring any more goods in, but there will be more money flowing through in circulation."

I do not want to read the whole of the Minister's speech in that particular debate, but it would certainly be worth the while of the people who, in one breath, say we are against capital development and in the next breath claim that they have always been for capital development no matter what the financial consequences to read that speech which the Minister for Finance made just a couple of years ago.

Will the Minister, in his concluding remarks, face that particular question and tell the country how, in spite of what he said in the past about borrowing in an inflationary period, he can justify borrowing and expending money for capital development which will not bring a penny return to the Exchequer and which will not add to our store of consumable goods? I do not hold either with the policy as enunciated by the Minister within the last few months or with the policy which he enunciated when he denounced us for our capital development in the past. I think that we should go ahead with capital development as quickly as is physically and socially possible. We cannot spend all our energies on capital development, for, if we did, our community would not have a reasonable supply of consumable goods, but we should spend a reasonable amount of our energies upon it so that we may hand on to those who come after us a national estate somewhat better than that which we took over from those who preceded us. We have the opportunity of doing that in this century, and we should be prepared to cut down on our consumption or on our leisure in order to build up a country of which those who fought for it in the past could be proud.

In their campaign against the capital development of various kinds undertaken by Fianna Fáil the Minister and the Minister's Party did a very disastrous thing from the point of view of national morale when they took the line that our approach to public buildings should be the same as in some straw-hutted banana republic. How long are we to go on boasting about the public buildings built here by the British? Can we not look forward to the time when we will have public buildings that will distinguish this nation from some of the backward uncivilised nations in the world? The Minister himself was one of the most vociferous in denouncing the consideration that was being given by the previous Government to public buildings, to concert halls and to reasonable accommodation for the Civil Service-reasonable from the point of view of efficiency, of getting a reasonable amount of work out of civil servants, and from the point of view of the comfort and health of the civil servants themselves. The Minister was loud in his denunciation of all such expenditure and for the last two or three Budget speeches, whenever he got into a corner he has come in here producing files about the extravagant expenditure that Fianna Fáil was about to undertake. Luckily, in this particular Budget speech he dragged out of the files one further fact, that any consideration that Fianna Fáil had been giving to the provision of more modern offices for civil servants, for Government buildings of any kind, was associated with a programme of building of private houses and of all sorts of other buildings amounting to a total of £100,000,000. In connection with our general programme for the building of houses, through public authorities and otherwise, we had in mind that it was right and proper for the Government to have a programme of public works of some kind which would take up the slack in case of a depression, temporary or prolonged, in the building trade. We had asked the Board of Works to give thought to this matter and to have prepared, side by side with the £100,000,000 scheme of building for ordinary purposes, a scheme of public buildings which would take up the slack.

The Minister for Justice the other day returned to his brief of about 1947-48. He forgot what has happened in the intervening period and, no later than last Saturday, he was still denouncing Fianna Fáil for having contemplated a new block of Government offices in the Castle. The fact of the matter is that the present Government are going ahead with that scheme which they denounced all over the country—and they are rightly going ahead with it. Everyone knows that, from the point of view of efficiency, of getting the most work out of the civil servants we pay, and from the point of view of their health, many of the Government offices in the Castle and elsewhere throughout the city and in certain parts of the country are a disgrace and also are most uneconomic. Not only is the Government going ahead with the block of buildings in the Castle, but they have also found an excuse to grab another set of offices, the bus depot of Córas Iompair Éireann. My belief is that the campaign against the bus depot has largely found its origin in the desire of the Minister for Finance to grab that building for civil servants and to blame Fianna Fáil for it. The Minister is going ahead in the Castle and is also taking the bus depot, in spite of the denunciations they made of Fianna Fáil.

Another matter to which the Minister gave no attention, although it was the subject of most of the speeches of the Opposition, was that only in 1948 in his Budget speech, as reported at column 2128 of Volume 110 of the Official Debates, the Minister said, in relation to his having saved £6,000,000 out of the £70,000,000 expenditure in the Supply Services proposed by Fianna Fáil:—

"If I cannot do better by this time next year, I will let Deputies accuse me of failure."

Does the Minister admit failure now when that £70,000,000 has gone to £78,000,000 plus £9,000,000, making £87,000,000? The Minister thought that the residual £64,000,000 was much too high. Indeed, he described the whole Book of Estimates of that year as prodigious and prodigal. He asked the Dáil to excuse him, as he could not see his way to promise a saving of more than £6,000,000. He told the Dáil that if he came back the following year and could not save more, they were at liberty to accuse him of failure. Instead of coming back to the Dáil with £64,000,000 or less, he is coming back this year and is, or should be, asking for £87,000,000.

In relation to our expenditure, he said in that same debate, as given in column 222:—

"The whole idea (of the Fianna Fáil Government) appeared to be a complacent system of accepting increases: of not searching out for any possible decreases, and of securing them from time to time."

He continued:—

"We want to ensure retrenchment over as wide a field as possible."

The Minister, in this present debate and for the last couple of months, has not been worrying about securing possible decreases, but seems to be searching for further ways of increasing public expenditure. I would not object to that as a proposition, provided the Government was elected on that basis and provided they had got that contract from the people. It is a proposition upon which a Party could go to the people and say: "Elect us and we will search out every way we possibly can to increase public expenditure." One might not approve of that policy, but it would at least be an open and an honourable one. One could find no fault with a Government, having got that mandate or contract from the people, going ahead and increasing public expenditure as much as possible. That was not the contract the present Minister for Finance had with the people. That was not the mandate he got from the people. He has no mandate of that kind. His only mandate in regard to Government expenditure was that, if the representatives of Fine Gael were elected, Government expenditure would be reduced by £10,000,000. Instead of reducing it by £10,000,000, the Minister has increased public expenditure, apart altogether from below the line capital expenditure, by £22,000,000. The Minister may treat the Opposition with contempt, but at least some explanation—if not some excuse or apology—is due to the people who entered upon a contract presented to them by the Fine Gael candidates, in which they promised to reduce expenditure by £10,000,000. A number of people in the Fine Gael organisation used to describe the Fianna Fáil supporters as crazy because they were supporting a Government spending at the rate of £70,000,000 a year. Surely, the Minister should advance some argument to his own supporters in proof of the desirability of his having changed his mind in such a revolutionary fashion in that particular respect.

There was a good deal of talk about the new stamp duty in 1947. The Minister has some amendments down to that particular tax and, since they will be discussed on the Committee Stage, I do not propose to deal with the matter now.

One Party supporting this Government promised the people that they would reimpose the excess corporation profits tax. I call attention to the fact that Deputy Martin O'Sullivan during the Budget debate read out a long list of businesses. That list must have rung very familiarly in the Minister's ears. Deputy O'Sullivan pointed out that scandalous as were the profits made by these firms during the Fianna Fáil régime, the average rate of dividend had gone up under the present Government by 2.3 per cent. When the Minister was in opposition he denounced Fianna Fáil for abolishing the excess corporation profits tax. He was a gallant comrade of the members of the Labour Party in denouncing its abolition and in alleging that it was done simply to facilitate the racketeer friends, as they were termed, of the Fianna Fáil Government. Is it to facilitate the racketeer friends of the Fianna Fáil Government that the tax has not yet been put back? I have not said much about that over the last two years lest I might, perhaps, have embarrassed the Minister in any way in his consideration of that particular matter. It must now be noted, however, that one of the main propaganda items which influenced the electorate in the last general election was this excess corporation profits tax and its abolition by the Fianna Fáil Government. Not only did the Labour Party promise directly that they would ensure that this tax was reimposed, but the Minister for Finance himself, and nearly all the members of the present Government, denounced Fianna Fáil for abolishing the tax. It was in vain that I, as Minister for Finance at the time, pointed out how impossible it was for us to maintain this tax when it had been abolished by the British Labour Government. That excuse would not be accepted. No matter how often it was pointed out that if we maintained that tax there would be no capital development here, the accusation was made that we abolished it simply to facilitate the profiteers.

Is it to facilitate the profiteers that the Minister has kept away from the reimposition of that tax for the past three years? If it is not for that reason, will he tell the people why? That, along with the charges of corruption, was one of the principal points in the Coalition programme. They have dropped the charges of corruption like a hot brick notwithstanding the promise made by the Minister for Agriculture down in Roscommon, when he had only been a couple of days in office, that the people would be amazed if they saw the Government files and all the corrupt practices that had gone on. But there has been no evidence of corruption except for one very lame effort and that was dropped very quickly. Even though the Government were compelled to drop it, they have never apologised either to the Opposition or to the people. They may consider themselves entitled to take away the good name of the Opposition and make no subsequent amend, but they should at least make some amends to the people whom they deceived into voting for them.

Another subject which the Minister avoided like the plague in his considered Budget statement and in his speech in reply to the Budget debate was the question of emigration. The Minister, the members of the Labour Party, the Clann na Poblachta Party and the other smaller groups that go to comprise the Coalition, had all the answers to the problem of emigration prior to the last general election and they did not keep these answers to themselves. On every platform on every possible occasion they could open their mouths when somebody could hear them, they proclaimed their cure for emigration. All the people had to do was to put Fianna Fáil out and emigration would stop. No sooner had they put Fianna Fáil out than they began to have some doubts as to whether they knew the causes of emigration and its cure. After many years of denunciation of Fianna Fáil policy, after holding out the "cure-all" to the people for emigration—"put Fianna Fáil out"—they solemnly, the moment they became the Government, set up a commission to inquire into the causes of emigration. What has happened to that commission? How long more is it going to consider this problem? It was a problem during the Fianna Fáil time, a problem which we never concealed. In every Budget statement I made, one thing I mentioned as a major item, when considering the national estate and the state of the nation, was emigration. I mentioned the proposals we had to stem it in the following year. What progress has this Commission on Emigration made?

In our last year of office, it happened that emigration had ceased and that, instead of emigration in the year 1947, 11,166 more persons came into the country than went out. In 1948, the first year of the miracle workers, who had all the answers and who were going to apply the cure immediately Fianna Fáil was put out, 12,793 more persons went out than came in and last year, 1949, the figure rose from 12,793 to over 18,000. The cure—"put Fianna Fáil out and stop emigration"—does not seem to have worked. I think the people are entitled to hear from the Minister who, rightly in my opinion, called public attention to this problem, something, after two years in office, as to what he has done, or proposes to do, to deal with this problem. At least, they are entitled to expect some mention of the problem of emigration in his Budget statement from the man who made so much about it during his time in Opposition. We do not accuse the present Government, as the Minister when he was in opposition accused the last Government, of deliberately forcing these people out of the country or of any desire to force them out of the country. Neither do we accuse the present Government, as we were accused in our day, of being responsible for the fall in the number of people employed on the land. Within the last two years over 50,000 persons who were working on the land in our day left the land. That was another problem which was dealt with at great length, and in not very kindly language, in former days by the people who were opposed to Fianna Fáil. They accused us of deliberately bringing about that result. We do not accuse the present Government of deliberately getting rid of 52,000 men off the land but I certainly do accuse the members of the Coalition Party of recklessly allowing a man to take charge of the Department of Agriculture who had that aim in view and who never made any secret about it.

We do not accuse the Government of having, for instance, deliberately shipped turf workers out of the country but the Minister might think over this particular aspect of the fuel situation. We are at present subsidising the British Coal Board to the tune of 25/- per ton to employ our people who were formerly engaged in the production of turf. We know that hand-won turf is not a fuel which is altogether suitable for mass consumption and mass methods of marketing, that it is not an altogether standard product, but, at least, when it is of good quality and well saved it is an excellent fuel and kept us from burning furniture during the war as they had to do in other countries. One of the excuses of the Minister for Industry and Commerce for dropping not only the hand-won turf schemes, but also the smaller machine-won turf schemes, was that it would cost a couple of shillings a ton more to produce than they could get for it. That, of course, depends on Government policy to some extent in allowing in foreign fuel supplies. It also, to a large extent, depends on the fact that we are subsidising the British Coal Board to the tune of 25/- per ton to employ our turf workers. If we can afford to subsidise the British Coal Board to the extent of 25/- per ton to employ our people to dig coal, surely we could stretch the price of turf a few shillings a ton to employ these people at home? I am not making any accusations of deliberateness about Government policy in this regard. I am simply pointing out some of the strange economic mazes, twists and tangles into which we have got since the present Government took over. The Government, of course, did not know where it came from and it does not know where it is going, and so we cannot expect any sure line of policy or any clear approach to the various problems with which our people have to contend.

What about the famous turf range that you are responsible for?

We are discussing matters of general national policy at the moment.

I thought you were talking about turf.

I also want to ask the Minister to deal with the question that was raised by the Minister for Industry and Commerce when speaking in Kilkenny on Saturday last. "Fianna Fáil," he said, "by vicious and irresponsible denunciations, are doing a grave disservice to the people." I have not heard any of the speakers on this side of the House engage in any vicious or irresponsible denunciations of the present Budget. I know perfectly well the type of statement that would have been made by the members of the present Government had we introduced such a Budget, and had we proposed to get out of political difficulties by borrowing instead of meeting the bill in the ordinary way, particularly in a time of inflation.

Now, as I said before on the Budget statement—and I say it again—I would much prefer to see the Minister printing this money openly and standing over it than borrowing it in the way that he proposes to borrow it in an inflationary situation. I believe that it is the duty of any Government to see that the money supply within the country is sufficient to enable the people to get the maximum out of the national economy and to enable them to produce to the maximum that they want to produce; but I believe it is also the duty of a Government to ensure that money is not pumped into circulation which will create and have a disastrous effect on the national economy and on the cost of living of the people. If the Minister, instead of borrowing this money from the Post Office Savings Bank and other Government funds or from the Marshall Aid Fund, had either to go to the people and ask them for it or go to the people and justify printing £12,000,000 worth of notes, we would not have the same avoidance of essential issues that we have had from the Minister since this series of debates started.

The borrowing of money and the spending of it have practically the same effect, particularly in an inflationary situation, as the printing of it. If at the present time the Minister borrows money from the Post Office Savings Bank, he certainly is borrowing it from people who are not spending and he is going to give it to people who will spend it—at least to the extent of 95 per cent. That is going to add to the stream of purchasing power circulating within the country. The Minister on many occasions, supported by all the authorities, has pointed out that there is already too much money in circulation, and to add to it is going to cause further trouble. In the immediate circumstances of this country, we are not going to get the full impact of inflation, causing a rapid increase in the price of goods, because the increased supply of money will operate to a large extent to induce a greater supply of goods from abroad. We can, of course, get that supply of goods at the present time and we can use some of our excess purchasing power to buy them, but in the long run, or indeed in the short one, if we continue to leave unbalanced our international trade to the extent that our visible balance is left at the moment, we will very quickly get rid of whatever savings our people have abroad.

Now there are other Governments which are just as fond of getting votes as the Minister, but they have been very careful with their countries' reserves. We have seen the grave steps that have been taken from time to time by the British Government to conserve their reserves. They say that they have only five or six hundred million pounds in liquid reserves. They have an investment reserve of probably three or four thousand million pounds behind those liquid reserves of five or six hundred million pounds, but instead of disturbing their investment reserves, they leave them where they are, and they are still anxious to safeguard their immediate liquid reserves running into some hundreds of millions. After all, I think we should not regard either our investment reserves or our liquid reserves, such as those which are in the hands of the Central Bank or in the hands of the Minister himself, as an enemy, as something that will burn our fingers if we do not get rid of them. It is not a bad thing for a private individual, a Government or a country to have some little liquid reserves to tide it over the heights and hollows of ordinary day to day life. It is no ill thing either for an individual —or indeed for a country—to have an investment reserve which he can on suitable occasion realise in order to create an equivalent investment in say a factory or a farm.

As the Minister well knows, we are not, as a Party, by any means tied to keeping for ever our investments abroad or the investments which our people have abroad. They are not in Government hands. They are, to a large extent, the investments of the people. We did everything possible to induce people to realise these investments abroad and to purchase machinery and equipment of various kinds so as to create industrial employment here. We were very largely successful in realising some of these investments, in the years when it was possible to do so, before the war; but when we were in the process of realising these investments we were denounced, not only by the Minister but by gentlemen who are professional economists for realising these investments or for allowing them to be realised and invested in this country.

The Minister said that I got very angry about a certain Senator who is taking quite a different line at the present time in regard to investments abroad and borrowing from what he took at the time of the Banking Commission. I was not angry, but at least I think the country is entitled to know from a person who holds himself out as an expert economist how it is that what was wrong when Fianna Fáil was in office suddenly became right when Fine Gael came in. After all, if a school teacher were to change his teaching of every item in the curriculum according to the change of Government the pupils would be in a rather awkward state of mind when it came to the end of term examination. Is a pupil to answer a question in economics in a different fashion because one Government is in office rather than another?

I do not want at this stage to recall a number of the criticisms of the administration of the previous Government by members of the present Government, but I certainly will request the Minister to deal with the desirability at a time when there is inflationary pressure around of adding to that inflationary pressure. The Minister may answer that, if he fears inflation or too great inflation, he will not spend the money. If he makes that particular answer, are these very desirable projects which were praised by every Deputy on the Government Benches who spoke on the Budget going to be dependent on whether the spending of the money will add to inflationary pressure or not? Are we to cease to build these schools because we cannot do it safely out of borrowed money? Are we to cease to carry out the land project because we cannot risk spending borrowed money upon such a project? Is afforestation similarly to be dependent on whether it is safe to spend borrowed money or not? Or would the Minister tell the House what is the real excuse to the people for having so drastically changed his mind in the last couple of years? I am not asking the Minister to go back to the time when he was in opposition to square his present attitude with his statements then, but I am asking him to square his present attitude with the statements he made and the attitude he took up so strenuously in the 1948 and 1949 Budgets. Why did it suddenly become virtuous to borrow money to the greatest possible extent and not to meet normal Government expenditure in a normal Government way? The people of the country are entitled to an answer to that question.

It seems to me that the Budget which has been introduced is meeting with an amount of hostility for one or two reasons. We have heard about turf and the winning of turf from Deputy Aiken. Deputy Aiken did not like to go back further than a couple of years, but quite recently, when reading the Official Report of the debate here, I saw where Deputy Aiken went back to 1913 when he joined the Volunteers at the tender age of 15, or something like that. I do not know exactly where he joined them, but some of us here joined them also at a very tender age. In addition to fighting for the cause in the place where we joined up, some of us had to go up and fight elsewhere.

What has that got to do with the Bill?

I know it has not. Deputy Aiken fought up there, and now he is ensconced here while there is a fight to be had up above. Why not go up and take up with Deputy Peadar Cowan?

The Deputy must come to the Finance Bill.

He spoke about the price of English coal. I remember when to import English coal in 1933 and 1934 we had to pay 5/- per ton extra. That was to prevent English coal from being burned here. Deputy de Valera, when speaking about light beer, should have thought of these things. He should remember what the taxpayers had to pay for the peculiar line followed in order to win a certain type of war. We have not anything to apologise for in regard to our borrowing. Deputy Lemass was the author in 1932 of "we have a plan". He was one of the finest liars that ever put his name to a political poster. I do not mean that in an unparliamentary sense.

It is very hard to differentiate between the use of the same word in different contexts.

I do not mean that Deputy Lemass is——

An untruthful person.

Yes. Thanks very much for the prompt. We must take into consideration that we are embarking on a programme which was never envisaged before in the life of this Assembly. We have a programme for hospitalisation, housing, drainage and land reclamation, and we are going to carry it out in a way which will ensure that it will be done quickly. In the area which I represent we have a programme for the building of 400 houses. In fairness to the Fianna Fáil Government, I must say that a number of these houses were being built when they were in office. We contemplate building within the next couple of years at least 1,100 more. That represents 1,500 houses, and these can come under the heading of town houses or rural houses. From the time of the passing of the first Labourers Act up to the present day approximately 3,200 houses have been built. That means that within the next few years we contemplate erecting 50 per cent. of the total number of houses built since the first Labourers Act was introduced, I think, in the 19th century. I am sure the Opposition will not take umbrage in that respect and that they realise that that scheme, which will be brought to its logical conclusion within two or three years, is very much in the interests of the people. The same remarks apply to hospitalisation. I will give every credit which is due to the Fianna Fáil Government for the number of hospitals which were built between 1932 and 1948, but I think it must be agreed that since we have come into office the rate at which hospitals are being built has very much increased and is, in fact, very much greater than that which prevailed during the Fianna Fáil régime.

On the subject of land reclamation, I sincerely hope that the scheme in that connection will bear results within the next two or three years. We all know that there are approximately 11,000,000 arable acres of land in the Twenty-Six Counties. I am sure everybody would be very pleased indeed if we could succeed in reclaiming a further 2,000,000 or 3,000,000 acres. Though the Opposition have been most caustic in their criticism of the scheme —at times I wonder if that criticism is for one purpose or another—I am prepared to believe that probably they are actuated by the very best motives.

Deputy Aiken referred to turf. Those of us in the South of Ireland who live in inland areas and between hills where there are no turf bogs or turf mountains are well aware of what Deputy Lemass allowed to be done in respect of turf during the emergency period. I have seen turf putting out fires in my county—absolutely quenching them. That quality turf was allowed to be sold in small inland towns for about 3/- a cwt. I wonder if Deputy Lemass when, in his wisdom, he was making his special Orders, ever considered the calorific value of turf. In Galway, Tipperary, Kerry, and even part of my own county people became overnight, if not exactly millionaires, very affluent. They became very affluent because Deputy Lemass allowed a certain bunch of racketeers to sell every quality turf—and the unfortunate people had no alternative but to buy it. I should be interested to hear Deputy Aiken give me his views in respect of the calorific value of turf compared with that of coal or timber. As I pointed out to him, he was responsible for the introduction of a range or a stove which was installed in every barracks in the country. I forget the name of it at the moment, but it was something like "Co-operative defence measure" or something like that.

What has that to do with the Bill which is before the House?

It has to do with turf.

Every reference to turf is not relevant to this Bill.

I listened to the speech which Deputy Aiken made. He emphasised the amount——

He did not make any reference to a turfburning stove.

The only reference I wish to make is that all these stoves were scrapped when this Government came into power. I want to know the position now——

The Deputy must come to the Finance Bill immediately. His references to a stove have nothing whatever to do with the provisions of this Bill.

Though every member of this House is anxious to help the turf industry of this country there can be no doubt but that for a number of years we were, as it were, thrown to the wolves in that respect. The impression that was created in the minds of the people of Cobh, Fermoy, Mitchelstown, and so forth, will not be easily eradicated. Deputy Lemass allowed everything in the line of turf to be sent to us. We had to pay 3/- a cwt. for a commodity which was 80 per cent. water. We protest strongly against that and I think we have emphatically protested against it in our vote in the last election. I do not wish to subsidise English coal mines and for that reason I feel that the Minister should consider carefully the potentialities of the mines at Castlecomer, Arigna and elsewhere. At the same time we must be realistic and ask ourselves if we are capable of fully developing these mines.

I remember that in the autumn of 1947 someone came down from the Department to the county council, of which I am a member, and informed us that the hand-won turf was to be finished with. When he came down it was more or less taken for granted. We asked him for certain data. I think he came back again after about a fortnight and I am nearly positive that what he told us was that hand-won turf would not be proceeded with. He said there were certain bogs which would be taken over for machine-won turf. I do not know whether Deputy Lemass can remember that, but I have a recollection of it. The idea was that band-won turf was to be finished with and only machine-won turf would be produced. We had taken over certain turbary rights.

Deputy Aiken was very worried about what happened some two or three years ago. He spoke about virtue and something else with regard to the present Cabinet. There were certain things that happened in the transition in 1932 and the transition in 1948. I am sure if the people who were responsible would only examine their consciences, they would be very sorry for certain actions they took. Argentine wheat is No. 1 and Deputy de Valera's light beer is No. 2. It is not a bad substitute for tea, mind you. Of course, Deputy de Valera always can bring something from under the hat. It was in 1947 or 1948 that the rabbit turned into a squirrel and, as a result, Deputy de Valera is on that side of the House.

And you are over there.

And I am over here— correct, Deputy. I would like to commend very strongly to the Opposition that when they are making any protests with regard to monetary matters which are dealt with in the Budget they should recollect the famous plan that Deputy Lemass advocated in 1932. I do not believe it is infra dig. to take a leaf out of another person's book. I wonder did they reduce the pensions that time? I was one of the people interested. I happen to be an ex-Army man and I have an Old I.R.A. record. We were going to be reduced, cut off, finished with, guillotined. As a matter of fact, a few of us were threatened with shooting.

This line of argument does not appear clear to me.

It is only a Cork habit.

I note that Deputy Corry is not here. Amazingly, that did not happen.

The Deputy will have to relate his speech to the Finance Bill.

The people who were speaking at that time about retrenchment are at the moment quibbling with regard to expenditure. So far as the Party I am associated with is concerned, our only point about this Budget is that we are not getting as much as we think we should get. The Labour Party will continue to move along their line irrespective of any other Party. They are out to gain for the plain people the amenities they are entitled to. While it does not realise all the Labour Party's ambitions, this Budget has gone a certain way towards proving that one-Party government is not the ideal form of government that Deputy de Valera and Deputy Lemass think it is.

I would like to ask the Minister for Finance to answer a question which I asked at the time of his Budget statement, but evidently he had no time to reply. I then asked him whether he had thought about the amount of borrowing which he contemplated in relation to the only known theory yet advocated, under democratic circumstances, to counter a cyclic depression. It was a serious question, not meant to confuse the Minister politically. I was genuinely interested to have an answer. As the Minister knows, in practically every democratic State, whether you have a semi-socialist or a supervised capitalist régime, these States are supposed to have plans for facing the effects of a cyclic depression for which they may not be responsible; in other words, for encouraging employment and investment which become insufficient as a result of the depression arising. Those plans were based more or less on the theories of the late Lord Keynes, but there were other people who advanced the same theories. They have never been put into practice, because the theories were only conceived in the middle of the last cyclic depression. The war intervened, with a high level of employment and all the symptoms opposite to those of a cyclic depression.

The Minister knows as well as I know the theory of what should be done, namely, that, in times when agricultural prices are high, when the prices of the main products of a country's exports are high, when external trade is very high, the Government should on the whole restrain its borrowing to the minimum point and should, if anything, encourage personal savings, so that when a cyclic depression arises it can do the only thing left, to pump-prime the entire economic community to borrow much more than before for certain classes of public works, to borrow much more than formerly for stimulating public and private investment and, at the same time, by whatever action they can take in regard to banking policy, to discourage excessive savings on the part of the people and encourage the private investor to invest more.

In the past two or three years, there have been a number of people who have questioned the validity of that theory. They have questioned whether it would work in practice and they have pointed out that, in America, where President Roosevelt tried out the theory, to a certain degree, it did not have the effect of largely reducing unemployment, but it nevertheless did have a certain stimulative effect on the American economy in general. In any event, the theory has never been tried out in regard to any cyclic depression that has occurred because, in fact, there has been none such. So far as I know, there are no alternative theories dealing with cyclic depression, except the Communist complete authoritarian control of the State.

I am asking the Minister, simply as a matter of interest and without any regard to any political view, whether he has studied this problem and whether he thinks it is the only valid method of overcoming the effects of a depression, and, if that is the case, whether he has allowed anything like a sufficient margin for pump-priming in connection with the borrowing programme he has in mind, which is taking place not during a slump in so far as our external trade is concerned but at a time when agricultural prices have never been higher in relation to the prices of other goods and when, therefore, owing to circumstances over which we have very little control, a considerable number of the community in the rural districts are more prosperous than they were in former times.

Those people in this country who have made even, like myself, a rather dilettante study of economics would be interested in the Minister's reply. If there were alternative theories, the Minister could advance one of them, but, so far as I know, there never has been any other theory, any other method proposed for dealing with a depression. I am asking the Minister where is the money to come from. Where will the additional borrowing come from if, as a result of there not being a world war in the future and as a result of there being a glut of commodities, distorted distribution or any of the other factors which cause depression, we have to do something to cure unemployment, to reduce the additional amount of unemployment that may be caused in this country.

I want to refer again to a matter I mentioned during the course of the discussion on last year's Budget—the granting of reliefs in respect of corporation profits tax. I know that those who speak for the industrialists here had reason to expect that this year's Finance Bill would go a long way, if not the whole way, to meet the case they have been continuously urging with the Department of Finance. They had what appeared to them to be a definite assurance to that effect from the Minister for Industry and Commerce. I was present at the function under the auspices of the Federation of Irish Manufacturers at which the Minister for Industry and Commerce spoke. It was obvious he was not speaking impromptu—his address was read from a manuscript which had been supplied in advance to the Press.

There were present on the occasion not merely the Taoiseach, but possibly a majority of the members of the Government, all of whom heard the Minister for Industry and Commerce tell the manufacturers present that their case for reliefs in respect of corporation profits tax was being fully and favourably considered and that it was likely that something to meet it would be done in the Finance Bill of this year. I admit that the Minister did not give an assurance in words which left the Government's intention beyond all doubt. It is not customary for Ministers, in advance of the Budget to forecast definitely what the Budget will contain. Nobody who was present at that function, however, had any doubt whatever about what the Minister intended to convey. He stated that he was impressed by the case made for reliefs by Irish manufacturers and he gave an assurance that, before the Finance Bill for the coming fiscal year was submitted to the Dáil, the claims of industry for tax concessions would receive the Government's fullest consideration. These were his words.

If the claims for specific tax concessions advanced by the Federation of Irish Manufacturers have received the Government's fullest consideration, I think the Minister should so inform the House and should inform the House also of the reasons for their rejection. It is obvious that the case they had made was one which impressed the Minister to whom they made it, the Minister for Industry and Commerce. If he has not been able to convince his colleague, the Minister for Finance, that the case was a good one, it is to be assumed that he has accepted his colleague's decision, and for good reason. The House is entitled to know what that reason is. I do not intend to reiterate that case here.

You have not even mentioned it.

If the Minister wants to refresh his mind concerning it, may I refer him to a speech made on the Finance Bill, 1947, by the present Taoiseach?

Does the Deputy uphold the claim? Does he think it is a good one?

In part, yes.

Will he tell us why, and what part?

Let me proceed for the moment on the line which I intended. I am bringing up, first, as an important matter bearing upon the relations between Ministers and the public, that the Minister for Industry and Commerce, in a formal statement made to a gathering of manufacturers, said that certain claims they had made for tax concessions had impressed him and gave them an assurance that, before the Finance Bill of this year was framed, that case would receive the Government's fullest consideration. Despite the fact that the Minister made that statement, and gave that assurance, there was no reference to these claims in the Budget statement and no attempt by the Minister to explain why he had resisted the case made to him by his colleague, and had decided to take no action on it. I referred incidentally to the fact that that case of the Federation of Irish Manufacturers for these reliefs was urged strongly by the present Taoiseach when he was a Deputy in opposition, in 1947. The only argument against granting these reliefs in part in 1947 was that the circumstances of that year did not permit of any substantial expansion of industrial activity, any re-equipment of existing industries or the foundation of new ones and that, consequently, the affording of inducements through taxation to secure that result was likely to be futile.

The circumstances of 1947 do not exist now. The British Government have decided that, in British circumstances, such tax inducements to the replacement of out-of-date equipment and the encouragement of new industrial activity should be afforded. I do not know that anybody here would regard our industrial condition as more satisfactory than in Great Britain and, if the British Government decided that inducements of that kind were necessary in their tax system, then, on the face of it, similar inducements are necessary here.

I am not, however, dealing with this matter for the purpose of urging that industry as a whole should pay less in taxation. The argument which was advanced here against the claim made, that the general rate of taxation is lower here than in Great Britain, does not apply to the case I want to make. In so far as some industrialists here have urged that the existence of these reliefs in the British tax scheme puts them at a competitive disadvantage in export trade, then that argument might apply. I do not think that the case for relief can stand on that ground.

That is the ground on which it is mainly made.

It is not the ground on which I am making it.

I would like to hear the other argument.

I am asking the Government to consider this from the point of view of Government policy. What do they want industry to do? Do they want industry to carry on by any makeshift methods possible so long as it contributes, through corporation profits tax, a substantial annual sum to the Exchequer, or do they want to encourage the reinvestment of earned profits, the replacement of outworn or obsolescent machinery and equipment and a general drive towards expanding industrial production and expanding efficiency?

On the assumption that the Government regard these things as desirable, that they want to give an advantage to the individual manufacturer, as against his Irish competitors, who is prepared to reinvest profits instead of distributing them in dividends, who is prepared to keep up-to-date with technical improvements in industrial processes, who is prepared to replace his existing machinery when new and better machines become available, then the obvious way for the Government to get that result is to adjust the tax system accordingly.

I again repeat I am not asking them to adjust the system in a manner which will lower the total yield. I am asking them to vary the burden as between one manufacturer and another, as between one business concern and another, so as to give the necessary inducements to progress, the necessary advantages to those who decide to accept the inducements.

We have here a tax system which is modelled largely upon the British system of 1922. The whole income-tax code of Great Britain was taken over and has since remained, in this regard at least, virtually unchanged. The present standard rates of wear and tear allowance have remained unchanged since 1922. They have been increased on a number of occasions in Great Britain. They were increased in 1932 by 10 per cent., in 1938 by 20 per cent., in 1946 by 25 per cent., and, in addition, in 1946 the British Government gave an initial allowance of 20 per cent. on capital expenditure incurred upon plant and equipment since 1944. That allowance was increased to 40 per cent. in the British Budget of last year and was described by the British Chancellor of the Exchequer as an expedient to help industry to pay the increased replacement costs of its fixed assets. On the face of it, there is as good a case for effecting those changes here as there was in Great Britain. There is at least as good a case. Many of us might think there is a much better case.

But apart altogether from these specific claims, put forward in a serious manner by the organised industrialists of the country, there is, from the point of view of general national policy, a case also for a complete re-examination of the whole system. Such an examination is proceeding in Great Britain at the moment. We have been content in this matter, as in other matters, such as the general law relating to company administration, to lag far behind Great Britain. I do not think we should be happy in that position. The British have set up a committee for the express purpose of examining the methods of computing trade profits for the purpose of charging them to income-tax and profits tax. There is a reference to that committee, which has not yet completed its work or reported, in the current issue of an English financial journal, the Economist, to which I would like to refer Deputies.

That committee has the task of finding some guiding principle that will give an equitable basis of computing taxable profits. It is admitted, I think, that such a basis has not yet been found, at least that such a basis does not exist to the satisfaction both of those who are responsible for industrial management and those who are responsible for revenue collection. It is admitted in the particular article to which I refer that no method is likely to be at once equitable and practical, but that something has to be done to stem what is called the seepage of capital which has been going on far too long in the guise of taxation of profits.

I think the Minister must be aware —I am quite certain his advisers are aware—that the present system of determining profits for tax purposes does not conform with good accountancy practice, that commercial prudence will normally force any company management to decide that the amount of profits available for development purposes or dividend distribution is substantially less than the amount which the Revenue Commissioners assess for taxation purposes. If that is so, then either the development of industry will be handicapped or there will be unfairness in the proportion of the total national tax burden which a particular section of the community is compelled to bear.

I should like to read from this article one extract:—

"If the committee can persuade the business community and the legislature that surpluses which are the by-product of inflation are not profits at all, and if it can lead the revenue to understand that, as a sleeping partner, it enjoys a majority share in the profits of industry and should, therefore, be more interested in commercial wellbeing than in forcing up the amount of taxable profits by meticulous and exacting applications of old rules of thumb, then it will have done its task well."

We have these old rules of thumb operating here and they operate to restrict our industrial and commercial development far more effectively than in Great Britain because—I have frequently expressed this view in the past—in the main, industrial expansion here must come through development of existing businesses utilising for capital purposes the profits previously earned.

This whole problem arises very largely out of the inflationary situation which has developed since the war. If there was stability of prices the problem would not be acute at all, but there can be no doubt that the present rise in the cost of raw materials is having a disturbing effect on industrial expansion, an effect which is accentuated by the rules of the Revenue Commissioners in assessing profits for taxation purposes. It is true that the higher cost of raw materials which followed on devaluation last year has created a serious situation for a number of our business concerns, not merely because the higher cost of materials and the higher cost of production will reduce the margin between costs and prices, but because taxation will be levied on the higher cost of replacing existing stocks. By some extraordinary interpretation of the law the Revenue Commissioners decide that the higher cost of replacing stocks is a taxable profit. Therefore, the rise in the price of materials is not the only burden which industrial concerns have to meet, as they also have to face a position in which real profits are sharply contracted by that rise, while taxable profits will be assessed at a higher level for the benefit of the Exchequer. I do not want to discuss the whole theory of this system of taxation, but it seems to me that it is time that we re-examined the theory. It is true that taxation can be levied without administration difficulty on corporation profits, but it is also true that in the process of doing so we can do damage to national development which cannot easily be remedied. I have heard it occasionally argued in this House that it does not matter how the tax burden is paid, that it is the total of the burden that matters. I think it matters tremendously how the tax burden is distributed between different economic activities and different sections of the community. In this particular instance I feel certain that any intelligent re-examination of the system of determining company profits for taxation purposes would result in changes which would cost the Exchequer nothing and which would be of real benefit to industrial development.

I am all the more concerned about this because I am certain that the course upon which the Government has now embarked must inevitably limit or stifle private enterprise. Most people will recognise that it is not possible to increase the cost of Government services by several million pounds, to rake into the Exchequer in taxation several million pounds more than ever was taken before and in addition to announce a large investment programme involving borrowing by the Government on a scale never previously attempted, without having the certainty of some economic consequences. We should at least investigate what the likely economic consequences are going to be and try to examine the question in a scientific non-partisan manner because such examination may at least enable us to devise means or to make suggestions towards means to minimise the worst of these consequences. This discussion has proceeded, as far as the Government side of the House is concerned, altogether excessively on a political basis. They have been far too much concerned to secure whatever political advantage they see likely to arise from the proposed method of financing Government expenditure in this year and far too little concerned with the possible economic effects of the course they are following.

I do not know what significance is to be attached to the fact that in the first quarter of this year there has been a very substantial increase in the adverse balance of visible trade and at the same time a substantial increase in the external assets of the commercial banks.

It is obvious, I think, that this year the adverse trade balance is likely to rise substantially and that the gap in our balance of payments will be higher than last year and possibly even than in the previous year. We closed the gap to a considerable extent in the past two years by reason of the income from the tourist trade, but of a certainty our net income from tourist trade will be very much down this year not merely because of expenditure abroad which our own people will undertake in connection with Holy Year pilgrimages and otherwise but also because the very same circumstances will result in fewer people coming here who might otherwise have done so. If side by side with that diminution in invisible items on the credit side there is to be a rise in debit items on the visible side, then we are facing a situation which will make it much more difficult for the Government to carry through the borrowing programme which it has in contemplation. If, however, there is this repatriation of external assets as disclosed by the trade returns, side by side with an increase in the external assets of the banks, it is obvious that the resources of private firms and individuals are being depleted and that, as I attempted to show in my statement on the Budget itself, is the inevitable consequence of the course which the Government is following.

Once again I want to emphasise the importance to the national economy of the tourist trade. I still suspect that in spite of the statements which are occasionally made by the Taoiseach and by other Ministers there is in the minds of the Government a feeling of hostility to that trade because of the foolish statements which they made about it in the past. We know that the Leader of the Clann na Poblachta Party, now Minister for External Affairs, foolishly advocated in the Dáil in 1947 a tax upon tourists. We know that the present Taoiseach, in what was almost the last speech he made in the previous Dáil, advocated a similar tax and although they now profess to recognise that their attitude then was wrong and profess to have learned since the importance of that trade in the whole economy of the country, nevertheless, no effective step has been taken, apart from a few speeches of a general kind, to expand it or to make it more profitable to the country. We still have occasional denunciations of luxury hotels from Deputies on the benches opposite who, apparently, think it is going to be practicable to maintain our tourist traffic income, much less to expand it, by giving abroad the impression that anything like a clean, decent hotel is something contrary to national policy. Is it not time that nonsense was stopped and finally discarded?

Whoever said that? That a decent clean hotel was contrary to national policy?

Only last week I heard Deputies opposite denouncing what they called luxury hotels.

That is a different thing. A luxury hotel bought with Government money, one that could not pay, is a different thing.

That is precisely the type of thing I am objecting to. It is intended, obviously, to show a bias, to score some minor political point and lead members of this House to wrong conclusions.

The interjection the Minister made.

What is wrong with it?

It is not true that those hotels did not pay.

It is true.

I say that that result was produced by the process of charging against these hotels the whole cost of all the property acquired in conjunction with them. Let me give an example. There exists at Portmarnock, County Dublin, one of the finest beaches in Europe. Is that agreed?

The Government did not buy that.

No—they did buy it. For a number of reasons, access to that beach was denied to the citizens of Dublin. One of the reasons was that the property between the public road and that beach was in private ownership. One of the objects of the Tourist Board was to buy that property, consisting of 200 acres of land, in order to build roads, amenities, shelters, lavatories, sites for restaurants and cafés. In the course of acquiring the property, they acquired a house which was the residence of the former owner of the property. They turned that house into a hotel. That hotel was sold but the selling of the hotel was justified on the ground that they made a loss; yet in order to show a loss they had to charge up not merely the cost of the building but all the cost of the property that was to be developed as a holiday resort and recreation ground for Dublin citizens. I presume that work has been dropped since. It would be regarded as a grandiose scheme such as those Fianna Fáil delighted in and which, of course, the present Government could not proceed with.

I am sorry that I was brought in to deal with this matter in that controversial way by the Minister's interruption. I am asking to be corrected if I am wrong in stating that this year in addition to the increase in the adverse balance of visible trade of several million pounds, we have the likelihood, because of the expenditure this year of our own people going abroad on holidays or on pilgrimages to Rome and the diversion for similar reasons of traffic that might be coming here, of a sharp contraction in our net earnings from tourist activity. We have the likelihood that the interest on our foreign investments will contract, because of the contraction in their total capital value. There is every reason to anticipate that the gap in our balance of payments will be widened this year. I am urging that, in these circumstances, it will obviously be much more difficult for the Government to carry through the financial programme outlined here. They cannot do it at all unless they take every precaution to ensure that borrowing on the scale they contemplate and the methods they use to borrow do not interfere with ordinary development through private enterprise.

I note that the Minister has decided that the amount to be allocated to this Capital Services Redemption Fund should be determined on the basis of assuming that money invested in Government Stocks will earn 3½ per cent. I would like at his stage to refer the Minister for Finance to some of his speeches in the previous Dáil. I will not twit him now with his pet scheme for raising money for Córas Iompair Éireann at 1 per cent. He did express the view here, during the course of our discussion on electrical development and other schemes, that there was no likelihood in our lifetime that the Government would ever have to pay more than 3 per cent. for money. If he has now to contemplate that Government borrowing will be on a 3½ per cent. basis—and that is the clear indication of his remarks here to-day, remarks which I think were not unpremeditated—then is it not right for him to re-examine the situation anew, to determine if it is necessary to get away from the 3 per cent. basis on which we have been operating for the past few years, or to decide if it is likely that, if Government borrowing is to continue on the scale which he envisages, even a 3½ per cent. rate will not prove to be an unduly optimistic assumption?

It is obvious to everybody that the more the Government borrows the more it is likely to have to pay in order to fill its loans. I want strongly to suggest that the evidence available to the House indicates that the Government is contemplating borrowing upon a scale which is impracticable, impracticable unless it is prepared to offer terms which are going to upset the whole of the capital market and force private firms seeking capital for investment purposes to raise their price also. The Minister did not attempt to meet the case that was made, based on the only information that members of the Dáil have, to show that the amount of money available for investment in any year is substantially below the amount that he proposes to borrow. If that is so, presumably he will not be able to borrow it and presumably this whole capital programme is very largely an illusion because it cannot be proceeded with. If it is not going to be proceeded with, what parts of it are to be discarded? I strongly suspect—and I think everything the Minister has said supports the suspicion—that if he finds it impracticable to proceed with the full borrowing programme, if any items on the expenditure list have to be cut off, it is the productive schemes that will be dropped, since they could be postponed, and the non-productive expenditure upon which staffs are employed—the suspension of which would mean the dismissal of civil servants, the closing of offices or the release of temporary staff—will be kept going in any event. That is the inevitable choice of the Government in that situation. Therefore, before the Minister comes to the House and argues in favour of this as a policy, there is on him the obligation of showing that it is a practicable policy and that it is not merely a device to jolly the Dáil along or to hold to the support of the Government, Deputies whose allegiance might waver if something of this kind were not presented to them. I believe that the policy will prove to be impracticable if pursued in the manner indicated by the Minister. The case the Minister attempted to make in his concluding speech upon the Budget was so prejudiced by political references that it could not have been seriously entertained. Whether or not the Fianna Fáil Party in 1926 supported the Shannon scheme has nothing whatever to do with this matter.

Has it not? You have not changed even yet.

If the Minister thinks that garbled quotations from past speeches have relevance, I would like to produce for him speeches made in the past by many of his ministerial colleagues in that connection; and I can do that.

I would be very interested to hear them. I did not threaten to produce quotations; I produced them.

I do not think they are relevant.

I am sure they are not too pleasant.

The Minister quoted them, knowing they were irrelevant. Whenever he was unable to answer the case made, he filled up the time with these irrelevant quotations and a few political gibes in order to occupy the necessary hour and give the appearance of making a case in reply.

How long did I speak about the Shannon scheme when I was replying—about a column and a half?

When I became Minister for Industry and Commerce in 1932 I found out a good deal about the Shannon scheme that I had not known before that time. I could have come in here then with allegations had I wanted to do that. I did not want to do it.

You were always a great bogeyman.

I was in charge of a national asset and I had no desire to disparage it in public.

It was after 1932 the "white elephant" was used.

Not by me.

No—not by you.

If the Minister wants to press the point, some day perhaps we may discuss here why it was never completed.

What about the £11,000,000 scheme for Civil Service palaces?

That has nothing to do with the problem before us now.

Here we have a Government that promised to reduce taxation. Instead of a reduction in taxation, the Government is proposing to increase it.

I gave a reduction in taxation.

The total amount of money which the people will have to pay into the Exchequer next year is higher than ever before. Is that not so?

Is taxation reduced?

No. The amount to be paid in taxation has gone up.

Where is the beer duty?

Here we have a Minister who promised to reduce expenditure.

Where is the tobacco duty?

Here is a Minister who said that economy and retrenchment would be the keynotes of his policy. Public expenditure in the past was never raised to within £10,000,000 of the figure it has reached this year.

What about the "man of vision"?

I do not understand the Deputy.

I am quoting the Deputy. That was March, 1948.

If I told all I knew I might disturb your equilibrium. Instead of a reduction in taxation, we have an increase. Instead of a reduction in expenditure, we have an increase. In order to avoid the political implications and consequences of those increases, we have an attempt to disguise them by the invention of arguments to justify borrowing instead of raising taxation to meet a proportion of the cost.

And, lastly, we have the linking up with that inflated programme of expenditure on supply services, an alleged capital investment programme which, in my view, is wholly impracticable. It is also impracticable in the view of those who are in a position and have the responsibility of advising the Government, namely, the Board of the Central Bank. Why is it not properly defined here if it is honestly and sincerely believed that that programme is a good one and that it can be carried through? Should not the Minister address himself to these questions? Can we hope that we shall get from him now that particular type of speech? Can we hope that we will get from him a serious attempt to prove that the programme is a sound and practicable one instead of a speech, such as we had on the Budget, dealing with matters that have no relevancy to this and which can only be made relevant to it on the assumption that we are concerned here with nothing except the advantages of our particular political Parties?

The Deputy who has just sat down has a great affection for old things. He is very anxious that the industrialists should have these easements with regard to obsolescence and wear and tear. Why did he not attend to these when he was in office? Why did he not look after these easements? If the things he now criticises—the rules of thumb operated by the Revenue Commissioners were rules of thumb and not applicable to conditions in industry —why did he not attend to them? He did not do so. Will he reconcile the speech he has made this evening with that made by his colleague. Deputy Aiken, who insisted for the third or fourth time that we have committted a breach of promise in not reimposing the excess corporation profits tax. Evidently that is what Deputy Aiken wants.

He does not want it.

He would like to think it would be reimposed.

He endeavoured to get some honesty from the Minister. Will you or will you not reimpose it? Did you promise to reimpose it?

I did not. I said it was a scandal to give a 25 per cent. remission at a time when prices were held down. We were told they were soaring. It was quite clear that profits were being made while wages and salaries were held down even to the extent of breaking a formal contract with the Civil Service. In those circumstances it was outrageous to let 25 per cent. go into the pockets of the industrialists. In a sense it is a good thing that it is there now because it is part of the answer to the argument put for ward with regard to obsolescence and wear and tear. I would like to argue in public the case made for the industrialists about whom Deputy Lemass is so much concerned, but I do not think I can be compelled here to go through all the arguments put up on paper with regard to these points.

What argument did the Minister for Industry and Commerce put up?

I have already answered in arguments I have had with these people. It is something new in collective responsibility if the Minister for Industry and Commerce is not to be permitted to attend a dinner and state there that he is impressed by the arguments put before him and that they will receive serious consideration before the Budget is introduced. Seemingly, he is not to be permitted to say even that without it being contended that he is thereby committing himself to acceptance of the arguments advanced by industrialists. That is putting very simple phrases far too far. That is only one of a number of memoranda on the points, but it was accepted. I do not believe there is any case for it. If the Deputy will brief himself with their arguments and, for the time being, take it upon himself to champion their cause and let us hear what the arguments are, then we can have a good debate and I believe I can effectively answer any of the points he puts up.

It is wrong to say that there is a rule of thumb operation. The phrase the Deputy used was certainly meant to imply that they were old-time rules fashioned long ago. It is a pity he did not see that some years ago. If he had inquired into it he would have found he had no case. There are no statutory percentages with regard to wear and tear rates. A very general phrase is used—whatever in the opinion of the Revenue Commissioners is found to be fair and just. From time to time I am advised by industrialists and business people, and sometimes even by the Revenue Commissioners, that they do not think the rates are fair. If they have a fair case, that case is inquired into. If the industrialists feel themselves aggrieved, they are entitled to go before the special commissioner and, after that, to the court. That is the situation. In addition to that, the Deputy says he would not support any case made by the industrialists if it was based only upon a comparison with the situation in England at the moment. That is the case that is made to me.

In England, as the Deputy said, there are arrangements that probably do ease business and industry a bit more than here, if you take it only on the rates allowed for wear and tear and obsolescence, but there are other things that have to be brought into the picture. It is true again to say that a certain percentage of extra allowances were given in different years but in each year a certain explanation for that was given by the Chancellor of the Exchequer. It was said, for instance, that they were given because the income-tax rates were being increased and that this was a method of offsetting such tax increases. Certainly, on the most recent occasion, it was said that at this moment it is a life and death matter for England to get exports.

Nobody can say, on the basis of the comparison of income-tax rates between this country and England, that there is any case for an easing of the situation in this country in that regard. We have not a life and death situation here as regards exports. Then, British industry had a very difficult situation to meet after the war. Industries were diverted, as far as possible, from their ordinary purposes to the war effort. They were given over to munition-making or to something to aid the war effort. There was then the process of reconversion of these industries to ordinary purposes after the war. That did not happen here. There was no occasion for it to happen and there was no necessity for reconversion here after the war. The tax that corresponded to our corporation excess profits tax in England was taken from business at a much higher percentage than here. The only excuse given here in the years, when I personally used to complain that they were not contributing as much as they might to the Exchequer, was that it was intended to provide them with a fund to cushion them against the period that would arise after the war when they would have to restock and make certain additions to supplies that had been stopped during the war. They did get the benefit of that fund. That was one of the reasons why extra allowances were given to them.

In addition, there can be no question at all that the amounts received by Irish industrialists and held by them as extra profits were larger than those held in England. There is also the important factor that while British industrialists are faced with the difficulty of building up exports and of exporting their products under very unfavourable circumstances, our people are producing mainly for the home market and the home market was never more strongly fortified for them with tariffs and quotas than it is at the moment.

Finally, there is the tax situation. The situation here is that on business profits, on every £1 up to £2,500 there is a tax of 6/6d. levied. In England, the tax on profits up to £2,000 is 9/- in the £. On profits over £2,500, there is a little more than 7/10d. in the £ collected here as tax while in England, if none of the profits over £2,000 are distributed, there is a tax of 10/1d.; if 50 per cent. of the profits are distributed they pay 11/2d. and if all the profits are distributed they pay 12/4d. in the £. If anybody tells me in face of these figures that there is a case for amending the rates, here, I should like to hear them.

The Minister for Industry and Commerce apparently thinks there is.

I do not know that he was observant of all these things but the matter was seriously considered by the Government and the application of these industrialists was, for the time being, rejected. May I add a final calculation as to the cost of the relief claimed? It is, I may say, an estimate, and there might have to be a plus or a minus to it. The reliefs that were claimed in a certain document I saw would mean that the Exchequer would have to forfeit £800,000 a year for the first five years. That is a considerable sum to give to a group of people who are so heavily protected as the industrialists in this country are. That is only a brief sketch of what the position is, a very brief indication of the answer that can be given to the points urged on behalf of business people in this country. However, if somebody wishes to put forward a more detailed argument, I shall undertake to deal with it when I know precisely what I have to deal with.

Deputy Lemass has gone back to his old confusion with regard to tourists and particularly with regard to the hotels. All I know about the Portmarnock Hotel is that the board which Deputy Lemass set up guaranteed that the hotel would be a profit-making concern. It was not. The Deputy says it was charged with all sorts of extras, but there were a number of extras with which it was not charged—rates and taxes of various kinds. So far as I remember, in the accounts I saw there was no charge even for lighting or for heating. Even with all that, I think they showed a profit only on cigarettes and the bar. It was demonstrated that as a hotel it never could pay under the conditions on which it was run because there were too few rooms in it. Yet that was the concern that the Deputy's board took over and guaranteed to be a profit-making concern. Because I for one am against that unbusinesslike approach, I, apparently, am to be represented throughout the country as objecting to the provision of a clean modern hotel in the place. I have no objection to the provision of a clean modern hotel. I would facilitate the provision of such a hotel and even give some assistance to it if it were needed but I do object to taking it over when it is not modern and when it is a hotel that cannot pay.

So far as tourists are concerned, I do not know what my colleague said but I am sure I said much more about tourists than he did and, in the circumstances in which I made these statements, I shall repeat them. Let us see what the circumstances were. So far as I remember, most of my statements with regard to tourists were introduced in the context of the Wages Standstill Order. I particularly used to ask what was the case for refusing to give civil servants what they were entitled to under the contract the Government had made, a contract which Deputy de Valera not merely asked but exhorted them to hold on to. He said that it would be their stand-by in the serious times that were ahead—that was to say, that they would get an increase in their salaries if the cost of living went up whilst they might suffer if it went down. The moment these poor people found the cost of living going up the contract was broken. I thought that was immoral. When I asked why it was done, the answer the Government gave me was: "If you put an extra £1,000,000 into the hands of the civil servants, look at the terrific inflationary effect." In these circumstances, I often asked why it was that £1 in the hands of a tourist was not inflationary while £1 in the hands of a civil servant was definitely inflationary? I never got an answer to that question. In a situation in which goods were in short supply here, I objected to people being allowed in here to spend money which they had made in producing wealth in another country. They were allowed in here, not to produce wealth, but simply to engage in competing for a diminishing supply of goods with the surplus wealth which they had made in another country. In the present circumstances, the situation is entirely different. There is no question of tourists now eating us out of house and home. They are in ordinary times an asset and, particularly in these days, if we have tourists coming from America, they are an asset of an extremely desirable type. But there is no necessary contradiction between having been against tourists during the war time and up to late 1947 and being a wholehearted enthusiast for tourists now. I do not see any contradiction between the two. A situation could arise again in which I would take the attitude of being antagonistic, but that situation has not arisen, and is not going to arise.

The adverse trade balance is worrying Deputy Lemass. When I take his economic arguments, I cannot forget the amazing accuracy with which he predicted in 1948 that deflation was upon us. As I remarked before, he did that with all the enthusiasm, earnestness and the sort of background of information, advice and knowledge which the Deputy always employs when speaking, but it was all wrong. He came to the House a week or so later and, again, with the same vehemence and the same conviction said that everything pointed to inflation. Both speeches were made with exactly the same sincerity and breathed that spirit of confidence in knowing everything which the Deputy manages to import into the tone of his attacks. The adverse trade balance is not worrying him so much, but he is always anxious to take anything that is a little bit, as he thinks, a sign of coming distress and to propaganda that as much as he can in order to do damage. Circumstances have beaten him over and over again. We can be content because I think circumstances will beat him again.

Deputy Childers asked me a question. I do not think I will be able to give him a complete answer until I see what the question was in the Official Report. At the moment, I do not know what I have to reply to. I think he asked if I agreed with what he talked of as Lord Keynes' theory with regard to public works in times of depression. For what it is worth I do, but I do not put myself on record as saying that it will add anything to the Keynes' doctrine. I do not know what the rest of the Deputy's question amounted to. I think he wanted to know if this movement of ours with regard to borrowing and investment was our application of the Keynes' theory. In other words, he wanted to know was this borrowing as against depression or borrowing in a deflationary period.

Mr. de Valera

That was not his point. He said that you were using up resources that might be needed for use when depression and deflation came.

I do not think so. We have plenty of resources. I think this country has plenty of elasticity and plenty of resources.

Deputy Aiken apparently feels that this is going to cause inflation, but at the end of his speech he began to wonder what we would do if we found that there was inflation. He spoke with a certain amount of horror at the thought that any of these projects would be dropped if inflation was discovered. Of course, that is not the only resort—to drop a scheme. There might be other ways of financing it, or it might be necessary to drop certain things. I would like to let him know that nothing is going to be dropped.

Deputy Aiken also feels that there is a contradiction as regards some of the speeches I made in 1947 with regard to inflation. I make to him the same remark that I made to Deputy Lemass, that conditions have changed enormously. Deputies should remember this—I have stressed the figure already and should like to stress it again—that borrowing to meet expenditure on these projects amounts to something short of £10,000,000—more than, in fact, we spent on these projects last year. The sum of £10,000,000 is now the sum that is requested. Taking what was done last year, I do not think anyone can say that there was any notable inflation as between 1947 and 1948 and 1949. If anything, I think the danger of inflation was less as those years went on. What is in question is, will the expenditure of £10,000,000 more this year than last year cause all the terrible things that the Opposition say are likely to occur?

Deputy Aiken gets back to 1947 and says that I criticised in those days the expenditure of money on roads, telephones and a variety of other things. I am sure I did. I asked at that time how much of all that expenditure was going to add to production, which was certainly the thing that was required at that time. I did not see why millions of money should be spent on roads at a time when consumer goods were in great scarcity. That did not seem to me to be a sound or an economic programme. The situation is entirely different now. I do not know whether the Deputies opposite accept what I said in the Financial Statement. I said that agricultural production, in volume, was at about the pre-war point, that industrial production was 43 per cent. up on pre-war, that exports are not yet, in volume, at the pre-war level, and that imports, in volume, are running a bit ahead of the pre-war level. That means, surely, that we are producing on both sides more than we were producing in 1947. We are not exporting as much as we did, so there must be more at home. We are getting more imports, and so there must be an addition to consumer goods. In these circumstances, surely, the letting loose of £1,000,000 or £2,000,000 or even up to £10,000,000 does not present anything like the serious problem that would be likely to arise from, say, the expenditure of £5,000,000 in 1945 or 1947. There has been a radical change as between these two periods. Therefore, I do not think that I need pay any heed to the arguments which the Deputies may address to me about the things I said in 1947 until they tell me that the conditions in 1947 are again reproduced. If they are, then my words might be relevant.

I gathered from Deputy Lemass that he does not like my references to the Shannon. I think they are definitely relevant. It was a big project of an imaginative type and it could easily have been misrepresented to such an extent that the people would not have subscribed the moneys required. The Deputies on the other side of the House did not help us with regard to that scheme. I pointed out to them that they should now admit that they had erred in their attitude towards the Shannon between 1926 and 1932. I ask them to take a lesson from the past and not to err again.

We have asked that these schemes of ours be examined. I have made two speeches outside the House on them and three speeches here, while other speeches have been made by my colleagues. We have done our best to get the details brought forward for examination. People can pick and choose and say what they object to, but, taking the scheme as a whole, what are the economic dangers that are inherent in the programme that we have outlined? I have done my best to answer all the points put up and I think I will have to submit them eventually to public approval and judgment and the public will have to make up their minds as to whether what we are doing is sound or whether there are dangers or not.

We have now got to the third excuse with regard to the new Government buildings that were planned. When I mentioned it first, Deputy Aiken was quick to tell us that it was merely a programme to relieve unemployment, that that was all it was intended to be. I countered at once by saying that there was a phrase on the file which indicated an appreciation on the part of people who favoured that scheme that, if it were gone on with, it would mean the inevitable postponement of the housing of the working classes for years. That was the phrase used.

Deputy Lemass then decided to have another go at an excuse and his new theory was that when the Deputy arrived at the ministerial post he found somewhere in the Board of Works a ruling that property in the vicinity of Merrion Street was to be bought up. I had the file searched since and I cannot get that ruling. I was a member of the Government in those days and I do not remember any such ruling. Further, I do not remember the matter being discussed. There was never a suggestion about building a new Parliament House. In the old days, in 1923 and 1924, there was a division of opinion as to whether the Bank of Ireland should be brought back to its original purpose, whether Kilmainham should be developed, or whether we should stay where we were. Once we were lodged in the College of Science I never knew of any scheme to leave it. There is no record on any file I have yet been able to unearth which shows any such ruling as Deputy Lemass spoke of.

The Deputy also made the excuse that there was no plan for devastating an area in Dublin. There was a distinct plan. It was written about and canvassed back and forward between Departments. As to the Cathedral which was to occupy Merrion Square which we were told in this House was the reason for the plan being abandoned, that was to be met in another way. Property north of Merrion Square and behind it in Fenian Street and other places was to be taken over with a view to persuading the ecclesiastical authorities to move the Cathedral back there in order to provide for the better devastation of the number of acres in the other area. There was an £11,500,000 scheme.

Mr. de Valera

Was it not completely turned down?

Mr. de Valera

It was.

It was not completely turned down for the reason that it was too expensive.

Mr. de Valera

It was completely turned down.

It was not turned down for the reason that it was inflationary or unproductive or any of these things.

Mr. de Valera

It was completely turned down.

It was turned down because of an approach made by the then Tánaiste to certain members of the Parties. We in Fine Gael said we would have nothing to do with it and would not allow him to bring in any legislation in connection with it. It met with terrific opposition and that possibly changed their minds. Then the other scheme developed in connection with land near the Park, of knocking down buildings on both sides of Kingsbridge and developing lands away down to Lucan, I think, and having a big Parliament House in the Park occupying a tremendous acreage. That was going to be substituted for the other one. One of these days I wish Deputies would agree that we should get out a White Paper about this containing all the decisions, etc. I do not think the Deputies opposite would like that.

Mr. de Valera

Personally, I do not mind if the truth is told.

In fairness to Deputy MacEntee it is only right to say that he did not agree with this proposal.

I gather that the objection taken to my reading of a particular memorandum is that that was not Deputy MacEntee speaking his own mind but, so to speak, the traditional Minister for Finance's point of view, that there was nothing more than that in it. There were good arguments used but, notwithstanding that, they were turned down and the plan was certainly gone on with and jollied around from 1933 until 1945. Now Deputy Aiken is on a new line. He thinks it is a scandal that any good public buildings in this country were erected under the British and that it was time we erected some ourselves. However, that is irrelevant to the Finance Bill.

Mr. de Valera

I do not mind debating it with the Minister.

The Deputy could put down a motion to have the project gone on with.

Mr. de Valera

The point is that it was never intended as an immediate project but to have it in reserve.

Should there not be a pool of works to start on some time? How can you have a pool of works if you do not start with them some time? The Labour people did not believe in that pool of works. They never wanted to see it there.

It was a board of no works.

How can you have it when you need it except you start planning now?

Question put.
The Dáil divided: Tá, 69; Níl, 49.

  • Beirne, John.
  • Belton, John.
  • Blowick, Joseph.
  • Brennan, Joseph P.
  • Browne, Patrick.
  • Byrne, Alfred.
  • Byrne, Alfred Patrick.
  • Coburn, James.
  • Cogan, Patrick.
  • Collins, Seán.
  • Commons, Bernard.
  • Connolly, Roderick J.
  • Corish, Brendan.
  • Cosgrave, Liam.
  • Giles, Patrick.
  • Halliden, Patrick J.
  • Hickey, James.
  • Hogan, Patrick.
  • Hughes, Joseph.
  • Keane, Seán.
  • Keyes, Michael.
  • Kinane, Patrick.
  • Kyne, Thomas A.
  • Lehane, Con.
  • Lehane, Patrick D.
  • McAuliffe, Patrick.
  • MacBride, Seán.
  • MacEoin, Seán.
  • McFadden, Michael Og.
  • McGilligan, Patrick.
  • McMenamin, Daniel.
  • McQuillan, John.
  • Madden, David J.
  • Mongan, Joseph W.
  • Morrissey, Daniel.
  • Costello, John A.
  • Cowan, Peadar.
  • Crotty, Patrick J.
  • Davin, William.
  • Desmond, Daniel.
  • Dillon, James M.
  • Dockrell, Maurice E.
  • Donnellan, Michael.
  • Doyle, Peadar S.
  • Dunne, Seán.
  • Everett, James.
  • Fagan, Charles.
  • Fitzpatrick, Michael.
  • Flynn, John.
  • Mulcahy, Richard.
  • Norton, William.
  • O'Donnell, Patrick.
  • O'Higgins, Michael J.
  • O'Higgins, Thomas F.
  • O'Higgins, Thomas F. (Jun.)
  • O'Leary, John.
  • O'Sullivan, Martin.
  • Palmer, Patrick W.
  • Pattison, James P.
  • Redmond, Bridget M.
  • Reidy, James.
  • Reynolds, Mary.
  • Roddy, Joseph.
  • Rooney, Eamonn.
  • Sheldon, William A. W.
  • Spring, Daniel.
  • Sweetman, Gerard.
  • Timoney, John J.
  • Tully, John.


  • Aiken, Frank.
  • Allen, Denis.
  • Bartley, Gerald.
  • Beegan, Patrick.
  • Blaney, Neal T.
  • Boland, Gerald.
  • Bourke, Dan.
  • Brady, Seán.
  • Breathnach, Cormac.
  • Breen, Daniel.
  • Brennan, Thomas.
  • Briscoe, Robert.
  • Burke, Patrick.
  • Butler, Bernard.
  • Carter, Thomas.
  • Childers, Erskine H.
  • Colley, Harry.
  • Corry, Martin J.
  • Crowley, Honor Mary.
  • Derrig, Thomas.
  • De Valera, Eamon.
  • De Valera, Vivion.
  • Flynn, Stephen.
  • Gilbride, Eugene.
  • Harris, Thomas.
  • Hilliard, Michael.
  • Kennedy, Michael J.
  • Kilroy, James.
  • Kissane, Eamon.
  • Lemass, Seán F.
  • Little, Patrick J.
  • Lydon, Michael F.
  • Lynch, John.
  • McCann, John.
  • McEllistrim, Thomas.
  • MacEntee, Seán.
  • McGrath, Patrick.
  • O Briain, Donnchadh.
  • O'Grady, Seán.
  • O'Reilly, Matthew.
  • Ormonde, John.
  • O'Rourke, Daniel.
  • Rice, Bridget M.
  • Ruttledge, Patrick J.
  • Ryan, James.
  • Ryan, Mary B.
  • Ryan, Robert.
  • Traynor, Oscar.
  • Walsh, Richard.
Tellers:—Tá: Deputies Doyle and Kyne; Níl: Deputies Kissane and Kennedy.
Question declared carried.

When is it proposed to take the Committee Stage?

Do the Opposition want time to make amendments?

Say this day week.

Committee Stage ordered for Tuesday, 30th May, 1950.