Dáil Éireann díospóireacht -
Thursday, 3 Apr 1952

Vol. 130 No. 9

Committee on Finance. - Resolution No. 11—General (Resumed).

Mr. J.A. Costello

The Budget which the Minister for Finance introduced yesterday is a cruel Budget. It is also a Budget which contains wholly unnecessary taxation. Therefore, it is an unjust Budget.

So many topics arise out of the speech made yesterday by the Minister for Finance, in introducing his Budget proposals, which urgently call to be dealt with that it is difficult for anybody like me, speaking here to-day, to select the particular topics in the order of priority of their urgency. I propose therefore, instead of trying to deal with all these problems, to deal merely with three or four of the outstanding features of the Minister's Budget and to leave over for early and urgent consideration in other places and at other times the other matters which will expose the economic fall aries of the Minister's statement yesterday and further demonstrate the ijustice and inequality of the present Budget proposals.

In the course of a recent speech, the Taoiseach declared that was his intention and that of his Government to balance the Budget by hook or by crook. In the light of the Minister's proposals and in the ligt of the disclosures which, very shortly, I shall make to the House and to the country, that phrase used by the Taoiseach—"by hook or by crook"—takes on a new and very significant meaning—a meaning which I at once agree was not attached to it by the Taoiseach when he used it. The country has not yet even recovered from the impact of the first shock of these Budget proposals. It will, therefore, receive a new and a startling shock when it is demonstrated that the proposals contained in the Minister's Budget statement yesterday contained proposals for the unnecessary collection of from £9,000,000 to £10,000,000 concealed taxation. The Minister gave his figures yesterday. I propose now, quite calmly and in detail, to justify the statement I have made that there are in the Budget proposals which will, in effect, result in raising from the already over-burdened taxpayers of this country a sum of from £9,000,000 to £10,000,000 unnecessary taxation. To justify that figure, I will give six items.

In the very few hours which we have had in which to study the Minister's speech on the Budget proposals, since the debate on his Budget speech ended last night, we have been enabled to pick out, from the details of his speech and of his taxation, items which amount, in all, to at least £9,000,000 or £10,000,000 of wholly unnecessary taxation. Not merely, therefore, will the people of this country have to face the burden of the colossal taxation that was indicated yesterday by the Minister in his Budget speech, but they will have the added horror of knowing that those proposals are extracting from the pockets of the taxpayers from £9,000,000 to £10,000,000 taxation which is wholly unnecessary to balance the Budget this year. May I remark, in passing, that figure of £9,000,000 to £10,000,000 is not without its own significance?

Deputies will recall that the figure which is given in the "Table Explanatory of Current Budget, 1952" for capital services is £9,277,000. Is it not legitimate then to suggest when it is demonstrated, as it will be demonstrated, that this Budget proposes to raise from £9,000,000 to £10,000,000 of taxation which is not required for the purpose of balancing the current Budget, that what has really been attempted here in these Budget proposals is covertly and in a hidden manner to finance the capital services which the Minister pretended yesterday he will finance in the way in which they were financed by the inter-Party Government—that is, by borrowing? He intends by the covert and concealed methods to which I have adverted, to provide the finances for these capital services out of current taxation. He is doing that in a covert and concealed fashion because he has not the courage to come openly to the people and say, as he and his colleagues have been saying for the last ten months, and for two years before that, that he and they did not believe in the system of financing capital expenditure by the inter-Party Government, and that when he and they got into office again they would finance it out of revenue, and not by means of borrowing, as was done under the régime of the inter-Party Government.

The first item to which I will call the attention of the Deputies is an item of £2,000,000 of unnecessary taxation. That item entails over-taxation to the extent of nearly £2,000,000 through the medium of the operations referred to by the Minister in his speech yesterday in relation to food subsidies. In the "Table Explanatory of Current Budget, 1952", circulated by the Government, Item 5 on the expenditure side contains a deduction for what is described as a saving on food subsidies amounting to £6.668 million. In fact, when the proper calculation is made the amount of such savings represents a sum of £8.58 million. That calculation, and the figure to which I have referred, is arrived at in the following Manner; in his Budget speech yesterday the Minister for Finance stated that the estimated cost of food subsidies for a full year on pre-war Budget levels represents a sum of £15,250,000 or £15.25 million. At page 45 of his speech he stated: "On existing rations and at present prices, food subsidies reduce weekly expenditure per person on rationed foods by approximately 2/-." He then goes on to state that these subsidies, amounting to the sum of 2/- per week, have been cut by 1/6 per week or, in other words, that the subsidies are being reduced to one-fourth of their present level. That reduction will only take place three months hence. For the first three months of the present financial year, therefore, the cost of the subsidies will be at the full rate and will accordingly in the first quarter of this financial year amount to one-fourth of £15.25 million, namely £3.81 million. I repeat: for the first three months of the present financial year food subsidies will cost the Exchequer £3.81 million because the reduction in food subsidies will not take effect until July of this year.

We must, therefore, calculate what the cost will be for the Exchequer in accordance with the Minister's proposals for the remaining three-fourths of the year. That, of course, will be one-fourth of three-fourths of £15.25 million. For the benefit of Deputies may I repeat that once more so that it will be quite clear: the full cost of food subsidies to the Exchequer if they had not been altered in the way the Minister now proposes to alter them would be £15.25 million, and one-fourth of three-fourths of that sum of £15.25 million must be calculated because the full cost of the subsidies will not be in operation for the last nine months of the present financial year? As the food subsidies have been reduced by one-quarter it is necessary to take one-fourth of three-fourths of £15.25 million to find out the precise cost under the Minister's proposals of the reduction in food subsidies, and that figure amounts to a sum of £2.86 million.

Add these two figures together—the sum of £3.81 million, which is the cost for the first three months at the full rate of subsidy, and £2.86 million, which is the cost for the remaining nine months of the financial year at the reduced rate of subsidy—and the figure arrived at is £6.7 million. That sum, therefore, represents the actual cost of food subsidies for the year 1952-53 at the full rate for the first quarter and one-fourth of the full rate for the remaining three-quarters of the current financial year. To get the savings, the real savings, it is necessary then to deduct from the full cost — £15.25 million—that sum of £6.67 million, and that deduction leaves a sum of £8.58 million—that is, in fact, £1.9 million or approximately £2,000,000 more than the saving which is set out at Item 5 of the "Table Explanatory of Current Budget, 1952." Therefore, instead of that figure of £6,668,000 which appears in that table as being the savings on food subsidies the figure of £8.58 million should have been set out and, deducting one from the other, should have shown a saving on the Minister's proposal in relation to food subsidies of £2,000,000.

I might remark in passing that it is again not without significance that the precise figure, or almost the precise figure, which I have demonstrated as being the actual cost of food subsidies, corresponds almost identically with the figure set out in item 5 as being the savings on subsidy. £6.67 million is the cost of subsidy this year; £6.68 million is the amount set out as savings. Is that a pure coincidence? However that may be, in that summary I have given I have demonstrated that there is £2,000,000 included in the Minister's proposals under this heading of over-taxation. I think that it is no mere coincidence.

The second item of over-taxation to which I wish to refer arises from the fact that the Minister's Budget statement contained no provision for a deduction for reserve stocks which are provided for in the Estimates and which, according to the Minister's own statement yesterday in his Budget speech at page 31, amounted to £1.8 million. Deputies will remember that that figure of £1.8 million was given in last year's Budget estimate to provide reserve stocks, over and above the normal supply, and that the normal supplies of stocks required for governmental purposes at various Government Departments were provided for and were met out of current taxation. On page 29 of the Minister's speech yesterday, he stated that expenditure on these stocks amounted to almost £1,000,000 less than was provided for because of the difficulty in securing supplies. I do not think it has ever been denied, nor can it be now denied, that there was and that there is necessity for making provision for such reserve stocks and that, in fact, provision is made in this year's Book of Estimates for such reserve stocks over and above the normal stocks. Particularly may we assume that to be so when it is known from the Minister's statement that it was not possible to purchase £1,000,000 worth of stocks for the provision of which money was laid aside last year. Therefore we know that such a provision is included in the sum of £94,871,623 provided in the Book of Estimates for the coming financial year and that it is not included in the figure for capital services which is Item 3 in the "Table Explanatory of the current Budget 1952" of £9,277,000.

The Minister, in his statement yesterday admitted that the moneys necessary to finance these reserve stocks are properly chargeable to capital and not to revenue. Accordingly, as there has been no indication of a change of policy in this matter in the Budget statement or in any other statement, we can legitimately assume that the provision for such reserve stocks to be found scattered through the Book of Estimates—for Local Government, Health, Army, the Board of Works and various other Government services—will in this year amount to not less than the figure we provided for in last year's Book of Estimates, a sum of £1.8 million. That is, as I have said, admittedly an item of capital expenditure to be financed, not out of current revenue but out of capital expenditure. In regard to that £1.8 million included in the Estimates, what the Minister is doing is raising that £1.8 million, which should be raised in the manner appropriate to capital expenditure, by means of revenue. Therefore, that gives a second item of over-taxation in this figure of £1.8 million.

I pass to the third item, which amounts to a sum of £1,000,000. Again, I point out that in the "Table Explanatory of the Budget, 1952," Item 4, the provision for proposals in the Social Welfare (Insurance) Bill, 1951, is stated to be a sum of £3,000,000. In fact, as I shall show, that provision of £3,000,000 in the table exceeds by £1,000,000 the amount actually required for social services. Speaking on the Second Stage of the Social Welfare (Insurance) Bill, 1951, as reported in Volume 130, No. 5, column 642, the Minister for Social Welfare gave his estimate of the charge which would come in course of payment during the rest of this financial year, if and when the provisions for the Social Welfare (Insurance) Bill became law, at a figure of something under £2,000,000. These are his words:—

"These various features are estimated to have the effect of throwing a charge of something under £2,000,000 on the Exchequer over and above what is in the Estimates already, as compared with the charge on the Exchequer of £2,750,000 in a full year."

There, the Minister for Social Welfare stated that the expenditure relating to his proposals under the Social Welfare Insurance Bill for the remainder of the financial year, after the Bill had come into operation, would be something under £2,009,000. In the Table Explanatory of the Budget, that figure is given at £3,000,000 so that the inescapable conclusion is that taxation is being raised unnecessarily by a sum of £1,000,000, this being the difference between the £3,000,000 stated at Item 4 of the Table Explanatory of the current Budget as being the proposals for social welfare, and the sum of under £2,000,000 stated as being the sum necessary by the Minister in charge of the Bill. There is another £1,000,000 of over-taxation.

The fourth item consists of failure by the Minister for Finance to take any account in his calculations for taxation of the amount of money that would be required to be met by taxation for the traditional item known as over-estimation. That traditional item of ever-estimation is also sometimes spoken of as economies and consists of departmental savings. We estimate for that, and we think it is a conservative estimate, £2,000,000. That provision for over-estimation, or for normal savings, is the figure which, since the establishment of this State, has been taken into account by every Minister for Finance in connection with his Budget proposals and the framing of taxation necessary to meet the Budget proposals of each financial year.

Experience has demonstrated over the years that there has never been less than a saving of £2,000,000 each year on departmental expenditure. The Departments are simply not able to spend all the money that is voted to them by the Oireachtas year after year. However close the Estimates may be or the efforts of those people who are charged with criticising and cutting down the Estimate prepared by each Department year by year, there has been a saving or an economy or an over-estimation—call it what you will—of a sum of at least £2,000,000, and the Minister for Finance ought to have taken that by no means trifling figure of £2,000,000 into account when he was framing the Budget proposals which he announced yesterday and which have caused such an appalling shock to the people of this country.

There is not a word said about it. Even if he was not to take it into account expressly, and even if it was not there or that he did not think it would be there, at least we are entitled to make this comment: that in a figure of £94,871,623, which is the tot of the Estimates for Public Services for the forthcoming year, he ought to have said to himself and to the country that it was legitimate for him, on such a colossal figure, to say that he would cut those Estimates by the very small and trifling figure of 2 per cent. He would then reach the sum of £2,000,000 which I have conservatively estimated as being the savings that are almost certain to occur and that will certainly occur in the course of the coming financial year. That is another £2,000,000 of over-taxation.

I now come to the fifth item, an item that we have very conservatively, I think, estimated at over-taxation to the extent of £500,000. It consists of excess provision for interest on public debt. In the White Paper entitled "Estimates of Receipts and Expenditure for the year ending 31st March, 1953," prepared by the Government and presented to Dáil Éireann in accordance with the provisions of Article 28 of the Constitution, on page 4, Part III there is provision for the "Service of the Public Debt" which is charged on the Central Fund, and is one of the Central Fund services. For the year 1951-52 the figure provided for interest was £4,319,767. For this year the provision is £6,389,000, a sum which represents, by deduction of the two figures to which I have referred, an increase of £2,000,000 in regard to interest on the public debt over what was paid last year. No explanation has been given of that increased figure for interest on the public debt. We have had no loan. There is only hope of a loan. It cannot be explained or, if explicable, it can only be explained, in part, by the provision that must be made this year for a sum amounting, I think, to £600,000 for interest on the American Loan Fund. That increased figure of £2,000,000 is unexplained and inexplicable so far as we are concerned, except to the extent of the £600,000 for the Marshall Aid Fund. I think we are being unduly conservative when we say, in reference to that, that there is at least a sum of £500,000 of over-taxation under this head of interest on the public debt. That is, therefore, another £500,000 of over-taxation.

I now come to the sixth and last item which makes up the sum to which I referred at the outset of my remarks, and that is the fact that the Minister has made no provision—or if he has made any he has made inadequate provision—for the buoyancy of the revenue.

Mr. Morrissey

It will not be very buoyant after this Budget.

Mr. Costello

In the Table explanatory of the current Budget, Part I, the tax and non-tax revenue was shown as amounting last year to an actual figure of £83.9 million. I have given the wrong reference. The reference should be to the "Estimates of Receipts and Expenditure" to which I have already referred.

In Part I the tax revenue and non-tax revenue for 1951-52, the first two items in the Estimates of Receipts and Expenditure, show that the actual sum received into the Exchequer was £83.9 million. In the second column the figures are given for the forthcoming financial year based on the same rates of tax as subsisted last year and those rates of tax are calculated to produce, when you add the two items together, the sum of £86.5 million, or an increase of £2.6 million in the revenue for the forthcoming year. On the same rates of tax as last year the Government expects a buoyancy in revenue of £2.6 million. It is to be hoped that, notwithstanding the efforts of the Minister and his colleagues to damage the economy of this country, the national income will, in spite of them, expand. It is undoubted that, with an expanding national income, the same rates of tax produce a higher yield and that higher yield shows itself automatically in revenue buoyancy.

In the year that has just ended that buoyancy amounted to the sum of £6.5 million. It is far too much to hope that anything like that buoyancy will be shown in the revenue that will be exacted from the cruelly oppressed taxpayers of this country by the unjust provisions contained in this Budget, and accordingly we make the modest provision that the revenue will show a buoyancy to the extent of £3,000,000. It will probably be more but we are taking these figures very conservatively. Those are the six items and I will give a résumé of them and add them up for the benefit of the Dáil.

The first item consisted of over-taxation on the subsidies proposals amounting to £2,000,000. The second item consisted of over-taxation in connection with provisions for reserve stocks amounting to £1.8 million. The third item consisted of the over-estimation in connection with the cost of the social security proposals to the extent of £1,000,000. The fourth item of over-taxation consisted of failure to make any provision for over-estimation, savings or economy amounting to £2,000,000. The fifth item of over-taxation was in connection with excess provision for interest on the public debt amounting to £.5 million; and the sixth and last item consisted of failure to take account of the receipts which will come to the Exchequer by reason of the buoyancy of the revenue to the extent of £3,000,000. Those sums amount in all to the sum of £10.3 million.

We believe that they are underestimates but we took the figure that I referred to and which I gave at the outset of my remarks. I said I would demonstrate, as I have demonstrated, that there are in the Minister's calculations something between £9,000,000 and £10,000,000 of over-taxation in this cruel and, as I say, for that reason, unjust Budget. And taking account of what I have demonstrated and the fact that £9,000,000 to £10,000,000 of unnecessary and concealed taxation has been imposed by the Minister on the people of this country in his Budget yesterday, the whole sinister and concealed purpose becomes apparent. It would have been too much to expect that the Minister for Finance and his colleagues, who had attacked our financial proposals in connection with the financing of our capital expenditure projects and our dual Budget for years, would lie down so softly in this Budget as the Minister apparently did yesterday when he just tossed aside this question of capital expenditure and capital projects by merely saying: "We are going to do, because we have not time to look into it, exactly what our predecessors did in connection with the financing of capital projects."

The reason why that was dismissed in the Minister's speech yesterday with those few casual remarks was because he had in his Budget proposals the concealed plan and the object of financing those capital projects by means of concealed taxation. The figure that I have referred to as being the amount of concealed taxation— unnecessary taxation—in this Budget amounts to the sum of £10.3 million. The figures for capital services in the table explanatory of the current Budget amount to a little over £9,250,000.

The over-taxation items amounting to something equivalent to the figure for capital services are no mere-coincidence, no mere casual happening, when we know that the departmental or official policy, if I may put it that way, has always been that the capital services ought to be paid out of taxation and that the Minister and his colleagues in speeches in this House, when they were in opposition, and in speeches outside this House, since they became the Government, have always alleged that they did not agree with the system of financing adopted in connection with the productive capital services of the last Government.

May I say here at this stage that, shocked as we were by the provisions of this Budget which, to use the phrase of my colleague, Deputy McGilligan, "contains proposals designed to butcher the taxpayers of this country", we cannot help being saddened by the consideration of the damage, the almost irreparable damage, that is being done and has been designed to be done over the last ten months to the economy and the building up of our natural resources which we, in the inter-Party Government, had designed and from which we had such high hopes for the future of the people in the agricultural and industrial productivity of this country and the development of its resources.

We had created a financial structure of impressive size. We had designed that financial structure along conservative financial lines. We hoped we had designed it in such a way as to make it impregnable against assaults of people such as the present Minister who have subsequently successively assaulted it. The Minister has been going round this country proclaiming the profligacy of the last Government and its expenditure of American dollars.

Let me bring to the recollection of Deputies and the people of the country our method of financing the capital projects and that very impressive and strong financial structure which we had erected. We did not dig our hands into the till wherein the Marshall Aid Counterpart Funds were contained and scoop it out and spend it, as the Minister has done this year. It has been explained again and again, and I shall only repeat very shortly the system which we have adopted. In the first place, we went to the savings of the people. We first took all the savings which there were in Savings Certificates and in the Post Office Savings Bank and other funds of that kind. Then we did what the present Government had not the courage to do. We went to the people for a national loan and we told them that we were asking them to lend to the Irish Government their surplus savings. We told them clearly and frankly and in every detail what we wanted them to give their savings to us for.

We got those savings from the Irish people on three successive occasions. We did not, for that purpose, eat into any of our now supposedly untouchable sterling assets. But, incidentally, in asking for and getting these savings from the Irish people, we did a service in connection with stopping inflation. Because we got from the Irish people for productive enterprises in Ireland, for the development of Irish national resources, their savings, having told them what we wanted them for, incidentally, we took away that excess purchasing power out of the current money which might otherwise have exerted an inflationary pressure at a time when real inflation might be said to have existed. Then, having got the small savings and having got the national loan savings, we then, and then only, had resort to the Marshall Aid Fund to a very limited extent and that was always there as a cushion when we got the loan from the people.

If the Government at that time, in order to finance the projects of productive national expenditure in which we were engaged, adopted the financial device of getting the moneys that we required before the National Loan had been launched successfully by means of ways and means advances, that money was paid back to the extent that it could be paid back out of the proceeds of the loan. It was only to the extent of some £6,000,000 or £7,000,000 that a draw was ever made on the proceeds of the Marshall Aid Loan. That was left there and would have lasted for years had that device been continued. Had that system of finance been adopted by the present Government, we would not now be in the position that every farthing of the Marshall Aid Loan is dissipated. Had the Government gone for a loan, that Marshall Aid Fund could, partially at least, have been kept in funds over a period of the next seven or eight years.

We did not stop there in our system of finance, because in each and every year—and this is a thing which, I imagine, is not sufficiently appreciated either by Deputies or the people of the country—in the Finance Act, we provided out of current revenue raised by means of taxation an annuity of such an amount that would, in a period of 30 years, completely amortise and pay off the entire of the debt we were incurring from time to time and year by year for the purpose of financing our schemes of capital expenditure. At the end of 30 years, as the result of our financial arrangement and scheme, as a result of that financial structure which we built up, there would not have been a penny increase in the national debt or the public debt in this country. I want to emphasise that fact because it is not sufficiently known. Our financial arrangement was such that we had made provision for the complete paying off of all the moneys which we would spend on productive capital enterprises and there would not be, at the end of 30 years, one farthing addition to the public debt of this country.

Where has that structure gone now? The Minister was not able to raise a loan last year. He gave a childish explanation in his Budget statement. I shall not make more than a passing reference to it. He was not able to raise a loan last year and he has brought about almost irreparable damage to the business, industry and agriculture of this country. That is why we feel saddened at the ruin of our hopes, founded on solid facts and achievement and evidenced by the fact that we left behind us capital assets of great value to the economy of the country.

There are one or two passages in the Minister's speech to which I should like to refer. In pages 4, 5 and 6 of the statement circulated yesterday to us, the Minister dealt with a very significant portion of his Budget speech. I refer to the section which deals with employment. May I trespass on the patience of Deputies by quoting a few passages? He said:—

"All over the world during the latter half of 1950, but particularly in the first half of 1951, an immense volume of advance purchasing took place. It was based on the belief that the prices of basic materials, which had then begun to soar, would continue their upward flight. This advance purchasing was reflected in corresponding increases in production and in stockpiling by manufacturers and traders. The tide has now turned, world prices of raw materials are falling and the abnormal production and purchasing of 12 months ago are being matched by a reluctance to buy because a general fall in the price level is expected. Whether that will come or not is by no means certain, but at the moment at any rate buyers are not prepared to take a chance on it. They are holding off so that everywhere there has been a heavy slump in the textile, clothing and footwear industries."

I skip a sentence there. Then the Minister went on:—

"Even here, however, as elsewhere, the fall in demand and the anxiety of traders to dispose of stocks have naturally caused a reduction in new orders, and this in turn has been reflected in lower output and employment in textile, clothing and footwear factories."

I skip another sentence. The Minister went on:—

"The Government cannot force consumers to buy nor is unemployment in the industries affected of the kind which, as in the case of some heavy manual occupations, may be relieved by public works. There is, however, reason to expect a recovery in activity and employment as a liquidation of stocks nears its end. Provided the price factor is favourable, trade should revive as soon as the individual need for more consumer goods in the form of clothes and footwear becomes significant and expresses itself in a resumption of individual purchasing."

The Minister then went on to talk about consumer resistance. We are entitled to inquire what contribution this Budget makes or the Government is endeavouring to make to the solution of the problem which the Minister so glibly and accurately stated in the passage to which I have referred. That inquiry reveals the fact that, in a situation where trade is restricted, where stocks are piling, and still pile on the shelves of the business community and industrialists, where unemployment is rife, and where industries are on half time and where half the employees are only kept on in sufferance, the Minister's contribution to help the consumer, to increase demand, to help the revival of business, and to put an end to consumer resistance, or else to ease that resistance, which has been so marked since the present Government came into power, was the Budget proposals to increase the prices of ten major commodities. These commodities are bread, flour, butter, tea, sugar, oil, beer, petrol and whiskey. If high prices for clothing and footwear and other commodities of that kind have caused unemployment and increased consumer resistance what effect can the increases in the prices of those ten more or less essential commodities have on the problem that has to be faced?

It is proper, I think, to say here at this stage that the Minister, while purporting to set out the problem that confronts this country, has taken no single step to grapple with this problem or to show that he has the slightest realisation of the real nature and extent of the real problem that confronts the country.

In a recent speech the Minister for Industry and Commerce gave it as his view that what we were suffering from now was not inflation but deflation. He made that statement within the last few weeks. How is that deflationary situation being met by the Minister for Finance? We recall the statement of the present Minister for Industry and Commerce some years ago, when in opposition, that the Irish people ought to have been made realise that instead of spending their own money they ought to give it to the Government to spend on their behalf and that it would be wise for them to realise that their interests would be served by their savings being mopped up by taxation in order that the Government might do the spending for them. That is what his colleague, the Minister for Finance, is doing in this Budget. He has put to use, in this context, Budget devices which are only justifiable in an inflationary situation.

In a recent speech I have demonstrated beyond question that we are not suffering from that type of inflation here. Therefore, what has been done in this Budget, by the cruel exaction of taxes which have been imposed on the people, is to attack the income of the people and to take from them their savings, therefore utilising an economic device which is only justifiable in periods of inflation if justifiable at all, but a device which is certainly not justifiable in a period of high prices, consumer resistance, unemployment, and increased emigration. Indeed I may say again in passing that if the Minister were serious in all the things he said in his Budget statement and in all the nonsense which he and his colleagues have been speaking about our people spending too much; more than they earn and living beyond their means, and, if the situation was such as he said it was, he ought really to be creating a deficit instead of creating, as he is attempting to create, a surplus by further taxation in his Budget.

I refer to a further passage, perhaps one of the most hypocritical passages in the Budget statement made by the Minister yesterday. He said:—

"When scarcities are caused and prices are raised by rearmaments, the ordinary consumer is bound to suffer. He becomes the victim of the fact that much more exigent purchasers are bidding against him in the world's market, purchasers with whom money is no object, since they can procure it from him and his like either by open taxation or more oppressively and inequitably by inflation. In these circumstances, it is an illusion to think that compensation can be secured by way of an all-round increase in remuneration."

It is an illusion to think that people whose livelihoods are now to be affected by the present taxation; whose incomes are going to be reduced by this taxation are going to be alleviated by an all-round increase in remuneration. Here again the real object of this Budget is revealed. Here again we see the policy of the Central Bank brought into operation, and a policy outlined in that infamous White Paper of last autumn brought into its full effect by the Minister's proposals in this Budget. He is striking at the incomes of the people and cynically asking them when he is increasing their costs by unjust taxation to give him more from their savings. He indulged in a clap-trap peroration about the confidence he had in the Irish people and the confidence the Irish people had in him but what his proposal amounts to is this: that while all the rest of the world are scrambling in the markets of the world to get the goods they want the Irish people must accept a lower standard of living for themselves; and in case they might spend more than they earn they are not to touch these precious sterling assets which are day by day and week by week rotting and depreciating in so far as they are not being used for purposes other than advancing the Irish economy in the hands of foreigners.

The Minister for Finance will not have anything to do with projects of capital expenditure. Revealed in his statement is his attitude that the capital programme of the Government will be limited by the proceeds of public loans or by hidden taxation in this Budget. That policy is inherent in the Minister's attitude and in the Minister's proposals. It cuts right across the policy publicly stated both by the Taoiseach and by the Minister for Industry and Commerce when they declared that the Government's programme for capital expenditure would be financed not merely from current savings but from past savings as well. That policy, emphasised by the Taoiseach and by the Minister for Industry and Commerce, has no part in this Budget introduced yesterday by the Minister for Finance. He will not have anything to do with external disinvestment, which both the Taoiseach and the Minister for Industry and Commerce and his colleagues have admitted is necessary if we are to continue to do anything for the amelioration, if not the full development, of our natural resources. The Minister for Finance will have nothing to do with anything that cannot be financed by taxation, although he pays lip service to savings without any constructive plan to secure savings and although he made a passing reference to the financing of capital projects by public loan. We are going to have no more houses, no more hospitals, no more capital development in regard to economic amelioration, no development of our resources unless the money can be got either by savings or by taxation.

How can there be savings with the crushing burden that it imposed upon our people by the Minister's unjust and unnecessary proposals? How can the Minister hope to get any loan in the circumstances in which this Budget is introduced? How can there be any excess saving by the people? How can they be encouraged to save, even small amounts, when there has been no plan or campaign, and certainly no plan and no campaign stated in this Budget that is a practical proposition, in reference to the encouragement of thrift and savings by our people?

The Minister naively stated, at page 40 of his speech: "I presume we may take it as common ground also that the current Budget must be balanced." To that principle, we on this side of the House, in or out of Government, have always subscribed. The Minister for Finance and his colleagues went throughout this country slandering Deputy McGilligan, the Minister for Finance in the last Government and defaming his colleagues, stating that they were profligate and that the Budget of last year would not balance. We have given the lie to those slanders and disproved that defamation. We have demonstrated—and Deputy McGilligan here yesterday in a few short words produced the figures that cannot be denied—that our Budget for the year ended a few days ago balanced and comfortably balanced. I hope we will have an end to those slanders and those lies. I want to repeat that last year's Budget balanced and comfortably balanced and that anybody who repeats those false statements is indulging now knowingly in what he he must believe in his heart to be a foul slander upon public people who have given their services to the amelioration of conditions for the Irish people.

I hope there will be an end to that; we have always subscribed to that principle and we now subscribe to it, but what we do not subscribe to is the method adopted by the present Minister in this present Budget of imposing upon the people cruel, unjust and unnecessary taxation by a concealed method, not taking account of the six items to which I have referred and which probably could be ascertained if we had time to do so. We have not taken account of these. They have been imposed in a covered manner on the people of this country. That will be an additional shock which the people will have to learn from this day onwards. They were shocked to know that they had to bear that colossal burden announced by the Minister for Finance yesterday. I do not know whether it will be any alleviation to them or not, or whether they will be further startled by the facts which we have brought out to-day, that of that colossal sum £9,000,000 to £10,000,000 was unnecessary and ought not to have been imposed in this present Budget.

What is going to be the effect of this Budget? We have no doubt as to the effect it will have on the working people. It has been expressed to me last night that the effect upon the middle classes is that nothing was left undone by the Minister and his colleagues in his Budget except to provide for the unfortunate middle-class people a lethal chamber in which to get rid of their troubles and their miseries. The impositions that will be placed upon the workers will undoubtedly bring about an additional demand for increased wages. There can be no question whatever about that. Those wages are going to be demanded on far more solid grounds than they could have been demanded a week ago and with greater justification. But they are going to be asked from employers who will not be able, however much they wish, to give the increase that not merely will be desired but that equity will demand should be acceded to. How can employers be expected to meet such demands, having gone through the frightful period through which they have gone in the last ten months since the present Government came into office, with recession of trade and industry, with consumer resistance, with the situation of uncertainty and lack of public confidence existing through out the country, with the position that they did not know whether to buy or sell, what was going to be the movement in international markets or what was going to be the trend of prices? There are very few businesses or industries in this country which have earned even sufficient to pay their way in the last ten or 12 months. Those employers in such industries will now be faced, as a direct result of the taxation imposed by this Budget, with an increase in wage demands. They themselves are subjected by this Budget to further increases and further difficulties in the way of carrying on their trade. How can they meet those demands in those circumstances? That is what the position which will have to be faced will be. The Minister for Finance cynically, with the approval of his colleagues, has done another very significant thing. He has carefully avoided taking any step, even a step which was open to him to take, for the alleviation of any set of taxpayers in this country. The Minister and his colleagues would not even raid the Road Fund, which was the traditional method for any Minister for Finance in the past to get money in ease of the hard-pressed taxpayer. They avoided that.

Mr. Morrissey

For the present.

Mr. Costello

When the Minister came to make his final calculations yesterday he found that he was only £800,000 short. He had to close a Budget gap of something like £15,000,000 or £16,000,000, and he found himself only short of £800,000. What did he do. He said: "I cannot reduce food subsidies. I cannot pave the way for the increase which everybody in the community will have to suffer in connection with food and other essentials by the proposals I am making. Therefore, I must give a belt to the income-tax payer." Although it was not necessary in this Budget, the income-tax payer, who is a soft mark for every Minister for Finance, was attacked and it is necessary for him to pay 1/- extra in the £. Some ridiculous and very limited alleviations are put in to try to give a face to the proposals.

I have said enough to show that I was more than justified in the statement I made at the outset of my remarks to the effect that this Budget is not merely a cruel Budget but an unjust Budget. I feel I am also justified in saying that, far from the people in this country rallying to the clap-trap cry which was comprised in the Minister's final peroration in the Dáil yesterday, they will rise up at the first opportunity they can get and put this present Government out of office. So far as we are concerned, the sooner that day comes the better. I have no illusions as to the task which will face any Government that comes into office as the successors of the present one. I do not like to think that any group of Irishmen would deliberately do such damage to their own country as the present Ministers have been doing, are doing and did as the climax of their operations by means of the Budget that was introduced yesterday. In my view, we can describe the Minister's proposal as a terrifying combination of stupidity and courage, and in that combination tyranny consists. Fianna Fáil, as a Party and as a Government, always like the lash of taxation and the fetters of Government Order and Regulation. They prefer to tax rather than to alleviate the people. They prefer to do the spending of the savings of the people rather than allow them to do it themselves. It will not be an easy task for any Government which succeeds the present Government to undo the damage they have done and which will come as a result of their Budget proposals when put into effect. At least, I think we can have some hope that by the application of wisely-conceived policies in a national patriotic impulse all may eventually be well.

Mr. Lemass

The calculations which Deputy Costello made to support his contention that taxation is being imposed unnecessarily were based upon three asumptions, firstly, that the Revenue Commissioners are incapable of estimating accurately the yield from taxes; secondly, that the Department of Finance is incapable of estimating accurately the interest on the public debt; and thirdly, that the accounting officers in every Department are incapable of estimating the cost of the services administered by their Departments. Does anybody believe that? Deputy Costello's calculations were based upon such obvious fallacies that, I am sure, most Deputies saw them at once, and that it is not necessary to expose them further. Why did he take that line? Why did he choose to build upon ridiculous assumptions and fallacious calculations a case that taxation was being imposed unnecessarily? He did it, because he wanted to avoid putting before the House any alternative to the Budget proposals. Whatever the basis of the calculation was, and the basis is the experienced judgment of the Government and its advisers, a deficiency of £15,000,000 approximately is expected this year. Somehow or another, that deficiency has to be met. Deputy Costello, in the course of a speech lasting an hour and a half, made no suggestions as to how that gap could be closed. Mr. McGilligan, the former Minister for Finance, speaking yesterday, equally avoided making any suggestion for the solution of that problem. I will admit that there is a possibility that the estimate may be slightly wrong. At this time of the year, it is not possible to calculate to the last penny the probable cost of a variety of Government services or the probable yield of a number of taxes. However, our experience suggests that the margin for error is not much more than 5 per cent. one way or the other. Even if we assume that it is in this year as great as 10 per cent., it is obvious that a very substantial addition to the revenue must be secured by higher taxes, or, alternatively, that expenditure must be drastically curtailed. That is the problem the Dáil is being asked to consider. The Minister for Finance has put before the Dáil a number of proposals for bridging that gap involving both higher taxes and reduced expenditure. Any Deputy who wants to criticise those proposals has an obligation to put forward some alternative to them. We cannot bridge that gap in the national revenue by passing resolutions here, by recording protests here. The gap is there. It is a hard fact and either we have to cover it by higher taxes or we will put the Government in a position in which it will not have the money to pay for all the services set out in the Book of Estimates.

I know that Deputies cannot be expected to approach this serious financial problem without regard to Party political considerations and that it is an obvious political handicap for any Government to have to come to the Dáil with proposals such as the Minister for Finance made yesterday. But is it not ridiculous to suggest that we are doing that unnecessarily? Do Deputies opposite think that members of the Government do not realise, as clearly as they have shown that they realise it, the unpopularity of increasing taxes? Do they think we have done it for the fun of it? Do they think that we regard ourselves as having any obligations in this matter except to keep the impost on the people at its minimum having regard to our other responsibilities?

Whatever the situation may be next year or the year after, the present Government has in this year the responsibility of making proposals to the Dáil for covering the gap between revenue and expenditure. We could have approached the problem of that gap from one direction or another. We could have said to the House that the undesirability or the unpopularity of increasing taxes was so great that we proposed instead to spend less and then we would be under obligation to indicate the particular expenditures we were going to curtail. Or we could have come to the Dáil with proposals to cover by increased taxation the whole of the expenditure set out in the Book of Estimates. We have combined both methods and we have presented our proposals here.

The aim of the Government was to spread the burden, the unquestionably heavy burden, over the community in such a manner as to produce the least hardship and to minimise its economic consequences. If Deputies want to deal with this matter seriously, to live up to their responsibilities, then they cannot criticise these proposals of the Government without submitting some alternative proposals in their place. The former Minister for Finance has not done so. The former Taoiseach has not done so.

Just in case anybody might take seriously his calculations, I want to deal briefly with them. I have said that the fallacy underlying each of them was obvious. In fact, as I listened to him, I had a picture of the discussions that must have proceeded within the Coalition Government whenever these financial problems were being considered there and, through that picture, an explanation of the financial mess that the Government is now trying to clear up.

We are told that we have underestimated the saving from the reduction in food subsidies. Deputy Costello went to considerable trouble to justify that assertion but he left out of account several things that many Deputies, I am sure, noted. First of all, they know that we are now eating last year's wheat. It is obvious, therefore, that the decision of the Government to give a higher guaranteed price to the Irish farmer in this year for wheat which will not become available for consumption, or the cost of which will not have to be borne upon the subsidy until next September, and the fact that we will have to pay a higher price for imported wheat of this year's harvest which will not become available until next August and the cost of which will not be borne on the subsidy until next August, mean that the cost of the flour and bread subsidies in the second half of the year will be very much higher than in the first half. Therefore, simply deducting one quarter of the total cost of the subsidies as representing their cost in the first three months of the financial year is completely fallacious, completely erroneous.

There is also the fact announced by the Minister for Finance yesterday that with the abolition of bread rationing the quality of bread will be improved by the reduction of the rate of extraction from 85 per cent. to 80 per cent., which will further increase the cost of the subsidy.

The House can take it that the calculations made by the Minister for Finance as to the saving on subsidies following all the changes he announced, including the changes in the social welfare services, have been accurately made.

I could not follow Deputy Costello in his reference to deductions from the cost of supply services in respect of reserve stocks. May I say that the cost of each of the supply services has been accurately calculated and there has been deducted from that cost every item of expenditure which Deputy McGilligan last year chose to describe as a capital investment? There is, therefore, no element in that sum which could be so described and in so far as any expenditure is contemplated upon reserve stocks in this year and that expenditure could legitimately be described as an investment, then the amount has been deducted in calculating the bill which the taxpayer has to meet.

Mr. Dillon

What about the £400,000 you are lending to Comhlucht Siúicre Éireann to buy manure? You do not know about it.

Mr. Lemass

We will deal with that when we come to the Estimate.

Mr. Dillon

You do not know about it.

Mr. Lemass

Deputy Costello said that in providing £3,000,000 for the cost of the Social Welfare Bill we were providing £1,000,000 more than was required. He, of course, made that calculation by the simple process of misquoting what the Minister for Finance said. The Minister said he was providing, in addition to the amount which the White Paper showed to be necessary, £3,000,000 to cover the estimated cost of the Social Welfare Bill and other charges expected during the year and contingencies which may arise.

In calculating the amount required to be provided against costs not covered in the Book of Estimates the Government had in mind legislation which it intends to ask the Dáil to enact during the course of the year and there is no excess provision in that item.

Last year, in similar circumstances, Deputy McGilligan provided £1,500,000 against the cost of the Social Welfare Bill then under discussion and other charges expected to arise. In fact, the additional charges that arose against which that £1,500,000 was provided amounted to £7,500,000.

Deputy Costello then fell back on the old expedient of assuming that there was over-estimation of the cost of the supply services. May I say that in its anxiety to minimise the charge falling upon the taxpayer this year the Government, long before the Budget was prepared, went through every supply service with a fine comb and eliminated from each Estimate, from each sub-head of every Estimate, any charge that it was thought might not fall for payment during the course of the financial year? It is not true that provision for over-estimation has been made in every Budget. It was not made last year and it would be completely improvident to assume any substantial over-estimation this year knowing, as we do, that each Estimate has been cut down to the bone.

I do not know if any Deputy seriously believes that the Department of Finance cannot calculate the interest that will have to be paid during this year upon the national debt. Deputy Costello I think was not very confident about that figure. He did, during the course of his remarks, begin to see that a new charge would arise this year, a charge of £600,000 in respect of interest upon the dollar loan. I think that the outcome of the year will show that the estimated cost of the interest on public debt is accurate to a £.

Then, in order to bring his total up to the £9,000,000 he wanted to reach, he assumed that the Revenue Commissioners could not calculate the yield of taxes and that in fact the Government would get some £3,000,000 more than the Revenue Commissioners advised it is going to get. As the House will have known from the White Paper, the Government is in fact assuming that the taxes which were in force last year will bring in more money in this year and in making that assumption the Government went to the limit that prudence would justify. It is, I know, not an easy matter to estimate in advance the yield of a number of taxes in any financial year. It is a matter upon which the Government must exercise its own common sense, applied to the Estimates furnished by those who are competent to advise upon the matter.

What I have said, I think disposes of Deputy Costello's suggestion that we are imposing taxation unnecessarily to the extent of £9,000,000 or £10,000,000. Will anybody tell us why we should do it? Is there any sane man in the country who thinks that the Government would impose taxation to the extent of £9,000,000 or £10,000,000 unnecessarily? We realise exactly how large is the political burden which we are carrying and will have to carry in the future because in the discharge of our obligations to the country we have to impose heavily increased taxes this year. Does anybody think that we are carrying that burden for the fun of it? Yet that was the whole basis of Deputy Costello's speech here to-day.

I refuse to take seriously, in the course of this discussion, any Deputy who criticises the proposals of the Minister for Finance for bridging the gap between revenue and expenditure and who does not at the same time give his own idea of how the gap should be covered. If they think that there are other taxes which should be substituted for the taxes proposed let them say what they are; if they think that instead of taxing we should have cut expenditure then they are obliged to indicate the expenditure they think should be cut.

Mr. Dillon

The Minister's fluency is flagging.

Mr. Lemass

It is an easy matter to describe the Budget as brutal and cruel; we are dealing with a brutal and cruel situation; there is no easy way out of it. For a number of years the national finances have been allowed to get into a condition because, of which sooner or later a Budget of the kind introduced yesterday would be necessary. The whole position of the national revenue has to be adjusted brought into closer relationship with the increased expenditure, and we have at least this consolation; it is almost a once-and-for-all process; if the Government can succeed in its intention of keeping the overall expenditure on public services within the present limit then we know that no similar adjustment of taxation will be necessary in future.

General Mulcahy

The body will not be alive.

Mr. Lemass

I propose to consider whether in fact, the taxes which we imposed are likely to have the drastic economic consequences which Deputy Costello described. During the course of many discussions here it was suggested by Deputies that the effort to end the partitioning of Ireland would be strengthened if we maintained here a level of social services and of health services at least as good as those operating in the Six Counties and the force of that argument was obvious to everybody. I am sure, however, that Deputies who used it did not contemplate that it would be possible for us to have equivalent social services without equivalent taxation. Yet we are improving the position for social services and expanding the scope of State activity in the improvement of social conditions while at the same time, even with these new taxes imposed by the present Budget, the cost of all the commodities affected is still very much less than it is in the Six Counties. Even with the additional 4d. taxation the price of petrol here will be the lowest in Europe; even with the additional 7d. to the cost of cigarettes the price of cigarettes here will be very much less than it is in the Six Counties or in Britain; so also will the price of beer and the price of spirits. We cannot hope to avoid forever the tax burden which other countries have had to bear in order to meet the expansion of State activity, an expansion which is taking place here just as definitely as elsewhere. We do not like to have to bear increased taxes upon these commodities and it is not much consolation to know that the present taxes are still much less than the corresponding taxes in neighbouring countries, but Deputies cannot urge all through the year that our expenditure on various services should be brought up to the same relative level as in Britain or in Northern Ireland unless they are prepared to contemplate taxes rising as well.

I thought it desirable to intervene early in this debate because the House will desire to know what is contemplated in respect of the foodstuffs affected by the subsidies. I think that insufficient publicity was given in this morning's newspapers to the fact that there will be no change in the cost of any of these rationed foodstuffs or in the rationing arrangements relating to them until 1st July next. I think it would be desirable and would prevent the possibility of misunderstanding by traders or by members of the public, if the newspapers would give wider publicity to the fact that no immediate change is contemplated in respect of these commodities.

Mr. Dillon

Would that apply to tobacco beer and spirits?

Mr. Lemass

I am talking about subsidised foodstuffs. It is the Government's intention that simultaneously with the disappearance, in some cases, and the reduction in the case of flour and bread, of the subsidies and the operation of higher prices for these foodstuffs, there will come into operation increased payments under all social welfare schemes. The aim is to effect both changes simultaneously in the first week in July. The effect of the subsidy changes contemplated is, as the House has been told, to increase the cost of these foodstuffs to each individual by approximately 1/6 per week. In July, because of the higher rates of benefit which will become operative when the Social Welfare Bill is passed, all persons who are out of employment and in receipt of unemployment insurance benefit or of national health benefit, or who are widows or orphans, will be very much better off than they are now. The additional payments they will receive will very substantially exceed the additional charges they will have to meet.

Mr. Dillon

I hope the Fianna Fáil T.D.s will go out and explain that to the people.

Mr. Lemass

Deputy Costello spoke here for an hour and a half without a single interruption. I hope the Deputy will restrain himself while I am talking now.

An Leas-Cheann Comhairle

The Minister is entitled to speak without interruption.

Mr. Lemass

The Minister for Social Welfare will introduce forthwith amendments to the Social Welfare Bill designed to increase the old age pension and the unemployment assistance payments so as to ensure that the beneficiaries under these schemes will be no worse off either in July next. It is clear, therefore, that the effect of the higher food prices will be confined to persons who are in employment and for them it is contemplated that the burden will be substantially eased by a rather considerable extension of the children's allowances scheme.

At present, under that scheme, the head of a family with three or more children is entitled to draw 2/6 per week in respect of every child from the third on. Under the new proposals which will be submitted to the Dáil in the near future, there will be paid in future 2/6 in respect of the second child and the payments for the third and subsequent children will be raised to 4/- per week. The effect therefore of the changes in food prices on families with two or more children related to increased children's allowance is to raise their weekly expenditure by 3/6 per week. In respect of a number of these families, however, and particularly workers in city areas and tradesmen in all areas, the changes in the income-tax code which the Minister has announced will reduce considerably the amount they will have to pay in income-tax.

Deputy Costello spoke here as if the effect of the income-tax changes was to impose new burdens upon the majority of income-tax payers, and particularly upon what he described as middle-class people. The fact is that under the arrangements proposed the great majority of income-tax payers will pay less, and, in respect of persons with earned income, in the case of a single man earning up to £850 per year or less, his tax will be reduced; in the case of a married couple, a reduction will apply if the family income is £1,000 per year or less; in the case of a family with one child, it will apply if the income is £1,100 per year or less; and in the case of a family with two children, it will apply if the income is £1,200 per year or less. Even in the case of people with unearned incomes, there will be a reduction in the tax payable where the income is £400 a year or less. The Minister for Finance has drawn my attention to the fact that reductions in the tax payable are greatest in the range from £300 to £500 per year.

I do not know if Deputies have ever considered these food subsidies to be a permanent arrangement. They were certainly never introduced as a permanent arrangement. When they were first inaugurated away back in 1941 and when they were considerably extended in 1947, it was made clear that they were regarded as a temporary device to stabilise the cost of living over a period in which abnormal factors appeared to be operating. With the disappearance of these food subsidies and their replacement by increased social welfare payments, however, it must be noted that a temporary aid is being withdrawn but a permanent aid is being substituted for it. It is certain that the food subsidies and the rationing they necessitated would have ended some time. The improved social welfare payments for which provision is being made will remain permanently in force. In the case of flour and bread, there has been from many quarters a demand for the abolition of rationing and the House, I think, is aware that rationing of flour and bread could not be terminated without increasing the price, because the danger of providing rationed flour and bread at a price so subsidised that it would be the cheapest form of animal feeding was so great that it could not be risked. The Government, in deciding upon the modification of the flour and bread subsidy and the abolition of rationing of these commodities, had necessarily to put the price of flour at the lowest point at which the danger of the purchase of flour for animal feeding would be eliminated. There are, in fact, some reasons to think that at present prices the margin of difference is not great enough, but I rather think that in the course of the year the margin will vary so as to minimise the risk.

Mr. Dillon

Would the Minister explain that?

Mr. Lemass

I do not want to be cross-examined. There are obvious advantages in ending the flour and bread rationing. The present rationing system operates most unfairly. It is true that in the cities there are many people who find that the existing ration is more than enough for their needs. On the other hand, there have been repeated complaints from rural areas, and particularly counties on the western seaboard, that the existing ration is altogether insufficient. There was, for a time last year, evidence of a black market springing up in some western counties for bread and flour sold off the ration. Restrictions on traders and the elimination of trade competition and rivalry also produced undesirable consequences.

With the change now contemplated, bread rationing will cease. It is known by the House, I think, that in addition to the 85 per cent. flour now being produced and sold on the ration at the subsidised price there is also available a 75 per cent. flour which is being sold at a price higher than would be justified by its cost production, a 75 per cent. flour which is sold at a profit to the Exchequer. The intention is to make available for all purposes an 80 per cent. extraction flour. That will be a very much better quality flour than is now available. It will not merely be more nutritious but it will also be less wasteful. By reducing the extraction from 85 to 80 per cent. we also will make available an increased supply of bran and pollard which is also desirable. It is clear however that the abolition of rationing means that subsidised flour— flour subsidised at the new rate—will be available for the producers of fancy bread and biscuits who are now paying an uneconomically high price for the 75 per cent. extraction flour; and therefore some reduction in the price of biscuits and other foodstuffs produced from the 75 per cent. extraction flour is to be anticipated.

Mr. Dillon

When they have not bread, give them cakes.

Mr. Lemass

It is, of course, open to any flour miller who wants to do so, to continue producing the 75 per cent. extraction flour. There are some people who consider that their health requires that they should consume flour of that extraction. It will still be possible for them to get it at the full economic price if any flour miller wants to make it.

It is not easy to estimate to what extent the consumption of flour and bread may increase by reason of the abolition of rationing. In calculating the cost of the flour and bread subsidy under the new conditions and at the new rate, we have assumed that there will be some increase in consumption— and that fact also invalidates Deputy Costello's calculations as to the saving following upon the subsidy alterations. I have had some concern about the possibility of a substantial increase in the consumption of flour and bread. We do not know yet what the outcome of our own harvest in this year is going to be and there may be some difficulty in maintaining full supplies of imported wheat. On the whole, we have thought it reasonable to assume that we could maintain a supply of wheat from home and outside sources sufficient to provide all the flour and bread which our people wish to consume.

Mr. Dillon

And cakes.

Mr. Lemass

The position in regard to tea is somewhat different. Most people have forgotten that before the war there was a variety of teas on sale at different prices and intense competition between tea blenders to get sale for their particular products by improving the quality and by cutting prices. All that competition in the sale of tea disappeared with the introduction of rationing. We set up then a bulk-buying organisation which bought all the tea we could get and that tea is sold to wholesalers at a flat selling price, so that it is available for purchase at the present time, on the ration or off the ration, at fixed prices without any variation according to quality or blend of the tea.

I think it is desirable that we should get back not merely to free sale of tea but to competitive trading in tea. Experience in other countries has suggested that if we do so there will be available on the market blends of tea at prices much lower than the average prices if all tea were sold at that price. The position, however, is slightly complicated by the fact that we have available in the country a substantial stock of tea at the present time, purchased by Tea Importers Ltd. and held as a general national reserve. While different grades of tea can now be priced separately and sold at varying prices to tea blenders who will themselves decide the blends they wish to prepare, there may not be in it a sufficient variety of all teas to permit in this year of the multiplication of blends to pre-war numbers. I think that we can do something to improve on that position, however. May I say that it is necessary to maintain for the present bulk buying of tea by Tea Importers Ltd.

Mr. Dillon

Who will buy it in competition, then?

Mr. Lemass

It will be a difficult process, at any time, moving from the position of a central bulk-buying organisation to one in which wholesalers make their own purchases abroad. We have, as national policy— which. I initiated and which my successor supported—withdrawn from the London Tea Market. We are now dealing direct with the countries of origin. We know that the Government of India would regard it as an unfriendly act if we were to cease the practice of buying tea direct in that country.

Mr. Dillon

Subject to their export taxes.

Mr. Lemass

Therefore, the transition from the position in which all our tea is purchased by one bulk-buying organisation to one in which private independent firms would be able to buy, will be conditional upon methods being devised to ensure that direct trade with India and other producing countries will be continued. In this year, however, any tea blender who wants to put upon sale a blend which is not possible from the varieties held by Tea Importers in stock, will be able to extend those varieties by placing orders with Tea Importers Limited, for the kind that he wants. We will facilitate Tea Importers, if necessary, in purchasing that tea in London or elsewhere in the present year. For next year the arrangement will be that wholesalers will make known their requirements to Tea Importers Limited, and Tea Importers Limited will buy tea in bulk in accordance with these requirements.

The derationing of butter also offers some problems. I think the House is aware that the consumption of butter per head has doubled since before the war.

Mr. Dillon

Hear, hear!

Mr. Lemass

That calculation may credit us with the substantial quantity of butter exported across the Border but in so far as we have to rely upon known statistics that would appear to be the position. The bulk of the butter used in this country is produced in the summer and even if we have had this considerable increase in consumption per head there has not been a corresponding increase in Irish output. I did not hear any "hear, hear!"

Mr. Dillon

Of course, there has. Did we not produce all the butter we wanted?

Mr. Lemass

It is obvious that there will be a problem of cold-storing butter to meet winter needs and possibly of importing butter for a limited period to supplement our production. The intention is that the price of butter to the consumer will be related to the economic cost of its production on the present price of milk, and to maintain that price throughout the year so that if cold-storage charges have to be met or if expenses should be incurred in connection with the importation of butter to supplement home output then some continuing subsidy payment of a limited amount may be required to achieve that result.

Sugar, again, is in a different position. There is no Exchequer interest in sugar. The alteration of the price of sugar or the derationing of sugar will not mean anything to the Exchequer. At the present time one half of our sugar requirements are purchased at 4d. per lb. and the other half at 9d. per lb. On the face of it, that seems to be a foolish arrangement. In any event, it would be undesirable to maintain in existence all the apparatus of rationing merely to continue that position in regard to sugar. The average price, therefore, of all sugar will be 6½d. per lb. That is a simple calculation which any Deputy can make. If half is sold at 4d. per lb. and the other half at 9d. per lb. it can now all be sold at 6½d. per lb., and that will be the price that will prevail. It means that the price of sugar to manufacturers using sugar in their productions will be reduced from 9d. per lb. to 6½d. per lb. Therefore, there will come into operation, almost simultaneously, a substantial reduction in the price of jams, marmalades and other manufactured foodstuffs in which sugar is an ingredient.

Mr. Dillon

Including chocolate crumb, £4,000,000 worth of which goes to Britain.

Mr. S. Collins

Including chocolate crumb and cakes.

Mr. Lemass

The extent to which it will be possible for us to continue making sugar available for export is a matter which arises separately and which will have to be considered separately.

Mr. Dillon

The Minister for Agriculture is absent, I notice.

Mr. Lemass

I wish, a Chinn Chomhairle, I could be allowed to speak without these stupid interruptions from Deputy Dillon. I think it is desirable that these facts should be made known to the public and that they should realise that this change in food subsidies is not made merely to save money for the Exchequer and will have consequences other than imposing burdens on consumers. There will be the additional advantage of the end of rationing. May I interject here to express my personal satisfaction that as the author of all these rationing schemes I also have the task of winding them up. There will be an improvement in the quality of flour in consequence of the lower rate of extraction. There will be a substantial reduction in the cost of jams and other foodstuffs in the manufacture of which sugar is used.

I hope no Deputy was misled by any of Deputy Costello's observations regarding capital expenditure. There is no intention of curtailing capital expenditure upon what he described as "productive capital enterprises". In fact, the capital expenditure undertaken in the financial year which is now ending was considerably greater than anything which the Coalition Government achieved. The capital expenditure contemplated in the coming financial year is greater still. There will be substantial difficulty in financing that capital expenditure. We do not believe it is desirable to minimise that difficulty in the least. We believe that that capital investment programme is not possible at all unless the Exchequer finances are straightened out. We believe that people will not be prepared to lend money to the Government for the purpose of financing these enterprises unless there is ample evidence that the Government is taking its own financial responsibilities seriously and is not afraid to face the political consequences of doing so. Deputy Costello, however, attempted to show that the £70,000,000 added to the national debt during the Coalition's term of office imposes no real burden on the people and is offset by productive capital enterprises. Will somebody point his finger to these productive capital enterprises?

Mr. Dillon

200,000 acres of arable land.

Mr. Lemass

The amount borrowed was £70,000,000. If that £70,000,000 is reflected in productive capital enterprises in the country surely these enterprises should be very obvious to everybody.

General Mulcahy

Does the Minister say £70,000,000?

Mr. Lemass

A sum of £70,000,000 was the addition to the national debt during that period, of which £40,000,000 is a dollar debt. I share the view of the Minister for Finance that it is undesirable that we should disinvest abroad or incur debt abroad for any purpose which does not have the effect of increasing our own production to an extent equivalent to the loss of purchasing power abroad for any purpose which does not reduce our imports or extend our exports in corresponding degree.

We cannot afford to dissipate the external assets of our people upon other than productive purposes, and I mean productive in the economic sense. To the extent that we wish to invest in hospitals and houses and social improvements, we must endeavour, if we are to keep our financial position straight, to raise the money for that purpose from the savings of our people. Every week now produces a newspaper report that some other country has reached the end of its ability to live on capital. Deputies have only to read the headlines to understand that other countries have been trying to do what we were doing for the past three years and have come to the end of their ability to continue it. We are not at the end of our ability yet—that is true —but we do not want to get there because, if we ever reach that stage, then the prospect of securing the investment in productive capital enterprise here, which is necessary as a permanent solution of our economic problems, will become impossible.

Mr. Dillon

It will become nothing of the kind.

Mr. Lemass

I wish the Deputy would run away to the nursery until this serious business is finished.

Mr. Dillon

I am quite sure the Minister does wish that, but I have not the slightest intention of running away. I am anchored here.

Mr. Lemass

I appreciate that the Deputy is handicapped. I know we are entering into a period of a new moon.

Mr. Dillon

Now, a lot of people in Ireland said that when they read the papers this morning.

Mr. Lemass

Deputy J. Costello asked what contribution the Budget makes to our particular situation. It is quite true that we have at the moment, like all other countries, difficulties in many directions due to slackness of demand; whether that slackness is due to an expectation that prices will fall or a reluctance to pay present prices in any event, it is difficult to say. It is impossible to forecast how the "price cat" will jump. There are many indications that the prices of basic raw materials will come down. There are other indications which suggest the opposite. It is a period of uncertainty and a period of uncertainty is always a period of trade difficulty.

I think that it is possible for us to take measures here which will minimise for our industrial producers the consequences of that world situation. Many of these measures have been taken already and it is largely in consequence of them that the Minister for Finance was able yesterday to say that the effect here has been less severe than in many neighbouring countries. There are other measures of a similar kind open to us and in so far as these measures are in line with the general policy of reducing the deficit in our external trade they can, I think, be taken without risk of serious detriment either to the present trading position or to the country's economy as a whole.

We recognise, of course, that the increased cost of beer and spirits and tobacco may involve a reduction in their consumption. The estimates of the yield of revenue from these increases have been made upon that assumption. The House is, I think, aware that there has been a very extraordinary increase in the consumption of beer and spirits in the past few years and the arresting of that increase, or the reversal of that friend, would not be regarded by many of us as a disaster. On the contrary, we think that the House, and the country as a whole, is entitled to be perturbed at the very substantial rise in the consumption of beer and spirits in recent years.

Mr. Dillon

Increased consumption of beer?

General Mulcahy

It was not light beer.

Mr. Lemass

The effect, if any, on employment in the tobacco and brewing industries is not likely to be considerable. I have one further comment to make in relation to some general observations made by Deputy J. Costello. He said it was my policy, as expressed by him, that the Government should spend for the people money that they would otherwise spend for themselves. That is not my policy at all. On the whole, I do not think it is desirable that the Government should increase its spending except in proportion to an increase in the national revenue as a whole. The serious aspect of our present position, however, emphasised by the Minister for Finance yesterday is that the total cost of Government—the total amount that the Government is spending upon the provision of public services—is rising much more rapidly than the national income. But if we come here with proposals for social welfare schemes, for health schemes, for an expansion of our education schemes or for any of these projects in which Deputies are interested, we do so because we believe that to be desirable in the interests of the people as a whole that the public should give some of the money that they would otherwise spend for themselves to the Government to spend for these purposes. If we did not believe that, we should not undertake these projects at all. The justification for every one of these schemes is the belief that the interest of the whole community requires that the Government should take from the people some of their incomes to spend on these schemes rather than leave them in their pockets to spend as they themselves think fit. If we cannot convince the people that it is in their interest that they should give up some more of their income in order to make these schemes possible, then there is something wrong with the schemes.

I believe that the position is that the great majority would clearly prefer to see the Government go ahead with these projects which it has in contemplation for the expansion of social welfare, health and similar services even though it means higher taxation rather than that these projects should be dropped altogether and tax increases avoided in consequence.

Mr. Larkin

By now the popular reaction to the Budget proposals will be starting to make itself felt outside this House. It might well be that in the light of the nature of the proposals the members of the Opposition Parties would be inclined to devote most of their attention to the individual burdens that will flow from these Budget measures so far as individual citizens are concerned.

It seems to me, however, that the Minister for Industry and Commerce in making his speech to-day—a piece of very nice skating on thin ice—has in fact posed a question to which it is more important the members of this House should find an answer. While not admitting it, he has used the phrase "a brutal Budget" and he has inquired why members of the Opposition should consider that the Government would impose a Budget so described if there was no necessity for it.

It is from that point of view, I think, we should concern ourselves with the nature of the Budget proposals even though the time that has elapsed since we received them yesterday hardly affords a reasonable opportunity of dealing with them in detail. Having listened to the Tánaiste to-day, it may be very nice to describe the Budget, so far as the mass of the ordinary people is concerned, as one under which, if they cannot eat as much bread, they can eat cake, or a higher quality bread; if they cannot put butter on their bread, they can put cheaper jam on it.

I think we should concern ourselves now with what we, as members of this Assembly, have to try to decide in regard to this Budget. It is all very well for the Tánaiste to come along and say that if the Opposition Parties do not like these proposals they should put up their own proposals. He did not do that on a previous occasion when he stated it was the responsibility of Government to devise policy and justify it and the responsibility of the Opposition to criticise it.

The Government must stand over its proposals both here and outside. If they have any doubt about it there is a remedy in their hands. It seems to me that the challenge he lays down is one that in the past we saw the members of his own Party anxious to avoid, but that does not necessarily mean that the rest of us will seek to avoid it in the same way.

My concern is not so much with the descriptions applied to the Budget, and I have read all of them in the newspapers this morning; I have read a number of opinions from what is called "the man in the street". But there has been one very noticeable exception: the Irish Press has no opinion from “the man in the street”—a marked change in respect of their publicity in regard to the two previous Budgets. Maybe they do not want to hear what the man in the street is saying as some of us have already heard it.

It seems to me that we should consider the Budget not merely as an indication of the method of State bookkeeping that the Minister for Finance proposes to follow but, more important still, in relation to the economy and industry of the country. The Tánaiste, to some very limited extent, did touch upon that because it was quite clear following the speech of Deputy Costello that somebody on the Government side had to deal with that very awkward subject. The Minister occupies the position not merely of bookkeeper for the Government, although it would seem that the present Minister sometimes regards that as his sole function, but he has also a certain responsibility placed upon him as main adviser of the nation as a whole in respect to economic problems, industrial problems and even social problems. Therefore, we are entitled to expect from him something more than the headline in the Irish Press:“Gap of £15,000,000 closed”; we are entitled to expect from him also an understanding of what is the significance of this Budget and its possible effects. We are entitled to expect that he will examine the position not merely at second-hand through the Statistics Office, or through the officers of his Department, but that he will examine, as a responsible political leader in the country, the whole economic situation, the trends and the immediate future prospects. It is on the basis of that examination that his bookkeeping will be proceeded with.

Earlier in this House there were a number of attempts to twit the Minister on the manner in which the Government has been recently following the measures adopted by the Conservative Government in England. I do not think that I could ever be accused of being a Conservative or of being very much in love with the Conservative Party but, in the present situation, I think it might even be of advantage to the country if Mr. Butler sat where Deputy MacEntee is sitting at present. I want to point out some of my reasons for saying that.

When the pre-Budget discussions in England were taking place, there was a very widespread view held that the Budget would be an exceptionally harsh Budget. All sections of the community were preparing themselves for such an eventuality and, when the Budget came along subsequently, one of the criticisms directed against the British Chancellor from members of his own Party and from the City of London was that the Budget was not, in fact, sufficiently harsh. One thing certain here is that the Minister is not going to have any criticism of that type even, I think, from members of his own Party. The answer made by Mr. Butler was that when he was considering the final proposals for his Budget he found that he had to have regard to the overall economic position and the changes which, in his opinion, appeared to be taking place, changes which indicated to him the possibility that we were moving from what he regarded as a period of inflation into one of deflation and that, in those circumstances, a tough and harsh Budget might be the very means of intensifying and increasing the rate of progress towards that deflationary period. Whether that is correct or not is not important, except to the extent that, on this view, his milder Budget has been accepted by the more conservative elements in his Party and by financiers in the City of London.

We are entitled to ask from the Minister for Finance, even now that he has presented the Budget, has he yet made up his own mind or has the Government made up its mind as to what we are facing in this country, because it is not an unfair criticism to say that, since July of last year, almost in every week that has passed, we have had differing statements from every member of the Government? Therefore, the Budget is interesting not merely in regard to its more intimate aspects —that is, in regard to the manner in which it affects immediately the lives of the people—but in regard to what we may expect as a result of the Budget in regard to our present economic position. I do not think it would be challenged if we described the present position as being one of recession, to use a mild word, so far as industry and business are concerned. We have had the rise in unemployment of 11,000 within the last 12 months. That increase in the main has shown itself in regard to workers employed in industries producing consumer goods and, more remarkable still, in regard to workers who had been enjoying fairly constant and remunerative employment in comparison with the general mass of workers in this country. That recession is not only present in the manufacturing industries but is also reflected in the wholesale and retail trades, and, while there has been some slowing up in the rate of increase in unemployment in the last four or five weeks, we have not yet made any absolute gain as compared with last year. In other words, we are still in a situation in which we have these enhanced figures for unemployment and this recession; in fact, one could use the word "stagnation" in so far as two main industries are concerned— boots and shoes and textiles and clothing. We have a general recession so far as the retail and wholesale trade is concerned. We have had as a consequence of that a certain increase in emigration. We have had widespread complaints by manufacturers and traders in regard to the drop in the public consumption of articles of a consumer character. We have, in addition, the old problem of a static figure for agricultural production.

Finally—it is something which had taken place before the Budget—we have had the increase in the bank rate. Is that a situation in which we require a Budget of this nature, one which is going still further to restrict public consuming power, particularly in relation to articles produced in these industries which are very heavily affected by unemployment at the moment? Are we going to benefit by a Budget which, in the eyes of the masses of the people, will represent more difficult living conditions here and, therefore, induce them to seek more equitable and easier conditions outside the country? Are we going to contribute by a Budget of this character to a revival of trade, both wholesale and retail? Are we going to make it easier to overcome the recession in the building trade or to provide consuming power in the pockets of our urban dwellers in order that they may assist agriculture to increase production? Are we going to leave in the pockets of our people money which they could make available without having to have recourse to the banking and credit institutions of the country who have now decided to charge a higher price for the money which they make available?

It is from these aspects that I think the Budget has to be more particularly examined. I, personally, feel that, whatever hope we had of a reasonably rapid overcoming of our economic recession, at the moment that hope has very largely disappeared when one examines the Budget proposals. I feel at the moment that it is most unlikely we are going to see the figure of 71,000 unemployed disappear from our records or of our getting back to last year's figures. I hope that, at the best, there will not be a further increase. I am very doubtful that we are going to see a restoration of the level of activity that we previously had in the building trade. I am certain that, so far as most of the wholesale and retail business people are concerned, the outlook for them is going to be fairly good.

If that is the case in regard to the economic aspects of the Budget, and if we tie that up with the question asked by the Tánaiste: "Why do we think that the Government have taken these measures" I think the answer is very plain. It is not so long since we debated at great length in this House a series of proposals emanating from the Central Bank, designed to meet what they regarded as the fiscal, economic and social problems which they see present in our economy at the present time. While the Tánaiste, in this House and in his public speeches, accepted the analysis set out in the report of the bank he did refuse to accept on behalf of the Government, or on his own behalf, the proposals put forward. We have had a very long and detailed discussion of that whole report, the analysis of it and the proposals it contains, and yet I think it is no unfair criticism to say that if the board of the Central Bank had come in yesterday and presented the Budget, instead of the present Minister for Finance, there would hardly have been a comma changed.

Mr. MacBride

It is word for word practically.

Mr. Davin

They are the Government.

Mr. Larkin

If that is the case, then we have to start and find reasons for it. It must be quite clear to the Tánaiste, and to every individual member of the Fianna Fáil Party, that the Budget is going to be unpopular, and that they will find great difficulty in defending the proposals put forward in it as the Government's policy. From that point of view, it might make good political capital for the Opposition to forget altogether about the basic problems that lie behind the Budget and to twit Fianna Fáil: to make as much capital as we can as to what are going to be their political difficulties, because I do not think that even the most optimistic member of Fianna Fáil, or even the Minister for Finance can feel that there is going to be any great measure of enthusiasm or popular support for it amongst our citizens generally, or even amongst the stalwarts of the Party. I could understand the Opposition Parties seeking merely to look at the political consequences of the Budget in so far as the interplay of forces between the political Parties is concerned. I could understand, to some extent, Independent members of this House taking the view that, as between one political Party and another, there is not very much to choose, or that, having made their choice, they proposed to stand by; but, in making that decision, they have no right to ignore what is underneath the feet of everyone of us and that is the economic problems and the economic situation.

May I say, with due respect to my friend Deputy Cowan with whom I have had many old associations in the past, that I think it is regrettable and is a peculiarly cynical reflection on Irish politics that his comment on the Budget yesterday was that it would not suit him to have an election for twelve months. It might not suit any of us to have an election for twelve months, but at least we do make some attempt to explain our personal difficulties in the light of some reasonably acceptable standards of political and economic principles. We would find ourselves in a most peculiar position in relation to Parliamentary Government if each and everyone of us, and the Parties, were merely to take that stand. It would be peculiarly bad if the approach which was shown not merely by Deputy Cowan but also by Deputy Browne, so far as the divisions last night were concerned, were to appear to be concentrated not on an analysis of the serious problems which confront us, but was purely in relation to our personal feelings as individual members of the House, or if the standards which we accepted twelve months ago had to be completely changed and redressed now to justify our present position. Everyone in politics has to make adjustments from time to time, but I think there are limits to the occasions on which that may be done.

If, in so far as this Budget is concerned, we are to have the approach made by Independent Deputies that, because they are so interested in certain features of legislation which they hope to see coming before the House, they have got to ignore the basic economic problems which face us in relation to this Budget, then they are not doing a service either to the people with whom they are concerned or the country as a whole, particularly when we find that, in relation to the Budget, there is not merely in it a most cynical attitude to the old proposals for improving social services but that it and the legislation regarding the new Social Welfare Bill are being nicely linked together in the very interesting manner revealed in the Tánaiste's speech this morning. Personally, I feel that the whole approach by the Minister is one that is not going to make for the welfare of the country and will not enable us to overcome our immediate problems.

I believe that our main danger at the moment arises more from deflation than from any other economic cause. I believe it was imperative that, in this situation, measures should have been taken by the Government which would help to restore the level of business and industrial activities rather than to repress and confine the natural recuperative forces which are at present within our country. That is one of the effects that will flow from the Budget and that, I think, is particularly likely to be the result when we not merely examine the whole basis on which the Budget was formulated but when we connect it up with the advance of our bank rate to the English level some weeks ago.

In so far as the extra taxation and the withdrawal of the food subsidies are concerned, it has been suggested that compensation is being provided for those sections of the people who, quite clearly, will require it. I submit that that is not merely a wrong but it is a deliberate misstatement of the position. In the first place, it is seeking to work on average figures and, in the second place, it is seeking to ignore certain social aspects that flow from the economic position of the individuals in the families in our community.

We are told that, in so far as the withdrawal of the food subsidies is concerned, it will represent an annual cost of 1/6 per head per week on the community. Anybody who knows the living habits of our people knows very well that the standard of food consumption is different. The particular types of food that are bought by the old age pensioner, by the unemployed man with a family, by the worker in fairly steady and well-paid employment, by the higher-paid middle-class clerical worker and by the person of affluent and independent means are entirely different. The percentage of certain foods eaten by certain families is entirely different to the percentage of those foods eaten by other families. In effect, what we have done by removing the food subsidies is to increase the price not merely of the basic foods but also of those foods the greatest quantities of which are eaten by the poorer members of the community. We have left untouched the foods that are eaten by the more wealthy sections of the community.

Anyone who has examined the economy of a man with a wife and three or four children will note the change that takes place when he is working and when he is unemployed. He will note that the first change which becomes apparent is the very big increase that takes place in the amount of bread bought for that family.

On one occasion I had to make some inquiries and I actually came across the case of an unemployed man with an income of 40/- a week, 28/- of which were spent on bread. That was an extreme case but, nevertheless, the fact is that the lower the income of a family the greater is the amount of money that is spent on bread. That will also apply to sugar and tea and probably to some extent, because of certain habits, to butter. It is in regard to those particular foods that the full effect of the withdrawal of the food subsidies will be felt.

The Government proposes to provide compensation for those people through the increase in certain social services and also through the provision of a new payment in respect of children's allowances. Of all the proposals put forward in the Budget probably the most cynical—it is the one that smacks more particularly of the Central Bank than anything else —is the suggestion that they are going to compensate the old-age pensioner for these changes in respect of food subsidies and taxation. They are going to do that to the extent of 1/6 per week. The members of the Fianna Fáil Party know as well as I do the kind of life the old-age pensioner lives who is completely dependent on his pension. I wonder would they like to sit down and work out what it would cost to continue to have the very minimum of what might be termed comfort rather than luxury in regard to a smoke and a drink and say whether that can be covered by 1/6? I have been trying to estimate it very roughly. The cost of the very minimum of food, smokes and a single drink in the week would wipe out the whole of the 1/6. That is the compensation we are going to give to the old-age pensioners!

If we look at the unemployed so far as the present position is concerned there is no immediate gain but we are told by the Tánaiste that out of the goodness of their hearts they are not going to bring about the changes in the food subsidies until the 1st July, and that simultaneously with those changes they have the improved benefits available under the Social Welfare Bill and also provision for improved rates in respect of assistance payments.

If we take the case of an unemployed worker with a wife and three children and measure what it is proposed to give him under the Social Welfare Bill in the form of increased unemployment benefit, we will discover that, taking the very minimum quantity of the subsidised foods for which he has to pay the enhanced prices and allowing him to pay the very minimum in respect of tobacco or on a drink, the whole of the increase in the payment of unemployment benefit will be completely wiped out by the additional charges he has got to meet. That is going to be the position right through the whole scheme of social welfare as set out in the new Bill.

Last week, we listened to the Minister for Social Welfare explaining at great length that, right through the whole of the year 1947, he and his officers were voluntarily engaged in devising and drafting new schemes to provide improved and enhanced social security for the people in this country and that only for the regrettable interlude of the inter-Party Government and Deputy Larkin all these improved measures would be operated. The Minister now brings his Bill into the House and instead of the people of this country being given a higher level of social security than they have enjoyed before, instead of having the gap closed as between their level and the level in the Six Counties, instead of, in fact, bringing this country into better alignment with the modern trend and modern thought in regard to social services, all we are going to get out of this legislation, this popularised Social Welfare Bill, is merely an increase in the rates of benefit to cover up the increased costs that will flow from the Budget. That is the kind of trap that the members of the Fianna Fáil Party have fallen into. That is the position that we have got to get ourselves out of.

Even if the Social Welfare Bill of the Minister for Social Welfare becomes law there will be no net gain for any recipient of social security as soon as the effects of the Budget proposals make themselves felt. The recipient of social security will be no better off. If you examine in detail the circumstances in respect of different families you will find that, when they have received the benefits of the Social Welfare Bill and when they have met the burdens imposed on them by the Budget, they will be worse off than ever before. And this is the Party that has set the standard and set the pace for improved social services in this country! As was pointed out in the debate, all they have ever done has been to allow themselves to be pushed from behind and to take one hesitating step after another in the direction that they have been compelled to go by popular feeling and by the issues raised by other political Parties. On this occasion, while they have sought to step out in front in order to obtain the political value of it, the Minister for Finance and the Central Bank have stepped in on top of them and the whole benefit of their social security code will be taken away from them and people will turn in disgust from what has turned out to be a very cheap three-card trick.

One special feature of the present Budget can be commented upon. In 1947 we had a Supplementary Budget under which increased taxation was imposed on tobacco, drink and cinema seats. Let us be quite frank about it. A great many housewives felt that that was a good measure because, while there was an increase in the price of tobacco and drink, they believed that they were getting a benefit in so far as the proceeds of that increased taxation was to be used to bring down the price of certain basic foods.

I can imagine, because I have already heard some of the comments, what will be the opinions of these housewives on this occasion when, not only have they to pay an increased price for the foods now covered by subsidies, but, in addition, as many of them have explained, they claim that a man who has worked hard during the week is entitled to some modicum of comfort and luxury to the extent of a couple of packages of cigarettes and one or two pints. As housewives, as mothers and as women charged with running homes, they believe that that is a reasonable and proper charge on the money available to run a home. They will have some interesting comments to make. I hope that not only members of the Fianna Fáil Party will hear these comments, but others who feel that the Budget is worthy of support, even though they have not to obey the same degree of Party discipline as the members of the Fianna Fáil Party.

I want to make a comment on what is probably one of the most important aspects of the matter so far as employed persons are concerned, those enjoying wages and salaries. A statement was made by the Minister that earnings have gone up by a greater percentage than the cost of living since 1939. I wonder is the Minister aware of one very peculiar fact, that the figure given for the percentage increase in earnings has not been accepted by any responsible body charged with the duty of speaking on behalf of workers. that no trade union or trade organisation has accepted that figure. Even the Central Statistics Office cannot explain how they got that percentage figure. If that is the case, and if the cost of living has increased by nearly 111 per cent. since 1939, nevertheless, on this figure, which has so far been inexplicable and has not been justified, we are asked to accept the position that workers drawing wages and salaries at least have maintained their position in relation to the rising cost of living. Everybody knows from actual experience that that is not the case.

We have another figure given in this House by the Taoiseach, that, while the cost of living to-day is 110 per cent. up on 1939, the increase in rates of wages—and they are much more reliable and can be much more readily checked than earnings—in respect of Dublin and 20 of the main towns in the country is 91 per cent. over 1939. Therefore, with the Budget coming into operation, the wage earners and salary earners are losers to the extent of 19 per cent. in the comparison between wages and the cost of living.

The situation to-day becomes some what similar to the kind of atmosphere we had in 1947. On that occasion, the Taoiseach told us of the terrible burden placed on the country and how there was nothing to do but tighten our belts and increase taxation and for workers to accept the view that they must not look for any increase of remuneration to offset the increased expenditure they were called upon to bear. He warned us on that occasion that if the trade unions would not accept his advice then the Government would have recourse to legislation and would take powers to prevent workers and trade unions seeking the increased remuneration they thought they were entitled to.

I wonder will the Taoiseach, or the Minister for Finance, or the Tánaiste say anything like that on this occasion, that if we are not good boys there will be another Standstill Wage Order, or if they have learned their lesson, if they have found that it is much more clever and will not create the same difficulties to use the financial manipulation recommended by the Central Bank and by that means force down consumption and rake off portion of the personal income of wage and salary earners rather than run into a headlong conflict with the great mass of the people as they did over the Standstill Wage Order from 1941 to 1946. Possibly they have become a little wiser after the three years they were out of office.

It should be plainly stated that during the last ten months, when there has been a rise in the cost of living of 11 per cent, there has been one very marked feature in the trade union movement—a peculiar kind of quietness. In the three years preceding that, if there was a rise of one point in the cost of living, those of us who have experience of trade union meetings knew that the first meeting we went to we would be faced with a clamour for an immediate increase in wages or salaries because of that rise in the cost of living. We then discovered that the clamour was always coming from one section, that it was coming from the gentlemen, who, although good trade unionists, preferred to take trade union policy from Fianna Fáil Cumainn. Deputy Ó Briain knows nothing of what we are talking about in this connection.

Donnchadh Ó Briain

I know that that is not correct.

Mr. Larkin

We had the very nice picture of the Party, which imposed the Standstill Order on wages and which so manipulated wages and prices that they finally created a gap of nearly 30 per cent. to the disadvantage of wages, sending henchmen into the trade union movement deliberately to stir up industrial discontent, raising issues in regard to wages and conditions in the hope that by that means they would create political differences. Unfortunately for Fianna Fáil, trade unionists are fairly competent and able. We made claims, not because of Fianna Fáil, but because that is our job, and we shall continue to make claims. We got the claims adjusted and the result was that in those three years the gap between wages and prices was closed to a greater extent than in any previous period.

During the last ten months, however, we have had a rise in the official cost-of-living figure of 11 per cent., the second biggest increase that has taken place in the cost of living since 1939 within a comparable period. The boys are quiet now.

Donnchadh Ó Briain

Six points of that increase took place in the period from February to May during a period of the Coalition Government.

Mr. Larkin

Suppose I answer you as you did us when you were in opposition: that you do not count the index figure but what the people are able to pay. We know what the index is because we have had to examine it very carefully and to discuss it across the conference table. We also know that if the index is calculated a little differently, it may be a little more helpful to us in making our case but it is there and we have to accept it. We cannot, like Fianna Fáil, play with the cards up our sleeves as well as with the cards on the table. We, at least, know, however, where the queen is.

Another serious aspect of the Budget is that for the last ten months we have had, as far as the trade union movement is concerned, a relative period of quiet. It is, of course, correct that the cost of living has increased and that claims for increases in wages have been made but it is also quite true and the responsible Minister knows it to be quite true, that there has been an exceptional period of moderation exercised by all sections of the community in dealing with these questions of wages and prices. Only in a very restrained manner have claims been formulated and put forward by workers during the last five or six months.

I think there is now going to be a limit to the extent to which trade union officials can limit their members. Trade union officials have exercised limitations on their members to the extent of advising them on their claims as to where they might fail and the success which might meet their claims, but the trade union movement, unlike the Government, have no legal power of compulsion. We cannot stop our members from making decisions and giving effect to them. As I said, we can give them advice on their claims and the difficulties with which they might meet but they can accept or reject the advice and give effect to their own decisions. That is a circumstance in which the Government must accept responsibility for anything that may happen because quite clearly where we have a period of a very sharp rise in the cost of living without any equitable adjustment of wages and salaries during the past 12 months and a further sharp imposition so far as basic foods are concerned there is and there will be a reaction by people in the wages and salaries classes. I hope the Government will bear that in mind and accept responsibility for it.

I suggest that if they feel that that situation can be dealt with by having recourse through legislation and by seeking to impose legal limitations on the activities of the trade unions that they recall what happened in 1947 and what put them for three years into the wilderness. I think you will find that many members of Fianna Fáil have come to realise since 1947 that whatever political changes take place one thing is unlikely to happen and that is that Fianna Fáil will ever again have an over-all majority. That is something worthy of consideration.

The Tánaiste has made a challenge, which he was of course careful to avoid when in opposition, that if the people did not like the Government's proposals they knew the road that was open to them. There is one course which the Government should not follow, in my opinion, and that is that they should not be led by bodies such as the Central Bank or the Joint Stock Banks. I am not making that statement in any sense of hostility to those gentlemen but because I believe that they are as completely wrong in relation to the type of policy to meet the needs of this country as they are in other matters and are completely different from the things which would make possible the policy of Fianna Fáil. The tragic mistake of Fianna Fáil since they became the Government of this country and certainly since the years 1937 and 1938 is that they have been too prone to follow the type of policy instituted by the banks and commercial interests in this country. Accepting their policy on their word and their sincerity, I think Fianna Fáil will themselves admit that the possibility of realisation of their policy is not best met by following the advice of these people. It is quite clear to anyone with ordinary common sense that the courage of the Fianna Fáil policy cannot be met by a policy of men who have been manipulating money and at the same time are too far removed from the day-to-day problems to know what is best for the country. It is a remarkable thing that up to the moment no responsible political group in this country has been prepared to accept publicly, without qualification, the advice given by the Central Bank.

I think if the members of the Fianna Fáil Party, and there are many sincere and progressive-minded men and women in that Party, take and examine in the present situation what is to be the possible future development of this country in the next ten or 20 years, they will not find a solution in the present Budget that seems to be built on the advice given by the Central Bank. There must be something wrong because it was almost impossible for us to imagine that a single Party such as Fianna Fáil, with its background and history of development and its outlook on national economy and development, can allow itself to be swayed by the Central Bank and the joint stock bank groups in this country.

It is true that, quite clearly, if we are going to have certain standards of social services, the money must be found to pay for them but it should not be found only through indirect taxation on the ordinary man in the street. It is a burden that should be borne not only by the ordinary working people but those who are better able to afford it and who have avoided it. It is quite clear that the ordinary individual citizen's ability to consume food and drink is limited by his personal capacity. From that point of view, put 3d. on the pint and one is not going to collect any more, within reason, from the man with £5,000 a year than from the man with £5 or £10 a week. That has always been the objectionable feature of indirect taxation. Secondly, it is hidden taxation, which the ordinary man in the street does not clearly appreciate, and it is the means of allowing those with large incomes to evade their proper share of responsibility. During recent weeks, there have been many comments made public on the defects in our income-tax code. Since July last, the Minister and the Department of Finance have mentioned in public statements that in April of this year we would have to face in the Budget the problem of what they regarded as the correction of the finances of the State. Surely, within the last seven or eight months, it could have been possible for the Minister for Finance to examine the machinery of income-tax to see if it could not be improved and, if that could not be done, that an endeavour would be made to ensure that the bigger section of the community, who have got a responsibility to make their contribution just the same as the present section who are covered by the income-tax machinery have, would be brought within that machinery.

Donnchadh Ó Briain

What section?

Mr. Larkin

The agricultural section. After all, the ordinary working man on the land has got about £5 per week. He is expected to submit himself to examination, and if he is held liable to tax he will pay it. My view in relation to the agricultural community is that I do not expect the farmer to pay any more than the man in the city or town. Surely, the man engaged in agriculture has the same duty as the town and city worker has at the moment to submit himself for examination to determine whether or not he should make a contribution.

Donnchadh Ó Briain

He does.

Mr. Larkin

In regard to income-tax itself, the proposal in the Budget is to increase the standard rate by 1/-. That is a flat increase applying to everybody, irrespective of the difference in their resources and their reserves. Surely if this gap has got to be closed, we could have a graduated system of income-tax.

Of course, I will be told immediately that there are very few rich people in the country and that there is no use in increasing income-tax by too great a figure because the yield would not be worth the trouble. I am not in a position of having machinery available to me which the Government has to examine the practical problems that might arise in regard to a proposal like that. What I am concerned with is that the approach to the problem by the Government and the Minister for Finance is an approach through channels which will inevitably put the whole of the burden on the great masses of the ordinary people. Their approach ignores differences in income and reserves and differences in standard of life and merely says: "You have got to pay your share in the most convenient way we decide."

I recall looking for the restoration of the excess profits tax. I recall, when I was sitting in the Government Benches for three years, being sniped at by Fianna Fáil because we had not brought back the excess profits tax. I frankly admit that that was not merely a mistake but something for which we are entitled to be held up to criticism. Bearing in mind that we have to face the problem of providing money, we know that, in the last year of their operation, the excess profits tax provided somewhere between £4,000,000 and £5,000,000, and the possibilities for that tax are still there.

The last list of company reports that I saw again showed their very healthy condition. In the meantime, although they have issued their bonus shares they have managed to maintain the old rate of dividend. If there is a company paying 10 per cent. and they double their capital by issuing the necessary number of bonus shares and still continue to pay a dividend of 10 per cent., that means that there is now a dividend of 20 per cent. being paid on the old capital. That is a common feature. I know of one company outside the city the net profits of which have increased in one year from £24,000 to £98,000. It may be argued, as it was argued before, that excess profits have a dragging effect on the development of industry, that they are difficult to collect and that they are inequitable in their application to various types of companies. We have heard all these explanations both from the Tánaiste and from Deputy McGilligan. Again I would point out that there never has been on any side of this House any objection in principle to excess profits tax. It was imposed by Fianna Fáil, and Deputy McGilligan was not opposed to the principle of it, but he did question the machinery that was being utilised to collect it. I would like to put this following question: "Why was this particular channel not explored? If it was not possible or practicable, then we could be told the reasons for it?" However, it is just put on one side. There is no extension in income-tax alleviation, no graduated scale of income-tax and no excess profits tax. Finally, a very definite tax is being put on some of the most essential foods for working-class homes and on the few luxuries, if one likes to call them by that name—tobacco and drink. There was not even a suggestion that there might be a purchase tax placed on luxuries, even though it might only yield a small amount by way of revenue.

It is the social approach which is the most important one in relation to the examination of the Budget, because, it seems to me, it is indicative of the future lines along which this country is going to develop. These lines are being determined, in my opinion, by people who have proven year after year not only in this country but also in every other country, to be completely incompetent to deal with basic economic problems. In relation to this country, they have proven year after year to have very little sympathy with the policy which we in this House feel is the correct policy. It is probably a tragedy for this country that a Party like Fianna Fáil should be pursuing this particular line of policy. Bearing in mind the situation in this country at the present time and the statement made by the Minister that there would be a gap of £15,000,000, I feel that, with the present economic and industrial situation in the country and while everybody agrees that we must balance the current year's account, it might have been a better contribution to restoring economic activity in the country if we decided we could have a deficit this year.

If we were not so much concerned with the application of orthodox principles, that both sides of the column must always balance, we would see that there is something more than figures involved in this. I am very much afraid that in our attempt to strike the balance in regard to State book-keeping, we are going to create further upset in regard to our economic book-keeping as a nation. That balance may not show itself in the form of increased public debt; it may not show itself in the form of a growing difficulty on the part of the Government to obtain money for its purposes; but it is going to show itself in the form of an increased number of our men and women idle in this country, living under depressed conditions and, worse still, deciding that so far as they are concerned—I have already heard such comments—whatever future life holds for them, it is not to be found in this country.

Mr. Dillon

I wonder, if the impact of this Budget on a man or woman living to-day in Drimnagh, Crumlin or in a labourer's cottage in any part of Ireland, were correctly assessed what weekly burden would this Budget put upon them? Would I exaggerate if I said that for an ordinary man or woman still unblessed with a family the charge would lie between 8/- and 10/- a week? Some of the Fianna Fáil Deputies look up in horrified amazement, but if they take out their pens and work it out, I think they will find that it is a fair calculation. For the house in which there is a man and his wife and two or four children, the burden of this Budget will lie somewhere between 10/- and £1 a week. I have not worked it out but I think those who are about to defend these proposals to the country have a duty to work it out themselves for the conditions with which each one of them is most familiar. Some will think of it in terms of rural dwellers; some will think of it in terms of city dwellers. Each Deputy of this House has upon him the duty to bring to the attention of the Leader of his Party, if he belongs to the Fianna Fáil Party, or to the Dáil at large if he belongs to the Opposition, what burden he believes this Budget will put on his constituents, whatever strata of society they belong to.

I want to read from column 49, Volume 126, No. 1, of the Official Debates, of 13th June, 1951, the date on which the present Government was changed. I spoke in this House on that occasion and used these words:

"I only hope and pray that the work we have started, that we have only just started, will not be destroyed in malice or envy or spite. I heard so many of the Fianna Fáil Deputies jealous of our achievements denigrate the things we had done. I knew they were doing it because they were jealous. I implore them, if they do not consider it a sin against consistency, to label the Deputies of this House as purchasable merchandise and glory in their right to form an Irish Government by their sufrage, so far to strain their consistency as to allow the plans they so much blew upon to carry on for the benefit of our people. If they are not able to build, let them not destroy; if they are not able to create, let them not sterilise; and if they are not able to treat the work of governing Ireland as a glorious adventure, in which it is a privilege to give all that one has, let them not turn it into a base, mercenary traffic of corruption and intimidation."

I think there were Deputies in this House who thought that that foresight was unduly pessimistic. How many think it now? Deputies on all sides of this House have found themselves at a loss to explain what philosophy can lie under the reckless, wicked, stupid proposals contained in this Budget. Study them by any canon of common sense and there is no explanation. But there is an explanation rooted in rotten politics. Does this House remember that I told them six months ago that the Taoiseach, Deputy de Valera, had warned the Fianna Fáil Party he intended to retire? Does this House remember that I told them six months ago that the Minister for Health, Dr. Ryan, and the Minister for Finance, Mr. MacEntee, refused to serve under Deputy Lemass, and had announced that when the Taoiseach retired they would retire with him.

An Leas-Cheann Comhairle

That does not seem to be relevant on the Budget debate, Deputy.

Mr. Dillon

This Budget is brought in, and it is a criminal thing to do, in order to create as much economic hardship in this country as is possible in this year, alleging that that was due to some problem bequeathed to this administration by their predecessors. It is designed to extract from our people in this financial year a revenue out of all proportion to what the legitimate charges which will come in course of payment would require, providing a means for the present Tánaiste to lead what he hopes to be the remnants of the Fianna Fáil Party into a general election next June.

General Mulcahy

June 12 months.

Mr. Dillon

Having presented a Budget for 1952-53, having used the surplus finances of this year for the purpose of bestowing benefits in 1952-53, Fianna Fáil, the same person but in different clothes, will emerge as the saviour of the nation with a new ambitious Taoiseach.

I do not blame the Ministers who want to retire. Why should not they? They have given 15 years' public service. Is there any reason to blame them if they want to return to civil life? The only conceivable reason why any man would want to remain in politics in this country is ambition and the love of power. These two essential qualities the Tánaiste has got. He wants to be Taoiseach, and these are qualities a man ought to have if he wishes to continue long in politics.

The Tánaiste is getting to-day a salary from the State of £1,525 a year. It is certain that he was earning over £4,000 without any trouble 12 months ago, and that he gave that up to take service again in the public service for one-third of what he could easily earn outside. No one but a man with the highest sense of political ambition would make that exchange. He has got it and he wants to get there.

When Deputies around this House say: "What is the meaning of this?", when the Tánaiste says: "Do you think we put on taxes for fun?", let someone explain it on more specious grounds than those I now propound to you, for I will prove this. What is criminal is that in this dirty political manæuvring, if these proposals are endorsed by Oireachtas Éireann, hundreds of small businessmen in this country will put up their shutters for the last time; hundreds of people at present employed in this country will buy single tickets to Birmingham, Manchester, Glasgow and Bootle.

The British Chancellor of the Exchequer raised the bank rate in England. That is all he did. The rest of his Budget was eyewash and everybody knows it. The only thing of significance he did was to raise the bank rate. Why? —Because he wanted to squeeze out of certain sections of industry the labour required for the armament factory and the mine. Our Government, in this country, is squeezing out of employment, in our country, our people, to send them to Birmingham, Bootle and the mine. That is a dastardly thing for Fianna Fáil to do in order to facilitate the Tánaiste to become Taoiseach with a bang. That is a dastardly thing to do.

At least those chaps who are driven out of their country can come back, but think of the small business man, who, if he has to close his doors this year will never open them again, who has been a respectable and respected member of the community in which he lives, not rich but secure, who before the end of this year will shut his shop for the last time and, in later middle age, go out and look for work. It is only those of us who live in the country, and know what that means, who can fully appreciate the hateful tragedy of that repeating itself a thousand or two thousand times up and down the country. It is revolting.

The principle laid down by the present Taoiseach is that you cannot have omelettes without breaking eggs. That is a sublime doctrine so long as you are not the egg. This Parliament was not elected to achieve great imperial designs or to face the gloomy fact that you cannot have omelettes without breaking eggs. We were sent here by our neighbours so to run this country that it would not be necessary to break human eggs in order to make the wheels go round. I claim that in the last three and a-half years there were no eggs broken in this country; there was not even a crack put in the most addled Fianna Fáil egg in the whole gang.

Mr. Carter

You smothered John Bull with them.

Mr. Dillon

Even the Deputy survived to get elected here and, when he was, we welcomed him in. When we do that we would do anything.

Mr. Carter

I was elected with as many votes as the Deputy.

Mr. Dillon

Yes, and so long as the Deputy was this Parliament is here to receive him with the deference to which the elected representative of our people is entitled.

Mr. Carter

I helped to put it here.

Mr. Dillon

This Budget is just stupid as finance. This Budget is not finance; this Budget is politics. I think Deputy Larkin is mistaken when he appears to deprecate the existence of what I heard the Leader of the Opposition describe and what I describe as the Treasury point of view. There is an abstract thing, the Treasury point of view, which it is the duty of certain high public officials of State to formulate and maintain, and the Government which is not sustained by that sort of help and guidance is very much the poorer for the want of it. The tragedy is, if you have a weak, vain, silly man as Minister for Finance, instead of understanding the function of those advisers who propound the Treasury view, he starts strutting in front of them to prove himself more orthodox than they and this silly little man who is at present the Minister for Finance in this country wants to prove to posterity that the Central Bank is radical compared with him, just because he does not understand what the memoranda they sent him are designed to do. They are designed to state a case to which regard must be had by a prudent Minister for Finance in formulating his proposals, but I never met a responsible economist yet who, ever in his heart, believed that the financial memorandum should be accepted literally as meaning what it said. There is only one man in Ireland who ever did that, and that is Deputy MacEntee, the present Minister for Finance, and there must be nobody more embarrassed in Ireland than those charged with the responsibility of formulating the Treasury view when they discover that the vain, silly little man to whom the Constitution requires them to address their memoranda has not only read them, but fundamentally misunderstood them.

The Tánaiste is right when he says: "We are not putting on the taxes for fun." They are not. They are putting on the taxes for spite, for vanity and for politics. They are putting them on in spite because they want to present the picture to our people that their predecessors left them a heritage which requires them to cripple the community to-day. It has been proven to them now that that is not true. The Minister himself is induced to do it in vanity because he wants to out-Butler Butler; he wants to qualify for the pedestal to be erected at the portico of the Central Bank. They are doing it in politics for the reason I have told: so that the new Taoiseach may bestow benefactions on a grateful electorate. There will be a fair exchange such as the exchange which has been negotiated with the dance-hall proprietors: if they will vote for him he will see that they are treated right on Budget day. One cannot but admire the cynical arrogance of a Tánaiste who in the Budget which taxes butter, bread, tea, sugar, incomes, the very right to draw our breath in Ireland and takes the tax off dance-halls because their proprietors had the prudence to make their bargain with the Tánaiste of to-day and the Taoiseach of tomorrow.

On that model he plans to make the next rate bargain: if the electorate of Ireland will emulate the dance-hall proprietors they will get their 1/-, too, and from the same liberal hand. Must one not admire the cynical daring impudence of that? Must one not admire the aspirant to power who tries it out on that docile tail over there and who then turns to the four moulting hairs of that tail and says to them: "We will be looking for you in the lobby when you are wanted and if you are not there you will be on the hustings." To which Deputy Cowan replies: "not for 12 months yet, if you please, sir"; and does not blush to repeat it in public in this House. Is that not so? Did he not say yesterday: "I am going into the lobby for I do not want an election for another 12 months"? Monte Carlo, close your door when you see the Tánaiste arrive —the greatest bluffer, the best poker player that ever stood in Irish politics. The busted flush in front of him—when they woke up they discovered that they had dwindled into four cards—an illegal hand.

An Leas-Cheann Comhairle

What bearing has that on the Budget statement?

Mr. Dillon

It is the fons et origo of those proposals.

An Leas-Cheann Comhairle

It is totally irrelevant.

Mr. Davin

Four kings is a good hand.

Mr. Cogan

The joker is on the other side of the House.

Mr. Dunne

It will be very interesting to hear Deputy Cogan.

Mr. Dillon

£70,000,000, says the Tánaiste, was added to the national debt, and there are groans of admiration from the illuminated hordes who sit behind him. "We must not borrow dollars to build hospitals and houses." Is there anyone so dense on the benches of Fianna Fáil as to believe that? There must be some, for the Tánaiste knows the material with which he has to deal, and he would not tell them fairy tales which none of them would believe.

His colleague published a White Paper, showing the amount of the national debt and the assets to be set against it, but, knowing his colleagues, he confidently relies upon them to read the figures set out on the liability side and obediently to turn their eyes from the sacriligious item: assets. In Table 5 of the financial statement, 1952, there is a list of assets. Take the statement showing the capital liability of the State on 31st March, 1951, and on 31st March, 1952, and the assets (including the Exchequer balance) held on these dates. Do the members of the Fianna Fáil Party know the meaning of the word "assets"—A-S-S-E-T-S? If they do not, they can ask their Minister for Finance to explain it to them.

I hear a murmur of protest that they do. Very well then, they will understand what I am going to tell them. If they look at the foot of the column of assets in the ownership of the Treasury on 31st March, 1952, they will see that the last item is the balance on the American Loan Counterpart Fund: £41,137,518. Let them look at the liability side. Now they all understand that word. They have been well tutored in that during the last six months— liability, liability, liability. There is a popular song about that if I could think of it. Dollar borrowings under United States Loan Agreement: equivalent of proceeds received: £40,671,086. If you have a liability of £40,671,000 and if you have assets of £41,137,000 are you rich or are you poor? I propose that as a nice weekend riddle to the financial pundits of Fianna Fáil, to get a bit of chalk, go out to the gable of the house, add it up, subtract it, then run twice around the house and look at it again.

Mr. Carter

Maybe you would lend us a slate.

Mr. Dillon

I suggest that the Deputy might climb on the roof and start on the slates there. It would make a nice decoration. When he has subtracted one from the other, let him certify to his colleagues which is the bigger and which the smaller.

Major de Valera

We know how the Deputy arrives at his financial arguments, anyway.

Mr. Dillon

Deputy Vivion de Valera, a courtly and agreeable colleague, whether you are on Opposition or on the same side, is willing and ready to undertake to lead any Deputy of the Fianna Fáil Party through the labyrinthine mathematics of that abstruse mathematical problem. I confidently commend the dullest member of the Fianna Fáil Party to the vicarious mathematical glory of Deputy Vivion de Valera. Is it not time that the Minister for Finance or Deputy de Valera explained to the House and his own colleagues what the Marshall Aid loan was? I do not believe that Deputy Vivion de Valera would be party to a fraud on his own colleagues. I challenge him to tell the House when he comes to speak whether he alleges to his own colleagues that the borrowing of dollars under Marshall Aid was in any sense a foreign debt, as his colleagues understand it.

Does Deputy Vivion de Valera not know that it was a pure exchange transaction providing dollars for current transactions pending the arrival of the day upon which convertibility would be restored, and that in respect of every dollar borrowed from the United States there was put an equivalent amount of our currency in the Central Bank and that we said to the Marshall Aid people: "On the due date we will have ready for you on deposit the full amount due in our currency or in sterling, but we will not have dollars." They said to us: "Nobody knows what the situation will be five years ahead. If we are prepared to take the risk of your having only sterling and not dollars, why should you worry about it?" We reiterated our position—and this is the source of all the "blah" about why there was a change in the Cabinet as to whether we would take Marshall Aid or not: the Minister for External Affairs, if my memory serves me right, would not be a party to leaving the United States of America under the shadow of a doubt—because we wanted to carry conviction to their mind that we were prepared to confirm to any provision in the legislation of Congress subject to the honourable understanding between the two honourable parties that, while we would do our best to get dollars on a given date, our confident belief was that, unless the United States of America Treasury and the British Treasury had, in the wide arena of the world, restored convertibility between sterling and dollars, we would only have sterling wherewith to pay our instalment, but that we would have sterling.

I want to put it to Fianna Fáil Deputies and I ask Deputy Vivion de Valera to tell them: Do not let people like Deputy Cowan fool you with tripe about this country selling itself to the United States of America. The United States of America never sought to buy this country. The United States of America is this country's best friend. I am going to have something to say about the United Soviet Socialist Republics who may have some aspirations to buy this country, or bits of it. There are five bits I have my eye on and they are beginning to walk like ducks. If they quack I will name them, because when someone walks like a duck, has feathers like a duck and quacks like a duck, even though he says he is a guinea pig, I am entitled to believe that he is a duck. Do not let Deputy Cowan fool you with that kind of tripe.

I propose to Deputy Vivion de Valera that at least we should, he and I, combine in the service of truth— objective truth. Is there not a distinction between international debt, as members of the Fianna Fáil Party ordinarily understand that phrase, and the Marshall Aid transaction? Is there not in the Central Bank sterling to meet every penny due in respect of dollar borrowings from the United States of America, and did Ireland not honourably and faithfully perform what she undertook to do, to have dollars, if they were available, but, if they were not, to have sterling or Irish currency, whichever the Americans chose to take?

I have heard that dirty phrase used again and again en passant by spokesmen for Fianna Fáil, nor was the Minister for Finance beneath the dishonesty of using it himself when he wound up these 71 pages yesterday. Listen to this:—

"When Fianna Fáil left office in 1948 this State stood high in credit with the world. It owed no foreign debt. The encumbrances which the preceding Government assumed we shall, however, honour, as Deputy Costello rightly said, to the last dollar. But we shall not add to them. We shall rely on our own people to provide by their industry and thrift the capital necessary to build up the nation. We relied on them before during stringent and terrible days. They did not fail us then, and they will not fail us now."

Foreign debt!

"On the solid basis thus laid, we can build a future worthy of the sacrifices of the past, worthy, too, of the men and women of this generation, the first to be born in freedom, but for that reason the more determined to preserve it. When Fianna Fáil left office in 1948, this State stood high in credit with the world. It owed no foreign debt."

That is the dirty implication, that the inter-Party Government financially committed this country in a way that prejudiced or abridged its sovereign right to settle its own policies in its own way. The last man in Ireland who should speak of owing no foreign debt is the Minister for Finance, who sponsored the legislation in this House to expunge the foreign debt; and a large percentage of the payments under that Act went into the coffers of the Irish Press. Let none of us forget that the last deliverance from foreign debt has as its endearing monument: “Truth in the News.”

An Leas-Cheann Comhairle

That has no bearing at all on this debate.

Mr. Dillon

It is the only foreign debt I know of.

Mr. Hilliard

The Deputy was far away from the raising of it.

Mr. Dillon

By heaven, if it was going to subsidise the Irish Press, I profoundly thank God that I was.

Mr. Carter

The Deputy should write to the Sunday Independent. It would save him a lot of trouble.

Mr. Dillon

The Irish people know damn well where the money went. Do not imagine for a moment that they have forgotten it. It was the first of many seedy transactions. I had sympathy with the Tánaiste to-day. The fluency was gone, the resilience was flagging and the speciousness was unconvincing. He was telling us, going back to this Budget, about sugar, and he said the price of sugar was going up to domestic consumers but coming down to manufacturers: Is it unfair to paraphrase that by saying that he soothes his soul with the thought that those who cannot afford butter will at least get cheaper jam. I asked him then did this apply to our export industries, to chocolate crumb, not to speak of that Fianna Fáil industry, sweetened fat. He said no. He had not made up his mind about that. I wonder what is going to happen to the chocolate crumb factory. Are they going to get the sugar necessary for them to make chocolate crumb and pay the farmer 1/9 a gallon for milk, because if they are not, there is a blue lookout for the boys.

Butter is going to be sold in Ireland hereafter at its economic price. Deputy Tom Walsh, the Minister for Agriculture, says that his costing commission is going to raise the price of creamery milk to 1/8 per gallon, at least. That means that the economic price for butter in Ireland at 1/8 per gallon for milk will be 4/8 per lb., unrationed.

Mr. S. Collins

And unobtainable.

Mr. Dillon

Now, the last time that we produced 700,000 cwt. of butter was in 1950. We bought it all, we paid for it all, and we ate it all, in Ireland. We produced the 700,000 cwt. of butter also in 1935, in the middle of the economic war. That year our people ate 300,000 cwt. and we shipped 400,000 cwt. to Great Britain; the British put down 54/- per cwt. and the Irish Government put down 86/- per cwt.; the British ate the butter—and we got the empty boxes. What is going to happen when the price of butter is 4/6? Do you think our people will be able to afford to eat 700,000 cwt. of it? Is not the purpose of this Budget stated to be to cut down consumption, because people are eating too much? What is going to happen to the butter that this Budget provides our people will not be allowed to eat? Where is it going to go? The economic price of butter manufactured from 1/8 milk is approximately 500/- a cwt. in 56 lb. boxes ex-creamery. The current price for the same butter in New Zealand is 271/- per cwt. f.o.b. a ship at Auckland. Riddle that one out; and when you are laying the soothing unction to your soul, that those of our people who are no longer able to reach on butter will be allowed access to cheap jam, then ask yourself: "What will we do with the butter?" The poor Minister for External Affairs has gone out—to look for alternative markets for it. I wish him luck. As certain as we are on this carpet, we will end up delivering the butter in Spain or Italy or Peru; The Peruvian will be putting down 2/- and we will be putting down 2/6, and the Peruvian will be eating the butter and we will be coming home with the empty boxes. If there is going to be a surplus of butter, I would sooner have let our people eat it than pay the Peruvian to eat it. This Budget says that we must pay the Peruvian to eat it—and like it.

Tea. We are going to take the subsidy off tea. The subsidy on tea was a dirty racket; it is a dirty racket. The tea subsidy can be taken off to-day and as a result the cost of buying tea would not be increased by a farthing. Those who wanted cheap tea could get cheap tea, those who wanted tea at 3/4 could get it at 3/4 and those who wanted tea at 4/4 could get it at 4/4, if the tea trade were taken out of the hands of the racket running it at present—Tea Importers Limited. When I am told that we are going to take tea off the ration but that the only way a tea wholesaler or retailer can get supplies is by going hat in hand to Tea Importers and telling them what he wants and they will buy it for him, I know that the net result is that instead of paying the money into the Exchequer, we will be paying it into the bank account of Tea Importers Limited and those who constitute it. There never was any need for a subsidy on tea; there ought not be a subsidy on tea. If the racket which was established by the Minister for Industry and Commerce, the present Tánaiste, had not been established, the need for this excess cost would never have arisen.

Yet, he has the impudence to tell us to-day that India would be vexed with us if we do not go on buying tea direct from Calcutta. Do you know the way India indicated her love for us and her grateful appreciation of our going to Calcutta? By clapping a large export duty on tea. And when we tried to buy it in Ceylon, she gave the high sign to Ceylon: "Come on, sister, you do the same." Both of them clapped an export duty on tea. The Indian Government and the Ceylonese Government will extract out of the tea consigned to the Irish teapot the last farthing they think the trade will carry.

If India does not like our withdrawing from the Calcutta bulk market when it suits us to do so, so far as I am concerned they can lump it. Divil a-much we got for nothing from India and divil a-much we asked for nothing from India and we do not expect anything for nothing. It makes me physically sick to be told that we would vex the Indians if we should withdraw from the bulk market in Calcutta. Vex them my foot. The fellows in Tea Importers Limited, constitute the nicest little monopolistic racket in this country—and that is saying a mouthful, because there are rackets in part of this country that would paralyse the trust-busting machinery of the Federal Government of the United States. "India would regard it as unfriendly if we stopped buying direct from Calcutta." Do you know, somebody ought to write that up in letters of gold on the facade of the establishment in Upper Mount Street. It would be most edifying for the British Ambassador who lives right opposite. No, I suggest that Tea Importers should register a house flag with the Irish Office of Arms in Dublin Castle and inscribe upon it as the motto: "India would not love us if we did not deal in Calcutta."

Just imagine an Irish Government being able to come into this House and call upon this Legislature to exact remedial measures for the abuse that our people are eating too much. I remember the day when that Treasury view was propounded to me, as duty dictated, in my ministerial capacity. The propounder of that view to me is running still—but in the best of friendship. I do not believe there was any man in Ireland better pleased to be put running like a redshank than that particular public servant whose duty it was to put the Treasury view to me. The Treasury view in this country is that our people are peasants and that they ought to stay peasants. The Treasury view is that if there are any aspirations abroad for our people to rise above the level of peasants, farming on a subsistence basis, they are to be looked upon with suspicion and distrust. The Treasury view is that if radios are coming into this country it is a certain sign that our people are going berserk with radios coming to them and what next will they want.

The Treasury view is: lipstick, powder, nylons and radios—the country is going daft. If the same warriors went out to paint the West End of London red they would be greatly disappointed if they did not see nylons, the lipstick and the face powder and hear the radios. But if they hear the radios or see these things in a house or a cottage in Kerry, Mayo or Donegal they come home to consult the Central Bank as to whether budgetary measures should not be taken to banish nylons and the powder and the lipstick and the radios from rural Ireland. "The people are getting too up in themselves. They will not work hard enough and they will start eating too much."

An Leas-Cheann Comhairle

The Minister is responsible for this Budget statement and not any public official.

Mr. Dillon

I am talking about the Treasury view and about the damn fools who accept it. Denmark accepted that philosophy. Denmark would not let their people eat too much. Denmark rationed butter in order to provide the wherewithal to build up trade with Britain and they shipped butter in far greater quantities to Great Britain than Ireland did. Denmark has this distinction in the realm of pathology as well as commerce. It was in Denmark that was first identified the deficiency disease begotten of a shortage of the butter vitamin. Danish children died while scientists sought to diagnose a complaint until then unrecognised and unknown. It was finally established to be due to the fact that the Danish people were shipping their butter abroad for sterling assets and eating oleo-margarine that had not been fortified with vitamins A or D.

The Danish Government were fortified that that scientific discovery would right the wrong but the poor yokels who constituted the Irish Government did not require instruction from pathologists or biologists instinctively to react against the view that our people were eating too much. The sound basic instinct of the Irish Government avoided the peril into which another Government unwittingly brought their people and from which they were turned back, not by any social consideration but by the emergence of a dietetic danger which threatened the population.

I see that the Minister for Agriculture has come into the House just now. I wonder if he will tell us what he is going to do with the butter manufactured out of 1/8 milk which his Costings Commission has undertaken to arrange.

Mr. Cogan

He will have to replace the 30,000 cows you did away with.

Mr. Davin

The Deputy Minister.

Mr. Dillon

Let us assume that he multiplies the cows and that their abundance grows. What does the Minister propose to do with the butter from 1/8 milk, the retail price of which is 4/6? His colleague, the Minister for Finance, thinks that our people are eating too much and that they should send it abroad. To whom is the Minister going to send it and what does he think they will pay us for it? This budgetary policy to which he has committed himself has all sorts of problems for those who contribute to the legitimate political aspirations of the Taoiseach-to-be. It is going to be a very dear service on those who have taken that shilling effectively to support the power of the future. Now the Tánaiste is a resourceful man.

I move to report progress.

Progress reported. The Committee to sit again later.