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Dáil Éireann díospóireacht -
Tuesday, 8 May 1956

Vol. 157 No. 1

Financial Statement Budget, 1956

1—CURRENT BUDGET, 1955-56

The outturn of last year's Current Budget is shown in Table I of the "Tables in connection with the Financial Statement" which have been circulated to Deputies. In comparing the actual result with our expectations we may ignore Motor Vehicle Duties and the Special Import Levy, since receipts are balanced by equivalent issues to the Road Fund and the Capital Fund, respectively. On this basis, current expenditure totalled £106.9 million against the budgetary estimate of £105.5 million, showing an increase of £1.4 million. This happily was offset as to £1.1 million by an increase in the revenue intake over budgetary expectations, leaving a deficit of £300,000 odd.

Of the increase of £1.4 million in current expenditure, over £1 million was due to increased pay in which the Army, Garda Síochána and Teachers participated as well as Civil Servants.

It will be recalled that I took credit last year for "general overestimation and savings" of £3,000,000 or £3,450,000 in all, counting a specific saving envisaged in flour subsidy. The actual saving on the total provision for non-capital Supply Services was £3,123,000, a gratifyingly close approach to the budgetary estimate.

All things considered, the year's results were not disappointing. This year, however, I must ensure that there will be no deficit, however small. As Deputies will realise from the survey of our economic position which I will give later, borrowing for current purposes is, in our present circumstances, indefensible.

II—CAPITAL BUDGET, 1955-56

Figures of the outturn of the Capital Budget for 1955-56 will be found in Table II of the paper I have already mentioned. It will be observed that total issues for capital purposes financed by the State amounted to £26.71 million as against the budget estimate of £34.07 million. The principal cause of the reduction was that the £4,000,000 originally provided for Exchequer advances to the E.S.B. had not to be issued because the Board successfully financed its capital requirements last year by direct borrowing from the public. The provision for payments on foot of the shipping programme also proved excessive; against the expected £1,500,000 less than £700,000 actually matured, which is one of the reasons why the provision required for Irish Shipping, Limited, in 1956-57 is so heavy. The rate of progress with hospital building was slower —and the receipts from the Hospitals' Sweepstakes greater—than we had expected. Expenditure from the National Development Fund was also below the estimate. By the end of 1955-56 total expenditure from the Fund had exceeded £4,000,000 as against allocations of over £7,000,000. The rate of expenditure from the Fund reflects the nature and diversity of the approved projects, some of which require a good deal of advance planning followed by expenditure spread over a number of years.

Vote expenditure on Housing in 1955-56 and borrowings by local authorities from the Local Loans Fund for Housing and other purposes were somewhat above the level of the previous year. Issues for telephone capital and expenditure on the Land Project and Arterial Drainage were also higher than in 1954-55.

As the financial year advanced the financing of capital expenditure in the public sector became more difficult and more costly. The world-wide rise in interest rates and the severe dislocation experienced in the British capital market had their inevitable effect on our economy. At home the upturn in consumption and decline in savings combined to cause a grave balance of payments problem, the financing of which resulted in a scarcity of capital for development purposes. The problem became increasingly acute as the year drew to a close. The E.S.B.'s first issue of £10,000,000 of stock in October, 1955, was over-subscribed. The smaller Cork Corporation issue in November was also successful. In December, however, the Dublin Corporation issue of £6,000,000 attracted little public support and Government funds were called on to subscribe over £1,000,000 under the underwriting arrangements. The banks had also to take up £3,000,000 of the issue. The results of the Government issue of £20,000,000 of National Savings Bonds in February were also disappointing.

This contraction of investment resources is a direct consequence of the substantial rise in consumption in a period when total production was static. Without peril to its political and economic freedom the community, as I said on the Vote on Account, cannot have at one and the same time both more consumption and more investment than its present output will support. The serious situation which has developed since last summer, and which I hope we are now beginning to surmount, is one which has caused the Government the greatest concern.

Various measures have already been taken to deal with it. The success of those measures depends on the cooperation of the public. Our economic development is at stake. Our hopes of improving our living standards and providing a larger volume of gainful employment depend on an adequate supply of savings to finance capital investment designed to raise national production.

BORROWING, 1955-56.

To finance the Capital Budget, the deficit on current account and other borrowing charges, a net borrowing of £24.53 million had to be incurred last year, after allowing for loan repayments of £2.85 million from local authorities and other borrowers. The sources of this borrowing were as follows:—

£ million

1. Small savings and net investment income of Departmental Funds

5.76

2. National Savings Bonds

18.65

3. Net decrease in cash balances of Exchequer and Funds

0.12

Total

£24.53 ml.

Underwriting subscriptions of over £5,000,000 in respect of National Savings Bonds were financed by sales of sterling securities from Departmental Funds.

So much for last year. Before turning to the budgetary problems presented by the estimates for this year, on capital and on current account, it is necessary to consider briefly the economic and financial framework in which my proposals must be set.

III—ECONOMIC SURVEY

When introducing the Vote on Account in March I reviewed the economic situation and pointed to certain dangerous tendencies which no Government concerned with the nation's economic health could allow to go unchecked. The balance of trade was deteriorating, savings had declined despite increases in money incomes, consumption was outrunning production and it was becoming difficult to raise adequate capital for local and national development. Remedial action could not await the budget and with Government approval I imposed a special levy on certain imports of a less essential nature, the proceeds of which would be used to finance capital expenditure. Hire-purchase transactions were restricted and I announced the introduction of an attractive new issue of Savings Certificates which in fact became available for public subscription last week.

It is much too early to appraise the effect of these measures. I hope that, reinforced by a careful and realistic budget, they will have adequate results. The improvement in the trade returns for March may, perhaps, indicate that the tide has begun to turn. But a persistent and substantial change for the better is needed over this year to provide a sure basis for future prosperity. The high levels of business activity, industrial production and employment are evidence that the economy is fundamentally sound. Our primary objective is to achieve a sustained increase in production and exports so as to ensure that internal expansion is protected and reinforced by a better external balance.

Because of what I said on the Vote on Account my economic survey to-day will be confined to a summary of the main trends, giving more up-to-date information than was possible in March.

BALANCE OF PAYMENTS

The final figures now available for our balance of payments show that we spent abroad last year £35½ million more than we earned. The increase of £30 million in the deficit as compared with 1954 was the result of a substantial rise in imports, accompanied by a decline in exports, with scarcely any change in net invisible receipts. It was not until the second half of the year that the gap widened to any significant extent and, indeed, the first signs of serious strain appeared only towards the end of the year when the expected rise in exports failed to materialise.

An analysis of payments by areas shows a substantial decline in our normal current surplus with Britain. We again made a good showing with the dollar area although the exceptional surplus of $3.7 million earned in 1954 was converted into the moderate deficit of $5.2 million. Our dollar earnings both from merchandise and invisible exports were higher in 1955 but the rise was more than outweighed by increased dollar outlay.

The deficit in the balance of payments in 1955 was financed almost entirely by the realisation of external assets by the commercial banks. This was in contrast with the experience of recent years when our external payments deficits were financed for the most part by an increase in foreign indebtedness. The loss of external assets by the commercial banks in 1955 was roughly equivalent to their total loss during the eight preceding years. The rate of loss of external resources represented by a balance of payments deficit of £35½ million could not be allowed to continue without risk of undermining our economic independence and our prospect of a sustained improvement in living standards.

We can expect no relief from an improvement in the terms of trade in 1956. Even a uniform rise in import and export prices must cause a deterioration in the balance of trade, imports being almost double exports. Last year, for instance, although the terms of trade showed little change, price movements added £4½ million to the trade deficit.

The trade returns for the early months of 1956 did little to allay anxiety about the trend of our external payments. Imports continued to rise in January and February as compared with 1955 while exports were much below the corresponding 1955 levels. Taking the two months together, the adverse balance increased by a further £6 million, imports being £2.6 million higher and exports £3.4 million less. The March returns, however, as I mentioned earlier, showed some improvement. For the first time for over a year, the rising trend in imports was reversed. Imports in March were down by £1.7 million as compared with the previous month and by £4.7 million as compared with March of last year. Much ground, however, has still to be regained if our external accounts this year are to close with a tolerable balance.

PRODUCTION

There was a fall last year in the volume of agricultural output, particularly in that part of output which is represented by exports of meat. The extent of the fall in agricultural output as a whole is estimated provisionally at 2 per cent. The increase in cattle stocks holds out hope that the ground lost will be recovered this year. Looking to the future, output and exports of cattle are likely to rise with the improvement in veterinary services and the reduction in the mortality of young cattle. There is, however, a limit to the increase that can be expected unless the number of cows—which has remained virtually stable for over a century—shows an upward trend.

Industrial production continued to expand in 1955. The preliminary figure for the volume of output in all industries and services covered by the Census of Industrial Production shows a 2½ per cent. rise over 1954. The rate of growth in manufacturing industry, which had been tapering off towards the end of 1954, improved again in 1955 and by the end of the year was running at a level 3.3 per cent. higher than in the December quarter of 1954.

EMPLOYMENT AND UNEMPLOYMENT

The higher industrial output in 1955 was accompanied by a corresponding increase in employment. Employment in manufacturing industries in December reached a record figure of 157,400. This was 1,700 higher than in December, 1954, and 6,300 higher than in December, 1953.

The employment situation in agriculture was not unsatisfactory; the fall of 3,000 recorded in 1955, from 421,000 to 418,000, following a rise of 500 in 1954, contrasts with an average decline of 16,000 per annum for the five years 1948 to 1953.

The total number of persons registered as unemployed in recent weeks is approximately the same as in the corresponding weeks of 1955 and is well below the 1954 level. In 1955 the percentage of the insured population which was unemployed averaged 6.8. This is the lowest percentage recorded in the post-war period.

PRICES AND EARNINGS

Prices generally were higher in 1955. Between December, 1954, and December, 1955, wholesale prices rose by 4.7 per cent. while the index of consumer prices rose by six points or by 4.8 per cent. in the 12 months to mid-February, 1956. Import prices of raw materials, which had been declining from the beginning of 1953 to the middle of 1954, commenced to rise in the third quarter of 1954 and contributed to the rise in living costs. A further factor was the substantial upward adjustment of wages and salaries in the second half of 1955. Average weekly earnings in manufacturing industries at the end of 1955 were higher by 11/- than at the end of 1954, while in relation to purchasing power, the corresponding rise in real terms was 5.7 per cent.

Salary and wage awards in 1955 were for the most part greater than the increase in retail prices but unless there is an increase in productivity this immediate benefit cannot endure. Moreover, if domestic costs continue to rise, the resulting higher prices of our products must hamper the development of new exports and may even threaten established export lines. Recognition is growing of the direct connection between pay increases, not matched by improved productivity, and rising prices. I am glad to say also that the imperative need for stability in our present difficult economic circumstances is becoming more widely accepted.

MONETARY SITUATION

In 1955, for the first time for many years, the deposits within the State of the commercial banks fell. The loss of deposits cannot be attributed to any reduction in the amount of credit made available by the banking system since bank lending within the State in the form of advances and investments increased at a higher rate than in any post-war year. In fact, deposits within the State fell by £13.2 million although advances and investments within the State rose by £18.2 million. These figures are closely related to the rise in consumption and the overspending on less essential imports.

NATIONAL INCOME

Complete estimates of national income and expenditure for 1955 have not yet been assembled but provisional figures are available for some of the more important components.

National income in money terms is estimated to have increased from £448 million in 1954 to about £460 million in 1955. In contrast, however, with an annual rate of growth in real terms of about 2 per cent. in each of the two preceding years, there does not appear to have been any increase in the volume of national production in 1955. The rise in national income was altogether a reflection of higher wage and other income levels—a purely monetary affair. In other words, there was no increase in production to set against the increase in money incomes. The full impact on the economy of the increases in remuneration will not be felt until this year as most of the awards were granted in the second half of 1955. Personal consumption at current prices increased by about 10 per cent. last year. This increase, with its effect on savings and on the balance of payments, was one of the dominant factors in the recent economic situation. While part of the increased expenditure is accounted for by price movements, the volume of personal consumption probably rose by as much as 7 per cent. in a year in which over-all production did not rise at all.

CAPITAL FORMATION

Excluding depreciation, net domestic capital formation in 1955 is estimated at £63 million or £9 million more than in 1954. The increase is, however, entirely accounted for by the change in the volume of stocks over the two years. As far as can be judged, there was no increase either in home-produced fixed capital or in imported capital goods ready for use. As net domestic capital formation was financed to the extent of almost £36 million by a draw on external capital resources, the estimated net increase in national capital in 1955 was only £27 million or 5 per cent. of gross national product at market prices.

SAVINGS

The increase in net national capital depends, of course, on what the community saves. Total savings in 1955 are provisionally estimated to have amounted to only £27 million. This was £21 million less than in 1954 and £30 million less than in 1953. The fall appears to have been in personal savings which are believed to have been only about one-half of the 1954 figure of £37 million. The reduction in savings last year is all the more serious because our rate of saving in relation to national income is not high at the best of times. I have often stressed during the past 18 months that, if we are to have a high rate of national development and at the same time have a better balance in our external payments, we must greatly increase our savings. This is our basic prescription for economic security and progress.

CONCLUSION

Our less developed economy is particularly exposed to the influence of economic variations and trends in the outside world. A few years ago it looked as if inflation had at last been conquered but, unfortunately, in almost every country there has been a further eruption in 1955, with serious effect on world prices. The countermeasures taken in individual countries have not yet been fully effective. World prices are beyond our control but that does not make them any less of a real problem for us. We must face the fact that every rise in world prices accentuates our trade deficit and threatens our existing standard of living. We can repel this threat only by producing more, particularly for export, and by doing so more efficiently.

In the light of my survey of our economic position to-day's budget must, above all, be a realistic budget. We must be sure of making ends meet on current account and our capital expenditure must be measured with prudence until savings have caught up and closed the inflationary gap. To give any further stimulus to inflation in this budget would make nonsense of our conclusions and precepts by strengthening the very forces which are upsetting the economy. Rather must we try to moderate those forces and, within the unfortunately narrow scope afforded by the need for making ends meet, do something more to encourage production and saving. These are the principles on which I have based this budget.

IV—CAPITAL BUDGET, 1956-57

Before turning to the Current Budget for 1956-57, I shall outline the prospect regarding capital expenditure this year. The estimates in Table II, totalling £27.64 million, cover the following services:—

£ million

Housing

7.96

Sanitary services

1.10

Hospitals

1.95

Agricultural development

4.63

Turf development

1.00

Telephones

1.50

Schools and other State buildings

1.82

Shipping and other transport

5.10

Afforestation

0.98

Fisheries

0.07

Industrial Credit Company, Limited

0.25

Supplementary Unemployment Fund

0.03

National Development Fund (expenditure)

1.25

Total

£27.64 ml.

On the Vote on Account I made the comment that it would be shortsighted to seek a way out of our present difficulties by cutting down such investment as will yield early returns in terms of increased output of saleable goods. I pointed out, however, that capital is not only scarce but abnormally dear at present and, having referred to the failure of the last National Loan to attract adequate subscriptions, I said:

"This makes it unhappily only too clear that, in the absence of a marked change in the savings trend, it would not be possible to meet all our desirable capital requirements without recourse to methods which would only increase the existing inflationary pressure."

I went on to say:

"In the screening process to which in the coming weeks I must subject the capital needs of the State and of the other bodies which depend on the State for support in raising their capital requirements, I must assume that the public will increase their savings to a significant degree. If this assumption were not made, very drastic reductions would have to be made in public capital outlay at great cost in terms of employment and of future prospects of improved living standards."

This, then, is the basis on which, in consultation with my colleagues in the Government, I have examined the estimates of capital expenditure not only by the State itself but by the E.S.B., Dublin and Cork Corporations and C.I.E. in the current year. Account must obviously be taken of the requirements of all these bodies when assessing the draw on the pool of national savings.

When the estimates of public capital outlay in the present year had been assembled, they showed that the outlay proposed was considerably above the level of recent years. It was obvious that, even on the most optimistic assumptions about a revival of savings, the aggregate demand for capital for public purposes exceeded the prospective supply. It was, therefore, inevitable that each estimate should be re-examined and that consideration should be given to the limit which our resources must set for public capital expenditure as a whole.

In this context the Government have been careful to preserve an equitable balance between social and economic considerations. In regard to housing, in particular, while the needs of local authorities outside Dublin and Cork are tapering off, having already been largely satisfied, it is recognised that a grave problem still exists in our two principal cities. The most sympathetic consideration has, therefore, been given to the capital needs of Dublin and Cork Corporations for housing, both for slum clearance and for house purchase loans. It was in pursuance of this that the Lord Mayor of Dublin was recently informed by the Taoiseach that approval will be granted for aggregate borrowing of £4,000,000 by Dublin Corporation in the current financial year and that the Government undertook to come to the aid of the Corporation should they not be able to raise independently £3,000,000 of capital in addition to the £1,000,000 already promised from the Local Loans Fund.

The estimates of Voted Capital Services have been re-examined and arrangements are being made to effect an economy of £600,000, reducing the requirement to £11,000,000.

As regards "below-the-line" issues and other items of capital expenditure, there has also been a realistic screening of requirements, the general aim being to eliminate overestimation and to adjust programmes to an up-to-date assessment of our needs.

The result of the general review is that the over-all capital requirements of the State and other public bodies in 1956-57 have been settled at a gross figure of £43,500,000, towards which there will be available over £3,000,000 of capital repayments accruing to the Exchequer and the Local Loans Fund, £3,000,000 from the proceeds of the Special Import Levy and a further £500,000 which I propose to transfer to capital purposes from the Road Fund. I am enabled to make this transfer from the Road Fund by the buoyancy of the revenue from Motor Vehicle Duties, which shows a surplus of £250,000 over allocations to road authorities. The other £250,000 must come from a slight reduction in the rate of expenditure on main road improvements so that capital development of a more urgent and essential nature may be proceeded with.

While public capital outlay this year will be at approximately the same level as last year, it will be financed in a way which will impose less strain on our balance of payments. As I have indicated above, a significant part of the finance will be obtained, not from borrowing or sales of sterling securities, but out of the proceeds of the Special Import Levy and by transfer from the Road Fund. The net borrowing requirement this year on foot of the capital programmes of the State, local authorities, the E.S.B. and C.I.E. will amount to about £37,000,000, as compared with £41,000,000 last year and an average of £36,000,000 in the three previous years. Provided personal savings recover to the 1954 level we can carry through a programme of national development of this magnitude without undue strain on our resources and with great benefit to our economic and social welfare.

V—CURRENT BUDGET, 1956-57

ESTIMATES OF REVENUE AND EXPENDITURE

Finally, I come to the estimates of current revenue and expenditure for the present year. These were presented to the Dáil a few days ago in the form of a White Paper and Deputies have had an opportunity of studying the picture they disclose. It is not a bright one. The estimated intake of revenue at existing rates of taxation is far from sufficient to meet current expenditure on Central Fund and Supply Services. Indeed, the revenue estimate at £113.49 million falls short of the current expenditure figure of £120.62 million by £7.13 million.

Ordinary tax revenue, apart from Motor Vehicle Duties, is estimated at £89,175,000 which compares with an actual receipt of £89,126,000 last year. It might be thought that tax revenue should be expected to display a greater buoyancy. Last year, however, we had a windfall receipt of the order of £500,000 in Death Duties and the revenue estimates for this year have had to take account also of the deterrent effect on dutiable imports of the Special Import Levy. I hope that, as a result not only of the levy but of a change in the attitude of the public towards less essential spending and of an increase in production, the import excess will be narrowed and our balance of trade improved. These are the immediate and primary objectives of policy and completely outweigh any revenue considerations.

POST OFFICE REVENUE

The estimate of non-tax revenue shows an increase of £1,145,000 over last year's receipt. This increase is due partly to the natural growth in the return from State assets according as our capital programme advances but mainly to an expansion of Post Office revenue. Last year the Post Office brought in £6,891,000, but even this large sum fell short of the out goings on postal and allied services, which have been considerably increased by higher pay and other expenses. In fact, the commercial accounts of the Post Office for last year are expected to show a deficit of roughly £500,000. It has always been a fundamental principle that the Department of Posts and Telegraphs should run its services on commercial lines; in other words, that it should not operate at a loss. Indeed, it would not be inappropriate that the Department should make some contribution by way of profit to general Exchequer revenue, though I am afraid I cannot hope for that this year. The minimum requirement, however, which must be observed is that the Post Office should pay its way. Towards rectifying the existing deficit, therefore, the responsible Minister intends to raise certain charges, the increased revenue from which has been allowed for in the White Paper figures. I may say that I understand it is not intended to increase the existing three-penny letter rate.

CAUSES OF INCREASED EXPENDITURE

As regards expenditure which is chargeable against ordinary revenue, that is, revenue other than the proceeds of Motor Vehicle Duties, the position is that this year's estimate of £114,871,000 exceeds last year's actual expenditure of £106,855,000 by just over £8,000,000. The increase arises under four main heads. The extra cost this year of the various pay increases awarded last year will be over £2,500,000. These increases cover not only the Civil Service, as ordinarily understood, but the employees of the Post Office, the Board of Works, the Forestry Division, the Land Commission and, in addition, the Army, the Garda Síochána and Teachers. The extra charge arises because this Government have met promptly and fully their obligations under the established Conciliation and Arbitration machinery.

The second large item of additional cost is a sum, again of over £2,500,000, for service of debt. I have mentioned earlier that there is an offset to this— amounting to £500,000—in the shape of additional revenue from State advances and investments. Included in this year's charge is the cost of servicing the National Loan issued in February last. This year, also, we begin to repay the principal of our dollar borrowings from the Government of the United States.

The provision of better health services entails additional cost to the Exchequer of almost £1,250,000, while the grant towards the relief of rates on agricultural land is £340,000 above last year's expenditure. Amongst the variety of items which account for the balance of the total increase of £8,000,000 I might mention the additional grants of £135,000 for Universities and Colleges.

The increases in debt charges, remuneration, health services, etc., are commitments which the Government must discharge in full and in a manner consistent with the present state of our economy. It must be understood that increased taxation is the inevitable and direct consequence of increased costs.

ALLOWANCE FOR SUPPLEMENTARY ESTIMATES

The difference between the current revenue and expenditure estimates is, as I have said, £7.13 million. Against expenditure now unforeseen I must make the usual provision of £750,000. At the same time, I would stress the Government's determination to avoid adding to commitments this year except in two respects, for which specific and complete provision is being made in this budget.

PUBLIC SERVICE PENSIONS

Frequent and insistent representations have been made to me and to other members of the Government about the position of superannuated members of the State and local authority services. In 1950, under the Pensions (Increase) Act of that year, pensions were increased. Since then there have been further appreciable advances in living costs which have been alleviated in the case of serving personnel.

Despite our straitened financial position the Government have decided to concede exceptionally a measure of relief weighted in favour of the most hard-hit of the pensioners. The cost of doing anything for pensioners, even in a modest way, is formidable because of their numbers. Provision is, nevertheless, being made in this budget for a scale of increases, on the model of the 1950 Act, graduated according to the amount of the pension. Details of the increases have not yet been worked out fully but I may say that what is contemplated is a maximum increase of 15 per cent. on the lowest pensions, as they stand, tapering by stages down to an increase of 6 per cent. for pensioners of £450 a year and over, who, incidentally, got no benefit from the 1950 Act. These increases will apply broadly to persons in the classes named in the 1950 Act and in the Defence Forces Pension Schemes who retired prior to 1st November, 1952.

I estimate the cost to the Exchequer at £120,000 in 1956-57 and at £180,000 in a full year. Legislation to give effect to this concession is being prepared.

SOCIAL INSURANCE BENEFITS

The Government have also considered those rates of benefit which are paid from the Social Insurance Fund. That fund, as the House is aware, has always been based on the insurance principle of contributions from the employer, the employee and the State. The benefits payable from the fund were determined as far back as October, 1949, since when their value in real terms has obviously declined. The Government have decided that these rates of benefit should be increased. Legislation to give effect to this decision will shortly be introduced by the Minister for Social Welfare. Bearing in mind that such legislation and its implementation will take some little time and that the contribution of the State towards the extra cost will be one-third, I must set aside this year £300,000 under this heading.

ALLOWANCE FOR OVER-ESTIMATION

The result of these adjustments is that the gap between revenue and expenditure has become £8.3 million. Some writing-down of this figure is, however, justified by our experience for some years past which shows that the provision made for expenditure is usually excessive, however carefully the original estimates are screened. Last year, as I mentioned earlier, the actual saving through overestimation came to £3,123,000. It would not be unreasonable to count this year on £3,000,000, leaving the deficit to be covered by budgetary measures at £5.3 million.

ADMINISTRATIVE ECONOMIES

To reinforce the prospect of obtaining a saving of this order, I intend vigorously to press on with the revision of Civil Service administrative methods so as to check the rising cost of government. Measures to that end are being pursued already. They must now be intensified and accelerated. I propose, therefore, to set up, under my immediate direction, a committee of the heads of the various Departments whose function it will be to push forward the introduction of improved methods in their own Departments and throughout the public service generally. I would add that, where involved or cumbersome techniques derive from statute, proposals will be formulated for amending legislation specifically designed to remove obstacles to the introduction of speedier, less costly and more modern administrative methods. By taking advantage of the normal wastage that arises from retirements, etc., such reforms can be effected and significant economies achieved, without discharging any serving official. I am authorised to make it clear that every member of the Government is determined to reduce the cost of administration in this way.

METHOD OF MEETING DEFICIT

I now pass to the measures which must be taken to eliminate the deficit of £5.3 million on current account. I may say at once that the Government do not propose that any part of this deficit should be met by a reduction in food subsidies. Indeed, because of the decision taken by the Government on its formation in June, 1954, the butter subsidy this year is almost £2 million higher than it was in 1953-54. The provisions for that subsidy and the subsidy on bread and flour are being maintained; we are not going to relieve even a serious budgetary problem by adding deliberately to the cost of essential foodstuffs when the maintenance of stability is of such critical importance. The principle I am following in this budget is to levy the taxation which is inevitable on less essential forms of expenditure, particularly on imports. I am taxing expenditure rather than income and I am hoping in this way not only to maintain production but to stimulate economy in regard to imports and a greater volume of personal saving. Any progress made in either of these directions will be a direct and immediate contribution towards putting our economy on a stronger and more stable basis.

It will come, therefore, as no surprise that I intend the brunt of the task of making ends meet to fall on tobacco and petrol, imports of which in 1955 amounted to close on £8.4 million.

TOBACCO

I propose to raise the main rate of duty applicable to leaf tobacco to £2 2s. 9d. per lb., an increase of 7s. 11d. Allowing a margin for the trade, this will have the effect of increasing the retail price of 20 standard cigarettes by 5d. The increased duty adds about 6d. to the selling price of an ounce of pipe tobacco but in the case of the hard-pressed varieties I propose to limit the average advance to 4d. by increasing the existing rebate allowed on such tobacco at a cost of £200,000 this year.

I propose also to levy a special excise duty of 7s. 11d. per lb., i.e., the amount of the increase in the customs duty, on all duty-paid stocks of unmanufactured, and manufactured tobacco held by the manufacturers at 5 p.m. this evening.

The other rates of tobacco duty will be raised in accordance with the increase in the main customs rate. Allowing for the cost of the increased rebate, I expect these measures to yield £2,955,000 this year.

PETROL

Consumption of petrol has been rising steadily over the years and reached the figure of £84,750,000 gallons for the year 1955-56 compared with 80,380,000 gallons in 1954-55 and 76,730,000 gallons in 1953-54. The duty was raised by 5d. in 1948, by 2d. in 1951 and by 5½d. in 1952. These increases seem to have in no way hindered the increasing use of motor transport and it will be conceded that much of that use is for less essential purposes. I propose to raise the customs duty from 1/9½d. to 2/3¼d. a gallon, that is, by 5¾d. a gallon, with a complementary increase in the excise duty. This will probably mean an increase of 6d. a gallon in the price of standard petrol. Petrol purchased for and used in agricultural tractors and farm engines is entitled to a repayment of 8d. per gallon from the existing duty. The rate of repayment will be raised by the amount of the increase in duty so that in effect petrol used for these purposes will not bear the increase in duty. The cost of this concession will be £20,000 this year leaving the net additional yield at £1,330,000.

HYDROCARBON OILS OTHER THAN PETROL

Side by side with the petrol duty there is a duty on the other oils included in the hydrocarbon group. Through the operation of a rebate pro vision, however, the latter duty becomes effective only where the one are used for combustion in road vehicles. In practice, only a small fraction of the oils is so used and the great bulk is free from duty. I do not now propose that the oils used as road fuel—mainly in omnibuses and heavy lorries—should bear any new impost. I am, however, forced to consider the oils which hitherto have had the benefit of a rebate of the full duty. They include kerosene, fuel oils and lubricating oils and comprise a substantial and rising item in our imports. To mark the need for economy in their use, and thus to restrain imports, I propose that these oils should in future bear an effective duty of 1d. a gallon. This result will be achieved by a variation in the existing rebate, with effect from the 11th instant. I am making an exception in the case of tractor vaporising oil which will continue to enjoy full immunity from duty.

The increased yield from the duty this year, allowing £45,000 for the exemption of tractor vaporising oil, will be £465,000.

MATCHES

The duty on matches has been twice reduced since the War to enable the retail price to be kept at 1½d. a box despite rising costs of production. I have come to the conclusion that in present circumstances this commodity could bear a modest increase and I propose to raise the duty by 4/6d. a gross. Allowing a margin for the trade, this will bring the price of the ordinary box of matches to 2d. I expect to get £170,000 from the increase in the current year.

TABLE WATERS

The main rate of duty on table waters has remained unaltered since its introduction 40 years ago at the low figure of 4d. a gallon. The quantity consumed has risen from around 1,650,000 gallons in 1939 to about 5,750,000 gallons at present. Considering the duty increases which other commodities have had to bear since 1939, it will scarcely be thought unreasonable to ask consumers to contribute a little more to the Exchequer. I propose, therefore, to raise the excise duty to a flat 1s. a gallon and the customs rate to 1s. 4d. The additional yield is estimated at £150,000 this year.

BETTING

It will be generally agreed that betting and gambling are high on the list of objects of non-essential spending, the curtailment of which will not affect production or employment but should help towards greater saving. Accordingly, I propose

(a) to increase the rate of the existing excise duty on bets made in bookmaking offices from 7½ per cent. to 10 per cent.;

(b) to collect from the Racing Board a stamp duty of 5 per cent. of the aggregate of sums staked by means of totalisators operated by the Board; and

(c) to collect from the Racing Board a stamp duty of 2½ per cent. of the aggregate of bets made with bookmakers on race-courses.

These measures will have effect in respect of bets made on or after the 1st July next. If the Racing Board so desire they will be free to meet their liability to stamp duty by increasing their current levy in the case of course bets and will be authorised to retain a larger share of sums staked by means of totalisators.

I propose also to attach excise duties to the gaming licences to be issued under the Gaming and Lotteries Act, 1956. The duties will range from £10 for a quarterly licence to £40 in the case of an annual licence.

I expect these measures to produce £290,000 this year.

ENTERTAINMENTS DUTY

In view of our present financial difficulties, I propose to restore the dance tax which operated up to 1952. The rates will be the same as before with the exception that I have introduced into the scale a measure of flexibility which past experience showed to be necessary. Under general entertainments duty law, dances held three miles or more from towns having populations exceeding 1,000 will be free of tax. Under the same law dances in towns of 1,000 to 2,000 would be entitled to a repayment of half of the duty paid. This latter concession would, however, be difficult to administer and accordingly I am introducing in its stead, for dances in those towns, a separate scale of duty producing approximately the same effect. With the smaller towns and rural areas excluded I do not visualise any great administrative difficulty in the collection of this tax.

The duties will operate from the 1st August next and I estimate their yield this year at £100,000.

NET YIELD OF ADDITIONAL TAXES

From the taxes I have mentioned, the net yield this year is estimated at £5,460,000, as compared with the deficit of £5,300,000. I have arranged that it should be rather more than is needed to bridge the gap because, as I indicated earlier, I wish to do something in this budget to encourage production and saving. I am conscious that direct taxation, that is, the taxation of incomes and profits, has a more deterrent effect on enterprise and saving than taxes on personal spending of a semi-luxury character. I have concentrated on taxes of the latter kind in order to meet the budgetary deficit. With the margin of revenue available I propose now to afford, by way of relief from direct taxation, some stimulus to expansion of output and to greater personal and corporate saving.

INDUSTRIAL TAXATION

In the budget of 1953 my predecessor announced the institution of a Committee to examine certain aspects of industrial taxation. That Committee concluded its labours last month and the report was presented to me on the 19th April, 1956. I should like to take this opportunity of extending thanks and appreciation to the Chairman and Members of the Committee who gave so much valuable time to this arduous task. I have no doubt that their report will prove extremely helpful to all in considering this complex problem.

Needless to say, since I received this report such a short while ago, I have not yet had the opportunity fully to study it and to consider its implications. The report is being printed and I hope will be available to the members of the Oireachtas and to the public early next month. There is, however, one proposal on which the Committee reports favourably and which I have myself always considered particularly apposite to our circumstances. I propose, accordingly, to include in the Finance Bill a section granting a 20 per cent. initial allowance for wear and tear on machinery or plant (exclusive of vehicles) acquired on or after 6th April, 1956, for use in a trade. I hope that this will act as an incentive to those engaged in industry to modernise their plant and so increase efficient production, thus contributing in some degree towards the solution of the problems to which I have earlier referred. This proposal will not affect the Exchequer in the current year because income tax assessments are normally based on the preceding year, but it will cost next year about £200,000.

I hope that as soon as the report is available everyone interested in the vital problem of industrial efficiency will study it carefully. Detailed official examination of the report will, meanwhile, be proceeding but will necessarily take some time. I said earlier this year and I repeat now that when that examination is completed I shall be prepared to consider a more general review of our code of direct taxation. It would obviously not be feasible or proper to tackle that until we have first considered in detail the valuable results of the lengthy study that was given to a particular aspect of the problem by the recent Committee.

I should also refer here to two other proposals designed to give a fresh impetus to investment by our citizens in Irish industrial development. Section 7 of the Finance Act, 1932, provided a 20 per cent. remission from income tax for certain public issues floated for the establishment or extension of industries. That section did not grant this benefit to "rights" or bonus issues following the original issue. The effect has been to subdivide certain Irish issues in a way that has made them less marketable, a disadvantage on which the Industrial Taxation Committee has also commented. I propose to remedy this defect by providing that "rights" or bonus issues, to the extent that they relate to shares with the 20 per cent. relief, may themselves qualify for that relief, thereby permitting the amalgamation of these issues so as to increase their marketability.

ESTATE DUTY

I intend also to grant a relief from Estate Duty for new public issues made for the promotion of Irish industry analogous to the income tax relief to which I have just referred. Broadly, my idea is that one-third of the value of any stock, shares or securities issued after the passing of this year's Finance Act and coming within the ambit of the new relief will, in the case of an individual dying domiciled in Ireland, be excluded from account in the assessment of Estate Duty.

SAVINGS INCENTIVE AND OTHER INCOME TAX RELIEFS

As an incentive to personal saving I propose to exempt from income tax the first £25 of the total interest otherwise assessable upon an individual taxpayer, arising from deposits with the Post Office Savings Bank, the Trustee Savings Banks, or the commercial banks. The estimated cost to the Exchequer of this exemption will be £50,000 in the current year.

I am linking with this concession some relief from income tax for married couples and for those who have to support dependent relatives. I propose an increased allowance of £10 in each case. The cost will be £106,000 this year and, in a full year, £287,000.

Last year I raised the tax free allowance for each child from £85 to £100. There is an anomaly in that the allowance is available to a taxpayer for the year in which his child is born whereas if he adopts a child in the year during which the adopted child was born, he gets no relief for that year. I propose to correct this anomaly.

Having granted these reliefs I emerge with a balance on the Current Budget. There are, however, some other changes in tax law, not of significance in my budgetary calculations, to which I wish to refer before I conclude.

OTHER CHANGES IN TAX LAW

Section 12 of the Finance Act, 1954, and Section 5 of the Finance Act, 1955, secured that interest on certain stocks issued by the E.S.B., by C.I.E. or by a local authority might be paid without deduction of income tax. To facilitate external subscribers to such stocks, I propose to provide that neither the capital nor the interest shall be liable to any taxation so long as it is shown that the stocks are in the beneficial ownership of persons who are neither domiciled nor ordinarily resident in the State; and also, that the interest shall not be liable to income tax so long as it is shown that the stocks are in the beneficial ownership of persons who, wherever their domicile, are not ordinarily resident here. This will bring these stocks completely into line with National Loans.

In 1947 a specially high rate of Stamp Duty—25 per cent.—was imposed on certain transfers of property to persons other than Irish nationals and those then resident here. It was designed specifically to meet the circumstances of that time and, as my predecessor then made clear, was to be purely temporary. The yield from the duty has shrunk to almost nothing and the circumstances in which it was imposed no longer exist. On the contrary, our anxiety now is to induce foreign industrialists to build factories here so as to increase employment and enlarge our export potential. When, for instance, we require skilled technicians to operate new processes and teach them to our own people, they should not have to bear this heavy impost. I propose, therefore, that this duty will no longer apply to industrial sites or private dwelling-houses as distinct from agricultural land.

I propose to continue for a further three years the exemption from Corporation Profits Tax which has hitherto been granted to certain concerns, including public utility companies.

There is a provision in existing law whereby the relief allowable for income tax purposes to a person in respect of a life insurance premium is restricted by reference to 7 per cent. of the actual capital sum payable on death. This limitation may impose hardship when it applies to a person whose health is impaired and whose annual premium, by reason of that circumstance, exceeds 7 per cent. of the capital sum payable. I propose to remove this hardship by relaxing the restriction in such cases.

CONCLUSION

The economic and financial problems with which we are faced this year arise partly because we do not live in an isolated economy and partly from increased domestic costs. In the light of these rising costs the estimates of expenditure have been cut to the minimum consistent with the provision of essential services, the maintenance of employment and the development of our resources.

Our economic conditions demand, first, a sufficient degree of order and stability to enable us to continue uninterruptedly our efforts to raise the standard of living of all our people; second, the setting aside by the community, in the form of savings, of sufficient resources to sustain the national development on which our hopes of higher standards are based, even though this may involve some immediate sacrifice; and, third, a determined and cooperative effort by all, both employers and employees, in agriculture, industry and other forms of production to increase the national output. I know our people do not desire that national development should be slowed down. The drift towards less essential spending is, however, directly limiting the resources available for that development. If it were to proceed unchecked it would frustrate our hopes for the future.

In raising the additional taxation that increased costs have made inevitable my aim has been to place the stress where it will least affect production and employment while, at the same time, influencing a return to a saving and spending pattern more in accord with our national objectives.

I do not, of course, suggest that budgetary measures are all-powerful. On the contrary, the decisions of individuals are more important in their economic effect than any financial measures of the Government.

It is, however, the Government's responsibility to do its part to secure the achievement of the national economic objectives. This Government will not shirk that responsibility and this budget is built on that principle. It is not a popular budget in the ordinary sense of that term but I do claim that it is a realistic budget designed to serve the long-term interests of our people. When those interests are fully appreciated, I am confident the Government will get the cooperation of all in the effort to secure a permanent and progressive increase in our standard of living.

At this stage it is usual to have a short statement from the Leader of the Opposition or his representative.

Mr. Lemass

The Budget which the Minister for Finance has just announced will, I think, come as a great shock and a great disappointment to the people of this country. The heavy increases in taxation which are to be imposed will provide the shock; the disappointment will arise from the evidence that this Government appears to have no conception of policy or plan for dealing with the very serious national problems which, in their incompetence, they have allowed to develop. Ministers have been trying for some weeks past to condition the public minds to the acceptance of increased taxation. They know they failed. They failed because for years previously these same individuals had been drilling into the minds of the Irish people that taxation here was unnecessarily high and that they could effect a reduction of it. There is not a Deputy sitting opposite who does not owe his seat in this House to repeated pledges to his constituents that he would be able to reduce the cost of Government and reduce taxation. What a pack of "phoneys" you have proven yourselves to be!

Let us take the record of this Government to date. When they came into office in 1954 they took over the last Budget of the previous Fianna Fáil Government—the Budget presented to this House before the election of 1954 by Deputy MacEntee. That Budget estimated the cost of non-capital supply services at £88,737,000. To-day the Coalition Minister for Finance estimates the cost of these services at £97,520,000—an increase on that side of the Budget of £8,784,000. For the Central Fund Services, the bill has gone up by £4,365,000. The total increase effected in the cost of Government services under this administration in two years is, therefore, over £13,000,000. Do Deputies now remember the broadcast statement of the Fine Gael financial expert, Deputy McGilligan, when he went to Radio Eireann a few days before the polling in 1954 and said that any Minister for Finance who knew his job would be able to reduce the cost of Government by not less than £10,000,000 per year and that he would not despair of reducing it by more than that? How many votes did that statement get you in the general election? Did you think then that you would see the day when you would sit behind a Minister for Finance applauding the imposition of new taxes?

What is this country getting for that £13,000,000 by which you have increased the cost of Government administration? Deduct the Central Fund services if you will—the higher charge for interest on the public debt; deduct the £700,000 by which the Estimate for Social Welfare exceeds the Estimate for 1954. There is nothing to be deducted in respect of food subsidies. The provision for these, including butter, is no higher this year than it was in 1954. That leaves £8,000,000 to be accounted for. What happened to it? Where is it gone? In waste and extravagance. That is what the country is paying for incompetent Government. "£10,000,000 a year could be saved by any Minister for Finance who knew his job"—but this Minister for Finance and this Government have added £8,000,000 to administrative expenses. That is what the people have got to pay because of their credulity in listening to the glowing election promises of these Ministers when they were seeking their votes.

The Minister for Finance is going to establish a commission to review administration methods in the Civil Service. He does not hope to succeed. Look at the Book of Estimates which he has presented. He contemplates that to do the same administrative work this year as was done last year will require 300 more civil servants, not counting Garda, or Army, or post office or teachers—300 more administrative and clerical officers to do this year the same work as was done last year. There has been no expansion in the public services worth talking about; £8,000,000 has gone in waste.

It was not merely in the election campaign that all these promises of reduced taxes were held out. Some few months ago the Taoiseach, on his Estimate, talked about the prospect of lower taxation without any diminution in Government services; indeed, he even held out a prospect of lower taxation and extended services at the same time. Did he know then where his Government was going? Did he know what was happening in the various Departments? Did he know how costs were rising because of incompetence, because there are men in charge of Government Departments who have no business experience and who do not know how to ensure that the money provided for the various Departments by the taxpayers is properly spent?

What did the people expect to hear in the statement from the Minister for Finance to-day? They expected to hear some definite proposals intended to bring about that increase in production and exports which this country needs to survive. What proposals have we got? A few finicky little measures which will cost the Exchequer nothing; an initial allowance for wear and tear on machinery that represents no increase in the allowance but merely an advance of the depreciation provision, and which costs the Exchequer nothing at any time; a modification of the provisions of Section 7 of the 1932 Finance Act, which does not matter. We devised that arrangement as a means to induce people to invest in Irish industry. It did not succeed. To the knowledge of many Deputies here, there are shareholders in Irish industry to-day who do not even apply for the allowance; and, if they wanted it, they would have to go through all this elaborate procedure of making an individual application to the Revenue Commissioners. What relevancy have these proposals to the national need, to the gap of £35,000,000 in our balance of payments, to the pulling down of the external reserves of the banks, forcing the present credit squeeze, a credit squeeze which is promoting widespread unemployment in many directions, and which is likely to become more acute during the year?

Have the Government any sense of responsibility? Have they any knowledge of the tasks that are facing them? Did it occur to them that this Budget deficit of theirs should be rectified by reducing the cost of Government? At one time they said that was possible. At one time they professed to believe that that was such an easy task that they had no difficulty in putting a figure upon the reduction that they could bring about. Can they now stop it rising? What is the meaning of all this nonsense that the Minister for Finance is talking— the effect of increased costs upon the national economy—when Government costs are going up far more rapidly than any other? Is there any sense in this exhortation to our people to avoid increases in cost which have an inflationary effect when the Government will not set a lead?

Can the Minister for Finance find in all the industrial activities carried on in this country, in all the business firms which are supposed to listen to his exhortation, any single one of them in which costs have risen as much as they have risen in the Government service? Does he not think that example is much better than precept and that he should begin his exhortation by announcing what he is going to do to bring down the costs of Government or to stop them rising?

We need savings. One of the main achievements of the Government to date has been the falling-off in the level of savings. The Minister for Finance is hoping, by various devices, to get savings back to the 1954 level. But what is there in this Budget designed to help to bring about that situation? Does the Minister for Finance think that he can encourage private people to save when he will not try to save himself? All this parade of new taxes, dearer matches, dearer mineral waters for the children——

Deputy Flanagan, the Parliamentary Secretary, is laughing now, but he is the culprit.

Mr. Lemass

Is this a joke to the Deputies opposite?

It is very laughable to the Parliamentary Secretary.

Mr. Lemass

Will that be their answer to the people who sent them here? Will that be their answer to the people they misled into believing they could reduce costs, the people who sent them here for that purpose? Will their answer be to laugh at them because they were such fools as to believe them? These increases in revenue coming from these additional imposts are very small in relation to the fantastic promises that the Government made. If the Government could save, not the £10,000,000 the Deputies opposite talked about but 10 per cent. of that, none of these higher taxes would be necessary.

These higher taxes are being imposed because of the Government's inability to prevent the cost of administration going up, their incapacity to devise any method of getting the cost of Government down. In 1953, the Fianna Fáil Government, of which I was a member, took a decision that taxation in this country had reached the danger limit. We announced that we had made up our minds on that fact and that, so far as we were concerned, there would be no increase in tax rates above the 1953 level. We made it clear that, if any Budget difficulty arose, that difficulty would be met by a reduction of expenditure and not by increasing the burdens on the taxpayer.

Tell us about the food subsidies.

Mr. Lemass

Can we, even now, get a promise that this is the last impost? We cannot. This is the second Budget this year. We will have a third. In last March the Minister came in here with a series of proposals designed to increase the amount that the Irish taxpayers will pay this year by £3,000,000. He comes in now in May with proposals to increase the levy on them still further by £5,500,000; and he tells us that the Minister for Posts and Telegraphs will bring in another Budget in a few weeks' time to raise another £500,000. Will that be the last Budget this year?

Will the Government make up their minds now that Government expenditure cannot go higher than they have let it go to date? Can they give the people a promise that there is any prospect of stability now? What is the use of all these exhortations to save unless the people can be assured that the value of money will be maintained? Only a very foolish man will save money now if he believes that this time 12 months that money will buy less in goods than it will buy to-day. Will the Government not realise that their responsibility in relation to prices is a definite one?

I am not talking now about their election promises. In their election campaign they promised to bring down the cost of living in every direction. Will they at least promise now to make some effort to stop the cost of living from going up still further? It is now the common theme of Ministers that the Government is powerless to control the upward movement of prices. Do they not realise that, unless they devise some method of maintaining stability of money values, of preventing prices rising further, all their exhortations to save will be useless and the increased level of investment which they are seeking will not come about?

Will they take to heart their own words:—

"Our economic development is at stake. Our hopes of improving our living standards and providing a larger volume of gainful employment depend on an adequate supply of savings to finance capital investment."

The Government cannot get savings without giving an assurance of stability of money values. Have they thrown in the towel completely in relation to this question of the cost of living? Is it good enough now for the Minister for Finance to come in here and say that prices are going up because of factors which are outside the control of the Government? The Government and Deputies opposite did not say that two years ago. They said then that every factor affecting prices was under the control of the Government.

Does the Deputy remember what happened to the food subsidies five years ago?

Mr. Lemass

I should be glad if the Deputies opposite would speak up.

The Government should tell us about the cheap pint.

Mr. Lemass

After two years of this incompetent Administration, we have a deficit in our balance of payments which threatens the future of every man, woman and child living in this country. We have rising prices. We have rising costs of Government. We have a higher and a rapidly increasing burden of taxation. All of that is falling upon an economy in which, as the Minister for Finance admitted here to-day, production is not rising. Any small expansion there was in industrial output last year was offset by the fall in agricultural production because of your incompetent Minister for Agriculture.

You are very narky over there.

Mr. Lemass

I must confess I have a considerable sympathy with the Deputies on the Government Benches, in view of the task which now faces them of explaining this Budget to their constituents. The Minister for Finance will have noticed that the applause that greeted his Budget was rather localised, and that not all the Deputies supporting the Government are facing this new duty of theirs with any enthusiasm. Do you remember the time when the Labour Party were giving the assurance to the electorate that they would not join in the Government, unless they got in advance an undertaking that the price of cigarettes and drink would come down? Was that assurance not given to the public by spoken word from public platforms and by advertisements in the public Press? Are they now going to vote for this 5d. on the package of cigarettes, this 6d. on the gallon of petrol, these higher taxes which the Minister has announced?

We put you in power in 1932 and you let us down.

Mr. Lemass

Do you remember what were described as the "cruel" and "unnecessary" taxes imposed in 1952? Every one of these taxes is still in force to-day, plus the new ones which have been announced. What explanation will you offer to the people who sent you here for this complete reversal of your position? Will you tell them that, when the Minister for Finance was announcing these new taxes, you cheered him? We shall have ample opportunity in the next few days of analysing the Minister's proposals far more fully.

You let the people down——

Mr. Lemass

Deputy O'Leary is to my knowledge the cleverest man in the Coalition groups. I think it is a perfect shame he is not Minister for Finance. I believe he would make a much better job of it than the man who is there.

You would make a bad job of it.

Mr. Lemass

The Minister has talked about pruning the capital expenditure of the State and public authorities but nevertheless he is contemplating facing the task of raising £37,000,000 for capital purposes this year. I think there is some explanation due to the Dáil as to how the Minister proposes to raise that money. It is only a couple of months since the Government attempted to raise money by public loan and failed, although they offered a rate of interest which was the highest ever offered for a public loan in this State for 30 years. Are they now contemplating methods of finance which are going to add to the difficulties of the country? Does the Minister seriously hope he can raise £37,000,000 out of public savings in this year? If he does not succeed in raising that sum of money, what is the prospect for maintaining the level of employment and the volume of trade— even the reduced level of employment and the reduced volume of trade which the country now enjoys?

The Minister is going to raid the Road Fund. A quarter of a million pounds is to be taken from the money that might have been available to the Road Fund for road maintenance purposes, in order to relieve the Exchequer difficulty.

Main road improvement.

Mr. Lemass

I notice the Minister for Finance is estimating a 14 per cent. increase in road vehicle duty revenue this year. I think that is nonsense. Having regard to the facts of the situation as they were developing, and as they have been intensified by the additional impost of March last, the prospect of a considerably greater increase in the number of motor cars on the road in this year than in any previous year is fantastic. Yet the Minister's proposition is that, although the revenue of the Road Fund is not likely to expand in this year in any degree equivalent to previous years, nevertheless he will raid it for the purpose of meeting his Exchequer difficulties. I do not know if the Minister has made any estimate of the number of road workers who will be unemployed by reason of that decision. I do not know if the Labour Party care. Surely, however, some member of the Government must have asked himself what was the likely consequence of this decision which they were taking and surely some member of the Government should, therefore, be in a position to give the House some information about it.

This Committee on Industrial Taxation has been a long time producing its report. I think the House would have been quite agreeable to adjourn the debate on the Budget for a fortnight to give the Minister time to read it and act upon its recommendations, if they are of value. We cannot estimate the value of the recommendations until we see them. Surely it will be recognised that what our country needs more than anything else is a very considerable expansion in the level of investment in private productive enterprises. I ask if there is any weapon available to the Government which can bring about that expansion which we must have, other than a suitable modification of the taxation of industrial profits—a suitable inducement to people to invest in industrial enterprise. Are we to wait 12 months while the Minister for Finance leisurely reads the report before any proposals arising out of the report will come before the House? Is this country to remain in the doldrums, as it has been for the past year, just because the Minister for Finance will not sit up for a night or two to read that report?

Mr. Lemass

I am not asking you to do that.

They made that mistake once.

Mr. Lemass

We are asking you to redeem your undertaking to the Irish people to reduce the cost of Government. It has gone up by £13,000,000 in two years. It is going up £8,000,000 this year. Will it go up another £8,000,000 next year? Will any member of the Government give an assurance that it will not go up? I am sure the people of this country are beginning to feel that this Government are completely irresponsible and that they do not know the magnitude of the duties they undertook when they accepted ministerial office. They are allowing a situation to develop which can be disastrous for this country and which generations may not be able to remedy.

This Government must face up to their responsibilities in a more definite way than they have hitherto attempted. This is not merely a matter of votes: I do not care whether you get or lose votes on the Budget. It is important that the country should be well governed and it is especially important that, this year, effective action will be taken to undo the damage which has already been done. It is essential to reverse the wrong direction of the national progress. We must try to get moving in the right direction again. The Government alone have the power to do that, and, if they do not intend to try, they have a duty to go back to the people and to tell them so. Last year the Minister for Finance described the 1955 Budget as "the first instalment, and only the first instalment, of the Coalition plans." This Budget is the second instalment. God save the country from the third instalment.

It is unbelievable that Deputy Lemass could have no serious comment to offer.

Mr. Lemass

I will have further comment to offer to-morrow

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