Dáil Éireann díospóireacht -
Wednesday, 3 Jul 1957

Vol. 163 No. 5

Committee on Finance. - Vote 3—Department of the Taoiseach.

The Taoiseach

I move:—

That a sum not exceeding £19,480 be granted to complete the sum necessary to defray the Charge which will come in course of payment during the year ending on the 31st day of March, 1958, for the Salaries and Expenses of the Department of the Taoiseach (No. 16 of 1924; No. 40 of 1937; No. 38 of 1938; and No. 24 of 1947).

There is nothing in particular to which I should draw attention in the Estimate. There is a slight reduction of £340, due to a diminution of staff.

I regret that the Statistical Survey is not available which usually gives an opportunity to Deputies to speak with knowledge of the fundamental economic facts. However, most of the relevant figures are available to Deputies in the official publications already issued, for example, in the Trade Journal, in the monthly trade returns, in the monthly Economic Series and, of course, in the statistical tables that were issued at the time of the Budget.

Looking back on the year 1956, we can say certainly it was a year of economic depression and, in a sense, a year of gloom. Perhaps the best single economic indicator is the national income. The figures show that the national income, at current market prices, has been reduced from £459,000,000 in 1955 to about £450,000,000 in 1956. That, in itself, is serious, because it shows that for the first time since the war there has been a reduction. From the end of the war up to the year 1956, there has been a steady increase. The reduction in 1956 is even greater if we express it in real terms. Gross national production at constant prices was about 3 per cent. less in 1956 than in 1955.

One could well expect that that would be accompanied by a reduction in agricultural output and a reduction in industrial output. These in turn would lead you to expect, if you did not know it otherwise, that there was a decrease in employment and, of course, an increase in unemployment, probably accompanied by an increase in emigration. Of course, it does not always follow that an increase in emigration accompanies an increase in unemployment.

In fact, gross agricultural output in 1956 was down by about 4 per cent., if you take account of the changes in stocks as well as sales off the farm and consumption on the farm. We had also a decrease in that year of industrial output of about 4 per cent., if you take all industries covered by the Census of Production. If you take transportable goods alone, you have a reduction of as much as 5 per cent. In agriculture, there were 9,000 fewer males employed than in the year before. The figure of 9,000 is alarming. There were about 8,000 fewer employed in industry. The total unemployment figures showed increases. The unemployment percentage went up from a relatively small figure of 6.8 per cent. in 1955 to 7.7 per cent. The number on the live register reached a very large figure at the beginning of 1957: it was as much as 24,000 more than it had been the previous year.

That figure was reduced in mid-March to about 16,000 more than had been on the register at the corresponding period last year, so that there was an improvement. This improvement continues to date. The difference between the unemployment figure for the 22nd June this year and the corresponding date in the previous year was 6,800. Emigration, as was pointed out in reply to a parliamentary question recently, cannot be determined accurately outside intercensal periods. Outside the intercensal period we cannot get any figures on which we can rely as regards emigration, but there is no evidence that the figure for 1956 did not reach the figure of 40,000 which was the average for the previous intercensal period.

When the Minister for Finance was introducing his Budget, as was usual he gave a picture of the State finances and of the general economic conditions. In the previous year there was a deficit as between income and expenditure: income failed to meet expenditure by close on £6,000,000. That deficit had, of course, to be met by borrowing. In that year, besides this deficit, capital expenditure amounted to £40,000,000. That £40,000,000 had to be met, to the extent of £29,000,000, by borrowing. Accordingly, if you take the borrowing necessary to meet the Budget deficit and to meet capital needs there were total borrowings of £35,000,000.

That was for the financial year 1956-57. When the Minister for Finance came to frame his Budget for 1957-58, he was faced in the first place with a deficit of £9,000,000 on current account. It was unthinkable in present circumstances that we should borrow to meet that deficit. Borrowing meant that we would have to eat in on the sums that would be available for the capital account. Because of that, the Minister and the Government made up their minds that we would have to balance the Budget. That was done, as you know; it was fully debated here in the House. The food subsidies were abandoned but some compensation was provided for those in the social assistance groups. There was some increase in taxation. In that way a balance was struck.

On the capital side, the programme amounted to £41,000,000 for the current year. We hope that the ready acceptance of the Exchequer bills may be an indication that the sum that will require to be borrowed will be provided. However, the whole situation, as everybody knows, has been serious. If we wanted to make any progress it was necessary to try and increase activity in various directions. Everybody knows that the one way in which that can successfully be done is by increasing production. It has been said so often that people are tired of hearing that phrase but it expresses a fundamental truth to which we must pay attention.

The circumstances did not give the Minister for Finance much opportunity, through the Budget, to induce activity or to give effect to the fundamental policy of the Government. However, a certain amount was done. One of our chief difficulties is, as is well known, our balance of payments. In 1955 there was a deficit in the total balance of payments of £35,500,000. It was obvious that no Government could complacently allow that to continue. The previous Government took steps, through the special import levies, and otherwise, to try and reduce it. It was reduced from £35,500,000 in 1955 to £14.4 million in 1956.

Serious consequences followed the previous Government's measures, however, and the present Government felt it was essential that economic activity should be stimulated. The Minister for Finance, in the Budget, did provide certain stimuli, particularly for exporters. It is obvious that if we are to continue to preserve the standard of living which we have at the moment and that we have been enjoying in recent times, we must do so without depleting our reserves. The consequences of such a depletion are now clear to everybody. Our external financial reserves are absolutely essential to us and they have been reduced to a level below which we cannot go without facing a situation in which the standard of living will inevitably diminish and unemployment will increase. We have to keep our eyes definitely on the position of the balance of payments. The trading deficit for the year 1956 was £73,500,000. In the first five months of this year there has been an improvement to the extent of £18.7 million, and it is possible that at the present moment, if we take into account the invisible as well as the visible items, we have a favourable balance.

Mr. Dillon

Hear, hear!

The Taoiseach

But we must beware of thinking that we can be sure that situation will continue. There are certain factors which could operate and which could very well upset that balance. There is, for instance, the fact that certain stocks were reduced and are likely to be replenished. Stocks for industry had been reduced consequent on reduced industrial activity. We have tried to revive it and that is also likely to lead to increased imports. On the exports side there is the fact that it is most unlikely that our cattle stocks will enable us to continue cattle exports at the same rate for the remainder of the year as we had for the first five months.

We must also take into account that the ratio between export and import prices, or the "terms of trade" as it is usually called, has worsened since the beginning of the year, so that we cannot be at all happy about the situation in the sense that we can be satisfied that the improving trend will continue. We hope it will, and certainly the Government will keep an anxious eye on the trade returns to try to ensure that the balance which it is so necessary to maintain, will in fact be maintained.

I have said that it is necessary to maintain that balance by increasing exports, and the Minister for Industry and Commerce has been very conscious of that. He showed that when he was in office before and since he has come back to office the Minister for Finance has been helping him by giving certain tax concessions as an inducement aimed at increasing the volume of exports. Taxation reliefs on increases in exports have been doubled—from 50 to 100 per cent. To meet the legitimate claim of those who pioneered in the export of Irish goods there is an alternative to the 100 per cent. in the form of 25 per cent. of the total. Other inducements include the inducement given to industry generally through an increased allowance for depreciation. A 40 per cent. allowance has been provided in the case of new ships. I am just mentioning a few of the steps that have been taken to foster greater industrial activity.

When we came into office one of our principal concerns, of course, was unemployment and the emigration that generally accompanies it. The building industry was in a more or less parlous condition and we set out to try to improve that situation. Between the aid given to the local authorities, through the Local Loans Fund and so on, and the other measures we have taken, it means an addition to the capital programme of close on to £2,000,000. That is a serious matter seeing the difficulty there is in providing capital. We did it after very serious consideration believing that, on the whole, it was best in the national interest.

Many people are of opinion that too much of our capital resources in the past have been devoted to building. While I realise that it was a very high proportion, I am one of those who felt in the past and still feel that, although we do not get from the building of houses an immediate return in productivity in the ordinary sense, it was a necessary foundation for the well-being of the community. While we have to watch very carefully so as not to overstrain our resources in that regard, I still think it would be quite unrealistic to consider the money that has been spent on housing as money spent uselessly. It has produced very valuable results in decent homes for our people, but it is quite true that there is a limit to what we can do in this respect. Fortunately the most pressing needs have been met, except in the large cities, but there is still considerable work to be done before our people are housed as the community would wish. With the best will in the world in that regard we have to face the fact that our capital resources are limited and that we have to ration them out and see that they are expended so as to produce the maximum advantage.

We have to review the situation carefully, therefore, in regard to capital outlay, and it was with full knowledge of the dangers of spending capital urgently required for productive purposes on amenities—some might be inclined to regard housing beyond a certain degree, at any rate, as an amenity—that we considered this matter. We must be careful to see that the amenities do not unduly encroach on available capital required for productive purposes.

I do not know that it is necessary to go into these matters at any greater length at this stage. If any questions are raised I shall, perhaps, do so in reply but I think it is unnecessary at this stage to do more than indicate the general aim of the Government. That general aim is to try to recreate industrial activity, to foster it and get it going again so that our people by their efforts will produce the things that are necessary to maintain the standard of life to which we have been accustomed. We have no vast mineral resources, such as other countries have. Our chief resource is our soil and consequently our principal industry is and must remain for a considerable period, as far as we can see ahead, agriculture. As far as the Government is concerned, therefore, every effort must be made to stimulate agriculture and every effort must be made by the people, in their activities, to increase agricultural output. Agriculture is the main source of our exports. It is very largely our agricultural exports which enable us to purchase the raw materials and other essentials required for manufacturing industry.

The basis upon which our agricultural economy can hope to expand is through the medium of profitable export markets abroad—export markets which will give a decent return generally and a fair recompense to the farmer. The securing of such markets must, therefore, be the primary aim of any Minister for Agriculture in present circumstances. Such markets and their potentialities will be explored to the utmost. Everything that can be done to secure these markets will be done. Everything that can be done will be done to avail of these markets. All the steps necessary will be taken. For that reason, a sum of £250,000 has been provided towards enabling the marketing side of our agricultural economy to be properly organised by getting all the information possible about foreign markets and by taking all the steps that have to be taken to ensure that the goods we have for sale will be profitably marketed.

I have told the House what we are trying to do in regard to industry. We are trying to build up industries which will give us exports that can be sold abroad at prices ensuring a reasonable return to our manufacturers here. In agriculture, we are of course also trying to become as reasonably self-supporting as we can. We are doing that for a variety of reasons. One of those reasons is related to our balance of payments position. It is quite clear that if we produce at home wheat and cereals which we would otherwise have to import, it will be good for our national economy as a whole. If our farmers produce barley and feed that barley to their stock, that will help to benefit our economy and we are doing our best and will continue to do our best to stimulate that effort.

I have made clear on many occasions what our industrial and agricultural policies are and it is hardly necessary for me on this particular Vote to dwell upon them again. We are convinced that progress has been made within the last three months. We are convinced that there is a spirit of greater confidence abroad. We are satisfied that if our people bend their will and their activities to the situation in which we find ourselves we can, here in this island of ours, make a home, and a happy home, for a much greater population than we have at present. The trouble is that, as everybody knows, there are certain attractions which pull our people from this country, apart altogether from economic pressures which may push them out. Our young people are affected by the idea that they can do better abroad. That is a quite natural feeling, but it is nevertheless a delusion. The successes that one hears about are generally the exceptions and not the rule and those who go abroad, and who have experience, are willing to admit that life in this country can be as happy as, if not happier than, life anywhere else in the world.

I have certain ideas of my own on this subject, ideas which may not be shared by others. One must take life as a whole and consider its satisfactions and the contentment it can give. One must consider the happiness which the individual can have within himself. Were it not for the pressures and the pulls which are causing our people to seek different ways of life, with different traditions, life here, if we were free to adopt our own standards, could be a very full life indeed, and we could carry a much greater population than we have at present.

Young people have different views. Many of them look for standards equal to the standards that they see in countries to which they have access, countries such as Britain and the United States of America. It will not be easy for us to overcome these attractions. If we are to overcome them, we shall have to imbue our people with the belief that here we have a splendid country, an excellent soil, a temperate climate and an intelligent people. If we want to have standards comparable to those of other countries we shall have to take full advantage of the opportunities that we have and we shall have to work harder. Hard work does not mean slavery.

Human beings are generally more content and happier if they are working, particularly when they see a profit from that work. If we can get our people back to that intense love of country which was so evident here some years ago, that will help us in this national effort. We hope that the people will make up their minds to a combined national effort so that we may overcome our present difficulties. These difficulties are not by any means insuperable. The results that have followed the efforts made in recent months have proved that the task is well within our competence. We have only to make up our minds as a people that there is a task and that, in order to accomplish that task, we must work intelligently, we must use all the scientific knowledge available to us and we must do that with the desire to succeed.

Progress reported: Committee to sit again.