The figures published in the booklet Economic Statistics issued prior to the Budget make depressing reading and give a rather depressing picture of the state of the national economy. In Table VIII, it shows that the gross national product at constant market prices in 1958 was £526,000,000 compared with £538,000,000 in 1957 and £528.6 million in 1956. These figures, taken in conjunction with other figures which I shall read later, indicate that all is not well with the state of our economy and that it will require the concerted efforts of all sections to effect an improvement.
It seems to me that there is too much destructive criticism from many different quarters concerning the state of the country. It is easy to see what is wrong and what should be changed; what is not so easy is to provide a remedy, or remedies, for these economic problems. Listening to this discussion, and having examined as carefully as one can the figures presented in the very informative Economic Statistics, it appears that we should concentrate on the area of agreement existing between Parties and seek to widen the area rather than the reverse, and that too much time is spent making debating points by showing where differences exist, or by enlarging points of disagreement.
While this may be good for Parties at a particular time, it seems that it is not good for the country. Undoubtedly, the lack of progress has been due to a very considerable extent to politics and personalities. If impending changes on the political scene will mean an end to these disastrous activities, then the sooner these changes occur the better. In recent months, very full proposals have been published of aims of economic policy, or desiderata which should be achieved. To a great extent, these proposals have been sponsored not only by the present Government but by the previous Government and they have secured general acceptance from interested outside bodies.
In considering these, however, insufficient attention is being paid to a number of the conclusions which have been drawn in these reports and the indices contained in some of the figures quoted in them. These reports laid down certain aims for agriculture, for an expansionist policy and dealt with certain aspects of agricultural policy. In that connection, I should like to ask what steps have been taken to implement the recommendations concerning marketing and the linking of the marketing arrangements and the price structure between this country and Britain? On page 212 of Economic Development, a suggestion is made that a bi-lateral beef policy would be of mutual benefit and would accord with modern internationalism in economic affairs. Having previously referred to the importance of the British market to Irish producers and the importance of the Irish supply to Britain, it suggests that it argues a joint approach.
The last agreement concerning trade which was made between the two countries was made over ten years ago. Many changes have since occurred and while, in the main, the 1948 agreement has worked well, very few modifications have been made in it. For that reason, it seems that in the light of the careful analysis which was made by the various Departments and which is contained in the report I have referred to, now is the time for a fresh look at that agreement with a view to effecting either a new agreement, if such is necessary, or whatever changes are deemed desirable in the light of changed circumstances.
A somewhat later agreement in respect of pigs, coupled with the guaranteed price which was effected by means of the maintenance of, in certain cases, an Exchequer subsidy, did for a while work satisfactorily. All the indications are that the pig industry is an industry which depends probably more than others on stable price conditions and the drop for the first three months of this year of 70,000 pigs delivered to the bacon factories indicated the serious effects which a change in price can have. In view of the substantial rise in recent years in the value of bacon exports, it is important to maintain that position. In 1956, the export of bacon and hams amounted to £2,000,000. It increased to £4.3 million in 1957 and last year it went up to £8.1 million. That is a valuable trade and it is important that careful attention should be paid to maintaining price stability so that there will be no deleterious effect on the numbers of pigs reared and sent for curing.
Notice taken that 20 Members were not present; House counted and 20 Members being present,
In order that progress should be continuous, stable conditions are essential and, while it is difficult, if not impossible, to secure those conditions, so far as external prices are concerned, certainly where the prices fixed are within the control of the Government here, it is important to maintain stability and to avoid fluctuations.
The figures given in Table V of Economic Statistics indicate that 1958 was a year of decline in agricultural output and while that may be due to a considerable extent to abnormal weather conditions, undoubtedly prices had a part to play. The very exceptional prices which obtained for cattle in 1957 were slightly reduced last year and also the reduction in the prices paid for wheat and milk delivered to creameries, as well as the weather, probably influenced production to an extent.
For that reason, I believe the Government should consider this whole question of a new, or certainly a revised, trade agreement with Britain. We have a number of other trade agreements with Continental countries and, while in many respects these agreements have been satisfactory and have afforded an outlet for a variety of commodities, in the main, trade with Continental countries is unsatisfactory, in that we import substantially more from these countries than we export to them. Most trade agreements with these countries were made many years ago. Some of them were revised on a yearly basis, or every few years. In a few cases, new agreements were negotiated. The time has arrived, particularly in view of the heavy adverse balance which characterises our trading with almost all Continental countries, when steps should be taken to see that these agreements are implemented in practice by the other countries and that no measures are taken which will prevent the full exploitation of the advantages of the agreements from our point of view.
If we are to recover the ground which was lost last year, more strenuous efforts will be needed, both on the agricultural and industrial fronts. The drop of £9,000,000 last year in agricultural income undoubtedly had a depressing effect, more especially when prices and costs continued to increase and inevitably meant that people continued and are continuing to leave employment on the land.
Reference has been made to the fact —without quoting any firm figures which would indicate what the position is—that emigration appears to have dropped. If the numbers in employment given in Table XII of Economic Statistics are taken in conjunction with a reply which was given last year in the British House of Commons, the position does not appear to be so satisfactory. Last year the total at work in the country was 1,131,000 compared with 1,163,000 in 1956 which would indicate that there was a drop of 32,000 persons. If the figure is taken of those not presently at work for any reason, either unemployable or in hospital, the figure shows a drop of 25,000.
Last year, for the first ten months, according to a figure given in reply to the question I have mentioned, 48,000 new applicants from Ireland got employment permits in Britain between 1st of January and 31st October, so that in round figures about 50,000 employment permits were issued in Britain last year to persons from this country. While it is true there is some drop in the numbers unemployed, when account is taken off the large number of new applicants for employment cards in Britain and the fact that the total at work is down in two years by 32,000, the picture is anything but satisfactory. This persistent problem of a high level of emigration has continued, as the Economic Survey indicates, under all Governments and in peace and war. For that reason, it is vital that we should endeavour to take whatever steps are possible to improve the economy by reducing taxation. The present administrative structure is too large and expensive for the country. The reference made by the Minister in the course of the Budget statement showed that the total cost of the Civil Service, Defence Forces, Garda and teachers, amounts to over £34 million, almost half the figure being made up by the cost of the Civil Service.
This is a matter which has been the subject of consideration by Governments over a number of years, and it is easy to say that an overhaul of the Civil Service is necessary. The general standard of the Civil Service —of all civil servants—is high, but the system is in many respects outmoded and requires to be modernised with a view to efficiency. Delay in dealing with this matter means a continuation of an excessively costly administrative machine. The matter has been the subject of Departmental examination for a number of years and it ought to be possible, in conjunction with the Civil Service staff associations and in the light of the experience gained by the examination that has been conducted, to devise a system in accordance with the needs of the country.
That does not mean dismissing and dispensing with the services of redundant civil servants. The new system to be put into operation should not affect existing serving civil servants who should be allowed to work out their time, but should mean that in the future—in the very near future—a new Civil Service system, in accordance with the needs of the country, would be put into operation. This procedure will not yield spectacular economies immediately but will provide an efficient and an economical administrative machine without causing hardship to those employed in the Civil Service. It is obvious that so far as possible State Departments should be run on the lines of an efficient business concern and, when criticism is made of the way the machine works, a great deal of unintentional and unnecessary criticism is expressed against officials where what is really at fault is the outdated system that has been allowed to continue in operation in entirely different circumstances. While demands for new and different services have grown, no worthwhile effort has been made to provide an administrative structure that would provide a machine suited to our requirements, and in keeping with the population of this country.
The whole fabric of the State structure, almost in every section from the top down, is top heavy for the size of the country. Sometimes views are expressed that we have to maintain certain standards for prestige purposes but prestige spending, in the main, gives a bad return and is responsible for a make-believe attitude in place of the realism which is needed in the competitive conditions existing at the present time. That lack of realism gives rise to a cynical reaction on the part of many who have to face the realities of a lack of employment and opportunity, and yet see a great deal of unnecessary expenditure in an effort to maintain a structure that is artificial and unsuited to the needs and capacity of this country.
The Economic Survey reveals some very important facts. Repeated efforts have been made by different Governments to start new industries and to provide employment. Whenever a new industry is successfully launched, bouquets are handed out all around, but if we look at some of the industries already established, we see they have declined. Attention is drawn to that in the Economic Survey on page 167 where reference is rightly made to the importance of industries based on agricultural products. It says there, in Chapter 17, paragraph 1:—
In 1929 exports of biscuits exceeded £500,000 and imports were only £11,000. Exports had declined by 1940 to £298,000 while imports increased to £19,000. In 1957, exports were valued at only £86,000 (of which £84,000 went to the Six Counties) while imports were valued at £120,000.
It goes on to say:
The substitution of an import trade for a once flourishing export trade is most regrettable. The development of an export business would be most helpful from the employment and balance of payments aspects.
It continues:
If capital should prove to be a limiting factor, the Industrial Credit Company should be able to provide the necessary facilities....
I believe that the factors contributing to that decline should be the subject of a most exhaustive examination, by the Department of Industry and Commerce and Department of Finance, to see what steps are possible to regain the valuable trade which once existed.
It is true that in connection with another industry which I propose to mention, taxation has a direct impact on its development. In paragraph 10 of the same chapter, reference is made to the distilling industry. It gives the average export figures for three pre-war years, 1937, 1938 and 1939, which amounted to approximately 230,000 gallons a year with a financial value of £179,000. In the post-war period, exports of whiskey grew steadily from 1948 to 1951, reaching a peak in the later year of 438,000 gallons valued at £558,000. They decreased steeply in the next three years but have since begun to recover. Undoubtedly in this connection taxation has a direct effect. In 1952, the effect of the tax on spirits had a serious reaction and exports in 1954 were down to a total of 127,000 gallons, valued at £224,000. They recovered, in 1957, to 194,000 gallons, worth £333,000. As paragraph 11 says:
"While total exports of whiskey are now above the pre-war level in value, because of higher prices, they are still below that level in volume and they are 50 per cent. less in volume than in 1950-51."
As I said, very often a great deal of attention and effort—governmental, ministerial, departmental and, in some cases, local—is put into the establishment of a new industry; but these two valuable industries, using homegrown raw materials, providing substantial employment, producing a commodity equal to the best produced anywhere and providing in many cases male employment, have been seriously affected, in the one case, by taxation and, in the other, by causes of which I believe a careful examination should be conducted.
That leads me to the other matter I wish to refer to. When the levies were imposed in 1956 in order to correct the adverse trade balance, one of the commodities on which a levy was placed was newsprint, in order to restrict at that time the importation of newsprint. During the course of the past year, the Minister, in reply to questions, said he would consider it in conjunction with this year's Budget. Although the Budget has been introduced, the duty on newsprint is still maintained. One firm alone, Independent Newspapers, Ltd., employs, directly or indirectly, a thousand persons. Taking the other daily papers and the weekly and provincial papers, the total number employed, both directly and indirectly, in the newspaper industry is very considerable. For that reason, the amount of money involved, while falling heavily enough on the industry concerned, is, from the Exchequer point of view, not very considerable, and certainly in the manner in which the balance was made up this year, not a frightening figure.
It is therefore clear that in the case of this existing established industry— an industry which exists without State protection, without State assistance of any sort, which provides well paid employment, which is decentralised in the sense that a great many of these newspapers are located in small towns or comparatively small towns throughout the country, as well as providing employment in Dublin—the continuation of the tax is unwarranted, more especially at a time when attractive inducements are being offered to foreign participants in industry here. This is another case of losing sight of existing valuable employment. The other two cases I mentioned—the biscuit industry and the distilling industry—both indicate and show what serious effects—certainly in the case of distilling; the biscuit industry is somewhat different—taxation can have on employment, exports and on trade generally. It is for that reason I hope the examples which they show and the effects which taxation had on the distilling industry will serve as a reminder that a similar reaction might occur in respect of those affected by the tax on newsprint. I believe the Minister should seriously consider the remission of that tax.
During the course of discussions which have taken place, and particularly during the last general election, there was a good deal of talk on marketing and the need for improved marketing conditions. In 1957, a sum of £500,000 was provided for the establishment of a marketing committee. It is true that the establishment of the committee was delayed somewhat. Now that it has been established, I understand two interim reports have been presented. Rumour has it that one of these deals with bacon. If this committee is to have any value, surely the reports should be made available to the public, more especially when the number of pigs sent to the factories for the first quarter of this year shows a drop of 70,000.
It is strange that in those circumstances these reports have not been published, because Government spokesmen during the last election spoke a great deal about improved marketing conditions. I understand the sum provided was not spent, or very little of it used, in the first 12 months. Now that the committee has furnished two reports, it ought to be possible for the public to see them and for those interested to get the benefit of the examination which that committee has conducted into marketing problems. The figures for the current quarter indicate that the import excess is growing again this year. These tendencies will require to be kept under review if some of the problems which existed previously do not recur again.
During the past two years, there has been a spectacular and continuous rise in the cost of living. Table 10 of Economic Statistics shows that the consumer price index increased from 107.7 in February, 1957 to 117.7 in February of this year. While that occurred, import prices dropped from 117.2 in February, 1957 to 107.3 in November, 1958. So that, while consumers here had to pay more for essentials, the goods that individuals imported here dropped in price substantially. What is even more significant is the fact that the price of bread, flour and butter increased substantially, while, at the same time, less was paid to our farmers for wheat and for milk supplied to the creameries. It is obvious that there is something wrong with an economic policy when, while import prices are declining continuously and while we pay less to our own producers for wheat and for milk supplied to the creameries, we charge our own consumers 3½d. more for a 2 lb. loaf, flour having increased by 70 per cent. and butter by 7d. per lb.
These facts undoubtedly compelled the Government to introduce the increase of 2/6 in old age, widows' and blind pensions. Evidently the Minister and his colleagues in Government consider that the increase in the cost of living justifies this increase in pensions. The Minister for Social Welfare must have approved of it. I suggest to the Minister that he should advise the Minister for Social Welfare to instruct the officials of his Department not to take the incidence of this increase into consideration in connection with the granting of home assistance. When a Minister has approved an increase, his officials should not try to whittle down the benefit of that increase by reducing home assistance. The fear that that may happen now is disturbing a number of possible recipients. There can be, in my opinion, no justification for such reduction.
The Minister in his Budget Statement referred to the fact that there is agreement on both sides of the House that taxation should be levied on expenditure rather than on income. Very often there is a slender balance between the level at which revenue can be maintained, or increased, and the rate at which it will depress production. Any easement, therefore, in the burden of taxation must undoubtedly stimulate production and, at the same time, act as an incentive. The heavy rate of taxation here has been a deterrent to further expansion. Many foreigners who come in here with the object of establishing industries are deterred from doing so because of the high rate of taxation. It is important, then, that taxation should be maintained at a stable level over as many commodities as possible at the same time and for as long as possible.
The very sharp drop to which I referred earlier in the case of distilling is an indication that, once penal taxes are imposed, the effect is very far-reaching. Improvement is slow, and very often long delayed. It is desirable from every point of view that taxation should be maintained at a stable level because nothing is more conducive to economic expansion than stable marketing conditions and stable taxation. Violent fluctuations act as a deterrent and cause not merely dislocation in industry generally but also frighten off those who might otherwise be induced to come in here to establish new industries.
