Dáil Éireann díospóireacht -
Wednesday, 29 Apr 1959

Vol. 174 No. 9

Committee on Finance. - Resolution No. 9—General (Resumed).

Debate resumed on the following motion:—

That it is expedient to amend the law relating to customs and inland revenue (including excise) and to make further provision in connection with finance.—(Minister for Finance.)

Minister for Finance (Dr. Ryan)

Before we adjourned last night I referred to the fact that Deputies had mentioned the Suez Canal crisis as having an effect on the monetary crisis that arose here towards the end of 1956 and I said that I had some observations to make on that point. First of all, according to the 1957 record of the International Monetary Fund the effect of the Suez Canal closure on Western Europe was not severe. Industrial activity was not significantly affected by lack of fuel or raw materials. I am taking that as referring generally to Western Europe and to come down to our own country I think there are no grounds for holding that the closure had a more adverse effect on Ireland than on other Western European countries.

At no time was there a serious shortage of oil supplies or any limitation of raw materials of industry. Imports of kerosene increased by 22 per cent. in quantity during the period October, 1956 to March, 1957 as compared with the period October, 1955 to March, 1956. I might mention that I am taking the six months following the Suez crisis when I take October, 1956 and March, 1957 and during those six months the import of kerosene was 22 per cent. higher actually than in the six months I have compared with it. Imports of motor spirit, other than aviation spirit, fell by only six per cent. and imports of fuel, gas and diesel oils fell by less than one per cent.

The effect of the crisis on industrial production can, therefore, have been only very slight. The depressed level of industrial production in October, 1956 to March, 1957 was mainly due to factors other than the Suez crisis, principally, the effect of the measures taken early in 1956 to redress the serious balance of payments position. The automobile assembly industry was probably most affected by the crisis because of the effect of petrol rationing on consumer demand but even in this industry the effect of the special import levies was greater. This is shown by the fact that in the six months, April to September, 1956, prior to the closure of the Canal, the number of new private motor cars registered and licensed for the first time had fallen by almost 50 per cent. compared with the corresponding period of 1955, due principally to the operation of the special import levy imposed in March, 1956. The Suez crisis had some impact on import prices, which increased by about six per cent. between September, 1956 and March, 1957. The wholesale price index rose by less than four per cent. in this period and the consumer price index remained stable.

It is clear, therefore, that the 1956-57 depression was not due to and, in fact, was hardly aggravated by the Suez crisis. It was due to the imposition of import levies in March, 1956. I am not disputing the necessity for the imposition of those levies. Something had to be done to deal with the serious position in our balance of payments. Whether that was the best method of dealing with it or not I am not going to discuss at the moment. As to what was the cause of the imbalance can be examined at another time. My only object in making these remarks at this stage is to have the Suez crisis removed from the picture.

Mr. Sweetman

So, people used more petrol when petrol was rationed —is that what I am to understand?

Dr. Ryan

There was 22 per cent. more kerosene brought in during those six months, six per cent. less petrol, and one per cent. less diesel and other oils, so that could not have been a very big factor.

Mr. Sweetman

Does the Minister mean less on the Budget estimate or less on the outturn of the preceding year?

Dr. Ryan

No. I am not talking about the Budget here. I am talking about the quantities imported.

Mr. Sweetman

What I mean is this. The Budget of 1956 was built on the basis of there being increased user of petrol in 1956-57. Is that six per cent. six per cent. less on that user or on the preceding year?

Dr. Ryan

I want to make it clear to the Deputy that I was not referring to the Budget. I did not examine those figures. I was referring to the upset in trade and I was taking the quantity of petrol imported during that period as compared with the corresponding six months in the former year and I was taking these figures just for the purpose of dealing with the point that trade was in any way upset here owing to the Suez crisis.

Mr. Sweetman

It was on the monetary end of it, the Budgetary outturn end, that I was speaking.

Dr. Ryan

We can examine that.

Mr. Sweetman

We shall have that another day.

Dr. Ryan

Yes, another time. I said in my Budget speech that unemployment had been reduced over the past 12 months and that emigration had been reduced, and that statement is true. The last return, for April 18th—the last return Deputies have got; at least, the last I have come across—shows a reduction of over 5,000 since the same date in 1958 and a reduction of 10,000 since the same date in 1957. At the same time there is a decrease in employment. That was also the case, I may say, when the Coalition Government were in power and were boasting during 1955/56 about the big reduction they were making in unemployment. During those years, also, the figure for employment was going down. So, if the last Government had any reason to make a claim that they were doing well by reducing unemployment during those years, 1955 and 1956, we have at least the same claim. In fact, this figure of employment has been reducing over the last 10 years. In fact, if Deputies would examine again Table 12 they will find that during the last 10 years employment has been going down, except for one year. The only year in which there was an improvement was 1954 and that, I think we can justly claim, was due to the result of three years of wise Government by Fianna Fáil.

Mr. Blowick

Says you, with your tongue in your cheek.

Dr. Ryan

That was the only year and, as well as being the only year in which total employment was increased, it was also the only year in the last 10 years in which agricultural employment was not reduced. It remained at the same figure, which was never done by either the Coalition or Fianna Fáil in any year except 1954.

Mr. Coogan

Is that the year in which you left office?

Dr. Ryan

Yes. I am coming to that. I was thinking that some less informed Deputy on the other side would make a remark like that. I am coming to the point that these figures are taken in March each year. So, they were taken in March, 1954, in or about the time the Governments were changing over and it would be a remarkable thing indeed——

Mr. Sweetman

I do not think the Minister is right. I think they are taken on 1st June.

Dr. Ryan

I am informed March.

Mr. Sweetman

1st June. The Government changed on 4th June, so the Minister can still make his argument, but I think 1st June is the date.

Mr. Coogan

Now who is less informed?

Dr. Ryan

I was informed officially, I may say——

Mr. Sweetman

It does not spoil your argument.

Dr. Ryan

Maybe I should say I was informed unofficially that the figures are largely, anyway, based on March returns.

Mr. Sweetman

I think it is 1st June.

Dr. Ryan

It does not spoil the argument.

Mr. Coogan

The people had made up their mind at that time to put you out.

Mr. Sweetman

I said that it did not spoil the Minister's argument. The difference between the Minister and myself is that I am always fair to him.

Dr. Ryan

Oh yes. Another point arises from the fact that these figures are taken early in the year. I was informed this morning, semi-officially or unofficially, that these figures are usually based on a March return but, whether it is March or June, the point I am making here will be almost equally effective. It is difficult to explain, I admit—nobody has given a very good explanation of the point —that you could have unemployment going down and at the same time employment going down and the only obvious explanation is that emigration makes up for the difference. At the same time, we are claiming that emigration went down last year and I will deal with that in a moment but I may be asked how do I explain that. The only explanation I can give is that these figures for employment are taken early in the year; the improvement in emigration took place, largely, towards the end of the year and if we are right in claiming that emigration has gone down in 1958, then we must definitely expect to see an improvement in employment in the 1959 figure.

Mr. Corish

May I say that that is contrary to what the Minister and Deputy Sweetman think? Surely employment figures are taken as an average over the whole year and are related to the number of insurance stamps sold?

Dr. Ryan

No. I believe they are taken early in the year. I do not know why, but that is what I have been told.

Mr. Corish

It is a bit daft to do that because peak unemployment occurs at the beginning of the year.

Dr. Ryan

Perhaps if I am asked a Parliamentary Question I can answer that more fully. I just casually asked for information this morning. It may be assumed, I think, that the figures are taken early in the year. That being so, and if emigration improved considerably during the year, we must expect an improvement in the employment figures for 1959, assuming they also are taken early in the year. I think we shall have to leave the matter at that for the moment.

Mr. Sweetman

The Minister has not got the final quarter sales of national health insurance stamps. Apparently they were not ready the other day.

Dr. Ryan

I believe they are out now, and they are up on last year. With regard to emigration, there is a certain amount of confusion. In fact there is a certain amount of suspicion, if you like, because sometimes in the House here or outside it Government speakers may say that emigration is decreasing. There are no statistics of emigration and the Office of Central Statistics will not give a figure except after the census. They know exactly then how many people have left the country. They compute the births and deaths. It is, therefore, only a matter of simple arithmetic to find out how many left in the intercensal period. When the Taoiseach replies to a Parliamentary Question here he cannot give statistics for emigration in the interim. He just conveys to the person seeking information what he gets from the Statistics Office. Apart from that, every year we get details of the number of people leaving the country by air and sea. There is no check on those who cross the Border and that is, if you like, a defect.

We also get the number of people coming in and, by deducting the number coming in from the number going out, we get a rough estimate of emigration. It is not an exact figure, but it is one from which one can gather the trend. If the figure is growing smaller and smaller, then the position with regard to emigration is favourable from our point of view. If the figure is getting higher and higher we know it is unfavourable. On that basis, the latest figure we have is for the twelve months ending February 1958; the figure is 59,000. For the twelve months ending February, 1959, the figure is 33,000. Now these figures are by no means reliable to the last thousand, but the position would appear to be that 26,000 fewer people emigrated last year as against the year before. That is all we can say about emigration. Summing up then, as between employment, unemployment and emigration, if the figures we have are correct—we know they are correct with regard to unemployment—then we must definitely expect to have a better figure for employment in 1959.

I took note of a few points made by Deputy Cosgrave. The Deputy is wrong in saying that the decrease in the export of whiskey is due to taxation. I know that is what the distillers say but I do not think they could prove the point. I do not blame the distillers for making that point as strongly as they can—perhaps they believe it— and it is a good point to make when they come along annually looking for a reduction in the tax.

Several Deputies referred to the tax on newsprint, among them Deputy Cosgrave and Deputy J.A. Costello. Deputy Costello said he objected to it in principle. He objected to the levy being coverted into a revenue tax. I have not been convinced that this tax should be removed. It was imposed in the first instance to curb imports of paper and generally to keep imports down. We are not yet clear—I have made that perfectly plain—of the danger of an adverse balance. A good case, therefore, would have to be made for the removal of any tax put on for the specific purpose of curbing imports. It is true the tax was imposed in the first instance as a levy. It is now a revenue tax. Irrespective of whether it is a levy or a revenue tax a case would have to be made for its removal which would outweigh or counterbalance the reason why it was imposed in the beginning. The tax is only five per cent.

Mr. Corish

An awful lot of newsprint is misused.

Dr. Ryan

That is quite right. I may say I was not approached by the proprietors of the daily papers in this matter. This does not apply to managers. I was approached by some of the provincial papers. I am sure the reason I was not approached is because the proprietors could not make a proposal to reduce the price of their respective papers and they therefore did not come along to look for a reduction in the tax. If the proprietors made a case that they were going to reduce the price of their papers one would have to listen to them. If the tax is removed it is obvious one of two things will happen; the money saved will be spent on more paper and interfere thereby with our balance of trade. I think our newspapers are quite big enough as they are; it is hard enough to go through them as they are without having them made any bigger. Alternatively, the money will go into the profits of the newspaper people. I do not know what those profits are like. I assume they are all right. Unless the danger of an adverse balance is removed we could not possibly consider removing the tax on newspapers.

A number of Deputies have quoted a poster that was supposed to have been issued by Fianna Fáil in the last election. I do not remember seeing the poster myself.

Mr. Corish

The Minister could hardly miss it.

Dr. Ryan

"Wives get your husbands back to work." Now that poster may have been issued but I do not think Deputies opposite should waste time arguing the point because, when they do, really what they are saying in essence is that there were so many wives with husbands out of work they were able to give Fianna Fáil a big majority. Opposition Deputies maintain that that slogan put Fianna Fáil back in office. I have already given the inference to be drawn from that argument. We should be realistic in these matters. The poster, if it was issued, may have influenced some votes, but it cannot have been a really big item in deciding the result of the election.

Several Deputies referred to the livestock census issued shortly before this debate. Naturally Deputies are interested in that census. What is the result of that census? The result is that over the last two years cattle have increased by 30,000 odd; sheep by 539,000 and pigs by 52,000. That is not bad for the two-year period. The trend is in the right direction especially when one remembers that the big increase in cattle is in in-calf heifers and that means a much bigger number of cattle in the years ahead.

There is one adverse feature. That is, that compared to last year pigs are down; in other words pigs went up the first year, went down the second year and on the whole they are higher than they were two years ago. On balance we are better off now than we were taking over from the last Government. I notice that where we have got an increase in livestock, tillage, or in production in agriculture it is claimed by some of the Deputies on the opposite side as being due to the good management of Deputy Dillon when he was Minister for Agriculture that all these benefits are coming to us. If they take the credit for all these things they ought to take the blame as well. If pigs went down last year let Deputy Dillon take the blame; alternatively we will take the credit or the blame as the case may be.

Mr. Coogan

You will not kill the calves now.

Dr. Ryan

If the Deputy continues to talk about the calves I may be tempted to repeat something about the Blueshirts, and I do not want to go into that again.

Mr. Sweetman

Of course, the fact in respect of livestock figures is that you do not see the results for a long time.

Dr. Ryan

No, that is true. It takes a long time especially in the case of cattle; it is three or four years before you get the effect.

Mr. Sweetman

Pigs perhaps give the quickest results, about a year.

Dr. Ryan

I want to refer especially to Deputy Russell's remarks. Many Deputies were troubled about the great expenditure, saying nothing was being done to reduce it. As Deputy Sweetman has just said about the increase in livestock, the reduction in expenditure is also a very slow process and I am doubtful if expenditure will come down. When people talk about reducing taxation there are two ways of looking at it. We did reduce taxation this year by way of a reduction of income tax and entertainment tax. In spite of that our income may be higher on the year. Whether Deputies would call that reduced taxation or increased taxation, I do not know, but if we can cut down the incidence of taxation and at the same time get in more money I think we have achieved our purpose in reducing taxation.

It must be obvious that you cannot give out more to old age pensioners and other people without increasing taxation, without increasing the income, as it were. Deputy Russell referred to the statement I made in the 1957 Budget in which I proposed certain specific savings and one of them was on the Civil Service. I said I intended to make a saving of £250,000 in 1957-58 on the remuneration of civil servants. In fact the saving was a little more than £250,000 when it was totted up at the end of the financial year. That could not be repeated the following year because civil servants got an increase in salary which amounted to something in the region of £750,000. I have no figures yet for the last financial year as to the cost of the Civil Service. I referred again last year to proposals for the reorganisation of the Civil Service. That is being done with two objectives. We believe that if this reorganisation is carried out—and as I said in my Budget it is now being considered by the staff organisations from whom we expect help in the matter—we expect to get a more efficient Civil Service and a more satisfied Civil Service and I hope eventually some economy, but of course it is very hard to get the economies when you have to face an increase in salaries every three or four years.

Mr. Russell

May I interrupt the Minister to say that I quoted his own words in 1957, that £17 million for the Civil Service was far too high? I did not refer to individual salaries which I know in some cases are too low.

Dr. Ryan

I know the Deputy quoted my own statement in that connection. I did feel and still feel it is too high for this country. The difficulty of reducing it is a very big one but it is not being lost sight of. However, let us consider current State expenditure in, say, 1948-49 as against what is estimated for the coming year. The reason I am taking those years is that I want to make a defence not only for this Government but for the previous Government, too. It is a twelve-year period from the 1st April, 1948, to 31st March, 1960. For six of those years we will have been in control by 1960 and for the other six years the Deputies on the Opposition side were in control. Taking these twelve years I want to refer to certain items: social welfare, health, education and agriculture. I do not think any Deputy would say we should cut down on social services. Even Deputies who are talking about expenditure being too high advocated we should go a bit further in that direction. The same applies to health. Every remark made here on health at any time is always to the effect that people are not getting the health services they should get or have to pay too much for it. Therefore, I do not know if we can make any economy there. In regard to education we all agree we should spend all we can on it. Ex-this year by a very substantial amount, something over £1 million, but nobody has objected to that. In relation to agriculture, everybody talks about giving more to agriculture.

Let us take these four items over the twelve years from 1948-49 until 1959-60, the estimate for which we have just completed. Social Welfare will be up by £15.3 million; Health will be up by £6.5 million; Education will be up by £7.4 million; and Agriculture by £6.3 million. Another item I shall put in which nobody seems enthusiastic about is the service of debt. We cannot help that; it must be paid; and that is £20.2 million.

Mr. Sweetman

Is that the gross or the net figure?

Dr. Ryan

The interest plus sinking fund.

Mr. Sweetman

It does not take account of interest coming back into the Exchequer?

Dr. Ryan

No. it is the gross. The total current expenditure in 1948-49 was £71.59 million and the estimate of the total current expenditure for 1959-60 is £127.57 million. That is a difference of £56 million and if you take these five items out, Social Welfare, Health, Education, Agriculture and debt, our expenditure is actually the same this coming year as it was in 1948-49.

It is obvious that you cannot give more for old age pensions or education without spending more. Expenditure goes up, that is the unfortunate fact. It is fairly obvious that as between four Governments, two from this side of the House and two from the other side, that between all of them the increases have been under these five headings. If you leave these aside expenditure on the other headings has remained constant. As a matter of fact taxation is a bit less because the income from the Post Office is now £5.6 million higher than it was at that time. If you do not regard that as taxation then taxation is lower than it was at that time. Of course, if you like you could regard that as taxation because the Post Office is a Government service and you can regard what you pay for stamps, for a telegram or for your telephone as a tax if you like.

The main object of this Budget is to promote production so as to increase employment and raise the standard of living. I am satisfied that the reduction in the standard rate of Income Tax, following many other concessions over the past five or six years to industry and also the large increase in the aids to agriculture, will have a significant effect in building up our economy. To give this fillip to our economy I am taking a risk in estimating for £2½ million to be found either from over-estimation of expenditure or under-estimation of income. There is no doubt that a Minister for Finance always takes a risk and, as I have already pointed out, the risk is not justified in nearly every case. The only thing, however, that can be charged against me is that I am taking a bigger risk this year than I did last year in taking £2½ million as a sum in expenditure to be covered by errors one way or the other.

I have taken this risk after due deliberation because I believe we have now got out of the depression. We descended into that depression in 1956 and it continued into 1957 but now our economy is ascending out of it. If I am right this Budget will be balanced and that fact in itself will help the ascent. If this Budget is balanced our economy will have improved considerably. I only hope that my optimism will be realised and I presume that I can say that every Member of this House will share with me the hope that we will see in this year an improvement in our economy.

Mr. Sweetman

Hear, hear!

Question put and agreed to.

This Resolution, Resolutions 1 to 8 come to by the Committee on 15th April, 1959, and the additional Resolution come to by the Committee on 22nd April, 1959, reported and agreed to.