Financial Statement. - Budget, 1962.

Economic Growth in 1961

In 1961, for the third year in succession, the momentum of economic advance was maintained. The volume of national production is estimated to have increased during the year by 4½ per cent. The cumulative increase over the three years 1959 to 1961 was almost 15 per cent. as compared with only 8 per cent. for the years 1950 to 1958. The rate of growth in 1961 appears to have been at least as good as that of a number of more industrialised Western European countries.

Our first concern must be to maintain a satisfactory rate of increase in national production. To sustain our present rate of growth, we must in particular continue to follow sound budgetary and monetary policies, promote higher savings and investment and try to secure that national production is not anticipated by advancing incomes.

Balance of Payments

Despite a widening of the trade gap and some disimprovement in the terms of trade, the balance of payments for 1961 showed a surplus of £1 million. The expansion of the economy during the year took place, accordingly, in conditions of external stability. It is worthy of note that over the past five years external receipts and payments on current account have been balanced. External reserves have risen and will serve as a support for future productive development.

Exports in 1961 amounted to £180 million as compared with £153 million in 1960 and £131 million in 1959. Agricultural products accounted for the bulk of last year's increase. Cattle exports rose by £10½ million of which store cattle accounted for £6½ million. The increase in exports of attested store cattle reflects the success of the bovine tuberculosis eradication scheme and is a welcome reversal of the downward trend experienced since 1957. Another substantial increase was in exports of carcase beef, which rose by £6 million. Exports of butter and bacon, carrying, of course, substantial subsidies, were also higher Industrial exports of many kinds, in particular, textiles, clothing, footwear, dressed leather and machinery, continued to expand.

Imports increased by a greater amount than exports with the result that the gap in merchandise trade widened by £7½ million. Most of the increase in imports consisted of capital equipment and materials for the continuing industrial expansion.

The increase in the import excess was offset by a substantial rise in net invisible receipts. Net receipts from tourism, travel, etc., went up by over £3 million while net income from investments, profits, etc., was almost £3 million higher.

Industrial Production

The main impetus to the growth in national production still continues to come from the industrial sector. The volume of production in manufacturing industries rose by 8½ per cent. in 1961, following increases of 8 per cent. in both 1959 and 1960. The rate of increase in 1961 was among the highest in Western Europe and, indeed, the total increase of 27 per cent. over the three years has been surpassed by few Western European countries.

All the major industrial groups shared in the expansion in 1961. Large increases were recorded in chemicals, engineering, clothing and footwear, food, and paper and printing.

Agricultural Production and Incomes

Agricultural output in 1961 pursued the steady but moderate upward course of recent years. Net agricultural output increased by about 6 per cent. in value and by 2 per cent. in volume. Farm incomes rose during the year by £8 million. As some running down of stocks took place, there was a greater increase in farmers' cash incomes, which rose by £10 million.

An important factor in the increase in farmers' incomes in 1961 was the expansion of agricultural exports to which I referred earlier. Exports of live cattle, beef, butter and bacon increased in total during the year by £19 million. Despite heavier imports of live animals than usual, the substantial exports of cattle and meat resulted in a reduction in the cattle stocks which had been built up in earlier years, particularly 1959. The livestock enumeration of January, 1962, recorded an estimated decline of 112,000 in cattle numbers as compared with a year earlier. On the other hand, it was satisfactory to note that the number of milch cows and heifers in calf had increased and that both pig and sheep numbers showed a marked rise.

Capital Formation and Savings

Gross fixed capital formation went up by £15 million in 1961 to £102 million, thanks mainly to heavier investment in factory building and larger imports of machinery and equipment.

Total savings increased by £9 million to £68 million. The value of the physical increase in stocks in 1961 being £7 million less than in 1960, the rise in monetary savings was of the order of £16 million. The National Loan in November and the recent Electricity Supply Board issue were both oversubscribed.

The increases in savings and fixed asset formation in 1961 were welcome. The first report on the Irish economy of the new Organisation for Economic Co-operation and Development, which has just been published, makes the comment that a major structural weakness in the economy in the post-war period has been the low level of capital formation, which has represented a much smaller percentage of national production than in the rest of Western Europe. In 1960, for example, the percentage of national production devoted to the creation of fixed capital assets in this country was 13 as compared with 21 for the countries of the European Economic Community combined. The increase in investment in 1961 merely raised our percentage to 14. There is obviously room for a great improvement in the level of capital formation.

Employment

The industrial expansion in 1961 resulted in the creation of additional employment. The number of persons at work in transportable goods industries in the December quarter was 5,400 higher than a year earlier and 15,100 greater than in the December quarter of 1958.

Total employment outside the agricultural sector as estimated in April, 1961, was 10,000 higher than in April, 1960. As the fall in the number employed in agriculture in the same period was some 4,000, net employment rose by 6,000. This is the first time for several years that the working population has significantly increased. The evidence since April is that employment in industry has risen further.

Unemployment and Emigration

During 1961 both unemployment and emigration continued to fall. It appears from the net passenger movement figures that less than 27,000 emigrated in 1961, while for the twelve months ended February, 1962, the figure was of the order of 22,000. As the natural increase in the population is approximately 26,000, these figures suggest that the decline in the population has at last been halted and that, if the recent trend continues, it will begin to rise. A rising population would have an important stimulating effect from the psychological and social, as well as from the economic, points of view.

Earnings and Prices

Earnings in 1961 showed a significant rise mainly because of the eighth round of wage and salary increases which got under way during the year. In December, 1961, hourly earnings in transportable goods industries were almost 11% above those a year earlier; the increase in weekly earnings was about 8%. These figures do not reflect the full impact of the recent round as awards have continued to be made in the early months of 1962.

Costs have been affected, as shown in the recent upward trend in prices, following a period of stability. The quarterly consumer price index as averaged for the year 1960 was at the same level as in 1958. In 1961, however, consumer prices rose 2.7% while the mid-February, 1962, figure registered a further increase.

It is no part of Government policy to stop anyone from getting the full reward he has earned for his output. On the contrary, the aim of national economic policy is to ensure, by better organised and more efficient use of productive resources, that real incomes and living standards will be progressively raised. A question might legitimately arise about the timing or amount of particular rounds of wage and salary increases and, indeed, about taking out the whole of the benefit of increased productivity in the form of more money rather than lower prices. On the whole, however, it must be acknowledged that the rise in the money earnings of industrial workers over the period from 1953 to the beginning of the eighth round, when converted into real terms by allowing for the rise in living costs, was matched by an increase in productivity, that is, in output per person.

But when we examine the eighth round, we find ground for some concern because the percentage increase in money incomes is higher than the percentage increase in national production. The inevitable consequence is the rise in costs and prices, which is already apparent, and the likelihood of strain on the balance of payments. There is also the necessity for higher taxation to meet the increased cost of public services and to lesson social tensions and inequalities.

How much more sensible it would be that money incomes should keep in line with national production. Then prices and costs would not be pushed up, as they are being pushed up at present with risk to our economy at a critical time. We all know how difficult it is to reverse these upward movements in the level of costs and prices. It would be much better to avoid them by ensuring an even upward progress of income and productivity. In this way prices and costs would not be disturbed. When income increases run ahead of productivity, their real value is necessarily reduced by price increases, so that the gain for the individual is in part illusory, while, for the economy, the disimprovement in its competitive position is unfortunately real. I have on many occasions emphasised the desirability of using productivity increases to bring about a reduction in prices, especially where our goods are not at present competitive in export-markets. This is all the more desirable as we face the severer competition involved in membership of the European Economic Community.

The difficulties created by the size of the latest round of income increases will be eased provided further claims for increased incomes are deferred until national production has expanded sufficiently to make them possible without another rise in prices. Neither the current rise in prices, due to incomes outrunning production, nor such increase in taxation as may be necessary for the reasons I have mentioned, should justify any demand for a further increase in incomes.

It is well that there is a growing realisation, in Ireland as elsewhere, of the need to establish a more orderly relationship between increases in incomes and increases in productivity. Some time ago the Irish National Productivity Committee issued a unanimous statement of the principles which should determine the division of the benefits resulting from increased productivity. Subsequently, the Irish Congress of Trade Unions and the Federated Union of Employers agreed in principle on the establishment of a National Employer/Employee Conference which would meet annually to discuss wages policy in the light of the overall economic position. I understand that the first meeting will take place soon and I wish it success. The Minister for Industry and Commerce has announced that the industrial relations machinery is being reviewed. But institutional developments, while desirable, will not be successful unless all concerned —employers and employees alike —not only recognise the nationally damaging effects of income increases which endanger competitiveness and external stability, but are also determined to ensure that these will not occur in future.

Prospects for 1962

The present year should see a further substantial rise in national output, although the increase may not be as high as in 1961 and may, as I have said, be accompanied by a deficit in the balance of payments. Last year's rate of increase in agricultural and industrial exports may slacken while imports will probably show a further substantial rise as a result both of the continuing expansion in economic activity and higher purchasing power resulting from the general increase in money incomes. It will be necessary to watch the situation carefully to ensure that no obstacles of our own making are placed in the path of our economic advance. If there is co-operation by all sectors of the community in saving a large proportion of their higher incomes, in increasing production, raising efficiency, and generally putting the national interest above sectional interests, we may anticipate another year of progress.

Later Prospects

Looking further ahead, one has to consider how the five-year Programme for Economic Expansion, which came into operation in April, 1959, should be reshaped as it approaches its term in order to meet the circumstances likely to confront the Irish economy from 1964 on.

Economic Programme

Preliminary work has started on the preparation of the Second Programme. Background information is being collected and the progress achieved under the current Programme is being analysed. The Economic Research Institute has been requested to study the conditions as to output, employment, investment, external payments, and kindred matters, which would be required by different rates of growth of the economy. It will not be possible, however, nor would it be reasonable, to prepare even the provisional outlines of the Second Programme until the negotiations regarding our application for membership of the European Economic Community have advanced to the point at which the conditions of Ireland's entry are established and the adaptations which will be required in industry, agriculture and other sectors can be assessed with some degree of precision. The industrial surveys which are being conducted under the auspices of the Committee on Industrial Organisation, and the corresponding surveys which are being made in the agricultural field, will provide the necessary groundwork for a considerable part of the new Programme.

European Economic Community Membership Application

The future turns so much on the question of what our relationship will be with Britain and the European Economic Community that a few words on current developments in this context will not be out of place.

In my Financial Statement last year I touched on the consequences for us of the establishment of the European Economic Community and the European Free Trade Association and of any eventual coming together of these two groups. As the House is aware, there have been major happenings in this field during the past year. Britain, our principal export market, and Denmark have applied for membership of the EEC and Norway is expected to do so shortly. Three other countries —Austria, Sweden and Switzerland— are exploring the possibility of becoming associated with the Community.

Ireland applied for admission as a member of the Community last July. A first meeting with Ministers of the Governments of the member countries of the Community took place in Brussels on 18th January at which this country was represented by the Taoiseach and the Minister for Industry and Commerce. The member countries have now requested that a meeting be held on 11th May between their Permanent Representatives in Brussels and senior officials of the Irish Government for the purpose of obtaining, in preparation for a further ministerial meeting, clarification on certain points of an economic character arising out of the Taoiseach's statement in Brussels.

These further meetings should clear the way to actual negotiations with the member countries. The Government—and the various interests throughout the country which will be affected—are anxious to know as soon as possible the terms of Ireland's membership of the Community.

Assuming that satisfactory terms of admission to the Community are negotiated, enough is known at present to enable the general outline of the new environment for agriculture and industry to be discerned.

For agriculture, there is the prospect of a market protected from outside fluctuations in which stable prices, eventually to be aligned, will rule. These are very considerable advantages which could aid the development of our agriculture. There are, however, limiting factors which it would be short-sighted to ignore. The agricultural production of the Community is already such as to meet a high proportion of the needs of the area and is capable of rapid expansion to meet increased demand resulting from higher incomes and a rising population. The levels at which the prices of various products will be aligned within the Community are not yet known. Furthermore, the Community, while protecting itself from outside fluctuations, cannot close its frontiers with the rest of the world if its external trade is to be maintained and expanded. These factors, the significance of which varies from commodity to commodity, serve to remind us that adjustments in the pattern of our agricultural production will be necessary to enable us to exploit those openings which will show promise of most profitable expansion.

On the industrial side, once the necessary level of competitive efficiency has been reached by our industries generally, there will be free access to a vast and expanding Community market, moderately protected against the rest of the world. In this market, development will be based on the economic allocation of resources and the growth of large-scale production under conditions of competition. Transition to this environment will necessarily involve changes in the pattern and structure of Irish industry. The range and scale of production will need to be adjusted to a "home" market many times larger than that to which we have been accustomed. This does not mean, however, that there will no longer be room for the small firm; efficient small units, both as suppliers of finished goods for consumer markets and as manufacturers of parts required for a more elaborate production system, continue to thrive in the Community.

I have outlined only the principal factors which will determine the reorganisation to be undertaken in the more important sectors of our economy. Ultimate responsibility for this task rests with agricultural and industrial producers themselves. Major decisions will, in general, have to be guided by the conclusions to be drawn from the work of the Committee on Industrial Organisation and the parallel studies and surveys being carried out in the agricultural sector, including industries based on agriculture. I can assure the House, however, that the Government will lose no time in taking any measures, or giving any assistance, which may be necessary to facilitate the process of adaptation and adjustment.

Recommendations of Committee on Industrial Organisation

The Committee on Industrial Organisation has recently presented an interim report recommending the provision by the State of certain general forms of aid towards adaptation of industry to meet Common Market conditions. The Committee has made it clear that the prime purpose of its recommendations is to encourage industry to undertake the necessary measures of adaptation in the shortest possible time. The Government have decided to proceed on the basis of the Committee's recommendations.

The principal recommendations are directed towards the important problem of the adaptation of industry to more competitive conditions. The Committee proposed that the initial allowances for tax purposes in respect of expenditure on industrial plant and equipment, at present 20 per cent., and on industrial buildings, at present 10 per cent., should be doubled, i.e., increased to 40 per cent. and 20 per cent. respectively. The Committee also recommended provision through the Industrial Credit Company Limited of loans on special terms for industrial re-equipment. The loans would cover a proportion, to be settled in each case by the Industrial Credit Company, of the expenditure involved and would be granted only where that Company is satisfied that there is a definite prospect that the re-equipment project will make the undertaking fully competitive. The special terms recommended are waiver of interest and deferment of capital repayments for up to five years.

The Committee also suggested a concession designed to encourage joint action by industrial enterprises in such fields as production and marketing. The proposal is that, where two or more enterprises set up a new joint industrial enterprise, each parent enterprise should be enabled to charge against its profits for tax purposes its share of any losses incurred by the joint enterprise in the first five years of its existence.

Provision will be made for the taxation concessions in the Finance Bill. The Industrial Credit Company will be asked to make the special loan facilities available and discussions will be initiated on the terms and conditions on which the requisite capital will be provided for the Company. As these facilities are designed to encourage industry to modernise and adapt itself to conditions of freer trade, they will not, of course, extend to loans covering normal replacements and renewals.

The Committee also made recommendations regarding industrial grants, technical assistance grants payable by the Department of Industry and Commerce, and marketing grants payable by Córas Tráchtála. The recommendation regarding industrial grants, which related to certain projects involving development of existing industries, will be dealt with in amending legislation which will shortly be introduced by the Minister for Industry and Commerce. The extent and conditions of an improvement in technical assistance and marketing grants are being considered in consultation with the Committee.

I should like to take this opportunity to emphasise that reorganisation of production for greater efficiency would still be an essential condition of national progress even if the European Economic Community had not come into being. It is made more urgent by the existence of that Community and our desire to become a member of it.

The Minister for Industry and Commerce has already announced that any forms of State and made available as a result of the Committee's recommendations would be granted in respect of measures of adaptation taken on or after the 14th December, 1961. Effect will be given to this decision. As these aids are aimed at quick results, they should clearly have a limited period of currency. I propose that the taxation incentives should apply to expenditure on equipment, plant and buildings, and to joint enterprises formed, up to 31st March, 1965, and that the special re-equipment loans should be available in respect of projects approved by the Industrial Credit Company up to the same date.

II. CAPITAL BUDGET, 1961-62

The outturn on Capital Account last year is shown in Table II of the Tables in connection with the Financial Statement. It will be seen that the capital requirements of the State and other public authorities came to £57.2 million as compared with the Budget estimate of £55.5 million. This close correspondence of the totals occurred despite variations under individual headings.

The more notable increases were £3 million for agriculture, mainly for guarantee payments on fat cattle and beef exports, over £800,000 for grants and credits for industry and almost £500,000 for television development. Items on which expenditure fell short of estimation included Irish Shipping and the Electricity Supply Board, the reduction in each case being due to delays in the incidence of payments. Building and construction work was short by £600,000 of the £14.4 million estimated; but this variation is not significant having regard to the size of the total and the diffused nature of the expenditure.

Progress with bovine tuberculosis eradication has been such that it is expected that, with the exception of five counties in Munster and one in Leinster, the country will be completely attested by the end of this year. I would urge on all concerned the desirability of co-operating fully in bringing this expensive, but necessary, scheme to completion as rapidly as possible.

III. CAPITAL BUDGET, 1962-63.

When I introduced my first Budget in 1957 I said, with regard to the public capital programme, that I believed that the aim should be not a reduction, unless that should be forced on us by the inadequacy of public support, but rather a reshaping so as to make the programme more directly productive.

In my first two years of office as Minister for Finance a sum of £10.55 million was devoted to agriculture, representing 13% of public capital expenditure for those two years. In the following two years the capital provided for agriculture increased to £23.18 million, representing 24½% of the total. This percentage is maintained for the two years 1961-62 and 1962-63 combined.

In the case of industry, taking grants and credit together, capital expenditure in the first two years of the six-year period since 1957 was £3.35 million, representing 4.2% of the total public capital programme in those years. In the following two years expenditure was equivalent to 7.9% of the total public capital programme, while for the last two years of the period the amount devoted to industry has reached a total of £17.1 million or 14% of total capital expenditure.

Table VI of the Financial Tables shows the main headings of capital expenditure this year in the form set out in the White Paper on Economic Expansion. It will be seen that expenditure is expected to reach a level of £66.88 million or £9.64 million more than the outturn for last year. Expenditure shows an increase under every heading except agriculture and broadcasting. There is a decrease under the latter heading because development works by the television authority are nearly completed. In the case of agriculture the decrease is due to the termination of the temporary scheme of guarantee payments on fat cattle and beef exports which was designed to accelerate progress in eradicating bovine tuberculosis.

The increase in the case of fuel and power takes account of increased expenditure of almost £3 million by the Electricity Supply Board, mainly on generating plant and new high tension lines. I may say that it is intended to make provision during the present session for the completion of the rural electrification scheme.

An extra £1.1 million, bringing the total to £3.5 million, is intended for telephone development. The high demand for telephones continues and is a reflection of increased economic activity and higher living standards.

The enlarged telephone development programme and the increase in other works of a capital nature for which the State is directly responsible, such as forestry, bovine tuberculosis eradication and airports, have caused the rise in the number of State employees in recent years. Every effort is being made to ensure that capital works are efficiently and economically carried out. This is a field in which outside management consultants can make a useful contribution. Two firms of consultants have been engaged in the Office of Public Works and their efforts have already resulted in more economic purchasing arrangements for stores and machinery, including expensive drainage equipment, and the integration of architectural and administrative functions in a manner which yields better planning and control of building work. A management consultant has also recently concluded an assignment in the Forestry Division of the Department of Lands and has been able to bring about substantially increased productivity on work in connection with forest development and management. The benefit is being shared by the workers who participate in the incentive bonus scheme.

The provision for industry this year is higher by £1.93 million; £1½ million goes towards the cost of the new nitrogenous fertiliser factory and there is almost £600,000 more for industrial grants. Also, for the first time, provision of £½ million is being made for Cómhlucht Siúicre Éireann. It is expected that the Company's plans for food processing will soon reach the stage at which the Government will be asked to provide additional share capital. The provision is conditional on the necessary legislation being passed and covers only investment in fixed assets.

The provision made for building and construction shows a substantial increase. Housing, sanitary and miscellaneous services account for an extra £2¼ million. This increase is due partly to increased costs but it also reflects a higher demand for loans and grants for private housing, a resurgence of local authority housing in a number of areas, particularly Dublin, and heavier expenditure on water supply, sewerage and miscellaneous services. These developments are both an indication and a consequence of the rise in national living standards. It is, however, necessary to keep an eye on the resources available and also, as I mentioned last year, to avoid the creation of peaks of intense activity which might be followed by slack periods.

The capital outlay of Córas Iompair Éireann will increase by £1.4 million this year to £2.5 million. Over £½ million of this sum will be devoted to hotel development works and the balance is attributable to acceleration of the railway modernisation programme.

The Government is reinforced by the views of the OECD in its belief that increased investment of a productive kind is in the national interest. The increased public capital programme for the current year has been approved on this basis.

IV. SOURCES OF FINANCE FOR CAPITAL BUDGET.

Table III of the Financial Tables shows the resources which were availed of by the Exchequer to meet capital requirements in 1961-62. The resources expected to be available towards the capital requirements of this year are set out in Table V.

Last year, the support from the public towards the financing of capital expenditure was generally up to expectation. The largest single contribution came from the fully-subscribed 6 per cent. National Loan in November which brought in £16.9 million.

Net receipts from the savings banks and savings certificates amounted to £5 million as compared with £4.2 million in 1960-61. Prize Bonds continued to attract subscribers and, allowing for encashments, brought in £2.4 million, much the same figure as in the previous year.

The confidence which I expressed last year in the growing public support for Exchequer Bills has been justified by an increase in issues of £2.8 million during the past year and the stage has now been reached when consideration can be given to the question of issuing Exchequer Bills more frequently than once a month. I am also considering the possibility of issuing tax reserve certificates to serve as a tax free temporary investment for persons or firms wanting a convenient means of providing in advance for tax payments.

This year's capital programme is bigger than last year's and still greater support from the community will be needed to finance it. The money required for national development should, to the greatest possible extent, be provided by our own people. During the coming year the Savings Committee propose to intensify their drive for new savings and I am confident that, with incomes generally higher, there will be an encouraging response from the public. The country is, indeed, indebted to this voluntary committee whose services are so generously given for the common good.

A natural result of the growth of public capital investment for some years past is the higher debt charges that have to be met from taxation. We cannot, as I said on the Vote on Account, have capital development without paying for it. We must, however, continue to make every effort to minimise the cost by pursuing the policy of favouring productive investment. In this way increased debt charges can be more nearly matched by increased revenue. The voted capital services will need to be examined critically from time to time to ensure that there is recourse to borrowing only for such items as are truly of a capital nature and provide assets for the continuing use or benefit of the public.

Last year the net charge for the service of debt in the Central Fund and Supply Services, allowing for the interest and dividends received from State loans and investments, was £21.5 million. Of this total, £10 million was sinking fund intended for the redemption of debt. This is a substantial amount but it can only be regarded as being fully applied when the current budget is in balance. Since the current budget has, in fact, been balanced over the last four years as a whole, one can say that a total sum of £36 million has been set aside effectively in that period for redemption of the public debt.

V. CURRENT BUDGET, 1961-62.

Outturn, 1961-62

Tax revenue was very buoyant last year and non-tax revenue also exceeded the budget estimate. The buoyancy was such that it covered the excess expenditure, as compared with the Budget estimate, of £5.3 million on the Supply Services and £0.54 million on the Central Fund Services. It was short only £700,000 of making good the budget adjustment of £3 million for errors of estimation.

The excess expenditure on Central Fund Services, apart from the Road Fund transactions which merely balance the intake of revenue from motor vehicle duties, was caused by the high level of interest rates on temporary borrowings.

When dealing with the Vote on Account, I adverted to the two principal factors which upset the budget allowance for the Supply Services. These were the pay increases, which cost an extra £2½ million in the year, and the large supplementary amount which had to be provided for agriculture. Some £5½ million of this supplementary estimate was for losses on the disposal of 1960 wheat and price support for butter and bacon exports.

The net result of the variations in current expenditure and revenue was a deficit of £708,000.

It might, perhaps, be argued that, if there had not been a substantial net reduction in tax rates last year, the deficit would not have arisen. I do not think, however, that there is good ground for calling in question the tax policy which has been consistently pursued in recent years. Its soundness is amply borne out by the revenue buoyancy stemming, not from increases in tax rates, but from increased national output and earnings promoted by the economic and fiscal policy of the Government, including the progressive reduction of direct taxation. Over the last four years, reductions have been made in direct taxation rates which are now costing the Exchequer upwards of £5½ million a year.

Expenditure and Taxation Levels

Last year I commented on the level of State expenditure and taxation in relation to national production, pointing out that the rise in State outlay since 1957-58 had been more than matched by the rise in national production. That statement still holds good. State expenditure chargeable against revenue has risen by 18½% in the last four years whereas the value of national production has increased by nearly 21%. The proportion of gross national product at market prices absorbed by all taxation, central and local, is about 22%, which is not high by international standards. Tax receipts retained for general Exchequer purposes, excluding road tax which is used exclusively for the benefit of road users, represent 16.9% of national production and are at virtually the same level as in the past three years.

By reference to international standards the proportion of our tax revenue taken in direct taxation is low. So also, so far as comparison is possible, are our rates of direct taxation. This point is significant in the context of our application for membership of the European Economic Community. The disincentive to effort and enterprise which direct taxation can represent has been very much reduced by the adjustments of recent years. More important still, however, is the position which now obtains so far as industrial profits are concerned. The Irish rate of tax, that is, income tax and corporation profits tax, on companies is now 41.7%. This compares with 53.7% in Britain, 50% in France, 51% in West Germany and 47% in the Netherlands. In addition, Irish companies enjoy complete remission of tax on profits attributable to increased exports. Further, in most Western European countries moneys paid by a company by way of dividend come out of profits subjected to tax and are normally taxed again in the recipients' hands. In Ireland, not only is the dividend not charged again to income tax in the hands of shareholders but, where exports relief applies, an appropriate part of the relief allowed to the company is passed on to the shareholder and, in addition, relief may be granted under Section 7 of the Finance Act, 1932, as amended. Another less obvious point is that most Continental countries take as taxable income the increase in the net worth of a company from year to year and thus automatically tax capital gains.

Commission on Income Taxation

I might, perhaps, at this point refer to the reports of the Commission on Income Taxation. I expect shortly to receive the Commission's seventh report which, I understand, will be their final one. The Commission will then have completed the valuable service which they undertook over five years ago. I gladly take this opportunity to pay tribute to the fine public spirit of the members in discharging with such care and attention this long and complex task.

The Commission's first report was concerned with the method of collecting income tax charged on salaries and wages; and it led to the introduction of the Pay As You Earn system. The Government's views on the recommendations in the second, third and fourth reports were given in the White Paper on Direct Taxation published last year on Budget Day. The fifth report, on co-operative societies, and the sixth report, on simplification, were published during the course of 1961. While I have studied these two reports with some care, I would prefer not to take decisions on the recommendations they contain until I have received and considered the Commission's final report which I expect will range over a wide variety of matters. The Government's comments on the recommendations in the fifth, sixth and seventh reports will be set forth in a White Paper which it is hoped to issue before the 1963 Budget.

Progress with tax reforms and simplification

On decisions announced in the White Paper last year, I have the following progress report to make:

First of all one taxpayer, one charge:

The idea here is that each taxpayer should normally be sent a single composite notice of assessment to income tax each year and a single demand later to cover the full income tax charged. This proposal will, as indicated in the White Paper, be implemented as soon as practicable after the delivery of electronic equipment about September, 1963. Considerable headway has already been made in preparing for the new arrangements which will then come into effect. These will involve radical changes in the whole income tax organisation, a comprehensive review of which is being conducted at present. The use of the electronic computer and the concomitant reorganisation of the income tax staffing will, it is expected, result in administrative saving and at the same time increase administrative efficiency. It should also help to ease the strain of work in tax offices. It has, in fact, been necessary to increase the Revenue staffing somewhat to cope with the extra work on Pay As You Earn but the additional expense involved has, of course, been amply recompensed in the form of increased revenue intake. I should like to acknowledge that the fact that the new system has operated so smoothly from the start is due mainly to the wholehearted co-operation received from employers and employees alike.

Surtax decentralisation:

Surtax liability has up to now been computed in the Special Commissioners' Office at Dublin but, under the decentralisation arrangements now being made, this will in future be a matter for the local income tax offices.

Collection of surtax from remuneration:

In last year's Finance Act a section was included for persons chargeable to surtax who are within the ambit of Pay As You Earn. It enables them, as from 6th April, 1962, to have their surtax collected in conjunction with their income tax. Many surtax payers are availing themselves of this facility.

One form of return for income tax and surtax:

The Finance Act, 1961, also provided for a single return of income by individuals which would suffice for the purpose of both income tax and surtax. The new forms of return are now being issued from the various tax offices. The forms themselves have been recast and simplified. I am confident that taxpayers will find their forms easier to understand and to complete than in the past; and I may say that in this matter the Revenue Commissioners have given effect to one of the recommendations in the sixth report of the Income Taxation Commission.

Consolidation of Income Tax Acts:

Considerable progress has been made in preparing for the consolidation of income tax law. It is my opinion, however—and in this I am of the same mind as the Commission—that there should be revising legislation before a consolidating Bill is introduced. Accordingly, I am having legislation prepared which will provide for contemplated reforms, will eliminate archaisms and deadwood, will remove flaws and in general simplify the code. Work on these amending provisions will be pressed forward and I hope to introduce an instalment of them before next year's Budget.

Stamp Duty Volume:

The compiling of a comprehensive volume on Stamp Duty law is nearing completion and it is hoped to send the material for printing within the next few months.

VI. CURRENT BUDGET, 1962-63 —DETAIL.

As the White Paper of Receipts and Expenditure shows, revenue this year is expected to increase by over £8 million at existing tax rates. Tax revenue accounts for most of this increase, namely, £6 million. The remainder is attributable to motor vehicle duties, Post Office receipts and radio and television licences but the increase under these particular heads is, of course, matched by corresponding increases in related items on the expenditure side. Interest on Exchequer advances, as might be expected, also shows an increase.

In estimating the yield from tobacco this year, it has been considered prudent to allow for the effect of published medical opinion and to assume a reversal of the upward trend in cigarette consumption. Account has also had to be taken of the full-year cost of reliefs in income taxation given last year.

Current expenditure, as compared with last year, is up by £8.2 million. Of this increase, Supply Services are responsible for £5½ million and Central Fund Services, including the Road Fund, for the balance. The principal items accounting for the increase in Supply Services were explained in connection with the Vote on Account. Debt service is responsible for the bulk of the increase in Central Fund Services but payments to the Road Fund on foot of motor vehicle duties also show an increase.

This year, for the first time, the Central Fund Services contain no reference to local taxation grants. I explained on the Vote on Account that the disappearance of this item is balanced by increased expenditure on the Supply Services.

On the White Paper figures the gap between revenue and expenditure is £745,000. To this I must add the first year's cost, estimated at £100,000, of the taxation reliefs which I am conceding pursuant to the recommendations of the Committee on Industrial Organisation. I must also add provision for the increased pay recently awarded to Secondary and Vocational Teachers. This widens the gap to £1,305,000. There are, however, obligations of a social nature which I must also take into account.

Pensions

The position of pensioners was debated by Dáil Éireann on 21st March last and a Government resolution was adopted to the effect that pensions proposals should be considered in conjunction with the budget, when they could be related to the taxation required to implement them. I indicated that the Government were sympathetically disposed to pensioners and I promised to examine, when preparing the budget, what increases could be given to them.

The pensioners concerned fail broadly into two categories, public service pensioners and social assistance pensioners. As regards public service pensioners, it was acknowledged in the debate that the pensions awarded to civil servants, gardaí, army personnel, teachers and officials of local authorities had not been adjusted as frequently as had the pay of serving personnel. Acts were passed in 1950, 1956, 1959 and 1960 which enabled certain increases to be given but these did not extend to all pensions and the increases given did not compensate fully for the rise in the cost of living. I have had an estimate made of the cost of raising service pensions to take account of post-war movements in the cost of living, with special provision for persons who retired earlier to bring them into line with their post-war colleagues, and I find that the cost would be approximately £1,300,000.

The Exchequer position precludes acceptance of a commitment of this order for service pension increases. I propose, however, to set aside £450,000 this year to cover increases for the various classes I have mentioned as from 1st August next. The full-year cost will be £675,000, which is half the cost of bringing pensions into line with the present cost of living.

In distributing the increases I propose to give priority to those longest retired and to bring all pensioners who retired before the pay revision of 1st November, 1955, up to the level of their equivalent colleagues who retired with the benefit of that pay revision. When introducing the necessary legislation later I shall give full details of the increases proposed. There will be some increase also in military service pensions and special allowances. The cost is included in the sum of £450,000 which I have already mentioned.

Social Welfare

The social assistance pensioners comprising the second broad category are old age pensioners, blind pensioners and widows. Persons on unemployment assistance should also, I think, be considered. It was made clear in the debate on the pensions motion that the adjustments which have been made in post-war years in social assistance pensions have more than kept them abreast of the cost of living. The last three Budgets in succession have provided increases amounting, in all, to 5/- a week. An increase in pensions calculated to compensate solely for the rise in the cost of living would amount to about 1/- a week.

And £20 a week to the High Court judges to cover them.

The Government believe there is general agreement that social assistance recipients, particularly old age pensioners and widows, should not be confined to an increase strictly related to cost of living considerations. They feel that this section of the community should be allowed to share in the general increase in national prosperity and I am providing over £1 million this year for improvements in social welfare.

It is proposed to raise non-contributory old age, blind and widows' pensions by 2/6d. a week. The personal rate of unemployment assistance and the allowance for an adult dependant of an unemployed person in both urban and rural areas will each be increased by 2/6d. a week.

It is proposed, further, to increase the child dependant allowances associated with non-contributory widows' pensions and unemployment assistance. As a special measure the rates will be raised to the level of those at present payable in respect of child dependants under the contributory schemes. As a result of the increase in the personal rates and those of dependants, a married man in receipt of unemployment assistance in an urban area with, say, three children will receive an extra 12/6d. a week.

The increases in social assistance rates will, of course, require legislation. It is intended that they will take effect from the beginning of August next and it is estimated that they will cost the Exchequer £825,000 this year.

The Government have also under consideration the improvement of the contributory insurance schemes. This, too, will require legislation and it is intended that the new rates of contribution and benefit will come into effect at the beginning of January next. The details have not yet been settled, but I think it proper to make a provisional allowance of £200,000 for the State contribution for a quarter of the year.

An increase is also warranted in two kinds of allowances administered by the Department of Health which are of a social welfare nature. These are the allowances for infectious diseases and disablement. The cost of increasing the infectious diseases allowance by 2/6d a week for a person without dependants and by 5/- a week for a person with an adult dependant would be about £50,000 in a full year and the cost of an increase of 2/6d a week in the maximum rate of the disabled person's allowance would be about £90,000 in a full year. Half of the cost of increasing both allowances would be borne by the Exchequer. I propose to set aside £50,000 as the Exchequer cost of increasing the allowances as from the beginning of August next.

The various improvements in social welfare payments and pensions which I have detailed are estimated to cost the Exchequer over £1½ million in the current financial year. The Deputies who recently supported the pensioners' cause will, I hope, give practical effect to their support by voting for the extra taxation required.

Farmers

As Deputies are aware, there has been an organised campaign in recent months for a huge transfer of income to farmers. While I do not propose to comment in detail on this claim, some of the basic issues raised are relevant in the context of the budget.

Let me say at once that the Government have the greatest sympathy for farmers in the difficulties they have encountered in recent years and are keenly aware of the importance of a sound agriculture to the well-being of the national economy. We have given practical evidence of this in the form of increased State aid for agriculture. While comparisons are affected by the choice of base date, it is true that, if one takes 1953 as the base year, the average farmer's income has not gone up as much as the industrial worker's although his output, in terms of volume, has gone up slightly more. The reason is that agricultural prices have, on average, risen very little in the past nine years in comparison with the rise in other prices. When the circumstances are examined, it is clear that workers in industry—certainly up to the recent round of wage and salary increases— obtained no more than was their due by reference to their increased productivity. As I have said already, there is a disparity between the rate of increase in money incomes represented by the eighth round and the recent rate of increase in productivity. With this reservation, however, no sector of the community has received in recent years more than the increased value of its output. If farmers' incomes have risen less in recent years than their physical output, it is because the price, or value, of what they produce has, here as in other countries, lost ground relative to the value of other things.

It is necessary to realise that there are practical, as well as equitable, limits to the transfer of incomes from one sector of the community to another. There is no undistributed share of national income. At any given time national income is already divided between the various sectors of the community. National income is, indeed, the sum of the several incomes already earned by the different sectors. A claim by any sector for a bigger share of the national income can be met only if some other sector or sectors bear, voluntarily or compulsorily, a cut in what they have already received. Economic growth is, however, best served if those who are expected to produce more are allowed to retain what they earn, subject to general fiscal policy. There would, therefore, have to be very strong grounds of social and economic necessity to justify compulsory surrender by any sector of any large part of what it has already earned by its productive effort. It must be recognised, moreover, that big compulsory transfers, whether effected by raising prices or taxation, would meet with a resistance which would express itself in the form of counter-claims for higher money incomes, leading the economy into inflationary chaos.

Apart from this, the fact cannot be overlooked that taxpayers are already contributing to a substantial re-allocation of national income in favour of agriculture. State aid to agriculture has risen from less than £5 million in 1938-39 to £13 million in 1953-54, £26 million in 1960-61 and over £37 million in 1961-62—when, admittedly, there were exceptional factors. The figure for the current year of almost £30 million is equivalent to 5 per cent. of national income, which is several times the corresponding British percentage. Taking into account the high proportion of our population which is engaged in agriculture, it is obvious that the taxation needed to transfer to farmers sums of the order of magnitude recently advocated would be quite impracticable and could be justified neither on economic nor social grounds.

There are serious difficulties, also, about the alternative course of raising agricultural prices. One-half of sales off farms is exported and increased production has almost all to be sold abroad. The prices realised for exports are not within our control and, in important cases, require the support of subsidies. If we increase domestic prices and so stimulate production for export, we run the risk, which experience shows to be a real one, of prohibitive anti-dumping measures against our subsidised exports. Moreover, it would obviously be unwise to raise prices before we are admitted to the European Economic Community. For some products, our home prices appear already to be rather high by European standards, though for others, particularly beef, they seem relatively moderate. We cannot yet predict what the price level for various commodities will be in an enlarged Community. Indeed, the chief agricultural advantage of membership may be a higher measure of certainly in regard to prices and markets rather than any marked rise in the general price level. Our interest, therefore, lies in keeping any competitive advantage we may have so that we may be able to realise fully the agricultural opportunities of membership of the Community.

I consider, therefore, that whatever transfer of income can be made to farmers this year, within the bounds of equity and practicability, should be financed by general taxation and should help the general body of farmers by reducing expenditure with which all are burdened.

The effect on local rates of contributions to various public charges, such as health services and roads, has lately been the subject of complaint. It would, however, be inappropriate for me to say much on this subject when the whole question of local finances and taxation is under review. A Select Committee of Dáil Éireann is examining various aspects of the health services, including arrangements for meeting the cost of the services and the question whether any alternative arrangements might be made. This Committee is to report before the 30th November next. Moreover, the Economic Research Institute is engaged in a preliminary study of local taxation and finances and interested Government Departments also have the matter under close examination.

It is, however, relevant to say that State grants now contribute more than rates towards the expenditure of local authorities. Indeed, for every £2 in rates collected by county councils, the State contributes over £3 and thus already bears the greater share of the cost of rural services. The State contribution here to local authorities is proportionately as high as in Britain.

I consider that the right way in which to help farmers generally this year is to give them further relief from the burden of rates and to do so by increasing the Agricultural Grant rather than by interfering with the present allocation of the cost of services. The sum which I am allocating for this purpose—£2½ million —is substantial in itself and is one which, because of the Exchequer position, requires a corresponding imposition of additional taxation. This sum will be used to increase the present relief from 60 per cent. to 70 per cent. on the first £20 of all valuations; to grant a new allowance of 25 per cent. on all valuations above £20; and to reduce the lower age-limit for employment allowances to 16 years. As a result, the State will be paying well over half of the rates on land and the net rates payable by farmers will be reduced below the 1956-57 level.

Tractor Tax

Representations have been made regarding the tax on farm tractors. While the standard rate of taxation for ordinary tractors is £31 10s. per annum, reduced rates of 5/- and £8 apply at present to farmers' tractors, depending on the uses to which they are put. Where a tractor is taxed at the 5/- rate, it is illegal to use it for road transport, except for its own necessary gear and farm implements. With an £8 tax, a tractor owner can transport his own agricultural produce and requisites for his farm, and he is also entitled to carry similar commodities for other farmers, provided that he does not accept reward. He is allowed, however, to receive reward for the haulage of another farmer's milk to and from a creamery or a separating station, and he may, under certain conditions, also use his tractor for the transport of another farmer's livestock to and from an auction, mart or fair. It is intended to reduce from 1st July next the £8 tax to £2 10s. at an estimated cost to the Road Fund of £100,000 this year.

Petrol for Agricultural Tractors

Before leaving the subject of tractors, I would like to refer to the repayment of duty of 1/1¾d. a gallon which is allowed for petrol used in agricultural tractors and farm machinery. This scheme has always been open to abuse and constant vigilance by revenue staff has been necessary to minimise the risk of evasion of duty. It was possible to justify the continuance of the concession as long as it represented a significant aid to the agricultural community but the great majority of agricultural tractors are now run on diesel fuel. In fact, I do not expect the total repayments this year to exceed £30,000. On the other hand, the concession is becoming increasingly uneconomic to administer, the cost being disproportionate to the dwindling benefit derived by the farming community. I recognise that the withdrawal of this relief without any prior warning might cause some hardship and so I am giving notice that the concession will cease at the end of this financial year. No repayment will; therefore, be allowed in respect of petrol purchased or used after 31st March, 1963.

Reviewing the Exchequer deficit at this point, I find I have a figure of £5,330,000 to contend with and I am afraid I have to add to this before considering the amount to be raised by additional taxation.

Entertainments Duty

During the year I continued to receive strong representations about the burden of the entertainments duty. Deputies have also referred to this subject in the House. When this tax was originally introduced more than 45 years ago it covered the whole range of spectator entertainments. Over the years, however, numerous exemptions were introduced, each with its own justification, and now the scope of the duty is virtually restricted to cinema shows and dances in the cities and larger towns. There is, therefore, some justification for the claim that the duty now discriminates against these particular forms of entertainment. Apart from that, however, it has been put to me that, despite substantial tax concessions allowed in recent years, the impact of television on attendances, combined with rising costs, is creating an increasingly difficult situation, particularly in the cinema business. It has been stressed that these developments threaten the livelihood of many persons who would find it difficult to secure alternative employment in this country.

I am satisfied that these representations are well founded and that there is no practical alternative but to abolish the entertainments duty completely. The cost of doing this with immediate effect would, however, be too high in the present budgetary situation. Accordingly, I have decided to terminate the entertainments duty with effect from 1st October next. The necessary provision will be made in the Finance Bill and the cost to the Exchequer in the current year will be about £450,000 I sincerely hope that the disappearance of this tax will ease the problems of the interests concerned and will minimise the danger of disemployment.

Taxation

The proposed abolition of entertainments duty widens the difference between current revenue and expenditure to £5,780,000. Even the deduction of £2 million for errors of estimation leaves me with a gap of £3,780,000. I propose to bridge it by moderate increases in taxation on two forms of spending which, however attractive, are not part of essential living costs—drink and tobacco. It would, I consider, be inappropriate, for economic and other reasons, to reverse the policy of reducing direct taxation which has contributed towards the notable improvement in national production in recent years.

Beer

In view of the fact that the consumption of beer is at its highest level for 10 years and bearing in mind that the duty has remained unaltered for the past 5 years, an increase in duty equivalent to a penny on the pint does not seem unreasonable.

I propose, therefore, to increase the duty on beer by £1 11s. per standard barrel. This increase will apply to both home-produced and imported beer and is expected to yield £1,350,000 this year.

I do not hear any clapping from behind the Minister now.

His face is going rosy.

The Minister must be allowed to make his statement. Deputies will get every opportunity to make their contributions.

Spirits

The rates of duty on spirits have not been altered for 10 years and consumption is now higher than it has been for some time past. Accordingly, I propose to raise the duties on spirits by the equivalent of 2d. a glass. I expect this to yield an additional £650,000 this year.

I propose also to take this opportunity to simplify to some extent the present complex structure of the customs duties on spirits. As matters stand, the rates for spirits imported in bottle are, in most cases, 1/- a gallon higher than the rates for similar spirits imported in cask. Moreover, the rate for spirits made from grain—gin, for example—is 1d. a proof gallon more than the rate for other spirits, such as brandy. Both of these differentials have survived since the turn of the century and have long since ceased to serve any useful purpose. In any event, the amounts are quite insignificant in relation to main rates of duty of over £9 a gallon. In settling the new customs rates, therefore, I propose to abolish these differentials.

Tobacco

As regards tobacco, I propose to increase the duty by the equivalent of 2d. on the packet of 20 standard size cigarettes. This increase would ordinarily add over 2d. to the price of the ounce of all classes of pipe tobacco. Pipe smoking is, however, under less of a cloud, if I may use such a metaphor, than cigarette smoking and, partly for this reason, I have decided not to put any extra impost on the hard-pressed variety of pipe tobacco, which accounts for almost 90% of all the pipe tobacco consumed in this country. This type of tobacco is at present rebated to the extent of 10d. per ounce and I propose to increase this rebate to something over 1/- per ounce in order to avoid the necessity for a price increase. Allowing for the cost of this increased rebate, I expect to obtain an additional £1,700,000 this year from the increase in the tobacco duty.

The concession whereby tobacco manufacturers receive a rebate of 5d. a lb. on their clearances of leaf is confined to firms which are in Irish ownership and control. This restriction was imposed when the original scheme was introduced 30 years ago as the relief was designed to help the small native firms to compete with their large rivals. In the intervening years one of the Irish firms, encouraged I would like to think by the rebate scheme, has expanded its business to such an extent that it can no longer be regarded by any standards as a small firm requiring protection. I am happy to say that the directors of this firm have acknowledged that this is so and have agreed that the existing concession is no longer essential to its well-being and that the withdrawal of the rebate would not damage its competitive position.

I have decided, therefore, to terminate the rebate scheme in its present form and to substitute a system of relief which will be universal in its application but will at the same time ensure the continuance of the necessary relief for the small firms. In future all manufacturers will receive a rebate of 1/6d. a lb. on the first 50,000 lbs. of leaf cleared from bond. These changes will save the Exchequer about £80,000 a year and at the same time will substantially increase the help given to the small firms.

In effect, this completes the budgetary arithmetic, as the net result of the changes I have announced is to bring in revenue sufficient to meet the deficit of £3,780,000 which I mentioned earlier. There are, however, a number of matters, affecting the Finance Bill rather than the Budget, which I would like to mention before concluding.

Interest on Tax Arrears

As a corollary to the introduction of tax reserve certificates, which will yield interest on advance payments of tax, I want to have interest charged on arrears of tax.

Under Pay As You Earn employees must bear their tax liability before receipt of pay. I do not think it right that business or professional people, or those whose income comes from investments, should suffer no disadvantage in withholding payment of tax after it becomes due. Delay exceeding nine days in paying over to the Revenue the tax deductions made from employees each month involves employers in liability to an interest charge of 1 per cent. for each month or part of a month. The yield from this interest charge is, I am happy to say, quite insignificant. There are, however, many non-employees who, despite the activities of the tax collectors, are dilatory about discharging their tax debts and I propose that they should have to pay interest on all tax not paid within three months of the due date, the interest to run from that date. The rate of interest I have in mind is ½ per cent. for each month or part of a month. I should, perhaps, make it clear that, where there is an appeal, the tax does not become due until liability has been determined. The interest charge will apply to all arrears of income tax (other than Schedule E tax), of surtax and of corporation profits tax and will be effective as from 1st January next. I shall later move the necessary Financial Resolution.

Evasion

It is, as I have said earlier, my hope that worthwhile administrative saving will come from the projected reorganisation of the tax service that will be associated with the introduction of an electronic computer. This will assist in making an intensified drive towards the detection and charging of any tax liabilities which may now be eluding the net. What I have particularly in mind are business and professional incomes as well as fees and commissions. It would be quite indefensible to permit persons with such incomes to escape with an inadequate contribution to the Exchequer when salary and wage earners are bearing their full share of the burden. The revenue staff to deal with these matters has been strengthened and it is intended that action should be taken without delay against evaders.

Corporation Profits Tax

The Finance Bill will provide for continuance for a further 3 years of the exemption from Corporation Profits Tax which has hitherto been granted to certain concerns, including public utility companies.

Non-Deduction of Income Tax— Agricultural Credit Corporation Securities

Under existing law, interest on debentures, debenture stock or certificates of charge issued by the Agricultural Credit Corporation, Limited, may be paid without deduction of income tax; and the interest is assessable to tax in the recipients' hands. The Agricultural Credit Act, 1961, enabled the Corporation to borrow on foot of other types of securities such as bonds. The Finance Bill will contain provisions under which interest on any such securities will be payable without deduction of income tax in the same manner as interest on debentures, debenture stock or certificates of charge.

Abolition of Minimum Duty

At present a minimum charge of 1/- is payable on dutiable parcels coming from the United Kingdom or Canada and of 2/6d. on dutiable parcels from other countries. These charges are not applied to gift parcels or to goods in passengers' baggage and I propose, as an administrative economy, to abolish these minimum charges and concurrently to obtain authority to waive small amounts of duty where that can safely be done.

Implications of Membership of EEC

As this is the first budget to be introduced since we applied for membership of the European Economic Community it is appropriate that I should refer briefly to what the consequences for the revenue may be. Obviously, the receipts we derive at present from protective customs duties will dwindle as our tariffs on imports from Member States are reduced. Further loss of revenue will result from modifications which it will be necessary to make in our revenue duties. In the years ahead, therefore, we will inevitably have to look for fresh sources of revenue to make good these losses.

Apart from this domestic revenue problem we must also bear in mind the great importance the European Economic Community attaches to the question of harmonising the taxation systems of the member States. All the present member States of the Community have general sales taxes or turnover taxes of one sort or another. Almost all the other countries of Western Europe also employ some form of general sales tax or purchase tax.

In these circumstances I have thought it well to ask the Revenue Commissioners to study the technical questions which would be involved in the adoption of various forms of broadly based taxes on expenditure. I want to make it clear, however, that no decision on the principle of such a tax has been taken by the Government.

Brussels Tariff Nomenclature

The Brussels Nomenclature forms the basis of the common external tariff of the European Economic Community and has been adopted not only by Western European countries generally but also by a large number of other countries. A provisional concordance of the Irish customs tariff with the Brussels Nomenclature was prepared last year and copies placed in the Oireachtas Library and elsewhere for reference purposes. This document has no legal basis. It is intended during this year to transform our tariff definitively into the Brussels Nomenclature and to issue it with statutory effect.

VII. CONCLUSION.

The present financial year is, in a sense, one of transition. We hope that during the year the question of our membership of the European Economic Community will be decided. Until we know the conditions of membership it would be unwise to make any significant change in our long-term plans. In general, therefore, the existing Programme for Economic Expansion will be continued; it has not yet run its course, it has been proved sound, and its objectives are in line with those of the Treaty of Rome. The immediate need is to concentrate on the preparations that obviously must be made to fit the various sectors of our economy for the much keener competition—and greater opportunities—that lie ahead. We have to do our best to maintain the recent improved rate of growth of national production, with its beneficial effects on employment, trade and living standards. We are trying in this budget to achieve these aims. We are also arranging for the improvement in real national income to be extended to classes who cannot contribute to it by their own efforts—pensioners and social assistance beneficiaries. For social reasons, also, we are transferring, through taxation, part of the income of other sectors of the community to the farmers, as they have been unable for some years past, for reasons largely outside their own— and Government—control, to gain as much of an increase in incomes as other producers, although their increased output in difficult times has been a considerable achievement and has benefited the national economy. A further rise in public capital expenditure is also being provided for.

In all this, care is being taken not to jeopardise the improved economic trends of recent years. It will be our constant aim to maintain these trends by sound budgeting, by advancing towards greater efficiency, and by being ready not merely to accelerate development when the opportunity offers but also to correct in time any adverse influences. On this basis, we may hope in this decade to see a progressive improvement in the living standards of a rising population.

Following are the Tables referred to in the Minister's statement:

TABLE I.

COMPARISON BETWEEN (i) BUDGET (APRIL, 1961) ESTIMATES AND (ii) ACTUAL REVENUE AND EXPENDITURE IN 1961/62.

Estimated

Actual

Estimated

Actual

£m.

£m.

£m.

£m.

1. TAX REVENUE (excluding 2 below)

111.64

119.22

1. CENTRAL FUND SERVICES (excluding 2 below)

26.97

27.23

2. MOTOR VEHICLE DUTIES

6.65

6.93

2. PAYMENTS TO ROAD FUND

6.65

6.93

3. NON-TAX REVENUE—

3. SUPPLY SERVICES (non-capital)

112.95(a)

118.23

Post Office

10.30

10.50

146.57

152.39

Miscellaneous

14.98

15.03

4. SAVINGS AND OVERESTIMATION—

net deduction from expenditure (b)

3.00

4. DEFICIT

0.71

TOTAL

143.57

152.39

TOTAL

143.57

152.39

(a) Original provision was £110.75m. to which was added £2.20m. in the Budget for agriculture, social welfare and other services.

(b) The Budget provided for a net adjustment of £3.0m., by way of deduction from expenditure, to allow for errors of estimation. The actual outturn represents a net adjustment of £2.29m. as follows:

£m.

Increase in Revenue Receipts

8.11

Less Increased expenditure on Central Fund Services including payments to Road Fund

0.54

Increased expenditure on Supply Services

5.28

——

5.82

——

2.29

——

TABLE II.

PROGRAMME OF CAPITAL EXPENDITURE, 1961/62—OUTTURN.

(Budget estimates in brackets.)

£million

Objects of Expenditure

Expenditure

Sources of Finance

Public Funds

Internal Resources

Other Sources, e.g., Banks, Insurance Companies, Stock Issues

1. Voted Capital Services

23.86

(21.20)

23.86

(21.20)

2. Local Authorities (a)

9.95

(10.00)

8.31

(8.38)

0.22

(0.07)

1.42

(1.55)

3. National Development Fund

0.15

(0.20)

0.15

(0.20)

4. Electricity Supply Board

5.88

(6.50)

0.78

(1.00)

4.60

(4.00)

0.50

(1.50)

5. Irish Shipping Ltd. (a)

1.46

(1.97)

0.97

(1.50)

0.03

(0.07)

0.46

(0.40)

6. Bord na Móna

1.80

(1.80)

1.80

(1.30)

(0.50)

7. Córas Iompair Éireann

1.10

(1.25)

1.10

(0.62)

(0.63)

8. Air Companies (a)

1.49

(1.35)

0.49

(0.45)

0.84

(0.90)

0.16

(—)

9. Telephone Capital

2.40

(2.50)

2.40

(2.50)

10. Industrial Credit Co., Ltd.

4.09

(3.50)

3.14

(3.20)

0.95

(0.30)

11. Agricultural Credit Corporation, Ltd. (a)

1.12

(1.02)

0.64

(0.25)

0.48

(0.50)

(0.27)

12. Shannon Free Airport Development Co., Ltd. (b)

0.72

(1.12)

0.72

(1.12)

13. Bord Iascaigh Mhara (c)

0.11

(0.22)

0.11

(0.22)

14. Bord Ghaeltarra Éireann

0.07

(0.04)

0.07

(0.04)

15. Irish Steel Holdings Ltd.

1.50

(1.75)

1.50

(1.75)

16. Nítrigin Éireann Teo. (d)

17. Radio Éireann

1.35

(0.88)

1.35

(0.88)

18. National Building Agency Ltd. (e)

19. Miscellaneous

0.19

(0.24)

0.05

(0.09)

0.14

(0.15)

TOTAL

57.24

(55.54)

46.34

(44.08)

8.36

(6.61)

2.54

(4.85)

(a) Sums raised for repayment of borrowing of earlier years are not included, viz. :—

£million

Actual

Estimate

Irish Shipping Ltd.

0.03

0.03

Local Authorities

0.12

0.10

Air Companies

0.25

0.75

Agricultural Credit Corporation Ltd.

1.13

1.13

(b) The total capital expenditure was £0.90 million of which £0.18 million was defrayed from voted moneys and is included at 1 above.

(c) The total capital expenditure was £0.12 million of which £0.01 million was defrayed from voted moneys and is included at 1 above.

(d) £0.02 million was defrayed from voted moneys and is included at 1 above.

(e) £0.05 million was provided by the Industrial Credit Company Ltd. and is included at 10 above.

TABLE III.

CAPITAL BUDGET, 1961-62.

This table indicates the amounts which were required from public funds for capital purposes and the manner in which these amounts were raised.

(Budget estimates in brackets).

£million

Resources

Requirements

1. Capital repayments available for re-issue—

1. Advances required for Capital Programme (Table II)

46.34

(44.08)

Exchequer

1.14

(1.10)

Local Loans Fund

2.61

(2.43)

2. Exchequer advances to enable repayment of bank accommodation by—

3.75

(3.53)

2. Capital Fund

0.46

(0.46)

Irish Shipping Ltd.

0.03

(0.03)

3. Small Savings and Prize Bonds—

Local Authorities

0.10

(0.10)

Savings Banks

3.49

(3.50)

Air Companies

0.25

(0.75)

Savings Certificates

1.51

(2.00)

Agricultural Credit Corporation, Ltd.

1.13

(0.39)

Prize Bonds

2.37

(2.50)

7.37

(8.00)

1.51

(1.27)

4. Departmental Funds—

3. Borrowing to meet payments under Finance Acts, 1953 (s. 16) and 1954 (s. 22)

Investment income and sales of securities

13.25

(9.00)

0.19

(0.25)

5. Balance found by—

4. Borrowing to meet payments under Bretton Woods Agreements Act, 1957, and International Development Association Act, 1960

(a) Increase of Exchequer Bills in hands of public

2.82

0.24

(0.26)

(b) Increase of Exchequer Bills in hands of banks

4.00

5. Redemption of 3% Transport Stock, 1955-60

0.04

(—)

(c) National Loan

16.91

(d) Other borrowings

0.60

6. Borrowing to meet deficit on Current Budget

0.71

(—)

24.33

(24.87)

7. Casual increase in Exchequer Balance

0.13

(—)

TOTAL

49.16

(45.86)

TOTAL

49.16

(45.86)

TABLE IV.

PROGRAMME OF CAPITAL EXPENDITURE, 1962-63—ESTIMATE.

£million

Objects of Expenditure

Estimated Expenditure

Sources of Finance

Public Funds

Internal Resources

Other Sources, e.g., Banks, Insurance Companies, Stock Issues

1. Voted Capital Services

24.67

24.67

2. Local Authorities (a)

11.66

9.92

0.12

1.62

3. National Development Fund

0.21

0.21

4. Electricity Supply Board

8.70

0.58

5.15

2.97

5. Irish Shipping Ltd. (a)

1.57

1.31

0.03

0.23

6. Bord na Móna

1.60

1.50

0.10

7. (i) Córas Iompair Éireann

1.80

1.80

(ii) Ostlanna Iompair Éireann Teo.

0.71

0.71

8. Air Companies

1.31

0.36

0.95

9. Telephone Capital

3.50

3.50

10. Industrial Credit Co., Ltd.

4.70

4.07

0.63

11. Agricultural Credit Corporation, Ltd.

1.45

0.70

0.45

0.30

12. Shannon Free Airport Development Co. Ltd. (b)

0.85

0.85

13. Bord Iascaigh Mhara (c)

0.22

0.22

14. Bord Ghaeltarra Éireann

0.05

0.05

15. Cómhulcht Siúicre Éireann Teo. (Food Processing Project)

0.50

0.50

16. Irish Steel Holdings Ltd.

1.00

1.00

17. Nítrigin Éireann Teo. (d)

1.45

1.45

18. Radio Éireann

0.50

0.50

19. National Building Agency Ltd. (a)

0.10

0.10

20. Miscellaneous

0.33

0.05

0.28

TOTAL

66.88

51.54

7.61

7.73

(a) Sums to be raised for repayment of borrowing of earlier years are not included,viz., Irish Shipping Ltd. £0.56m., Local Authorities £0.11m., and the National Building Agency Ltd. £0.05m.

(b) Total estimated capital expenditure is £1.08 million, of which £0.23 million is being defrayed from voted moneys and is included at 1. above.

(c) Total estimated capital expenditure is £0.28 million of which £0.06 million is being defrayed from voted moneys and is included at 1. above.

(d) Total estimated capital expenditure is £1.50 million of which £0.05 million is being defrayed from voted moneys and is included at 1. above.

TABLE V.

CAPITAL BUDGET, 1962-63.

This table indicates the amounts which it is expected will be required from public funds for capital purposes and the manner in which these amounts may be raised.

£ million.

Resources

Requirements

1. Capital repayments available for re-issue—

1. Advances required for Capital Programme (Table IV)

51.54

Exchequer

1.07

Local Loans Fund

2.62

2. Exchequer advances to enable repayment of bank accommodation by—

3.69

Irish Shipping Ltd.

0.56

2. Capital Fund

0.48

National Building Agency Ltd.

0.05

0.61

3. Small Savings and Prize Bonds—

Savings Banks

4.00

3. Borrowing to meet payments under Finance Acts, 1953 (s. 16) and 1954 (s. 22)

Savings Certificates

2.00

0.15

Prize Bonds

2.50

8.50

4. Departmental Funds—

4. Borrowing to meet payments under Bretton Woods Agreements Act, 1957, and International Development Association Act, 1960

0.25

Investment income and sales of securities

12.00

5. Balance to be found

27.88

TOTAL

52.55

TOTAL

52.55

TABLE VI.

PUBLIC CAPITAL PROGRAMME, 1957-58 TO 1962-63.

£ million.

1957-58

1958-59

1959-60

1960-61

1961-62

1962-63 Estimate

1. Building and Construction:

(i) Housing

10.76

6.53

7.79

8.76

9.20

10.69

(ii) Sanitary and miscellaneous services

2.40

1.78

1.39

1.72

2.10

2.84

(iii) Schools

1.33

1.42

1.70

1.32

1.69

2.00

(iv) Hospitals

0.94

0.26

0.28

0.24

0.15

0.30

(v) Other building and construction

1.17

0.23

0.40

0.47

0.69

1.40

TOTAL

16.60

10.22

11.56

12.51

13.83

17.23

2. Ports, Harbours and Airports

0.42

0.91

1.55

2.24

2.65

3.09

3. Tourism

0.02

0.07

0.09

0.18

0.33

4. Agriculture

4.00

5.48

10.98

10.56

14.71

12.83

5. Agricultural Credit

0.42

0.65

0.84

0.80

1.12

1.45

6. Forestry

1.11

1.14

1.31

1.49

1.52

1.61

7. Fisheries

0.16

0.17

0.30

0.20

0.13

0.29

8. Fuel and Power

8.69

7.60

7.45

7.40

7.68

10.30

9. Telephones

1.15

1.45

1.35

2.10

2.40

3.50

10. Transport

7.83

6.27

4.80

8.34

4.05

5.39

11. Industry

0.54

1.14

1.71

3.19

5.12

12. Industrial Credit

2.81

2.08

2.52

4.09

4.70

13. Radio Éireann

0.10

1.35

0.50

14. Miscellaneous (including the National Development Fund)

0.79

0.63

0.66

0.50

0.34

0.54

TOTAL

41.17

37.89

44.09

50.56

57.24

66.88

The figures for 1959-60, 1960-61, 1961-62 and 1962-63 do not include amounts of £2.03m., £2.85m., £1.53m. and £0.72 m. in respect of repayment of borrowing.

Under head 1, the figures for 1960-61 and 1961-62 are provisional; those for 1957-58, 1958-59 and 1959-60 are audited.

In addition to the expenditure on housing under head 1, £0.25 m. in 1960-61, £0.31 m. in 1961-62 and £0.18 m. in 1962-63 is included under head 2 in respect of housing development by Shannon Free Airport Development Co. Ltd.

TABLE VII.

VOTED CAPITAL SERVICES.

1961-62

1962-63

Original Estimate

Expenditure

Original Estimate

£000

£000

£000

Vote 9—Public Works and Buildings

Subhead A

21

65

38

,, B (part)

2,100

1,822

2,750

,, J.1

23

19

25

,, J.2

780

763

1,080

,, J.4

,, K (part)

290

170

383

TOTAL

3,214

2,839

4,276

Vote 29—Local Government

Subhead E.2

2,400

2,204

2,500

Vote 37—Universities and Colleges

Subhead B (4)

30

30

520

,, D (4)

45

45

32

TOTAL

75

75

552

Vote 40—Forestry

Subhead C.1

130

130

135

,, C.2 (1), (2), (3) and (6)

1,398

1,392

1,473

TOTAL

1,528

1,522

1,608

Vote 41—Fisheries

Subhead D.8

1

1

1

,, D.9 (part)

2

2

5

,, E. (part)

19

15

60

TOTAL

22

18

66

Vote 42—Roinn na Gaeltachta

Subhead C (1)

181

160

185

Vote 43—Agriculture

Subhead E.3 (C)

14

12

15

,, K.6 (C) and (D)

760

933

970

,, K.7

2,278

2,010

2,208

,, K.8 (B)

1,900

1,871

2,050

,, K.11

5,140

4,707

5,833

,, K.K.11

240

4,197

5,833

,, K.13

50

26

67

,, M.6

40

TOTAL

10,422

13,756

11,343

Vote 44—Industry and Commerce

Subhead J.1

650

931

1,000

,, J.2

500

499

1,000

,, N

24

50

,, R

170

70

TOTAL

1,150

1,624

2,120

Vote 45—Transport and Power

Subhead C (part)

21

3

25

,, E (part)

240

151

150

,, F.2

100

63

174

,, F.3

100

120

160

,, G.1

8

14

2

,, G.2

460

211

385

,, G.3

390

324

650

,, G.4

450

595

135

,, I

110

,, L (part)

210

177

232

TOTAL

1,979

1,658

2,023

TOTAL

20,971

23,856

24,672

TABLE VIII

EXCHEQUER STATEMENT FOR YEARS 1960-61 AND 1961-62.

Revenue and Other Receipts

Total Receipts into the Exchequer from

Expenditure and Other Issues

Total issues out of the Exchequer to meet payments from

1st April, 1961 to 31st March, 1962

1st April, 1960 to 31st March, 1961

1st April, 1961 to 31st March, 1962

1st April, 1960 to 31st March, 1961

REVENUE

£000

£000

EXPENDITURE

£000

£000

Customs

44,933

41,007

Central Fund Services

34,160

31,108

Excise

33,510

30,189

Supply Services

142,090

126,949

Estate, etc., Duties

2,865

3,213

TOTAL EXPENDITURE

176,250

158,057

Stamps

2,955

2,742

Income Tax (Including Surtax)

31,295

27,999

Corporation Profits Tax, etc.

3,667

3,284

Motor Vehicle Duties

6,927

6,456

OTHER ISSUES

Post Office

10,500

9,700

ISSUES UNDER THE FOLLOWING ACTS:—

Sundry Receipts

15,034

14,249

Local Loans Fund Acts, 1935-61

5,600

4,760

Turf Development Acts, 1946-61

1,340

1,403

TOTAL REVENUE

151,686

138,839

Telephone Capital Acts, 1924-60

2,400

2,100

Irish Shipping, Ltd., Acts, 1947 and 1959

1,003

1,348

Agricultural Credit Corporation, Ltd., Acts, 1927-1961

1,765

OTHER RECEIPTS

Sea Fisheries Acts, 1952-59

112

151

Trade Loans (Guarantee) Acts, 1939-54

5

24

REPAYMENTS, ETC.:-

Air Navigation and Transport Acts, 1936-61

743

6,277

In respect of issues under :—

Electricity (Supply) Acts, 1927-61

775

966

Electricity (Supply) Acts, 1927-61

676

630

Shannon Free Airport Development Co., Ltd., Acts, 1959 and 1961

Turf Development Acts, 1946-61

272

228

720

775

Sea Fisheries Acts, 1952-59

40

34

Bretton Woods Agreements Act, 1957

232

246

Trade Loans (Guarantee) Acts, 1939-54

30

21

Industrial Credit Acts, 1933 and 1959

3,135

2,000

Insurance Act, 1953 (Section 2 (4)

16

Grass Meal (Production) Acts, 1953-59

45

30

Road Fund (Advances) Acts, 1926 and 1948

85

359

Gaeltacht Industries Act, 1957

70

40

Road Fund (Grants and Advances) (Temp. Provisions) Act, 1959

31

15

Finance Acts, 1953 (S.16) and 1954 (S. 22)Broadcasting Authority Act, 1960

1901,351

23095

Gaeltacht Industries Act, 1957

2

International Development Association, Act, 1960

13

54

1,136

1,303

Irish Steel Holdings (Ltd.) Act, 1960

1,500

400

Road Fund (Grants and Advances) (Temporary Provisions) Act, 1959

200

200

MONEY RAISED BY CREATION OF DEBT:-

21,199

21,099

Ways and Means Advances

31,750

29,450

Exchequer Bills

119,000

93,500

ISSUES FOR REDEMPTION OF DEBT:—

Bank Advances

7,200

2,500

Ways and Means Advances

19,240

18,735

Savings Certificates

3,510

3,209

Exchequer Bills

110,500

86,250

Telephone Capital Acts, 1924-60

2,400

2,100

Bank Advances

7,200

2,500

Prize Bonds

4,615

4,190

Savings Certificates

2,005

1,870

6% Exchequer Stock, 1980-85

16,909

14,788

Prize Bonds

2,249

1,961

Other Borrowings

6,519

9,546

3% Transport Stock, 1955-60

38

2,925

Other Borrowings

5,917

5,952

191,903

159,283

147,149

120,193

TOTAL RECEIPTS

344,725

299,425

TOTAL ISSUES

344,598

299,349

Balance in Exchequer on 1st April, 1961, and 1st April, 1960

607

531

Balance in Exchequer on 31st March, 1962 and 31st March, 1961

734

607

TOTAL

345,332

299,956

TOTAL

345,332

299,956

TABLE IX.

LOCAL LOANS FUND.

CAPITAL RECEIPTS AND ISSUES.

RECEIPTS

ISSUES

1961-62

1962-63 (Estimated)

1961-62

1962-63 (Estimated)

£000

£000

£000

£000

1. Opening balance

11

1. Loan Issues:

2. Capital Repayments

2,627

2,647

Housing, Sanitary Services, etc.

7,823

9,387

3. Exchequer Advances

5,600

7,300

County Homes, Hospitals, Dispensaries, etc.

124

250

Vocational Schools

238

250

Harbours

23

30

2. Repayment instalment on moneys raised

30

30

3. Closing balance

TOTAL

8,238

9,947

TOTAL

8,238

9,947

TABLE X

ROAD FUND

RECEIPTS AND ISSUES

RECEIPTS

ISSUES

1961-62

1962-63 (Estimated)

1961-62

1962-63 (Estimated)

£000

£000

£000

£000

1. Opening Balance

1. Normal Road Grants (a)

6,366

6,900

2. Motor Taxation, etc.

6,927

7,250

2. Special grants under the Road Fund (Grants and Advances) (Temporary Provisions) Acts, 1959 and 1962, for roads affected by the closure of railway lines and by particular major industrial undertakings

550

400

3. Grants and/or advances under the Road Fund (Grants and Advances) (Temporary Provisions) Acts, 1959 and 1962

550

400

4. National Development Fund grant

2

3. Special Road Grants (financed from the National Development Fund)

2

4. Administration, etc.

383

350

5. Repayment of Advances (b)

178

6. Closing Balance

TOTAL

7,479

7,650

TOTAL

7,479

7,650

(a) Including payments on foot of previous years' allocations.

(b) As part of the compensation for the cessation of annual grants to local authorities from the Local Taxation Account, advances to the Fund under the Road Fund (Advances) Acts, 1926 and 1948, and the Road Fund (Grants and Advances) (Temporary Provisions) Act, 1959, outstanding on 31st March, 1962, amounting to £1,176,000 have been treated as non-repayable grants pursuant to the Road Fund (Grants) (Temporary Provisions) Act, 1962.

TABLE XI.

STATEMENT SHOWING CAPITAL LIABILITIES OF THE STATE ON 31ST MARCH, 1961, AND 31ST MARCH, 1962, AND ASSETS HELD ON THOSE DATES.

On 31st March, 1961

On 31st March, 1962

LIABILITIES:—

£000

£000

Money raised by issue of securities:

3½% Fourth National Loan, 1950-70

3,429

3,429

3¼% National Security Loan, 1956-61

4,867

61

3% Exchequer Bonds, 1965-70

19,006

18,684

3½% Exchequer Bonds, 1965-70

25,012

24,509

5% National Loan, 1962-72

16,633

16,531

4½% National Loan, 1973-78

19,736

19,451

4¼% National Loan, 1975-80

17,266

17,266

5% National Savings Bonds, 1971-81

18,242

17,584

5½% National Loan, 1966

5,781

5,781

6% National Loan, 1967

19,221

19,221

5½% Exchequer Stock, 1971-74

14,248

14,248

5¼% National Development Loan, 1979-84

18,403

18,403

3% Transport Stock, 1955-60

92

53

6% Exchequer Stock, 1980-85

15,647

39,337

Exchequer Bills

23,000

32,500

Savings Certificates (Principal)

25,706

27,210

Prize Bonds

16,592

18,957

Ways and Means Advances

111,291

118,621

Dollar Borrowings under United States Loan Agreements

38,930

38,378

Under Telephone Capital Acts, 1924 to 1960

17,418

19,116

Other Borrowings

10,630

11,231

441,150

480,571

Capitalised liabilities:

Under Land Acts, 1923 to 1953—

Advances for Costs Fund and State Contribution to Price (including deficiencies in Land Bond Fund arising from revision of annuities)

15,820

15,910

Under Housing (Financial and Miscellaneous Provisions) Act, 1932— State contributions capitalised

36,041

36,924

State contributions towards loan charges of local authorities for sanitary services capitalised

4,360

5,129

Annuity under Damage to Property (Compensation) (Amendment) Act, 1926

3,523

3,450

59,744

61,413

TOTAL GROSS LIABILITIES (see note below)*

500,894

541,984

ASSETS:—

Repayable advances:

Electricity Supply Board

62,773

62,127

Local Loans Fund

98,126

103,726

Road Fund

1,092

Industrial Credit Co. Ltd.

600

955

Purchase of Creameries

1,362

1,362

Bord Fáilte Éireann

9

9

Bord na Móna

15,973

17,501

Bord Iascaigh Mhara

1,130

1,201

Bord Gaeltarra Éireann

80

147

Radio Éireann

95

1,446

Under Finance Acts, 1953 (Sec. 16) and 1954 (Sec. 22)

699

889

Agricultural Credit Corporation Ltd.

1,125

Aer Rianta Teo

250

Shannon Free Airport Development Co. Ltd.

310

181,939

191,048

Shares of Sundry Undertakings:

Agricultural Credit Corporation Ltd.

300

940

Cómhluct Siúicre Éireann, Teo.

500

1,500

Industrial Credit Co. Ltd.

5,899

8,679

Aer Rianta Teo.

9,975

10,468

Ceimici, Teo.

496

496

Irish Shipping Ltd.

8,279

9,282

Alginate Industries (Ireland) Ltd.

29

29

Irish Assurance Co. Ltd.

90

90

Colucht Groighe Náisiúnta na hÉireann, Teo.

396

396

Shannon Free Airport Development Co. Ltd.

1,168

1,578

Irish Steel Holdings, Ltd.

1,400

2,900

Min-Fheir (1959) Teo.

30

75

Payments under Bretton Woods Agreements Act, 1957

4,350

4,582

Payment under International Finance Corporation Act, 1958

119

119

Payment under International Development Association Act, 1960

54

67

33,085

41,201

Balances held on sundry Funds and Accounts:

Exchequer Account

607

734

National Loans Sinking Funds

7,469

10,277

Savings Certificates Reserve Fund—

Principal Reserve Account

3,808

3,848

Capital Services Redemption Account

1,907

620

National Development Fund (Winding-up) Account

923

773

Capital Fund

240

237

Savings Certificates Account

101

100

Proceeds of Dollar Borrowings under United States Loan Agreements—

Balance on American Loan Counterpart Fund

40,724

40,295

55,779

56,884

TOTAL ASSETS £

270,803

289,133

* When considering the Liabilities Statement at 31/3/62 alone it should be borne in mind that there is double reckoning in the totals to the extent of £53,111,000 representing the investment in Ways and Means Advances to the Exchequer and in Exchequer Bills of the proceeds of dollar borrowings, the balance in the National Development Fund (Winding-up) Account and of part of the balances of the National Loans Sinking Funds and the Savings Certificates Fund (Principal Reserve Account). This is offset in the Assets Statement where the balances on the American Loan Counterpart Fund, the National Development Fund (Winding-up) Account, the National Loans Sinking Funds and the Savings Certificates Fund (Principal Reserve Account) include the Funds' investments in Ways and Means Advances to the Exchequer and Exchequer Bills.

TABLE XII

STATE DEBT BALANCE SHEET

LIABILITIES

31st March, 1961

31st March, 1962

ASSETS

31st March, 1961

31st March, 1962

£000

£000

£000

£000

Outstanding Public Debt as per previous table*

451,014

488,873

Liquid Assets (as per previous table)*Repayable Advances and Shares

5,899215,024

3,773232,249

Telephone Capital Acts, 1924-60

17,418

19,116

Pre-1922 Advances to Local Loans Fund

6,285

6,285

Transition Development Fund

6,635

6,635

National Development Fund

6,874

7,024

Sinking Funds and Interest, etc., thereon

69,880

77,241

Other Voted Capital Services

128,787

152,643

United Kingdom (Capital Sum) Act, 1938

10,000

10,000

Capital Fund

8,978

9,412

Insurance (Amendment) Act, 1938

1,034

1,034

Dáil Éireann Loans (Internal and External)

1,025

1,025

Property Losses Compensation paid in Stock

1,579

1,579

Land Bonds (State Liability)

15,820

15,910

Subsidy under Housing (Financial and Miscellaneous Provisions) Act, 1932 (capitalised)

36,041

36,924

Subsidy under Sanitary Services Schemes (capitalised)

4,360

5,129

Subsidy for Rural Electrification

5,002

5,777

Annuity under Damage to Property (Compensation) (Amendment) Act, 1926

3,523

3,450

Advances to Road Fund written off

1,176

Discounts on National Loans (net)

1,885

2,409

Issue under Great Northern Railway Act, 1953

2,250

2,250

Liability for Transport Stock assumed under Transport Act, 1958

9,889

9,889

Budget Deficits

62,584

63,291

Other Items

528

528

£

536,157

581,811

£

536,157

581,811

* Excludes double reckoning to the extent of £49,880,000 and £53,111,000 at 31/3/61 and 31/3/62, respectively, in respect of Ways and Means Advances to the Exchequer and Exchequer Bills from the American Loan Counterpart Fund, the National Development Fund (Winding-up) Account, National Loans Sinking Funds and the Principal Reserve Account of the Savings Certificates Reserve Fund.

TABLE XIII

TABLE SHOWING, OVER A SERIES OF YEARS, GOVERNMENT REVENUE AND EXPENDITURE AS WELL AS EXPENDITURE FROM REVENUE OF LOCAL AUTHORITIES AND RATES COLLECTED.

Year

Revenue paid into Exchequer

Exchequer Issues for Central Fund and Supply Services (excluding Voted Capital)

Expenditure from Revenue of Local Authorities (a)

Amount of total in Col. (4) derived from Government Sources

Rates collected

(1)

(2)

(3)

(4)

(5)

(6)

£000

£000

£000

£000

£000

1952-53

95,919

98,467

36,700

17,410

14,239

1953-54

102,803

104,655

41,560

19,600

15,987

1954-55

106,728

108,479

44,263

21,248

17,041

1955-56

111,675

112,237

47,783

21,887

17,746

1956-57

117,664

123,859

51,076

22,393

19,700

1957-58

122,921

128,803

51,022

24,717

20,077

1958-59

126,410

126,250

53,062

23,666

20,561

1959-60

129,856

128,682

55,104

24,480

21,412

1960-61

138,839

139,565

58,168

26,379

22,058

1961-62

151,686

152,393

62,861 (b)

26,739 (b)

23,161 (b)

1962-63

159,822 (c)

160,567 (c)

67,229 (c)

29,926 (c)

25,040 (c)

NOTE:—(a) The Revenue receipts of Local Authorities comprise broadly Rates, Government Grants and Other Receipts,e.g., rents, fees, etc.

(b) Approximate.

(c) Estimated.

TABLE XIV

TABLE SHOWING STATE AID TO AGRICULTURE FROM 1958-59

1958-59£000

1959-60£000

1960-61£000

1961-62(Provisional)£000

1962-63(Estimate)£000

Subsidies of final products:

Butter and other milk products

2,025

56

2,350

4,750

1,872

Wheat

1,859

372

834

1,200

Bacon

400

300

850

1,550

1,000

Bacon factory grants

50

67

Subsidies to reduce production costs:

Ground limestone

457

297

236

430

570

Phosphatic fertilisers

709

2,036

2,131

2,225

2,400

Potash

195

523

600

Petrol

40

48

44

35

33

Drainage, land reclamation and general improvement schemes:

Arterial drainage

719

1,037

1,044

1,220

1,612

Land Project

2,361

2,373

2,167

2,278

2,208

Other drainage schemes

108

90

49

5

Improvement of Land Commission Estates

638

673

620

716

716

Other improvement Schemes

464

450

426

456

475

Gaeltacht and Congested District Schemes

171

205

181

208

211

Elimination of disease, livestock improvement, etc.:

Bovine T.B.

1,283

5,122

4,961

8,936

6,048

Pasteurisation plant

247

29

39

30

40

A.I., milk production and livestock improvement

56

49

50

75

75

Administration of improvement and regulatory Acts

185

183

194

271

316

Grants towards farm buildings, etc.:

Farm buildings and water supplies

750

795

803

995

1,053

Poultry houses and equipment

33

44

60

63

124

Orchard planting

3

4

4

5

3

Education, research, advisory and technical services:

Education

378

358

449

503

545

Research

232

389

500

646

808

Advisory services

308

319

339

376

411

Rural organisations

23

18

20

26

23

Technical services

158

148

165

196

217

Departmental capital expenditure on land and buildings

53

71

85

196

235

Land annuities:

Halving of land annuities

722

732

745

763

790

Bonus to vendors and other costs

117

117

118

118

118

Relief of rates:

Agricultural Grant

5,520

5,575

5,664

5,849

6,050

Rural Electrification

1,000

1,140

966

780

580

Capital for Agricultural Credit Corporation, Ltd.

1,765

700

TOTALS

21,019

23,030

26,289

37,239

29,900

NOTE:—Figures are net of appropriations in aid.

On a point of order, would the Leas-Cheann Comhairle indicate to the House, or would the Taoiseach say, who is entitled to copies of the Budget Statement?

That is not a matter for the Chair; the Chair has no function in the matter.

I would draw the attention of the Chair to the fact that two members of the public have been provided with copies of the Budget Statement prior to the start of the debate. These two members are in the Distinguished Strangers' Gallery. They have had an opportunity of studying all aspects of the Ministerial statement, right down to the hour and——

This is not a point of order.

It is of vital importance that no disclosures be made to anybody, outside members of the Government.

This does not arise.

Is it or is it not a fact that copies of the Budget Statement——

The Deputy may not make a speech. The Deputy must resume his seat. I have called Deputy Sweetman.

I want inquiries to to be made into this.

The Deputy must resume his seat or I shall ask him to leave the House.

I want a decision on this.

I have already informed the Deputy that the Chair has no function. Deputy Sweetman.

Who is responsible for this? Is it the Taoiseach?

It is not a matter for the Chair, as I pointed out to Deputy McQuillan.

Let us have an answer to the question. How has it happened?

Would the Taoiseach give an answer?

I have called on Deputy Sweetman.

In point of fact, all ex-Ministers, of any year, are always given copies.

I am talking about members of the public who are not members of this House. I hope Deputy Sweetman understands the position. I am not referring to ex-Ministers or to members of the House.

Deputy McQuillan must resume his seat.

We are not concerned with ourselves.

Deputies

Chair.

Do not try to smother it.

Deputy Dr. Browne will resume his seat. Deputy Sweetman.

Those Deputies opposite who found themselves in the unfortunate position of having to acclaim the Minister for Finance as he sat down should have realised that during his speech the Opposition would be able to judge by their features and not by their applause at the end. Of course, it is quite understandable that they were completely befogged. They were befogged in the first place because the Taoiseach so far abused his high office and the Minister for Finance so far abused his high office months ago as to stump the country telling it that there would be a tale of woe.

At that time, the Taoiseach and the Minister for Finance were hoping that we in Opposition would fall into the trap—because it was a Party trap and nothing else—of following them in that respect. When the Taoiseach and the Minister for Finance quite deliberately went out and said months ago that, without buoyancy, there would be much higher taxation, they were doing it for one of two reasons. I leave the Taoiseach himself to be the judge and to admit to the public which reason was the true one.

Either, as the event has turned out, he and his Minister did not know the first thing that was happening about revenue, either they did not know that revenue was buoyant, either they did not know that inevitably there would be an improvement in revenue because the eighth round was last year injected into the community or—and I suspect the second is the real reason—the Taoiseach was deliberately flying a Party kite because he hoped that, by preparing the country for a tale of woe, when it appeared that there would not be such a dreadful weight of woe today, everybody would say what a grand fellow he was.

While that may be good Party tactics, it is very bad national tactics indeed. There are many people who, in the past few months, might have taken other measures to stimulate their business and to stimulate employment if they had thought we were riding on an even keel. But, the very threats issued by the Taoiseach and his Minister for Finance inevitably must have had the effect of preventing certain people from taking the action that otherwise they might have taken to improve conditions.

It was obvious that there would be an increase in buoyancy in revenue. I wonder, however, how many Deputies opposite realised that when the Minister for Finance stood up here today he was able to count, without raising a finger, on an additional £8,000,000 in the coming year— £6,070,000 on ordinary tax revenue and the balance on non-tax revenue and motor vehicle duties. He could count on £8,000,000 additional revenue with which he could make adjustments.

Allowing for the fact that apparently he made no effort whatever, when introducing the Supply Services, to carry out the proper function of Minister for Finance, even then, after making, as he says himself, the normal adjustment of £2,000,000 for errors of assessment, he had a balance of £1,250,000 or, in rough figures, the amount he has given away to the old age pensioners. Without lifting one finger, he had £1,250,000, even though he failed completely to make any effort to control the cost of the Supply Services, as was demonstrated beyond question here on the Vote on Account.

It is not without reasons that the Minister is receiving that extra money. In the past year, the Minister took out of the pockets of the people a higher percentage of the gross national product than was taken since 1949-50— and even before that, so far as I know, but I have not gone back farther than that. A higher percentage of what everyone in the country has had to work for has been garnered by the Minister for Finance in the past year, 1961-62, and, as far as I can make a quick calculation, will be able to garner in this year, than ever before in the past 12 years. He garnered a higher percentage in all that period in respect of taxes on expenditure. He garnered a higher percentage in respect of taxes on income and on capital— going back to that period, with the exception of a couple of years when Deputy MacEntee was Minister for Finance.

It is no wonder, in those circumstances—when the percentage of the product for which the people throughout the country have to work is being taken to a greater degree by the Minister than by any Minister for Finance before—that we should have the buoyancy in revenue to which I have already referred. In that circumstance, what was needed here beyond all question was a proper incentive Budget but there is no sign of any incentive to anything worthwhile in this Budget.

Let us look at our trade situation. We know from answers given last week in the House that there was an improvement of £28,000,000 in our trade position last year. That is purely the result of the world price position compared with 1957, that our import excess was down by £28,500,000, but we have this year for the first time a prognosticated view by a body that is not a partisan body, a body that is prepared to make an ordered appraisal of the position. Let us look at the sample industrial survey made by the Economics Institute and we find that in the first quarter of 1962, to which the Minister made no reference in his Budget statement, exports are going to be lower in 37 per cent. of the cases, lower by twice than the number of cases in which there is going to be an improvement.

We find also that orders in the first quarter of this year are 42 per cent. lower than they were in the first quarter of last year. We find that there is not a single firm which feels that it has not a sufficient stock of finished products. We find that there is not a single firm, according to the sample survey, that feels that its plant and equipment are inadequate for the production it will attain during this year. There is not, unfortunately, a single firm which feels that its employment content is inadequate. On the contrary 16 per cent. of them feel that their employment is excessive.

In that picture, we have a Budget which fails completely to produce any real incentive. The recommendations of the Committee on Industrial Organisation to which the Minister referred to-day and which he has indicated he is going to implement, are recommendations that are made much too late. Time and again from this side of the House, we, in this Party, made it clear that we felt it was urgent that there should be a proper appraisal and that there should be new incentives to make certain that our industries would be put in the position of being able to compete in Common Market conditions and so protect the livelihood of our people employed in them.

We got yesterday the report of the Committee on Industrial Organisation, a report which is clearly the epitaph of the failure of Deputy Lemass's policy which, as Minister for Industry and Commerce, he operated over the years and which was designed so that many Irish firms and industries could not survive freer competition from imports. Right through the whole of that report, it is clear that the members of that Committee realise and appreciate that the Government have been doodling in not dealing with this matter on the basis of preparing this country as a whole for entry into the Common Market.

The position in relation to agriculture is exactly the same. We see no sign of any real incentive towards greater agricultural production or any attempt to ensure that those who are engaged in that industry can hope for future improvement. Even if we take two examples about which we have often heard Ministers shouting, ground limestone and farm buildings, two matters in respect of which it is generally accepted that there must be a substantial improvement if we are to be able to achieve any increase in production, we find in each of those that last year the Ministers concerned failed completely to reach the average of the three years which they so often decried, the three years in which we were in office. In these three years, we were able to provide more ground limestone than the average of the five years during which Fianna Fáil had been in office. Never since the time we were in office have as many people applied for farm building grants. Again the average for the three years we were in office exceeds the average of the five following years when Fianna Fáil were in office. Yet the Minister for Finance smugly considers that in the situation in which we are, it is not necessary to give any incentive in either of these important respects.

We shall have further opportunities of considering in greater detail the exact taxation imposed in the Budget and the exact remissions made. I know that the Minister in his statement today referred to the competition of television with the cinema, and correctly referred to it, but he rather slid over making any reference to the dance-hall proprietors about whom we heard a good deal in this House six or seven years ago. I do not know what the Minister will say in justification of that remission which will cost something just under a million pounds a year. We are all aware that certain cinemas are entitled to some compensation against the impact of television but we shall be interested to hear what the Minister will say in justification of the remission to the dance-hall proprietors who apparently have waited eight years for their pay-off. They hitched their wagon to his star eight years ago.

He has provided gold paint for their wagon.

Any Deputies on this side of the House who were watching the faces of the Deputies opposite will realise what they felt, as Deputies on this side of the House feel and as the country will feel, when they learned that out of the increased national income last year, and out of what they were led to believe by Fianna Fáil, a mere increase of 2/6d. is all that the social service classes and the pensioners are to get.

I wonder exactly how those Deputies opposite will feel when they realise that they are sitting behind a Minister who proposes to charge a rate of no less than 12 per cent. per annum to taxpayers in future, one per cent. per month? Does that not put the Minister in the money-lending or usury class?

A half per cent.

In my copy, it is one per cent.

I said one-half per cent.

You brought it down? I am delighted to hear you mended your hand.

It is in your copy, too. Read it again. Do not blame me—it is one-half per cent. in your copy also.

It is one per cent. here.

It was one-half per cent.

We shall get it in a moment but it is not one half per cent. or one per cent. in the case of the tax on beer.

You are not sorry for making the mistake?

Not in the slightest. I shall come back to it when I read it again. One penny on the pint is not one-half per cent. on beer——

I did not say it was, either; I said the other thing and you would not accept it.

When I come to it, I shall see. I am not going to accept anybody's interjection.

You are wrong.

Here now is the quotation from the Minister's speech: "...involves employers in liability to an interest charge of one per cent. for each month or part of a month". According to my calculations, that is 12 per cent.

It is PAYE you are talking about there.

Is that not interest on tax?

Not at all—it is PAYE.

Turn to page 61, line 3 —"The rate of interest I have in mind is one-half per cent...."

It is one per cent. for each month on page 60.

That is the employer.

But he is a tax-payer.

No, he is only gathering the tax; he is a collector.

Of course he is a taxpayer. I am delighted to hear that the other taxpayers will have to pay only six per cent, or one half per cent. per month, but one per cent. per month is 12 per cent. If we cannot agree on that simple arithmetic, it is a poor situation.

We all understand that the Minister is an adept at one thing. He wanted to bring in a red herring because he realised that the 1d. on the pint of beer was coming immediately afterwards and he did not want to have any reference to that, if he could avoid it. As far as I can ascertain, last year was the first year we went back to the 1953 consumption of beer. Now beer has got a smack by way of extra tax that is to be paid by those who can least afford it, with the result, no doubt of a cut-back ultimately on those who have barley contracts. The same will apply in the case of the whiskey tax which will have much the same effect.

I frankly admit I cannot understand at short notice the difference between the Minister's figures for one sort of spirit and another, but that will keep until another day. We would have been interested to know the amount by which the Minister had estimated tobacco consumption would be cut back by reason of the scare. Last year, 25 per cent. of total tax revenue came from tobacco; this year, I think with the increase, we shall not be any lower but probably higher. To put it mildly, that is a most unhealthy state for any country—to be depending so much on one commodity in respect of which public taste might change very simply.

At Question Time, we had some interjections about housing expenditure. Let me put on record again that housing expenditure, and the Local Loans Fund issue for it provided in the Budgetary Tables that have been circulated, do not even yet amount to the sum paid for that expenditure in 1956-57. While it does represent a welcome improvement on the amount the Government made available in the past four years, it still has not gone up to the point at which it was in 1956-57.

It is not really in respect of all these things that the public will ultimately judge the failure of the Government. That failure is contained in the report of OECD, the failure to live up to the promise made by the Taoiseach when, on this side of the House in 1956, he said that if only Fianna Fáil were given the chance, they would provide within five years 100,000 new jobs for our people. At the end of that period— because the Minister has been there for five years—all he can say is that instead of more employment, there has in fact been a reduction in employment on the figures given by OECD, of 34,000.

Instead of 100,000 more, there are 34,000 fewer people employed today than when Fianna Fáil took over the reins of office. Not merely that but the Minister, the House and the country should remember that in that period the number of our people who have gone away to seek the work promised them here by Fianna Fáil in that 100,000-job manifesto, is 250,000, the flower of our young people. No matter what the Minister may say, more people, more Irish men and women applied in 1961 than in 1959 for new employment cards in England, and it has been admitted here by Fianna Fáil that, in 1959, emigration was runing at the rate of 50,000 a year, so that, obviously, if more applied in 1961, there was more emigration than in 1959.

If that is the record of which the Government are proud, nobody else in the country is proud of it. Everybody will realise that the Budget does nothing to ease the situation, nothing to improve the lot of our people in a permanent and genuine way. On the contrary, it is merely a stop-gap device by people who, as the Committee on Industrial Organisation says in its sphere, are always too late in everything they even try to do.

At this point in the discussion on the Budget, I am concerned only with the actual proposals made by the Minister. I think it should be said straightaway that if this Budget was designed in an attempt to satisfy the needs of certain sections of the community, it has proved a dismal fiasco. If it is intended to satisfy what seem to have been the demands of certain of the Independents, I can now understand why it was necessary for the Government Party to send for Deputy Briscoe to come back posthaste.

He should have brought Singer with him.

The people were entitled to expect more from this Budget. None of us was impressed— and the Minister's Party were not impressed—by the type of political trickery we saw displayed in the gloomy speeches made since January, chosen to give the impression that the country could not afford to do a great deal for, say, certain of the social welfare classes or State pensioners, knowing, as Deputy Sweetman has said, that the revenue has been buoyant and that the indications are that the taxpayers next year will contribute considerably more than they contributed in 1961-62.

We had discussions recently in the House on pensions generally and on social welfare benefits, and we were told, as usual, to wait for the Budget. Some people made the modest demand of 5/- extra for the old age pensioners. I think most people in the Dáil and in the country really believed that, in the 1962 Budget, a genuine effort would be made to uplift the standards that applied to the old age pensioners for the past few years, but here we see in the Minister's proposal the usual thing trotted out—an increase of 2/6d. for the old age pensioners, the widows and the orphans, which will be paid from August next. There is another increase of 2/6d. for unemployment assistance, in certain cases, from January next. We are entitled to ask——

Contributory insurance.

Yes, contributory insurance.

The Deputy said unemployment assistance.

We are entitled to ask why these increases could not be given earlier.

The Deputy should know. He did the same.

That is not a sufficient answer but I shall go ahead and try to demonstrate to the Minister why he should——

Why did the Deputy not do it?

The Minister will have plenty of opportunities for talking. I thought he might be tired.

The Deputy should know why.

There is no question of retrospection for the social welfare classes, but, as the Minister was reminded here today, there was retrospection in respect of people who are employed by the State to whom it is proposed to give increases of £600 per annum retrospective to November last. In any case, the proposal in this Budget is to devote this year a sum of £1 million to those in the social welfare classes. Apart from the present inadequacies of the old age pensions—and particularly the widows' pensions and blind pensions—there are other factors which should have induced the Minister to make a real effort on this occasion to do a little better than the usual 2/6 for the social welfare recipients. Another factor in this matter of increased social welfare benefits is the fact that a big part of the old age pensions has been transferred to the workers and employers, that is, to the contributory insurance scheme.

We have heard boasts in recent years, and especially in recent months, about the rise in the national income. We were told by various Ministers last year that for the first time in a long time we had a surplus in our balance of payments. National production, we are told, has increased to a considerable extent. I think we are entitled to ask the Government to devote to social welfare a reasonable percentage of the tax revenue. They have not done that since they came into power in 1957.

In 1960-61, expenditure on social welfare was £26.2 million and tax revenue stood at £114.9 million. The amount devoted to social welfare in that year was 22.8 per cent. This year, if my calculations are correct, it will be about 20 per cent. People are under the impression that we devote a colossal amount of money to social welfare. Some critics of social welfare say we devote too much to it, but the trend in the Fianna Fáil Government has been to decrease the percentage of tax revenue paid on social welfare as the years go on.

Because we have not 100,000 unemployed.

Where are the 100,000 jobs?

The Minister proposes this year that approximately £27,000,000 will be spent on Social Welfare. People seldom have regard to other types of expenditure in the State which are not subject to criticism. It is of interest to note that £20,000,000 per year is paid as interest on the national debt. We are prepared to pay that sort of money to banks and people who dabble in money but all we can afford for Social Welfare benefits is £27,000,000.

In part of his speech, the Minister says:

The Deputies who recently supported the pensioners' cause will, I hope, give practical effect to their support by voting for the extra taxation required.

I want to tell the Minister that so far as we are concerned, we do not think that devoting approximately £1,000,000 out of indirect taxation to the tune of approximately £4,000,000 is the proper way to treat the old age pensioners, the widows and orphans and other pensioners and consequently we do not propose to vote for this increase.

That is a good excuse.

The Minister wants to raise £4,000,000 and devote £1,000,000 to social welfare benefits, giving 2/6d. per week extra to old age pensioners, but frankly, he will not get our support for that.

Social welfare recipients will benefit by almost £4,000,000.

Is that so?

According to the Minister's statement, this year the increase will cost in the region of £1,000,000.

Taking the contributory pensions into account, it will be £3.75 million.

The Minister has said that he will devote approximately £1,000,000 to social welfare benefits.

It will mean £3,000,000 next year.

We are not prepared to support a Budget that gives a mere £1,000,000 out of £4,000,000 collected from indirect taxation. This seems to me to be another attempt by the Government or the Minister to make an attack on the workers who recently got an eighth round wage increase. We have heard some critical comments, if not from the Minister, certainly from the Taoiseach in recent months. A substantial portion of this taxation will be paid by the ordinary folk. The recent eighth round of wage increases meant to workers an increase of anything from 15/- to £1 or maybe 22/-or 23/- per week. I suggest that the tax proposed here will take from their wages very many shillings per week. I shall not attempt here now to say how many in the case of the average worker but, in respect of beer, tobacco and increased contributions, at least some shillings which he has won for himself in the last round of wage increases will certainly be taken from him in the proposals contained in this Budget.

Workers must remember—I do not know whether the House appreciates it or not—that the Minister also proposes to increase the insurance stamps. It will be remembered that there was an increase about two weeks ago which we were told was to pay for contributory old age pensions, whereas we knew from experience that portion of the increase demanded from the workers at that time served no other purpose than to relieve the Exchequer of some of the expenditure in respect of the payments of both contributory and non-contributory old age pensions.

Many people are inclined to believe —and many Ministers are inclined to believe—that the eighth round increases were responsible for a certain amount of disruption. The opinion in the country is that the increases which were given to civil servants recently put a very heavy burden indeed on the Government, but, as was pointed out to the Minister for Finance last week, the income tax that will be collected on the increases given to workers during the present year will offset approximately the increases to civil servants for a full year.

It has been given as a figure by the Minister for Finance that £6 million would be necessary to finance the recent increases to the civil servants. It has further been reckoned that a sum of £5 million by way of income tax will be paid into the Exchequer by the workers and so offset to a great extent the increases that have been given to those employed in the Civil Service and who got the increases recently.

I honestly thought that the Minister would, indeed, introduce a social welfare Budget this week. In view of the improvements which he and his colleagues have boasted of in recent years, he certainly could have examined the case for an increase in children's allowances, especially in respect of larger families. If this Budget had demonstrated that a fair and equitable proportion of the taxes to be raised would be devoted to the needy sections, we would have no hesitation in saying that we would support the Government in the proposals which they are putting before us.

You would in your hat!

I do not know. The Minister can have his own opinion. He should know the Labour Party by now and know that we are not prepared to support the type of Budget which he introduced and which we believe is not fair and just to the social welfare classes.

The Minister in the course of his speech referred to unemployment and emigration. Again, there seems to be the impression in the country that the problem of unemployment and emigration has been solved. I do not know what figures Deputy Sweetman quoted but I want to give the Minister and the country some other figures with regard to unemployment.

One would imagine from the boasts of the Fianna Fáil Party that industries are springing up in every single parish but when we ask for precise information from the Minister for Industry and Commerce as to the number of new factories and jobs created we are not told the figures that are sometimes spoken about outside church gates and from election platforms. The year 1955 is supposed to have been a bad year so far as industry is concerned if we are to believe the speeches made by those in the Fianna Fáil Party. In 1955 there were 1,181,000 people in employment. In 1961 there were 1,119,000. That is a difference of 62,000. In effect, that means that as compared with 1955 there were 62,000 fewer persons in employment in 1961. The Minister may say these figures are out of date but as far as any of us knows they have not changed substantially. It would not be unreasonable to say that even now as compared with 1955 there are 50,000 fewer in employment in this country.

I gather from the Minister's speech and from some of his colleagues that the problem of emigration does not constitute such a big problem as it did some years ago. He says that the latest figures show that emigration in February stood at about 22,000 and that that was offset by the natural increase in population but I think the Minister, the Government and the country have a problem so long as there are 22,000 or 24,000 people emigrating from this country in 1961 or 1962.

There were no proposals by the Minister to give any real incentives to industry with a view to creating new employment or maintaining existing employment. The skimpy reference—because skimpy it was—to the possibility of our becoming members of the Common Market was something that certainly was not expected in his Budget speech. If our application is successful and if we find ourselves in the Common Market within the next six months, I suggest that we have not done much to prepare for such entry.

There are many old industries in this country which need financial incentives. I suggest that what is proposed for them in this Budget will certainly not ensure in some cases that employment will be maintained at its present level or that there will be any increased employment.

I want to say on behalf of my Party that we are sadly disappointed at the proposals the Minister has made in this Budget. We believed that in view of all the circumstances something would have been done to give at least the old age pensioner, the widow and orphan, the blind person and the unemployed some decent standard in their weekly allowances so that thereafter increases would be related to an increase in the national income or the cost of living. We find now that despite the money available to the Minister by way of buoyancy of the revenue and by way of increased taxation, he hands them merely a few crusts which they may gnaw on for another while until the thought comes to the Government to give them something really worth while.

It is quite clear that the Government have not decided to change their attitude since 1932 towards the one class in which I am very interested, that is, the small farmers. This Budget makes it abundantly clear that the campaign to exterminate the small farmers is in full swing. At the same time the Minister, cunningly, through his Budget speech, tries to give the impression that there is to be some relief for the small farmer. He is giving a certain amount of extra relief in rates on the first £20 valuation on land. He is increasing the agricultural grant from 60 per cent. to 70 per cent. I just worked out how that would affect the average type of small farmer along the West coast.

Let us take the case of a man with a £10 valuation. In Mayo, the farmer with a £10 valuation last year would have paid £11 6s. on his land, after the agricultural grant had relieved his rates to a certain extent. This year, he will pay £8 12s. The farmer with a valuation of £10 gets £2 14s. extra relief in his rates by this Budget. That is the amount of help the Government consider sufficient to stop the eroding flight from the land that is taking place and will continue to take place after this Budget, where complete townlands are clearing out and leaving, in some cases, not even one house inhabited out of eight or nine in particular townlands. I could give the names of several villages of from twelve to eighteen houses in Mayo where only one house remains inhabited. The same applies to other counties.

The Minister has put a penny on the pint, twopence on spirits and twopence on cigarettes. In view of the recent medical findings concerning the damage cigarettes have been doing, I have nothing whatever to say to that tax. Although a smoker myself, I feel compelled to assist in stamping out cigarette smoking, if at all possible, or at least to divert cigarette smokers to the pipe for the sake of their health.

I want to come to another aspect of relief for farmers. The Minister has graciously reduced the £8 tax on agricultural tractors to £2 10s. In the parishes I am familiar with in the West there are about 20 tractors to the parish. Therefore, this means a relief of about £100 to 20 tractor owners for a full year. Neither must we forget the remaining few owners of petrol tractors. They are being deprived of the rebate they got on petrol to the tune of £30,000. Therefore, of the amount given by the Minister in the reduction of the tax on agricultural tractors, £30,000 will be paid by the unfortunate farmers who happen to have petrol tractors. I regard that kind of tricking as nothing but an insult. The Minister cunningly tried to convey to the farmers that they were getting enormous reliefs. The Minister must know that some of the figures that have been given by himself and his colleagues are completely wrong and misleading. He has spoken on the question of unemployment and emigration. He said:

It appears from the net passenger movement figures that less than 27,000 emigrated in 1961, while for the twelve months ended February, 1962, the figure was of the order of 22,000.

Yet the British Overseas Migration Board in their seventh report tell us that 67,598 Irish men and women applied for new work cards in England last year. Where does the truth lie between these two statements? Both cannot be true. Seeing the toll emigration is taking all over the country, I know that at the very least the Minister's figure of 22,000 is far from the truth. I am prepared also to concede that the British figures may include some duplication and might be wrong by a figure of 10,000.

What we should remember, however, is that this Budget shows the determination of the Government to wipe out completely the farmers under £20 valuation. Their day is gone. It seems the Government are preparing for a mass influx when we join the Common Market. The average price of agricultural land in this country is from £80 to £100 per statute acre, while the comparable price in Germany, Holland and Belgium is from £500 to £540 per statute acre. Seeing the way these people have been scourged with wars and upsets of various kinds for many years, the very moment we join the Common Market and there is free movement, there will be a wild influx of these people to buy the holdings from which a Fianna Fáil Government have forced our own people to England, America and Australia.

Well, I hope the Deputy will not support Fine Gael or Fianna Fáil in the application for admission to the Common Market.

I shall support any Party in favour of applying for membership of the Common Market. I think it is a step in the right direction and my only regret is that we did not apply for membership years ago.

We had a better "common market" then but we did not hear much about it.

If you said that years ago you would get your poll broken by some Fianna Fáil commissar.

If somebody made the statement the Minister for External Affairs made last week, that the price we will have to pay for joining the Common Market is the surrendering of some of our sovereignty, he certainly would get his head broken.

Do not let us ramble on to that.

There has been a shadow of gloom over the country for a number of years due to the failure of the Fianna Fáil Government after they put us out in 1957. They were put in on a promise of 100,000 new jobs. In the preceding two years, no matter what Government had been in power, they would have had to encounter a certain amount of imbalance in our trading relations.

If it was as easy as that to put us out, where was the need to make this extravagant promise of 100,000 new jobs in five years, of spending an extra £220,000,000 on giving employment and developing industry and agriculture?

There was no need.

Then it was a foolish thing to make such a scandalous bid for people's votes; but having made that bid, it was still more scandalous not to make the slightest attempt to implement the promises.

Has the Parliamentary Secretary not seen the written promises?

I fought that election, too. I did not have to make any promises.

Deputy Blowick must be allowed to make his statement without interruption.

With all the talk about the buoyancy of revenue, is a half-crown a week the best the Minister can do for the most helpless section of our people? Most of it will be taken back by other increases in the Budget. It is the old Fianna Fáil practice of giving with one hand and taking back with the other. Such a miserable increase is an insult to the old age pensioner. If the inflow of money to the Exchequer is as buoyant as it is supposed to be—and there is a certain amount of buoyancy—we should deal more generously with the old age pensioner and the widow and orphan. I support every word Deputy Corish said on this subject. It is shabby, and it should be beneath any Government to deal with our old aged people in that way.

In the last few words of the Minister's speech, referring to the farmers, he said:

... they have been unable for some years past, for reasons largely outside their own—and Government— control, to gain as much of an increase in incomes as other producers, although their increased output in difficult times has been a considerable achievement and has benefited the national economy.

The farmers are supposed to have had last year an increase of £8,000,000. If that is so, why has the Minister decided to give them concessions?

At page 4 of his speech the Minister said:

Agricultural output in 1961 pursued the steady but moderate upward course of recent years. Net agricultural output increased by about 6 per cent. in value and by 2 per cent. in volume. Farm incomes rose during the year by £8 million.

He let the cat out of the bag because, further on, he said:

... the substantial exports of cattle and meat resulted in a reduction in the cattle stocks which had been built up in earlier years, particularly 1959. The livestock enumeration of January, 1962, recorded an estimated decline of 112,000 in cattle numbers as compared with a year earlier.

That proves beyond yea or nay that the farmers are now being compelled to live on their capital. They have to sell their capital stock and the Minister blandly describes that as an £8 million increase in their income. If cattle stocks keep declining year by year as a result of the way farmers are being treated, how long does he think our exports will stand up to it?

As I said a moment ago, it is clear, particularly as far as the small farmer of £20 or £25 valuation is concerned, that Fianna Fáil have made up their mind that the sooner this type of farmer is banished from the country the better. This Budget is going one further step along the road. The farmer whose valuation is over £25 is getting some relief. If the farmer over £25 valuation cannot live surely the man under £25 cannot live? It means that more and more houses throughout the country will be closed. The country towns will also suffer because the people there cannot make a living unless the population of the countryside remains. The countryside is becoming more deserted day by day and this Budget is doing nothing to improve that situation. In fact, the few things contained in it to help the farmers are nothing short of an insult.

The Minister has tried to convey the impression that the farmers' demands are based on greed or on envy of their luckier brothers who are able to get increases in their incomes or wages. That is not the case. There has been a fierce outcry amongst the farming community against the high rates. As I have said often before, and it is worth repeating, the farmers never objected to paying while they had it but the farmers' situation is desperate because they have not the wherewithal to meet their bills. Some of that decrease of 112,000 cattle for last year will continue next year and the year after and in a year's time if the Minister for Finance, Deputy Dr. Ryan, is there, he will have a very different story from what he had this time.

Over the past 40 years at this time of the year very serious problems of State have had to be faced by Ministers for Finance. The various occupants of that office have, over the years, treated the House to comparable speeches of inept platitudes and political clichés. The speech to which we have listened today is in similar vein, the only difference being that today the Minister for Finance is facing the most serious position that has ever faced this country, I suppose, since the Act of Union, if it is not even more important than that.

In those circumstances the Minister has provided us with this completely unimaginative and inept speech. These proposals are merely a measure of the failure of the Minister and his Party over the years to create anything like prosperity in Ireland. The speeches I have heard on every occasion I have been here over the past few years and any speeches I have read, have all had the same content: "Prosperity is just around the corner. We are facing a new upsurge in the life of the country and the welfare of the people is only a matter of a very short time." While we have listened to those speeches and while the public have read those speeches over the last 40 years a great number of our people have had to leave the country because they could not find work here due to the policy of successive Ministers for Finance and of successive Governments.

If I am being unfair may I say that we have heard recently, from the Government benches of all places, that suddenly the brake has been taken off, some impediment to prosperity, to the expansion of our economy, to an increase in our national income has been removed, some deadweight has been lifted off the body politic of our society which has allowed the Taoiseach to come forward to supply the nostrums, to create this society bursting at the seams with prosperity and which we are now told we are living in today. Could any member of the Government Party please tell us the name of the impediment? Why is it that he received support from the Government Party over all these years if he was that great obstruction to progress and prosperity?

Let us assume that that is an overstatement of the position. What has happened in the five or six years? Each year we have been presented with a rosy spectacle, the Minister for Finance telling us about the prosperity around the corner, how well we are doing, that exports have been increasing, production going up, that the worker was never better off. With all that rosy talk, in spite of all the reiterated promises of prosperity, there was a net drop of three per cent. in the number of people in the country. Throughout the whole history of several of the separate Governments over the last 40 years we have never had less than between seven to 10 per cent. of the people unemployed in addition to a continual rate of emigration starting at 16,000 a year and recently running between 40,000 and 50,000. All the time there has been a failure on the part of successive Ministers to understand the problems that were facing them and to undertake the measures that were needed to deal with those problems.

One of the dangers of living in a heavily censored society such as ours, a closed society such as ours, where the political leaders control most of the outlets of information, education, press, television, the radio a mythology can very easily be built up about any particular side of the society about which the leaders of the society want to create such a mythology. Probably the greatest and most misleading mythology in history is that which is being built up about the success of Irish industry since the early Thirties. Because of the dependent nature of our industries, because they are, in the main, subsidiaries of parent industries outside the country, because of their structure, we said, when the Common Market proposition was put forward here, that it was inevitable that the vast majority of our industries would be unable to stand up to the competition of the Common Market. It was inevitable, we said, because of the protected manner in which they have continued to exist over the years, because of their complete failure to make any attempt to develop export markets, because of their complete failure to take any advantage of mechanisation, automation, or the general modernisation of plant and machinery essential to keep pace with developments in the rest of the world.

We said that then. We have said it every time an opportunity has arisen here since. We were told that what we said was not so, that we were unpatriotic, anti-national, and so on. Now, a group of the Minister's officials, handpicked officials, sat down to examine the present state of Irish industry. In the light of the report which lies on the Minister's desk from that group, how can he possibly come in here now with this bromide of clichés as his answer to the incomparable competition facing this country, now on the threshold of the Common Market, in the next five or ten years?

We were taken to task for our criticism of Irish industry, and its failures. Listen to the criticism by this Government-sponsored body set up to examine the present state of Irish industry, now that we are on the threshold of the Common Market. They say most of our firms are too small. They say that, because of short production runs, they would not be able to meet competition from outside. They say there is under-utilisation of industrial capacity. They say there is a lack of vertical integration. They say there is a relatively high wage cost per unit of output. They say there is poor design of Irish goods. They say there is a lack of marketing organisation. Could there be a more categorical condemnation of Irish industry, private enterprise,laissez faire, conservative private enterprise, upon which successive Governments have depended over the past 40 years in order to create a prosperous society, to provide full employment, better health services, better education, and so on ? On every possible count upon which one can assess the capacity, the quality, or the merit of an industry, Irish industry has been found wanting.

Now we are faced with an impertinent demand from these people that we should ask the unfortunate taxpayer to find an unlimited sum to subsidise incompetence so that they may weather the rough time ahead in the Common Market, these people who for the past 30 years have mulcted the public with their restrictive trade practices, theircartels, their monopolies of one kind or another. The public are now called to the rescue. It is our view that the public should have been asked to come to the rescue 30 years ago with industries based on public ownership. Had that been done then we would now be in the position to decide for ourselves whether we would go into or stay out of the Common Market instead of being in the position in which we are at the moment, a tin-can tied to the dog's tail, dragged in by the British Government; if they go in, we go in; if they stay out, we stay out. Where now is our vaunted independence? Why were you slaughtering one another between 1916 and 1922, if this was your main ambition for Ireland?

It is quite clear that the Government are indulging now in yet another desperate effort to cling to power. For that is all this Budget is. Nothing more. There is nothing creative in it. There is nothing original in it. There is nothing new. There is no promise that the Government have at last grasped the seriousness of our dilemma. Faced with this report on industry, faced with our agricultural economy in the position in which it is, uncompetitive even in the protected Commonwealth market, how can the Minister think we could possibly survive in the competitive terms of Common Market trading? After 40 years of mis-Government we are now in the position that we are not certain whether we will be taken in at all to the Common Market. Because we are so near to destitution and such a backward, undeveloped society, if we are to believe the findings of our own commission on Irish industry, they can scarcely make any other decision than to exclude us. Alternatively, if they take us into the Common Market, we will spend our lives as the destitute poor relation at a millionaire's banquet.

The only wealth we have is the rivers, lakes and land of Ireland. As Deputy Blowick said, the land will be bought up right, left, and centre, by wealthy refugees from various welfare societies of one kind or another, many of them of doubtful origin. More sinister still, and more undesirable, is the prospect when we think upon our isolated areas in which it would be possible to establish munitions industries. And still more sinister is the prospect that in these isolated places it would be possible to establish rocket bases and other installations from which they could pelt one another, when the time comes, and we will be target No. 1 in those circumstances.

That is the measure of it. Those in Government today have betrayed the whole cause for which some of them fought so courageously 40 years ago and for which many of their comrades died so bravely. We are now facing a position in which we have absolutely no control. It would have been useful if, over the years, Ministers for Finance had framed an intelligent fiscal policy designed to create prosperity in our society. This Government today are betraying our freedom for certain very doubtful advantages in the European Economic Community. The desperate effort to cling to power is best exemplified by the 2/6d. for the old age pensioner. That is an insult. Trade unions have obtained 21/-, 25/- or 30/-per week for their workers. Half-a-crown to the old age pensioner is altogether inadequate. It is the most offensive proposition in the Budget, rendered more offensive still by the fact that its payment will be delayed until August next. It is difficult to accept that the Minister actually had the temerity to make this proposition.

When the motion on social service pensions tabled by the Fine Gael Party was being discussed recently in this House, the Minister said the Budget was the time to deal with matters like that. He gave us to understand that he would put forward his propositions in the Budget. His promise was quite misleading because it now transpires that the time is not the Budget but rather next August. Meanwhile, we have the added offensive proposition that the wealthy friends of these people in the judiciary, who are quite well off as it is, are not alone to get an increase in salary, but that the increase will be retrospective to last November.

The Deputy may not discuss that on the Budget.

With the decrease in the value of the £ it is quite clear that this contribution is grossly inadequate to meet the needs of unfortunate pensioners. Someone said that the taxes we are asked to vote on here are the taxes on beer, spirits and tobacco. That is not so. What we have here is yet another example of the departure of Fianna Fáil from the very fine principle they once had of taxing the wealthy in order to help those not so well off and the poor. We have had a continuous departure from that principle over the years. Listening to successive Government statements it would appear now as if there was something sinister or immoral in the proposition that we should impose direct taxation. Direct taxation is the fairest way of collecting taxes because it is assessed by an independent body which decides on the total income of the individual. After most careful assessment, it is decided what the individual can most fairly pay and he is asked to pay it. I cannot see a better or fairer way than that.

We are not only asked not to tax the wealthy; we are asked to impose a total of £2,000,000 in taxation of an indirect kind, that is, anybody who was involved in the eighth round of wages is now to have some of that money taken back and in fact some of these unfortunates who are not to get their money until August——

May I point out to the Deputy that the time taken by spokesmen of the Parties is——

Very good; I shall conclude shortly. This, in fact, is not the end of the taxation which our people have suffered. We have had increases in relation to Posts and Telegraphs, increases in the price of bread, another increase in the price of tobacco and another increase in transport charges and a separate increase on beers and stout. So this is not the taxation figure we are asked to decide on finally today. The public have had a much greater burden imposed on them.

In regard to the tax on tobacco, I naturally support it, but I think it is a completely hypocritical gesture on the part of the Minister to try to create the impression that he is endeavouring to honour the exhortations and the proposal by the College of Physicians, but he forgets the fact that I have asked Ministers who could have taken effective steps to do something about this cancer problem—the Minister for Posts and Telegraphs, to curtail advertisements for tobacco; the Minister for Health, to intensify his campaign to restrict the use of tobacco, and the Minister for Justice, in his small way, to restrict children from buying cigarettes in slot machines. It is quite clear that we are in the hands of the same people who have led us into this pitiful situation, a situation in which we are now to lose all rights of planning in this new society, political rights in our new society.

It is quite clear from the report we have just heard on industries that there will be a great increase in unemployment which cannot be absorbed. It is absurd to suggest that in five or six years, we can produce a new industrial superstructure when we could not do it in 40 years. There will be mass unemployment. There will be continued emigration and there will be the low national income which makes so much rubbish of the suggestion that our percentage donation to social services is comparable with that of other countries. It is only comparable because of the small size of our——

May I remind the Deputy again——

I shall merely say that we do not intend to support this Budget.

I am not calling any of the Deputies offering.

On a point of order, in view of the fact that this Government look like having only a few more hours——

The Deputy is not making a point of order. The Deputy will resume his seat.

On a point of order—

If the Deputy will allow me, I am going to explain the position.

You have allowed a Deputy who represents a Party of two to speak. You have allowed Deputy Dr. Browne to speak who represents himself and Deputy McQuillan. There are at least seven Independent Deputies. At least one or two of them can get five minutes.

Will the Deputy allow me to explain the position? The Minister for Finance read a statement regarding the financial and economic position of the country. It was a statement, not a motion. The practice, since this House was set up, has been that a spokesman of each Party replies to or comments on the statement made by the Minister for Finance. The spokesman for each of the Parties has now spoken and I must now conclude——

There were two Deputies representing two Parties of two and seven of us are denied——

That is not of my making. It has been there for the past 40 years.

Is it in Standing Orders?

I am only acting in accordance with the practice over the past 40 years.

I was referred to, in your absence, Sir, by the Labour Deputy when he was speaking and while I appreciate I am not the Leader of a Party, could I encroach——

Please understand that this is not the closing of the debate on the Budget——

It may very well be.

——but only of statements in respect of the statement made by the Minister for Finance as to the economic and financial position of the country. I cannot allow any further speeches.

Why was Deputy Dr. Browne allowed to speak?

Deputy Dr. Browne went to the country as a Party and two were returned. He was the spokesman for the Party. In Committee on Finance, Financial Resolution No. 1——

Deputy Barron represents a Party.

Surely one Deputy cannot be a group?

Is two a group?

With all respect, Sir, I stood as a member of a Party.

One Deputy cannot be a group.

I do not want to speak but I stood as a member of a Party.