The purpose of a budget nowadays is not merely to regulate the nation's finances but also to promote national progress. To judge what this year's budget should do, it is necessary to review the main features and trends of the past year. I can be brief about this as two recent publications—Economic Statistics, prepared by the Central Statistics Office and issued last week, and the annual report on Ireland by the Organisation for Economic Co-operation and Development — are already available to Deputies and contain an extensive account of the position of the Irish economy.
During the past year, the volume of national production continued to increase; output and employment in industry rose; considerable industrial investment by both internal and external interests continued; emigration fell and the population increased. The growth of both national and industrial production was, however, less than in 1961; the volume of agricultural production did not expand; and a gap developed between incomes and productivity which occasioned the recent White Paper.
National Production in 1962
The volume of national production is now provisionally estimated to have risen by 2½ per cent in 1962, as compared with 3.8 per cent in 1961. The growth of the economy over the period 1959 to 1962, covering the first four years of the Programme for Economic Expansion, was 18 per cent. This represents an annual average of almost 4½ per cent, a rate of increase comparable with that of more highly industrialised Western European countries.
A primary factor in the slowing down of the rate of growth in 1962 was the failure of agriculture to expand because of weather and other difficulties. Industrial growth, as measured by the volume of output of all industries and services, also slackened, being 5 per cent as against 8 per cent in the previous year. Since increased industrial production must to a large extent be for export, particularly to Britain, it is likely that part of the reason for this lay in the comparatively slack condition of the British market during the year; part, also, may be attributed to loss of competitive advantage as a result of higher costs following the eighth wage round.
The rate of growth in 1962 was not unsatisfactory when set against developments during the year in Britain and on the Continent. In Britain, domestic production fell in 1962, while in a number of Continental countries there was a smaller increase in the volume of gross national product than in 1961.
Second Programme for Economic Expansion
Economic growth, of its nature, cannot be absolutely steady from year to year. Ups and downs are to be expected. The OECD report forecasts an upturn in 1963. It is our concern, as a Government, to create conditions in which the growth rate will rise so as to maintain over the coming years the average achieved since 1958. The Second Programme for Economic Expansion, to be published this year, will have this as its chief objective. The general outline of the programme is now being drafted and it is hoped to begin consultations with representative farming, industrial and trade union organisations in a few months.
Balance of Payments
There was a balance of payments deficit of £13½ million in 1962, compared with a surplus of £1 million in 1961. The change from surplus to deficit resulted from a bigger trade gap brought about by a fall in exports and a rise in imports. Exports amounted to £174 million or £6 million less than in 1961; imports were £274 million or £12 million more. The deficit of 1962 should, however, be viewed against the background of overall equilibrium for the previous five years.
The fall in exports in 1962 was a reversal of the upward trend since 1959. It was mainly due to a reduction of £12 million in cattle and beef exports, following exceptionally high shipments in 1961. There were increases in other agricultural exports, notably mutton, lamb, pork and butter, which together rose by £4 million, and a small increase—£1½ million—in industrial exports. The net reduction of £6 million in total exports is to be compared with the rise of no less than £50 million over the two preceding years. It is an unwelcome change that exports failed last year to rise sufficiently to pay for the higher imports required to sustain our development programme.
The connection between exports and economic growth has been clearly shown in the past year. Expansion of the economy can take place only on the basis of a continuous rise in exports; when this is missing, the growth rate suffers.
The increase of £12 million in imports was spread over a wide range of commodities, mainly capital goods and materials for further production. There was also some increase in imports of consumer goods.
Though there was a deficit of £13½ million in 1962, our reserves were not reduced by this amount. Indeed, thanks to a substantial inflow of capital, our net external assets rose by £9½ million during the year. A great part of the capital inflow was direct investment in industry and in minerals exploration and purchases by externs of Irish Government and other securities. This type of investment is important to us at the present stage of our development. It is also a mark of confidence in the economy and does not represent, in any real sense, "hot money".
Capital Formation and Savings
Both capital formation and savings increased in 1962. Mainly because of the large volume of building and contruction carried out during the year and the high level of imports of capital goods, gross fixed capital formation rose by £14 million to £115 million. This represented 15 per cent of gross national product, compared with 14 per cent in 1961 and 13 per cent in 1960, but we have still some distance to go before the ratio matches the general average in Western Europe.
Total savings amounted to £74 million or £7 million more than in 1961. Of the £20 million National Loan issued in November last, £18.4 million was subscribed. This response was satisfactory having regard to the other public issues earlier in the year. The Electricity Supply Board loan of £7 million issued in March, 1963, was heavily over-subscribed.
Employment, Unemployment and Emigration
As mentioned in Economic Statistics, previous estimates of the total numbers at work in the decade 1951-1961 will have to be revised by reference to the 1961 Census returns.
Whether one takes manufacturing or transportable goods industries—and in either case the information, derived from the Census of Industrial Production, is dependable—the numbers employed increased by almost 25,000 between March, 1958, and December, 1962. In manufacturing industries employment in the December quarter of 1962 was 4,600 higher than in the same quarter of 1961. In all non-agricultural economic activity there was an estimated rise in employment of 7,000 over the year but it would seem that this was more than counterbalanced by the fall in the numbers engaged in agriculture, for which reliable figures are not yet available.
Unemployment among insured persons in 1962 amounted to 5.7 per cent, or the same figure as in 1961. In recent months, mainly because of the harsh weather, unemployment figures rose somewhat, but with the advent of milder conditions they are falling again.
Emigration continued to decline in 1962. Net passenger movement outwards by sea and air totalled 20,800, compared with 26,800 in 1961. The consequence of the drop in emigration was that in 1962, for the first time for many years, the population rose. There has been a further improvement in 1963; in the twelve months ended February, 1963, the figure for net passenger movement outwards fell to 12,200. Even if some of the reduction is associated with present economic conditions in Britain, emigration has now been consistently below previous levels for long enough to justify expectations of a permanent improvement.
Prices
Consumer prices rose during the year, the index in mid-November, 1962, being 4 per cent higher than in mid-November, 1961, while there was a further increase of 2 per cent in mid-February, 1963, following a temporary rise in food prices due to the effect on supplies of the exceptionally cold weather. Wholesale prices were on average 3 per cent higher than in 1961. There was an improvement of 1 per cent in the terms of trade; import prices showed no change while export prices rose by about 1 per cent.
The White Paper on Incomes and Productivity
Because the national economic interest required greater understanding of the urgent need to close the gap between incomes and productivity which had emerged in 1962, the Government in February last issued the White Paper "Closing the Gap". Its purpose was to emphasise to all, whether they receive incomes in the form of dividends and profits or are paid salaries or wages, that increased output is the only safe basis for an increase in incomes. General restraint was asked for until national production had risen sufficiently to support a further general increase in incomes without damage to the economy. The White Paper has been fully debated in this House and there is no need for me to enlarge further on its contents.
Since the White Paper was issued, estimates of output and earnings in manufacturing industry in the December quarter of 1962 have become available. Thanks to the rise in production in that quarter, there was some narrowing of the gap between incomes and productivity as compared with the September quarter. However, the rise in output per head since the December quarter of 1960 was less than half the rise in earnings. Productivity has still to be increased considerably before the gap will be closed.
The OECD report on Ireland, which gives the independent view of an international institution on our economic situation, has this to say about the desirability of incomes restraint:
"The ability of the authorities to pursue an ambitious expansionary policy untrammelled by the need to resort to stop-and-go policies can be seriously limited if money incomes are pushed up excessively. And a repetition of the sort of wage round that occurred at the end of 1961 and in the early months of 1962 could easily compel the authorities to fall back on such policies, thereby seriously weakening the more dynamic forces that have developed in the Irish economy in recent years."
We are not doing anything unique in this country in calling for temporary restraint in incomes until output has increased. The OECD report on "Policies for Price Stability" has pointed out that governments are becoming increasingly convinced of the need to evolve some form of national incomes policy. Measures have been taken in a number of European countries in recent years to promote a general policy of conformity between income increases and increases in productivity. Our White Paper has the same purpose. It is to be hoped that both employees and employers will understand it in this light and will, in their own and the community's interest, co-operate with one another and with the Government in bringing to a successful conclusion the discussions initiated by the Taoiseach with a view to establishing a more orderly relationship between income increases and the growth of national production.
Prospects for 1963
In November, 1961, Ireland, in association with the other countries of OECD, accepted the collective target of a 50 per cent rise in the volume of national production over the years 1960 to 1970. A great and sustained effort is needed to attain this objective, which calls for the high, but not unrealistic, annual average growth rate of slightly more than 4 per cent. Our purpose in 1963 is to do better than in 1962 when the growth rate was only 2½ per cent. This involves not only progress in investment, productivity and employment but also avoiding anything which would make the attainment of the target more difficult in this or future years.
In our present circumstances, the way to remedy the slackening in the growth rate is not by stimulating consumer demand. The volume of consumer spending in 1962 rose by 3½ per cent, a figure in excess of the increase of 2½ per cent in the volume of national production. Internal demand is already so high that a deficit is being incurred in external payments. Instead of a further stimulus to demand, what is needed, as already mentioned, is increased productivity and the diversion, by way of saving, of a higher share of incomes to productive investment.
Economic prospects for 1963 depend to a great extent on how exports fare. Provided we can sell competitively, we can reasonably hope for some stimulus to exports from a revival of activity in Britain and increased prosperity in continental Europe. So far as agriculture is concerned, it is notable that the enumeration last January showed an increase over the previous January of 121,000 cattle. This also should lead to increased exports. Imports, like exports, are likely to rise and a moderate deficit may again emerge in the balance of payments. This need not cause alarm. I share the view expressed in the OECD report that Ireland's exchange reserves are high enough to enable moderate overall deficits to be faced in support of the economic development of the country. But it is important to ensure that even moderate deficits are not incurred simply to enable us to consume more than we can afford.
The overriding need in 1963 is to narrow further the gap between incomes and productivity and so improve the competitiveness and volume of our exports. This is the key to a higher rate of economic growth.
External Trade Relations
Any survey of the economic scene would be incomplete without referring further to our external trade relations.
A year ago attention was focussed on the measures necessary to prepare the national economy for early entry to the European Economic Community. Anticipations in that regard have been altered by the breakdown last January in the British negotiations with the Community. The resulting situation was discussed fully in the House at the time and I do not propose to cover the same ground again.
I would, however, like to emphasise two points. First, in the sphere of external economic relations there is no adequate substitute for membership of an enlarged European Community which would include Britain. Participation in such a grouping would afford us free access to a vast and growing market and would secure for our agriculture the kind of trading conditions which would enable agricultural production to develop on a sound economic basis. While these advantages are not now within near reach, the Government believe that, in time, the way will be opened to the participation of Ireland, Britain and other applicant countries in the European Economic Community.
In the meantime, the Government will do all in its power to secure, in bilateral or multilateral arrangements, improved openings for our exports, particularly agricultural exports. This in effect means reducing the protection we have been affording our industrial products—a process in itself desirable as a stimulus to efficiency—as a means of bargaining for improved outlets. There are conditions of oversupply and depressed prices for some agricultural products in the only market still a relatively open one, namely, Britain; and extensive protective barriers exist in other countries. It would be unrealistic to expect that, in these conditions, such improvements as it may be possible to achieve will be comparable with those that would be obtainable under the common agricultural policy of the EEC.
My second point is this. The growth of the national economy, and with it the raising of our living standards, is becomingly increasingly dependent on industrial production and exports. At the same time, the world is moving into an era of freer trade in industrial products and the initiatives being taken for the lowering of tariff barriers, while they will increase the openings for exports, will also intensify competitive conditions in international trade. There is, therefore, greater need than ever to raise our whole industrial sector to a pitch of efficiency which will enable it to compete successfully in world markets.
There is not as yet, I fear, a sufficient sense of urgency. The need for extensive reorganisation has been conclusively established by expert analysis of comparative production costs and by thorough surveys which have diagnosed the problems of individual industries and suggested solutions. Most of the reports of the CIO survey teams have by now either been published or made available to the industries concerned in preliminary form. The Government have provided a range of aids and incentives, including adaptation grants and special re-equipment loans. So far the response to these inducements, which are available only to 31st March, 1965, has not been sufficient in scope or volume. Much more rapid and intensive progress is essential.
In agriculture, too, a series of special surveys has been undertaken, which, like the Dairy Produce Survey Team Report recently published, will provide information and guidance as to possible improvements both in domestic production and in export marketing. State aid will continue to be available to promote efficient production and export but it will, of course, be realised that, as our industrial base is still relatively small, it is not possible to match the aid given to agriculture by more highly developed countries.
In the period immediately ahead we face a challenge as great as, and in some ways even greater than that which would confront us on entry to the EEC. The rewards to be gained are also great: an expanding and better balanced economy and rising living standards. Moreover, by matching the progress of other European countries we will be facilitating our entry to the European Economic Community when circumstances favourable to this step emerge.
Conclusion
What should be our purpose in this budget in the light of the foregoing review? Clearly, it is right that the State should, directly and indirectly, increase the volume of productive investment and do everything else in its power to promote as rapid a growth of the economy as can be sustained without excessive strain on the balance of payments. There is no need here at present to stimulate consumer spending—our spending is rather too high in relation to our production and saving—and one of our main concerns must be to avoid adding to personal spending until production has caught up. Another of our problems is the deficit in our current budget—a deficit which, if it persisted, would divert into the financing of current expenditure savings needed to finance the higher capital expenditure which is nationally desirable. We must do something effective this year, therefore, towards bringing our current finances back into balance.
With a deficit on last year's account, and with greatly increased expenditure to face this year, additional taxation is unavoidable. Increased taxation is never popular and it can always be argued that it means a cut in income or purchasing power. This argument, however, is sometimes carried so far as to imply that the money raised by taxation is withdrawn from circulation and destroyed, whereas, of course, it goes back again to the community in the form of services of every kind, including grants, subsidies and social welfare payments. Nothing is taken that is not returned in another form and the notion of a general loss of real income through taxation does not make sense.
II. CAPITAL BUDGET
Outturn, 1962-63, and Estimates, 1963-64
Taxation changes tend, inevitably, to monopolise attention at budget time. The capital expenditure proposals do not receive due notice. In the hope of bringing about a better balance, I have published a separate paper this year dealing with the Capital Budget at greater length than is possible in the Financial Statement. The relevant Tables, hitherto included in the Tables in connection with the Financial Statement, appear this year in the new publication. It is hoped that this will encourage greater interest in, and discussion of, the various items of public capital outlay and a closer examination of the contribution which the large and growing volume of public capital expenditure makes to national development.
It may suffice for me to say here that actual capital expenditure in the year 1962-63 was £65 million as compared with the estimate of almost £67 million. There were, of course, variations under particular headings which are described in the Capital Budget paper but the total expenditure corresponded closely with the Budget estimate.
Public capital requirements for 1963-64 are estimated at £79½ million which is an increase of £14½ million on the outturn for last year. The details are shown in the Capital Budget paper.
In view of the importance of building and construction in capital programmes, both public and private, the Government have decided to set up a National Advisory Council for the Building Industry. The arrangements are being made by the Minister for Industry and Commerce. It is intended that the Council should survey the building work in prospect over the coming years and advise on means of ensuring that it progresses in an orderly, efficient and economic manner.
Sources of Finance for Capital Budget
Table 2 sets out the sources from which last year's expenditure was met and Table 4 the manner in which it is hoped to finance the programme and certain other items of capital expenditure in 1963-64. It will be observed from Table 3 that the Exchequer is expected to provide almost £58 million leaving the balance of almost £22 million to be found from other sources. The community, as I have already indicated, is not yet saving adequately for development needs. A greater degree of public support will be needed to enable the Exchequer to meet the heavy demands which this year's extended programme will make on it.
The Savings Committee continues to devote its energies untiringly to the development of thrift especially among wage and salary earners and has extended its activities to the schools where the saving idea is also being encouraged. There is no shortage of attractive modes of saving and it is hoped that there will be a sustained and progressive increase in the total volume.
III. CURRENT BUDGET—OUT-TURN, 1962-63
It was disappointing, but not surprising in view of the heavy supplementary requirements for Supply Services, particularly for agriculture, that a deficit of £4.85 million was incurred last year. A sum of £5½ million for supplementary items was provided in the Budget, as revised in June in connection with the milk price subsidy, but, in the event, expenditure on current Supply Services exceeded the provision by £2.9 million. There was a saving of £¾ million on the Central Fund Services, excluding payments to the Road Fund, but total current expenditure exceeded the estimate by £2¼ million. The increase in payments to the Road Fund is balanced by a similar increase in motor taxation receipts.
On the revenue side, expectations were, in the aggregate, closely borne out by the event. Motor taxation, apart, total revenue was only £327,000 short of the estimate. The components of the revenue total, however, diverged markedly from the original expectations. There was a shortfall of some £3¼ million in customs and excise revenue which was largely counterbalanced by extra receipts from the direct taxes—income tax, sur-tax, corporation profits tax and death duties. The principal indirect taxes which disappointed our hopes were those on tobacco, beer, spirits and petrol. Their relatively poor showing may be attributed to various causes. There was some forestalling in the month or two before the last Budget in anticipation of increases in duty on spirits and tobacco. The severe weather affected some items. But the principal cause was the effect on consumption of the budget increases in duty, accentuated in the case of beer and spirits by trade price increases. The lesson of last year's experience is that it would be unwise to depend this year on traditional taxes on expenditure for any substantial increase in revenue.
IV. CURRENT BUDGET, 1963-64— INTRODUCTION.
Growth in taxation and expenditure
Much public attention has been directed of late to the growth of taxation and public expenditure and to the proportion of national product absorbed under these two headings. It is right that these trends should be carefully watched and their implications studied. A new table is included this year in the Tables relating to the Current Budget which may help in assessing how far there is justification for uneasiness.
This table shows the growth of State current expenditure in recent years and the proportion which such expenditure represents of gross national product. The year 1958-59 may be taken as base because it marks the commencement of the period covered by the Programme for Economic Expansion. The main feature emerging from the table is that although State current expenditure has grown considerably over the period 1958-59 to 1962-63—from £126 million to £168 million or by one-third—it has not greatly increased as a proportion of national product.
So far as total taxation and current expenditure are concerned, the public authorities here, central and local, account for about one-quarter of the national product. The proportion has not risen much over the past decade and comparisons with other European countries indicate that it is not relatively high.
This, however, is not to say that we can be negligent or uncritical in our financial or fiscal policy. It is possible to defend, in the circumstances of a developing economy, a temporary rise in the public expenditure and tax ratios provided it is clear that there will be a reasonably early and adequate increase in national production. On that basis, taxation would not become a permanently heavier burden on the economy or, account being taken of the beneficial effects of expenditure, an impediment to economic progress.
In view of the increased emphasis placed on public investment, it is not surprising that the amount provided for debt service, including repayment, increased from £24½ million in 1958-59 to £34½million in 1962-63 and accounts for over 20 per cent of total current expenditure. It is also worthy of note that, in the same period, expenditure on social services has been increased from £47 million to £57½ million while expenditure on the economic services—broadly, agriculture, industry and transport—has grown from £22½ million to £35 million. These expenditure trends are a consequence of the role which, in the circumstances of this country, the State has to play both in promoting growth and in ensuring that all sections of the community share in the resultant increase in national prosperity.
Administration
Some comment on administrative costs will be expected. As Table III shows, remuneration accounted for £51½ million or 30 per cent of total current expenditure in 1962-63. The constituent items were:
£million |
|
Civil Service |
23.5 |
Army |
4.9 |
Garda Síochána |
4.5 |
Teachers |
13.6 |
Health Authorities' Staffs |
5.1 |
As regards the Civil Service, which accounts for 45 per cent of the pay bill, every effort is being made, through the re-allocation of work and through organisation and methods surveys, to keep numbers and cost at a minimum. There is, however, no escaping the inevitable consequence of the growth of State activities. Since 1956-57, there has been a large expansion in the telephone service; the Department of Agriculture has intensified the campaign to eradicate bovine tuberculosis; there has been an expansion of the forestry and fisheries programmes; the Revenue Commissioners have had to organise and operate the Pay As You Earn scheme and deal with increased airport and frontier traffic. There has also been an expansion of the work of other Departments.
In order to ensure that the most economic use is being made of the available staff resources, consultants continue to be employed, with good results. Every effort is being made to increase administrative efficiency, and thus to reduce costs, by extending the use of labour-saving machinery and by improving methods of work.
The use of modern electronic and other means of data processing, in particular, is transforming civil service work. An electronic installation recently introduced in the Post Office Savings Bank is enabling the work of the bank to be done more efficiently and at much less cost. The electronic computer in the Revenue Commissioners' Office, when installed, will do a great deal of the routine work connected with income tax assessment and collection for the entire country and will perform payroll, statistical and accounting work. Other machine installations are in view for various sectors of the Government service. I have had an Inter-departmental Committee set up to advise and co-ordinate the various activities in this field.
The training of staffs is now being carried out on a larger scale than ever before in our Civil Service, and basic training courses are provided by my Department for all recruits to the Administrative, Higher Executive and Executive grades. Various specialised courses are also held, and some Departments, in addition, organise training to meet their own particular requirements. Advantage is also taken of training courses offered by the Institute of Public Administration and by the City of Dublin Vocational Education Committee. I am convinced that substantial benefits are being derived from these activities.
V. CURRENT BUDGET, 1963-64—DETAIL
Estimates of Receipts and Expenditure
The Estimates of Receipts and Expenditure show that revenue at existing tax rates falls short of meeting expenditure by £8½ million. Due allowance being made for recent experience under particular heads and for the general economic outlook in 1963-64, it has been assumed that revenue will be almost £8¾ million above last year. Expenditure is estimated to rise by £12¼ million and thus the deficit incurred last year is enlarged by £3½ million.
The opening deficit of £8½ million, large though it is, is not the whole story. This year again the Budget must make some additional provisions, in pursuance of the Government's policy that the whole community should share in improved national income.
Farmers
The provision for the Supply Services must be adjusted at the outset for the cost to the Exchequer of the increased payment to creamery milk suppliers of a penny a gallon recently announced. This assistance for milk producers follows the principle that State expenditure in the agricultural sector should help to sustain production and exports, and thus to achieve a better balance between the incomes of farmers and other producers. State aid to agriculture, capital and non-capital, exclusive of the additional subsidy, was already estimated at £37.3 million for 1963-64. It includes relief amounting to over half of the rates on agricultural land, the cost of eradicating bovine tuberculosis, fertiliser subsidies, land project outlay, grants for farm buildings and water supplies, advisory services and agricultural research. Of this amount direct price supports to agriculture accounted for £7.2 million. To this must now be added the £1¼ million for the additional milk price allowance. Further, because of the increase in milk production shown by recent figures, it is necessary to add £½ million to the Estimate to cover the probable cost of dairy produce subsidies this year. The total supplementary provision will, therefore, be £1¾ million, which brings to £39 million the aid being given to agriculture.
The addition to the milk price is as much as the Exchequer can afford this year by way of extra help for farmers. This form of extra help has been chosen because, as the Minister for Agriculture has said, dairying is the basic factor in our agricultural economy; it provides the main source of income for great numbers of our farmers, especially the small and medium-sized farmers; and it is intimately linked with the development of our cattle, pig and poultry industries.
Social Welfare
Every budget for the last four years has contained proposals to increase old age and other pensions and unemployment assistance, the object being not merely to protect the value of these social payments but also to give the recipients some share in the improvement in national income. The increases have given special recognition to the responsibilities of those with dependent children. Since the most recent improvement became effective in August last, there has been a slight upward movement in the consumer price index—some three points or less than 2 per cent. There will be a further slight increase in the consumer price index when the proposed expenditure tax comes into operation. To offset these price changes and to add something to the real value of the benefits, it is proposed to increase the maximum rates of 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 raised by 2/6d. a week. The total improvement, including this increase, in old age and widows' pensions in the last five years will, therefore, have been 10/- a week. In the same period the total improvement in unemployment assistance for a married man and wife will have been 17/6d., in addition to which there have been large increases in the allowances for dependent children.
The increase in social welfare payments last year was extended to two kinds of allowances administered by the Department of Health, those for infectious diseases and for disablement. It is again proposed to provide for increases—of 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, and of the disabled person's allowance by 2/6d. a week on the maximum rate. Half the cost of increasing these two allowances will be borne by the Exchequer.
The changes in rates will be effective from 1st November next and will cost this year about £600,000.
It is proposed to introduce increases in benefits under the social insurance schemes from the commencement of the contribution year in January next. The State contribution will be £110,000 for the last quarter of this financial year.
Public Service Pensions
I said on this occasion last year that the cost of raising public service pensions to take account of post-war movements in the cost of living and to bring those who retired earlier into line with their post-war colleagues had been estimated at £1,300,000. The Exchequer position precluded acceptance of a total commitment of that order but provision was made in the Budget to bring pensioners who retired before the pay revision of 1st November, 1955, to parity with their colleagues who retired with the benefit of that pay revision. Subsequently, a further 6 per cent was added.
The Government feel that there would be general approval of some further advance being made in this Budget in the process of bringing service pensions up-to-date. The cost is a more serious consideration this year when substantial extra taxation has to be raised to finance the public services. The maximum revision that can be afforded is to bring the older pensioners to parity with their colleagues who retired with the benefit of the 1959 pay revisions. The groups affected are civil servants, national teachers, Gardaí, Defence Force pensioners, local authority officials, military service pensioners and holders of special allowances. The increases will be payable from 1st November next and the cost is estimated at £120,000 this year.
Economies
The gap has now become £11 million and my first concern is to see whether it cannot be narrowed, even slightly, by some reductions in the current expenditure already proposed for this year. The Government have decided that, however desirable the expenditure on certain items, it is preferable that it should not be incurred this year, or should be spread over two or three years, rather than that it should add to this year's already heavy taxation requirement. This decision applies to the following items:
1. The grant to the Road Fund in the Estimate for Local Government will be reduced from £550,000 to £150,000. The Road Fund will benefit this year from a substantial increase in motor tax revenue and, despite the grant reduction, is expected to have a greater total income than last year.
2. Purchases of defensive equipment, clothing reserves and helicopters will be spaced out so as to save £350,000 on the Vote for Defence but at least one helicopter and requisite spares will be obtained this year.
3. A saving of £50,000 will be effected by postponing recruitment of Gardaí and by other economies in the relevant Vote.
By these reductions, which total £800,000, the gap is narrowed to £10¼ million.
Errors of Estimation
It is customary to make an adjustment for errors of estimation, which may mean either underestimation of revenue or overestimation of expenditure or, of course, a combination of both. Last year was unusual in that nothing was realised towards the adjustment made in the Budget. Having regard to experience in earlier years, and to the special effort which has been made to estimate adequately for agriculture this year, a deduction of £2 million is considered to be warranted.
Revenue Balances
There is one other thing I can do to reduce the tax requirement and that is to draw on the revenue balances which for many years now have stood at about £2 million. These balances have served to augment the revenue inflow, and thus to obviate temporary borrowing during the early, and hitherto lean, part of the financial year. Already, the steady flow of income tax revenue into the Exchequer, largely because of PAYE, has reduced the need to hold these balances. The tax reserve certificates will also help increasingly to smoothen out fluctuations. The process will be carried further by the introduction of a general tax on expenditure, payable monthly into the Exchequer. In these circumstances, it is unnecessary to maintain the revenue balances and they will be taken into the Exchequer this year. This, of course, is a once for all operation but it is warranted by the disappearance of the basic justification for holding the balances and by the higher yield of revenue which will come from the new expenditure tax in a full year.
Extra Taxation
To close the gap of £6¼ million which still remains, there is no alternative but to impose extra taxation. I propose to raise this money, all of which is required to maintain necessary public services, by levying £3.4 million on profits and rents and obtaining the balance, in effect, from a new turnover tax. The Government would not consider it equitable to expect wage and salary earners to bear increased taxation on their expenditure, especially so long as restraint regarding income increases remains necessary, unless the recipients of profits and rents were first called upon for a major contribution. My aim in this, as in all the provisions of the Budget, is to preserve social equity within a sound financial framework intended to promote national progress.
Corporation Profits
Profits have risen substantially in recent years and can bear an increase in taxation without being unduly cut back; to tax them specifically is obviously the right course as an increase in income tax, while it would fall on profits, would also raise the tax bill of wage and salary earners. It is, therefore, proposed that the rate of Corporation Profits Tax, which is now 10 per cent, be increased by 5 per cent and that all profits, including those hitherto within the exemption limit of £2,500, should bear this new 5 per cent. The extra tax will be payable in relation to profits arising on or after 1 January, 1962, and is estimated to yield £3 million this year.
This action, taken in the special circumstances of the current year, is a limited departure from the policy in regard to direct taxation which has otherwise been consistently followed in recent years, namely, the reduction of direct taxation in order to encourage earning and saving. Under this policy, the rate of income tax has been brought down from 7/6d. to 6/4d. in the £. The desirability of adherence to this policy is outweighed this year in the case of business profits by the conviction that social justice requires an even distribution of the additional taxation which is unavoidable.
So far as it may be argued that the tax increase will have an adverse economic effect, it should be remembered, in the first place, that the various capital allowances for modernisation of plant and buildings will, if such expenditure is being incurred, enable companies to avoid or reduce the impact of the additional tax. Even at the higher rate, our taxation of profits will not compare unfavourably with that obtaining in most European countries. Moreover, because of our tax exemption for exports, companies can offset the increase entirely by expansion of exports; by throwing into bolder relief the value of the tax exemption, the increase should provide a further stimulus to higher exports. External as well as domestic interests planning to set up or expand export businesses may do so in the knowledge that complete freedom from income taxation will continue to apply as heretofore to their profits and that, in addition, generous grants and other incentives are available.
25Per Cent Exports Tax Relief— Tapering-off
It will be recalled that in 1957 a measure of relief was provided for those companies which had pioneered in foreign markets without the help of any tax aid and whose current exports might not materially exceed those for either of the standard years prescribed. These companies were allowed to choose, instead of the 100 per cent relief on increased exports, a 25 per cent remission of the tax referable to the profits from all exports. This alternative relief was made available for a five-year period which, in the case of corporation profits tax, commenced on 6 April, 1958, and, for income tax, began with either the year 1958-59 or the year 1959-60. I propose to bring in a "tapering-off" provision under which a reduced measure of this relief will be allowed for the five years following the last year of the existing relief in any given case. There is already a tapering-off provision in connection with the 100 per cent relief.
Residential Rents
The full amount of the net rents from premises occupied for business purposes has for the past thirty years or so been liable to tax. In their Second Report the Income Taxation Commission recommended that landlords of residential or other property let for non-business purposes, instead of being assessed under Schedule A on a notional figure fixed by reference to the valuation, should be charged under Schedule D on the net income receivable: that is, gross rent less landlord's outgoings such as rates, maintenance and repairs. This recommendation was subject to two provisos. The first was that special relief should be allowed where the rent was controlled under the Rent Restrictions Acts. The other was that in all cases full liability should be reached only in stages over a period of three years. The first White Paper on Direct Taxation recognised that this recommendation was desirable in principle but indicated that the Government did not propose to alter the income tax position before rent control was substantially relaxed or abolished.
Besides the present need for extra revenue it is manifest from the changes which have taken place in the past two years that this matter now calls for fresh consideration. There has been a marked upward trend in property values, accompanied by higher rent charges for non-controlled residential properties. Under 1960 legislation houses become free from rent control on certain changes in occupation and possession and also on conversion into self-contained flats. The number of non-controlled dwellings is also increasing, especially in the Dublin area, according as new houses are constructed. The practice of letting furnished flats which are outside the scope of rent control is growing. The narrowing of the area over which rent control operates and the fact that there is a material and growing loss of revenue justify changing the tax position. The very large amount of income arising from the letting of residential property should bear its equitable share of the tax burden. The Finance Bill will, therefore, contain provisions to implement the Commission's recommendation in this respect.
Under the new provisions all profit rents will be taxed in the same manner under Schedule D. Income from the letting of land, including conacre lettings hitherto assessed on a notional basis, will be brought within the scope of the charge. This will affect only persons who derive income from the letting of land and whose total incomes are sufficiently large to make them liable to income tax. The change will have no effect on farmers who farm their own land or who work land taken on conacre.
The question of giving a measure of special relief to landlords as recommended by the Commission has been considered. The first White Paper on Direct Taxation adverted to the difficulty of giving relief for rent-controlled properties, on the lines suggested by the Commission. It is accordingly proposed, as regards controlled properties, to allow a deduction of 40 per cent of the net assessable rents, subject to a maximum of £200 for each individual taxpayer. As regards non-controlled properties, it is intended to allow, for a three-year period, a deduction of 20 per cent of the net assessable rents, subject to a maximum of £100 for each individual taxpayer. These reliefs are intended particularly for persons living on small incomes derived from property.
I expect that the new method of taxing rents will bring in about £400,000 in the current year.
Turnover Tax
I come now to the new tax on expenditure. As the Dáil is aware, the Government have for some time past been considering various forms of taxation in force in other countries on sales, purchases and services. The Income Taxation Commission, in their Third Report, recommended by a majority the introduction of a purchase tax at wholesale level at a rate or rates between 7½ per cent and 15 per cent with exceptions in favour of certain commodities. The proceeds of the tax were to be used to reduce the rate of income tax. The first White Paper on Direct Taxation, in the course of a comment on this recommendation, said that a sales tax would not be inappropriate to the circumstances of this country and, if the necessity were to arise for a major increase in taxation, it might become unavoidable.
This necessity has now arisen. It is not safe to rely for substantially increased revenue on the duties on only four commodities — tobacco, beer, spirits and oils — the yield from which is liable to be seriously affected by changes in demand. The danger inherent in this situation has become more pointed by reason of the reduction which will continue to occur in other customs revenue as a consequence of the lowering of protective tariffs. Moreover, without a more dependable source of revenue, it would be impossible to proceed with any programme of tax reform.
Economic growth of itself will result in revenue increasing without the necessity of raising rates. It is, to say the least, very doubtful, however, whether revenue buoyancy can, in fact, fully reflect the growth in national income if our commodity taxes, from which the bulk of revenue is derived, continue to be narrowly based. The situation might conceivably arise in which, for purely technical reasons, sufficient revenue could not be raised for improvements in social and economic services which were both desirable and within the country's means.
All these considerations make it necessary to introduce as soon as possible a new tax on personal expenditure capable of producing a worthwhile yield.
The Government gave careful consideration to a purchase tax applicable to selected commodities, chargeable at the wholesale stage but not necessarily at a uniform rate. It is important, however, that the tax chosen should disturb as little as possible the existing patterns of trade and industry. It would be indefensible in our circumstances to introduce a tax which might threaten the prospects of expansion of particular industries, or their very existence, and bring unemployment in its train. It is immaterial in this context whether or not the goods produced or dealt in are classed as luxury goods; the work they provide is not a luxury for the employees. From the point of view of the Exchequer, a purchase tax of the kind mentioned would have a narrower base than a retail stage tax because it would cover only a limited range of commodities, would be applied at an earlier stage of production and could not, moreover, be extended to services. A much higher rate would, therefore, be needed to give the same yield as a general retail stage tax. The impact would inevitably be increased by the trade "mark-up", to the disadvantage of the consumer and without any direct gain to the revenue. From the trader's point of view, the selective application of the tax would add greatly to the complexities of bookkeeping; additional working capital would be necessary because tax would be payable in advance of retail sale; and changes in the tax rate could involve loss.
The Government also considered the multi-stage tax and the tax on value-added. Apart from other features, such as the complex provision needed for export rebates, multi-stage taxes have the disadvantage that the final price of a commodity increases not merely by the amount of the tax at each stage but also by the amount of the trade "mark-up" on the tax which has been paid. While the value-added system of taxation largely avoids these disadvantages, it is rather complex for a country which has had no previous experience of sales taxation.
The Government decided, therefore, in favour of a low-rate tax on all retail turnover and applying to services. Besides its simplicity and productiveness, such a tax avoids the risk that expenditure will be switched from one form of consumption to another, to the detriment of particular industries and of the people deriving a livelihood from them. Taxing at the retail level should eliminate the "mark-up" feature I have already mentioned. The tax will be on turnover, not on individual sales, and the trader will not have to apply a uniform percentage increase to the price of every commodity. From the consumer's point of view, there is the assurance that the force of competition will prevent traders from making disproportionate increases in any line.
The new tax is unobjectionable in the context of the long-term harmonisation aims of the EEC. If it should become necessary for us later on to adopt a value-added tax to conform with developments elsewhere, the retail stage tax can with little amendment form a constituent part of a value-added system.
The tax will, in general, include all retail sales and will apply not merely to expenditure on goods but also to expenditure on services, subject to the following exceptions.
Excepted Expenditure on Goods:
Sales of goods for resale.
Sales by farmers of their own produce.
Sales by individuals of their personal property.
Exports.
Bulk sales of certain basic building materials.
Sales of goods of a capital nature to a concern for the purposes of its business.
Excepted Expenditure on Services:
Services provided for the purposes of a business.
Transport services.
Education.
Services provided by the State, by local authorities and by the Radio and Television authorities.
Services given in return for wages and salaries and for professional fees such as fees charged by doctors, solicitors and accountants.
Lettings of houses and accommodation otherwise than in the course of carrying on hotel and guest house businesses.
Banking and insurance.
It is proposed to register all persons, whether manufacturers, wholesalers or retailers, who for business purposes sell or buy goods, and all persons who in the course of their business provide services. Apart from the excepted items I have mentioned, the general rule will be that registered persons will be accountable for tax on the goods and services they sell but will not be required to pay tax on the purchases necessary for their business.
Persons engaged in building and allied activities and certain other persons engaged solely in the business of selling excepted goods or providing excepted services will not be required to register or to pay tax on their turnover, but they will not be permitted to purchase goods or materials free of tax, except to the extent that they can avail themselves of the exemption I have already mentioned in favour of certain basic building materials purchased in bulk.
The tax will be calculated by applying the appropriate rate to the taxable turnover, which in general will be the gross turnover less receipts from registered persons. The tax due will be remitted monthly, with a simple covering statement. The accuracy of the monthly statements will be checked by reference to the accounts furnished to the Revenue Commissioners for income tax purposes. There will also be powers of investigation and inspection.
Goods imported by unregistered persons will bear tax at the same rate as domestic sales.
The preparations for introducing the tax—the drafting of regulations, registration and so on—will take some time and it is proposed that it should not come into operation until 1st November, 1963. It follows that only four months' receipts will reach the Exchequer during the current year. Because of the extensive base of the tax, I am satisfied that the low rate of 6d. in the £ should suffice. This is estimated to bring in £3½ million this year.
It is because the tax will apply to all retail sales, with the few exceptions indicated, that it is possible to have a rate as low as 6d. in the £. If food, clothing and fuel were to be excepted, a rate of up to 2/- in the £ would be necessary to produce the same yield. The tax would become a selective tax at wholesale stage and would have all the economic and other disadvantages I have already mentioned.
There will be relief, by way of reduced rates of tax, for persons in a small way of business. In fact, very small businesses will have to pay only a nominal charge. The intention is to charge only a flat 5/- for the first £50 of monthly turnover and 3d. in the £ for the next £50 of monthly turnover, which would mean that a shop with sales of £100 a month would pay only 17/6d. tax a month.
I think that most businesses, no matter how small, will find the monthly system of payment the most convenient. If I find, however, that there is a demand for a weekly system, it may be possible, where the turnover does not normally exceed, say, £100 a week, to arrange to have the tax paid weekly by affixing stamps to cards as is done in many cases with income tax under PAYE.
I am hoping, and will be grateful, for the active co-operation of the business community in the work of devising simple and effective procedures for the operation of the tax so that it will cause as little trouble as possible to all concerned. Because of its simplicity, I think the tax will be one of the most economical yet devised, with an administrative cost less than 1 per cent of the yield.
Alleviation Provisions
Although the tax will be low, the Government realise that, as food and other basic commodities come within its scope, certain sectors of the community should be given some relief. The increase of 2/6d. a week in various social payments which I announced earlier will more than cover the effect on social welfare recipients of the new tax as well as compensating for the increase since last August in the cost of living. The Government propose to alleviate the burden which the new tax will impose on families by augmenting the existing scheme of children's allowances. At present the allowances are 15/6d. a month for the second child and 22/- a month each for the third and subsequent children. It is proposed to introduce a new allowance of 10/- a month for the first child and to increase the allowance of 22/- a month for third and subsequent children to 26/6d. This means that, on average, the allowances will be increased by more than 4/6d. a month for each qualified child in a family. This should offset the increase resulting from the tax in the basic cost of rearing a family.
These reliefs, like the turnover tax, will apply from the beginning of November next and, as they will cost £1.2 million this year, will reduce the yield of the tax to a net £2.3 million. This is not sufficient to bridge the gap but I am counting on increased effectiveness in collecting direct taxation to make up the deficiency, as I shall explain before I conclude.
It has been argued against a general sales tax that it would increase the proportion of indirect taxation, which is already high in this country by international standards, and that it would be inequitable in its incidence. The available information indicates that, in our tax system, the combined incidence of direct and indirect taxation is not regressive. Government policy with regard to taxation, as stated on many occasions, is that it is a good principle in the circumstances of a developing country to place the emphasis of taxation on expenditure rather than on income so that earning and saving will be encouraged rather than spending. This policy has been justified by the improvement in the economy in recent years. It is in the national interest and particularly in the interests of the wage-earning and the less well-off members of the community that economic growth should be promoted by all possible means.
It is not contrary to equity that those members of the community who can afford to spend most should pay most, as will be the position secured by the new tax.
Reports of Income Taxation Commission
At this point I should like to refer to the effects of acceptance of certain of the recommendations of the Income Taxation Commission as announced in the Second White Paper on Direct Taxation which was issued on 16th April. The White Paper sets out the decisions of the Government with regard to the recommendations made in the Fifth, Sixth and Seventh Reports of the Commission. A glance at the various recommendations suffices to show the extent and value of the work which has been performed by the Commission. A debt of gratitude is due to them. Their extremely difficult task has been completed expeditiously and the various reports have served to clarify the problems requiring attention and will greatly assist in making the income tax code simpler, more intelligible and more equitable.
Inevitably it is not feasible for the Government to accept all of the many recommendations which the Commission has made but, as the two White Papers on Direct Taxation show, quite a high proportion of the recommendations has, in fact, been accepted. The implementation of these recommendations will involve extensive legislation. Much of this will be included in the forthcoming Finance Bill and the remainder dealt with as soon as practicable.
Tax Evasion
The Government have accepted in broad principle the Commission's recommendations on evasion in their Seventh Report. The Commission said that a complete review of the penalty sections should be taken in hand without delay. This has been done and the forthcoming Finance Bill will contain a new set of penalty sections. Another section to be included in the Bill following on a recommendation of the Commission will require banks and other financial institutions to make returns in relation to moneys held on deposit by Irish residents. The return, except for current accounts, will, however, be one of interest accruing rather than of amounts on deposit and it will be sought only where the interest exceeds £15 in the year, which represents an average deposit of £1,500 at present. The first year for which information may be sought will be 1962-63. This will place the bank depositor in the same position as an investor in securities or an employee as regards his remuneration. The information obtained will, of course, be treated as confidential by the Revenue Commissioners. The Commission regarded the keeping of business records as of fundamental importance in the scheme of income taxation and they stated that the Revenue Commissioners should have access to whatever records exist. It is proposed to incorporate a section in the Bill enabling the Revenue Commissioners in certain circumstances to require a person to deliver accounts of his business to the Inspector of Taxes and to make available his business records for inspection.
Improvements in organisation coupled with the provisions I have just mentioned will mean that tax evasion will in future be attended by a greater risk of detection. I recognise, however, that it might be regarded as unreasonable to bring in these provisions without first giving a special opportunity to persons who may have been concealing some of their incomes to put themselves right with the Revenue Commissioners without incurring any penalty. I therefore propose to arrange that any taxpayer concerned will be supplied on application with a form of undertaking to be completed and sent to the Revenue Commissioners before 31 March, 1964. On this form the taxpayer will undertake to furnish the Revenue Commissioners by 30 June, 1964, or such later date as they may allow, with the accounts and information they consider necessary to enable them to compute the amount of all tax underpaid; and to have the accounts certified by an approved accountant if the Revenue Commissioners so require. When this undertaking has been executed the Revenue Commissioners will accept, in full settlement, payment of the amount of the underpaid tax and they will not look for penalties.
This is a substantial concession and will, I have no doubt, be so regarded and used by persons who up to now have failed to pay their full tax. I should, however, stress that leniency will not be shown to any taxpayer concerned who fails to avail himself of this offer.
A loophole in the existing law which will be closed relates to the case where a person, who engages in a trade or profession and is taxed on actual profits under Schedule D, engages also in farming which is charged under Schedule B. Where a question arises as to the adequacy, having regard to the person's standard of living and financial position, of the amount of business profits returned he may allege that the apparent discrepancy is accounted for by large profits on farming. Since his farming profits are taxed on a notional basis under Schedule B the taxpayer has nothing to lose by overstating them. A new section will provide that farming operations in such cases shall be assessed under Schedule D by reference to actual profits.
It is expected that the various measures proposed for dealing with tax evasion will bring in £600,000 in 1963-64 and materially greater sums in future years.
Miscellaneous
The arrangements which are being made to bring the "one taxpayer, one charge" system into operation, as set out in the Second White Paper on Direct Taxation, entail some changes in assessment procedure which, for technical reasons, necessitate the introduction of a Financial Resolution. I shall explain this further when moving the Resolution. Another Resolution is required as a result of the proposed alignment of income tax and sur-tax which is also mentioned in the White Paper. There will also be a Resolution to remedy a defect in the operation of exports tax relief.
Customs and Excise Provisions
I would like to refer briefly to some customs and excise provisions which will be contained in the Finance Bill and none of which will have any significant effect on the revenue.
I propose to extend by three months the period of credit for payment of excise duty on lager beer, as the present period, which is the same as for ordinary beer, is inadequate and adversely affects the competitive position of Irish lager in export markets.
It will be necessary to amend some penalty provisions in the customs and excise law following the Supreme Court decision last December that the provision in Section 186 of the Customs Consolidation Act for the election of the penalty by the Revenue Commissioners is unconstitutional.
It is proposed to seek power to make regulations exempting goods from customs and excise duties where it is necessary or expedient to do so in order to comply with an international convention or agreement to which the State is a party.
Provision will also be made for some changes of minor importance in relation to imported spirits, and authority will be sought to make statutory regulations governing the temporary importation of motor vehicles.
Stamp Duties
To avoid complete loss of stamp duty on transfers of external stocks and shares I have to forgo one-half of the existing 2 per cent duty by reducing it to 1 per cent as from 1 August next. This is a consequence of proposed legislation in Britain under which domestic transfers of securities will be liable to the reduced rate of 1 per cent from that date. If we were to retain the 2 per cent rate, the result would be that most transfers of such securities to or from Irish persons would be stamped in Britain rather than here. The cost of reducing the duty to 1 per cent will be £70,000 this year. The change will mean that transfers of stocks and shares issued outside the State will be chargeable at the same rate of duty as transfers of stocks issued by Irish companies and other Irish bodies. I am prepared to consider further the rate on transfers of the latter class when I have the report of the interdepartmental committee which is investigating the question of improving the marketability of Irish securities.
A few further modifications in stamp duties can be made without upsetting the budgetary balance. I propose to abolish in the Finance Bill the duty of 6d. on bills of lading. I also propose to provide that insurance companies may compound for the duty on policies of insurance of all classes; and that local authorities may compound for the duty on their cheques or pay orders. Provisions will also be included to relieve local authorities and State-sponsored bodies from the obligation of having the duty on conveyances and leases of lands to them adjudicated. Such instruments, if stamped with the proper duty, will accordingly not require to bear the adjudication stamp before being deemed to be duly stamped. These provisions will all take effect from 1 August, 1963.
I made reference last year to a comprehensive volume on stamp duty law which the Revenue Commissioners were preparing. The volume will be on sale later this year. It will be in loose-leaf form so that it may be kept up to date by the issue of amending leaves which may become necessary upon changes being made in the law.
Conclusion
I am too long in politics to think that this budget will escape criticism, that there will be no exaggeration and no misrepresentation. Serious and honest critics must, however, accept the obligation of explaining what they would have done. Would they have cut expenditure by many millions so as to reduce or even eliminate the need for increased taxation, and, if so, under what heads? Would they have given nothing to the farmers or the old age or other pensioners? Would they have imposed different taxes to cover their deficit and, if so, what taxes and with what effects, economic and social? I omit questions which only the irresponsible would consider: for instance, whether the deficit should be ignored, or even added to, regardless of the need to pay our way and the vital connection between financial order and economic progress.
I believe that the solution I have proposed of this year's budgetary problem is a sound and fair one. A big increase in investment is provided for in the Capital Budget, to strengthen the pace of national development and to increase employment. The claims of dairy farmers, social welfare recipients and others to some improvement in their position, or at least to protection against disimprovement, have not been ignored. The taxation needed to reduce—and in time to close —the budgetary gap has been selected with careful regard to social equity. Profits and rental income are called upon for the primary contribution, while a general tax on current spending, no longer avoidable, will not become effective until November, will be at a low rate, and will be accompanied by relief for all families with children.
The new tax must, of course, fall on many without alleviation, if the yield at such a moderate rate is to help meet the need for more money to finance the public services. I realise that it will be said to be unfair and inconsistent to cause living costs to rise by taxation at the same time as everyone is being asked to be content with his existing income until national production has risen further. But, however understanding and sympathetic one may be, however tempted to take an easy, popular line, it would be altogether irresponsible and inconsistent with the community's future welfare either to pretend that public services can be provided without paying currently for them or to contemplate a further general rise in money incomes before national production catches up even with existing incomes. The Government hope that their taxation proposals—intended merely to pay for services and benefits obtained by the community—will be considered just and acceptable and will not become an occasion for the raising, through untimely income increases, of the costs of production, and, therefore, the home and export prices, of Irish goods. This we cannot, as a nation, afford. Our progress depends on our goods becoming more competitive in export markets and I have faith in this being understood by all who care for the nation's interest.
I, therefore, recommend this budget to the Dáil as a set of responsible and equitable measures designed to keep our national finances in order, to be fair in the allocation of benefits and burdens, and to promote the higher rate of economic growth which is the key to greater prosperity for a larger population.
Following are the tables referred to in the Minister's statement:
CURRENT BUDGET, 1963
TABLE 1
COMPARISON BETWEEN (i) BUDGET ESTIMATES AND (ii) ACTUAL REVENUE AND EXPENDITURE IN 1962-63.
Estimated |
Actual |
Estimated |
Actual |
||
£m. |
£m. |
£m. |
£m. |
||
1. Tax Revenue (excluding 2 below) |
129.12 (a) |
128.76 |
1. Central Fund Services (excluding 2 below) |
29.61 |
28.83 |
2. Motor Vehicle Duties |
7.15 |
7.40 |
2. Payments to Road Fund |
7.15 |
7.40 |
3. Non-Tax Revenue— |
3. Supply Services (non-capital) |
129.19 (b) |
132.10 |
||
Post Office |
11.64 |
11.44 |
165.95 |
168.33 |
|
Miscellaneous |
15.64 |
15.88 |
4. Savings and Overestimation— net deduction from expenditure(c) |
2.40 |
— |
4. Deficit |
— |
4.85 |
|||
TOTAL |
163.55 |
168.33 |
TOTAL |
163.55 |
168.33 |
(a) Original provision was £128.52m. to which was added £0.60m. in June in respect of additional duty on tobacco.
(b) The original provision was £123.7m. to which was added £4.485m. in the Budget for agricultural grants, social welfare and further £1.0m. in June for milk price increase.
(c) The Budget provided for a net adjustment of £2.0m. and a further £0.4m. in June by way of deduction from expenditure, to allow for errors of estimation. The actual outturn represents an increase of £2.45m. as follows:
£m |
|
Reduction in Revenue Receipts |
0.07 |
Increased Expenditure on Supply Services |
2.91 |
2.98 |
|
Less net savings on Central Fund Services, including payments to Road Fund |
0.53 |
2.45 |
TABLE 2.
EXCHEQUER, STATEMENT FOR YEARS 1961/62 AND 1962/63.
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, 1962, to 31st March, 1963 |
1st April, 1961, to 31st March, 1962 |
1st April, 1962, to 31st March, 1963 |
1st April, 1961, to 31st March, 1962 |
||
REVENUE |
£000 |
£000 |
EXPENDITURE |
£000 |
£000 |
Customs |
46,864 |
44,933 |
Central Fund Services |
36,232 |
34,160 |
Excise |
34,653 |
33,510 |
Supply Services |
157,052 |
142,090 |
Estate, etc., Duties |
3,500 |
2,865 |
TOTAL EXPENDITURE |
193,284 |
176,250 |
Stamps |
3,058 |
2,955 |
|||
Income Tax (including Sur Tax) |
36,167 |
31,295 |
OTHER ISSUES |
||
Corporation Profits Tax, etc. |
4,516 |
3,667 |
|||
Motor Vehicle Duties |
7,403 |
6,927 |
ISSUES UNDER THE FOLLOWING ACTS:— |
||
Post Office |
11,440 |
10,500 |
Local Loans Fund Acts, 1935-61 |
7,080 |
5,600 |
Sundry Receipts |
15,877 |
15,034 |
Turf Development Acts, 1946-61 |
1,050 |
1,340 |
TOTAL REVENUE |
163,478 |
151,686 |
Industrial Credit Acts, 1933-59 |
2,625 |
3,135 |
OTHER RECEIPTS |
Irish Shipping Ltd. Acts, 1947 and 1959 |
1,891 |
1,003 |
||
REPAYMENTS, ETC.:— |
Broadcasting Authority Act, 1960 |
160 |
1,351 |
||
In respect of issues under:— |
Electricity (Supply) Acts, 1927-62 |
953 |
775 |
||
Turf Development Acts, 1946-61 |
282 |
272 |
Shannon Free Airport Development Co. Ltd. Acts, 1959 and 1961 |
988 |
720 |
Sea Fisheries Acts, 1952-59 |
46 |
40 |
Agricultural Credit Acts, 1927-61 |
50 |
1,765 |
Gaeltacht Industries Act, 1957 |
3 |
2 |
Gaeltacht Industries Act, 1957 |
30 |
70 |
Agricultural Credit Acts, 1927-61 |
1,125 |
— |
Sea Fisheries Acts, 1952-59 |
132 |
112 |
Air Navigation and Transport Acts, 1936-61 |
250 |
— |
Irish Steel Holdings Ltd. Act, 1960 |
1,100 |
1,500 |
Electricity (Supply) Acts, 1927-62 |
720 |
676 |
Telephone Capital Acts, 1924-60 |
3,675 |
2,400 |
Tourist Traffic Acts, 1939-55 |
— |
— |
Finance Acts, 1953 (S. 16) and 1954 (S. 22) |
280 |
190 |
Trade Loans (Guarantee) Acts, 1939-54 |
22 |
30 |
State Guarantees Act, 1954 |
1,970 |
— |
Shannon Free Airport Development Co. Ltd. Acts, 1959 and 1961 |
2 |
— |
Air Navigation and Transport Acts, 1936-61 |
227 |
743 |
Road Fund (Advances) Acts, 1926 and 1948 |
— |
85 |
Grass Meal (Production) Acts, 1953 and 1959 |
40 |
45 |
Road Fund (Grants and Advances) Temporary Provisions, Act, 1959 |
— |
31 |
Trade Loans (Guarantee) Acts, 1939-54 |
— |
5 |
2,450 |
1,136 |
International Development Association Act, 1960 |
14 |
13 |
|
MONEY RAISED BY CREATION OF DEBT:— |
Bretton Woods Agreements Act, 1957 |
232 |
232 |
||
Ways and Means Advances |
31,500 |
31,750 |
Sugar Manufacture Acts, 1933 and 1962 |
1500 |
— |
Exchequer Bills |
148,000 |
119,000 |
Nitrigin Eireann Teo Act, 1963 |
400 |
— |
Telephone Capital Acts, 1924-60 |
3,675 |
2,400 |
Road Fund (Grants and Advances) (Temporary Provisions) Act, 1959 |
— |
200 |
Prize Bonds |
4,538 |
4,615 |
24,397 |
21,199 |
|
ISSUES FOR REDEMPTION OF DEBT:— |
|||||
Savings Certificates |
3,870 |
3,510 |
Ways and Means Advances |
19,835 |
19,240 |
Tax Reserve Certificates |
185 |
— |
Exchequer Bills |
153,000 |
110,500 |
Bank Advances |
17,500 |
7,200 |
Prize Bonds |
2,556 |
2,249 |
6% Exchequer Stock, 1980-85 |
— |
16,909 |
Savings Certificates |
2,380 |
2,005 |
5¾ National Loan, 1982-87 |
19,715 |
— |
3% Transport Stock, 1955-60 |
16 |
38 |
4½% Exchequer Stock, 1968 |
14,550 |
— |
Bank Advances |
17,500 |
7,200 |
Other Borrowings |
13,305 |
6,519 |
Other Borrowings |
10,143 |
5,917 |
256,838 |
191,903 |
205,430 |
147,149 |
||
TOTAL RECEIPTS |
422,766 |
344,725 |
TOTAL ISSUES |
423,111 |
344,598 |
Balance in Exchequer on 1st April, 1962, and 1st April, 1961 |
734 |
607 |
Balance in Exchequer on 31st March, 1963 and 31st March, 1962 |
389 |
734 |
TOTAL |
423,500 |
345,332 |
TOTAL |
428,500 |
345,33 |
TABLE 3
MAIN HEADS OF CURRENT GOVERNMENT EXPENDITURE.
£000
1957/58 |
1958/59 |
1959/60 |
1960/61 |
1961/62 |
1962/63 Provisional |
1963/64 Estimate |
|
Service of Public Debt |
22,902 |
24,639 |
25,566 |
28,374 |
31,113 |
34,376 |
38,289 |
Social Services: |
46,672 |
46,889 |
48,294 |
50,444 |
51,905 |
57,440 |
59,677 |
Social Welfare |
25,471 |
25,354 |
25,357 |
26,129 |
25,694 |
27,894 |
28,684 |
Education |
13,084 |
13,489 |
14,554 |
15,557 |
16,581 |
18,825 |
19,765 |
Health |
8,117 |
8,046 |
8,383 |
8,758 |
9,630 |
10,721 |
11,228 |
Economic Services: |
23,907 |
22,628 |
20,272 |
24,930 |
30,602 |
34,869 |
37,374 |
Agriculture |
13,758 |
13,284 |
10,137 |
14,058 |
18,893 |
22,233 |
22,924 |
Industry |
1,567 |
1,580 |
1,745 |
1,537 |
1,638 |
1,931 |
2,631 |
Transport |
7,774 |
6,965 |
7,449 |
8,289 |
8,905 |
9,308 |
10,265 |
Forestry and Fisheries |
808 |
799 |
941 |
1,046 |
1,166 |
1,397 |
1,554 |
General Services: |
22,564 |
23,409 |
24,800 |
26,235 |
28,113 |
30,685 |
33,141 |
Post Office |
7,014 |
7,387 |
7,560 |
7,846 |
8,834 |
9,662 |
9,842 |
Defence |
6,023 |
6,119 |
6,617 |
7,102 |
7,527 |
8,235 |
9,509 |
Justice, including Gardai |
4,762 |
4,976 |
5,073 |
5,591 |
5,814 |
6,123 |
6,197 |
Public Service Pensions |
4,765 |
4,927 |
5,550 |
5,696 |
5,938 |
6,665 |
7,593 |
Other Expenditure |
12,519 |
8,346 |
9,135 |
9,718 |
10,595 |
10,965 |
12,108 |
TOTAL |
128,564 |
125,911 |
128,067 |
139,701 |
152,328 |
168,335 |
180,589 |
Remuneration included in above figures |
38,285 |
39,448 |
41,466 |
43,845 |
45,272 |
51,693 |
53,501 |
1957£m. |
1958£m. |
1959£m. |
1960£m. |
1961£m. |
1962£m. |
|
Gross National Product |
581.3 |
597.0 |
634.2 |
668.8 |
710 |
764 |
Current Government Expenditure as % of G.N.P. |
22.1% |
21.1% |
20.2% |
20.9% |
21.5% |
22.0% |
TABLE 4
ROAD FUND
RECEIPTS AND ISSUES
RECEIPTS |
ISSUES |
||||
1962-63 |
1963-64 (Estimated) |
1962-63 |
1963-64 (Estimated) |
||
£000 |
£000 |
£000 |
£000 |
||
1. Opening balance |
— |
— |
1. Normal road grants (a) |
7,106 |
7,325 |
2. Motor Taxation, etc. |
7,403 |
7,700 |
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 |
400 |
550 |
3. Grants under the Road Fund (Grants and Advances) (Temporary Provision) Acts, 1959 and 1962 |
400 |
550 |
|||
3. Administration, etc. |
297 |
375 |
|||
4. Closing balance |
— |
— |
|||
TOTAL |
7,803 |
8,250 |
TOTAL |
7,803 |
8,250 |
(a)Including payments on foot of previous years' allocations.
TABLE 5
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 |
|
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 |
57,885 |
26,476 |
22,058 |
1961-62 |
151,686 |
152,393 |
62,825(b) |
26,744(b) |
23,161(b) |
1962-63 |
163,478 |
168,335 |
68,645(b) |
32,817(b) |
22,773(b) |
1963-64 |
172,140(c) |
180,589(c) |
71,416(c) |
34,336(c) |
23,530(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 6
TABLE SHOWING STATE AID TO AGRICULTURE FROM 1959-60.
1959-60 |
1960-61 |
1961-62 |
1962-63 |
1963-64 |
|
£000 |
£000 |
£000 |
(Provisional)£000 |
(Estimate)£000 |
|
Subsidies of final products: |
|||||
Butter and other milk products |
56 |
2,350 |
4,698 |
3,172 |
4,668 |
Wheat |
372 |
834 |
1,150 |
1,543 |
500 |
Bacon |
300 |
850 |
1,850 |
2,825 |
2,000 |
Bacon Factory Grants |
— |
— |
26 |
23 |
80 |
Subsidies to reduce production costs: |
|||||
Ground limestone |
297 |
236 |
493 |
645 |
725 |
Phosphatic fertilisers |
2,036 |
2,131 |
2,215 |
2,400 |
2,600 |
Potash |
— |
195 |
503 |
600 |
700 |
Petrol |
48 |
44 |
36 |
33 |
— |
Drainage, land reclamation and general improvement schemes: |
|||||
Arterial drainage |
1,037 |
1,044 |
1,083 |
1,617 |
1,861 |
Land Project |
2,373 |
2,167 |
2,064 |
2,108 |
2,232 |
Other drainage schemes |
90 |
49 |
5 |
— |
— |
Improvement of Land Commission Estates |
673 |
620 |
648 |
740 |
813 |
Other improvement schemes |
450 |
426 |
440 |
485 |
475 |
Gaeltacht and Congested District Schemes |
205 |
181 |
189 |
200 |
209 |
Elimination of disease, livestock improvement, etc. Bovine T.B |
5,122 |
4,961 |
8,970 |
6,618 |
5,682 |
Pasteurisation plant |
29 |
39 |
39 |
40 |
20 |
A.I., milk production and livestock improvement |
49 |
50 |
64 |
75 |
75 |
Administration of improvement and regulatory Acts |
183 |
194 |
218 |
276 |
334 |
Grants towards farm buildings, etc.: |
|||||
Farm buildings and water supplies |
795 |
803 |
1,007 |
1,303 |
1,233 |
Poultry houses and equipment |
44 |
60 |
60 |
65 |
73 |
Orchard planting |
4 |
4 |
4 |
3 |
2 |
Education, research, advisory and technical services: |
|||||
Education |
358 |
449 |
478 |
525 |
546 |
Research |
389 |
500 |
623 |
783 |
1,019 |
Advisory services |
319 |
339 |
378 |
399 |
496 |
Rural organisations |
18 |
20 |
23 |
26 |
25 |
Technical services |
148 |
165 |
181 |
217 |
254 |
Departmental capital exditure on land and buildings |
71 |
85 |
128 |
160 |
356 |
Land annuities:Halving of land annuities |
732 |
745 |
765 |
786 |
821 |
Bonus to vendors and other costs |
117 |
118 |
118 |
118 |
118 |
Relief of rates |
|||||
Agricultural Grant |
5,575 |
5,664 |
5,839 |
8,530 |
8,816 |
Rural Electrification |
1,140 |
966 |
775 |
953 |
600 |
Capital for Agricultural Credit Corporation, Ltd. |
— |
— |
1,765 |
50 |
— |
TOTALS |
23,030 |
26,289 |
36,835 |
37,318 |
37,333 |
NOTE:— Figures are net of appropriation in aid.
CAPITAL BUDGET, 1963
PART II
CAPITAL BUDGET TABLES
TABLE 1
PROGRAMME OF CAPITAL EXPENDITURE, 1962-63—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 |
24.95 |
(24.67) |
24.95 |
(24.67) |
— |
— |
||
2. Local Authorities (a) |
11.69 |
(11.66) |
9.87 |
(9.92) |
0.62 |
(0.12) |
1.20 |
(1.62) |
3. National Development Fund |
0.07 |
(0.21) |
0.07 |
(0.21) |
— |
— |
||
4. Electricity Supply Board |
9.75 |
(8.70) |
0.95 |
(0.58) |
4.80 |
(5.15) |
4.00 |
(2.97) |
5. Irish Shipping Ltd. (a) |
1.43 |
(1.57) |
1.34 |
(1.31) |
0.09 |
(0.03) |
— |
(0.23) |
6. Bord na Móna |
1.50 |
(1.60) |
1.40 |
(1.50) |
— |
0.10 |
(0.10) |
|
7. (i) Córas Iompair Eireann |
1.44 |
(1.80) |
— |
— |
1.44 |
(1.80) |
||
(ii) Ostlanna Iompair Eireann Teo (b) |
0.09 |
(0.71) |
— |
0.09 |
( — ) |
— |
(0.71) |
|
8. Air Companies |
1.01 |
(1.31) |
0.23 |
(0.36) |
0.55 |
(0.95) |
0.23 |
( — ) |
9. Telephone Capital |
3.68 |
(3.50) |
3.68 |
(3.50) |
— |
— |
||
10. Industrial Credit Co. Ltd. |
3.55 |
(4.70) |
2.63 |
(4.07) |
0.80 |
(0.63) |
0.12 |
( — ) |
11. Agricultural Credit Corporation, Ltd. |
1.55 |
(1.45) |
0.05 |
(0.70) |
0.59 |
(0.45) |
0.91 |
(0.30) |
12. Shannon Free Airport Development Co., Ltd. (c) |
0.99 |
(0.85) |
0.99 |
(0.85) |
— |
— |
||
13. Bord Iascaigh Mhara (d) |
0.13 |
(0.22) |
0.13 |
(0.22) |
— |
— |
||
14. Bord Ghaeltarra Eireann |
0.03 |
(0.05) |
0.03 |
(0.05) |
— |
— |
||
15. Comhluct Siúicre Eireann Teo. (Food Processing Project) (a) |
1.24 |
(0.50) |
0.56 |
(0.50) |
— |
0.68 |
( — ) |
|
16. Irish Steel Holdings Ltd. |
1.10 |
(1.00) |
1.10 |
(1.00) |
— |
— |
||
17. Nítrigin Eireann Teo. (e) |
0.40 |
(1.45) |
0.40 |
(1.45) |
— |
— |
||
18. Radio Eireann |
0.30 |
(0.50) |
0.30 |
(0.50) |
— |
— |
||
19. National Building Agency Ltd. (a) (f) |
— |
(0.10) |
— |
(0.10) |
— |
— |
||
20. Miscellaneous |
0.20 |
(0.33) |
0.04 |
(0.05) |
0.16 |
(0.28) |
— |
|
TOTAL |
65.10 |
(66.88) |
48.72 |
(51.54) |
7.70 |
(7.61) |
8.68 |
(7.73) |
(a) Sums raised for repayment of borrowing of earlier years are not included, viz.,
£ million |
||
Actual |
Estimate |
|
Irish Shipping Ltd. |
0.55 |
0.56 |
Local Authorities |
0.12 |
0.11 |
National Building Agency Ltd. |
— |
0.05 |
Comhlucht Siúicre Eireann Teo. |
0.94 |
— |
(b) The total capital expenditure was £0.10 million of which £0.01 million was defrayed from voted moneys and is included at 1. above.
(c) The total capital expenditure was £1.12 million of which £0.13 million was defrayed from voted moneys and is included at 1. above.
(d) The total capital expenditure was £0.16 million of which £0.03 million was defrayed from voted moneys and is included at 1. above.
(e) The total capital expenditure was £1.12 million of which £0.72 million was defrayed from voted moneys and is included at 1. above.
(f) The total capital expenditure was £0.20 million of which £0.10 million was defrayed from voted moneys and is included at 1. above and £0.10 million was provided by the Industrial Credit Co. Ltd. and is included at 10. above.
TABLE 2
CAPITAL BUDGET, 1962-63.
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 1) |
48.72 |
(51.54) |
|||||
Exchequer |
2.45 |
(1.07) |
2. Advances to enable repayment of borrowing by— |
|||||
Local Loans Fund |
2.91 |
(2.62) |
Comhlucht Siúicre Eireann Teo |
0.94( — ) |
||||
5.36 |
(3.69) |
Irish Shipping Ltd. |
0.55(0.56) |
|||||
National Building Agency Ltd. |
—(0.05) |
|||||||
2. Capital Fund |
0.49 |
(0.48) |
Local Authorities |
0.10( — ) |
1.59 |
(0.61) |
||
3. Small Savings and Prize Bonds—Savings Banks |
4.35 |
(4.00) |
3. Borrowing to meet payments under Finance Acts, 1953 (s.16) and 1954 (s.22) |
0.28 |
(0.15) |
|||
Savings Certificates |
1.49 |
(2.00) |
||||||
Prize Bonds |
1.98 |
(2.50) |
7.82 |
(8.50) |
4. Borrowing to meet payments under Bretton Woods Agreements Act, 1957, and International Development Association Act, 1960 |
0.25 |
(0.25) |
|
4. Departmental Funds— |
||||||||
Investment income and sales of securities |
11.83 |
(12.00) |
5. Redemption of 3% Transport Stock, 1955-60 |
0.02 |
( — ) |
|||
5. Balance found by— |
6. Borrowing to meet payment under State Guarantees Act, 1954 |
1.97 |
( — ) |
|||||
(a) 5¾% National Loan, 1982-87 |
19.71 |
6. Borrowing to meet payment under State Guarantees Act, 1954 |
1.97 |
( — ) |
||||
(b) 4½ Exchequer Stock, 1968-Banks |
9.70 |
7. Borrowing to meet deficit on Current Budget |
4.85 |
( — ) |
||||
Departmental Funds |
4.85 |
|||||||
14.55 |
||||||||
(c) Tax Reserve Certificates |
0.18 |
|||||||
(d) Casual decrease in Exchequer Balance |
0.35 |
|||||||
(e) Other Borrowings |
3.16 |
|||||||
37.95 |
||||||||
Less— |
||||||||
Decrease in Exchequer Bills in hands of Banks |
5.00 |
|||||||
Decrease in Exchequer Bills in hands of Public |
0.77 |
|||||||
5.77 |
32.18 |
(27.88) |
||||||
TOTAL |
57.68 |
(52.55) |
TOTAL |
57.68 |
(52.55) |
TABLE 3
PROGRAMME OF CAPITAL EXPENDITURE, 1963-64—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 |
26.46 |
26.46 |
— |
— |
2. Local Authorities (a) |
15.16 |
12.25 |
1.41 |
1.50 |
3. National Development Fund |
0.24 |
0.24 |
— |
— |
4. Electricity Supply Board |
11.75 |
0.60 |
4.50 |
6.65 |
5. Irish Shipping Ltd. |
0.35 |
0.26 |
0.09 |
— |
6. Bord na Móna |
1.65 |
1.65 |
— |
— |
7. (i) Córas Iompair Eireann |
1.43 |
— |
— |
1.43 |
(ii) Ostlanna Iompair Eireann Teo. (b) |
0.51 |
— |
— |
0.51 |
8. Air Companies |
4.03 |
0.58 |
2.35 |
1.10 |
9. Telephone Capital |
4.50 |
4.50 |
— |
— |
10. Industrial Credit Co., Ltd. |
3.47 |
3.00 |
0.47 |
— |
11. Agricultural Credit Corporation, Ltd. |
1.60 |
— |
0.50 |
1.10 |
12. Shannon Free Airport Development Co., Ltd. (c) |
1.25 |
1.25 |
— |
— |
13. Bord Iascaigh Mhara (d) |
0.22 |
0.22 |
— |
— |
14. Bord Ghaeltarra Eireann |
0.05 |
0.05 |
— |
— |
15. Comhlucht Siúicre Eireann Teo. (Food Processing Project) (a) |
0.82 |
0.82 |
— |
— |
16. Irish Steel Holdings Ltd |
1.00 |
1.00 |
— |
— |
17. Nítrigin Eireann Teo. |
3.50 |
3.50 |
— |
— |
18. Radio Eireann |
0.25 |
0.25 |
— |
— |
19. National Building Agency Ltd. (a) (e) |
0.18 |
0.18 |
— |
— |
20. Miscellaneous |
1.24 |
1.05 |
0.19 |
— |
TOTAL |
79.66 |
57.86 |
9.51 |
12.29 |
(a) Sums to be raised for repayment of borrowing of earlier years are not included, viz., Local Authorities £0.12m., National Building Agency Ltd., £0.15m. and Comhlucht Siúicre Eireann Teo. £0.68m.
(b) Total estimated capital expenditure is £0.56m. of which £0.05m. is being defrayed from voted moneys and is included at 1. above.
(c) Total estimated capital expenditure is £1.41m. of which £0.16m. is being defrayed from voted moneys and is included at 1. above.
(d) Total estimated capital expenditure is £0.28m. of which £0.06m. is being defrayed from voted moneys and is included at 1. above.
(e) Total estimated capital expenditure is £0.43m. of which £0.25m. is being defrayed from voted moneys and is included at 1. above.
TABLE 4
CAPITAL BUDGET, 1963-64
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 3) |
57.86 |
|||
Exchequer |
1.25 |
||||
Local Loans Fund |
3.10 |
2. Advances to enable repayment of borrowing by— |
|||
4.35 |
National Building Agency Ltd. |
0.15 |
|||
Comhlucht Siúicre Eireann Teo. |
0.68 |
||||
2. Capital Fund |
0.52 |
0.83 |
|||
3. Small Savings and Prize Bonds— |
3. Borrowing to meet payments under Finance Acts, 1953 (s. 16) and 1954 (s. 22) |
0.30 |
|||
Savings Banks |
5.00 |
||||
Savings Certificates |
1.50 |
||||
Prize Bonds |
2.00 |
8.50 |
4. Borrowing to meet payments under Bretton Woods Agreements Act, 1957, and International Development Association Act, 1960 |
0.25 |
|
4. Departmental Funds— |
|||||
Investment income and sales of securities |
14.00 |
||||
5. Balance to be fund |
31.87 |
||||
TOTAL |
59.24 |
TOTAL |
59.24 |
TABLE 5
PUBLIC CAPITAL PROGRAMME, 1958-59 TO 1963-64
£ million
1958-59 |
1959-60 |
1960-61 |
1961-62 |
1962-63 |
1962-63 Outturn compared with estimate |
1963-64 Estimate |
|
1 Building and Construction |
|||||||
(i) Housing |
6.53 |
7.79 |
9.03 |
9.20 |
10.74 |
+0.05 |
12.52 |
(ii) Sanitary and miscellaneous services |
1.78 |
1.39 |
1.84 |
2.10 |
2.32 |
–0.52 |
3.36 |
(iii) Schools |
1.42 |
1.70 |
1.32 |
1.69 |
2.27 |
+0.27 |
2.60 |
(iv) Hospitals |
0.26 |
0.28 |
0.56 |
0.15 |
0.36 |
+0.06 |
0.90 |
(v) Other building and construction |
0.23 |
0.40 |
0.47 |
0.69 |
1.33 |
–0.07 |
2.06 |
TOTAL |
10.22 |
11.56 |
13.22 |
13.83 |
17.02 |
–0.21 |
21.44 |
2. Ports, Harbours and Airports |
0.91 |
1.55 |
2.24 |
2.65 |
2.44 |
–0.65 |
2.99 |
3. Tourism |
0.02 |
0.07 |
0.09 |
0.18 |
0.35 |
+0.02 |
0.52 |
4. Agriculture |
5.48 |
10.98 |
10.56 |
14.71 |
13.50 |
+0.67 |
13.09 |
5. Agricultural Credit |
0.65 |
0.84 |
0.80 |
1.12 |
1.55 |
+0.10 |
1.60 |
6. Forestry |
1.14 |
1.31 |
1.49 |
1.52 |
1.63 |
+0.02 |
1.94 |
7. Fisheries |
0.17 |
0.30 |
0.20 |
0.13 |
0.17 |
–0.12 |
0.29 |
8. Fuel and Power |
7.60 |
7.45 |
7.40 |
7.68 |
11.25 |
+0.95 |
13.40 |
9. Telephones |
1.45 |
1.35 |
2.10 |
2.40 |
3.68 |
+0.18 |
4.50 |
10. Transport |
6.27 |
4.80 |
8.34 |
4.05 |
3.97 |
–1.42 |
6.32 |
11. Industry |
0.54 |
1.14 |
1.71 |
3.19 |
5.31 |
+0.19 |
8.37 |
12. Industrial Credit |
2.81 |
2.08 |
2.52 |
4.09 |
3.55 |
–1.15 |
3.47 |
13. Radio Eireann |
— |
— |
0.10 |
1.35 |
0.30 |
–0.20 |
0.25 |
14. Miscellaneous (including the National Development Fund) |
0.63 |
0.66 |
0.50 |
0.34 |
0.38 |
–0.16 |
1.48 |
TOTAL |
37.89 |
44.09 |
51.27 |
57.24 |
65.10 |
–1.78 |
79.66 |
Under head 1 the figures for 1961-62 and 1962-63 are provisional; those for 1958-59, 1959-60 and 1960-61 are final.
The figures for 1959-60, 1960-61, 1961-62, 1962-63 and 1963-64 do not include amounts of £2.03 m., £2.85 m., £1.53 m., £1. 61 m. and £0.95 m. in respect of repayment of borrowing.
In addition to the expenditure on housing under head 1, £0.25 m. in 1960-61, £0.31 m. in 1961-62, £0.29 m. in 1962-63 and £0.50 m. in 1963-64 is included under head 2 in respect of housing development by Shannon Free Airport Development Co. Ltd.
TABLE 6
VOTED CAPITAL SERVICES.
1962/63 |
1963/64 |
||
Vote and Subhead |
Estimate (including Supplementaries) |
Expenditure |
Estimate |
£000 |
£000 |
£000 |
|
No. 9—Public Works and Buildings |
|||
A.—Purchase of Sites and Buildings |
38 |
83 |
50 |
B.—New Works, etc. (New Buildings and Reconstruction Works) |
2,750 |
2,425 |
2,858 |
I.1.—Arterial Drainage—Surveys |
25 |
18 |
25 |
I.2.—Arterial Drainage—Construction Works |
1,080 |
1,030 |
1,300 |
I.4.—River Fergus Drainage |
— |
— |
— |
J.—Purchase of Engineering Plant and Machinery, and Stores |
383 |
423 |
378 |
TOTAL |
4,276 |
3,979 |
4,611 |
No. 29—Local Government |
|||
E.2—Grants under the Housing (Financial and Miscellaneous Provisions) Acts, 1932 to 1962, and the Housing (Loans and Grants) Act, 1962 |
2,500 |
2,500 |
2,750 |
No. 35—Universities and Colleges and Dublin Institute for Advanced Studies |
|||
B.—University College, Dublin (Item 4) |
520 |
425 |
900 |
C.—University College, Cork (Item 3) |
— |
— |
20 |
D.—University College, Galway (Item 4) |
32 |
32 |
9 |
TOTAL |
552 |
457 |
929 |
No. 38—Forestry |
|||
C. 1—Acquisition of Land (Grant-in-Aid) |
270 |
270 |
320 |
C.2—Forest Development and Management (Parts (1), (2), (3) and (6)) |
1,516 |
1,356 |
1,619 |
TOTAL |
1,786 |
1,626 |
1,939 |
No. 39—Fisheries |
|||
D.8—Pond Fish Culture |
1 |
1 |
1 |
D.9—Contributions to the Salmon Conservancy Fund |
5 |
5 |
6 |
E. —Grant-in-Aid of Administration and Development of An Bord Iascaigh Mhara (Part) |
60 |
33 |
60 |
TOTAL |
66 |
39 |
67 |
No. 40—Roinn na Gaeltachta |
|||
C(1)—Deontais faoi Achtanna na dTithe (Gaeltacht) |
185 |
179 |
190 |
No. 41—Agriculture |
|||
E.3—Improvement of Poultry and Egg production (Part of Item C) |
15 |
16 |
10 |
K.6—Farm Buildings Scheme and Water Supplies (Items (C) and (D)) |
1,170 |
1,225 |
1,140 |
K.7—Land Project |
2,108 |
2,108 |
2,232 |
K.8—Lime and Fertilisers Subsidies (Part of Item (B)) |
2,050 |
2,050 |
2,250 |
K.11—Bovine Tuberculosis Eradication Scheme (Net) |
6,399 |
6,470 |
5,672 |
K.K.11—Bovine Tuberculosis Eradication Scheme— Guarantee Payments in respect of Export of Fat Cattle and Carcase Beef |
154 |
138 |
— |
K.13—Grants to Bacon Factories |
35 |
23 |
80 |
M.6—Grain Storage (Loans) Act, 1951 |
— |
— |
— |
TOTAL |
11,931 |
12,030 |
11,384 |
No. 42—Industry and Commerce |
|||
J.1—Grant under Undeveloped Areas Act, 1952 (Grant-in-Aid) |
1,000 |
1,000 |
1,150 |
J.2—Grant under Industrial Grants Act, 1959 (Grant-in-Aid) |
1,000 |
617 |
1,600 |
J.3—Re-Equipment Grants, etc. (Grant-in-Aid) |
— |
— |
250 |
Repayable Advances to Nítrigin Eireann Teoranta (Grant-in-Aid) |
950 |
720 |
— |
St. Patrick's Copper Mines, Ltd.— General Mining, Development and Testing Operations (Grant-in-Aid) |
320 |
206 |
— |
TOTAL |
3,270 |
2,543 |
3,000 |
No. 43—Transport and Power |
|||
C.—Equipment, Stores and Maintenance (Purchases) |
25 |
16 |
17 |
E.—Grants for Harbours (Permanent Improvements) |
150 |
44 |
150 |
F.2—Resort Development (Grant-in-Aid) |
93 |
88 |
200 |
F.3—Development of Holiday Accommodation (Grant-in-Aid) |
263 |
263 |
315 |
G.1—Acquisition of Land, Buildings, etc. |
2 |
2 |
15 |
G.2—Constructional Works at Airports including Furnishing of Buildings |
1,120 |
834 |
680 |
J.—Catering and Sales Service Shannon Airport—Provision of Working Capital (Grant-in-Aid) |
110 |
110 |
60 |
L.1—Shannon Free Airport Development Company, Limited (Part of Grant-in-Aid) |
232 |
132 |
155 |
TOTAL |
1,995 |
1,489 |
1,592 |
No. 48—International Co-operation Repayable Advance to the United Nations |
107 |
107 |
— |
TOTAL |
26,668 |
24,949 |
26,462 |
TABLE 7
LOCAL LOANS FUND
CAPITAL RECEIPTS AND ISSUES
RECEIPTS |
ISSUES |
||||
1962/63 |
1963/64 (Estimated) |
1962/63 |
1963/64 (Estimated) |
||
£000 |
£000 |
£000 |
£000 |
||
1. Opening balance |
11 |
— |
1. Loan Issues: |
||
2. Capital Repayments |
2,905 |
3,100 |
Housing, Sanitary Services, etc |
9,268 |
11,200 |
3. Exchequer Advances |
7,080 |
9,150 |
Vocational Schools |
554 |
800 |
Hospitals, County Homes, Dispensaries, etc. |
144 |
200 |
|||
Harbours |
— |
50 |
|||
2. Repayment instalment on moneys raised |
30 |
— |
|||
3. Closing balance |
— |
— |
|||
TOTAL |
9,996 |
12,250 |
TOTAL |
9,996 |
12,250 |
TABLE 8
STATEMENT SHOWING CAPITAL LIABILITIES OF THE STATE ON 31ST MARCH, 1962, AND 31ST MARCH, 1963, AND ASSETS HELD ON THOSE DATES
31st March, 1962 |
31st March, 1963 |
|
LIABILITIES:— |
£000 |
£000 |
Money raised by issue of securities: |
||
3½% Fourth National Loan, 1950/70 |
3,429 |
3,420 |
3¼% National Security Loan, 1956/61 |
61 |
— |
3% Exchequer Bonds, 1965/70 |
18,684 |
18,292 |
3½% Exchequer Bonds, 1965/70 |
24,509 |
23,981 |
5% National Loan, 1962/72 |
16,531 |
16,415 |
4½% National Loan, 1973/78 |
19,451 |
19,411 |
4½% National Loan, 1975/80 |
17,266 |
17,204 |
5% National Savings Bonds, 1971/81 |
17,584 |
17,450 |
5½% National Loan, 1966 |
5,781 |
5,781 |
6% National Loan, 1967 |
19,221 |
18,534 |
5½% Exchequer Stock, 1971/74 |
14,248 |
14,214 |
5½% National Development Loan, 1979/84 |
18,403 |
18,108 |
3% Transport Stock, 1955/60 |
54 |
— |
6% Exchequer Stock, 1980/85 |
39,338 |
38,090 |
5¾% National Loan, 1982/87 |
— |
25,000 |
4½% Exchequer Stock, 1968 |
— |
15,000 |
Exchequer Bills |
31,500 |
26,500 |
Savings Certificates (Principal) |
27,275 |
28,765 |
Prize Bonds |
18,958 |
20,940 |
Tax Reserve Certificates |
— |
185 |
Ways and Means Advances |
118,620 |
124,085 |
Dollar Borrowings under United States Loan Agreements |
38,378 |
37,585 |
Under Telephone Capital Acts, 1924 to 1960 |
19,116 |
22,052 |
Other Borrowings |
11,232 |
14,395 |
479,639 |
525,407 |
|
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) |
15,920 |
16,150 |
Under Housing (Financial and Miscellaneous Provisions) Act, 1932— |
||
State contributions capitalised |
36,924 |
37,980 |
State contributions towards loan charges of local authorities for sanitary services capitalised |
5,129 |
5,936 |
Annuity under Damage to Property (Compensation) (Amendment) Act, 1926 |
3,450 |
3,372 |
61,423 |
63,438 |
|
TOTAL GROSS LIABILITIES (see note below)* |
541,062 |
588,845 |
ASSETS:— |
||
Repayable advances |
||
Electricity Supply: Board |
62,127 |
61,453 |
Local Loans Fund |
103,726 |
110,806 |
Industrial Credit Co. Ltd. |
955 |
3,430 |
Purchase of Creameries |
1,419 |
1,419 |
Bord Failte Eireann |
9 |
9 |
Bord na Mona |
17,502 |
18,619 |
Bord Iascaigh Mhara |
1,201 |
1,288 |
Bord Ghaeltarra Eireann |
148 |
175 |
Radio Eireann |
1,446 |
1,746 |
Under Finance Acts, 1953 (Sec. 16) and 1954 (Sec. 22) |
890 |
1,169 |
Agricultural Credit Corporation Ltd. |
1,125 |
— |
Aer Rianta Teo |
250 |
— |
Shannon Free Airport Development Co. Ltd. |
310 |
399 |
Nitrigin Eireann Teo |
— |
1,144 |
191,108 |
201,657 |
|
Shares of Sundry Undertakings: |
||
Agricultural Credit Corporation Ltd. |
940 |
990 |
Comhlucht Siuicre Eireann, Teo. |
1,500 |
3,000 |
Industrial Credit Co. Ltd. |
8,679 |
8,829 |
Aer Rianta, Teo. |
10,468 |
10,696 |
Ceimici, Teo. |
496 |
496 |
Irish Shipping, Ltd. |
9,282 |
11,172 |
Alginate Industries (Ireland) Ltd. |
29 |
29 |
Irish Assurance Co. Ltd. |
90 |
90 |
Colucht Groighe Naisiunta na hEireann, Teo. |
396 |
396 |
Shannon Free Airport Development Co. Ltd. |
1,578 |
4,000 |
Irish Steel Holdings, Ltd. |
2,900 |
2,476 |
Min-Fheir (1959) Teo. |
75 |
115 |
Payment under Bretton Woods Agreements Act, 1957 |
4,582 |
4,814 |
Payment under International Finance Corporation Act, 1958 |
119 |
119 |
Payment under International Development Association Act, 1960 |
67 |
81 |
41,201 |
47,303 |
|
Balance held on sundry Funds and Accounts: |
||
Exchequer Account |
734 |
389 |
National Loans Sinking Funds |
11,140 |
15,922 |
Savings Certificates Reserve Fund— |
||
Principal Reserve Account |
3,848 |
3,888 |
Capital Services Redemption Account |
620 |
222 |
National Development Fund (Winding-up) Account |
773 |
700 |
Capital Fund |
237 |
189 |
Savings Certificates Account |
165 |
165 |
Proceeds of Dollar Borrowings under United States Loan Agreements— |
||
Balance on American Loan Counterpart Fund |
40,295 |
39,833 |
57,812 |
61,308 |
|
TOTAL ASSETS |
290,121 |
310,268 |
* When considering the Liabilities Statement at 31/3/63 alone it should be borne in mind that there is double reckoning in the totals to the extent of £57,309,000 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 balance of the National Loans Sinking Funds and the Savings Certificates Fund (Principal Reserve Account). This is offset in the Assets Statement where the balance 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 9
STATE DEBT BALANCE SHEET
LIABILITIES |
31st March, 1962 |
31st March, 1963 |
ASSETS |
31st March, 1962 |
31st March, 1963 |
£000 |
£000 |
£000 |
£000 |
||
Outstanding Public Debt as per previous table* |
487,950 |
531,536 |
Liquid Assets (as per previous table)* Repayable Advances and Shares |
4,700 232,309 |
4,000 248,960 |
Telephone Capital Acts, 1924/60 |
19,116 |
22,052 |
|||
Pre-1922 Advances to Local Loans Fund |
6,285 |
6,285 |
Transition Development Fund |
6,635 |
6,635 |
National Development Fund |
7,024 |
7,099 |
|||
Sinking Funds and Interest, etc. thereon |
79,152 |
88,814 |
Other Voted Capital Services |
152,643 |
176,848 |
United Kingdom (Capital Sum) Act, 1938 |
10,000 |
10,000 |
|||
Capital Fund |
9,413 |
9,828 |
Insurance (Amendment) Act, 1938 |
1,034 |
1,034 |
Dáil Eireann Loans (Internal and External) |
1,025 |
1,025 |
|||
Property Losses Compensation paid in Stock |
1,579 |
1,579 |
|||
Land Bonds (State Liability) |
15,921 |
16,150 |
|||
Subsidy under Housing (Financial and Miscellaneous Provisions) Act, 1932 (capitalised) |
36,924 |
37,980 |
|||
Subsidy under Sanitary Services Schemes (capitalised) |
5,129 |
5,936 |
|||
Subsidy for Rural Electrification |
5,777 |
6,730 |
|||
Annuity under Damage to Property (Compensation) (Amendment) Act, 1926 |
3,450 |
3,372 |
|||
Advances to Road Fund written off |
1,176 |
1,176 |
|||
Discounts on National Loans (net) |
2,400 |
3,102 |
|||
Issue under Great Northern Railway Act, 1953 |
2,250 |
2,250 |
|||
Liability for Transport Stock assumed under Transport Act, 1958 |
9,889 |
9,889 |
|||
Payment under State Guarantees Act, 1954 |
— |
1,970 |
|||
Budget Deficits |
63,291 |
68,148 |
|||
Other Items |
528 |
528 |
|||
582,800 |
636,463 |
582,800 |
636,463 |
* Excludes double reckoning to the extent of £53.111 m. and £57.309 m. at 31/3/62 and 31/3/63, 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.