Financial Statement. - Budget, 1963.

General

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.

There are two things which always seem to me to be typical of the Fianna Fáil Party: one is the brazenness of their bluff and the other, the excellence of their propaganda.

On a point of order, I would ask the Fine Gael backbenchers to deal more courteously with Deputy Sweetman than they dealt with the Minister for Finance. If they want to chat, they can go out to the Library.

(Interruptions.)

Take your medicine.

I would not have sat down for such a disorderly point of order but for the fact that I thought the Tánaiste was going to honour the statement that he made some years ago when he said that any Minister who took any part in raiding the till or the petty cash was not fit to be a Minister and should resign forthwith. On this occasion the Minister for Finance, and Deputy MacEntee as Tánaiste, have not merely raided the till but they have taken the whole till away. One would have thought that for the sake of showing the example of honouring his speech, the Tánaiste would have realised his obligations.

As I said, the thing that astounds one in relation to this Budget is the atmosphere of bluff and propaganda with which it was heralded by many people and particularly by the Taoiseach. Last week, he tried to make it appear that the Budget was going to be the starting point towards a new programme. Instead of being such a starting point, it is going to be a crippling point for many of the people in this country. Of course, that was done partly to take away attention from the mistakes and from the errors, and from the results of those mistakes and errors by him and his Government and the Minister for Finance. Where did we start to-day? We started, first of all, with the knowledge that last year the Minister for Finance ended up the 1962-63 Budget with a deficit of £4,857,000, with a deficit that means that we are going to pay this year and every year ahead for 19 more years £679,000 for the purpose of meeting the cost that will arise in sinking fund and interest over the years to recoup the deficit for which the Minister was responsible last year. We start with that deficit for which he has given no explanation but, of course, the explanation is obvious. The explanation is that revenue came up to expectation but the Minister for Finance as Minister for Finance failed to exercise his proper functions of looking over the finances and expenditure in the country and allowed expenditure to rise beyond the money he had to meet it.

We can go further from that. I wonder how many people, how many Deputies of the Fianna Fáil Party, realised when the Minister for Finance came in today that on 1st April he was able to say, without his having even to get up from his seat, that he was going to have tax buoyancy of something over £6¼ million and increased non-tax revenue of almost another £2 million—buoyancy in revenue, without having to lift a finger, of up to £8 million, buoyancy in revenue enough not merely to wipe out the deficit of last year, not merely to provide the £1¾ million provided for the price of milk or to double it, not merely to provide for the social welfare benefits that are included—that amount of buoyancy and enough extra revenue to meet all that—if only he had made the effort of ensuring that expenditure would be kept at last year's level, not even at the level estimated this time last year but at last year's actual level. All those benefits could have been included and the deficit of last year wiped out if only the Minister for Finance had properly acted in pursuance of the functions vested in him. It is because he did not—for that reason and that reason alone— that we have here today a Budget whose impositions, perhaps, not yet realised, will be crippling in their effect on very many people throughout the community, not merely in this year but in the year ahead.

It was not merely in relation to the Budget of last year that the Minister failed. He failed, in addition, in his job of guiding the external transactions of the community in such a way that we went on external balance to a figure of £13,400,000 on the wrong side. That is not merely the figure for 1962. It is a figure in respect of which the trend month after month and quarter after quarter since last year has been steadily rising. The figures released only yesterday show a further increase in our import excess.

The immediate effects of that have been hidden by the hot money to which reference was made by economists, by the Banking Review, and which everybody seems to know about except the Minister for Finance. If it has had the effect that we are now living on capital externally it is because the Minister has failed in his task of guiding the economy in the right way.

But, of all the facts that emerged during the past week in the documents circulated, the figures that have now been disclosed in relation to employment must shatter the confidence of everyone who has seen them and who appreciates them. If we take the returns in the pink book Economic Statistics, we find that last year there was a reduction of 19,200 in the number of people on the land of Ireland, that the policy of this Fianna Fáil Government has meant that 19,200 people have been pushed off work on the land of Ireland. If we go back to 1956 we find that in the intervening period 48,500 people have been driven off work on the land because of the policy of the Government. If we take the number of paid employees in agriculture, apart from those engaged in family work, we find that the increase in industrial employment does not provide any proper margin at all above that. Five thousand paid employees lost their jobs in agriculture last year. That is supposed to be a record of which the Minister for Finance today can be proud.

As I say, for years the position has been that there has been some increase in industrial employment that would at least offset that but, while there were 5,000 fewer people paid in agriculture last year the offsetting increase in transportable goods industries has only been some 3,000.

I shall now turn from that aspect of economic activity to the total number of people at work. I shall leave out of account altogether the number of people who have left the country. It was estimated by one of the big firms the other day that the reason why their sales of flour were down was that there were 300,000 fewer mouths to eat their flour. There is a table that has been dropped this year from theEconomic Statistics but which can be reconstructed. If it is reconstructed we find that, in spite of all the ballyhoo, in spite of all the propaganda and in spite of all the promises by Fianna Fáil, between 1956 and 1962, even taking account of any increase in employment in industry that there may be, there are today as we stand here 58,500 fewer persons employed in Ireland than there were six years ago and the Minister for Finance expects that he will receive plaudits from the people on that record.

Where are the 100,000 jobs the Taoiseach promised? Where was the great plan the Taoiseach promised he had only to take out of a drawer and put into operation and that, not merely after a period, but so many in the first year, so many in the second year, the third year, the fourth year and the fifth year? Where are the placards Fianna Fáil had about wives getting their husbands back to work? There are 58,500 fewer persons at work today than there were the day they walked into the jobs for themselves beyond.

Let us go on from that damning failure of the Government to consider the position in relation to the national debt. The national debt at the end of last year was £531 million. It increased by £43 million in 1963 alone and the cost of servicing that debt has gone up to £32 million from £18 million when the Minister took over. Up to the time they came into office the increase in the cost of servicing the national debt could safely be taken account of by increase in non-tax revenue but we now need £22,940,000 to service the national debt this year, whereas in 1957/58 we needed only £11 million, that again taking into account each year the amount that comes in the repayment of advances.

How is it that in spite of all the money we see expended for the purpose of allegedly increasing production we see no sign of that increase when we come to the other side of the exchequer book? Why is it that we see a virtual stagnation in agricultural output because of the failure of the policies of the Minister for Agriculture? The net output of the agricultural industry increased last year by only one per cent. Why is it that there is virtually no increase in our livestock population? Why is it that when we sold 200,000 cattle last year there is only an increase in the cattle population of 120,000, 80,000 less than the number sold?

It is now obvious to everybody that industry last year was showing that sign of sluggishness which meant that all we had got before was a taking up of the slack that was present in existing concerns and was due to the effect of the boom at the other side of the water which the Minister for Finance has admitted today when he said that one of the reasons for the reduction in our industrial exports last year was the change in the economic situation across the way.

Where is this Budget going to help the development of an incomes policy? We said last year and the previous year that the development of an incomes policy was vitally necessary to the country. We cannot afford to have the continued effect of play and counterplay between opposing interests in our economic life. This Budget is not going to do much to help the situation and neither did the hamhanded White Paper issued by the Government three months ago. All that this Budget and that White Paper have shown is that this Government do not understand what an incomes policy really is. Their policy has been concerned solely with restricting earnings but by an incomes policy we would have expansion in salaries and wages, expansion in profits, in agricultural earnings and in social service benefits. Of course, that has never been Fianna Fáil's understanding of these matters. Instead they have always preferred to rely on incomes.

If we turn again to the industrial increase and to the figures given for the gross national product we will see nothing of the increase of the kind which we have heard so much about and for so long in sermons from members of the Government. However, after six years the Minister for Finance has taken my advice. It has taken him six years to realise that my advice was good and excellent advice. Six years ago I told him it was desirable to have a separate Budget statement issued in relation to the capital Budget. When Dr. Ryan and the Fianna Fáil Party came into office they were not going to admit that anything done here by their predecessors could be of any value and so they buried that idea for six years hoping that, when they reintroduced it, people would have forgotten where it came from. It is a good thing that even after that lapse of time the Minister has adopted that policy but it is unfortunate that he did not do so earlier.

We see a tribute in the Budget statement to those who, by their savings have helped to provide necessary capital but we see no reference on the part of the Minister to the fact that the most permanent form of small savings has ceased to be as attractive as they used to be. Saving certificates are by far the most permanent form of small savings and yet they are the only type of small savings that have shown a decline. I would have thought that it would be obvious to the Minister for Finance that this is the time to introduce a more attractive issue in that respect.

Last year and the year before people got from the Minister for Finance a new form of taxation in PAYE. This year they have got another new form of tax in what the Minister has called a turnover tax. I think most of them will go home tonight and tomorrow wondering what new tax Fianna Fáil are going to think up for them next year. People will realise that if they get the opportunity Fianna Fáil will not fail to put another blister on them next year. I do not blame the members of the Fianna Fáil Party for failing to follow what was being done as the Minister announced this turnover tax today. The Minister read so quietly and so fast that nobody could follow him but I wonder will the members of Fianna Fáil and of the public generally realise tomorrow that the Minister, instead of taxing perfumes, furs, expensive motor cars and jewellery as was announced by the Minister for Lands, is taxing bread, butter, sugar, tea and milk and all the necessaries of life?

He is taxing the clothes of every sort that we have to wear. He is taxing the clothes of every sort that we have to get for our children. It does not matter what it is: whether it is the hair-do for the lady or the hair-cut for the man, or bread, butter, milk or clothing—all have been taken into the maw of the Minister for Finance by this Budget.

There is no question of any luxuries. There is no question of a differentiation in tax as between the fur coat and the loaf of bread. There is no question of a differentiation on tax as between the expensive motor car and the ordinary, cheap, small car a person might want to buy. There is no question of a differentiation in tax for the thing that is really necessary as against the thing that is a complete and absolute luxury. There is no question of ensuring that those who could afford to buy the most luxurious articles should pay the highest rate of tax on those articles. Apparently, simplicity is the only thing that matters. There is no question of hardship because the fact that all goods are being attacked is not apparently a matter of any consequence.

Even that was not enough for the Minister. He endeavoured to balance his Budget this year by, as I have said, taking the till money out and leaving no revenue balance whatsoever. If there has ever been a more disgraceful method of robbing the till, I shall allow the Tánaiste to explain it when he speaks on this Budget, and no doubt he must speak to defend his honour because, as an honourable man, he should have resigned after what he said, rather than adopt this Budget.

The Minister has increased the imposition of corporation profits tax not merely on all companies but also in respect of the first £2,500. It is easy for Deputies to say that will not hurt anyone, but I believe this additional imposition will have the effect of ruining many small family businesses. I believe the turnover tax will make it virtually impossible for small family businesses to carry on. It will not affect the bigger businesses because they have their own resources. They have the money to modernise and with that modernisation, they can take advantage of the industrial allowances that are given under the income tax code.

The small family business has not got the money to do that. It has not got that type of reserve. Its difficulty has always been to carry on from day to day. It will find now that there will be less and less profit, and many of those family businesses will find that as a result of this Budget their days are numbered. Before I leave the corporation profits tax, I should say that in our circumstances it is from the accumulation within the companies by selffinancing that we are able to get greater productivity and modernisation. At one fell swoop, the Minister has cut down on that, and that is bound to affect productivity in the future.

Again, it is easy for the Minister to refer in wide and sweeping terms to taxation on rents and on unfurnished lettings. We all know that after the breadwinner has gone, one of the ways in which the widow can help make ends meet—be she a farmer's widow or the widow of a man who owned his house—is to let the land or the house until her family have grown and can take their place in the world.

That type of letting will come under the attack of this Budget not merely in respect of conacre land. In addition, the widow who lets her house in Dublin will find the same penalty imposed on her. That will inevitably have the effect that there will be fewer houses and fewer flats to rent. Working people in Dublin, and working girls, find it hard enough to get flats at present but this will mean that there will be fewer houses and flats to rent, and when they come on the market they will be sold for owner-occupation only and not for letting.

I do not understand how the Minister can possibly calculate that the cost of this turnover tax will be as light as he says. How is it to be collected from the huckster shop?

I should like to ask Deputy Sweetman a question, with his permission and yours, Sir. Is the Deputy going to make another Budget speech tomorrow, because I understood that the convention was that brief statements would be made after the Minister had spoken, and that the main debate was reserved? I am suggesting to the Deputy now that, bad and all as he is, he is now making a major speech.

The Deputy will speak for as long as he likes in accordance with the rulings of the Chair, and he will not be deterred in the slightest by the disorderly interruptions of the Tánaiste who should be honourably writing out his resignation.

The Deputy referred to a speech of mine. When I was making that speech——

Will the Tánaiste, for goodness' sake, sit down?

The Tánaiste should try to learn how to behave, if he does not know how.

At this juncture the Chair would like to point out that it has been the convention that brief statements were made.

I have not been speaking for half an hour yet.

Is that what the Deputy calls brief? It sounds like a funeral.

It is a funeral; it is a wake.

The Tánaiste occasionally talks without thinking. I know he realises——

It is the funeral march of the Opposition.

——these are the obsequies of Fianna Fáil. This turnover tax will mean that inspectors will be going into huckster shops——

Solicitors' offices are worrying the Deputy.

They are exempt.

We are exempt.

Deputy Leneghan does not know a thing about it.

Order. Deputy Sweetman.

Licensed premises are already suffering from the effects of last year's Budget. There was a drop of one-sixth in the consumption of home whiskey as a result of the Minister's action last year. Tobacconists have been suffering because of the Minister's action last year. Petrol, one of the Minister's best revenue collectors, will have to meet this additional impost, as will bread, butter, sugar, tea, milk, clothing and everything, so far as I can see, that is in everyday use. When anyone complains, the Minister says: "Do not worry, boys; there are others worse off in other countries." That is all he can say.

What about the situation of the ratepayers? Last year's relief was swallowed up in the increased rates this year. One of the provisions in this Budget, the increased disablement benefits, will automatically increase rates by Government direction.

Does the Deputy want to cut that out?

If you want to give it, pay for it.

They had plenty to pay for it out of the buoyancy in the revenue, if they had only used it in the proper manner.

It is exposing itself now. Cut the social services. Is that not it?

There was enough to pay for the social services. It does not matter which page you turn to in the Budget Statement; it all amounts to the same thing. According to the tables issued today, last year, 22 per cent of the gross national production was taken by the Central Government. That was the highest amount taken in any of the past five years. It has increased immeasurably, and this Budget will go down in history as the one in which Fianna Fáil deliberately placed further blisters on the backs of the people, deliberately increased taxation not by itself but as a percentage of everything everybody needs. If that is something for which they think they will get praise in the country, they have another think coming because the people will be only too anxious, as soon as they can, to pass a verdict on them, and no uncertain verdict it will be.

Without closer examination of the details of the Budget, I should like to express some comments on behalf of this Party as to how the Budget appears to us at this stage. I think the Minister for Finance displayed considerable political sagacity and foresight when at the top of page 62 of his statement, he said:

I am too long in politics to think that this Budget will escape criticism, that there will be no exaggeration and no misrepresentation.

Anybody who knows the Minister's wily ways will realise it was at that point that introspection broke out within him and the Minister realised that the 61 pages which he had already written, or which his expert advisers had written for him, would be insufficient to insulate him against criticism.

The Minister is right, of course. He is too old a warrior, as is the gentleman on his left, not to realise that this is not the kind of Budget you can ride around on with a white horse underneath, announcing yourself as a kind of Messiah to the people. This is a disappointing Budget; it is a pedestrian Budget, a Budget of shifting here and chopping there, moving from one thing in one direction to another thing in another direction. If cards were in use, this Budget is very like a game of Find the Lady because there are moments here and there when you are wondering what is happening. If you travel back over the statement, you will find that what is purported to be given away in one place has already been taken ten pages earlier, that compensation promised in one portion of the statement is utterly inadequate in the circumstances governing the case.

What has been made quite clear is that the Minister in his review has said that exports fell last year. That is a very serious situation against the background of the European Economic Community, in circumstances in which we are supposed to be making arrangements to combat the effects of EEC membership on our industries and agriculture. In 1962, our exports fell by comparison with previous years. I think nobody can gainsay the absolute necessity and urgency of pushing our exports to the highest possible pitch, and the fact that last year, by a relatively substantial figure in our circumstances, our exports fell, is an indication that basically we have not yet got to grips with the problems confronting us as far as Europe is concerned, that we are still in a relatively stagnant position.

Not only has there been a fall in exports but the whole employment position seems to have got into a condition in which it is almost impossible to understand the factors that are at work. A Parliamentary Question recently elicited the fact that in 1962 18,200 persons left agricultural employment. Is that not a very serious situation? Yet we were told in the week before the general election in 1957 that Fianna Fáil had a plan to put 100,000 persons into employment in four years, a plan that would end emigration.

It is now six years since that promise was made and the position to-day is that there are fewer in employment. These figures cannot be denied. This booklet issued by the Taoiseach's Department, Economic Statistics, shows that in 1956 409,000 persons were employed in farm work. The number in 1962 had dropped to 360,000; in other words, there were approximately 49,000 fewer persons employed in agriculture in 1962 than in 1956. This has happened notwithstanding the Government's covenant that, if they got into office, they would provide 100,000 jobs in four years.

Surely, after six years, nobody can be accused of peevishness or impetuosity if they ask the Government where are the 100,000 extra jobs, bearing in mind the fact that there are 49,000 fewer people in agricultural employment today than in 1956. It may be said that employment in industry has gone up. It has, of course. We had to do something for the people. Let us look at the figures. In 1956, there were 154,000 people employed in industrial production or engaged in the transportable goods industries. The number in 1962 was 170,000. Approximately, 49,000 people left agriculture and 16,000 got new jobs in industry and that means that 33,000 fewer persons were employed, according to these figures. Somebody ought to explain how this plan for 100,000 new jobs is working. It does not seem to work in accordance with the ordinary rules of mathematics. These figures show instead that we have fewer people in employment in Ireland today than we had in 1956, notwithstanding the 1957 plan to give 100,000 new jobs.

All this has gone on in spite of large scale emigration from the country. If there had been no emigration in the past six years, the number unemployed here, the number out of industrial and agricultural employment, would be substantially more than is revealed by an examination of these statistics.

It is not unreasonable to ask: what is the Government's real plan for dealing with unemployment? What is the Government's policy in respect of agriculture? Is it to allow agricultural employment to fall and fall, and to continue to hope that we can absorb a fraction of those who leave agriculture into industrial employment and allow emigration to take care of the remainder? Will somebody state the Government's policy in half-a-dozen sentences so that we may know and understand in full in which direction we are moving?

The Minister has admitted that since November, 1961, prices have risen by six per cent, which is a pretty substantial increase. This Budget will, of course, add considerably, in my view, to the increase in the cost of living.

Hear, hear.

Against the background that prices have risen by six per cent, to talk about a wage pause by which the Government would put their finger on the scale against the wages and salaries of the workers is obviously an unfair method of approach. The Minister was much more sagacious when he came to talk of the wage policy and he spoke of a policy of adjusting production and incomes. One can generally agree that out of the pool of production come the wages and sustenance standards of those who are employed and I do not think, as I said during the discussion on the pay pause motion, that it would be impossible—I think it would be desirable—for the responsible central trade union organisation and the employers' organisation to discuss the matter. It should be possible to work out a wage policy and an economic policy that would avoid upheavals from time to time and give reasonable satisfaction to both sides. The Taoiseach's wages regulation, with entry into the business of salary, was comparable to the bull in the china shop. It caused considerable comment and disquiet amongst those who were apparently to be the victims of the Government's wage policy.

The turnover tax now announced in the Budget and heralded for some time is to appear later in the year. Apparently there is to be a tax of two-and-half per cent or 6d. in the £ on practically everything apart from a few isolated commodities. How this will work is another matter but two and a half per cent will be taken from everybody who goes into practically any kind of shop to buy commodities. If you take an ordinary tradesman, carpenter, bricklayer, plasterer, glazier, tiler or an ordinary clerk who has a wife and a few children, he spends roughly £10 a week. He will pay at least an extra 5/-a week. That will be the minimum tax. I suggest this may work out not at 6d in the £ but at 1/8 in the £. For example, what will be the tax if a person buys 1/- worth of goods? Will the tax be one-twentieth of a shilling? If so, what coinage will be used? I suspect that if a person buys 1/- worth under this tax, he will pay at least a halfpenny and if he buys 20 separate items worth a shilling each, 20 separate halfpennies will have to be paid, that is on the assumption that the shopkeeper adjusts the matter on the basis of a halfpenny. In a great many cases, it is not always possible to get a halfpenny and many people give pieces of paper for halfpennies in provincial shops. They say: "I have no halfpenny but keep that bit of paper until the next day". I suspect that there will be 1d. minimum tax in many cases where relatively small amounts of money are spent. The effect will be that the tax will be substantially more in small instances than if you had to pay 6d in the £. If you buy £10 worth, the calculation is clear and you pay an extra 5/-but where people have slender resources and have to buy small quantities and have to use the curren coinage, I am afraid they will not get away with 6d in the £ but will have to pay substantially more and may in fact pay up to 20d or 1/8 in the £.

That will be a nice turnover tax to inflict on these people at the same time as they are being advised by their political superiors to take note of the necessity for a wage pause. This matter needs further examination by the Government who should take note of the fact that a new impost is being put on the backs of people who are not able to bear the present burdens, much less meet the demands which will amount to another £3½ million. The weakest backs and the most slender incomes will feel this tax most.

Up to 1957, the problem here was to give the people food at the cheapest possible prices. For that purpose, we had a scheme of food subsidies. Fianna Fáil did not like that. In 1952, when they got back to office after 1951, they slashed a substantial number of food subsidies to the extent of about £9 million. When they got back to office again in 1957, they slashed the remainder of the food subsidies, so that instead of a situation in which it was part of the national policy to subsidise food production and give food to the people at the lowest possible price, we have now, thanks to this Government, got away from a food subsidation policy and embarked in a whole-hog manner on a scheme of food taxation.

This is the first Government in this country to impose a tax on foodstuffs. That tax is being imposed in this Budget by a Minister for Finance who quaintly says that he thinks there may be criticism. Fianna Fáil now enjoy the reputation that prices were never higher than they are today and they are the first Government to put this blanket taxation on foodstuffs and at a time when people are groaning under the burdens they are now compelled to bear.

I see nothing in this Budget calculated to give any inspiration whatever to our people. I see no evidence of any clear plans for the growth or expansion of the economy on either the agricultural or industrial front. It is a gloomy reflection to remember that our exports have gone down and nobody is yet prepared to say that we can correct that tendency this year, although, personally, I hope we shall be able to do so.

On the agricultural front, we have reached the stage when one of our biggest products—milk, and its corollary, butter—has now become the enemy of the Irish Exchequer. We are now spending £3½ million a year in getting other people in other countries to eat our butter at a price 40 per cent cheaper than our own people can eat it. Surely that is a defect in the agricultural economy that ought to be remedied by methods other than sending an odd commercial traveller around here and there to see if he can sell a few cwts of butter? A sum of £3½ million is now being spent on what must be recognised as the most wasteful form of investment, namely, selling our products at a substantial loss to other people.

In the developments that have taken place since General de Gaulle's temperamental decision in January last to have nothing more to do, for the time being, at all events, with the British application for membership of EEC, I think most people will have discerned, both in industry and in general discussions at public gatherings, a slackening of the urgency about our membership of EEC. If this is allowed to go uncorrected it must mean, inevitably, a falling back to the old ways, to the old methods, and a resort to reliance on whatever can be sold on the home market, with all the difficulties involved in that if, at the same time, this sense of resignation to events is accompanied by a continued reduction in the tariffs on imported commodities.

I see nothing in the Budget which is likely to act as a clarion call to the nation or as an incentive to gear the nation for the emergency of our membership of EEC. I see in it many petty changes of a kind which in my view affect neither one way or the other the internal economy and which, beyond providing light reading for people who are interested in Budgets, will make no substantial contribution to the eradication of our difficulties or the removal of many of the evils which press with such rigour upon our people.

The Minister has suggested that there should not be any criticism of this Budget. He must have had his tongue in his cheek because for the first time since I have come to this House—I am here exactly 20 years now—a deficit will be found by the Minister for Finance from the very poorest people in the country. One statement the Minister made was that employment in industries producing luxury goods is no luxury to the employees concerned. In every other case when Governments had to find additional expenditure the very first thing the Minister for Finance turned to was to see if the money he required could be got from luxuries and non-essentials. That was the method employed during our time by the two inter-Party Governments with a great measure of success, a great measure of relief and an easement of the burden on the poorest classes of people.

On employment?

Look atEconomic Statistics published by the Parliamentary Secretary's Government inside the past few weeks. The record of unemployment there is well ahead of anything that occurred during our time.

92,000 in 1957.

At the very least, during our first three years in office —for the first time since 1848, the Great Famine—the downward fall in population was stopped. It was actually reversed and there was a slightly upward increase in 1951 as a result of our economic policy.

Explain it otherwise. The Parliamentary Secretary will get a chance when he is speaking to explain it otherwise but the fact remains, just as Deputy Norton has said, that we had established that system. We had established and maintained the system of food subsidies. It was bad enough for Fianna Fáil on two occasions to remove these subsidies—first, when they got back to power in 1952 they reduced them to the tune I think of about £9,000,000 and, when they got back in 1957, they removed them altogether—but now the wheel has gone full circle and instead of removing subsidies on food and driving up the price of it they have actually resorted to taxing food.

Let us look at what they propose to do under this Budget. It certainly is sad to see that they have descended to such a meagre thing. First and foremost, I mention the proposed turnover tax and the tax on conacre lettings for the first time in the history of this country.

It is qualified. Read it.

What does the Parliamentary Secretary think of that?

It is a very good thing.

The grant to the Road Fund has been cut by £400,000. It was £550,000 last year. It is reduced to £150,000 now—a cut of £400,000. It reminds me very strongly of the way the Local Authorities (Works) Act money was completely wiped out in their time. For the first time in the history of this country, every single article the ordinary working man must buy is now taxed.

That is rot—dishonest. We are imposing no tax whatsoever. Deputy Norton made the same allegation. Just see how it works out.

It is the sly way in which you have taxed——

This is the best Budget brought in for the working man and Deputy Corish will admit it.

It was only the corncrakes——

That is a fact. There was no reference to corporation profits tax or to the social welfare increases.

Break the silence and tell us how——

Could Deputy Blowick get a chance to speak?

This is a turnover tax.

I must insist that Deputy Blowick be allowed to make his speech.

I have no doubt the Chair and the House will give the Parliamentary Secretary ample opportunity to refute what I say if I prove to be wrong.

The Deputy is wrong.

The Minister says he proposes a turnover tax. He tells us he proposes to start a register of every person doing business in the country. Is that not right? Very good. As I take it from the Minister's speech, without any elaboration or explanation other than what the Minister has just told us, a certain tax will be levied on everybody engaged in business. In other words, they have to turn in monthly accounts to the Revenue Department. They can find the tax any way they want to: there is no word of a prohibition. Take the shopkeeper who sells small quantities — sixpence worth and one shilling's worth—to the ordinary poor people throughout the country. I imagine this imposition will not lean as heavily on the big business as it will on the small business. Take the small businessman who sells tea by the quarter or half pound, a box of matches — any small quantity with which we are familiar. How is he to operate this tax and how is he to bear it out of his profits and not raise the cost of these commodities? The loaf of bread, the lb. of butter—all such commodities must bear an increase from the shopkeeper. Otherwise the shopkeeper will find himself inStubbs' Gazette.

Is that not so?

Not necessarily.

Honestly——

This is not a debate by retort.

This is the second Budget.

I shall willingly give way to the Parliamentary Secretary, if he can prove I am wrong. It would save a lot of acrimonious debate when the Budget comes to be discussed tomorrow and next week. I am thinking of the small shopkeepers down the country who will just be told: "Your turnover per month was £300, £500— whatever it is—you pay so much and collect it any way you like." There is nothing to stop one shopkeeper from putting a heavier tax on the loaf of bread, on the lb. of butter, on the lb. of tea or other commodities.

Did the Minister not tell the Deputy that the tax on a turnover of £100 would be approximately 17/6d.?

I do not care what it is. I am trying to put myself in the shoes of the shopkeeper who is concerned with the collecting of this tax. How is he to apportion it on his goods?

The Parliamentary Secretary should not be keeping it a secret.

I thought the Labour Party, of all Parties, would have welcomed this.

We might, if we heard your explanation.

I must insist on a hearing for Deputy Blowick. This is not the final debate on the Budget.

It is the poorest sections of our people, the ordinary working man in the town and the small farmer, who make up the bulk of the people, who are being asked to find the £3½ million deficit. We in our time decided to find money such as that through luxury goods. We put a levy on certain luxury goods and nonessentials and we were backed at the time by the man who is Taoiseach today. We know what happened. Big interests got to work the moment an election was in the offing and, whether they did or not, the result was the same. The moment the Fianna Fáil Party got back into power the big interests were protected and the poor man had to bear the burden, through the removal of the remainder of the food subsidies. It is even worse today because taxation is being imposed on the essential commodities bought by the ordinary working man.

Which is not true, of course.

I do not know who advised the Minister to put a tax on conacre? How will that be collected?

The Deputy should read what the Minister said.

I read it ahead of the Minister and then waited to see how it would sound out of a man's mouth but that muddled me completely. I do not know what will come out of a conacre tax. Next he will be taxing the cat.

Going out through the skylight.

The Minister or his adviser has a pane of glass missing out of his skylight. Here is a question on which the Parliamentary Secretary might exercise his mind. What will the 6d. in the £1 cost a county council in increased rate charges alone? No attempt has been made to relieve rates. I am thinking of the mass of ratepayers who are up against it at the present time. There are the small farmer and the small businessman in the town whose rates have gone up beyond their capacity to pay. It is high time to bring some relief to those classes. No attempt has been made to stem emigration. We are losing 50,000 or 60,000 people every year, which is considered part of the pattern.

Where are the 50,000 or 60,000 we are losing every year?

They are in England, and it is a good job England is there.

Surely the Parliamentary Secretary is not contending——

It is 12,500, the lowest figure in the history of the State.

Come off it.

In another ten years, there will not be even 10,000 or 12,000 left if Fianna Fáil stay much longer in power. That is the reason. It is as plain as a pikestaff, and at that time Fianna Fáil will be boasting that the figure has been reduced to a few hundred poor crippled and disabled people who will be left. They say it is part of the pattern to take emigration as it is and leave it so; it is all right and the sooner the people go, the better. At the same time as the Minister for Finance and his colleagues in the Government proceed to banish the people off the land, the Minister for Lands and the Taoiseach stand up in various parts of the country and denounce these people who are gone as being unpatriotic scoundrels and all the rest.

That is not relevant to the Budget.

I shall leave it; I shall have more to say at a later stage. It certainly has been a surprise Budget in many ways. If the Minister thought he would get away without criticism, he must be very innocent or the very opposite.

Does the Deputy welcome anything in this Budget?

The fact that the few things that are any good are so meagre and that we have to wait for 1st November for them makes me doubt whether I should welcome them.

Deputy Dr. Browne.

Is it correct to say that any two-member Party here, even a Communist Party or any other Party, can address this House in regard to the Budget while a Party of six Independents can say nothing at all?

I do not see how a combination of six Independents can be a Party.

If six are not a Party, I cannot see how two are a Party.

Once again, this House is facing what has become the traditional pattern in the economy over the years, an increasing deficit in the balance of trade, a failure to increase exports, an excess of imports over exports, a lack of sufficient increase in industry or agriculture, all creating a demand on the Minister for Finance to find the money needed to continue to pay for the rudimentary social and other services by taxing the public generally. It is quite clear that the position which the Minister now faces is in many ways comparable with the position which the Minister for Finance faced in 1957. It is true to say that the solution of the then Minister for Finance for that problem was in no way as ruthlessly harsh as is this Minister's solution for his dilemmas.

However, as in 1957, so now in 1963, the solutions which are offered by the Minister are merely accountancy solutions. As Deputy Norton said, there is no sign of a plan or a policy. It is as if we merely appointed a firm of chartered accountants to look after our affairs and that each year they come forward with a bill and tell us how we shall pay it. There is no creative attempt by the Parties on either side to tell us how, by means of intelligent planning, to organise land labour and capital, to create a dynamic increase in the formation of capital so that we do not have to revert to penal taxes of one kind or another which have such a serious and painful effect on the mass of the people and particularly on the group least able to bear these impositions.

I have very little to say on this Budget except that it is primarily an anti-family Budget. Its impact will be felt most by the family unit. The family unit in our society is the largest single consumer. The larger the family, the greater the consumer; the greater the consumer, the greater the tax burden.

The result of what is effectively a consumer tax is that the person with the large family will be hurt the most. I do not believe the offsetting social benefits will, in fact, offset the penalties imposed by the Budget. There is no doubt that this Budget in its effect will impose a mean and harsh penalty on the family man and on his wife and children. It must be taken in the context of the fact that a wage standstill order has been imposed. While the cost of living has been allowed to rise by seven points, we have the addition of these new taxes.

No one knows better than the seasoned members of the Front Bench of the Government Party that this Budget, with its greatly increased taxation on the mass of the people, is most damaging politically. It could have been introduced only in a situation in which the economy was in very great danger indeed and deteriorating rapidly. It can have been acceptable to the members of the Government only because, in fact, they have no other choice and have at last fully understood and accepted the position of impending bankruptcy now facing the economy as a result of the drift, which is the only policy they have followed since they have taken over. There is no doubt whatsoever that this drift towards national bankruptcy will not be halted permanently by the measures outlined by the Minister in his Budget Statement. They are merely a very harsh and unjust taxation on consumer goods, which will hurt most of all those people least able to bear it—the family man and his children.

We must recall that the case disclosing this serious economic situation facing the country was made by the Minister for Finance and carries all his authority. It is based on figures provided by Government Departments. In my view, this makes all the more serious the indictment of the Taoiseach implicit in the facts. Until as recently as last November, in this House and outside it, the Taoiseach claimed and protested that the economy was in a state of unparalleled bouyancy. He claimed that prosperity was at a peak never equalled before. In fact, he claimed that so prosperous was this unit of society that we were all fitted to take our place in Europe in the face of the most bitter competition from the most advanced societies in Europe.

In respect of this now clearly shown fraudulent misrepresentation of the true position, we had the Taoiseach supported by members of his Party at all ranks, by members of the Seanad. by the newspapers and by political economists supporting the Government. In the light of the disclosures by the Minister for Finance as to the true position, the public can only conclude that the two year old campaign by the Government to mislead the people at home and in Europe was either the result of a deliberate attempt to mislead and misinform in order to get into the Common Market on what was, in effect, a bogus prospectus, which would be called in the courts an attempt to perpetrate a swindle or a fraud, or alternatively, it was due to the fact that the Taoiseach and his colleagues, or their advisers, so wildly misread the economic indicators that they blundered into their present position. In either condition, it seems clear to me that it is clear the Government are not fit to govern and should resign without delay before greater and more irremediable damage is done to the national economy.