Financial Statement. - Budget, 1964.

1. ECONOMIC SURVEY.

I propose this year to make only a brief comment on recent economic developments. The Central Statistics Office booklet "Economic Statistics" and the report on Ireland by the Organisation for Economic Co-operation and Development, both published this month, provide a comprehensive review of the economy over the past few years.

The volume of national production in 1963 is provisionally estimated to have risen by 4 per cent, as compared with 2½ per cent in 1962. Over the five years, 1959 to 1963, inclusive, the average annual increase was 4½ per cent. As the OECD report points out, these five years "witnessed Ireland's period of fastest economic growth in the century."

In manufacturing industries the increase in output last year was 6½ per cent, one of the highest in Europe. Because of a reduction in the acreage under crops, which offset an increase in cattle production, net agricultural output showed a slight fall. The further increase in cattle herds, however, is now contributing to higher sales. Employment in transportable goods industries rose, a gain of 7,800 being registered between the December quarters of 1962 and 1963. Unemployment and emigration continue to be much lower than a few years ago. Since the 1961 Census it is estimated that the population has grown by 25,000.

Exports, both agricultural and industrial, rose substantially during 1963. There was a more than off-setting increase in imports, though this was largely of capital goods and raw materials to support the industrial expansion.

It is estimated that a balance of payments deficit of £22 million was incurred in 1963, as compared with a deficit of £13½ million in 1962. As the net external assets of the banking system and departmental funds rose by £3 million during the year, the deficit appears to have been more than covered by an inflow of capital. I agree with the statement in the OECD report that foreign capital should not be a substitute for measures to stimulate domestic savings nor for proper action to deal with a balance of payments deficit resulting from domestic inflation. The 1963 capital inflow was accompanied by a rise in domestic savings and helped to raise the proportion of the gross national product devoted to capital formation.

Turning now to the year ahead, I should like to give some indications of how the economy is expected to shape; these are based on the usual pre-budget assessment, made in consultation with professional economists, the purpose of which is to help in framing the budget in such a way that economic growth will be sustained at a high rate without too great a deficit being incurred in our external payments.

There are grounds for hoping that an even higher growth rate than the 4 per cent of 1963 may be achieved this year. The buoyancy of the economies of Britain, America and Western Europe should help us to expand our exports and thus to maintain the momentum gained in the second half of 1963, when industrial output and exports rose faster than in the first half of the year. The improvement in export market conditions for cattle in recent months is also helpful.

On the other hand, the effects of the large rise in incomes as a result of the "ninth round" will be significant in 1964. There has been general satisfaction that a national agreement was reached at the beginning of the year, avoiding a "free-for-all" and promising stability for a period of two-and-a-half years. At the same time, it cannot be overlooked that, as the increased incomes are being paid in advance of the expected increase in output, there are risks involved for the economy. A steep rise in productivity is needed to offset the higher wages and salaries and keep costs in industry and services from rising significantly. If industrial costs are pushed up so as to render our goods or services less competitive with those of other countries, this will hamper the expansion of our sales abroad and our tourist industry. Since the growth of the economy depends mainly on increased exports, the continued expansion of production and employment could in consequence be endangered.

Another risk lies in the use that may be made of the large increase in incomes. If it is spent mainly on personal consumption goods, involving heavier imports, the effect, combined with a weakening in our capacity to expand exports, could be to lead us into balance of payments difficulties. Spending on consumption goods would also absorb resources which could otherwise be used in productive investment.

It is, therefore, essential that every effort be made to minimise the possible adverse effects of the "ninth round", so that advantage may be taken of the otherwise favourable prospects for the economy. Managements should strive to bring up the productivity of workers so that they will not only be paid more but that their work will be worth more. Some of the initial strain on costs should be taken on profits, in consideration of the future easement when productivity has advanced. And workers should be encouraged to increase their individual savings.

If these steps are taken, the outlook for 1964 is good and the balance of payments deficit, though it will be higher than in 1963, will contain a temporary "hump" which we can surmount. If they are not, difficulties may develop requiring corrective action. It is a year in which we must be on our guard and, therefore, one in which the budget, while being framed so as to maintain development, should not itself give a fillip to consumption. A balance on current account must, therefore, be our objective.

In concluding this brief survey, may I say that I feel certain it would be better for the national economy—for workers as well as for employers and every other section—that the periodic increases in money incomes should correspond as closely as possible with the growth in national production and thus assure the price stability, the advantageous competitive position and the parity between money and real income increases which were good features of the years 1958 to 1960. I hope there will be growing appreciation on the part of all concerned with wage and salary negotiations, including those charged with the duties of conciliation and arbitration, of the wider national economic interests involved, and especially at this critical period in our development, of the need for maintaining and, indeed, improving our competitiveness in export markets.

2. CAPITAL BUDGET

This year a separate paper dealing with the capital budget has again been published so that information about the components of the State capital programme may be readily available for examination and discussion.

Actual capital expenditure in 1963/64 was £78.5 million as compared with the estimate of almost £80 million.

The sources from which last year's expenditure was financed are set out in Table 2 in the paper. The main contribution came from the National Loan of £25 million. The £20 million which was sought from the public was fully subscribed and additional applications amounting to £1.3 million were met by reduction of allotments to Departmental Funds. This was a satisfactory result, especially as the Electricity Supply Board had already floated a loan which was fully subscribed and several successful private issues had also been made. Small savings during the year, however, were somewhat less in total than had been hoped. Net investment in Savings Certificates and Prize Bonds increased by £¾ million and £½ million, respectively, but, although deposits in the Post Office and Savings Banks were nearly £1 million greater than in the previous year, withdrawals were also larger and the net increase in deposits, excluding interest, was only £2½ million instead of the £4½ million expected.

Table 4 shows the proposed method of financing capital expenditure in 1964/65. The amount to be provided by the Exchequer in the current year is almost £71 million and over £25 million is to be obtained otherwise. The expenditure contemplated on schemes of national development is thus, in money terms, 22 per cent greater than last year but should nevertheless be within the competence of the economy having regard to the considerations set out in the Second Programme for Economic Expansion. The bigger the contribution made by current savings, however, the more satisfactory will it be from the economic standpoint. Building and construction (which includes houses, schools and hospitals), air and other forms of transport, industrial grants and credit, and telephone development are the principal categories for which extra capital is needed.

As I have said already, every effort must be made to ensure that the £40 million or more of spending power due to the "ninth round" will not excessively raise demand for consumer goods and services at the expense of capital needs. I would, therefore, ask everyone to put aside some proportion of increased earnings into savings. The higher the proportion the better.

I am having an examination made of the present arrangements for National Savings to see whether there is any way in which they need to be improved or brought up to date. As the current issue of Savings Certificates has been on sale for eight years, I am increasing the maximum permitted holding from £1,250 to £2,500. I have recently, as is known, made the next Prize Bonds draw more attractive by adding two bonus prizes of £10,000 each. As a result, there were nearly twice as many applications for Bonds during the recent issue period as there were a year ago and over £1 million extra was subscribed.

The Post Office Savings Bank and the Trustee Savings Banks cater for small savers, affording a guarantee of immediate repayment, whenever required, with interest and without loss of capital. The Post Office Savings Bank is looking into the possibility of giving an improved service to its customers. The Trustee Savings Banks have represented that their progress is handicapped by certain statutory limitations and I hope to introduce legislation shortly to remove these.

I should like again to refer to the excellent work being done by the Savings Committee, whose members voluntarily devote much of their time to the promotion of savings. The Committee has just completed a campaign for the encouragement of saving by children in primary schools — a campaign which met with considerable success as a result of the full co-operation and assistance of the clergy and of teachers. The habits of thrift acquired by the children should be of value to the economy in future years.

Another very important feature of the Committee's work—and one which will yield more immediate results—is the organisation of savings groups in places of employment. These groups operate a type of savings scheme based on the deduction of savings from pay; it might be referred to as "Saving as You Earn". Saving is thus made easy, regular and virtually automatic. At the present time, more than 20,000 people save about £1 million a year where they work, through the 250 groups already in existence—100 in private firms, 50 in semi-State organisations and 100 in Civil Service and local authority offices. These range from groups of about ten people to a group of over 4,000 members.

There is obviously still much scope for this activity and when I met the members of the Savings Committee recently I was pleased to hear that all existing groups are being asked to make a special effort to increase their membership and savings. In additions, the Committee is about to undertake an intensive drive for new savings groups in firms and factories throughout the country. The campaign will begin immediately in the Dublin area and I understand that it has the full backing of the Irish Congress of Trade Unions. I feel sure that, as hitherto, employers will also readily co-operate.

3. CURRENT BUDGET, 1963/64— OUTTURN

Recent wage and salary increases have not only contributed to this year's budgetary problem but could be regarded as themselves accounting for last year's deficit of £2.2 million. The specific wage increases for the Garda Síochána and for national teachers and the general increases arising from the "ninth round" cost 2½ million in 1963/64. Additional expenditure was, of course, also incurred on items other than pay. State outlay on pensions, children's allowances and agriculture was specifically increased in the budget and there was need, as well, to provide for various unforeseen items such as shipbuilding subsidy and additional expenditure on health grants. It is indicative of the buoyant state of the revenue that, although the total supplementary provision needed for current services exceeded the budget estimate by £5.3 million, the overall deficit was limited to £2.2 million.

The most important feature on the revenue side of the budget last year was the introduction of the turnover tax in November. It is now working smoothly and the assumptions made in last year's budget about the advantages of this particular type of sales tax have been borne out. The yield from the tax, £3.7 million, proved to be closely in line with the budget estimate of £3½ million. The tax did not, as the cost-of-living figures for mid-November and mid-February confirm, result in a disproportionate increase in prices. Competition, consumer awareness and good sense on the part of traders combined to ensure that the effect of the tax was to raise prices by little more than the tax rate itself. The tax provides a reliable and indispensable new source of revenue to finance our economic and social development.

4. CURRENT BUDGET, 1964/65— INTRODUCTION

The turnover tax came into force only last November. So did the increase in children's allowances and in other social welfare benefits which have offset for a large proportion of the population the effects of the tax. We have had in recent months the "ninth round" of wages and salaries. Of its economic implications I have already spoken. From the revenue point of view it will swell receipts but it also entails a large rise in expenditure.

The basic figures for this year's budget are shown in the White Paper "Estimates of Receipts and Expenditure" published a few days ago. Though revenue, at £208.35 million, is up by £23.9 million, current expenditure is shown at £209.96 million and an initial deficit appears of £1.61 million.

On the revenue side, full allowance is made for the buoyancy of the economy. Special consideration was given to the prospective yield from the duty on tobacco. This is one of the most important items of revenue and the intake in February and March had been adversely affected by the coincidence of the United States Surgeon-General's report and Lenten self-denial. The setback now appears to have been transitory and, if the tax rate were unchanged, the realistic estimate is that tobacco consumption this year would show no fall on last year.

The expenditure total includes £6.85 million for "ninth round" pay increases and £2 million for CIE subsidy. Neither of these items was settled in time for inclusion in the Volume of Estimates and special attention is, therefore, drawn to them in the White Paper. The payment of subsidy to CIE depends, of course, on the enactment of amending legislation.

The salient features of expenditure this year are apparent from Table III of the Current Budget tables. Social expenditure in the broad sense shows the largest increase at £8.7 million. This was to be expected in view of the full year's cost of the increase granted to social welfare recipients in last year's budget, the growth of the health services and the increasing outlay on education. The further improvements in teachers' salaries which have recently been granted will widen the difference between this year and last year; so will any express provision made for additional expenditure in this budget.

Current expenditure represented 22.7 per cent of gross national product last year. It is expected that this year's ratio will show some small increase but will still be moderate by international standards.

The Government have given very careful consideration to the problem which a deficit poses. Producers are being urged to avoid as far as possible an increase in prices. The Government do not themselves want to cause any rise in prices that can possibly be avoided. At the same time, it is essential to persue a sound financial policy. To leave a deficit uncovered would, in present circumstances, be bad finance; it would add to inflationary pressure and widen the balance of payments gap. An optimistic assessment of revenue is justifiable, and has in fact been made, but it is important not to incur any serious risk of a current deficit this year when there will be a much larger capital budget. Further taxation is, therefore, unavoidable.

Moreover, there are certain items of expenditure not provided for in the White Paper of which account must be taken.

There are, first of all, what I might term foreseeable supplementary needs. Certain claims for pay adjustments distinct from the "ninth round", such as those of teachers and Post Office clerks, have been the subject of conciliation or arbitration settlements. Other claims and various minor items have also to be dealt with. I do not know what the extra liability will amount to but I have thought it prudent to make an indirect provision for it by not making any deduction this year for errors of estimation. In the past these deductions have been of the order of £2-£3 million.

Secondly, and as an entirely separate matter, consideration must be given to the question of arranging, by taxation, a transfer of incomes to certain sections of the community in view of the extent to which wages and salaries have recently been increased.

5. CURRENT BUDGET, 1964/65— DETAIL

Farmers

By utilising the production aids and the advisory and educational services now available, and through increased co-operation, farmers can take direct action to increase their production and their incomes, as indeed many of them, even on holdings of moderate size, are already doing, to their great credit.

As in most other countries, agricultural incomes in Ireland are, in general, lower than those earned in other occupations, though the difference is not as great in Ireland as it is in some other countries. Without the high scale of State expenditure in relation to agriculture, the disparity between agricultural and other incomes in Ireland would be much greater. There is no justification for the gloomy picture painted in some quarters of the farmer's position. Agriculture in Ireland, as elsewhere, faces certain difficulties, particularly in international trade, which are beyond the power of any individual Government to overcome completely.

We have to export a much higher proportion of our agricultural output than any other country which is reasonably developed economically, with the single exception of New Zealand. For many products, because of the tendency of world agricultural production to outrun commercial demand, the prices obtainable in export markets fall short of meeting the cost of production. While our marketing methods must be improved as far as possible, it would be a mistake to think that this in itself will solve then basic difficulty which is that export markets are over-supplied and price conditions in these markets are distorted as a result of the domestic support policies followed by the Governments of importing countries. Great industrial economies such as Britain and Germany, in which agriculture represents only a small percentage of the national product and makes only a minor contribution to exports, can afford to assist their agriculture to an extent that we cannot emulate.

Until the domestic agricultural policies of exporting and importing countries are effectively co-ordinated and harmonised so that efficient farmers in different countries can obtain reasonably uniform returns for the products they sell, the present export marketing difficulties are likely to continue.

The higher prices available for cattle this year will, if they continue, raise farmers' receipts by several million pounds. The price improvements already announced for barley and sugar beet should add close on £1 million. It is the Government's policy that a reasonable relationship should be maintained between the incomes of farmers and those in other occupations. In consideration of the general rise in non-agricultural incomes, they have decided that a further substantial increase in farmers' incomes should be assured by State action. It is, therefore, proposed that the amount of aid to agriculture should be increased, at the cost of the taxpayer, by close on £5 million in a full year, amounting to £4½ million in the current financial year. The increase will comprise:

(1) an addition of 2d. per gallon to the price of creamery milk. It is to be expected that there will be the same increase in the price paid for liquid milk in the Cork and Dublin Milk Board Areas but this will concern the consumer rather than the taxpayer:

(2) additional relief of rates on agricultural land to the extent of £1.4 million, which, allowing for the higher rates being struck this year, will enable the net charge for rates on agricultural land to be kept at or below the 1956-57 level; and

(3) the raising of the minimum prices for pigs by 8/- a cwt. for grade A and 5/- a cwt. for grade A special.

The increase in the milk price will come into effect at the beginning of May and the higher pig prices will operate from 1st June. In deciding to raise pig prices by the amounts indicated, the Government took fully into account the effect on pig production costs of the increase in the minimum price for feeding barley of the 1964 crop, as well as other factors.

The total cost to the State of supporting milk prices is already £6 million a year. The further aid now afforded will raise the cost to £9 million in a full year. The cost of the rates relief on agricultural land will be raised to nearly £11 million. Support of pig prices is now expected to cost the State about £2 million a year.

Various capital grants, for farm buildings, water supply and other purposes related to the objectives of theSecond Programme for Economic Expansion, have already been increased and their cost is expected to double by 1970. Total State expenditure in relation to agriculture, including the measures I have just outlined, will now amount to over £43 million a year.

The large increase increase in State expenditure on agriculture should be of considerable assistance to farmers in expanding their production to meet the targets of the Second Programme. In particular, the increase in the price of milk, together with the calved heifer subsidy scheme, should be a powerful impetus towards attainment of the goal we have set for increased cattle production.

Social Welfare

When consideration is being given to incomes generally, it would be regrettable to overlook the social assistance beneficiaries. The Government have decided that provision should be made for a further increase of 2/6d. a week for the non-contributory classes of old age and blind pensioners, widows and unemployed persons and their adult dependants. This will come into effect from the beginning of August next and will cost £730,000 in the present year.

Public Service Pensions

Despite various increases already granted, the purchasing power of pensions payable to former public servants has not kept up with the value of money when these pensions were awarded. Deputies are familiar with the problem, which was discussed in the House last week on the Second Reading of the Pensions (Increase) Bill. Increases in pensions must be considered both from the budgetary standpoint and also in view of the repercussions on pension schemes outside the public service. The substantial increases granted in 1962 and 1963 are costing the Exchequer about £1,100,000 this year. Having regard to this and other pressing commitments, the most that I can afford to give to the public service pensioners on this occasion is 5 per cent, which goes part of the way towards compensating for the rise in the cost of living since 1959. The increase will be granted to the same groups of pensioners for whom I provided an increase last year, with the addition of those who retired between December, 1959, and November, 1961. Military Service pensioners and holders of special allowances will also benefit. The increase will take effect from 1st October next and the extra cost to the Exchequer this year will be £140,000.

Post Office Charges

These income transfers to farmers, social assistance recipients and public service pensioners will cost in all £5.37 million this year and have the effect of widening the deficit to £6.98 million. From this I am deducting £2 million in anticipation of the higher charges which, as the Minister for Posts and Telegraphs has already announced, will be necessary to meet the additional cost of Post Office services owing to "nine round" and other pay increases. It has always been the policy that the Post Office should pay its way, one year with another, as a commercial service. The new charges may not balance the extra cost immediately because there is an element of pay arrears to be covered but this may be made up temporarily from existing balances. Appropriate orders will be made at an early date and the details of the increased charges will then be given by the Minister for Posts and Telegraphs.

Additional Taxation

To cover the remaining £4.98 million—an amount that can be more appropriately met by adjustments in particular taxes than by a change in the rate of turnover tax—I propose to increase the duties on petrol, cigarettes, beer and imported spirits. It will be noted that, for the customary retail units, the increases in duties are slightly less than a round number of pence. These margins have been left to allow for the turnover tax mark-up on the increase in duty.

Petrol and Diesel Road Fuel

The effective rates of duty on petrol and diesel road fuel have not been altered for the last seven years and, during this period, consumption of both these fuels has been rising steadily. I can reasonably look to this source for additional revenue. I propose to increase the duties on petrol and diesel road fuel by 2 11/12d. a gallon. I expect this to yield an additional £1,250,000 this year from petrol and £250,000 from diesel road fuel.

I am increasing from 6d. a gallon to 9d. a gallon the rate of repayment of duty on diesel fuel used in road passenger vehicles. There will, therefore, be no effective increase in taxation of diesel fuel used in buses. Since practically all buses use this type of fuel, bus passenger fares should not be affected.

Hydrocarbon oils, other than petrol, will continue to be relieved completely from duty when used otherwise than as road fuel.

Tobacco

I propose to increase the main rate of customs duty on leaf tobacco by 5s. 1½d. a lb. which is slightly less than 3d. on a packet of 20 standard size cigarettes. Special consideration must, however, be given to the position of pipe tobacco. The statistical evidence which suggests that cigarette smoking is injurious to health does not apply to pipe smoking. Whilst neither I nor my predecessors can be accused of encouraging smoking in any form——

Deputies

Hear, hear.

——I think it would be unfortunate if, at the present time, pipe tobacco were to suffer equally with cigarettes. Accordingly, in the case of hard pressed pipe tobacco I propose to increase the rate of the existing rebate by 4s. 6d. per lb. For other pipe tobaccos I propose to introduce a similar rebate of 4s. 6d. per lb. The incidence of duty on all classes of home-made pipe tobacco will thus remain unaltered.

The increased tobacco duties are estimated to yield an additional £2 million this year, allowing for some fall in cigarette consumption.

Beer

I propose to raise the duty on beer by £1 10s. 3d. per standard barrel which is slightly less than a penny on the pint. This increase will apply to both home-produced and imported beer and is expected to yield £1,100,000 this year.

Spirits

In the year just ended the total quantity of spirits cleared for home consumption was nearly 1,100,000 proof gallons, a figure which has not been equalled in 40 years. It is clear, therefore, that some additional revenue can be sought from this source. At the same time, I must take into account the possible consequences for the distilling industry of an increase in the excise duty on home-made spirits. Ten years ago, imported spirits accounted for only about one-fifth of domestic consumption of spirits and, except in abnormal supply conditions, this pattern had remained more or less stable for the preceding thirty years. In recent years, however, there has been a progressive and significant rise in the consumption of imported spirits, notably of brandy and whisky, and the share of the expanding market commanded by imports now exceeds one-third.

Although we may perhaps expect that, with increased spending power, consumption of imported spirits will rise, none of us would wish this trend to continue to a point where imports would threaten the well-being of the home distilling industry.

I propose, therefore, to raise the customs duty on imported spirits by £1 9s. 7d. per proof gallon which is rather less than 4d. a glass and to leave the excise duty on home-made spirits unchanged. Allowing for a retarding effect on imports, I expect the increased customs duty to yield an additional £300,000 this year; and, since sales of home-made spirits should benefit, I expect to get a further £100,000 in excise duty. Thus, the overall increase in the revenue from spirits is estimated at £400,000 this year.

Even when turnover tax has been allowed for in all cases, the full increase in retail prices, corresponding to the additional duties and tax, will be 3d. a gallon on petrol, 3d. on the packet of 20 standard size cigarettes, 1d. on the pint of beer and 4d. on the glass of imported spirits.

Road Fund

These duty increases will provide an extra £5 million of revenue, leaving me with only £20,000 in hands—not of itself enough to afford any tax relief. There is, however, one direction in which I can look for a supplement. Motor taxation receipts are particularly buoyant. They were £835,000 more last year than they had been in 1962/63. The estimate which has been taken for this year, at £9 million, represents a further increase of over £750,000. The Minister for Local Government has agreed that, if this estimate is realised, it will not be necessary to call on the Exchequer for the grant of £200,000 included in his estimate. As I believe the figure of £9 million will be realised, I propose to divert the £200,000 to other purposes.

Age allowance and small incomes relief

The "age allowance" for persons who have reached the age of 65 years is at present confined—subject to "marginal" relief—to those whosetotal income does not exceed £600. Within that income limit existing law gives in effect a deduction of one-fourth of unearned income; the maximum deduction, which is allowed where the income is wholly unearned and amounts to £600, is £150. I have been urged on several occasions to raise the income ceiling. Having considered the matter fully I have reached the conclusion that the structure of the relief should be altered. My proposal will extend the relief and simplify it. In future, entitlement to full relief will not be confined to cases where the total income does not exceed £600. Persons aged 65 or more, irrespective of their total income, will be entitled to a deduction of one-fourth of their unearned income, will be entitled maximum allowance of £150. There will be a proviso that, where a person has both earned and unearned income, the aggregate amount of the deductions for earned income relief and age allowance may not exceed £500, that is, the existing limit for earned income relief. The proposed change, it is estimated, will cost £80,000 in the current year.

I have received many representations about the effect of higher living costs on small investment incomes. Taxpayers over 65 are relieved by the provisions I have just mentioned. I propose to introduce a new allowance for persons under 65. In their case, the Finance Bill will provide that incomes up to £450 a year will qualify for a deduction equivalent to earned income relief, with marginal relief above that figure. The cost of this new deduction will be approximately £100,000 in the current year.

Corporation Profits Tax

Under the general heading of corporation profits tax, I am making the following proposals:

(1) Losses will be allowed to be carried forward for corporation profits tax purposes and set off against later profits as is done in the case of income tax. This relief will operate as from 1st January, 1962, the date from which the tax-free margin was abolished.

(2) Under existing law a private company, the liability of whose members is unlimited, is outside the scope of corporation profits tax. There is evidence that this exemption is being exploited for the purpose of avoiding tax and I propose to bring companies of this type within the charge as from 1st January, 1964. I shall move the necessary Financial Resolution later. The Resolution is in broad terms but the Finance Bill provision will make it clear that only profits arising from 1st January, 1964, will be brought into charge.

(3) In computing the profits of a director-controlled company for purposes of corporation profits tax, that maximum deduction which may be claimed for the remuneration of a director is £1,500. I have received numerous representations that this limit, which has stood unaltered since 1947, should be raised and I propose that, as from 1st January, 1964, a new limit of £2,500 should apply.

Taking these three corporation profits tax proposals together the net cost to the Exchequer for the current year will be approximately £40,000, which disposes of the balance available.

The procedures in relation to the assessment and collection of corporation profits tax will be brought broadly into line with those which now apply in relation to income tax and sur-tax. The Finance Bill will contain a provision under which, as from a date to be fixed by the Revenue Commissioners, assessments to corporation profits tax will be made by inspectors of taxes and the tax will be payable to the Collector-General.

Where a company resident in Ireland has profits arising abroad, all tax paid on those profits in the foreign country is deductible in computing the amount to be charged to Irish income tax, notwithstanding that the whole or a part of the foreign tax may be set off as a credit against Irish corporation profits tax. This is anomalous as Irish corporation profits tax is no longer admitted as a deduction in calculating profits for income tax purposes. I propose to insert in the Finance Bill a provision, which will require a Financial Resolution, limiting the deduction for foreign tax to the amount, if any, which cannot be allowed as a credit against Irish corporation profits tax.

Collection of certain tax arrears

It is visualised that the new arrangements for collection of income tax and sur-tax outlined in the First and Second White Papers on Direct Taxation will be fully operative as from the current year. The Finance Bill will provide that the Collector-General may recover tax outstanding on the termination of the existing system of local collection.

Exports Relief

Under a scheme for the centralised export of Irish bacon, arranged under the Pigs and Bacon (Amendment) Act, 1961, all sales of bacon in the export market are made by the Pigs and Bacon Commission who are empowered to obtain supplies by compulsory purchase from licensed bacon curers. As a consequence, curers who previously exported their own bacon have lost any entitlement to exports relief since, under existing law, relief is confined to the actual exporter. I shall, however, be granted to bacon curers vision in the Finance Bill to enable relief to be granted to bacon curers for bacon compulsorily sold by them to the Commission and afterwards exported.

Compensation for loss of office

Under existing law, payments to retiring directors or other employees may in certain circumstances represent both a deductible expense for the concern which pays them and a tax-free advantage to the recipient. This state of affairs can be readily exploited as a means of tax avoidance, which has become known as the "golden handshake". I propose to bring within the tax charge voluntary payments on the termination of employments and all payments described as compensation for loss of office. Exemption, however, will be provided in favour of reasonable lump sum payments of the nature of superannuation benefits or by way of compensation to redundant employees; and other exemptions will include payments on death in service or on account of physical injury or disability. I shall move the necessary Financial Resolution later.

Restrictive Covenants

I propose to introduce a provision to put an end to the avoidance of sur-tax by means of arrangements, known as restrictive covenants, which usually take the form of a top executive's undertaking not to set up in competition with the concern he serves or to enter the employment of its competitors. In return the concern gives him a large benefit in money or money's worth which, as the law stands, is not liable to sur-tax in his hands. A Financial Resolution will be necessary.

Exemption of profits of Voluntary Health Insurance Board

It has repeatedly been urged that a profit or surplus arising in any year from the operations of the Voluntary Health Insurance Board should not be subjected to tax. In general I have to resist firmly any proposal to exempt profits from taxation, even where corporations providing public services are concerned. However, in view of its particular circumstances and the social importance of the service it gives, I am satisfied that the Voluntary Health Insurance Board merits special consideration and I accordingly propose, as an exceptional step, to include in the Finance Bill a provision relieving the trading profits of the Board from income tax.

Schedule A

As a measure of tax simplification I propose to include in the Finance Bill a provision enabling Schedule A assessments to be dispensed with in the case of business premises owned and occupied by companies. The provision will be so framed that the overall tax liability of companies will not be affected. Also, in many instances per- sons who are not themselves liable to income tax are required to account under Schedule A for tax deductible from ground rents and this has been a source of complaint over the years. I propose to introduce a scheme under which, at the instance of the inspector of taxes, arrangements may be made in certain circumstances for the payment of ground rents in full, leaving the tax due by the recipient to be recovered by direct assessment. This change in procedure, where adopted, will not affect the amount of the tax liability of either the payer or the recipient of the rent.

Unsettled Appeals

The Finance Bill will provide that, where an assessment to tax is appealed against, any amount of tax agreed between the inspector of taxes and the taxpayer as not being in dispute shall be payable on account, subject to any necessary adjustment when the appeal has been determined.

Covenanted Subscriptions

The Finance Acts of 1957 and 1959 granted a tax advantage in relation to certain covenanted subscriptions for research or for teaching the natural sciences. I intend during the present year to examine how these concessions might be modified so as to prevent abuse, while leaving an adequate, though temporary, incentive for such subscriptions.

Stamp Duties

I propose to abolish with effect from 1st August next the stamp duty of sixpence on letters of allotment and letters of renunciation. The revenue involved is negligible. I also propose to provide that statutory bodies may compound for the stamp duty on their cheques or pay orders. This facility has already been granted to banks and to certain local authorities.

I might say that the volume on stamp duty law which the Revenue Commissioners have prepared for the assistance of the legal profession and others will be published this month.

6. SECOND PROGRAMME AND TRADING RELATIONS

Second Programme

When the outline of theSecond Programme for Economic Expansion was published in August last, it was stated that the principal functional organisations would be consulted regarding the practicability of the programme and the best means of realising its aims. The views of most of these organisations and of international economic agencies have since been received and are being considered. The industrial aspects of the programme have been examined by the National Industrial Economic Council, which found that the industrial target is “certainly capable of being achieved”. A series of consultations with representatives of the principal industries regarding the detailed targets for these industries has also been undertaken and is making good progress. Arrangements are being made to keep the NIEC informed of the course of these discussions. The consultative process has taken somewhat longer than was expected but it has been extremely valuable. It is now hoped to publish the second part of the programme, in which details will be given of the contributions expected from the major sectors, before the summer recess.

Trading Relations

To achieve the targets of the second programme we need an increase of the order of 75 per cent in exports of goods and services over the decade 1960-70. Although agricultural exports will be expected to make a substantial contribution, the major part of the increase will be in industrial goods, exports of which must rise by over 150 per cent in the decade. We have set ourselves this target in the full realisation that, between now and 1970, the movement towards freer trade will continue and intensify in Western Europe and North America, the areas with which we have the closest trading relations.

Since the breakdown in the British negotiations with the European Economic Community in January, 1963, the Government have kept our trade policy under continuous review with the aim of securing improved openings for our exports. We are in constant contact with the Community through our mission in Brussels and the arrangements which have been made for periodic discussions with the Commission on matters of mutual interest will keep us informed of developments and enable us to explore any possibilities of improving our trading relations with the Community.

The Government have decided to reopen discussions on the terms of accession to the General Agreement on Tariffs and Trade (GATT). These were postponed in 1961 pending the outcome of our negotiations with the European Economic Community. The GATT is the principal forum for the examination of trade problems on a world-wide scale and comprises all the leading trading countries outside the Communist bloc. It is instrumental in promoting multilateral negotiations for the reduction of tariffs and other barriers to trade. In view of our growing interest in international trade it is important that we should be associated with these negotiations, particularly, those due to commence in a few weeks' time — known as the Kennedy Round — which are expected to result in significant tariff reductions. These reductions will afford some return for the lowering of our own tariffs which we have undertaken as a means of promoting efficiency and preparing ourselves gradually for more competitive conditions. The Kennedy Round negotiations are intended also to embrace trade in agricultural products the aim being to provide better terms of access to world markets. There are certain problems in regard to preferential duties and low-cost imports for which we shall have to find a solution in the course of our discussions with the contracting parties to the GATT.

The conditions of trade between the more developed and the less developed countries are under consideration in the United Nations Trade and Development Conference at present taking place at Geneva, at which Ireland is represented.

Realism demands that in trade matters we continue to give primary consideration to the British market. During the year discussions were held both the Ministerial and official level with the British authorities on trade relations between the two countries. At these discussions particular stress was laid on the importance for Irish agriculture of improved outlets in the British market. Reciprocal concessions were sought for the increased opportunities offered to British exporters by the reductions in our industrial tariffs. These discussions are continuing. As the Taoiseach said recently in London, the Irish Government desire that the close economic links between the two countries, which already include important features of a regional free trade area of common market, should be strengthened and consider that this would be to the advantage of both countries.

An economic climate favourable to the expansion of trade is a necessary supplement to formal trading arrangements. Experience throughout the world in recent years has shown that economic growth in the major industrial countries is as potent in expanding industrial trade as the lowering of trade barriers. The immediate prospect in this respect is encouraging so far as our principal export market is concerned and should enable us to get off to a good start with our Second Programme.

7. CONCLUSION

This budget is presented at a time when the rate of economic growth is high and the prospects for increased production, exports and employment are good provided competitiveness is maintained and the balance of payments deficit is kept within tolerable limits. Some strain on costs, prices and external payments is inevitable because of the degree to which the recent rise in money incomes anticipates the increase in national production. The Budget, therefore, is intended to favour saving, to increase investment and to put a slight brake on consumption. It provides for economic and social needs on a scale as generous as available resources will allow. It plays a part in seeing that improved incomes are not confined to particular sections but are extended throughout the community. The assistance given to farmers, social assistance recipients and public service pensioners has had to be met by increased taxes on items which at the margin are not essential and do not enter materially into the cost of living. It is regretted that any further taxation should be necessary this year but a budget deficit which would add to spending and widen the balance of payments gap would be indefensible.

Special measures have been taken to improve the position of farmers. The generous State aid now being afforded to agriculture is intended to increase productive and earning capacity — to generate additional income — and not just to provide a temporary supplement to existing income. Financial assistance is accompanied by continuous international negotiation aimed at ensuring satisfactory export outlets for agricultural products in face of a pronounced movement towards greater regulation of access to the principal export markets.

The Second Programme sets high but not unattainable targets. The united efforts of all concerned with the production and sale of goods and services will be needed to achieve them. The Government are doing their part by maintaining a high level of investment, by providing grants, fiscal incentives and other aids and encouragements and by attending to education, housing, health and other community needs fundamental to progress. Government policy has been effective both in promoting a high rate of growth of the economy and in ensuring that all share in the increasing national prosperity. We are confident that, in return, a wholehearted effort will continue to be made by all to safeguard that prosperity and to advance it further.

Following are the tables referred to in the Minister's Statement:

TABLE I

COMPARISON BETWEEN (i) BUDGET ESTIMATES AND (ii) ACTUAL REVENUE AND EXPENDITURE IN 1963/64

Estimated

Actual

Estimated

Actual

£m.

£m.

£m.

£m.

1. Tax Revenue (excluding 2 and 3 below)

142.63

144.80

1. Central Fund Services (excluding 2 below)

32.32

32.05

2. Revenue Balances

2.00

2.00

2. Payments to Road Fund

7.70

8.24

3. Motor Vehicle Duties

7.70

8.24

3. Supply Services (non-capital)

143.55 (a)

146.35

4. Non-Tax Revenue —

183.57

186.64

Post Office

12.15

12.10

Miscellaneous

17.09

17.28

4. Savings and Overestimation — net deduction from expenditure

2.00

5. Deficit

2.22

TOTAL

181.57

186.64

TOTAL

181.57

186.64

(a) The original provision was £140.57m. to which was added £3.78m. in the Budget for agriculture, social welfare and public service pensions less £0.8m. specific savings.

TABLE 1

EXCHEQUER STATEMENT FOR YEARS 1962/63 AND 1963/64

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, 1963 to 31st March, 1964

1st April, 1962 to 31st March, 1963

1st April, 1963 to 31st March, 1964

1st April, 1962 to 31st March, 1963

REVENUE

£000

£000

EXPENDITURE

£000

£000

Customs

50,349

46,864

Central Fund Services

40,292

36,232

Excise

37,752

34,653

Supply Services

171,973

157,052

Estate, etc., Duties

3,601

3,500

Stamps

3,478

3,058

TOTAL EXPENDITURE

212,265

193,284

Income Tax (including Sur Tax)

40,209

36,167

Corporation Profits Tax, etc.

7,710

4,516

OTHER ISSUES

Turnover Tax

3,697

IISSUES UNDER THE FOLLOWING ACTS :—

Motor Vehicle Duties

8,238

7,403

Local Loans Fund Acts, 1935-61

8,450

7,080

Post Office

12,100

11,440

Turf Development Acts, 1946-61

914

1,050

Sundry Receipts

17,285

15,877

Industrial Credit Acts, 1933-59

100

2,625

Irish Shipping Ltd. Acts, 1947 and 1959

255

1,891

TOTAL REVENUE

184,419

163,478

Broadcasting Authority Act, 1960 and 1964

70

160

electricity (Supply) Acts, 1927-62

1,060

953

Shannon Free Airport Development Co. Ltd. Acts,

OTHER RECEIPTS

1959 and 1963

1,400

988

REPAYMENTS, ETC :—

Agricultural Credit Acts, 1927-61

860

50

In respect of issues under :—

Gaeltacht Industries Act, 1957

75

30

Turf Development Acts, 1946-61

333

282

Sea Fisheries Act, 1952-59

236

132

Sea Fisheries Acts, 1952-59

52

46

Irish Steel Holdings Ltd. Acts, 1960 and 1963

1,250

1,100

Gaeltacht Industries Act, 1957

5

3

Telephone Capital Acts, 1924-63

4,615

3,675

Electricity (Supply) Acts, 1927-62

768

720

Finance Acts, 1953 (S.16) and 1954 (S.22)

210

280

Trade Loans (Guarantee) Acts, 1939-54

9

22

State Guarantees Act, 1954

1,970

Shannon Free Airport Development Co. Ltd. Acts,

Air Navigation and Transport Acts, 1936-61

632

227

1959-63

2

2

Grass Meal (Production) Acts, 1953 and 1959

50

40

Agricultural Credit Acts, 1927-61

1,125

Trade Loans (Guarantee) Acts, 1939-54

3

Air Navigation and Transport Acts, 1936-61

250

International Development Association Act, 1960

14

14

1,169

2,450

Bretton Woods Agreements Act, 1957

1,063

232

Sugar Manufacture Acts, 1933 and 1962

1,500

1,500

Nítrigin Éireann Teo, Act, 1963

1,955

400

1,169

2,450

Transport Act, 1963

1,000

National Building Agency Ltd. Act, 1963

275

MONEY RAISED BY CREATION OF DEBT

Alginate Industries (Ireland) Ltd. (Acquisition of

Ways and Means Advances

31,050

31,500

Shares) Acts, 1949 and 1954

10

Exchequer Bills

151,000

148,000

Telephone Capital Acts, 1924-63

4,615

3,675

25,997

24,397

Prize Bonds

4,852

4,538

ISSUES FOR REDEMPTION OF DEBT :—

Savings Certificates

4,670

3,870

Ways and Means Advances

25,980

19,835

Tax Reserve Certificates

1,018

185

Exchequer Bills

142,000

153,000

Bank Advances

29,800

17,500

Price Bonds

2,448

2,556

5 % Exchequer Stock, 1984/89

24,889

Savings Certificates

2,390

2,380

5% National Loan 1982/87

19,715

3% Transport Stock, 1955-60

16

4½% Exchequer Stock, 1968

14,550

Bank Advances

29,800

17,500

Other Borrowings

13,109

13,305

Other Borrowings

9,032

10,143

Tax Reserve Certificates

496

265,003

256,838

212,146

205,430

TOTAL RECEIPTS

450,591

422,766

TOTAL ISSUES

450,408

423,111

Balance in Exchequer on 1st April, 1963, and 1st April, 1962

389

734

Balance in Exchequer on 31st March, 1964 and 31st March, 1963

572

389

TOTAL

450,980

423,500

TOTAL

450,980

423,500

TABLE III

MAIN HEADS OF CURRENT GOVERNMENT EXPENDITURE

£000

1958/59

1959/60

1960/61

1961/62

1962/63

1963/64 Provisional

1964/65 Estimate

Service of Public Debt

24,639

25,566

28,374

31,113

34,374

38,104

42,154

Social Services:

46,889

48,294

50,444

51,905

57,515

63,474

72,134

Social Welfare

25,354

25,357

26,129

25,694

27,889

31,045

34,058

Education

13,489

14,554

15,557

16,581

18,908

20,724

24,645

Health

8,046

8,383

8,758

9,630

10,718

11,705

13,431

Economic Services:

22,628

20,272

24,930

30,602

35,039

39,184

43,293

Agriculture

13,284

10,137

14,058

18,893

22,320

24,011

25,015

Industry

1,580

1,745

1,537

1,638

1,927

3,118

3,730

Transport

6,965

7,449

8,289

8,905

9,422

10,649

12,667

Forestry and Fisheries

799

941

1,046

1,166

1,370

1,406

1,881

General Services:

23,409

24,800

26,235

28,113

30,612

33,453

38,099

Post Office

7,387

7,560

7,846

8,834

9,694

10,121

11,781

Defence

6,119

6,617

7,102

7,527

8,065

8,506

10,286

Justice, including Gardaí

4,976

5,073

5,591

5,814

6,149

7,150

7,905

Public Service Pensions

4,927

5,550

5,696

5,938

6,704

7,676

8,127

Other Expenditure

8,346

9,135

9,718

10,595

11,108

12,423

14,278

TOTAL

125,911

128,067

139,701

152,328

168,648

186,638

209,958

Remuneration included in above figures

39,448

41,466

43,845

45,272

51,164

55,258

63,498

1958

1959

1960

1961

1962

1963

£m.

£m.

£m.

£m.

£m.

£m.

Gross National Product

599

636

671

718

774

823

Current Government

Expenditure as % of

G.N.P.

21.0%

20.1%

20.8%

21.2%

21.8%

22.7%

TABLE IV

ROAD FUND

RECEIPTS AND ISSUES

RECEIPTS

ISSUES

1963/64

1964/65 (Estimated)

1963/64

1964/65 (Estimated)

£000

£000

£000

£000

1. Opening balance

45

1. Normal road grants (a)

7,836

8,495

2. Motor Taxation, etc.

8,238

9,000

2. Special grants under the Road Fund (Grants) (Temporary Provisions)

3. Grants under the Road Fund (Grants) (Temporary Provisions) Act, 1962, as amended by the Finance Act, 1963

150

200

Act, 1962, as amended by the Finance Act, 1963, for roads affected by the closure of railway lines and by particular major industrial undertakings

150

200

4. Other receipts

43

3. Administration, etc.

400

550

4. Closing balance

45

TOTAL

8,431

9,245

TOTAL

8,431

9,245

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

TABLE V

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

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

64,165

28,792

23,203

1962-63

163,478

168,335

70,008(b)

32,910(b)

22,773(b)

1963-64

184,419

186,638

73,598(b)

34,302(b)

24,386(b)

1964-65

208,350(c)

209,958(c)

80,543(c)

37,605(c)

26,887(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 VI

STATE AID TO AGRICULTURE

FROM 1960/61

1960-61£000

1961-62£000

1962-63 £000

1963-64 (Provisional) £000

1964-65 (Estimate) £000

Subsidies of final products:

Butter and other milk products

2,350

4,698

3,168

6,018

6,111

Wheat

834

1,150

1,540

600

Bacon

850

1,850

2,825

1,400

1,500

Grain Storage Grants

307

Subsidies to reduce production costs:

Ground Limestone

236

493

636

725

730

Phosphatic Fertilisers

2,131

2,215

2,382

2,750

3,000

Potash

195

503

630

700

810

Petrol

44

36

33

Calved Heifer Grants

405

Drainage, land reclamation and general improvement schemes:

Arterial drainage

1,044

1,083

1,617

1,870

1,665

Land Project

2,167

2,064

2,109

2,187

2,170

Other drainage schemes

49

5

Improvement of Land Commission Estates

620

648

739

813

873

Other improvement schemes

426

440

478

475

504

Gaeltacht and Congested District Schemes

181

189

197

209

213

Elimination of disease, livestock improvement, etc.:

Bovine T.B.

4,961

8,970

6,472

4,657

2,575

Pasteurisation plant

39

39

22

20

20

Brucellosis eradication

214

A.I., milk production and livestock improvement

50

64

68

75

76

Administration of improvement and regulatory Acts.

194

218

280

334

349

Grants towards farm buildings, etc.:

Farm buildings and water supplies

803

1,007

1,307

1,383

1,938

Poultry houses and equipment

60

60

64

73

77

Forage Harvesting Equipment Grants

35

Orchard planting

4

4

3

2

3

Education, research, advisory and technical services:

Education

449

478

452

546

599

Research

500

623

767

1,021

1,134

Advisory services

339

378

399

496

564

Rural organisations

20

23

25

39

26

Technical services

165

181

240

254

260

Departmental capital expenditure on land and buildings

85

128

160

356

318

Land annuities:

Halving of land annuities

745

765

786

821

843

Bonus to vendors and other costs

118

118

118

118

119

Relief of rates:

Agricultural Grant

5,664

5,839

8,530

8,955

9,422

Rural Electrification

966

775

953

900

1,000

Capital for Agricultural Credit Corporation, Ltd.

1,765

50

860

1,100

TOTALS

26,289

36,809

37,050

38,964

38,653

NOTE :—Figures are net of appropriations in aid.

TABLE EXPLANATORY OF CURRENT BUDGET, 1964.

REVENUE

EXPENDITURE

£m.

£m.

1. Tax Revenue (excluding Motor Vehicle Duties)

168.23

1. Central Fund Services (excluding payments to Road Fund)

35.54

2. Motor Vehicle Duties

9.00

2. Payments to Road Fund

9.00

3. Non-tax Revenue

31.12

3. Supply Services (non-capital)

165.42

208.35

209.96

4.Add:

£m.

4.Add:

£m.

Post Office revenue

2.00

Agriculture

4.50

Additional taxation—

Social Welfare

0.73

Hydrocarbon oils

1.50

Public service pensions

0.14

Tobacco

2.00

5.37

Beer

1.10

Imported Spirits

0.40

215.33

7.00

215.35

5.Deduct:

5.Deduct:

Income tax — age allowance and small incomes relief

0.18

Grant to Road Fund

0.20

Corporation profits tax

0.04

0.22

TOTAL

215.13

TOTAL

215.13

DEPARTMENT OF FINANCE, 14 April, 1964.

PART II

CAPITAL BUDGET TABLES

TABLE 1

PROGRAMME OF CAPITAL EXPENDITURE, 1963-64—OUTTURN

(Budget estimates in brackets) £ million

Sources of Finance

Objects of Expenditure

Expenditure

Public Funds

Internal Resources

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

1. Voted Capital Services

25.63

(26.46)

25.63

(26.46)

2. Local Authorities

15.23

(15.16)

11.65

(12.25)

1.55

(1.41)

2.03

(1.50)

3. National Development Fund

0.12

(0.24)

0.12

(0.24)

4. Electricity Supply Board

13.76

(11.75)

1.06

(0.60)

5.70

(4.50)

7.00

(6.65)

5. Irish Shipping Ltd.

0.36

(0.35)

0.26

(0.26)

0.10

(0.09)

6. Bord na Móna

1.50

(1.65)

1.45

(1.65)

0.05

(—)

7. (i) Córas Iompair Eireann

2.25

(1.43)

1.90

(—)

0.35

(1.43)

(ii) Ostlanna Iompair Eireann Teo. (b)

0.13

(0.51)

0.13

(—)

(0.51)

8. Air Companies

3.55

(4.03)

0.63

(0.58)

2.42

(2.35)

0.50

(1.10)

9. Telephone Capital

4.61

(4.50)

4.61

(4.50)

10. Industrial Credit Co., Ltd.

2.58

(3.47)

0.10

(3.00)

2.25

(0.47)

0.23

(—)

11. Agricultural Credit Corporation, Ltd.

2.40

(1.60)

0.86

(—)

0.74

(0.50)

0.80

(1.10)

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

1.40

(1.25)

1.40

(1.25)

13. Bord Iascaigh Mhara (d)

0.24

(0.22)

0.24

(0.22)

14. Gaeltarra Eireann

0.08

(0.05)

0.08

(0.05)

15. Comhlucht Siúicre Eireann Teo. (Food Processing Project) (a)

0.87

(0.82)

0.83

(0.82)

0.04

(—)

16. Irish Steel Holdings Ltd.

1.28

(1.00)

1.25

(1.00)

0.03

(—)

17. Nítrigin Eireann Teo.

1.95

(3.50)

1.95

(3.50)

18. Radio Eireann

0.07

(0.25)

0.07

(0.25)

19. National Building Agency Ltd. (a) (e)

0.13

(0.18)

0.13

(0.18)

20. Miscellaneous

0.36

(1.24)

0.06

(1.05)

0.30

(0.19)

Total

78.50

(79.66)

52.38

(57.86)

15.17

(9.51)

10.95

(12.29)

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

£ million

Actual

Estimate

National Building Agency Ltd.

0.15

0.15

Comhlucht Siúicre Eireann Teo.

0.67

0.68

(b)The total capital expenditure was £0.16 million of which £0.03 million was defrayed from voted moneys and is included at 1. above.

(c)The total capital expenditure was £1.60 million of which £0.20 million was defrayed from voted moneys and is included at 1. above.

(d)The total capital expenditure was £0.30 million of which £0.06 million was defrayed from voted moneys and is included at 1. above.

(e)The total capital expenditure was £0.43 million of which £0.30 million was defrayed from voted moneys and is included at 1. above.

TABLE 2

CAPITAL BUDGET, 1963-64.

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)

52.38

(57.86)

Exchequer

1.17

(1.25)

2. Advances to enable repayment of borrowing by—

Local Loans Fund

3.20

(3.10)

4.37

(4.35)

National Building Agency Ltd. Comhlucht Siuicre Eireann Teo.

0.15 0.67

(0.15) (0.68)

0.82

(0.83)

2. Capital Fund

0.54

(0.52)

3. Small Savings and Prize Bonds—

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

0.21

(0.30)

Savings Banks

2.34

(5.00)

Savings Certificates Prize Bonds

2.28 2.40

(1.50) (2.00)

7.02

(8.50)

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

1.08

(0.25)

4. Departmental Funds—

Investment income and sales of securities

12.48

(14.00)

5. Borrowing to meet issues to C.I.E.

1.00

(—)

5. Balance found by—

6. Borrowing to meet deficit on Current Budget

2.22

( — )

(a) 5¾% Exchequer Stock, 1984-89 (Public Subscriptions)

21.20

7. Casual increase in Exchequer Balance

0.18

( — )

(b) Tax Reserve Certificates

0.52

(c) Other Borrowings (net)

4.08

(d) Exchequer Bills from Banks

10.50

36.30

Less—

Decrease in Exchequer Bills in hands of Public

2.82

33.48

(31.87)

TOTAL

57.89

(59.24)

TOTAL

57.89

(59.24)

TABLE 3

PROGRAMME OF CAPITAL EXPENDITURE, 1964-65—ESTIMATE.

£ million

Sources of Finance

Objects of Expenditure

Estimated Expenditure

Public Funds

Internal Resources

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

1. Voted Capital Services

29.35

29.35

2. Local Authorities

20.38

16.51

2.30

1.57

3. National Development Fund

0.15

0.15

4. Electricity Supply Board

12.40

1.00

4.80

6.60

5. Irish Shipping Ltd.

0.43

0.43

6. Bord na Móna

1.80

1.80

7. (i) Córas Iompair Eireann

3.50

1.60

1.90

(ii) Ostlanna Iompair Eireann Teo. (b)

0.19

0.19

8. Air Companies

7.10

2.30

2.80

2.00

9. Telephone Capital

6.00

6.00

10. Industrial Credit Co., Ltd.

3.50

3.00

0.50

11. Agricultural Credit Corporation, Ltd.

3.00

1.10

0.74

1.16

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

1.25

1.25

13. Bord Iascaigh Mhara (d)

0.28

0.28

14. Gaeltarra Eireann

0.10

0.10

15. Comhlucht Siúicre Eireann Teo. (Food Processing Project) (a)

0.65

0.50

0.15

16. Irish Steel Holdings Ltd.

0.50

0.50

17. Nítrigin Eireann Teo.

2.90

2.90

18. Radio Eireann

0.60

0.60

19. National Building Agency Ltd. (e)

0.31

0.31

20. Taiscí Stáit Teo.

1.50

1.50

21. Miscellaneous

0.22

0.02

0.20

TOTAL

96.11

70.77

13.67

11.67

(a)Sums to be raised for repayment of borrowing of earlier years are not included, viz., Comhlucht Siúicre Eireann £0.44m.

(b)Total estimated capital expenditure is £0.23m. of which £0.04m. is being defrayed from voted monies and is included at 1. above.

(c)Total estimated capital expenditure is £1.61m. of which £0.36m. is being defrayed from voted monies and is included at 1. above.

(d)Total estimated capital expenditure is £0.37m. of which £0.09m. is being defrayed from voted monies and is included at 1. above.

(e)Total estimated capital expenditure is £0.71m. of which £0.40m. is being defrayed from voted monies and is included at 1. above.

TABLE 4

CAPITAL BUDGET, 1964-65

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)

70.77

Exchequer

1.28

Local Loans Fund

3.36

4.64

2. Advances to enable repayment of borrowing by Comhlucht Siúicre Eireann. Teo

0.44

2. Capital Fund

0.56

3. Small Savings and Prize Bonds— Savings Banks

4.00

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

0.20

Savings CertificatesPrize Bonds

3.003.00

10.00

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

16.00

5. Balance to be found

40.46

TOTAL

71.66

TOTAL

71.66

TABLE 5

PUBLIC CAPITAL PROGRAMME, 1959-60 TO 1964-65

£ million

1959-60

1960-61

1961-62

1962-63

1963-64

1963-64 Outturn compared with estimate

1964-65 Estimate

1. Building and Construction

(i) Housing

7.79

9.03

9.67

10.74

12.12

-0.40

16.61

(ii) Sanitary and miscellaneous services

1.39

1.84

2.29

2.32

4.13

+0.77

4.10

(iii) Schools

1.70

1.32

1.69

2.27

2.69

+0.09

3.14

(iv) Hospitals

0.28

0.56

0.86

0.36

1.04

+0.14

2.90

(v) Other building and construction

0.40

0.47

0.69

1.33

1.96

-0.10

2.47

TOTAL

11.56

13.22

15.20

17.02

21.94

+0.50

29.22

2. Ports, Harbours and Airports

1.55

2.24

2.66

2.44

2.65

-0.34

3.25

3. Tourism

0.07

0.09

0.18

0.35

0.50

-0.02

0.67

4. Agriculture

10.98

10.56

14.71

13.50

12.42

-0.67

11.30

5. Agricultural Credit

0.84

0.80

1.12

1.55

2.40

+0.80

3.00

6. Forestry

1.31

1.49

1.52

1.63

1.81

-0.13

1.75

7. Fisheries

0.30

0.20

0.13

0.17

0.30

+0.01

0.37

8. Fuel and Power

7.45

7.40

7.68

11.25

15.26

+1.86

14.20

9. Telephones

1.35

2.10

2.40

3.68

4.61

+0.11

6.00

10. Transport

4.80

8.34

4.05

3.97

6.29

-0.03

11.22

11. Industry

1.14

1.71

3.19

5.31

7.19

-1.18

9.16

12. Industrial Credit

2.08

2.52

4.09

3.55

2.58

-0.89

5.00

13. Radio Eireann

0.10

1.35

0.30

0.07

-0.18

0.60

14. Miscellaneous (including the National Development Fund)

0.66

0.50

0.34

0.38

0.48

-1.00

0.37

TOTAL

44.09

51.27

58.62

65.10

78.50

-1.16

96.11

Under head 1 the figures for 1962-63 and 1963-64 are provisional; those for 1959-60, 1960-61 and 1961-62 are final. The figures for 1959-60, 1960-61 , 1961-62, 1962-63, 1963-64 and 1964-65 do not include amounts of £2.03 m., £2.85 m., £1.53 m., £1.61 m., £0.82 m. and £0.44 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, £0. 42 m. in 1963-64 and £0.56 m. in 1964-65 is included under head 2 in respect of housing development by Shannon Free Airport Development Co. Ltd. TABLE 6

VOTED CAPITAL SERVICES.

Vote and Subhead

1963/64

1964/65

Estimate (including Supplementaries)

Expenditure

Estimate

£000

£000

£000

No. 9—Public Works and Buildings

A.—Purchase of Sites and Buildings

100

100

50

B.—New Works, etc. (New Buildings and Reconstruction Works)

3,233

3,177

3,875

I.1.—Arterial Drainage—Surveys

22

21

25

I.2.—Arterial Drainage—Construction Works

1,250

1,250

1,267

I.4.—River Fergus Drainage

J.—Purchase of Engineering Plant and Machinery, and Stores

350

360

108

TOTAL

4,955

4,908

5,325

No. 28—Local Government

E.2—Private Housing Grants

2,750

2,750

3,040

No. 30—Primary Education

A.1—Training Colleges, Grant towards cost of additional accommodation

50

No. 34—Universities and Colleges and Dublin Institute for Advanced Studies

B.—University College, Dublin (Part of Item 4)

900

900

1,110

C.—University College, Cork (Part of Item 3)

20

20

40

D.—University College, Galway (Part of Item 4)

9

9

8

TOTAL

929

929

1,158

No. 37—Forestry

C.1—Acquisition of Land (Grant-in-Aid)

320

320

120

C.2—Forest Development and Management (Parts (1), (2), (3) and (6))

1,619

1,489

1,631

TOTAL

1,939

1,809

1,751

No. 38—Fisheries

Pond Fish Culture

1

Contributions to the Salmon Conservancy Fund

6

6

D.—Grant-in-Aid of Administration and Development of An Bord Iascaigh Mhara (Part)

60

60

95

TOTAL

67

66

95

No. 39—Roinn na Gaeltachta D.—Tithe Gaeltachta

190

188

186

No. 40—Agriculture

E.3—Improvement of Poultry and Egg production (Part of Item C)

10

15

16

K.6—Farm Buildings Scheme and Water Supplies (Items (C) and (D))

1,380

1,290

1,840

K.7—Land Project

2,232

2,187

2,170

K.8—Lime and Fertilisers Subsidies (Part of Item (B))

2,380

2,241

2,530

K.11—Bovine Tuberculosis Eradication Scheme (Net)

4,699

4,645

2,570

K.13—Brucellosis Eradication Scheme (Net)

17

214

K.14—Scheme of Grants for Calved Heifers

405

K.16—Grants to Bacon Factories

80

98

150

Grants for the provision of grain storage

330

307

Bovine Tuberculosis Eradication Scheme—Guarantee Payments in respect of export of Fat Cattle and Carcase Beef

2

TOTAL

11,128

10,785

9,895

No. 41—Industry and Commerce

J.—Grant to An Foras Tionscal (Grant-in-Aid)

3,285

2,998

5,000

No. 42—Transport and Power

C.—Equipment, Stores and Maintenance (Purchases)

17

9

18

E.—Grants for Harbours (Permanent Improvements)

150

39

190

F.2—Resort Development (Grant-in-Aid)

200

180

250

F.3—Development of Holiday Accommodation (Grant-in-Aid)

315

315

420

G.1—Acquisition of Land, Buildings, etc., at Airports

15

1

15

G.2—Constructional Works at Airports including Furnishing of Buildings

680

449

600

K.1—Shannon Free Airport Development Company, Limited (Part of Grant-in-Aid)

155

200

295

K.2—Shannon Free Airport Development Company, Limited (Housing Grants)

62

Catering and Sales Service Shannon Airport — Provision of Working Capital (Grant-in-Aid)

60

TOTAL

1,592

1,193

1,850

No. 49—Health

K.—Hospitals Trust Fund (Grant for Building Purposes)

1,000

TOTAL

26,835

25,626

29,350

TABLE 7

LOCAL LOANS FUND

CAPITAL RECEIPTS AND ISSUES

£ million

RECEIPTS

ISSUES

1963-64

1964-65 (Estimated)

1963-64

1964-65 (Estimated)

1. Opening balance

1. Loan Issues:

2. Capital Repayments

3.20

3.36

Housing, Sanitary Services, etc.

10.63

14.94

3. Exchequer Advances

8.45

13.15

Vocational Schools

0.75

1.12

Hospitals, County Homes, Dispensaries, etc.

0.26

0.35

Harbours

0.01

0.10

2. Closing balance

TOTAL

11.65

16.51

TOTAL

11.65

16.51

TABLE 8

STATEMENT SHOWING CAPITAL LIABILITIES OF THE STATE ON 31ST MARCH, 1963, AND 31ST MARCH, 1964, AND ASSETS HELD ON THOSE DATES

31st March, 1963

31st March, 1964

LIABILITIES:—

Money raised by issue of securities:

£000

£000

3½% Fourth National Loan, 1950/70

3,420

3,358

3% Exchequer Bonds, 1965/70

18,292

17,813

3½% Exchequer Bonds, 1965/70

23,981

23,303

5% National Loan, 1962/72

16,415

16,415

4½% National Loan, 1973/78

19,411

19,203

4½% National Loan, 1975/80

17,204

17,204

5% National Savings Bonds, 1971/81

17,450

16,668

5½% National Loan, 1966

5,781

5,781

6% National Loan, 1967

18,534

17,961

5½% Exchequer Stock, 1971/74

14,214

14,183

5½% National Development Loan, 1979/84

18,108

17,192

6% Exchequer Stock, 1980/85

38,090

37,664

5¾% National Loan, 1982/87

25,000

24,380

4½% Exchequer Stock, 1968

15,000

15,000

5¾% Exchequer Stock, 1984/89

25,000

Exchequer Bills

26,500

35,500

Savings Certificates (Principal)

28,749

31,068

Prize Bonds

20,940

23,344

Tax Reserve Certificates

185

706

Ways and Means Advances

124,085

128,872

Dollar Borrowing under United States Loan Agreements

37,585

36,768

Under Telephone Capital Acts, 1924 to 1963

22,052

25,860

Other Borrowings

14,395

18,472

525,391

572,495

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)

16,150

16,520

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

37,980

39,510

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

5,936

7,171

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

3,372

3,291

63,438

66,492

TOTAL GROSS LIABILITIES (see note below)*

588,829

638,987

ASSETS:—

Repayable advances:

Electricity Supply Board

61,453

60,750

Local Loans Fund

110,806

119,256

Industrial Credit Co. Ltd.

3,430

3,530

Purchase of Creameries

1,419

1,419

Bord Failte Eireann

9

9

Bord na Mona

18,619

19,726

Bord Iascaigh Mhara

1,288

1,472

Bord Ghaeltarra Eireann

175

245

Radio Eireann

1,746

1,816

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

1,169

1,379

Agricultural Credit Corporation Ltd.

500

Shannon Free Airport Development Co. Ltd.

399

1,273

Nitrigin Eireann Teo.

1,144

3,099

Coras Iompair Eireann

1,000

National Building Agency Ltd.

275

201,657

215,749

Shares of Sundry Undertakings:

Agricultural Credit Corporation Ltd

990

1,350

Comhlucht Siuicre Eireann Teo.

3,000

4,500

Industrial Credit Co. Ltd.

8,829

8,829

Aer Rianta, Teo

10,696

11,327

Ceimici, Teo.

496

496

Irish Shipping, Ltd.

11,172

11,427

Alginate Industries (Ireland) Ltd.

29

39

Irish Assurance Co. Ltd.

90

90

Colucht Groighe Naisiunta na hEireann, Teo

396

396

Shannon Free Airport Development Co. Ltd.

2,476

3,000

Irish Steel Holdings, Ltd.

4,000

5,250

Min-Fheir (1959) Teo.

115

165

Payments under Bretton Woods Agreement Act, 1957

4,814

5,877

Payment under International Finance Corporation Act, 1958

119

119

Payment under International Development Association Act, 1960

81

95

47,303

52,960

Balance held on sundry Funds and Accounts:

Exchequer Account

389

572

National Loans Sinking Funds

15,923

21,597

Savings Certificates Reserve Fund—

Principal Reserve Account

3,888

3,928

Capital Services Redemption Account

222

1,122

National Development Fund (Winding-up) Account

698

578

Capital Fund

189

140

Savings Certificates Account

149

149

Proceeds of Dollar Borrowing under United States Loan Agreements—

Balance on American Loan Counterpart Fund

39,833

39,247

61,291

67,333

TOTAL ASSETS

310,251

336,042

*When considering the Liabilities Statement at 31/3/64 alone it should be borne in mind that there is double reckoning in the totals to the extent of £62,408,000 representing the investment in Ways and Means Advances to Exchequer and in Exchequer Bills of the proceeds of dollar borrowings, the balance in the National Development Fund (Winding-up) Account and of part of the balances of the National Loans Sinking Funds and the Savings Certificates Fund (Principal Reserve Account). This is offset in the Assets Statement where the balances on the American Loan Counterpart Fund, the National Development Fund (Winding-up) Account, the National Loans Sinking Fund and the Savings Certificates Fund (Principal Reserve Account) include the Fund's investments in Ways and Means Advances to the Exchequer and Exchequer Bills.

TABLE 9

STATE DEBT BALANCE SHEET

LIABILITIES

31st March, 1963

31st March, 1964

ASSETS

31st March, 1963

31st March, 1964

£000

£000

£000

£000

Outstanding Public Debt as per previous table*

531,450

576,579

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

3,912 248,960

4,925 268,709

Telephone Capital Acts, 1924/60

22,052

25,860

Pre-1922 Advances to Local Loans Fund

6,285

6,285

Transition Development Fund

6,635

6,635

National Development Fund

7,099

7,249

Sinking Funds and Interest, etc. thereon

88,812

99,879

Other Voted Capital Services

176,848

202,474

United Kingdom (Capital Sum) Act, 1938

10,000

10,000

Capital Fund

9,828

10,348

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)

16,150

16,520

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

37,980

39,510

Subsidy under Sanitary Services Schemes (capitalised)

5,936

7,171

Subsidy for Rural Electrification

6,730

7,790

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

3,372

3,291

Advances to Road Fund written off

1,176

1,176

Discounts on National Loans (net)

3,102

3,040

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

1,970

Budget Deficits

68,148

70,466

Other Items

528

528

636,375

693,091

636,375

693,091

*Excludes double reckoning to the extent of £57.379 m. and £62.408 m. at 31/3/63 and 31/3/64 respectively, in respect of Ways and Mea Advances to the Exchequer and Exchequer Bills from the American Loan Counterpart Fund, the National Development Fund (Winding-up) Accounts, National Loans Sinking Funds and the Principal Reserve Account of the Savings Certificates Reserve Fund.

A year ago, from these benches, we warned the Minister for Finance and the Government that the path on which they were then travelling in imposing taxes on the essential necessaries of life was one that was bound to bring in its train an inflationary spiral which would end God knows where. The Minister today has had to devote a substantial part of his Budget speech to the fact that we have that inflationary spiral now, an inflationary spiral he himself touched off a year ago.

Deputies

Hear, hear.

Deputy Dr. Ryan, Minister for Finance, came into this House today with the announcement that, in the Tables he had circulated, he was going to provide, and to find by way of borrowing in this year, a record sum in relation to the expenditure of the Government, a sum approximately double the sum borrowed in 1956-1957. He came to the House at a time when, as he said himself, there was a substantial danger of inflation, having himself for the third successive year brought the year to a close with a Budget deficit, a Budget deficit which arises this year, as it arose last year, and the year before, not because of a shortfall in revenue but because of increased expenditure and because the Minister for Finance failed to exercise the control that it is his duty to exercise. If, therefore, there is any danger in the inflationary position to-day it is a danger that arises solely because of the action the Minister himself initiated last year, and because he failed during the year just gone by to take any proper step to see whither he was travelling. He came to this House today in the knowledge that he would get, out of old taxation, a record sum. Notwithstanding the fact that he was going to get out of old taxation that record sum, he has today in his Budget, in the measures that give effect to taxes for the current year, imposed £17 million additional taxation this year on the people as compared with last year: £17 million new taxation.

Deputies

Hear, hear.

£7 million in the Budget and £10 million in the turnover tax for the months for which it was not in operation last year.

Hear, hear.

£17 million additional new taxation and £14 million buoyancy in revenue — £31 million in all, bringing the share the Government will take of the national cake to an all-time high level. In doing that, he has given some mere temporary benefits to which I shall refer in a moment. The tragedy is that he has taken this additional buoyancy and this additional new taxation and, by and large, it is all being frittered away without any real provision for long-term needs and the necessary long-term expansion. Do all of us not realise that there is no hope of our keeping pace in the modern world with the new inventions and new techniques that are being developed every day, unless there is a real and substantial improvement in our research possibilities and in our educational possibilities?

Deputies

Hear, hear.

There is nothing in this Budget that provides for the additional needs of education in regard to that development. Admittedly, there is an increased sum for education but that increased sum for education arises because those who are engaged in education are entitled to receive their 12 per cent increase in line with the rest of the community. There is nothing in this Budget for the real, long-term needs of education and the development of our educational facilities, a development we must have if we are to succeed in keeping pace with Europe, much less the United States of America, in increased benefits and improved higher living standards in the Free World.

There is nothing in this Budget for the improvement of health services, services about which the Minister for Health has been talking for so long and in relation to which he set up his Health Committee as a smokescreen to try to cover up his own defects. If that were a really genuine effort, he would have been able to persuade his colleague, the Minister for Finance, to include something in this Budget in that regard. This comes at a time when the Minister for Finance has not only come in with a Budgetary deficit to swell the inflationary pressure but has also told the House, as he had to tell the House, that for the second year running, we have had a substantial deficit in our balance of payments, a deficit over the past two years of £35 million, which, in relation to external reserves, is being met by what? By the sale of Irish assets.

I have made it clear at all times that I believe it is entirely desirable that foreign capital, foreign knowhow and foreign technique should be brought in for the purpose of developing our manufacturing potential and increasing our industrial and other employment; but that is not the type of capital that is coming in to offset the deficit in our balance of payments current account. It consists to a large extent in the sale of assets already here, assets which will not be improved in any way by being sold off to foreign hands. It consists in large sales of the wholesale distribution arrangements of this city, large sales of hotels already there and functioning and not, therefore, for future development. That sort of investment, like the foreign investment in land, does not bring any benefit to the Irish people and is, in fact, merely covering up present defects and creating future difficulties.

The Minister in his Budget Statement has acknowledged, and rightly, that agriculture is in a difficult position and that it is essential that there should be a measure of relief granted to agriculture in the current Budget. Everybody expected that; everybody knew it should come. In the short time at my disposal, as far as I can see, the twopence a gallon on milk is the exact figure the Minister will get from the increased price for butter sales and could be met, as was advocated from these benches not so long ago, by the removal of the levy by Bord Bainne in that respect. It does not give any real indication of a proper approach to the fundamental long-term problems of agriculture. It should have given some indication that the proposals the NFA set out in their Green Book were being considered and that there was going to be an adequate placing aside of funds and reserves to meet that.

We see nothing like that, nor, in the same context, do we see any relief for the hard-pressed small shopkeepers, whose rates in the coming year will be well nigh impossible for them to meet. Naturally, I am more intimately acquainted with the rates in the two towns in my own constituency, Naas and Athy. There the manager was looking for an increase of more than 10/- in the rates for the coming year. There is nothing anywhere in this Budget to give the ratepayers hope of relief from this burden they will be called upon to bear in the coming year.

Having regard to the ninth round of wages and the increases in the early part of this year, most people felt that social welfare benefits would be increased by more than 2/6d. I note there is nothing in the Budget Statement that takes account of contributory pensions. It is only in the noncontributory band that this small, disappointing increase has been given. As regards State pensioners, the Minister himself, in the wording of his Budget Statement, made it clear that he acknowledged what he was doing was pitifully unjust and that it failed completely to meet the just claims of these pensioners for an increase to meet the increased cost of living.

Turning for a moment from the expenditure side of the Budget to the receipts side, what do we find? The first thing the Minister promises us is that a second Budget will be introduced later in the year by the Minister for Posts and Telegraphs. The people will no doubt be delighted to know that, if they want to take their families out on Sundays for a drive, they are going to have the pleasure of paying 3d per gallon more for their petrol and that distribution costs for the wholesale and retail trade, whose distribution is largely done by petrol vehicles, will also go up. Far worse, however, the cost of diesel oil for transport which is a fundamental cost in industry, is to be increased at this juncture. That will be something that will affect very substantially manufacturing and distribution costs at a time when our costs are already in jeopardy of being pushed up so much as to price us out of our export markets.

I will agree with the Minister that no Minister for Finance has ever encouraged tobacco, and the Minister is certainly living up to that pattern this year. It means that the duty content of the packet of 20 Players will go up to 3/- out of the new price of 4/-. I note, too, that the man who drinks his pint is not going to escape this year the wrath of the Minister. Naturally, those of us who drink Irish whiskey are relieved that we are not going to have to pay more for it. However, it seems to me that the Minister is going to have some little difficulty, having regard to our overtures to GATT and the reduction of protective tariffs, in justifying the fact he is now changing what heretofore has been a revenue impost into a protective impost. All power to him if he is able to get away with it. However, there are other implications to which, I am sure, the Revenue Commissioners directed the attention of the Minister. I know from my own knowledge they were brought to the notice of both Deputy MacEntee and Deputy Aiken when they were Ministers for Finance.

It is at least some consolation that the Minister, when imposing the tax on diesel oils, made some provision by virtue of which it will not affect road passenger vehicles; but that does not affect the manner in which the cost of diesel oil, which is used in all the heavy transport in the country, is being still further increased at a time when the Minister for Transport and Power has done his utmost to ensure that every railway line that could be closed in the country is closed.

The people who got increases in their wages and salaries confidently expected the Minister for Finance on this occasion to increase the allowances for which there is provision under the Income Tax Acts. It is nonsense to suggest that the increases, which the Taoiseach suggested during the by-elections were full increases, are full increases, when in fact his colleague, the Minister for Finance, has come along and taken from these people approximately one-third in income tax alone and is taking more in other forms of indirect taxation.

The Minister has lamentably failed to meet the real challenge of the times — the long-term development of our economic growth — and has completely frittered away the great opportunities given to him by the buoyancy in revenue to provide for the essential permanent things. They will have to be provided for by other means in the future, but the Minister could have provided for them with a properly planned Budget, really designed to examine the long-term position and develop long-term economic growth and not merely give us a temporary sop to try to avoid political unpopularity.

I believe the Budget should be used as an instrument for distributing the resources of the nation and for placing the tax burden in accordance with the principles of social justice. I regard this Budget, as all Budgets, in that light. The Budget is also connected with something the Minister seemed to steer away from — the question of unemployment, employment and emigration. After listening to the Minister's speech, I think the Budget has been a complete failure. One must have regard to many things when considering a Budget of these dimensions — the Budget provides for approximately £210 million, something on which we did not hear much comment from the Minister — and we must ask ourselves was there any attempt to prune this amount to see whether or not non-productive services could be cut out or whether much of the money was being expended properly. We have had no indication from the Minister that there has been this detailed examination to see whether or not there is room for economies in certain of our services.

One thing we must remember about this Budget, something the Government would like to forget, is that it still includes the turnover tax. The Minister made reference to it and I think he described it as reliable and indispensable. I suppose the statement that it is reliable is true because people have to live; they have to eat food; they have to buy bread and the other necessaries of life. Whether or not it is an indispensable tax is a matter of opinion, views on which were expressed by members of the Labour Party during discussions last year.

Last year the turnover tax extracted from the taxpayers something like £3.69 million and this year it is estimated to yield something in the region of £14 million. It must be remembered that this Budget still includes the provision whereby tea, bread, butter, sugar, flour, meat, clothing and footwear carry the 2½ per cent turnover tax. What strikes me particularly this year is the Minister's reference to the tax on beer, cigarettes, tobacco,et cetera. Last year when he wanted to provide excuses for the introduction of a turnover tax, he said, in effect, that the consumption of beer, spirits, cigarettes and tobacco was at near-saturation point and that if he attempted to increase these in price by way of taxation, the returns would diminish and diminish very rapidly. Last year the Minister got his turnover tax at 2½ per cent on practically every commodity one can think of. He gave the impression last year as regards beer, cigarettes and the other commodities which are being further taxed today, that they were not considered because they would not give him any appreciable sum of money. This year he gets something in the region of £5 million from these same commodities.

Despite what the Minister said last year in regard to these consumer articles, they did go up in price. Therefore, the people have the increases necessitated by the turnover tax, the increases imposed by the manufacturers, plus the increases the Minister now proposes to impose one year afterwards.

Last year the Minister estimated that the turnover tax would bring in a sum in the region of £10½ million. Now his estimate is a little over £14 million. Therefore, the turnover tax this year will produce about 40 per cent more than he estimated in his last Budget. We cannot too strongly stress the damage that has been caused by the introduction of the turnover tax, particularly in regard to prices. What I am amazed at is what appears to be the complacency of the Government in the matter of prices. They do not seem to be concerned. Nobody is at all impressed by the half-hearted statements made from time to time by the Minister for Industry and Commerce in regard to the investigation of prices. If there is to be an investigation of prices of essential commodities, it should not be held in secrecy by any Department of State. It should be held in public or at least a report on the investigation should be made available to the public because the public want to know why these increases have been imposed.

There has been a tendency in recent months to blame price increases on wages. Wages are not the biggest element in any increase in prices that has taken place in recent months. The Government themselves must take a share of the blame for some of the increases in wages because it was necessary to grant increases in order to compensate for the turnover tax this Government introduced. The Minister and the Government should now be warned that the trade union movement are gravely concerned by this tendency towards price increases. There is no use in quoting the cost of living index figure for November and February. As far as I can see, most of the big increases occurred after the cost of living index figure was published for mid-February.

While the trade union movement here agreed, and rightly so, that a national wage agreement should obtain for a period of two-and-a-half years, they cannot allow the 12 per cent increase they negotiated on behalf of their workers to be frittered away by this gradual process of price increases about which the Government appear to be very complacent indeed. It seems to me — I may be wrong in this — that the Government have a vested interest in prices. The turnover tax represents a considerable income to them. This year the Minister says it will be £14 million, and if prices go up, it will be greater. The Government ought to be warned that unless they control prices, the trade union movement will have to think twice about the national wage agreement which they made because they must protect their members. If they are to be compensated to the extent of 12 per cent—of course the Taoiseach wanted to have only eight per cent—and if their wages are to retain their purchasing power, serious regard must be had to the question of prices.

One would imagine from the various statements of the Government and from their complacency that a great deal was being done about social welfare. I want to tell the Minister for Finance and the Minister for Social Welfare that their record in respect of social welfare is a bad one in recent years.

It is better than yours.

We shall talk about yours, now that you have responsibility. I answered for mine when I was there. We were always led to believe by the Minister for Finance and by various Ministers for Social Welfare in the Fianna Fáil Government that if they got more by way of taxation they would pay it out to the social welfare recipients.

That is a nice way of approaching it.

It is the Minister's way of approaching it. I am not as adept as the Minister at juggling with figures but we were always led to believe that if this Government got extra money by way of taxation, income tax or turnover tax, they would be prepared to improve social welfare benefits. They have got in any amount of money in the past six or seven years but the social welfare recipients have not got their share of it.

Let me quote some figures. In 1957-58, £25.5 million was devoted to social welfare payments: tax revenue amounted to £102.7 million and social welfare got 24.8 per cent. It has been declining year by year since then. In 1963-64, £31 million was devoted to social welfare: tax revenue stood at £155 million and social welfare got 20 per cent. In 1957-58, social welfare recipients got 24.8 per cent and in 1963-64, the amount declined to 20 per cent. In 1964-65, pre-Budget, social welfare got £33.9 million out of revenue amounting to £177.2 million. The share for social welfare went down to 19.1 per cent, and again tax revenue has gone up.

While I have not had an opportunity of examining the figures in detail, I guarantee this to the Minister for Finance and the Minister for Social Welfare, that in 1964-65 even a smaller percentage of tax revenue will be devoted to the social welfare group. It is fantastic that in a year in which we expect to get so much money, in a year in which our gross national product will amount to something like £900 million, all we can afford for the old age pensioners is 2/6d. The Minister may tell me: "During your time, you did not give them that; you gave it in one or two years," but having regard to the cost of living, to the value of the pound and to the amount that the Government have taken in in tax revenue, the old age pensioners have been treated scandalously.

I heard the Minister for Social Welfare accepting on behalf of the Government a principle embodied in a motion tabled by Deputy Sherwin to the effect that social welfare payments should keep in line with wage increases. Therefore I suggest that if the old age pensioners were to get their due, they would be given 4/- to 5/- extra per week today. I notice tremendous efforts being made — perhaps the Minister may say it will not cost a lot of money — in regard to corporation profits tax and to give tax inducements to those who export. All these sums of £20,000 or £30,000 add up. It must be remembered also that while from 1954 to 1957 and in the few years on from that, it cost over £1 million to give the old age pensioners an extra 2/6 a week, today it costs almost £750,000 to give the 2/6. Therefore the Government's task should be easier in many respects.

I believe that the system employed for getting the money should be looked into. I and my Party supported in every way the tax proposals which the Minister introduced last year, apart from the turnover tax, in respect of corporation profits tax and the regulations in respect of tax rebates. They were very good proposals but there were many more avenues that needed to be explored. There is great concern, particularly among the economists, not to touch too hard on the fellow who is engaged in production, in a management capacity. The theory seems to be that if you increase sur-tax by 1d., he might fly from the country, that if you touch the business man or the industrialist to any degree in regard to surtax and other taxes, he may get out of the country.

The Minister must be aware that there is a lot of money which is not subjected to any sort of income tax. This is the day of the take-over bid and of take-overs; this is the day of speculation on the Stock Exchange and of speculation in property, and profits made from those transactions are not taxable. I may pose the question: What is the difference? Why is there this difference in regard to the man who goes out tommorrow and buys property for £1,000 and in three months' time, sells it for twice its value, and with the profit, buys a bungalow, in respect of which there is no tax? If the salary or wage earner wants to buy a house, he pays money on which he has been taxed. I do not know whether there is a substantial amount of money involved in such matters but whether it was £40,000, or better still, whether it was £750,000, efforts should be made in that respect to ensure that people such as old age pensioners who need an increase at present will get it.

I want to deal only briefly with these matters because this should be on the record in view of the fact that little or no mention was made — I may be corrected on this but as far as I can gather there was no appreciable comment — of unemployment, employment or emigration. The Minister boasted, and I suppose rightly boasted, that for the year ended February, 1963, the rate of emigration stood at 12,200. There were certain circumstances that obtained last year but at least, the Minister said, it showed a trend, meaning that it showed a trend downwards. For the 12 months ended February, 1964, emigration was 25,660. That is double what it was in February, 1963. It is not fair to say that it is doubled in view of the circumstances that obtained last year, but it is now up 25,000. A few months ago we had the Minister for Transport and Power saying that it was now around the 11,000 or 12,000 mark, that this was the normal figure. The Government need not be complacent about figures so far as emigration is concerned. I received the impression from Fianna Fáil spokesmen that as far as employment is concerned the country is booming and that as far as unemployment is concerned, it is negligible.

Let us quote a few figures contained in the booklet which the Minister published last week. In 1963, there were 1,000 more at work than there were in 1962. That is an improvement, but there were 3,000 fewer at work in 1963 than there were in 1960. There were 8,000 fewer at work in 1963 than there were in 1959, and in the bad year about which the Fianna Fáil people talk, the year 1955, there were 94,000 more employed than there were in 1963.

Hear, hear.

What price theFirst Programme for Economic Expansion? What is the prospect for the Second Programme, if this is the result we get from the first? It is true that as far as manufacturing is concerned, there were 4,000 more employed in 1963 than in 1962 and there were 9,000 more employed then than in 1957 but the Government have responsibility for all workers, to provide the conditions to ensure that these will be employed, but we have lost 54,000 from agriculture in the rural areas from 1957.

The Taoiseach does not seem to be too annoyed about unemployment but he and every Deputy in Fianna Fáil should look at the statistics given to us every week. These show that on 4th April, 1964, there were 3,500 more unemployed than there were on 4th April, 1963. I am not quoting 1963 because everybody can see that to some extent it was an abnormal year. Even as far as last year is concerned the unemployment figure on the last Friday or Saturday available shows that it is some hundreds higher than it was in April, 1963.

I should like to conclude by saying that the Budget may be balanced and the two and two make four on either side; that is a very important thing for the Minister for Finance and a very important thing for the economists but it is not the most important thing. There are still many social injustices, particularly in respect of lower paid workers and in respect of those dependent either on social welfare benefits or on pensions. They get the usual crust today in an all-time record Budget. The halfcrown certainly could not, as every Deputy knows, compensate them for the increase in the cost of living in recent months and recent years. This Budget does not do anything; it does not hold out encouragement for an increase in employment, even at the rate forecast in theSecond Programme for Economic Expansion. This Budget does not show, as the Minister said last year, that the tendency for emigration is to fall; it does not show that unemployment has fallen appreciably in the past two or three years. Because of these things and because of the social injustices which have still been uncorrected, the Budget is a failure.

As a Deputy representing a rural constituency, my principal interest in the Budget was to see if the Minister or the Government had any plan to check the denudation of the countryside caused by the flight from the land. The Minister offers two well-picked bones for us to chew on for the next 12 months, one, represented by the few shillings extra by way of relief of rates on agricultural land and the other, by a further 2d. a gallon on milk. That is the size of the Minister's plan for checking the flight from the land, that is, if the Government have any serious intention of trying to check it.

Various statements made by Ministers throughout the year have attempted to put across to the people the image that emigration is declining. Emigration has come to a full stop in some areas because there is no one left to emigrate and in other areas there is nobody left but the old people whose last emigration will be to their final resting place. It would seem that the policy of the Government is aimed at the complete wiping out of the countryside while at the same time the propaganda machine keeps up the idea that everything is satisfactory. Does the Minister seriously believe that he will remove the disparity between agricultural and non-agricultural occupations by giving a few shillings relief in the rates on agricultural land and an extra 2d. a gallon on milk?

I am not one of those who believe that any section of the community should cry out for an increase in income simply because somebody else has got a well deserved increase. I do not believe in such an approach. But, if the Government are serious about holding the small farmers on the land, the few who are left, some provision will have to be made besides the miserable sops contained in the Budget.

The Minister has treated old age pensioners and blind pensioners very miserably in view of the deterioration in the purchasing power of the £. A halfcrown increase to old age pensioners is very poor. The Minister from time to time jibes about what the inter-Party Government did in their day but we gave a halfcrown increase when a halfcrown was worth something. Today 2/6d. is little more than pence one would give to a child.

The Minister has put extra taxation on cigarettes. If that tax helps reduce cigarette smoking. I have not much to say against it, in view of world medical opinion as to the health hazards involved. If the increased taxation on cigarettes reduces cigarette-smoking, the Minister will have taken a step in the right direction. Medical opinion all over the world is that cigarette-smoking is a serious danger to health. In that case, something should be done about it, something even more drastic than a tax that would discourage cigarette-smoking.

The Minister has put a penny on the pint, the poor man's drink. He has put 4d. on the glass of imported spirits in order to prevent any danger of the home distilling industry being hit. That is all to the good.

There is one thing that should not be lost sight of in regard to all these taxes the Minister is imposing in this Budget. All these taxes will be affected by the turnover tax of 2½ per cent. I am sure the Minister will be quite pleased when at the end of the year he gets the returns of revenue. He told us when the turnover tax was introduced last year that it would produce £9 million in a single year. That has gone up to a figure approaching £15 million. My own guess at the time was that it would produce £16 million in a single year. Certainly, when these new taxes are in operation, it will reach £16 million. Out of that the Minister could be more generous to the old and the blind and should have made a more determined effort to reduce the disparity between farmers' incomes and other incomes.

Great play was made with the 12 per cent increase to all other workers. They wanted it, but the Minister should remember that farmers, particularly the small farmers, have nobody to give them a 12 per cent increase. Had the Minister his tongue in his cheek when he spoke about the increased prices for cattle that took place last year? I am a farmer and I meet a number of farmers. That was the first I heard of any increase in the price of cattle. There might have been an increased demand as compared with the horrible failure last year but there has been no increase in the price of cattle and the Minister will not be able to put it across that there has been an increase in farmers' incomes because of that.

This Budget is disappointing to me and, I am sure, to most rural Deputies. It seems that the policy of the Government is to back up what the Minister said in 1945 when he was Minister for Agriculture: "There are too many people on the land". I want to tell him that I still believe in what I and members of my Party advocated over the past 20 years, that if the Government want to hold the farmers, particularly small and middle-size farmers, on the land, the land should be completely derated.

That problem and the problem of unemployment are the two most urgent matters facing the Government. These problems have been very carefully sidestepped in this Budget. There is no employment in the countryside. Young people are leaving the land according as they leave school. The same situation as has obtained down through the years obtains today. The moment the young people in the country areas reach maturity, or even before that, they leave. They have lost hope of making a living in their own country.

Financial Resolutions.

Is it a fact that nobody can speak on behalf of the Independents, although we have had to listen to people down there speaking and raving for half an hour?

I would point out that only the leaders of the various Opposition Parties are called upon at this stage by the Chair. The Deputy will get ample opportunity.

Some of the Independents are in Opposition.

It is not a question of being in Opposition or otherwise. Only the leaders of Parties are called on to speak at this stage. The Deputy will get every opportunity of speaking on the Budget at a later date.

You do not call that two-man Party down there a Party, the leader of which can speak?