As far as my experience of Parliamentary proceedings here is concerned, yesterday was without doubt the gloomiest day I have ever seen. It started off with a very depressing speech from a very depressed man—the Taoiseach. There was no lifting of the gloom when the Minister for Industry and Commerce decided to intervene in the debate at a later stage. Yesterday, my leader, Deputy Dillon asked for honesty in the discussion of these matters and in the handling of the problems that have arisen for us. I wish that honest viewpoint had started earlier. Just after the blow had fallen, when the 15 per cent levy had been announced, our two Ministers went to London. The best the Taoiseach could say on his emergence from the conference room in Downing Street was: "One advantage was that uncertainty had been removed and we now knew what we are up against." Later he said: "We now know how bad the thing is." That was the consolation offered through the Press.
As I said, the depression had not even lifted yesterday. His speech was a depressed speech and he himself was clearly a depressed person. However, we are told by the Taoiseach that the British Cabinet Ministers, whom he met with his colleague, the Minister for Industry and Commerce, had been very much impressed by our arguments. I gather from his remarks— I can supply the details if necessary— that he felt the British did not know how severe the blow was to us. Also, apparently, they were not aware we were going to take badly the breach of an international agreement.
I find it hard to believe that the members of the British Cabinet did not know how severe the 15 per cent levy was going to be, even on the limited quantity of goods on which it was being imposed. They have their own statisticians. They are not mathematically inefficient. They can add and subtract and add a percentage. It is incredible to me that this matter had not been fully considered and that, even appreciating our satisfactory trading relationship from the British angle, the British decided the 15 per cent was going on our industrial goods, as it is going on the goods of other people with whom they had treaty obligations.
It must have been appreciated that this was a breach of the agreement. I do not think there has been any denial anywhere of that. But yesterday the Minister for Industry and Commerce said that it was all very well now to talk with a certain amount of hind-sight—that nobody expected these levies. Deputy Dillon asked yesterday if the consultations, which were supposed to be the valuable outcome of the arrangements the Taoiseach made in 1960, had taken place, and the answer came: "Yes, frequently." In his speech yesterday the Minister for Industry and Commerce confirmed that. He said that they had had discussions. I do not know whether it was completely between officials or whether it was Minister with Minister. I gather it was the latter. He did say that the Chancellor of the Exchequer had told himself, the Minister for Industry and Commerce, that the difficulties were there, that they were piling up and that something would have to be done about it. I wonder did that not make our people think what would happen.
The Minister thinks that nobody could have conceived that there would have been a breach of an international agreement. I do not know. I am not personally aware as to whether minutes were taken of the discussions which I attended myself in 1948. I know there were notetakers present, but I do not remember ever seeing a printed minute of what happened at that conference. I am quite sure recordings were made of it. In any event, quite a number of civil servants crossed with Deputy John Costello, the then Taoiseach, and the group I belonged to in 1948. Those civil servants must have a memory of what happened then. I think anybody considering our position and being told by the Chancellor of the Exchequer, Mr. Maudling, that the balance of payments difficulties were enormous and would have to be tackled by a Government sooner or later, the first thing that must have occurred to our people on hearing that was that the weaknesses of the 1938 Agreement, which in 1948 we tried to strengthen, would be used to our disadvantage.
Possibly before this debate is over, if not, certainly on some other occasion, I want the Taoiseach, who was the architect of the 1938 Agreement, to explain to this House what I found it impossible to explain when I was put under cross-examination in 1948. The Chancellor in those days, Sir Stafford Cripps, said very pointedly there were two clauses at balance in the 1938 Agreement. "There is the main clause where we demanded certain things, and there is the clause where your people attempted to demand certain things." Then he put into sharp contrast the phrases they had used. The framework of all this was a statement on the table, "We know what we wanted and we got a phrase which guarded what we wanted. Either your people did not know what you wanted, or you failed to record what you desired. As far as our Governments are concerned, the United Kingdom agreed on goods which would enter the United Kingdom without customs duties." That ended the clause to our benefit.
In the same document the Chancellor of the Exchequer was alert to point out that we were put on notice that the British had written in on their side that there were two things to guard against. One was customs duties and the other was quotas. When we look at the 1948 agreement, we see that the British demanded and got free entry of goods into this country, without tariffs and without quotas. The then Taoiseach, Deputy Dillon, myself and others, extemporised arguments — and some arguments that we really did not believe in—and said that entry free from customs duty meant free entry without quotas or customs and the answer was that the phrase was carried in the same document. We were flanked by many civil servants during the 1948 negotiations and they must have known that the British had stressed very strongly that we were unguarded so far as quotas were concerned and all we had precluded was certain customs duties on certain parts of our goods.
I have said before and I want to repeat that it was pointedly urged, and our attention was drawn to the fact, that there were two ways of interfering with our trade. One was customs duties and the other was quotas. We protected ourselves against one only, whereas in the same document three or four clauses down, the British had been at pains to protect themselves against customs duties and quotas. If the British had decided to use a system of quotas instead of putting levies on, we would have objected because so far as we could in the 1948 agreement, we had held the door open for argument.
If one reads the GATT arrangements, one discovers there that balance of payments considerations permit quotas to be fixed. If the British Government had had time, and if they had decided on a different programme, they could have avoided the situation they are in with their associates in GATT and EFTA. They could have avoided the situation they are in with us by pushing open the door the present Taoiseach left swinging for the imposition of quotas upon our goods. They decided, in their wisdom, that the quota system was a bad one. It could not be as swift as the attachment of the levies which do not require expensive administration machinery. They could have avoided breaches of international agreements with the EFTA countries and at least the suspicion of a breach in the GATT negotiations.
Last night Deputy Booth made light of this 15 per cent and said the picture was being painted black by people on this side of the House for Party purposes. He said the Labour Government in England had made the situation look blacker than it was for Party political purposes. I am aware that when the first hint of these levies was made public, the Tory Chancellor of the Exchequer said: "If we left the Labour Government our problems, we left them our solutions." The Minister for Industry and Commerce can tell us that when he met the Tory Chancellor of the Exchequer some time before the vacation, he was told these difficulties about the balance of payments were mounting and something would have to be done. If one reads the House of Commons debates, one finds that there is no great controversy in England about the levies as opposed to any other method of meeting the difficulties. Clearly the Tories now in Opposition know the files reveal that they had projected exactly the same system as is now being operated by the Labour Government.
I read in the paper that the President of the British Board of Trade, Mr. Jay, "heard spokesmen of Britain's EFTA partners accuse her of causing a `crisis of confidence' in the group. They described the import curb as `unfair play', `hitting below the belt', and a `flagrant disregard' of EFTA's rules." The President of the Board of Trade is reported as having said:
...it would not have been possible to exempt EFTA countries from the 15 per cent surcharge without also exempting British Commonwealth countries. EFTA and the Commonwealth together made up half of Britain's imports and it was not possible to exempt both from the surcharge because this would put a greater burden on other countries and could also frustrate the aims of the surcharge.
Mr. Jay said Britain was examining her EFTA partners' difficulties and would continue to consider what she could do to ease them. But she was unable to suggest any possibilities at present.
I want these words to be noted by people who are inclined to think this is a very temporary matter. We heard it said that it will last for only six months. I tried to track down this phrase about the six months and I find the British have agreed that they will review the situation in six months. In other words, they will have another look at it, but there is no promise whatever in regard to six months.
The Swiss asked what value can be placed on international treaties if they are to be so flagrantly disregarded. The Director of the Federation of Danish Industries said: "...if Britain insisted on this degree of economic sovereignty, other EFTA countries were bound to face up to the consequences of this unilateral action."
However, for good or bad, the British have decided to operate along those lines. Deputy Dillon told the House yesterday of discussions we had in regard to them. It is true, as he said, that one junior member of the British Government with a reputation as an international lawyer was brought in and said very openly and frankly that so far as he understood the system with regard to the interpretation of treaties, every treaty had a special clause written in and if it was not written in, it was implied, that the treaty lasted only so long as circumstances did not fundamentally change. We pointed out that in international law text books that was ascribed to Russia in the Czarist days, and first made its appearance as an argument in connection with the interpretation of treaties when trouble arose over the neutralisation of the Black Sea. It was claimed on behalf of Russia that every treaty has an escape clause and that, if circumstances changed, the treaty was no longer binding. If one surveys international law textbooks of those days, we find there was a proud boast against that. The British had the view that when treaties were made, they were meant to be kept and should be kept and that there was an obligation on those entering treaties to observe the terms of the treaties unless they could either renounce them, under whatever terms of renouncement there were, or could get the agreement of the other parties to the treaty that some fundamental change had occurred and that therefore the treaty had to be rearranged.
I take the view, as expressed by a Swiss representative at a recent EFTA meeting: what value can be placed on international treaties that are so flagrantly disregarded—what value? That is the difficulty we are in for the future. There is no doubt about it that what happened in Britain in regard to these surcharges must make people take a completely new view of international law.
The British were the people who held with the western nations up to this that international treaties were more than mere contracts between individuals; that they might be frustrated here and there by impossibility of performance but that international treaties were on a different level and that these pacts were and ought to be observed. Those champions of that attitude towards international treaties have now succumbed to circumstances. They have accepted that such difficulties as balance of payments difficulties create a new situation and that, in that new situation, a treaty can be broken not only without the agreement of but without consultation and even without prior notice to the other parties to such agreements.
It is in those circumstances that we have to view the statement made here by the Taoiseach yesterday. He wants to have a new trade agreement. It will not be worthwhile having a new trade agreement unless it provides for and encourages an expansion of trade. I supose he will tell us at a later stage that it would be a good thing to write into any new trade treaty a clause that it is not to be abandoned, that it is to be kept. If that is written in, that clause can be overridden by necessity.
It is interesting to look back and to see what the present Taoiseach said as Minister for Industry and Commerce when dealing with our agreement of 1948. He asked himself three questions: (1) could a better agreement than what was being then discussed have been made; (2) were there any features of the agreement which were so objectionable as to call for its dismissal and (3) would it be better or worse if we had no general or comprehensive trade agreement in force with Great Britain under the circumstances then obtaining—should we have only temporary arrangements within its scope? He answered all these questions in a way favourable to himself. He thought there were many objectionable features. He thought a better trade agreement could have been made. His suggestion to this House in August, 1948, was that if we had refused to accept the treaty a new and better one could be negotiated. Finally, he expressed the point of view that as far as he was concerned he would rather have no treaty agreement and just let us have ad hoc temporary arrangements of a very limited scope. He was not backed in that point of view by anybody. His Leader in those days repudiated him.
After two days' debate, the 1948 Trade Agreement was passed without a division being challenged. The fear of the House in those days was that if the then Minister for Industry and Commerce, the present Taoiseach, got control of those matters again he would denounce the 1948 Trade Agreement and try to put something better in its place.
The 1948 Trade Agreement lasted. It is still operating in a trading association with Britain save for such minor adjustments as were made in 1960. I do not know what the point of view of the Taoiseach is. He thinks the British are rather sorry for having broken our agreement. He tells the public that the British recognise that they have broken faith with us. The best thing he can offer is that we can make a new agreement with those faithless people. I do not know whether or not he hopes to write in a new negativing clause to the effect that whenever we make this treaty it will not be subject to sudden changes, even for balance of payments difficulties.
I would ask that somewhere in the near future the Taoiseach would tell us why he failed to put in a clause equal to the one the British inserted in 1938. They guarded against customs duties and quotas : we were content to guard against customs duties only. We left the way open for the British, by quotas, to prohibit entry of our goods, not by making them dearer. That was the situation that the British had while we can complain of their lack of faith in having broken this agreement. But at least they made it clear that the situation they found when they came to Government was so serious that action of a decisive and quick type had to be taken and that it did not permit them to use the escape clause they had with us and other people with whom they had a trading association, namely, to have quota restrictions. This matter was so urgent that they had to act quickly.
Deputy Booth thinks that the Labour Government are making a bad picture worse and that it is only for political Party purposes. The calculation with regard to the adverse balance of payments from Britain's point of view is £600 millions to £800 millions. That sum will not be got rid of in six months' time. I do not know whether the British will use that "six months' time"—a phrase which is floating around these discussions—as possibly the escape machinery for quota restrictions. If they do, remember our position under the 1938 agreement, although we bettered some of those phrases and recorded our disagreement with the British point of view in Clause I when we met them in 1948. One member of the new British Government has said, regarding that deficit of £600 million to £800 million, that it represents almost their entire reserves in the nature of hard currency. Yet people here take it light-heartedly. They think that this will be a levy of 15 per cent and that that is all. They think it will be all over in six months' time and that we shall then resume our march wherever the marching is leading us.
I do not know how bad our balance of payments situation is. It is only when we get the details of it at the end of the financial year that we may be able to see whether it is really serious or whether some of it can be taken in our stride. The new Business News supplement of the Sunday Times wrote quite favourably of our deputation. It states that Ireland's case for special treatment is strong and points out that Éire's own economy is at a critical stage. It says that our adverse balance of payments, in relation to GNP, is far worse than even the most pessimistic forecasts for Britain. The article goes on to say that the successful policy of attracting foreign industries could be permanently damaged by a loss of confidence in Ireland's special relationship with Great Britain.
That, of course, is the terrible difficulty that faces us in the future. Everybody recognised that we had a special arrangement. The trade balance was in Britain's favour but we were good customers of each other and yet, in that situation there suddenly emerged this terrible crisis of the balance of payments difficulty and, facing that, the British had no scruple. They disregarded any obligation they had to us. They could have gone through the door the Taoiseach left swinging open in regard to quotas but they did not take that way out. Instead they introduced their levies, which are really customs duties. Any foreign industrialist might have been tempted by what was regarded as our specially favourable position in the British market: such an industrialist will now think again. He would have to consider that international law has gone into a new phase in which an important nation originally sticking to treaties and upholding that slogan has now succumbed itself and, in the teeth of obligations to us, to their Commonwealth people, to GATT and EFTA, have decided on these surcharges.
The future has to be clouded for many years by what has happened in the past fortnight. Treaties are no longer sacred; they need no longer be kept. If there are difficulties arising that make any fundamental changes— we do not know what changes—then, the treaty goes by the board and other parties to it will be informed afterwards, not even advised beforehand of what is going to happen.
What is going to happen here? We have had two suggestions made, one by the Minister for Transport and Power who thought that workers should do everything in their power to undo the effects of "a totally unjustifiable increase of five per cent in labour costs" arising from their ninth round wage increase. When the Minister for Transport and Power is speaking of an unjustifiable increase of five per cent, I do not know if he knows this, but he is criticising an agreement made and approved by his leader. I take that five per cent increase to mean the five per cent over two, or two and a half years for which this agreement was to run. The Minister, as usual, turns his eye on the workers and they are to be appealed to and, as Deputy Tully said, the implication was that if they do not listen to that appeal, something worse will happen to them.
The new Minister for Justice thinks it is time for the nation to come together. He said people should join in an act of faith in the future of the country. We should say that for the next 12 months no claim should be made except as a claim for Ireland, and Ireland in that connection is represented by the new Minister for Justice, and whatever he says is Ireland's claim should command everybody's support. He speaks of responding to the challenge and said it was the test of any community. If the nation failed in this respect, it would not deserve to survive. Then he spoke of the "problem" of the 15 per cent levies. The Minister is a master of platitudes: he said problems are there to be solved. He did not say but he hinted how he would solve this one when he said that we were very lucky in this country to have a tax system which would raise the revenue to keep Irish workers in industry.
We were told two Budgets ago that all the ordinary sources of revenue had dried up or got to the point of diminishing return. The Minister for Finance went back on that this year when he again attacked tobacco and beer but two years ago we had to fall down and adore the grand new tax, the turnover tax. Apparently, another twist is to be given to that. Out of curiosity, I looked at the Iris Oifigiúil statement of Receipts and Issues out of the Exchequer between 1st April, 1964 and 24th October. That is the last one that came to my hand. The return of tax and revenue yield shows the revenue is very buoyant. People are being fleeced more and more by the impositions put on them in recent years but the turnover tax shows the biggest increase of all. We get a £3? million increase in income tax; £2? million increase in excise; £1? million in customs and the turnover tax tops the lot at £7.6 million up to 24th October. It is running at a little more than £1 million a month. It will certainly be £12, £13, or £14 million by the time we come to the end of the financial year. It will be a scandal if there is any attempt to raise any further taxes from this community.
The Minister for Finance did not really deny at the end of the Budget debate this year that he had at least £4 million to £5 million of what are ordinarily called "Balances to be surrendered." It has been a feature of Budgets for years back that the Minister for Finance took cognisance of that and allowed £3 million or £4 million or £5 million for what was called over-taxation. This year he did not allow anything for that. He had enough money; he certainly had £4 million and I believe he had £5 to £5½ million. I recently saw where his colleague, the Minister for Social Welfare, complained that while he wanted certain moneys for social beneficiaries, he could not get them because the Minister for Finance had pledged the whole amount to the State service.
The Minister for Social Welfare has never been notable for his views on State service, the garda, the Army and the teachers. These are the people who, for years in the view of Fianna Fáil, should not get any increases in their remuneration. Even in our time when we established the system of arbitration, the point was made many times that this made a very serious imposition on the taxpayers and for years, of course, Fianna Fáil had, in a grossly immoral way, refused to allow State personnel to get the benefits that industrial workers had got in the outside world. However, the Minister for Social Welfare is annoyed that State servants have lifted so much of the extra revenue that came in that there is no more for the social beneficiaries. He could have doubled the old age pensions instead of giving the five per cent to State servants : that is all it was decided to give them, five per cent of what they were entitled to. We could have given them the whole lot and that would be giving benefits to those who most deserved them. The money given to those people could not have led directly to any increase in the balance of payments difficulty. The people I am speaking of would have spent the extra money on foodstuffs or, perhaps, clothes, but they certainly would not be the people who would be directly responsible for any great imports. Indirectly, if they spend a lot of money in the shops, the shopkeepers might possibly import more goods.
But there was plenty of money in hand and there still is, and I believe no matter how much we want to help the Government in the present situation— we are not objecting to what they are doing at the moment—we should certainly be very hostile to any suggestion that new moneys should be raised by taxes.
I want to go back to the turnover tax which showed an increase of £7.6 million and is still growing steadily with some four months to go. Remember, on the statement of the Minister for Finance, three-quarters of that has arisen from taxes on food, fuel and clothes—three-quarters of what we get in. That was the thought which was in the mind of the new Minister for Justice when he told us about this wonderful tax machine which will enable us to raise revenue for the help of Irish industry.
Deputy Tully spoke about the very affluent people in our community at the moment. We are supposed to be living in an affluent society. Sometimes I wonder who those people are. I know people who are not affluent and they are the people one should seek to help at this particular time. We are going to aid industry and business people. A new magazine Business and Finance, which was published recently, talks about one firm—I do not intend to mention it—and says that this firm's results one year were fabulous, outstanding and amazing and that their profits, free of tax, had come from a little over a quarter of a million to a little over a half a million—£267,000 had swivelled up to £516,000 in the last year. After taxes had been paid, the difference was between £116,000 and £280,000.
I should like to know who those affluent people are until I am told something about the distribution of that money. It may not amount to much after a big number of shareholders are paid. The increase in the profits of that firm rose from a bit over a quarter million pounds to a bit over half a million pounds. They are among the people who are mainly a monopolistic concern here for the supply of certain goods to our people. I do not believe they go into any export of goods at all.
With regard to the help we have to give, I put down a number of questions for answer this week to find out how far we should help business, particularly those on the export side. I asked, in particular, if the Minister for Finance would state his estimate of the value (1) in total since 1957 and to the nearest date and (2) year by year since 1957, of the concessions made to firms producing or finishing goods for export by way of tax remissions or incentives of any kind. I am told that the total since 1957 of the value of exports tax relief is £4 million. Then I get the figures year by year which make up that £4 million : they are nil, 0.4, 0.6, 0.7, 1.2 and 1.1. That, from our point of view, is our sacrifice to the people who are exporting goods. I am amazed the figure is not bigger than £4 million over five years. I could not get any other information. With regard to most of my other questions, I was told that the information was not available.
The Minister for Industry and Commerce is always speaking here about firms who have come into this country with foreign capital. I tried to find out whether these foreign firms coming in here were asked to put up any capital, what proportion was fixed capital and what proportion of working capital was provided by those foreign participants. I am told the information requested is not available, and if it could be compiled at all, it would be only after a long and searching investigation. The Minister did not consider that such an investigation would be warranted in view of the time and expense involved. I asked the number of firms established in the State since 1957 completely by native investors or capitalists and I am told no information is available. I also asked if the Minister would tell me his estimate of the value in total since 1957 to the nearest date of the concessions made to firms producing or finishing goods for export by way of rates remissions in whole or in part. I am told no information is available.
Despite all this, we are helping those firms and it is suggested we are going to continue to give help to the firms coming into this country. We do not know where we stand. We do not know how much money those people have brought in and what proportion of the entire money involved is given by the State. If the money supplied by the State is invested in fixed assets, it might be of some value, but, if not, it would disappear. I also asked if there was any obligation on the firms who came in here to train Irish workers. I knew myself from sad experience, when we came to Government in 1948, that we had to tackle that problem. We found our efforts were to some extent frustrated because the technical knowhow in regard to one State-sponsored concern was more or less a monopoly of foreign workers. There had not been any training given to Irish workers.
When the Shannon Scheme was going through, we imposed an obligation on the Germans that they would train workers to take their place. There had been a considerable number of German technicians at the beginning. The result was, as a result of our endeavours, when the war came later on, the technical knowhow was in the possession of Irish nationals. We got them trained by the Germans here. The same thing happened, to a smaller extent, in the case of the Sugar Company. I am told, in answer to my question, that there is no obligation imposed but that most of those people are keen on Irish labour or get them trained. I am not talking about training. It is a good thing to get them trained. I am talking about Irish people being trained here. I am told by the Minister for Industry and Commerce that there is no obligation on those firms.
I hope one of these days that we will have a full-dress debate on the point raised by Deputy Tully, that is, in regard to the European Economic Community. There now seems to be on the Government side a change of attitude. It has to be made quietly and cautiously because we have been talking a lot about applying for full membership. We intend to persevere for full membership: we hope to get full membership and we have no fears of what full membership imposes. I doubt every one of these assertions. I would be horrified if full membership were granted to us in our present weak position. I believe there are other ways in which we could lay a better foundation for better work in this country than running after this business of the Common Market, which only exists as far as General de Gaulle lets it exist and which will probably be brought to a standstill one of these days.
Suppose we get into the Common Market. We have a programme of what is called economic expansion, which is built on our entry to the Common Market. It is also built on the aim that we will get certain extra people into employment. I just want to put in summary what I would like to put in great detail. I take the economic statistics prepared for the 1964 Budget with the other table in the Programme for Economic Expansion. I am dealing with this entirely on the employment side. It has been pointed out that once you have a community to ills a prey, wealth accumulates and men decay. The Programme contemplates a great decay as far as our manpower is concerned. If the Programme for Economic Expansion is looked at, one finds that by 1970, it is believed there will be 1,133,000 people in gainful occupation. That is some 10,000 fewer than the number of people who were gainfully occupied in 1955. It is just 12,000 under it.
Supposing we get to the point that by 1970 there will be jobs for 1,133,000 people, do not forget that there will be a 15-year span as between 1955 and 1970. The natural increase in our poulation is round about 26,000 a year. It may not refer to those who will not require to look for gainful occupation. There are a number of people who slip into the shoes of their fathers, or somebody who is a proprietor of a business. It is a very weak calculation to say that only 20,000 will have to look for gainful occupation as they come to working age, whatever that may be. Now, over 15 years, that is 300,000 people, and we are not providing a single job for these. The hope is that by 1970 we will have the same number of jobs for gainfully occupied people, and other people, as there was in 1955, and 300,000 will either have to join the ranks of the unemployed here or take to the boats and go off to England and become emigrants. That is what is called economic expansion. If it is economic expansion, it has along with it a population expulsion and nobody can boast of that. That is our best hope and if we get into the EEC, that is what will happen. In the meantime, we will have a new treaty with the faithless people who broke the treaties of 1938 and 1948, and that is the best the Taoiseach can hold out.
