I have here a copy of the policy document "Towards a Just Society". I propose to read portion of this document so that I can demonstrate exactly what I say. In March, 1965, in the section dealing with prices and incomes, it is stated:
Ireland has not been unique in suffering from a constant rise in the level of prices since the end of the war. Whilst there are some economic arguments in favour of a steady and small rise in prices, it is generally accepted that price stability should be one of the principal objects of government economic policy. Rising prices can produce undesirable inflationary conditions; in an open economy they can bring about Balance of Payments difficulties either because rising costs make our exports less competitive or because of increased import demand; increased prices result in increases in the cost of government expenditure which are frequently not matched by revenue buoyancy resulting in budgetary difficulties.
In criticism of the prices policy then being adopted and pursued by the Fianna Fáil Government, it goes on to state:
On social and economic grounds a policy on prices and incomes is urgently necessary.
Further in the same section, it is stated:
In an attempt to slow down the rise in prices the Fianna Fáil Government have attempted to influence the rise in wages alone. Consideration, however, should have been given to the desirability of influencing other kinds of income, and modern discussion has centred on the need as well for influence on the level of profits and other non-wage incomes as well as on wage incomes. Policies in this connection, known generally as "Incomes Policies" have been advocated for Ireland by Fine Gael for a very considerable time. We stress the view that such an approach is the correct approach, and we can see the success with which such policies have been operated in other countries.
It is accepted that an essential prerequisite for the formulation of any incomes policy must be an accurate estimate of future economic trends. Fine Gael, therefore, proposes to strengthen the existing arrangements for economic forecasts.
The Government must have an accurate estimate of future economic trends, particularly of increases in productivity, and must be in a position to state with accuracy the average increases in wages appropriate to the economic situation, consistent with price stability, Balance of Payments etc. It can by these means indicate a norm for increases in wage and non-wage incomes. The Government must establish machinery providing for consultation between Trade Unions, Employers' groups and the Government itself, so that the Government's views can be considered, and so that norms for increases in wages and non-wage incomes can be agreed.
Those statements are contained in the Fine Gael policy document on what an incomes policy should be. There are many more details in that document as to how it should be worked out, but the point of principle made in that document was that, in modern social conditions in a highly competitive world, it was essential, if proper planning were to take place, that an incomes policy should be adopted and pursued. We were the first Party to say that here, and we were the first Party to seek to get public conviction on that score.
How were our views greeted? In the course of the last general election, the Taoiseach, whose Minister for Finance has moved this motion today, dealt with our policy in relation to incomes in a speech in Mullingar on 5th April, 1965. I deliberately recall what he had to say in view of what is now urged here today. In the Irish Times of 6th April, 1965, there is a report of the Taoiseach's speech in Mullingar and in Navan on the previous day. It reads:
The Taoiseach, Mr. Lemass, speaking at Mullingar and Navan yesterday, said that during the course of this election, the leader of Fine Gael, Mr. Dillon, had referred many times to what he called an incomes policy. He has not attempted to define this in any respect. He probably meant, and certainly intended the public to understand, some system of regulation of wage and salary increases by the Government.
We of Fianna Fáil do not believe that any system of this kind is workable. It has never been successfully operated in any country, except the Communist countries. I want to make it clear that we are definitely against it. If we are in Government, we will not apply it; if we are in Opposition, we will oppose it strongly.
There is the Taoiseach, the Leader of Fianna Fáil, only ten months ago, dealing with a new idea in the economic development of our country, and an idea which he now accepts, an incomes policy. He would not apply it if in government, and if in opposition, he would strongly oppose it. Perhaps he did not understand what was involved. If so, one can only regret his lack of knowledge. Or did he intend by that opposition to confuse the people and try to suggest that an incomes policy meant the regulation, in a unilateral way, of wages and salaries without regard to economic growth? If so, it is perfectly clear that the Taoiseach was deliberately trying to confuse the people.
Again, during the course of the election, the Fine Gael Party announced in their policy document new views—I suppose they were new views because they were not commonly expressed—or certainly fresh views in relation to banking and credit. These views were introduced in the section dealing with the banking and monetary policy and read as follows:
The Irish banking system has many striking peculiarities, not the least of which is the lack of informed discussion on it. In other countries a great deal is written on banking matters and the actions of the monetary authorities are discussed and criticised by experts both inside and outside the banking world. Not so in Ireland. In the absence of expert discussion and with only a minimum of information being made available to the public there is little wonder that when the subject is discussed it is frequently debated on an emotional rather than an intellectual level. By this comment it is not intended to imply that only the critics of our present system are at fault. It is true, of course, that slogans such as "breaking the link with sterling" are frequently more influenced by a misplaced patriotic fervour than by an exact knowledge of the workings of redeemable currencies and of the Legal Tender Note Fund. For it is equally true that the defenders of our present system tend to conduct the controversy in similar types of clichés, and emotive slogans such as "Hands off the banks" or "It's your money they are after" are used instead of rational arguments to frighten the ill-informed and fainthearted.
The document, having discussed the undue rigidity imposed by the suggested 30 per cent ratio in the external assets to deposits in Ireland, then went on to suggest a positive role for the Central Bank. In relation to that, the role, the suggestion was that the Central Bank should be given the power and authority, by fixing without rigidity, certain ratios, to control the amount of credit which at any time would be available in this country in relation to our economic difficulties.
Reference was also made in the document to what appeared to be the situation in the early part of the year and what had gone before, that balance of payments deficits were being incurred but that they were being concealed by the large inflow of capital into the country which had occurred and was occurring in 1964. The policy document went on to say:
Balance of payments deficits will certainly recur in the future (at the moment we are facing a considerable one). Is it prudent to rely on the inflow of capital from outside in the hope of avoiding restriction of bank credit? We do not believe that it is.
There again in relation to banking and credit, the Fine Gael Party, with courage and with clarity, proceeded to chart the way for new thinking, to suggest that the Central Bank should be made a real Central Bank, given a role to play in consultation with the Government, in consultation with a proper planning programme, and that the amount of credit available at any time should be tempered and tailored into the economic requirements of the situation and of the future.
How were our views in this regard dealt with by Fianna Fáil? I have here a cutting from the Irish Press relating to a speech made by the Taoiseach in Castlebar on March 29th, 1965 and the report had this to say:
The Taoiseach said in Castlebar last night that if on April 21st a Fine Gael Government was elected with its declaration of intent already made to control banks and banking credit that was the day when the flight of capital from Ireland would start.
He went on to say that:
those people with money on deposit in the banks would start transferring it out of the country to protect themselves against Government interference with their plans.
How proper was the introduction to the Fine Gael policy document when it said that in relation to any discussion on banking or credit policy, the emotive term was always used by the man who wanted to protect what was there, who did not understand or wish it and had to use terms like "It's your money they are after" or "Hands off the banks". That is what the Taoiseach proceeded to do in the last general election, although the Fine Gael proposal was precisely the proposal which he, through his Minister for Finance, now asks Dáil Éireann to approve of with precisely the same banking proposals.
The position now is that the Central Bank in the course of 1965 have operated as a bank, as a proper Central Bank, applying no rigid ratio but determining the amount of credit that should be available related strictly to the economic circumstances of the time. That is what we proposed and now, ten months later, we find that our proposals are apparently accepted.
Also in the course of the general election we referred to the necessity for the control of the Government's capital programme, with its effect on the creation of demand and so on:
A good deal of the total investment in the State is undertaken in the public sector of the economy by the Central Government, Local Authorities and State bodies. Whilst some portion of the public capital programme depends for its implementation on decisions outside government control, the bulk of the investment undertaken in the public sector is under the direct control of the Government. Government forecasting of its own expenditure has, however, been inaccurate to a considerable degree. Reform in the machinery of government will be necessary to ensure that detailed and accurate estimates of future investment in the public sector can be undertaken. At present, investment, particularly social investment, is haphazard and uncoordinated. A further defect lies in the lack of adequate machinery for inspection and criticism of the capital programme of the Government.
Today we have the Minister saying that, in relation to this question of the capital programme, the aggregate demand, he now accepts what is contained in the NIEC Report, that there is need for greater attention to priority, that guidance is necessary and that some machinery must be devised to inspect and co-ordinate the expenditure decided upon. Again, in that regard our views have been justified.
I mention this because I saw in one of the newspapers this morning or yesterday some comment to the effect that this debate here today was a peculiar one. It follows the tabling by the Fine Gael Party of a motion which is being discussed with the Government's motion. Fine Gael tabled their motion on 23rd November before this Report was published. In that motion Fine Gael again call for an incomes policy and ask the Government to take steps to initiate such a policy "designed to secure a continual and orderly growth in the economy." We were informed last week that the Government were going to give time for the discussion of our motion, and that was agreeable to us. Shortly afterwards, we were told: "no," that the Government would put down a motion of their own, and they put down this motion moved by the Minister today. It is precisely the same thing. It is rather peculiarly worded. I suppose the object has been to enable the Government to have the last word in this debate. If that is what they are after, there will be no hard feelings in that regard.
We are faced here by a proposal which is in accordance with the things we believe in. It is in accordance with the policy we have advocated. We are entitled to point out that those who now proceed to advocate our views and assert our principles were the people who not only strongly opposed the things we stood for in the last general election but who also have on their own account a pretty poor record as far as administration and industrial relations are concerned. Remember that part of what the Minister asks us to approve here today is this statement—and if I were Leader of a Government who could have this said of his administration I would be tempted to get out—here is what the Minister for Finance asks Dáil Éireann to approve of. It is a comment on Government administration in this country over the last couple of years. On page 6 of the NIEC Report the point is made:
The acceleration in the widening of the trade deficit in 1964, therefore, was the result of a decline in competitiveness and an increase in domestic inflationary pressure, which were in turn the result of increases in money incomes and a substantial increase in investment facilitated by an accelerated rate of credit creation. These developments were accompanied by changes in the distribution of the real national product and by growing and active dissatisfaction with wage and salary differences and with differences between wages and salaries and other forms of income. The dissatisfaction with income distribution and with differences between incomes must be regarded as a real danger to economic stability in the immediate future.
That is a comment on the effect of the manner in which this country was governed in 1964 and the years before it.
What kind of leadership had this country in those days that could have permitted a situation of this kind to develop? We were in the process of ending one Programme for Economic Expansion and embarking upon another. What kind of planning took place that could have resulted in a situation in which there was a decline in our competitiveness on the export market, an increase in domestic inflationary pressure and a substantial increase in investment facilitated by an accelerated rate of credit expansion? What kind of planners had we that could not have enabled some programme to be drawn up that would have allowed this country to trade on satisfactory terms with our competitors abroad and, at the same time, provide for the development of our economy the necessary credit and secure that it would be available?
We are entitled to point out that a Government of whose period of office that appalling indictment is made in this Report, have a particularly poor record in relation to this whole question of wages and incomes and industrial relations. It is worth recalling that in 1960 the Taoiseach, as head of the Government, opposed the seventh round of wage increases. He said the country could not afford it, although it is now clear, and is made clear in this Report, that that increase was fully justified. But the Leader of Fianna Fáil opposed it at that time and said the economy could not support it. In fact, the seventh round, judging by this document here, did not affect our competitive position abroad. In other words, what increase was granted in the seventh round was quite within national productivity and was a proper increase.
In 1961, just prior to the general election of that year, the Taoiseach personally, as Head of the Government, by direct Government intervention in the ESB dispute of that year brought about the eighth round 12 months later by actively convening Dáil Éireann in the month of August. Forgetting why he had brought us here, he initiated the eighth round arising from the ESB dispute. Whether the eighth round was justified or not in 1961 can only be decided by the result. The result undoubtedly was that in 1962 this country lost its competitive position on the export market and there was a definite down-turn in the economy. Therefore, the eighth round, if considered in relation to our competitive position, was probably not justified— but it was the Taoiseach's responsibility.
When the economic recession of 1962 was upon us, when it was being experienced, we had the next step—the publication of the document Closing the Gap in February of 1963, in which, in paragraph 4, the Government condemn the eighth round of wage and salary increases and declare that the granting of the eighth round had, in fact, upset the balance between incomes and output. Having made that condemnation in the document, Closing the Gap, an appeal was made for a voluntary wage restraint until national production would have caught up with the eighth round and a guarantee given, in paragraph 18, that the Government, on their part, would ensure that there would be a reasonable stability of prices and external payments. That was set out in Closing the Gap in February, 1963—the Government asked people to restrain wage and salary demands and, at the same time, guaranteed a maintenance of stability in prices. Six weeks later, in came the turnover tax and, with it, as Deputies will recollect, a spiralling of prices all over the country.
When the turnover tax went into operation in November of that year, it resulted in one of the most dramatic upward surges of prices this country had seen for a long time. We know the result was the coming into operation, at the beginning of 1964, of the ninth round of wage increases and the result from that, throughout 1964, was a further spiralling of prices and of the cost of living. Up to that, I think it is fair to say that whoever was responsible—whether or not Government Ministers have the facilities available to them, one would imagine they would— there was no mind trying to work out the proper operation of our economy.
Decisions were taken in a stopgap way. The ESB dispute, on the eve of a general election—give them what they want. More difficulties in relation to other elements—a sudden decision. The result, over the years we have been considering, has been a stop-go in relation to our economy. There has been no planning, no leadership, no assessment of what was required to be done. Throughout all that time, this Party was demanding an incomes policy; this Party was trying to get the Government to have regard to projected growth in national output in relation to incomes generally; this Party was trying to suggest that this vital matter of industrial relations should not be settled at the point of a gun: this Party was suggesting that a crisis should not be allowed to develop but that the matter should be settled immediately, logically, in a planned way and that, if that were done, we could look forward to retaining our competitive position abroad, because we exist on exports, and that the economy could expand at least logically and inevitably. But there was none of that.
After the introduction of the ninth round, we went into the year 1964, the year of the great spree, the year in which unfortunate workers in this country found suddenly they had a larger pay packet but, when they went to use it, they found it was just so much illusion; the year in which credit was doled out all over the country; the year in which anyone wishing to speculate on the Stock Exchange could go to his bank manager and could immediately ask for a loan; the year in which millions and millions of foreign money came pouring into this country—some £36 million in all— the year in which prices were rising, inflation was rampant. What were the Government doing? How were they controlling the situation? Ministers were going around to banquets, like so many good-time Charlies, talking about the golden days, talking like golden boys about the wonderful prosperity that was around the country. All this euphoria was created and all the time, abroad, our competitive position was disimproving but it was being concealed; the widening crack was being covered by the inflow of foreign capital.
I suggest that a Government responsible for allowing that situation to develop are a Government that have not done their duty by the people who elected them. Surely the Government had available advice from their Departments to see what was happening? The Fine Gael Party saw it. In this document, published eleven months ago, we pointed to the fact that there was danger in an undue reliance on an inflow of foreign capital. We pointed to the fact that industrial relations and an incomes policy should be developed. We pointed to the fact that there was no inspection, no control. no mechanism for doing it in relation to the development of the Government's capital programme. We pointed to the fact that the demand upon the resources available to our community was not foreseen or controlled in a logical way. We asked for planning, for leadership, for some effort by Government Ministers to sit down and work out a sensible programme. That has not been done.
Fianna Fáil won the last election. It was a democratic election and they were elected properly by the people. It may be one of the bitter things in politics that, when an election is over, one's opponent proceeds to wear one's own clothes, to run away with one's pants: that cannot be helped if it will add up to the national benefit. When I criticise Fianna Fáil for their opposition to our policies in the past, that is not to say that I resent their advocacy of those policies now: I welcome it. I consider it a good augury for the future that a political Party can, in so short a space of time, realise the evils in which they had been floundering and realise the mistakes they made in opposing principles that had emerged so clearly as being the right and proper ones.
At the same time, I am bound to assure the House that these are late days. This is the month of January, 1966. How different Ireland's story might have been if, last March or last April, before the storm clouds proceeded to throw down the heavy rain, in a period of calm, a better incomes policy had then been embarked upon and if thought and consideration had then been given to the development of the things which the NIEC now suggest. Of course, that was not done and, in the period since, we have had an appalling situation. The Government, having been elected back to office, found themselves—whether or not they expected it, I shall not dwell on now—with the economic indicators pointing to stormy weather. That stormy weather has come in the months which have ensued. But, throughout all this, our industrial relations in this country have taken a nose-dive.
I have here the International Labour Organisation assessment of the effects of industrial disputes in this country compared with other European countries. The position is that in relation to the number of days lost through industrial disputes per 1,000 persons employed, this country has the highest figure of all countries in Europe. We have 1,580, the next nearest being Italy with 1,270. The amount of productive time lost in this country through industrial disputes is the highest in Europe. It was that danger we in Fine Gael had in mind when we suggested an orderly development of a prices and incomes policy so that decisions would not have to be made in the height of a crisis, with two sides with their hackles up, the danger of many thousands of others being hurt, and then a panicky concession or a panicky acceptance of an offer. Those are not industrial relations. They lead merely to further disaffection; to revenge on one side and to a determination on the other to be tougher next time. All that leads to industrial disputes.
Over the past 12 to 18 months, our economy has been pock-marked with strife and dissension, with bad feeling, with bitter complaints in relation to employer-employee relationships, and all the time the Government have been going around not knowing what to do, with ministerial speeches at dinners tut-tutting this and that, but with no leadership given. It is the logic of events that is forcing inevitably—and has forced inevitably—a realisation of principles which guide this Party. It was last October, before the NIEC Report was published, that the Taoiseach announced, despite his earlier rejections, his support for an incomes policy. In a speech published in the Irish Independent of October 27th, 1965, having condemned our incomes policy in the past, he suddenly came out to say:
An incomes policy is a fundamental requirement of continuing economic growth, and it is also the foundation of a just social policy, which must involve a degree of income redistribution.
That was on 27th October. The NIEC Report was published on 25th November. It is, I suppose, a coincidence that that particular paragraph which I have quoted appears precisely in those words in the NIEC Report. Was it just accidental, or did the Taoiseach happen to get an advance copy and decide to climb on the bandwagon quickly and make a speech in favour of an incomes policy because he knew the NIEC Report was coming out in favour of the Fine Gael view?
In any event, the argument is over and on all sides of this House—I assume this to be so—there is now general agreement on the validity of the proposition that if we are to continue to be a viable country in the competition that lies ahead, we must be intelligent in the way we plan our own efforts. We cannot continue to price ourselves out of export markets; we cannot continue to take decisions affecting the economy as a matter of political gesture, or in the height of a crisis, or something of that kind. We must plan what we intend to do. The NIEC Report mentions that if we allow a completely uncontrolled series of industrial disputes throughout the length and breadth of the country, we may jeopardise the employment of 30,000 workers and, indeed, jeopardise the viability of this country in the immediate future.
That brings us to what now has to be done. The water which has gone under the bridge cannot even be put into a bucket: it is gone, and what might have been will not solve the problems of the present. It is here I want to express some concern. I did not gather from what the Minister has said any real idea of what is the Government's advice in relation to the present situation. The Minister used a number of—and I hope he will pardon me saying this—clichés, that wages and incomes must keep within the growth of national production; we must preserve the real value of wages —and words of this kind which we have all heard so often—but what does he suggest be done? At the moment we have in this country almost two armed camps—the employers and the employees poles apart. What is going to bring them together? How far should they come together? What is the Government's lead and advice on this matter? Leadership is required at this juncture. It is no good the Government or anybody else pooh-poohing the present situation and saying: "Lads, do the best you can." That will not solve our problems.
I had hoped that the Minister would have given some indication of Government thinking in relation to this. How far can the economy afford to go? How far can we afford an increase in purchasing power this year and for how much of the year? The Minister says that the £1 a week suggested by the trade union movement would represent an increase of seven per cent, or something around £37 million. Is it suggested that everyone was to get £1 a week—male and female workers? Is it to be suggested that the £1 a week is to operate throughout this calendar year? The Minister says if it does, it will represent seven per cent and, apparently, the economy cannot afford that.
There are other things which should be mentioned. We will have a lesser increase in stocks this year, cattle stocks and other agricultural stocks. That will mean there will be that reduction in demand—of what order one does not know. It is suggested that it might be of the order of £10 million.
The Government come in for some justifiable criticism even on recent events. There certainly has been a sharp drop in the number of persons employed in building construction works, according to the latest figures in mid-December which show a drop of about 1,370. Although most employers held on to their employees at Christmas because of Christmas boxes, bonuses and so on, there has been a marked recession in the past two or three weeks in that industry. Did the Government know of that? The fantastic things is that unless the Government get some results very quickly, this will continue to be true. Despite the reform of the capital building programme, the Government at no stage were aware of the volume of building work actually in operation. I have no doubt it came as a shock to them to find a marked reduction in building employment in the figures for mid-December. But anyone could have told them that: anyone could have told them that in the past eight or nine weeks there has been a definite reduction in a number of starts in building and a reduction in the amount of building being done, largely due to the fact that the Government too peremptorily and too drastically cut their own building programme. This indication shown by the building barometer is a most serious one, if we are to have a recession of that kind in building employment, which in my view is totally unnecessary and should not have taken place if the Government had the means of carrying out its own capital programme.
The Minister for Finance assured the House that some £31.9 million would be spent on public buildings this year. It has not been possible to do it because he had not the facilities available and this again is something in which we, I think, have been proved right. If there had been a Ministry of Economic Planning whose concern it would be to see that a capital commitment in the country's yearly programme was carried out we would not have had these difficulties nor the situation in which the Government suddenly find they do not know from one stage to another what the volume of building in the country is likely to be. I do not believe it is intended unemployment—I am certain that would not be so—but if we have unemployment growing in the building industry, undoubtedly the Minister need not worry about difficulties in regard to aggregate demand because there will be room left for wage adjustments. Whatever the figure may be, if we can afford this year another £25 million or £20 million in increased purchasing power because of the run down in stocks, the reduction in employment, how is this to be divided? Could the Minister indicate what the Government's view is on that point?
The Minister for Agriculture tells us that we are going to increase cattle exports by 150,000 to 200,000. I hope we do; certainly we have the means to do it. If we do, that is £10 million more coming into the hands of our farmers. Do the Government approve of that or will they stop it? Will they prevent £10 million being earned by the farmers by fiscal or monetary methods? And if the margin for increased purchasing power is £20 million with £10 million going to the farmers, does it mean that the workers and salary earners will squabble about the remaining £10 million? These are the things the Minister should tell us. After all, the Government should not be a sleeping partner in the country; they have an active role to play, to guide, to lead, to plan and to give the country the advice required particularly in times of crisis. In this regard I fear the Government are failing us sadly at present.
Whatever the industrial setup may be at present I hope it does not happen that anyone will allow the present situation to bedevil the development of an incomes policy, because, mark you, even if it were possible—I do not know whether it is or not; I have neither the figures nor the information —to settle the present wage demand by the wholesale application of a £1 increase, that is not an incomes policy and if a settlement were achieved in that way I hope the Minister and everyone else will not breathe a great sigh of relief, put away the economic statistics and so on and go off to play golf or something else. It is only when this crisis is overcome that the situation and climate can be ripe for the development of an incomes policy. It can only be done with the co-operation and approval of all sections of the community and a general feeling of goodwill. That is why it is so urgent that the rancour and cancer of industrial dissension should be removed as soon as possible from our economy.
In my view, we have a very short time to gather our resources and build up our economy in relation to competition abroad. We must develop an intelligent knowledge of how to do it; we must get all sections of the community working in agreement for the development of our resources and the development of our ability to sell goods abroad and to beat our competitors in so doing. That is why industrial dissension, while it may have the immediate effect of reducing progress and undoubtedly we suffer more than any other country in Europe in that respect, it may also have the effect, if there is a lack of foresight or knowledge, of depreciating our competitive position abroad. That also would be disastrous.
It is only when the entire field can be cleared of difficulties of this kind that everybody can get down to doing what should be done, that is charting in an intelligent way how our resources shall develop in future; how we can make a partnership of employers, employees and the Government so that the country can expand. We in Fine Gael are gratified that so many of the things we stood for are now being more generally recognised. We are gratified that the courage and resolution that 12 months ago enabled a political Party to come out in a strong and assertive way with new ideas and principles, who had to face and suffer from misconceptions and misconstructions and from the old cries of "It's your money they're after" and all the rest of it, have borne fruit. We are glad that we have survived it and that now, at a time of crisis in this country, the Dáil is listening in assuredness to the things we advocated and the country is likely to follow.
