Léim ar aghaidh chuig an bpríomhábhar

Dáil Éireann díospóireacht -
Wednesday, 26 Jan 1966

Vol. 220 No. 2

Economic Situation.

Debate resumed on the following motion:
That Dáil Éireann agrees generally with the views and recommendations contained in the Report of the National Industrial Economic Council on the Economic Situation, 1965, which was laid before Dáil Éireann on the 24th November, 1965.
—(Minister for Finance).

Last night Deputy Harte was anxious to know the opinions of other countries of the action taken by the Irish Government in 1932. I want to give the Deputy a statement from the Minister for the Interior in Rhodesia, reported in today's issue of the Irish Times:

With far less resources than we have, and a much poorer trading position, Éire stood up at close range to the anger of Great Britain and the same vindictive sanctions.

Britain and her allies did everything possible to smash that proudly defiant little country standing firm on its democratic rights. Today, the sovereign independence of Éire is internationally recognised and the country which refused to give in to the same threats, bullying and vindictive sanctions that we now face enjoys prosperity and happiness it never knew under British rule.

Who said that?

Read the paper and you will see.

Smith's man said it. The Deputy should be ashamed of himself. His own Government are against Smith.

Let those who joined Britain in endeavouring to enforce these vindictive sanctions ask themselves where they are.

Last night I made suggestions which, if adopted, would have a very good effect on our adverse trade balance and on our economic position. I would suggest that it is not asking too much of the Minister for Transport and Power that he would bring together representatives of Irish Shipping, the B and I Company Limited, the Verolme Dockyard and the Liffey Dockyard with a view to evolving ways and means by which Irish ships can be overhauled and repaired in Irish dockyards, giving permanent employment to an extra 100 people. I do not think that would impose too great a task on the Minister for Transport and Power.

I have here a newspaper cutting which indicates that a shortage of bingo tickets is the latest problem caused by the strike in Dublin port; that these tickets are printed in Britain and distributed by a city firm which have now notified its customers that its supplies are at rock bottom; that in some of the bigger halls thousands of these books are consumed every week. I recommend this matter of bingo to the kind attentions of the Minister for Finance when he is preparing his Budget. He has a very ready means of dealing with people who, while carrying on this game here, send abroad for tickets rather than give employment to Irish people in the printing industry.

I have another communication from an unfortunate man to the effect that he got a parcel at Christmas containing a pair of Irish-made football boots, that the attached tag indicated clearly that the boots were made in Dundalk, that he congratulated himself on contributing to the success of the Buy Irish campaign until, on turning up the boots, he saw "Made in France" stamped on the soles.

Will the Deputy say from what he is quoting?

I am quoting from last Thursday's Irish Times. I have a whole pile of these here, including the £17,000 organ for the Galway Cathedral, which is coming from Liverpool. Surely a little bit of thought on the part of these people could completely change the present unsatisfactory aspect of our trading? Surely a little bit of patriotism on their part would spell an improvement for our economy? I have dealt with the Government-subsidised industries which are also engaged in this game. If these and the private firms showed a little more patriotism, our entire adverse trade balance could be wiped out within 12 months.

I was very glad to hear Deputy Noel Lemass suggest a minimum wage when he was speaking here last night. When we speak of an increase of £1, I suggest we should start with the lowest paid worker in the State. We had occasion 12 months ago to deal with a State firm, the Irish Sugar Company. The price of beet is fixed on costings. It is the only agricultural product in relation to which the price is based on cost of production. Our costings, agreed to by the Sugar Company, showed that we were entitled to an increase in price because of the rise in costs. The Sugar Company refused to give that increase and we were forced to take strike action. We were forced to strike mainly because the £20 a week and the £100 a week gentlemen were not prepared to pay an extra halfpenny on the lb. of sugar. The beet season is over now, but the result of that will be seen in the extra cost of £1 million imports of foreign sugar within the next 12 months, adding still further to our balance of payments problem. When we interviewed the Sugar Company some two months ago in order to get the company to fix the price for the 1966-67 beet crop, we were met with the position that they were unable to pay any increased price. We accepted that. In my opinion, there will be a further reduction in the acreage of beet here in the next 12 months and that will mean a further reduction in sugar manufacture.

I give the facts as I see them. The price of beet is based on a wage of £7 a week for an agricultural labourer. When I hear complaints here and when I discover there are people looking for a 40-hour week and a wage of £20 per week, I wonder if they would not be prepared to pay an extra penny on the lb. of sugar so that their comrades working in the fields at £7 per week would get the increase in wages to which they are entitled.

There is another firm here in Dublin which gives considerable employment and which has a couple of million pounds profit each year. I crossed swords with that firm last Friday and they assured me that, despite the profits they are earning, they could afford to pay no more for malting barley than the price extracted from them in 1948, namely, 57/6 per barrel. That price was extracted from them in 1948.

By Deputy Dillon.

No, Deputy Corry. At that time Deputy Dillon had fixed a price of 50/- and I put another 7/6 on it and got it. These are the facts and facts are stubborn things. If the farmer can get for what he produces on the land only the same price as he got 15 years ago, how can we look for more production?

Hear, hear.

Is it any wonder that there is a flight from the land and into industry? Thank God, we have industries in my constituency to absorb these workers. But these are the conditions in which the farmer has to live and try to eke out a livelihood. These are the conditions under which he has to pay an extra 20 or 30 per cent increase in rates on agricultural land each year. These are the things I want considered and rectified, long before we consider the five-day a week boys and the £20 a week boys.

I can produce proof of what I say. I had an agricultural labourer working for me for some 20 years. He reared a very decent family. When the boys were 12 or 13, they worked during the holidays thinning beet and so on. As soon as they came to 17 or 18, they came to me looking for a letter to Ford's or Irish Steel. A month ago the wife of one of them wrote to me asking if she could get a medical card. She has six children.

She will not have that problem long more.

The matter was investigated by the manager of the health authority and he wrote and told me that the husband's earnings in Irish Steel during the previous 12 months amounted to over £1,100 as an ordinary labourer.

He must have been working day and night.

He was a good worker.

He cannot have been working for a farmer anyway.

I am just making the comparison between the £20 a week, the £1,000 and the £1,100 a year in industry and the man producing sugar with a wage of £7 a week for these people to eat. I think the comparison is a fair one. I say, first things first.

What about the in-betweens?

The Deputy is not an in-between fellow by any means. If increases are to be given, the first increases should go to those lower-paid classes in order to bring them up to a fair standard of living. Those of us who are in agriculture have seen over the past eight or nine years the skilled men on the farms getting out. I do not grudge any man the highest wage he can get. It is bad practice for people to be ground down for fear of some little increase in the cost of living, while other people got an extra £400 a year, perhaps, to cover the cost of living in the past 12 months. That kind of thing must cease. That example was first shown by my brother-in-arms over there, Deputy Dillon, and by the former Deputy Morrissey when he wrote down to the Sugar Company saying: "The previous Government have been far too generous with the farming community and we cannot agree to any increase in the price of beet during the coming year."

There is not a scintilla of truth in that statement.

That was said. The two Ministers involved were the then Minister for Industry and Commerce and the then Minister for Agriculture, Deputy Dillon, who admitted in this House that £1 million a year was slapped on the backs of the beet farmers and he knew nothing about it. Those are fairly stubborn facts. A little bit of patriotism and courage on our part can change the whole aspect of affairs in this country, can change it as in my opinion it should be changed.

However, while there is one picture of the farmer endeavouring to work with no profit as he did last year at the finish of the beet campaign, there is another picture of the fellow who invests his money in a bank and gets 22 per cent on his shares. I refer to an announcement in the Cork Examiner today to the effect that the Hibernian Bank Ltd. paid an interim dividend of seven per cent, less income tax, last August and that it is now proposed to pay a final dividend of 15 per cent, less income tax, that is, 22 per cent for the past 12 months. Those are the people who have no money to lend anyone today. As long as we have those conditions in regard to finance, so long will we be in trouble.

I am anxious to see this country going ahead, to see our people getting employment. That is what our comrades died for. Every year there are goods coming into this country which should not be imported. Worse than that, 75 per cent of the advertising time of Telefís Éireann is occupied with advertising foreign foodstuffs which are in competition with what our own people are producing. It is about time that dirty game was stopped too—Surprise peas and all the rest of it.

My main interest in that is that some two years ago we started a little industry in east Cork to give employment to our people and a decent livelihood on the land to our farmers. It has worked out successfully, more than successfully. Last year the net profit on peas was over £60 per statute acre. That is a big improvement on the previous position and there could be further improvement, because this year we had to import foreign peas to supply the home market. The opening is there for us. That opening is largely a question of finance, and I made what I consider was a very fair offer to our people, namely, that for every contract a farmer got for one acre of peas, he would take ten shares in the factory. They grew 350 acres last year and on that basis we had applications for 1,380 acres of peas in east Cork. It is now up to Erin Foods Ltd. to do their part in developing this industry.

That is an honest way of meeting the present difficulties. At the moment there are 100 people employed there. With further expansion, we shall have 250 or 300 employees there next year. That is the kind of employment I want for our boys and girls, employment with decent working conditions and provided from the produce of our own land. A little more of that and a little less of the groaning and grousing we hear would go a long way towards making this country more happy and contented than it is at present. When proposals of that description come up, I suggest they should receive the earnest attention of the Government in so far as financial aid is concerned.

I do not wish to delay the House but I should like to say I was amused at a question asked by Deputy Corish today about early marriages and I should like to quote a passage from the Cork Evening Echo of Thursday last. It will show us that despite the tightness of money, we must admit that the first Minister to appreciate the difficulties of the ratepayers of this country is the present Minister for Health. He has come to our assistance this year and thereby indicated that he has the utmost confidence in the future of this country. Here is what the Cork newspaper states:

The maternity cash grant paid by health authorities to women in the lower income group (that is, those entitled to the general medical service) to be raised from £4 to £8 for each confinement and the grant to be doubled in the case of twins, trebled in the case of triplets and so on.

This, of course, has no relevance to the motion before the House.

Nothing could be more relevant than the fact that we have a Minister who does not think we are bust, as Deputy Dillon does. He is a Minister who has confidence in the future of the country and who is prepared to prove his confidence by doubling and trebling the maternity allowances in the early marriages Deputy Corish asked about.

It might be a matter for the particular Estimate but it certainly is not relevant to this debate.

Surely it has to do with production.

I am suggesting that if the Minister for Agriculture saw fit to give double for twin calves, we would come out a lot better on the agricultural side. I have made my case as fairly as I could and I only hope that some of the views I expressed will be listened to and acted on.

Mr. O'Leary

In the course of this discussion, nominally on an incomes policy, I have been somewhat disappointed by the contributions by Government Ministers. It is true that the report of the NIEC was a good one of its kind, in that it did not injure any particular interests, in that it spoke in general terms of what were desirable objectives and about an incomes policy. Therefore, we have a situation in which every Party in the House can agree on the general sentiments of the report. Why there is ground for disagreement is, perhaps, because the Report does not go into the difficult question of incomes policy implementation. I suppose it was not the desire of the NIEC in the first place to do so. Naturally, we looked to the Minister for Finance and other Government spokesmen to enter these areas and to tell us how they intend going about the implementation of an incomes policy. It seems to me, judging from their comments during this debate, that while talking about an incomes policy, they felt that the real culprits before us in this debate have been the trade unions.

That is why I have been pretty disappointed that we have not heard anything of this bright new world in industrial relations which the Government wish to inaugurate. In using this term "incomes policy", the Government do not appear to give it more significance than just another fashionable cliché that it may be convenient to use at this time. While in general we are all in favour of a rational increase in all forms of incomes—that they should move in accordance with a predetermined plan—the implementation of this plan is another matter and this debate has not taken it much further on the road towards implementation to judge by the contributions of the Ministers who have spoken. Questions have been set but no indication given of the answers necessary on this subject. There has been general talk about the relationship of income growth to productivity growth, but can there be productivity measurement on an industry by industry basis? What, for instance, can be done on a measurement basis in the transport industry? How would one measure the productivity output in that area? What would it be in the sector of distribution, in the area of the Civil Service, the teachers, in the service industries?

In discussing the other side of an incomes policy, without which there cannot be any relevant discussion, namely, profits, we expect an answer on how we can go about the question of regulating distributed profits and what are the realistic methods in that area. We can ask if banks and other lending agencies will be required to regulate their charges in accordance with predetermined profit growth rates. In two-thirds of our national income area, the application of an incomes policy will be extremely difficult. We could ask about the control of incomes in the case of the sole traders and of partnerships.

It is in these areas that I would expect a Government seriously intent on an incomes policy to go about the matter of informing us. If the Government are serious about investing with reality and expanding this idea of an incomes policy, they should furnish answers in these areas. It is true we cannot adopt the measures of countries that have less green paint politics than we have and a little more of what we used to call in the old days independence. We cannot adjust the foreign exchange rate of our currency in the way they can, but if we are serious about an incomes policy, we must spell out what we mean by that policy.

An incomes policy is invariably discussed in the context of an economy not subject to as much external influence as ours is. The feasibility of an incomes policy, without which there as ours is open to question and on this issue, we should like to have answers as to whether it is practicable at all. Where attempts have been made to evolve an incomes policy in Europe they have been made in conditions of full employment. The type of full employment they enjoy we do not know: the full employment we are seeking is not the same as they had in these continental countries. In these countries it means the avoidance of temporary upsets at the end of a cycle but what we are seeking is the creation of new employment. This debate on an incomes policy should extend in scope into boardroom policy and into the company directors' meetings and not be concentrated on the trade unions only.

This debate should not have been turned into another opportunity providing one of those grand designs on the trade union movement, of listening to the moralising of people who know nothing about the trade unions. We had thought these people coming forward in this debate would have spoken about how an incomes policy was to affect them in their respective ways of life. Those Deputies who are company directors, how was the incomes policy to affect them? The OECD Report on this subject in its examination of how this has been tackled in Europe, whether on profits or price structures dealt with all the difficulties of introducing even a form of price control, about all the ways in which public control in this area can be superseded—how, in fact, any measures we set down here can be superseded.

Our Party here last year supported the prices measure which the Government brought in at that particular time. We were aware of the Bill's deficiency but at least we showed our own interest in this area by strengthening it in several respects. We are glad our contribution at that time had the effect that we did help to bring in on this measure, a clause for investigating specific prices that were too high at any particular time. Legislation for implementing an incomes policy is just not there at present. No evidence is given in any of the contributions we have heard from Government spokesmen in this debate that it will be shortly introduced. In fact, one might question, in this area of seeking to have profits and unearned income conform to certain laid down criteria, whether a policy that has been pushed all along on the basis of success being with those who make the highest profits, can be serious when in fact it is now said that they wish to introduce control over these incomes.

Much play has been made in this debate of the culpability of the trade union movement over the past year or two. No Deputy in this Party has a brief for any particular trade union but since this debate on the problems of an incomes policy has not touched on other people in our community and has centred on the trade union movement, I think, in all honesty, I should rebut some of the wild charges that have been made about the trade union movement. I think the trade union movement, since this economy began to expand in 1961, has played a responsible part in our economy. Their responsibility has been shown in their participation in the Committee of Industrial Organisation, a participation that was never invited. We have played a responsible part in all the embryonic decision-making on the way our economy should operate, which in recent years, has been a feature of our economic life.

We had been speaking generally in a wilderness in previous years and, if you like, without fully fleshing our concepts. We in the labour movement have been talking generally about the need for planning our economy. We had been saying in general terms that there could be no progress unless there was an ordered progress, a rational progress, and unless it had definite aims in front of it. We had grown so accustomed to our arguments that we may have considered them to be particularly our own. We see those same objectives and aims adopted by other Parties, and more luck to them, but if they adopt those policies and aims, it is not merely enough to adopt them but they should say what are the steps they propose for implementation of those ideas. If the Party are in Government, they should tell us what legislative machinery there is or what steps they will take in the next few years to make them a reality.

The trade unions participated in the NIEC and contributed to the decisions they have made in recent years on the way our economy should go. Their participation in those organisations could be regarded as a limited culmination of some of the objectives we had. We must stress a limited culmination because though their reports are excellent and are as nearly as possible impartial, they really leave the job of making the decisions to the Government of the day. On the basis of those reports, it is the job of the Government to make those decisions. It is not enough for the Government in power to approve of those reports and to come to the House presenting a report of civil servants and expect applause all round. In doing so, they are failing in their responsibility. This Report sets out the case clearly and it is the job of the Government to make the decisions in this case. It is up to the Government to utilise this Report and not evade responsibility by failure to bring decisions forward.

We could ask what use are excellent reports to a Government, whose Chief Executive, the Taoiseach, up to a short time ago was scoffing at the entire idea of a prices policy and, up to quite recently, called an incomes policy impractical. I do not wish to make any sniffle for inter-Party achievements but I do not think it is sufficient for the Government to come to this House with a Report of this nature and make no further suggestion as to how an incomes policy is to be brought nearer. I think all of us should strive to look at the facts impartially at the present time. I do not think I should, as a junior Deputy, emulate the kind of treasonous opposition of the Fianna Fáil Party in relation to the 1956-57 economic problems.

We are faced with economic problems at this particular time but the Government in power are burdened with the task of leading us out of those difficulties. They should tell us how they propose to get us out of this trouble. We have developed some of the tools of economic planning which the Labour Party have been looking for for years, in the NIEC and elsewhere. Far more of this planning machinery will be necessary before, in fact, we can say we are fully in charge of the economic decisions in this country. We have a democratically elected authority and yet the influencing of credit is the sole prerogative of banks and other credit agencies. We have no control over the day to day policies which determine the activities of manufacturers and exporters. I do not see how we can really proceed on an ordered economic growth in all forms of income when the people in charge of the real economic decisions are not subject to any democratically elected control. If we want to be honest, we must say that the position of the Taoiseach and other Ministers is that of punters guessing at form. They are really punters guessing at economic form and pretending to be omniscient over an abyss of ignorance with regard to the real decisions. They lack control over the real levers of economic decision in our economy.

A Government have a right to look for an incomes policy in this country when they are prepared to meet three necessary conditions: firstly, an assurance of rising production and rising incomes and telling us how this is to be achieved—if restraint is asked of any section of the community that restraint should be shown to be exercised in relation to other sections of the community; secondly, an assurance that equity and social justice will determine the policies and that those most in need will get the utmost benefits from the direction the economy is going; and thirdly, that what is asked for in respect of wages and salaries should also apply equally to profits and dividends.

I have said I have had a feeling during this debate that many Government spokesmen are using the idea of an incomes policy as a convenient 1966 cliché, and particularly at this particular time because they have not told us how this is to apply in the area commonly described as the employers' area. Anyone who has looked from time to time at our tax system knows that property incomes in this country are elusive. We do not know how to work out how much is involved and it is sometimes beyond the subtle brains of the tax office to work this out. This is not merely the talk of someone in the Labour Party. The Brussels Commission on the economic situation in the Common Market only a year ago referred to this danger when they said there was a danger that with information on other categories of income being less accurate, or non-existent, the weight of any restrictive measures contemplated would fall on salaries and wages.

That is the danger I see in this talk about an incomes policy, when the Government do not show themselves determined, or indeed interested, to see how it will operate on other forms of income. So, in fact, by a long route, and by much circumlocution, when they talk about an incomes policy what they are really doing is talking about a wages policy. I recommend to each member of the Cabinet, if they are interested in the problem of how an incomes policy would operate in this private ownership area, a very interesting book by Professor Titmus on incomes distribution and social changes. I recommend it to each member of the Cabinet. This book documents in somewhat painful detail some of the methods of camouflaging income in this area.

Unless everyone is serious about this policy, our Party have no intention of standing over a situation which, without the measures I have mentioned, will rapidly become a jungle of self-financing, depreciating arguments and corporate income switches in which the trade unions will be the babes in arms. It is true that the NIEC Report mentions some of the problems in this area, but it does not go into all the difficulties involved. One would have thought that a Government who have seen fit to talk about a three per cent rise for a section of the population would have been more explicit about the methods to be used in the formulation of an incomes policy for the other people in the community. I may be forgiven for saying that it struck me as a new Deputy from the opening remarks of the Minister for Finance that the economic thinking on this matter of incomes was back to the Closing the Gap period. Here was the same obsession with wages as the only form of income that needed to be controlled. Here was the same lack of imagination about the effect on industrial relations, and the same failure by the Government to face up to facts in relation to other forms of income. This was the wage freeze all over again, without an all-embracing policy on incomes such as the use of the term would seem to indicate.

Only last week I was at a trade union conference at the national trade union centre. We have seen the effects of the last wage round whittled away not by wildcat strikes but by wildcat prices. These members exercised responsibility in their discussions last week. The National Agreement could have been saved, and when this Party called for some control of prices to save it, the Taoiseach and the Fianna Fáil Government rejected the idea of price control. If we want to look for the saboteurs of the National Agreement it is to the Government of the day, during the lifetime of the Agreement, that we should look.

The Minister referred to an increase of three per cent for members of the unions, but I did not hear him say anything about the undoubtedly culpable part played by the other parties to the recent talks, in which it was a prior condition of the continuation of the talks that a blanket guarantee on fringe benefits would be given before there would be any discussion on wages. That was not the way to go to the conference table in any real negotiations I have ever taken part in. Despite what happened to the last National Agreement, the unions were anxious to conclude yet another national agreement, but they did not secure any co-operation from the other side. Flirting with clichés or with the idea of an incomes policy will not get the Government the co-operation they seem to desire from the trade union movement. It requires a lot more hard thinking than this Cabinet appear to have given the matter so far, before that co-operation can be had.

I was extremely disappointed in this debate. Listening to different Government speakers, I asked myself several times whether it was a wages policy we were discussing or an incomes policy. I did not hear any of the material or the detail I had hoped for in this debate. I would have thought the Government would have realised that this situation is not like previous situations, that we cannot get away with the same old tricks, because the tricks are beginning to be played out and the card deck is empty. We must have practical proposals. So far I have not heard this stressed in this debate. Perhaps the Government are keeping the best wine until last. I hope when the Taoiseach gets up to speak he will have a good bottle with him, because I have been extremely disappointed in the debate so far.

I want to draw the attention of the House to something to which I first directed attention seven years ago, and it is the practice which was then adopted of abandoning the principle of the anonymity of civil servants. The document with which we are asked by Government motion today to agree in general, the Report of the NIEC, is not itself signed by Mr. T. K. Whitaker, but the introduction to the Report which summerises its contents concludes with the statement that the full body of which he is Chairman concurs in and approves the contents of the Report.

I propose to make some reference to the contents of this Report which appear to me to reflect very gravely on the actions of the Government. Whether it is desirable that a senior civil servant should be placed in the position of passing judgment on an elected Government of which he himself is a servant is a matter to which I think Oireachtas Éireann should turn its mind, and determine for the future whether this should be permitted as a general practice. I do not want to conduct any debate with Mr. Whitaker. I feel it is highly undesirable that the names of distinguished members of our public service should be drawn up in a debate in this House.

The Secretary of the Department of Finance, whoever he may be, may be charged to serve faithfully any Minister for Finance whose appointment this House chooses to approve. It is highly undesirable, in my submission, that his name should be employed either in terms of approbation or depreciation of the Government which, of the time being, he is called to serve. Now this I fear is not confined to the document which we are at present discussing. We have had two so-called Programmes for Economic Expansion founded on a Grey Book which was avowedly the work of Mr. Whitaker and certain chosen colleagues. In the years that have elapsed since the appearance of the Grey Book signed by Mr. Whitaker and the two so-called Programmes for Economic Expansion, which were very largely attributed to Mr. Whitaker, every folly that the Government have perpetrated has been perpetrated under the alibi that it was in pursuit of the objectives of the Programmes, first and second, for economic expansion which, after all, were the handwork of the detached and omniscient Mr. Whitaker.

I do not think it is necessary for me to say that I yield to no one in my admiration for that distinguished public servant or, indeed, for the vast majority of those who serve the State in the Civil Service, but I want to sound this note of warning to the House: they are being put in an impossible situation if they are faithfully to discharge the duties which they are pledged to discharge, if they are called upon in public to express and pass judgment on the elected Government of this country. The duty of the Secretary of the Department of Finance is frankly to give his opinion to the Minister he serves and having deployed all the arguments that he considers it requisite to bring before him, then to learn from the Government what their policy may be on a specific question and faithfully to carry out that policy to the best of his ability.

We seem to be drifting into a situation in which the whole situation is being reversed and the elected Government are coming to this House and justifying their follies on the alibi that "We only did what Mr. Whitaker told us to do". But mark this grave danger, that when the Government come to the House and say: "We did this or that on the advice contained in Mr. Whitaker's publication," Mr. Whitaker's lips are sealed. He spoke once seven years ago; since then his constitutional position forbids any public pronouncement by him, until this document appears. It is remarkable that when you come to see who signs this document, his name is conspicuously absent from page 56 because it is signed by the members of the Standing Committee of the National Industrial Economic Council. His name appears only on page 10 where he expresses general assent to the Report of the Standing Committee and adopts their proposals. For seven years we have heard no comment from him; now the Government informs us that we are to accept his report as the basis of the justification of whatever the Government now proposes to do. Here is his verdict, according to this document, on the Government's performance.

I direct the attention of the House to paragraph 80 on page 55 which states:

As noted in Part II above, the total of bills, loans and advances of the commercial banks increased by £25 million between March, 1965, and July, 1965, despite the fact—

despite the fact—

that a policy of credit restraint had been in force since April, 1965. Of the increase of £25 million, just over £20 million is attributable to increases in Government bills and the balance is due to increases in loans and advances to the private sector.

If you turn back, Sir, to paragraph 24 of the introduction, on page 10, you will find that Mr. Whitaker refers to the impact of Treasury Bills on the general situation and he said:

The lesson to be drawn from 1964 is that there is a danger that an abnormally high inflow of capital may be used to allow a rate of credit expansion which cannot be maintained when the inflow returns to a normal level. This also applies to increases in bank liquidity resulting from abnormally large issues of Exchequer Bills which can have the same effect as a large capital inflow in increasing the liquidity of the banks and thereby permitting an expansion of domestic credit. The Central Bank will, no doubt, consider it appropriate to take action, should the above circumstances recur, to keep the rate of credit expansion in line with the requirements of economic growth.

We have come to a queer pass when the Secretary of the Department of Finance passes a vote of censure on the conduct of the elected Government of this country. Bear this in mind, the comment that has just been made refers to the total expansion in bank credit and I have knowledge that these are very complex matters, not easy to follow, but this Report emphasises that this vast increase in bank credit has been as to £5 million in the private sector and £20 million by the Government.

But on page 14 significant and alarming words are used to conclude paragraph 7:

If the Central Bank's advice to the commercial banks regarding the growth of total bank lending had been strictly complied with——

Perhaps I had better read all of paragraph 7:

Between 31 December, 1964, and 31 March, 1965, bills, loans and advances rose by £8 millions as compared with £12.3 millions in the same period a year ago. Between 31 March, 1965, and mid-July, 1965, the increase was nearly £25 millions as compared with £15 millions over the same period in 1964. The 1964 increase comprised a rise of nearly £12 millions in loans and advances in the private sector and £3 millions in Government bills. In March-July, 1965, on the other hand, loans and advances rose by £4 millions, but Government bills rose by over £20 millions.

That is a significant paragraph. I want Deputies to listen carefully to the conclusions which flow from that statement. The paragraph goes on to read:

If the Central Bank's advice to the commercial banks regarding the growth of total bank lending had been strictly complied with and had taken immediate effect, loans and advances to the private sector and/or lending to the Government would have been reduced. But the mechanism of credit restriction is such that this is not immediately possible—indeed, as the figures bear out, a short-run increase in the rate of bank lending is a not unexpected result of credit restriction as normally applied, for the tendency for customers to make full use of credit facilities already granted tends to outweigh for a time the effects of credit restriction on those seeking new accommodation or a renewal of existing facilities. This means that the effects of credit restriction tend to be uneven and arbitrary in the early stages; later, however, as more and more bank customers' credit facilities fall due for renewal, its effects become more evenly spread.

Developments since July, indeed, have borne out this view.

I know a man in this country and he had a shop. He dealt in grocery, seeds and manures. He was asked by his bank to reduce his overdraft by £6,500. He remonstrated with the bank and said it was practically impossible if he was to carry his customers. They told him they wanted him to do it. He liquidated his grocery stock and got out of the grocery business. He met their demands. In the last 12 months he reduced his overdraft by £6,500. Last Monday week he got a message from his local bank manager that he wanted his overdraft completely paid up. He went to the bank manager and said he could not do that. "How could I pay off the remaining overdraft in 48 hours?" he asked. The manager said "Do not talk to me. It is not my business. It is the man down from Dublin." The unfortunate man replied "Nobody can do that." The following Wednesday morning there was a receiver in his premises and a padlock on his door. "later, however, as more and more bank customers' credit facilities fall due for renewal, its effects become more evenly spread." That shopkeeper has discovered what "evenly spread" means to him. Of course, the gentleman who drew up that beautiful report knows nothing of trivia of that kind. He is just another egg that has to be broken so that economic omelettes may be made by the master cook here. But we are the poor individuals up and down the country who have to meet our bank managers daily and who are told by our bank managers that they have no money to lend. When you ask them : "How is it you have no money to lend?", you are told: "Because the Government have borrowed it all."

Is there any denying of that? Are we all going daft in this country? I often ask myself have we lost sight of what the purpose of Government is? The purpose of Government, surely, in any normal democratic society is to cater for the welfare of the ordinary people, not to wipe them out of existence and then tell them that this is an unfortunate consequence of the Second Programme for Economic Expansion getting out of step. Of course, in the classic words of a leader of the Fianna Fáil Party: “You cannot have omelettes without breaking eggs.” On behalf of the individual eggs in this country—economic eggs, who are simple, ordinary people like the rest of us, trying to raise families in decency, independence and respectability—I want to protest against their being wiped out to finance a gambler's riot such as is being continued in this country by the Government at present. The gambler's riot is not such by my description but by the description of the Report which their own motion asks us to adopt in this House at present. Do not forget I have read out to you the tale of this Report: if you maximise the number of Exchequer Bills pouring into the banking system and if the inflation that ensues therefrom calls into existence restrictions, they do not operate immediately but gradually; but, however uneven thier application may be at first, they spread to affect everybody and the broken eggs are then forgotten.

I have read this report very carefully. I want to submit to the House it represents the most crushing indictment of a Government I have ever read in the classic, restrained language of public servants, national or international. Many Deputies are deceived by the very measured language employed in a report of this kind. A long tradition of conservatism formulated every paragraph of that Report. Do not imagine the man who signed that Report drafted it. It was drafted in the Department of Finance by men with the highest sense of responsibility who still wanted to use the most conservative language their conscience would permit them to employ. So, when we turn to paragraph 18, we see recited there the effects of the cumulative measures applied in July, 1965. I want to go through them in detail. Paragraph 18 on page 19 says:

Certain proposals aimed at adjusting private and public consumption were among the following measures that the Government considered applicable to the current economic situation and which An Taoiseach announced in Dáil Éireann on 13th July, 1965.

When these were announced, this House was confidently told by the Taoiseach that they represented the solution of all our problems. This is the end of January, 1966 and our condition today is infinitely worse than it was last July. When I warned certain Deputies that that was going to be the case, there were many hopeful souls in the benches of Fianna Fáil who looked at me with horror and said such pessimism was unbecoming in the presence of the jovial confidence of the Taoiseach, which was greeted with a storm of applause from his benches. That is why yesterday, when Deputy T.F. O'Higgins rose to follow the Minister for Finance, who had introduced this motion, I asked Deputy O'Higgins to pause a moment until we would see if we would hear from the Fianna Fáil benches any echo of the applause of last July. There was a silence that would have done credit to the mausoleum of a mastodon. Look at them now, three mournful customers sitting behind their leader.

"Bored" is the word.

No, dejected; but, I see, he is fortified by abundant supplies of water to lubricate his intended reply. I need no water to quench my wrath. I rejoice to discover I am still capable of the saeva indignatio the present situation demands.

As I said, paragraph 18 lists the effects of the cumulative measures applied in July. First, there is the adjustment of the capital programme for 1965-66. Now, what do these words mean? These words mean that there will not be as much money available in the fund to which a local authority can turn to borrow money for the erection of houses for our people. These words mean that, two years ago, when the world was overwhelmed by the tragedy of the passing of President Kennedy, we were loud in declaring that we would appropriate money to raise a suitable memorial to what he did for the name of Ireland amongst the nations of the world and it is now our indescribable humiliation that the adjustment of the capital programme for 1965-66 imposed upon us the obligation of declaring before the same world that the tribute we so confidently planned two years ago we can no longer afford to pay for.

The adjustment of the capital programme means that there will be less houses built; that there will be less schools built; that there will be children left without the opportunity of education that they will never get again, because, remember, as they grow out of school attendance age, they never get the chance again of having the education they would have had, if we had not to adjust our capital programme. If we thought of that adjustment before we built the vast hotels, the office buildings with carpets from wall to wall, if we thought of the need of that capital adjustment, we could have waited for the skyscrapers with the Chinese hats while we provided good schools and houses for our children and our people and we might have had enough left to redeem our enthusiastic promise that, whether by erecting a concert hall or endowing education, we would make our modest contribution to the perpetuation of the memory of a great American whose people came from Ireland.

The second remedy is the diversion of bank loans and advances as far as possible to mainly productive purposes. I ask Deputies to turn back again to paragraph 7, to which I have already directed their attention. I would remind them that the man whose business has been closed down was one of those who thought that, by giving employment in his native town, he was engaged in a productive purpose. I do not know how many more there are like him. No banker got that chance of me because I foresaw what was coming and I took precautions, 18 months ago, to make myself independent of every banker in this country. It is only the fools who believed the Government and who left themselves dependent on credit who are now beginning to feel the impact of the remedy which Mr. Whitaker says the Government announced their intention of implementing last July.

The headlines of Pravda.

Now, I want to say something of which this House should take careful note and nobody more careful note than the Head of the present Government.

The next corrective measure, according to this Report, is the avoidance of further increases in personal incomes. Before I sit down today, I shall have something to say about labour relations, but I want to say this, as an employer all my life. If I were a member of a trade union in the morning and were summoned to attend a meeting in Liberty Hall or Marlborough Street to be told that I must moderate my demands for any increase in my wages at the same time as every joint stock bank in Ireland has announced an increase from ten to 30 per cent in their profits this year, and an increased distribution in their dividends to every shareholder, I would throw a brick through the window. I want to say—and it is one of the blessings of having shed some of the responsibilities that I have shed that I can say it because it needs to be said—that it is beyond my comprehension how the joint stock banks of this country can reconcile it with their conscience to join in a demand that the working men of this country should exercise the kind of restraint which it may become vital upon all of us to exercise and, at the same time, proclaim greater profits than they have ever revealed before.

Mind you, a great many Deputies and a great many people in the trade union movement of this country are not such fools as not to know that banks know how to conceal their profits but their revealed profits are there for all to read. Bad as that is, at a time like this, their revealed distribution of increased dividends sets a headline for any irascible or intractable trade union member who gets up and says: "Are you asking me to join in a national effort to exercise restraint in my wage claim while the gentleman who has invested £100,000 in a joint stock bank in England will get £2,500 a year more for just sitting down, and nothing else, for the next 12 months?" That is what I call irresponsibility. If some of these gentlemen who are busy denouncing fly-away strikes and unauthorised strikes would search their own conscience occasionally, they would discover that some of the irresponsibility perpetrated in trade union circles in this country fades into insignificance beside the kind of irresponsibility to which I have now referred. "Avoidance of further increases in personal income"—ought these words not choke the Taoiseach when he rises to address this House?

The introduction of price control— I know that a great many members of my own Party, to which I am proud to belong, have been passionate advocates of price control. I know that the Labour Party—and I am shocked at it—believe that price control is the solution of all our ills. I suspect that this is about the only thing in regard to the public life of this country on which the Taoiseach and myself are in practically entire agreement. The only difference between us now is that he hypocritically, falsely and shamelessly has yielded to public pressure to come out and do public penance for his previous affirmation to this House that he did not believe price control could work outside war and emergency conditions when the public would accept rationing. He has given way in that regard because he is afraid of the pressure being brought to bear upon him by the more obscurantist elements in his own party.

I want to ask my own colleagues and the members of the Labour Party— and I have been in business all my life —would any Deputy tell me how can you effectively control the price of tea, jam, soft drinks, bread, biscuits, boots, polish, clothes or almost any other commodity the ordinary person uses? I want to tell you perfectly frankly— and I know what I am speaking about —you can put any price control you like on tea in the morning and I will defeat it in ten minutes. Do you know what tea you are drinking? Do you know what tea is? Do you know that when you want to make a blend of tea to sell to your customer across the counter, you may combine eight different teas in the blend? Your aim is to produce the best tea at the lowest price you can give it to your customer. If you intend to sell it at 4/4d, you may, for the purpose of improving your trade, blend the tea with what you would ordinarily ask 4/5d for, expecting the penny extra value to draw custom. But the Minister for Industry and Commerce comes along and controls the price of tea at 4/- a lb. It would not take me ten minutes, if I wanted to spite him, to bring the real value of the tea down to 3/11d and get a penny extra profit. There is not a creature in this House, not one, who could detect the difference—not one of you but, perhaps, a couple of old women in County Mayo might because they are probably the best judges of tea in the world. But 99 per cent of the members of this House would not have the slightest notion what had taken place.

Jam—do you know what jam is?


Turnips, etc.

But you can alter the quality and cost of jam. By varying the content of the jar of fruit, sugar and fruit pulp, you can reduce the price of jam by 1d or 2d. There is not a jam manufacturer in this country who could not adjust the quality of jam in such a way as not only to save himself a penny but, if he wants to be spiteful, get an extra ¼d for himself.

Soft drinks—do you know what soft drinks are made of?

That is what drives me almost frantic. The Leader of the Labour Party—a man for whom I have the utmost respect—replies "Water". It is that kind of over-simplification which is leading him and his colleagues into——

I heard Deputy Dillon describe minerals as somewhat the same some time ago.

I am giving the Leader of the Labour Party a lesson that he may benefit from for the rest of his days. Mineral waters are made of sugar, water, fruit juice, fruit concentrate and gas. You control the price of soft drink, and the man who is using sugar the following morning starts using saccharine. In one scoop he not only recovers for himself the entire amount of the price reduction you made but possibly a penny a dozen in addition. Now, if I could persuade my fellow Deputies in this House to realise this ghastly illusion, and particularly the members of the Labour Party, I would protect thousands of simple wage earners in this country from cruel exploitation. Price control, without ration and control from the very top to the bottom such as we had during the World War, is an illusion.

The Prices Control Bill was accepted unanimously in the House.

I warned this House when I was Leader of this Party that I regarded price control with the gravest suspicion.

Yes, but the Leader of your Party agreed with the Bill brought in last July.

I admit that the Leader of the Labour Party is consistent in his illusion. I am trying to tell the House things that matter and, mind you. Deputy Healy is smiling to himself. I think he knows these facts just as well as I do.

But the NIEC report——

The NIEC report was complied by a body of men who never earned a penny in their lives. I intend to make my own speech in my own way —every word of it. If you control the price of biscuits, what biscuit are you going to control? Are you going to control "Afternoon Tea"? Do you know the advertisement on TV?—"Ladies are always lauding the luxury of "Afternoon Tea',"—then a butler with a white-gloved hand picks one up and says: "she is perfectly right", and the lady says: "I am delighted, Adolphus, that you appreciate the quality of `Afternoon Tea' ". Are you going to control "Marie" or "Wheatmeal" biscuits? There is only one uniform brand of biscuit in this country, that is, dog biscuits. If you want to control the price of biscuits, go and ask Jacobs what price control will trouble them because, by a trifling adjustment of one wheel, no bigger than a halfcrown, controlling the intake of butter, grease, sugar or flour, they can offset any price control you could choose to establish. And, if they want to be spiteful, they can earn a halfpenny or a farthing more in spite of your price control.

Are we going to control the price of boots? If there is a price on boots of 45/-, go and ask any boot manufacturer in this country and he will make a supply of boots which will cost £2 a pair. Mind you, the working man who will buy a pair of boots for £2 will be back to buy another pair much sooner because so surely as you control the price of boots, he will get split tops instead of kip.

Are we going to control the price of clothes? What part of the clothes are you going to control? There are 47 different constituents in the coat I am wearing. You can save perhaps anything from 1d. to 6d. on each of them, never mind my waistcoat, and trousers, to boot. These things sound queer but the Taoiseach knows something about them: he was brought up in the drapery trade. I know something about them: I was brought up in the drapery trade. Do not let us blind ourselves into the belief that we can find our way out of the economic difficulties with which this country is at present struggling by selling ideas which will do no good. Above all do not let us practise on those who trust us the most horrible confidence trick of all, that is to say: "We have brought down the prices but we have deceived you in respect of what is a vital matter, that you are getting less for your money at the lower prices than you were getting before we interfered." There is also the very complex question of how prices are made up——

But we must think of the complication of what it takes to keep a family.

I am going to talk about that. Deputy Corish and I and everybody who has been blessed with children have to meet these complications in their own time and many of the problems they have to meet are not soluble by anything this House can do. They have to meet and overcome these problems and God is to be thanked that we have families to look after. Those who have not got them envy us who have, with all our problems.

The last word I want to say on prices is this. Of course the Taoiseach knows this: he knows this from his family experience and his own experience, as I know it from my family and my own experience. The maximum price invariably becomes the minimum price. Once you establish a price, you find that will become the minimum price.

Like agricultural wages.

I want to say a few more words and I shall not apologise for what I have to say. This is one of the most important debates we have ever engaged in. I have been listening to a great deal of talk about economic planning but I recognise that as society becomes more complex, it becomes progressively more difficult to preserve freedom. I want to ask the House to pause for a moment and I want Members on all sides, my own side, Fianna Fáil and Labour, to ask themselves: what is the maximum price you are prepared to pay for planning? Remember, if you go in search of this thing, before you find it, you will find that nothing less than the maximum price will purchase it. That is as certain as that we are in this room. I want to ask this fundamental question: what are we all here for? This is called the talking-shop by many of those who denigrate Dáil Éireann. That is its proudest title. This is the talking-shop of Ireland, the one place where an elected representative has the right to raise his voice and to insist on being heard. I have known it as an independent Deputy and as a Party Deputy, and I glory in the fact that in the hands of every Ceann Comhairle who has served in this House for the 34 years that I have been here as an Independent Member, I was always scrupulously protected.

You may ask what has this to do with economic planning. I suggest that the whole purpose of the talking-shop, of the Oireachtas and of the Constitution, is to ensure that we shall live as free men and women in dignity and peace. Mark you, we can live in peace without dignity but I should sooner be dead in riot and tumult than live without liberty. As I understood it, we stood out before the nations of the world as a people who would rather go hungry, rather go naked, homeless and even rather die than live without liberty. Are we becoming a people who repudiate all that? Are we prepared to say now in our time: "We are prepared to forgo all that if the price is high enough. What fire and sword could not take from our fathers, we will sell to the first man who gives us 30 pieces of silver, provided we all get a share of it?" We should think about that.

While thinking about it, I want to ask this question: a great many countries have had recourse to economic planning of the most extreme degree. The country which has planned most ruthlessly and with the greatest indifference to freedom is Russia. They have been having five-year plans for the past 40 years. What is the net result? They are depending for their bread and butter on the US and Canada that never had a plan in their existence. The USSR would be in a state of acute famine today if they were not in a position to buy wheat from Canada. They would willingly buy it from the USA if the USA would let them carry it in Russian bottoms. The only thing preventing them is the United States stipulation that it must be carried in United States ships.

China is perhaps the only country that would claim to have planned more ruthlessly and we can make all allowance for the fact that China was poor, that she had special difficulties and that she was too ambitious, but she had a plan for a great leap forward. We all know what happened that. I think it is true to say that millions may have died in the Ukraine as part of the lubrication of Russia's economic plan but just as many millions died in China to provide a springboard for the great leap forward. Where are they now? Poorer than they ever were, hated by their enemies and, if you read today's papers, facing a final battle between the elements in China itself who want a decision made between guns and butter. The generals want guns; the civilians want butter. I wonder whose planning will prevail.

In this poor old country which has staggered along so far without the luxury of planning, we do not have to ask ourselves whose planning will prevail. Whatever plan is decided on by this House, that is the one that will prevail because there is nobody in the country powerful enough to oppose its authority. In China I think Mao Tse Tung may be hard put to make his views prevail. Hsiao Hua, who has recently emerged, has spoken of different views.

France is the greatest model of all economic planning can do. They are past masters and they do it with style. They have a very able Civil Service. I do not know how far all the planning that has gone on in France has contributed to the affluence they enjoy today. What I do know is this : that their affluence is nothing in comparison with that of Western Germany across the Rhine, whose gospel has been no planning but the stimulation of private enterprise off which the Government of Germany will sweep a sufficient surplus to provide security from destitution for all.

Who is better off? The Germans are able to house their own people and millions—not thousands or hundreds of thousands—but millions of immigrants whom they are calling in to fill the void created by the demand for labour in Germany from Turkey, Greece, Spain, Portugal. Go and look at the French and see how their workmen live and see what planning has done for them. They were told, as this White Paper tells us, that housing was something that could wait; that they could live in the shacks until the luxuries were provided and the tourists catered for and the wealth generated. Germany was going to be able to have the houses and the cream for all her people and nobody had to die hungry or cold while the elect enjoyed the cream and the people were left waiting to be broken as the eggs that it was necessary to break in the making of Fianna Fáil economic omelettes.

Italy has had plannings. She had at one time a thing that I thought held great promise—an Institute for Industrial Planning and Development. I remember well drawing the attention of the Fine Gael Árd Fheis to its existence and saying it was something we ought to examine and consider whether it was appropriate in our circumstances. I want to submit to this House that, with all her planning, Italy has had more instability than any other country in Europe. She has had more ups and downs. But the net fact that emerges if you look at Europe is that the members of the European Economic Community have enjoyed a vast expansion in their prosperity and affluence. Some of them attribute it to planning; some of them attribute it to the absence of planning. Erhard in Germany is as strong against planning as the French Minister for Economics was for it. Both arrangements were capable of producing instances like the Der Spiegel case in Germany and the murder of the Moroccan in Paris. Neither system, though they were both supposed to have fronts of shining steel, like Joan of Arc on the one hand and Lohengrin on the other, has proved on examination of the obverse of the medal, to be as stainless as they would have had us believe.

But if you think of nothing but about economics and money—and mind you, they are not a very inspiring topic— but if that is what you are all worrying about, if that is what your souls have all become rooted in, I want to point out that if you scan the world, the countries that are rich, the countries that have most to distribute, are the countries where planning is anathema. The United States of America is not only the richest country in the world; she has the highest social services in the world; she has the greatest army in the world and she is carrying two-thirds of the rest of the world on her back and the very name of planning is anathema to her. She is not a country that waits for her own poor to come hat in hand looking for alms to a Department of Social Welfare, as we do in this country. If you do not come knocking on the door here, you can die of starvation. They go out to look for the poor. The President of the United States of America goes out and searches the countryside and says: "I have found the poor and our first duty is to go to their aid and we have got to launch a programme to abolish poverty."

I remember certain members of the Fianna Fáil Party speaking with derision of a speech I made at the Fine Gael Árd-Fheis. When I said the first objective of any modern Christian society is to abolish poverty, they said that I was just talking for the sake of talking. But it is the first objective. The first country that has engaged on that task with a sense of realism and demonstrably with the resources for performing it is one of the countries in the world where the word planning is anathema.

What country keeps famine from others' doors? Millions would be dying in the most planned economy in the world today but for the resources of the wheatlands of Manitoba and Alberta. Do they plan? The only plan they had was Social Credit and that was so daft they even stopped calling themselves "Social Crediteers."

I want to ask the House this question: Suppose we irrevocably commit ourselves to economic planning, who is going to do the planning? Are we going to do it? Are we fit to do it? I do not think the Deputies of this House are. I know very well we are not. They would employ a body of men, not a single one of whom has ever earned a penny in his life and they will from time to time produce documents of this kind and the Government of the day, instead of facing the problems they have to meet and resolving them——

What does the Deputy mean by saying they never earned a penny in their lives?

Never went out either with a pick or a shovel or to give a service or to do anything but to theorise at a desk or to lecture in a university.

That is rubbish. The money they got was earned.

Yes, I suppose, but it is into their hands we are going to hand the whole function. I take the old-fashioned view that what the people intended was that it was we whom they elected to do that work with the assistance of the civil servants whom we employ. That is the difference. As I understood Government, when I was a member of it, the Taoiseach directed me to carry out a certain policy as the policy of the Government. I then consulted the civil servants in my Department and such others as I chose to call in and, when the matter was thrashed out, I, as Minister for Agri culture, said: "That is the decision." If, then, the Government of which I was a member approved of my decision, the civil servants carried out that policy.

Are we now going to delegate all that away from us here and are we going to find ourselves from time to time confronted with a document of the character we are now considering, with a resolution on the face of it that we generally approve this document and direct the Government to proceed along these lines? I warn the House they are travelling an exceedingly dangerous road, if that is the road they intend to travel, because, so surely as we get launched on that road, so surely do we abrogate our own authority. Remember, we started on this road with the First Programme for Economic Expansion; we proceeded further along it with the Second Programme for Economic Expansion; and we have now reached the stage of receiving reports from NIEC, or whatever they call themselves. We are steadily advancing along the road to the point when this House will have little or nothing to say.

Remember, too, that we are the elected representatives of the people and the danger is that we are proposing to our own people that, as we go further and further along this road, each milestone is a better panacea than the last milestone we passed, the milestone at which we guaranteed we had the panacea for all our ills. Remember, last July everything was lovely in the garden. Remember when the First Programme was produced and then, with the Second Programme, everything was opening out before us. "Let Lemass Lead on." We were facing new horizons and crossing mountains, smoothing out hills, turning corners and straightening paths. What is the position now? Now we are back in a worse thicket than we were ever in before and now Lemass—I am speaking, Sir, in the terms of the Fianna Fáil manifesto—is to be called upon to lead us on again, but now he is going to be provided with a slash hook in the form of this book, a general licence to slash his way anywhere he wants to go. In the next morass in which he finds himself, a slash hook will be no use; he will need a sledge hammer.

A bulldozer.

And the last authority he will seek to use not only on the undergrowth but on anyone who seeks to sabotage Fianna Fáil. Deputy Corish, the leader of the Labour Party, is too young to remember, but his late father, God be good to him, would remember; I remember a time in this House when, if you disagreed with Fianna Fáil, it was sabotage and, in a national crisis, I remember the ex-Minister for Agriculture, Deputy Paddy Smith, saying: "To blazes with the Supreme Court. If it stands in our way, we will sweep them out of it." Let us mind where we are going. Before I depart from this document, I want to ask how many of these people know that business has its ups and downs.

The FUE was represented on that.

It was—three of them. Maybe they did not say as much as I would say.

We accept that.

I see our Government telling a firm in this country to roll back its prices quite arbitrarily. That firm is engaged in diversified industrial activity and, bear in mind, it is located in several locations. That firm may make a profit one year and the next year lose £1 million on one part of its enterprise and it may suffer a loss of £2 million in other parts of its enterprise, but it is taking the rough with the smooth, and, in the middle of its operations, it is told to roll back its prices arbitrarily. That firm may say: "We are too long in Ireland to do anything dramatic." But watch. Watch. Where will its future development take place? Will it elect to develop in Dublin or in London? And its development means a great deal to this country.

Now I want to raise this question with this House. I have listened to this debate for a considerable time and it has become a question now, if there is an increase in production, of who will get the fruits of that production. Is it the working man? Or is it the man who owns the business? Has that not been the substance of the argument that is proceeding? Did it occur to anybody's mind yet that there is a third party to this transaction? Has it occurred to any labour leader or to any capitalist that, if there is increased production, or a reduction in costs as a result of increased efficiency, the consumer might get a share of that? Has that occurred to any Deputy? I have not heard it mentioned in the course of this debate.

It is mentioned in the Report.

I am talking about the debate. I have not heard anyone speak for the consumer. I suggest that is the key to the whole problem. Instead of engaging in a frantic struggle to grab the whole increased value of increased production, or lower costs for the producer, be he a labouring man or an employer, some attention should be paid to the consumer and part of the increased production or lower costs belongs to the consumer. A reduction in the cost of living might make a very substantial real contribution to the value of the wages earned by the average man and woman.

To my way of thinking, the things that are requisite to a decent society and the solution to most of our present ills are education, the development of the social conscience and an appreciation of the Christian ethic. There recently appeared over the name of Aubrey Jones a most important article. It appeared in The Observer of December 5th last. It is entitled “Why an incomes policy really matters”. I do not agree with all its conclusions but I venture to state it is the most powerful argument I have ever read for the institution of an effective incomes policy. I am going to trouble the House to listen to the concluding paragraph because it contains profound wisdom that this and other Parliaments might well consider.

There is no sanction against absolute power. There was no sanction against supreme power exercised by a monarch or by an oligarch. Equally there is no sanction against supreme power exercised by a group of workers in electricity, for example.

We can think of many others. There are a number of other essential services in our society.

No strike can be contemplated here;——

In an essential service on which the lives of people depend.

——the workers could hold society to ransom. Here is—

for the first time in history——

——supreme power no longer at the top but at the bottom.

The only answer to supreme power is to build up a body of conventions, of moral restraints, which will ensure that it is responsibly used. This was the only answer to power at the top. It is the only answer now to power at the bottom. And this is what an incomes policy is all about.

The problem is whether democracy or popular government can be saved from itself. I do not know the answer. The answer lies in the womb of time. All I know is that the attempt to save democracy from itself has to be made. For, unless we make the attempt and persist in it then the great popular movement of which we are heirs, and therefore trustees, will begin to overturn itself, will start to reverse itself, and carry our children and our grandchildren we do not know whither.

Those words, I think, are classical. They end a long article founded on a lecture called the Sidney Ball Lecture delivered by Aubrey Jones at Oxford. They are deserving of thought and reflection by everybody in this House and especially by those in the Labour movement.

I want to conclude by recording that we in Western Europe have lived to see absolute power wielded by an individual. England began to bring that under control in Tudor times and gradually the absolute power of the monarchy was restrained by the aristocracy of England. One might say the process began with King John and the Magna Carta. I suppose it did, but the effective restriction of absolute power in the monarchy in Great Britain was initiated under the Stuarts in the reign of King James I and Charles I and was punctuated by a revolution, a reversion to the monarchy and the gradual evolution in Georgian times of the constitutional monarchy until at last in the 20th Century the oligarchy of the aristocracy disappeared and the real power became centred in the Parliament of the people.

Absolute power had been surrendered by the monarchy, had been surrendered by the oligarchy, and it found its true home in the representatives of the people. It has now passed on into the trade unions and the trade unions of Ireland can destroy the country or can save it. They have the right to demand, if they make their contribution, that every other section of this society, bankers included, will make theirs. But it is the trade unionists who are today wielders of supreme power. I was once asked by an intelligent pressman in this country if I lusted for power, and I answered: "There are only two classes of people in the world who lust for power, fools and harlots."

I never heard such nonsense in all my life.

Wise men recognise that power carries with it responsibilities which are extremely difficult to discharge. The other category referred to are, to say the least, not philosophically reflective.

Our situation today is grossly exacerbated by the follies of the Government. The whole of this hideous dialectic with which we are now struggling was initiated by the accursed turnover tax. That started the spiral of inflation which is now creating problems for us all. Somehow, some way, we must break this vicious circle. It cannot be done if everyone does not play his part. One of the most powerful contributions to a solution of this problem falls to be made by the trade unions. If their contribution is not matched by that of other sections in our society, we shall go irretrievably "bust" economically and socially.

I am not such a pessimist as to believe that result is inevitable. I would be gloomily pessimistic if I felt we were faced with a perpetual Fianna Fáil hegemony in this country. I do not think that is so. Fianna Fáil are finally discredited in the eyes of our people for the frauds they really are. It is in that confident hope that I look forward to the future of this our country and in the assured belief that when the time comes the trade union movement, acting as the real Fifth Estate of Ireland, will serve our people as well as or better than the third and fourth have been called upon to serve them before.

The Report of the National Industrial Economic Council which is now being considered by the Dáil is a document of very considerable importance. It is important not merely because of its character and content but also because it has been produced by this Council which consists of a number of persons appointed by the Government, university professors, economists and other people with special qualifications, a number of persons nominated by the Irish Congress of Trade Unions, others nominated by the Federated Union of Employers, by other employers' organisations, by State boards and by the Federation of Irish Industries.

When a Council so composed produces a Report recounting the developments in the national economy during the past year and setting forth views and recommendations regarding the future, and does so unanimously, we have to take it very seriously indeed. Because of the importance of the Report, because of its implications for the future development of this country, and because as a Government we agree with the views and recommendations contained in it, we considered it was desirable that it should be brought before the Dáil on a motion which asks the Dáil to express general approval of these views and recommendations. We believe that if it is endorsed in that way by the Dáil—and, I hope, unanimously—it will achieve additional authority and add to its utility in relation to the situation with which the country is now coping.

The debate on the Report can properly extend over the country's present economic situation and the prospects for 1966, but those who have participated have given special attention to the dangers to the country which are inherent in our present disturbed industrial relations and have been discussing that part of the Report which deals with the development of what is called an incomes policy. The NIEC in this Report state there are three requirements which are essential if we are to reach the targets which have been set in the Programme for Economic Expansion. First is a policy for the planned development of incomes; the second is action to prevent effective demand arising at an excessive rate, and responsibility in that sphere rests almost exclusively on the Government; and thirdly, a policy for the regulation of bank credit.

The Government motion asks the Dáil to agree with the views contained in the Report and is being discussed in conjunction with another motion tabled by the Fine Gael Party which relates solely to an incomes policy and this has been, as I have said, the main topic of the debate. Deputy O'Leary said the Government were talking about an incomes policy as a popular cliché or a political gimmick of some sort. I want to make it quite clear that we are talking about it because this very responsible body, the NIEC, have told us in precise terms that it is essential to the security of the country and the achievement of the development targets we have set ourselves. What is the practicability of an incomes policy, what is its application in our present circumstances?

These are questions we have got to answer and before we can answer them we want to clear our minds as to the aims and implications of the incomes policy that we are talking about. There has been for many months past, both in the Dáil and outside, far too much woolly thinking, far too much ambiguous comment about an incomes policy to help us to get the right answer to these questions and the time has come to get down to precise definitions. The NIEC have helped us in this process of defining in the Report we are now discussing what we mean by an incomes policy.

The purposes of an incomes policy, as the Government understand them, would be first of all to ensure that increases of total national resources, brought about by higher production and higher exports, are distributed fairly among all sections of the community; and in that connection the word "fairly" does not necessarily mean equally in a percentage sense but would cover the possibility of giving special regard to the claims of particular categories of people—the lower paid workers, the farmers or the social welfare classes.

The second purpose of an incomes policy as we understand it would be to ensure that improvements of income are made in such manner as will, as far as possible, help to maintain conditions of price stability so that, among other advantages, higher incomes would represent real improvements of living standards. The third purpose of an incomes policy would be to ensure that income adjustments are made at such an extent and at such times and in such a way as will facilitate the continuing expansion of total national production and thus make possible further improvements of living standards in the future.

It is easy enough to state purposes of this kind but we have to translate them into their practical implications in the circumstances this country now faces or will face at any future time. I think the practical implications of an incomes policy with these purposes can be expressed clearly enough. A sensible incomes policy would imply that, in the aggregate, increases of incomes over any reasonable period of time should not fall short of, nor should they exceed, what is made possible by the expansion of national resources brought about by reason of higher production. This is basic to the whole conception of an incomes policy.

There is not now any opposition, certainly no vocal opposition, to the declared national policy of a steady, continuing improvement of wages and salaries. The aim is to achieve this steady and continuing improvement of incomes in a way which will not defeat itself by causing prices to rise unduly or the increase in employment to stop. Preferably, the improvement of incomes should follow on the realisation of higher production rather than anticipate it. Furthermore, there is another implication which must be faced and that is the acceptance of the contention that if some income groups get an increase higher than the average which the state of the economy permits, others must be prepared to accept lower.

When we speak, as many Deputies have in the past, about arrangements to secure a higher proportionate increase for lower-paid workers, we must not try to deceive ourselves and, above all, we must not try to deceive these workers. I want to say that, particularly among trade unionists, there is no indication yet that this implication of an incomes policy, this willingness of some workers to accept less so that others can get more is understood or accepted because——

Why confine it to trade unions as against others in the salaried classes?

I have said that the only evidence of prevailing attitudes in this respect arose in the trade union movement and there the evidence has been that the principle is not yet accepted.

What about the civil servants who have got increases of hundreds of pounds?

Are they not in trade unions too?

That is not an acceptable answer.

I was about to say that in particular industries and particular trades, changes in earnings should be related to changes in productivity in these industries and these trades so that price increases will not be occasioned by them. Finally, there is the obvious implication, mentioned by Labour Deputies, that all forms of incomes, earned and unearned, including profits, rents and professional fees, should be brought, as far as practicable, within the ambit of an incomes policy, but the problems of doing so are considerable and when we speak of it, we must not ignore the magnitude of these problems. I should like to refer again to Deputy O'Leary's statement in that respect. I was not surprised by it because it was typical of the speeches of members of the Party to which he belongs. He made it clear they were accepting no responsibility—he as an individual, nor his Party—to do anything more in this matter than to ask questions and point to problems—that they did not regard themselves as having any other role to play or any obligation to formulate answers to the questions he put forward.

It is reasonable enough to state what are the purposes and implications of an incomes policy. It may possibly even be easy enough to secure agreement on them in general terms. I do not know whether this definition which I have given of the Government's conception of the purposes of an incomes policy or its practical application would be generally accepted either in this Dáil or outside it. Probably acceptance of general aims of an incomes policy and even of the implications of trying to realise those aims has never been a real difficulty, either in this country or any other. The difficulty arises when consideration has to be given as to how such a policy can be realised or how it can be applied in a particular situation such as that which faces the country now.

The desirable way of achieving an incomes policy would be by general agreement among all the organisations and persons who have functions in regard to the regulation of incomes— the Government, the trade unions, the employers and so on, agreement on the principles and implications which would settle its character, and by their willingness to forgo voluntarily using whatever economic power they possess in a way that would disrupt, or frustrate, its application. The alternative, and it seems the only alternative, to bring about the achievement of an incomes policy would be to impose it compulsorily.

You will try that.

If we do not try it, somebody else may.

Oh, you will try it.

The Government believe that it is desirable to persist with the effort to define and secure acceptance of an incomes policy directed to the purposes which I have stated. The advantages of an incomes policy would be fairly considerable. It would be advantageous because it would mean that the settlement of income changes from time to time would be made by the intelligent examination of possibilities created by the country's economic growth and not by the brutal or reckless use of economic power leading to industrial strife involving the loss of national resources by reason of the interruption of production.

It would be advantageous because it would give the assurance that the proper proportion of the additional resources secured by the country's economic progress would be fairly distributed to all elements of the community in accordance with our overriding social purposes, that undeserved poverty and economic insecurity should be progressively eliminated from this country. It would be advantageous because of the assistance it would give in the planning and the achievement of the country's economic expansion by which further improvements in individual incomes could be accelerated and, I suppose, also because it would facilitate the accumulation of capital which we need to finance our future expansion.

In this context the question of whether or not salary and wage changes should be made now under the auspices of a comprehensive national wage agreement or by separate agreements related to individual occupations is not really very important. It is still an open question, in my mind, as to which is the better procedure. What are important are the principles and the considerations which should determine the character of any agreements. National wage agreements, such as that which was negotiated by the Congress of Trade Unions and the Federation of Employers' Organisation in 1963 have advantages and they have disadvantages. Chief among the advantages are that they help to ensure that all workers, including those who are not organised in trade unions or, even when organised, have the minimal bargaining powers, will participate in the same degree as other workers in the benefits of rising national output. A national wage agreement will also help to set standards which can be conveniently applied in the application of price control so that price adjustments, which may be necessary to allow the agreed national wage improvements to be implemented in some cases can be permitted with general understanding of the reason for them.

The chief disadvantages, as I see them, are, first, that they tend to stratify the wage structure without regard to economic changes or variations in the economic value of the work of particular categories of workers. They tend to ignore the circumstances prevailing in particular trades and industries, including changes in productivity, which are taking place. They can impose on some occupations an undue burden that could operate to reduce output and reduce employment in them.

Nowadays, it seems wage claims are not so much based on workers' needs, living costs or productivity changes as on comparisons with other workers. This has been most marked in our experience in recent years. The Report of the National Industrial and Economic Council, which sets out three principles relating to an incomes policy, defines the third of those principles as the need for a general consensus on what constitutes a reasonable difference between wages and earnings in different occupations. This consensus is likely to develop very slowly indeed. It is this interest in comparisons, which has been so notable recently, which often impedes negotiations on wage claims relating to the circumstances of individual trades and industries without repercussions on other trades, and is perhaps an argument for the adjustment of wages in present circumstances by a comprehensive national agreement. In the circumstances of this country in this year a national agreement, if negotiable, would probably be preferable, even if it is not regarded as a settled procedure for future application. I understand this is the outlook of the National Executive of the Irish Congress of Trade Unions. It certainly would give us time for the process of education regarding the importance of productivity and the justification for adjusting wages between occupations so as to allow for economic changes and so produce a new outlook in regard to those matters.

There is, however, a situation developing now here which requires prompt action. Probably it does not give time for the leisurely development through discussion of an incomes policy, as ordinarily understood. For many weeks past our public opinion has been gravely concerned about the prospects of continued industrial strife due to the resistance of employers to unrealistic demands for wage and salary increases and other changes with the same effect on costs. The Government have been under very heavy pressure from many quarters, and from public opinion generally, to intervene in this situation to prevent this happening. There is, I think, no doubt whatever that national development has been very adversely affected by the present position of uncertainty in the field of industrial relations. Unless this is cleared up, unless this uncertainty is removed, the consequences to the country's rate of economic growth in this year could be quite serious. This, of course, is very much the concern of the Government.

The Government have at all times a responsibility to define clearly the economic situation as it is and as it may develop, to state their views as to what it is feasible to attempt by way of income increases, and to seek to arrange matters so that what is feasible is in fact what is done. What we are trying to do in this debate is to give our clear view as to what is feasible in regard to income increases this year, and to leave nobody in any doubt as to what we regard as the consequences of trying to do more in that regard than the state of the national economy will suport.

One of the major issues of national policy now coming to the forefront in this country, as in other countries, is whether the responsibility of Government stops at this point, or whether it extends to include an obligation so to arrange matters as to make sure that conditions conforming to the national interests, as decided by the Dáil, by the national Parliament, are established even against the opposition of sectional interests. There is no doubt that the interests of the country, and its continuing economic and social progress, would dictate, as the Minister for Finance stressed yesterday, that higher labour costs should be avoided this year.

We are now facing a serious economic situation, a situation in which the holding of the present level of employment and the maintaining of present living standards, will be hard enough. If we can get through this year without a serious rise in unemployment—and some rise in unemployment has already been recorded the significance of which should not be overlooked by anyone—and with increased exports to reduce the deficit on our external payments, we will have done not only all that it now seems reasonable to hope for but we will also have laid the foundation for a resumption of the country's economic progress and an improvement of its people's living standards at a steady pace in future years. If this aim for 1966 is frustrated by rising labour costs, or by industrial strife, we could find ourselves before the year is over in very serious trouble indeed, with higher prices and reduced industrial production causing a contraction of our exports, and consequently a much more serious rise in unemployment than has yet taken place.

While the policy of the Government has been based on the assumption that the great majority of our people will want to react in a responsible way to the national needs, we must recognise that the prospects of securing agreement to avoid wage increases in this year, to forgo the prospect of immediate benefits for the sake of greater benefits in future years, have been seriously undermined by the creation amongst workers generally of expectations not only of wage increases but of increases of a quite unrealisable size. These expectations have been strengthened by the reiteration of the falsehood that the benefits of wage increases in recent years have been fully nullified by subsequent price rises, and that prices are still rising, so as to justify further wage increases to maintain present living standards.

The average increase in weekly industrial earnings over the past three years as shown in the official index numbers since the first quarter of 1963 to the third quarter of 1965 has been not 12 per cent but 20 per cent. This does not mean, of course, that living standards have increased in that proportion. No one had any doubt—no one in the Dáil or outside it, no matter what they said—that the 12 per cent wage increase in 1962 would cause some rise in prices, just as an attempt now to force a further increase in wage rates greater than the increase in national production would support would, if successful, of a certainty cause a further rise in prices.

During that period since 1963, notwithstanding the rise in prices, there has been a real gain in workers' living standards, a gain of between six per cent and seven per cent which is not out of line with the real increase in national resources during the same period. The general price level has remained virtually unchanged for the past nine months. The consumer price index number in the May quarter of 1965 was 180; in the August quarter it was 181; and in the November quarter again it was 181. The food price index numbers for each of the four quarters of 1965 were 140.4, 143.8, 140.2 and 139. There is now a reasonable likelihood that overall price stability has been restored. Indeed, there is no factor in sight which would operate to cause prices to rise generally in this year except an increase in wages not offset by higher productivity.

This price stability since last May was not due to price control. Control was a very minor factor in bringing it about. It was due almost entirely to the fact that wages rose during those months by less than productivity increased during the same period. That is the only certain way in which stability of prices can ever be maintained. The importance of price stability, both because of its consequences on our living standards and the competitiveness of our exports, cannot be over-stressed. It is the workers' assurance that wage increases which they may secure from time to time, even when they are in a percentage sense less than some trade unions would seek, would represent real gains, not paper gains only, or jeopardise their own employment or the continuing improvement of the circumstances of the country.

If the prospect we have to face is wage claims, based upon unrealistic notions of what it is possible for the country to meet without serious adverse consequences, on employers who are prevented by price control from recouping themselves by passing on higher labour costs in higher prices, then a series of destructive trade disputes could very well take place involving heavy losses of earnings to many workers, losses of production for the country in the very year in which increases in production are most essential, and very probably a withdrawal or postponement of many plans for the enlargement of our industries or the setting up of new industries which are our main hope of rising employment.

Already there have been suggestions that many industrial developments which we hoped would commence this year may be postponed until our labour relations situation has been clarified. If this really is the prospect, what is the duty of the Government in regard to it? There are many people who are advising us to legislate to prevent it, often people who have given no thought to the implications of what they are proposing. There are others who are advising us to let matters take their course, arguing that the folly of unregulated and unreasonable wage demands will not be learned by many workers until it has been demonstrated by stoppages of work, the loss of wages, rising unemployment, rising prices and the putting back for a long time of the country's hope for greater economic expansion. This would not be a very attractive prospect, nor would it represent a situation which I, or my colleagues in the Government, would like to preside over.

I do not think, if that is the situation which is now in prospect, that it should be allowed to develop without a serious effort to prevent it, but the responsibility for preventing it cannot rest on the Government alone; it must be shared by the trade union leadership as well as by the more responsible employers. The unanimous acceptance by the Dáil of the NIEC Report could help in this situation. It is not impossible to visualise the Government, trade union leaders and employers' leaders, sitting around a table to work out what it is feasible to attempt in wage increases in this year which will give workers all they can get in higher wages without danger to their employment or to price levels. This is a matter which should be capable of being decided in a reasonable and objective way by reasonable men by reference to known facts and sensible expectations. I think the National Industrial Economic Council can be relied upon to give a fair and objective assessment of the possibilities. If there is any prospect that these methods might be effective, we would regard it as a duty of the Government to give them every chance within our power. It would be irresponsible in the extreme to allow the country to be plunged into a welter of industrial strikes—from which everyone, particularly wage earners, would emerge as losers—without a serious effort to avoid it.

We know that the Irish Congress of Trade Unions have decided to seek wage increases limited to a maximum of £1 per week. The Irish Congress of Trade Unions declaration in that regard was very carefully phrased but it has been interpreted, and they must know it has been interpreted, by most people, by most workers as well as employers, as meaning that an increase of £1 per week is to be sought by all workers in all cases. The Federation of Employers' organisations which has been conducting these negotiations, has declared its intention of opposing claims of this size. This is not free negotiation; it is not indeed negotiation of any kind. Each side has declared its position either as a preliminary to a general conflict or as a preliminary to further negotiations. If negotiations are feasible—and this is not for the Government to say—then the Government will facilitate them but we could not give the support of Government endorsement to an agreement which would in our view, have adverse effect on employment and on prices, and would be in direct conflict with the principles set out in the NIEC Report. Nor could we agree that any such agreement, which so departed from the requirements of the situation as we understand them, should be applied generally throughout the services for which the Government have financial responsibility.

If agreement could be reached upon principles which could be either expressed in a national wage agreement or applied in individual agreements I would hope that everyone concerned, including the trade union leaders, would go out to the people to explain and justify it. Part of the difficulty of making the ninth round agreement fully effective was the reluctance of its trade union negotiators to defend it in a positive way. They cannot be unaware that it was this reluctance to defend the agreement they had made, which led many trade union members to the belief that the agreement was not intended to last its full term, and created in the minds of employers suspicions as to the motives of the Irish Congress of Trade Unions and the negotiators.

If there is to be another national agreement with acceptance of principles to be applied in individual agreements relating to particular trades and occupations then those who make them must be prepared to defend them, otherwise we can find ourselves back in an even worse position than that from which we have emerged. If all this effort should fail, if there is no prospect of getting either a new national wage agreement related to the circumstances of this year, or agreed principles to be applied in individual agreements, then other methods of protecting the country from the ill-effects of a complete breakdown in that regard would have to be examined. We know from reports which have appeared in newspapers that recent efforts by the Congress of Trade Unions and the confederation of employers' organisations to negotiate a new national wage agreement did not succeed, and that the reason for this failure was stated to be the proposal on the employers' side that there should be a stabilisation of employment conditions in this year in respect of demands which would affect labour costs other than wages. Now, it is possible to understand the reluctance of the Irish Congress of Trade Unions to try to bind their constituent unions in this regard, and indeed also to understand their long term policy of improving working conditions in regard to the length of the working week and the working day. Very few people who have any knowledge of developments in the past century will contest the inevitability of continuing progress in these respects. Most reasonable people, however, and this I am satisfied includes most wage earners, certainly all the wage earners with whom I have had the opportunity of having personal conversation, would agree that in the circumstances of this country in this year there is no great urgency about pressing claims for shorter hours or other marginal changes in working conditions, much less the enforcing of these claims by strikes which cause serious losses of wages, not only to those directly involved, but also to many hundreds of other workers as well, and of course loss of production to the country.

A reduction in the working week from 42½ to 40 hours without loss of earnings would be equivalent to a six per cent increase in wage rates, leaving aside altogether the question of any reduction of output which might be involved. This country could not carry in this year a general increase in wage rates of six per cent without facing a further and considerable rise in prices and almost incalculable consequences for our export trades. But to make a claim for changes which would involve this increase in wage rates while at the same time seeking to increase these rates is completely unrealistic. The Irish Congress of Trade Unions in their statement make it very clear that the Congress Executive accepts this to be so but this point needs constant reiteration, if it is to be understood. There is a duty upon trade union leaders to explain to their members that when an improvement in working conditions is feasible, it will usually be a matter of making a choice, of taking that improvement in the form of higher wages or in some other way such as reduced working hours, and that there will be rarely circumstances in which both together would be possible at the same time.

I have on a previous occasion expressed my desire to see consideration given to the practicability of drawing up under the auspices of the Labour Court codes of fair employment for each occupation, codes which would cover all aspects of working conditions other than wages, which would be subject to periodic reconsideration in the light of economic and technical changes and which could be given the form of enforceable contracts so as to ensure that uniformity of conditions throughout the trades to which they apply would be established. Action along those lines would ensure that matters affecting working conditions other than wages could be considered in an intelligent way and not left dependent upon sporadic trade union action against individual employers. I am certain that this idea will be adopted sometime. I hope to see it taken up now by those directly concerned and the Government will be prepared to support it by legislation, if that should be necessary.

This debate would ordinarily cover the country's economic prospects for the coming year in the light of the NIEC report on the outturn of 1965, but it would be a useless exercise to attempt to make forecasts if the prospect is one of widespread and persistent industrial strife. If this happens not only will there be no economic progress but the danger of an economic setback, which could push unemployment up again to the 100,000 mark and set up an intensification of emigration as in the middle of the 'fifties. It will not be much consolation to be able to put the blame for these disasters, if they happen, on the trade unions, the Federated Union of Employers or anyone else.

Or the Government.

Or the Government. It will be no consolation to be able to place the blame on any quarter if those disasters happen. But anybody who could help to avoid them and who failed to try would carry a heavy responsibility before history.

The NIEC will be making a forecast of economic growth possibilities in this present year. It is not my intention to anticipate their report but I would urge that no final decision should be made by anybody, whether employer or trade union, until this report has been completed. The measures taken by the Government to deal with this unfavourable economic situation which developed in 1965 are having effect. The deficit in our external payments in 1965 will be, it is now fairly clear, less than we assumed it would be in July last. The volume of spending has been curtailed; price stability has been achieved, and our external reserves are recovering. The indications are that in 1966 it will be reasonable to expect an overall increase in national production of about three per cent and that the external payments deficit can be brought below £30 million. However, the growth rate of the national economy which can be confidently envisaged is less than would be required to achieve the full targets in the Second Programme for Economic Expansion. The external payments deficit will still be high enough to require in 1967 the maintenance of fairly severe curbs on total spending, including bank credit and Government capital outlay.

The fact that our national economy is passing through a period of difficulty at this time need not cause us to reconsider our targets or to despair of realising them. This tendency in some quarters to exaggerate our difficulties and talk about the country going bankrupt is just stupid and irresponsible.

The country will be glad to know the Taoiseach accepts there is an economic crisis.

I do not know if the Deputy understands what I have been talking about. All countries seeking economic expansion at the rate at which we have been trying to maintain in recent years must expect to encounter these difficult passages from time to time, and it would have been extremely optimistic to think that they could not arise for us. We are moving out of the difficulties of 1965 but our recovery is still somewhat precariously based and could be upset very easily. Upset could come from the contraction of export market openings due to economic difficulties in other countries or by reason of difficulties in financing our capital programme, or by an undue rise in our internal costs. By and large, it is only this third factor—the factor of internal costs—which is completely under our control.

If we set about resolving our present problems, organising our future progress in an intelligent, commonsense way, avoiding as far as possible any loss of production due to labour disputes or any other cause, we will soon be back again in calmer waters, able to steer a confident course ahead and in increasing measure get ourselves into a position in which we can give all the people of this country who work for their living not only assurance of security in their employment but also of a steady and continuing improvement in their personal circumstances. We have to make one choice or the other, and make it soon. I have expressed the view that the responsibility for reaching the right decision in this matter does not and cannot rest with the Government alone. Certainly, if the parties who have to contribute that decision are prepared to co-operate with the Government, that co-operation will be very freely and wholeheartedly given.

We have heard the Taoiseach, the Minister for Finance and the Minister for Industry and Commerce say that the most workers could expect to get by way of increases was in the region of three per cent.

That is not quite what was said. What was said was that a three per cent increase in all incomes, in the aggregate, is the most that can be counted on, without an increase in prices or loss of employment.

Yes, a three per cent increase.

Without an increase in prices or loss of employment. You can get a higher rate of increase at the expense of higher prices and less employment.

A three per cent increase for a man earning £10 a week means an increase of 6/-, but an increase of three per cent for a man earning £5,000 a year—and there are people with £5,000 a year—means an increase of £3 per week.

Nobody suggested a flat rate, not even Congress.

There are people who earn £96 a week. They would get an increase of £3 per week. A man with £10 a week would get an increase of 6/-.

Does the Deputy think there should be a greater increase for lower-paid workers?

Not only do I think it but Congress think it, and Congress have declared their policy.

And are prepared to accept the implications?

We heard the Minister for Industry and Commerce weeping crocodile tears for the lower-paid workers. We heard the Minister for Finance say that lower-paid workers were undoubtedly entitled to an increase and could justify one. I should like to ask the Taoiseach one question. The Taoiseach's Government employs a large number of what could be described as lower-paid workers. In view of the statements made by the Taoiseach and the Minister for Finance regarding the three per cent, how does the Taoiseach propose to give an increase to these people? Does he intend to exceed the three per cent for the lower-paid workers in Government employment? Silence—no answer from the Taoiseach.

I have made it quite clear that these are matters we are prepared to sit down and talk about, provided the people on the other side are prepared to come along with is.

They are prepared to talk. Congress, in asking its constituent unions to place a ceiling of 20/- on any increases they may seek, did so in order to ensure that lower-paid workers would at least get that. Let us assure the Taoiseach that it was not a very popular move for Congress to make.

The Deputy can say that again.

It was not the kind of stand that the Executive of the Congress could make to the delegates at the special delegate conference and expect to be applauded, because the workers in this country, despite the Government's apparent opinion that they cannot count, realise that, in order to get back into the position in which they were when they achieved the 12 per cent, they would require far in excess of £1 a week. However, in order to try to make some contribution not only to the lower-paid workers but to the financial situation and economic difficulties of today due to a Fianna Fáil policy, they undertook to recommend that trade unions would not seek more than an increase of 20/- per week. That is the contribution the organised workers of this country have made.

A few moments ago, when speaking to this House, the Taoiseach referred to an incomes policy and to implementing the recommendations of the National Industrial Economic Council. We on these benches have been advocating an incomes policy for a long number of years but we mean an incomes policy, and apparently the Taoiseach's and the Fianna Fáil interpretation of an incomes policy is that one section, and one section alone, of the community should make all the sacrifice and one section and one section alone should be asked to contribute, to restrain themselves——

Does the Deputy accept the contents of this NIEC Report?

Deputy Moore should read it.

Deputy Moore has to understand it: that is a big job.

The incomes policy we envisage does not mean that the workers alone should contribute. While the Taoiseach and his Ministers are urging lower-paid workers and organised workers to restrain themselves and to seek no more than three per cent, I would ask the House to look at the other side of the picture. I wonder why no appeal is made by the Taoiseach or his Ministers to other sections of the community. At the risk of boring the Minister for Industry and Commerce—as obviously I bored the Taoiseach, who has now left the House —I should like to read a few returns from some of our poorer employers who cannot afford more than three per cent.

In 1964, Irish Ropes made a net profit—I emphasise the word "net"— of £103,000, and in 1965 they made a net profit of £154,000—that is slightly in excess of three per cent, I think; in 1964, Youghal Carpets made a net profit of £93,000 and in 1965, they made a net profit of £116,000. The dividend paid was 34 per cent—that is slightly in excess of three per cent; in 1964, Ranks made a net profit of £110,000 and in 1965, they made a net profit of £176,000; and Batchelors, in 1964, made a net profit of £95,000 and in 1965, they made a net profit of £113,000.

There is more. Killeen Paper Mills made a net profit of £190,000 in 1964 and in 1965, they made a net profit of £213,000. I shall give the House a few more. In 1964, Booth Poole made a net profit of £59,000 and in 1965 they made a net profit of £62,000.

There were a few strikes.

Lincoln and Nolan— the Taoiseach will probably verify this —made a net profit of £115,000 in 1964 and in 1965, they made a net profit of £177,000.

I could go on with these firms but now I shall have a look at the banks. We are all agreed that there is a credit squeeze. The poor banks must be doing very badly. Let me give some illustrations.

In 1964, the Provincial Bank made a net profit of £215,000 and in 1965, they made a net profit of £259,000, an increase of approximately £45,000; in 1964, the Royal Bank made a net profit of £110,000 and in 1965, a net profit of £121,000; and in 1964, the National Bank made a net profit of £363,000 and in 1965, a net profit of £457,000.

I shall just finish on this, although there are others. In 1964, after the Bank of Ireland had paid dividends and directors' fees—the Minister for Finance also got his whack out of it —the net profit was £969,000 and in 1965, their net profit was £1,098,000. I shall repeat that figure, lest somebody might think it a mistake: the net profit of the Bank of Ireland in 1965 was £1,098,000. Is that three per cent? Is that the Fianna Fáil understanding of an incomes policy? On that basis, the Government are asking workers who are earning anything from £7 to £10 or £11 a week to accept three per cent. What about their friends? What are the Government asking their friends to accept? All the loot they can get.

That, apparently, would be the situation and that would be the Fianna Fáil interpretation of an incomes policy. As I said before, the only section of this community—not only now but in previous years when we had accepted the 10/-, when we had accepted the 12 per cent and now, when Congress comes out and asks its members to restrain themselves in the interest of the lower-paid worker and the economy as a whole to 20/- —who are asked to make sacrifices, are the workers? No, 12 per cent would be far too much for a man with seven, eight, nine or ten children, while, for the lads down in the Bank of Ireland, £1,098,000 is not too much.

Did the bank put the money in their own pockets?

They did not put it in ours: I will tell you that, son. Yesterday, the Minister for Industry and Commerce shed crocodile tears for the lower-paid workers. He also gave, and it was followed up by his leader here today, the warning to workers: Do not seek justice; the outcome will possibly be that you will be unemployed. This was the Minister's warning to the workers of this country: If you seek more than three per cent, you will end up losing your job. I had the privilege of working for a very old man and he had a saying which I was reminded of when listening to the Minister yesterday. He used to say: "If you work for nothing, you will never be idle". This is apparently what the Minister is telling us. This is also in the face of the profits I have read out, and no one has contradicted them in relation to the banks, because they cannot be contradicted.

There is also a Survey of the Irish Banks prepared by Dudgeon & Sons, Stock and Share Brokers, and, in the first paragraph of page 5, under the heading of “Principal Conclusions”, we find another little item to show how badly off the banks are doing and the monied classes. I quote:

The strength of the Irish commercial banks is only partially disclosed by their balance sheets. In addition to published reserves of just under £20 mn., it is estimated that they have hidden reserves of the order of £40-45 mn., in the form of unpublished Contingencies, Premises and Pensions Reserves, Bad Debts Reserves and under valued investments and premises.

So they are not doing too badly either as far as their capital is concerned. They will not be asked to take three per cent. In the face of this, the Minister for Finance has indicated he wants more money. The Government must have their whack! He has also indicated he intends to get it, but not by going after those boyos—oh no! Who? The workers, the ordinary man depending on a week's wages for his family. Do not touch the lads, and he has indicated that he intends to raise his money by indirect taxation. I would not be a bit surprised if he were contemplating increasing the turnover tax.

The Taoiseach has stated that we are all to avoid strikes. Nobody realises that more than we do. They cost us very dearly and we are the only people —and when I say "we", I talk about the Irish Congress of Trade Unions and the organised workers they represent— who have made any contribution toward a reasonable settlement of the issues which now confront the country on the industrial front, by asking their members, and having it accepted by their members to confine themselves to 20/-. It is only fair to say that if it is the Government's intention to come along with their indirect taxation, or have another go at the turnover tax, workers in this country will fight and, if the only way they can get justice is by fighting, they will fight well. When the Taoiseach and the Fianna Fáil Government come to this House and tell us that, apart from trying to restrain workers and impose restrictions on their earnings, they intend to restrict profits, dividends, rents, fees, etc., organised labour will play their part, but not until then. If this is to be a free-for-all, let it be a free-for-all and, if it is to be a proper incomes policy, you can rely on our co-operation.

I do not think anyone would seriously disagree with quite a large part of the Taoiseach's speech here this afternoon. I listened to it fairly fully and I felt that many of the arguments which he advanced were arguments which would secure general agreement, but it occurred to me that many of the Fianna Fáil Deputies who flocked into the House to hear the Taoiseach must have felt a little confused at times. They might have been forgiven for thinking that they had possibly wandered into a discussion at the Policy Committee of the Fine Gael Party. I certainly would have sympathised with the feelings, for example, of a person like the Minister for External Affairs on a visit to this country to find, when he comes into the Dáil, that the Government are solemnly asking this Assembly to give formal endorsement to Fine Gael policy which was so derided some months ago.

The Taoiseach, in part of his speech, painted a sombre picture for this year. If I heard him correctly, he argued that, so far as the present year is concerned, it would be difficult enough to hold the present level of employment. He pointed to the fact that there was already a perceptible drop in employment and he suggested that the significance of that should not be lost on the House. He made the case that it would be hard enough to hold the present level of employment and the present standard of living. I think I am quoting him correctly when I say the case he made for the present year, 1966, was that that was all it would be reasonable to hope for, that we should hold the present standard of living and the present level of employment. That statement coming from the Taoiseach certainly paints a very sombre picture. It is quite clear that the airy-fairy type of confidence we heard in this House and elsewhere from Fianna Fáil spokesmen in the past few years, has now been replaced by an atmosphere of gloom and despondency.

We are entitled to examine the causes of that. It is clear that the country is now experiencing a most serious economic situation. Possibly it is no exaggeration to say we are going through now, and have been for the past six or eight months, one of the most serious periods of economic difficulties the country has faced for very many years. I do not think that Deputies, no matter what Party they represent, should approach the present economic situation by taking too pessimistic a view. I have no confidence in the present Government but I have confidence in the basic soundness of the Irish economy. Many people will find it hard to understand why the picture now being painted by Government spokesmen has changed so quickly from the rosy picture we were so accustomed to even a few months ago. Why, when a comparatively short time ago everything in the garden seemed to be rosy, have we now such a dramatic change for the worse in the picture presented by the Government?

I am not, and do not pretend to be, an economist and I find it just as difficult to understand that dramatic change as do the ordinary people who are seeing the picture painted by Government spokesmen now and comparing it with the picture painted only a comparatively short time back. It is important that we should all, as far as possible, endeavour to understand what has gone wrong and, understanding it if we can, that we should endeavour to see that the Government do what is necessary to put things right.

I think there is general agreement that there are some obvious causes for the present difficulties. First, we have a near-disastrous deterioration in the balance of payments position; a deterioration brought about by a fall in exports and an increase in imports. In addition, there has been a sharp, steep rise in the cost of living and in prices. The Taoiseach expressed the hope today that price stability may have been reached but certainly in 1964 and 1965 there was a sharp increase in the cost of living and a steep increase in prices. In addition to the balance of payments difficulty, the rise in the cost of living and rising prices we also had a slowing down in industrial output.

Different causes have been given for the balance of payments difficulties. We all know, because it has been stated so often, that there was a fall in cattle exports and if the sole reason for the balance of payments position was the decline in exports of cattle and beef which might be temporary and could be remedied, we would all agree that the prospects might not be quite as gloomy as they appear to be and even the picture the Taoiseach painted today might not be quite so black. I think there is also agreement that in regard to the balance of payments difficulty the trouble runs far deeper and it is not accounted for entirely by a deterioration in cattle and beef exports but, in addition, the momentum in the export of manufactured goods has been slowed down or lost. The British surcharge obviously had some effect and the Government are entitled to say that was something over which they had no control. That is true to an extent. It was true up to last month or so when our negotiators were negotiating a trade agreement with Great Britain. Certainly, I am not satisfied that our negotiators should have come home without having negotiated as part of their arrangements with Great Britain, that the British surcharge should cease to have effect in respect of this country.

However, undoubtedly the British surcharge had an effect. In losing the momentum in the export of manufactured goods a very definite part was played by increased costs of production here and because of this we lost our competitiveness in manufactured goods. I do not think it can be denied that this loss was in turn caused or partly caused by the imposition of the turnover tax by the Fianna Fáil Government some years ago and by the injection of the 12 per cent wage increase into the economy.

On the question of the balance of payments, there is, on the one hand, the fall-off in exports, the drop in cattle exports and the slow-down in the export of manufactured goods. On the other side of the coin, there has been an increase in imports. Here again, I believe that this is partly due to loss of competitiveness of Irish manufactured goods as against imported articles. For quite some time there has been in operation a Buy Irish campaign. I do not know if members of the House or of the Government regard that campaign as having been successful but there is no reason why it should not succeed, if the Irish commodity was competitive as against the imported commodity, but because we have priced ourselves out of the market and because we have lost our competitiveness and because that was due in part at least—and I believe in great measure—to the policies pursued by the Government, we have this increase in imports of manufactured goods. I agree that the increase caused in that manner, taken as a percentage of the whole, is probably not a great deal but it is significant.

The greater part of the increase in imports was caused by increased imports of capital equipment and material for use in Irish industry and agriculture. That type of import is one which in certain circumstances certainly is desirable. If we import the sinews of war, so to speak, the equipment and the material that are necessary to give greater efficiency to our industrial effort and to our agricultural industry, which in turn results in greater production, then that type of import is desirable but only providing we are in a position to pay for it by increasing our exports. We have fallen down so far as that aspect is concerned. The increase in capital equipment, the increase in consumer goods, have taken place but we have not been able to pay for them by an increase in exports.

It was, perhaps, unfortunate that at the same time as we were faced with these difficulties—the increase in prices, loss of competitiveness, balance of payments difficulties, reduction in exports, increase in imports—there was another factor which played its part, that was the severe reduction in the rate of inflow of foreign capital into the country but, so far as the inflow of capital into this country from outside was concerned, I do not think the Government were ever entitled to assume that the inflow would continue at anything like the same rate as existed in 1964. I think I am correct in saying that in 1964 the inflow was in the region of £36½ million —a figure which was very considerably higher than what was regarded as the normal. If the Government based any of their calculations on that inflow being maintained into the year 1965, 1966, and so on, then I think they made a serious miscalculation. There were factors there which could mark out 1964 as an exceptional year for the inflow of foreign capital. The Taoiseach himself has said that the figure of about £25 million is a figure which could be regarded as a reasonable normal figure to expect. However, the fact that between 1964 and 1965 there was a drop in the inflow of foreign capital again added to the difficulties particularly coming at the same time as a very serious worsening in the balance of payments position.

As I see it, those are the salient features in the malaise affecting our economy at the moment. I think we are entitled to inquire why that has come about before we examine what steps the Government are taking to deal with it.

The Minister for Finance, when he occupied his previous post as Minister for Industry and Commerce, was quoted in the Irish Times of Friday, 2nd April, 1965, as saying that the management of a country was like the management of a business; if they were well managed they would succeed and prosper; badly managed, they would lose money and fall into debt; that the shareholders in a country were the people and the management was the Government.

I think it is fair to take the test which was set as recently as April last by the Minister for Finance and to test the position in this country against those measures and standards which he then laid down.

Measured against that test, what is the position we see in the country today? Many of these matters that I propose mentioning were already referred to by the Taoiseach here this afternoon. Possibly the most immediate matter for concern, the thing that will strike people immediately when they start thinking of the picture presented by this country at the moment is the degree of industrial unrest, of strikes and of threats of strikes. At the moment we have the dock strike. Over the past months we have had a bread strike, a newspaper strike, the maintenance men's strike, the Irish Telephonists Association strike and a threatened subpostmasters' strike and I am quite sure that does not cover the entire list. We are presenting in this country that picture of grave industrial unrest.

A second thing that springs to my mind is that we introduced here prices legislation within two or three months of a declaration by the Taoiseach that it would be only in abnormal circumstances such as prevailed in the last war or where the situation was clearly out of hand that his Government would think of extending Government controls in this way even as a temporary device. The Taoiseach made that declaration. I think I am giving a fair summary of it. He made that declaration when he was speaking in this House on 13th May last on the General Budget Resolution. Yet, within two or three months of that the Government introduced price control legislation into the House. Surely, if the Taoiseach's statement of May last is to be taken seriously, that is an acknowledgment by the Government that they regard the situation as having gone completely out of hand?

I have already referred to the deterioration in the trade balance, to the fall in the net capital inflow, to the increase in imports and the fall in exports. There was also a fall in external reserves of £34 million in the first half of 1965 and—a very serious position so far as the economy of this country is concerned—there was a fall in personal savings and a rise in personal consumption expenditure. There was a fall in the rate of industrial production and, as the Taoiseach mentioned here this afternoon, there was an, admittedly, if you like, gradual, rise in unemployment but, as he said it was a significant matter and one which we cannot overlook.

We have in operation a tight credit squeeze affecting practically every type of business and enterprise in the country and we have all over the spectre of fairly rampant inflation. Taking the test laid down by the Minister for Finance when he was Minister for Industry and Commerce, speaking in April of last year, I do not think any spokesman for the Government can claim that we have here, on that test, a country that is well managed, succeeding and prospering. The second part of the test the Minister applied was that, if the country was badly managed, it would lose money and fall into debt. We are, I think, entitled to see how we are faring on the second leg of the Minister's test.

The Irish Banking Review in its issue of December, 1965, refers at page 5 to what it regards as a trend in the wrong direction:

A further trend which is in the wrong direction is the change in the relative amounts of credit afforded to private and public borrowers. Whereas the percentage of total credit advanced to most classes of private borrowers decreased this year—

They are talking about 1965—

the percentage to public bodies increased by 26 per cent and to Government by 19 per cent.

Later on it comments that the growth in Government borrowing from the banks reflects the financing of a larger overall budgetary deficit.

On the second test, therefore, which the Minister applied in April last, we are faring just as badly as we did on the first leg of the test.

Another matter which will give rise to a certain amount of concern and create a certain amount of uneasiness is, I think, the fact that there was a noticeable fall in the prices of securities on the Dublin Stock Exchange. Now this is the kind of picture that faces us when we are discussing the economic situation and the two motions on the Order Paper. This is a really deplorable picture of the national economy in less than 12 months from the time when the Taoiseach was telling the country we were entering on a period of great opportunity and warning the voters during the general election campaign that, when Fine Gael were previously in Government, credit had dried up, business enterprise was subject to credit restrictions and thousands of people had lost their employment. What is the position today? You have credit drying up. You have the credit squeeze. You have credit restrictions. You have, as the Taoiseach himself acknowledged this evening, a rise in unemployment already becoming apparent.

During the time about which we are talking, there was an increase in industrial production. What is vitally important and what cannot be overlooked in talking about the economy is the fact that, while industrial production did increase, there was, as I mentioned earlier, this slowing down in the rate of growth. This trend became apparent in 1964 and continued on into 1965. According to the figures I have seen, in the March quarter of 1965, production increased by approximately four per cent over the March quarter of 1964. That has to be compared with an increase of about 11 per cent as between the March quarter of 1963 and the March quarter of 1964. You have, therefore, the vitally important fact that there was that fairly radical slowing down in the rate of growth. You have also the fact that there was a slowing down in the volume of retail sales.

I said earlier that this discussion must be somewhat confusing to some of the Fianna Fáil Deputies who have been taking an interest in it. One of the favourite gambits of Fianna Fáil spokesmen when we are discussing economic affairs and, indeed, most other matters in which their proposals are under investigation or subject to criticism, is to look across the House, and ask: "What is the alternative, what are your proposals?" When the Taoiseach was engaged some eight or nine months ago in knocking Fine Gael proposals for an incomes policy, I wonder if he had asked himself what is the alternative at that time, would it ever have occurred to him that inside nine months he would be coming into the Dáil and saying, in effect, that there was no alternative but to accept the Fine Gael policy for prices and incomes? He is probably blessing his good fortune that he is able to hang the hat now on the NIEC report rather than have to acknowledge in public that this arose out of the Fine Gael policy document entitled "A Just Society".

The fact is that Fine Gael published their proposals, concrete proposals, as far back as last April. The NIEC Report was published last November. It is being discussed now in January, 1966. The proposals are the same. The aims are the same. Nine months have been wasted. Apparently the Government now think that an incomes policy should be implemented. They have tabled this motion which shows they are prepared to approve of the NIEC Report. In the light of that, is it not true to say that nine months that could have been employed in implementing an incomes policy have been wasted, an incomes policy the Government are now apparently prepared to implement? Nine months have been wasted. All the time the deterioration was going on in our economic position.

Is it any wonder that in that situation the Irish Banking Review of December, 1965, should pose this question? I am quoting from page 47 where they say:

The deterioration of the balance of payments has led to many warnings and some corrective measures. The question may fairly be asked if some of these warnings should not have been pronounced some time ago and some of the remedies applied earlier. Delay in facing up to difficulties may make their correction more severe and prolonged.

Is it any wonder that another journal which, to my mind anyhow, has certainly not been noted for any hostility to Fianna Fáil Governments over the years, a journal called Irish Industry, in its issue of November, 1965, should have an editorial headed: “Who is to blame?” and should say in the course of that editorial:

Surely a lot of valuable time was allowed to slip by since the first warning clouds of a forthcoming economic depression appeared on our horizon. Government spokesmen, over the last year have drawn attention to the developments which would, in their opinion, lead to difficulties. Strangely enough, nothing was done about it until the position reached its present critical stage.

Later on in the course of this editorial, it is stated:

In important matters like this the business community looks to the Government for guidance. Surely it should have been possible to regulate national spending to national income. No doubt the position was patently obvious to the Department of Finance at all stages, and the Central Bank repeatedly issued its grave warnings. Why then do we have to have every few years these apparently avoidable terms of high financial crisis.

They then say:

The Minister for Finance in a recent statement admitted that the Government felt it was not entirely blameless. Mr. Lynch is to be complimented for this admission. We feel, however, that the Government must shoulder not portion of but the full responsibility.

As I say, that journal, as far as I know, has never been hostile to Fianna Fáil Governments. Members of the Fianna Fáil Party will, I think, regard the Irish Banking Review as in no way having a political axe to grind. The same question is raised in the minds of the writers of these articles: Why did the Government waste time? Why did they not do something about this when it was apparent that a situation was arising which was going to develop into a crisis? We in the Fine Gael Party are entitled to say, so far as this question of an incomes and prices policy is concerned, that the Government have wasted nine valuable months in a period when time might well have been the currency of our economic salvation. That currency was wasted by the Fianna Fáil Government. They have now come to the conclusion that there should be an incomes policy.

I make no apology for emphasising what has already been stated from these benches, that the Fine Gael Party pioneered the drive towards an incomes policy. It is all very well for the Government spokesmen, when their proposals are under fire, to say: "What is the alternative?" in an endeavour to combat criticisms or to cover flaws in proposals put forward by the Government, by adopting what people used to regard as the best method of defence, namely, attack. We in the Fine Gael Party, prior to the last general election, took the trouble to sit down, and study the position systematically and exhaustively, to get the most expert opinion we could, to make a comprehensive survey of the economy, of the weaknesses and flaws we found there, and to suggest our remedies. I think we are entitled to remind not only the Government but the people as a whole that that exercise was engaged in and that those concrete proposals were put forward and are now being accepted by the Fianna Fáil Government.

I have here both the Fine Gael policy document and the Report of the National Industrial and Economic Council. In the section of the Fine Gael policy document dealing with prices and incomes, it was stated that one of the major failures of the Government had been their inability to control the level of prices, and it went on to say that on social and economic grounds, a policy on prices and incomes is urgently necessary. The NIEC Report, in paragraph 13 on page 7, comes out with the same idea, that on social and economic grounds, such a policy is necessary, and the very first sentence in paragraph 13 of the NIEC Report is:

Incomes policy has both an economic and a social purpose.

Paragraph 12 of the Report reads:

If the continuity of economic development is to be assured three things at least are necessary, first, a policy for the planned development of incomes; second, effective action to prevent aggregate demand from rising at an excessive rate; and, third, a policy pertaining to credit.

Again for the purpose of comparison, I may say that the Fine Gael policy document, in dealing with this question of a prices and incomes policy sets out that:

Consideration should have been given to the desirability of influencing all kinds of income. Modern discussion is centred on the need for influencing the level of profits and other non-wage incomes as well as wage incomes. Policies in this connection are generally known as incomes policies and have been advocated for Ireland by Fine Gael for a considerable time.

That is one of the things we said in our policy statement regarding an incomes policy.

I find this in the NIEC Report in paragraph (13) of page 7:

An incomes policy that does not embrace all categories of money incomes, namely, wages and salaries, farmers' incomes, professional earnings, rents, profits and realised capital gains, is repudiated as inadequate and inequitable.

Again, in the Fine Gael policy document, we made the point and emphasised it that as the largest employer in the State the Government should not merely await development of those patterns but they should deal quickly with the claims of their own employees. In that policy statement, we emphasised the necessity for the setting up of guide posts for price behaviour and, having determined the proper behaviour of prices, we suggested it would be necessary that those seeking increased prices should notify the Government and then, if required, that they would have to justify their price increases.

As far as that idea is concerned, it was incorporated by the Government last year in their Prices (Amendment) Bill. We pointed out also in the Fine Gael policy statement that the Government's approach to this question of an incomes policy, from the point of view of dealing with wage incomes alone, had shown no intention of dealing with non-wage incomes or indeed, at that stage, with rising prices. The Fine Gael proposals put before the electorate last April were clear cut. They were not accepted then but they are accepted now by the Fianna Fáil Party and in that sense I think it is true to say that the policies advocated by us then, while derided by Fianna Fáil spokesmen, have now secured general acceptance. It is fair to argue from that that they were worthwhile policies, that the Fianna Fáil Government were not able to find adequate or suitable alternative policies.

I do not mind what I regard as simply a tactical manoeuvre of the Fianna Fáil Party in putting down a motion that the Dáil approves generally the NIEC Report rather than simply accepting the Fine Gael motion which was on the Order Paper long before the NIEC Report was published. It is only a tactical manoeuvre because it amounts to the same thing. The Government are asking the Dáil to approve and adopt principles advocated by this Party several months before the NIEC Report came out. It is interesting to note that in the speech of the Taoiseach on 13th May last, to which I referred earlier, he said in regard to an incomes policy:

I do not think we should allow ourselves to be hypnotised by vague ideas and slick phrases about an incomes policy without fully understanding it or being able to state clearly what this expression is intended to mean. Whether what some people call an incomes policy is practicable at all depends really on what is meant by it.

No one was left in doubt as to what we in Fine Gael meant by an incomes policy. The Taoiseach went on on that occasion:

Most of the ideas I have heard expressed seem to me to be clearly and completely impracticable. The broad aim of the Government is to ensure that all sections of our people will share fully and freely in rising national prosperity. So far as earned incomes are concerned and I am referring to wages and salaries in particular—

Again at this stage, the Taoiseach was confining his mind particularly to wages and salaries in so far as an incomes policy was in his mind at the time.

—this can, in my view, be achieved by periodic adjustments under national agreements freely negotiated following full consideration of the general economic situation...

The point I wish to make is that even as late as May last apparently the question of producing, never mind implementing, a prices and incomes policy was not in the Taoiseach's mind. The NIEC report also points out very emphatically the need for a credit policy. On page 10, paragraph (24) it says:

Finally, action is necessary in the field of credit policy. The role of credit policy in the first instance is to ensure that the volume and composition of credit will be in line with the planned growth of consumption and investment expenditures.

As far as the question of credit policy is concerned, we in these benches can justly claim we did our best to secure acceptance of the necessity for having some kind of rational determination of our credit policy. We pointed out the lack of power of the Central Bank, the lack of power even of the Government to control credit policy and we advocated certain reforms, possibly minimum reforms, of the powers of the Central Bank by means of an amendment of the Central Bank Act. I do not think I am being unfair to the Taoiseach when I say that this question of the necessity for some greater degree of control in banking and credit policies generally is one on which the Taoiseach has changed his mind. When the Fine Gael statement was published dealing with credit and banking policy the Taoiseach, as he did in relation to other aspects of that policy, was severely critical, though some years earlier, in 1957, he made a pronouncement with regard to the part the banks should play in the affairs of this country. At that time, the Taoiseach was in opposition. According to the Irish Times of 18th January, 1957—I am reading now from my own note of that report but I think it is an accurate one—the Taoiseach said:

The part which the banks must play in the effort under national recovery is vital. There appears to be some foundation for the widespread belief that the management of our banks do not regard themselves as being under any special obligation in this regard. It is essential that the banks should have regard to the requirements of national policy as defined by the Government of the day in granting or withholding credit. To the extent that this is not so now, changes must be introduced that will make it so. Decisions on credit policy should be taken at a higher level than the bank boards of directors. The present power of the Central Bank to control the operations of the commercial banks has not, so far as was known, been utilised. It was now fairly clear that those powers were inadequate.

Those were the views that the Taoiseach expressed in 1957.

As I have said, when we examined this general question of credit and the part that the banks might play and when we recommended certain changes, certain modifications and certain strengthening of the position of the Central Bank, the Taoiseach also gave his comments. According to the Irish Press of 20th March, 1965, he had this to say:

The Fine Gael document on the powers of the Central Bank could have been written by any newly-fledged economics graduate without political sense or experience. It is entirely theoretical and of no practical importance at this time. No practical disadvantage has been experienced in regard to Ireland's economic progress by reason of serious deficiencies in the Central Bank's powers. Some day, no doubt, it may be considered desirable to consider changes but, until they are seen to be necessary, interference with the country's banking structure and arrangements would be unwise and could be destructive of public confidence.

That was 20th March, 1965. Here we are, some months later, discussing a Report from the National Industrial and Economic Council in which attention is called to the necessity for action in the field of credit policy. Again, I do not think I am claiming anything this Party is not entitled to when I say we were again in advance of the Government's thinking on this question. We were possibly too far in advance of some of the thinking of the general public on the question. However, there it is. We have, in this discussion, a very full vindication of the views we expressed at that time.

I do not propose saying very much more because this is a personal view of mine. It is a pity, in some ways, that debates of this sort, dealing with the economic situation, particularly when it is a bad one, should have to take place in public because there is always the danger that a person will possibly say more than he should or express something more strongly than it is advisable. But we are a democracy. The people are entitled to know what is going on. Indeed, while, on the one hand, I see the danger of creating such an atmosphere of gloom and despondency by talking about the present economic situation which would shake confidence not only in the Government —I do not mind that—but would shake confidence in the Irish economy itself. I think there must be balanced against that the fact that our people here have always been prepared to face up to realities.

Our people are a courageous people. They are a people who are both able and prepared to accept their responsibilities. The better view is that the right thing is to talk honestly to the people, to explain the difficulties, to lay it on the line so that they can appreciate it and understand it. If that is done, the kind of effort which is required to get the country out of the mess in which it is at the moment will be made willingly by the people.

I had hoped that Deputy M. J. O'Higgins might have referred more clearly to the Report of the NIEC. If he had done so, and if he had studied the Report itself, apart from a brief glance at the summary in the first few pages, he would have been spared the mystification to which he has confessed on the subject of the present economic situation. I would prefer, in whatever I have to say, to base my remarks exclusively on the Report, which we are supposed to be discussing.

Deputy M. J. O'Higgins stated it was not in the public interest or the national interest that we should try to spread gloom and despondency, but he, and other members of his Party, have done little else during this debate and during the earlier debate before Christmas. The actual facts of the case are set out so clearly in the Report before us that it is no harm, even at this stage, to repeat them. There was a rise in the import excess of approximately £22 million in the first seven months of 1965. That was due to an increase in imports of nearly £14½ million and a fall in exports of nearly £7½ million. We would have every reason to be alarmed if these figures were caused by some lack of confidence, some drastic loss of our competitive position or some gross overspending on consumer goods but the actual facts of the case are quite different.

While agricultural exports, in the shape of meat and meat preparations, fell by nearly £9½ million, other exports rose by nearly £2 million. Therefore, we should be very careful to make it clear to the public there has not been a drop in our industrial exports. It has been quite the reverse. There has been a continuous rise in the value of our industrial exports. The only disappointing feature has been that the rate of that rise has been somewhat reduced during last year. The rate of export has been going up very consistently and towards the end of 1965, a period which is not covered by this Report, the rate of industrial exports has been increasing again.

As far as imports are concerned, there was a considerable increase in cereals and feeding stuffs which was due, not to any factors within the Government's control, but simply to lack of cereals and feeding stuffs of our own. That accounted for £5.7 million. Then we come to machinery and transport equipment. That is capital expenditure. Under that heading, we get an amount of £1.8 million in respect of car parts imported for assembling here, which are, to a certain extent, I suppose, regarded as consumer goods, but it is a small proportion.

Then we have medicinal and pharmaceutical products, manufactures of metal and petroleum and petroleum products, £1 million each. This is a situation which should not have given us any grounds for alarm, if it had not been for the fact that there were unfortunate and unpredictable losses of cattle and meat exports. Coupled with that, we had a reduction in the net capital inflow into this country—and here again this is a matter which is dealt with very clearly in the Report. This was due to factors completely outside our control, due to the restrictions by the Governments of the United Kingdom and the United States of America on external investment by their citizens. It was not that the investors had lost confidence in this country as a good line in investments. It was simply that capital generally was restricted on an international basis, and capital was not available in the proportions in which it had existed previously.

A lot of nonsense has been talked about the effect of the 12 per cent wage increase and the turnover tax on the cost of living. People have said, and are still saying, that the benefit of the 12 per cent wage increase was completely frittered away by increases in prices. That is an illusion, and it is time we got this rumour nailed once and for all. I have had it thrown at me time and again. I remember during the last general election campaign one of my constituents stated that he could not vote for Fianna Fáil because we had not controlled the cost of living. I asked him how badly he was affected and he told me life was hardly worth living at all and that it was very hard to make ends meet.

He was the tenant of a subsidised local authority house. I asked him what difference the 12 per cent wage agreement had made to him and, after a certain amount of cross-examination, he admitted that his increase had been 37/6 per week, but he hastened to assure me that all that extra amount had been swallowed by the cost of living. After further cross-examination, he admitted that his wife was still able to keep him and his family clothed and fed. He further admitted that out of the 37/6, he had given her only 20/-and had retained 17/6 for himself. I pointed out to him that he could hardly be doing too badly out of that additional 17/6, if his wife was bearing most of the additional cost of living.

At that stage he changed his mind and said it was the additional expenditure, the extra costs that were really killing him. I asked for particulars, and he explained quite frankly that every ten days, or every fortnight, he liked to take his wife out for a drive in the car. This was the man who could hardly make ends meet. He liked to take his wife out for a drive in the car in the evening so that they could have a few drinks together, or perhaps even a meal. He stated then that the worst part of it was that he had to employ a baby-sitter and he said: "The baby-sitter sits in front of my fire, looks at my television set, makes tea for herself, and charges me 10/- per night." That was the man who was insisting to me that the cost of living had become so intolerable that he could hardly make ends meet. He was living in a county council house, a subsidised house. I am glad to say he was able to buy and run a car of his own, to buy a television set and a transistor, and his wife and family were well fed and well clothed, but he had managed to convince himself that he was almost on the verge of bankruptcy.

In actual fact, the rise in the standard of living of the great proportion of the people has easily been the most rapid in living memory. The reason for our difficulties so far as industrial exports are concerned are also set out quite clearly in this Report. I do not need to repeat them here but it was a pity that some of the speakers did not trouble to read this Report to save themselves from some of the gross inaccuracies which they produced during the debate.

I should like now to refer to the question of wage differentials. This is set out on page 35 of the Report. It refers to the fact that since 1960:

The differences between the earnings of manual workers and certain classes of clerical workers have again tended to widen. As the machinery for settling disputes about wages and salaries in particular occupations has evolved, there has emerged a large number of relationships between wages or salaries in particular occupations and those in occupations which are judged comparable.

This, to my mind, underlines a matter to which the Taoiseach referred earlier this evening, that is, that part of the reason—I should probably say the main reason—for the unsettled conditions in our industrial relations at the moment is due not to the fact that people are not being paid enough, but to the fact that there are other people who are being paid more. We have all got ourselves into the habit of looking around to see what our comparative position is. I hasten to add that this is no prerogative of the wage-earners. It afflicts all classes of the community, professional people, managing directors—the lot. We are all looking over our shoulders or across the street to see who is getting what. This is a general weakness, and it is something which must come out in the open, because wage and salary claims are always alleged to be on the basis that it is unjust that the claimant should be asked to work for the wage or salary which he is drawing at the moment.

Paragraphs 43 and 44 of the Report refer to a general feeling of dissatisfaction, and paragraph 45 refers to the need for securing some consensus on wage and salary differentials. It is at that stage I part company with this Report, because I think it is entirely fanciful for anyone to suggest that you can get any group of wage or salary earners to admit for a moment that their wages or salaries are properly lower than someone else's. Human nature does not work that way. If you say to a managing director of a company: "You are adequately remunerated at a rate of £3,500 a year and we ask you to agree that it is only right and proper that the managing director of another company of comparable size should be given £4,500 a year", it is going to be very hard to get that agreement because we all feel we are as good as the next man, and probably better. We are probably wrong but we all have that feeling. We are no more likely to get that agreement among managing directors than to get county council road workers to admit that their hourly rates should be lower than those of a man employed, say, in a coalyard attending a mechanical lift, although not actually engaged in the manipulation of machinery. Who is to say that the roadworkers should be paid more than the man in the coalyard?

If we are going to suggest for a moment that we can get agreement by bodies of wage or salary earners to their incomes being less than somebody else's, we have got another think coming because human nature does not work in that way. I feel we are getting to the stage where we have got to have some way in which wages and salaries can be negotiated with some sort of discipline. In that connection I want to make it very clear that, in my view, the only way which such discipline can be secured is not by legislation but by the maintenance of a strong trade union movement, really strong, matched by, and not necessarily, in opposition to, a strong employers' organisation. It is essential, too, that all individuals should be members of one or the other. These freelances who try to fight it out on their own are very often trying to get it on the cheap. They would be only too willing to accept wage increases which trade union activity may secure for trade union members without accepting the obligations of trade union membership. At the same time, I feel that many employers are just as irresponsible by trying to plough a lone furrow instead of joining with their fellow-employers and trying to evolve a general policy for employers which will fit in with, and be complementary to the policy of the Irish Congress of Trade Unions. I do not believe that the average trade union member at the moment——

Notice taken that 20 Members were not present; House counted, and 20 Members being present,

I feel at the moment that the average trade union member has far too little confidence in the leadership in the Irish Congress of Trade Unions and I believe he should have much more confidence than he has.

That is known as killing by faint praise.

No; I do not want for a moment to kill by faint praise because I believe that not only in the members of Congress but in its staff, it has built up a very useful and able team of men. The trouble at the moment, however, is that Congress can act only in an advisory capacity and it is an extraordinarily difficult thing to do, to carry the complete co-operation of a large number of men on a highly technical issue. It was suggested in a previous debate that we might even have submitted the Free Trade Agreement to a referendum. That, of course, would have been complete lunacy because you could never have explained such an agreement in detail to every solitary voter in such a way as to enable him to make a fully objective decision as to whether it was wise or unwise. He could very easily decide whether he wanted it or not but that is not the point at issue. The point at issue is whether it was a wise item of national policy. Here we have a situation in which it has been clearly established by this Council that prices are very largely controlled by national income and that wage rates are a major factor in the whole build-up of national income. I strongly suspect that the experts in the Executive of the Irish Congress of Trade Unions knew perfectly well that at the moment the proper recommendation would be to hold fast and not to make any further demands at this stage, but if they had done that, they would have lost the confidence of their own membership. They have done quite remarkably well already because the demand from the membership was for a very much greater amount than £1 per week. It was for a very much larger amount. It is only right that we should pay some tribute to the leadership of Congress which has been able to convince a delegate meeting that the original demands were quite fanciful, quite unrealistic and, in fact, very very dangerous. It got a fair distance but I think they will have to go further because the facts are quite clearly there, that an increase of more is no use, that it just does not have the desired effect.

Do we take it that the Deputy agrees with the £1?

No, the position has been clearly stated by the Taoiseach that a £1 increase for everyone would be an intolerable blow to the national economy. It would be a seven per cent increase.

We are not looking for it for you.

No; the Deputy is very generous. If it would help the national economy, I would forgo the £1 and it would not mean anything.

Not to you.

Nor to the economy, either. It is only when you get into big numbers that the trouble arises.

I appreciate that there is poverty in the country and that there are very low-paid workers still, but I would much prefer proposals such as Deputy Noel Lemass made, that we should strive towards a minimum wage. The people who are suffering—and there are people who are not getting much kick out of life at the moment—are the people who are working but at a very low wage. Those are the people who, next after the social welfare classes, should have our first consideration. The number with that very low wage is not so colossal. When you take all wage-earners into consideration and say everybody has to get £1, that is crazy. To many people sitting on the Labour benches, £1 a week would not be of any assistance at all. I know they are all beginning to look frightfully humble at the moment. If they say it would make a difference, to be perfectly frank, I would not believe them. There are many people in the country who do not require £1 a week. If we are going to make an overall national wage agreement, they will have to get it. I do not believe that is the right way of doing it. We have to look at it in a much more careful way, as has been set out in this Report.

The Report goes on to deal with tax evasion on professional earnings. Here, I feel, I must comment, too. There is a widespread illusion on the part of all businessmen that professional men "fiddle" their income as a matter of principle. There is an equally widespread illusion among professional classes that businessmen live on inflated secret expense accounts and make unheard of wealth in that way. I have been a professional man for quite a number of years and I have been a businessman for a number of years. I know that so far I have found it impossible to "fiddle" in either capacity.

Mr. O'Leary

The Deputy is in a state of sanctifying grace.

No; it is simply a matter of the eternal vigilance of the Revenue Commissioners.

He does not belong to that club.

They and their staff are most vigilant. The idea that a professional man can get away without keeping proper books is just crazy.

Two sets of books.

A trade union could keep two sets of books.

The Deputy is entitled to proceed without being interrupted continually.

In fact, a professional man has to keep books. If the members of the Labour Party want to know why, it is not because he is under a legal obligation, but because, if he does not, the Revenue will get after him with such as assessment that, unless he can prove they are wrong and he is right, he is for the high jump. Professional people have to keep books of their earnings. If they do not, they are caught.

The position is the same in the case of these fearful people called company directors and senior executives, who live so lavishly out of expense accounts. I know that the company in which I work is no exception. Every penny I draw for expenses, if I travel to England by boat or plane, is entered as part of my income by direction of the inspector of taxes. It is only taken out of my income in so far as I can prove it was money spent on the company's business. If only the members of the Labour Party would take the trouble to find the facts and not listen to stupid rumours, they would be doing a far better day's work for the country.

There is an idea that there is widespread tax evasion. In fact, there is not. I do not know whether Deputy Dr. O'Connell "fiddles" his accounts. I do not accuse him of doing it. If he knows better than I do as a professional man how to "fiddle" a professional man's accounts, he can tell the Revenue Commissioners. He cannot say at one time that he is the stalwart of the working man and a member of the working classes and the next minute that he is a professional doctor. He has to be one or the other.

I am both.

You cannot fleece the poor with one hand and work for them with the other.

I do not charge them.

I only hope the Deputy will polish his halo and make sure it is well secured in case it might blow away in a high wind.

I am telling you there are two sets of books.

If the Deputy argues he has two sets of books, I hope the Revenue will take note.

I asked Deputies to allow Deputy Booth to make his case without interruption. He is entitled to do that. Deputy O'Connell has not yet spoken. He can make his case by way of speech and not by way of interruption.

Now we come to another matter which causes trouble, company profits. This requires careful analysis. Here again even the members of the Labour Party should know a bit more about the facts of life. You do not judge a company's profitability or stability by the study of a profit and loss account only. If you take companies which are developing very rapidly in this country at present, such as Irish Dunlop, with tremendous expansion in Cork, this is being financed out of those horribly naughty funds knowns as profits. If that company had not made profits and did not take care to make profits, it would not have been able to expand its activities and increase its employment. If you ask any wage-earner what sort of company he would like to work for— a company making good profits or a company only making ends meet— there is only one answer. There is no security in a company not making profits. But the stupid, ignorant idea that profits mean cigars and champagne all round for the directors went out of fashion about 50 years ago. Yet this so-called Labour Party here still cling to it like a lifebelt.

We must have hurt the Deputy.

I was delighted that the Deputy was kind enough to give publicity to the profit figures of the company by which I am employed. I am most grateful to him. If he likes to go on and describe the actual activities of the same company in greater detail, it is something which he or his colleagues can do but which I am precluded from doing. It is essential in any commercial activity that it should make a good profit. Nobody should get hot and bothered about it or be ashamed about it.

Do not interfere with that—only cut the wages.

There is no hope for a man whose mind is either completely empty or closed. Maybe it is both. In fact, in business no one can say that for the next 50 years this company will go on making minimum profits. Deputy Dillon admitted it. Only these so-called Labour representatives say that there is no risk in business, that you do not have to provide for bad times as well as for good. If you have not got reserves, if you have not been conservative, if you have not built up good profits and put them to good use, then, at the first blast of cold air, you will coil up and, then, who will suffer? The shareholders will probably get a reasonable price on the realisation of assets but the actual employees will have lost everything. Some people may smile and say: "Yes, it is always the workers who get the worst", but they never imagine that it is only in a profitable business that a wage earner has any security whatsoever.

(South Tipperary): You must look up the capital inflow.

No, it is not that. It is the income, the ordinary rate of income from doing business. How anybody is to get a complete incomes policy that will deal with the rate of profit which a company is allowed to make, I cannot say. We very often hear remarks bandied about that certain companies' profits are believed to be excessive. What is meant by "excessive"? I might as well say that somebody's wages are excessive. There is no yardstick by which you can judge it. Excessive over what? It is usually the man who is making more profit than I am who is making an excessive profit. I am the only person who is making a reasonable profit. That is the sort of stupid, selfish attitude we all have. I am not pointing the finger of scorn at anybody: we are all human. The price, wage or profit is excessive simply because we have to pay. Let us face up to facts. I do not believe that, for quite a number of years, we shall be able to evolve a completely comprehensive incomes policy to deal with company profits, rents and so on: it is a very complex business. I do admit that it is desirable to work towards that but for anybody to say that we can do it just at the snap of one's fingers is sheer nonsense.

So far as company profits are concerned, I would say there is a lot to be said for some restriction on distributed profits, but that is a different matter and that is not what has been put up so far. Every encouragement should be given to companies to make profits and to plough them back into the business—and to hell with the cigar and the champagne. That is the way a proper business is run, anyway, but, the more encouragement the Government can give, the better. However, if encouragement does not work, some restriction might be no harm. However, the idea that only capitalists benefit from a profitable return from a company is just nonsense.

There are very many trade union members, ordinary working men, if you like, who are holders of shares in public companies and that is the most desirable thing that has happened for a long time. Consequently, if you are too rough with the shareholders, it is not only the fellows who are having their holidays in the south of France or in the Bahamas, and so on, who will be affected. You are dealing with the investment of ordinary working men and women. You are dealing with their savings which they have invested to the best of their ability. So, sooner or later, I believe that the facts of life will percolate even into the minds of the Labour Party and that they will realise how out of date is the conception of labour and capital striving against each other, with the wicked capitalists getting the most unholy joy out of grinding the faces of the poor, while the honest working man is never suspected of knowing the meaning of an honest day's work. We are getting together. We are coming to understand each other better and therefore we must get rid of these stupid ideas. I agree we are in need of some incomes policy but I do not go any further than that and the Report does not go any further than that either, for the very good reason that it did not know where to go.

As a matter of urgency, I would advocate that we should encourage all wage and salary earners to hold off for this year, except in the case of the very lowest paid workers and that this should mean a sacrifice by the slightly better-off members of a community in favour of those who are finding life pretty hard just at the moment. That would be a constructive effort. One could say that far more would be done by fleecing the rich—simply because it is not a feasible proposition. If you said that all company directors should have their salaries cut by half, it would not give sufficient funds to pay anybody an increase of anything and there would be a loss of tax to the Revenue which would make it harder to pay for the social welfare benefits.

I feel we have got to get to the stage where strong trade unions can meet and discuss reasonably—as they are well able to do—with strong employers' organisations but this can only be done so long as the result of that negotiation is final. This business of referring everything back will get us nowhere. We have had one full delegate meeting of Congress already which has accepted the suggestion of £1. I would hope there will be a further meeting, at a not too late date, at which a full delegate meeting will authorise the Executive of Congress to enter into full negotiations and to reach a final and binding agreement with the employers' organisations which shall then be enforceable by the unions themselves.

This business of constantly referring everything back is, as I have said before in this House, sheer anarchy. It is not democracy, the essence of which is that a body of people delegate authority to an executive and control that executive only by their ultimate obligation to submit themselves for reelection. That is something which both employers and trade unions must accept. It is only right that it is for employers just as much as for trade unions. I think all employers should get together and join employers' organisations and I would much prefer that we got as unified and as strong a one as Congress.

Up to now, one of the weaknesses of the trade union movement has been a tendency towards disintegration. I hope we can get integration and that we can get a reasonable agreement. Whether or not we can, I do not know, but I think public opinion is coming round to a fuller realisation of the actual facts. We may cod ourselves that an increase in the standard of living is possible by an increase of £1 a week but we are just codding ourselves, purely and simply. It is stated quite clearly in this Report that an increase of £1 a week in money incomes is inevitably followed by a rise of six per cent in the cost of living—that an increase of £1 a week is worth six per cent.

Would the Deputy elaborate on that?

The Report elaborates on that perfectly adequately but if the Deputy wishes me to take him through it, I shall do so.

Do not bother. I shall see the Deputy later about it.

I shall give the Deputy the reference.

It is just in relation to what the Deputy has just said, that an increase of £1 a week represents an increase of six per cent in the cost of living.

I quote from paragraph 52 at page 39 which says:

It follows from these figures that, for every one per cent rise in total money incomes which takes place without any increase in total real output, the price level will rise by 0.6 per cent.

Yes, but that is not what the Deputy said.

It would not represent £1 a week in purchasing power. That is what I was trying to get at. By getting £1 a week extra—well, first of all, you have to pay tax out of it in many cases and, secondly; whether you pay tax or not, you will not get the full value.

Four and half per cent.

That is something which people outside the House have got the hang of quicker than the Labour Party. They could not have been slower anyway.

Deputy Booth made a mistake in his comments and he is now fixing that up but he should not try to blame the Labour Party.

I did get a bit tangled up because I had not got the page in front of me.

I do feel we have got to make it clear to the country that this is not a period of crisis in any way. The word "crisis" is infectious and is apt to spread alarm and despondency. Deputy M. J. O'Higgins referred very fairly to the Banking Quarterly Review but it made it clear that there was a period of temporary economic difficulty but nothing which could not be surmounted if proper steps were taken. So there is no crisis. There is a period during which our rate of expansion has been reduced but it still continues at a slightly lower rate—granted it is a considerably lower rate than we would like—but it is still expanding. As long as we have discipline, we will get through this stage. Capital will become available from other countries, as it did before. Cattle exports are bound to increase, and are already increasing; the British import surcharge will go at a comparatively early date to our great benefit; and then the rate of progress can be resumed.

The future is full of hope. It never was one for despair but we have got to have restraint and commonsense. If we get the full co-operation of this House, we will set an example to employers and trade unions. I am equally convinced that we can get some interim measure of agreement on that level but we must not allow ourselves to be panicked into doing it. We must not get the illusion that there are untapped sources of revenue which are just wide open to the Government, if only they had the guts to get after them. There is no one to be milked just as easily as that. There is not a huge number of idle rich and there are not enormous commercial industrial profits being made which do not already contribute more than their fair share to the national revenue. We have got to be thankful for it but we can easily throw things to the winds if we act or speak in an irresponsible way. I had hoped that at least this Report would have brought us down to reality a bit more and enabled us to see the situation as serious, but certainly not hopeless, and one which presents a challenge which I think we can and will be able to meet.

I listened very carefully to Deputy Booth. He certainly intrigued me. He advocated to the House that we should make ourselves acquainted with the documentation given to us and, in particular, this one. While he was talking, I could not help remembering a book written at the behest of 400 employers in Dublin called "Disturbed Dublin". I am sure Deputy Booth has it in his library.

I have not got a library.

Or shelf.

I have a shelf.

It was commissioned, funnily enough in 1913, and, funnily enough again, a good proportion of what Deputy Booth has said is in that book so he got a lesson from the glorious 400!

Maybe I wrote it myself.

Deputy Booth also indicated that some people here have not studied this NIEC Report. It would appear to mean that he is the one of the "some people" who did not study it. It is my understanding that his Party advocate its support. We heard what he had to say about professional earnings. This is what the Report says about professional earnings at paragraph 62 on page 45:

Professional earnings do not form one homogeneous category of income and within particular professions earnings vary widely depending on age and standing. Dissatisfaction with the behaviour of professional earnings within the context of dissatisfaction within income distribution in general, exists in part because of a belief, which may be real or imaginary that it is easier for this category of income to evade income taxation. At present those who are engaged in trades, professions and vocations are not obliged to keep records in order to prove their income.

That is wrong.

It goes on:

While there are severe penalties for failure to furnish a proper income tax return, it is difficult to secure that a proper tax return has, in fact, been made if adequate records of receipts and expenses have not been kept. The position in regard to professional earnings contrasts sharply with that of wages and salaries, where the possibility of tax evasion is generally negligible. We, therefore, draw attention to the recommendations in the Seventh Report of the Commission on Income Taxation, that there should be a statutory obligation on all who carry on a trade or profession to keep a correct record of business and professional transactions and that these records should be available for inspection by the Revenue Commissioners. Moreover, special thought requires to be devoted to benefits in kind in order to ensure that these are properly taxed.

That is in the List Finance Act, too.

We must also have regard to what has been said by Deputy Booth. He said that to evade tax, you must be able to prove company business. That is the greatest "fiddle" of all times and is one of the things which disturb the working class person, and members of trade unions. Deputy Booth has advocated a strong trade union movement and a strong employers' organisation. We have a strong employers' organisation called the Federated Union of Employers. I am convinced that Deputy Booth is a member of that organisation but he did not speak about their irresponsible actions of late in connection with the handling of trade union matters. One has only to have regard to the recent threatened dispute amongst maintenance workers. There was a threatened dispute there and the action taken by the employers was to serve notice of dismissal on maintenance men who had not served notice on them. This is the strong employers' organisation that Deputy Booth is advocating. It is about time employers were dealt with in these matters. Many an unfortunate man or woman has to face strong criticism on the part of the employer and there is nothing about it, but if a worker goes outside the door, there is murder over it.

I do not intend to spend much time dealing with what Deputy Booth said but I should draw attention to the fact that under the Friendly Societies Act, trade unions are obliged to account for their finance. The same provision is in the Trade Union Acts. Let us not cod ourselves about the 2/- and 2/6 of the trade unionists compared with the pounds of company directors' profits.

It is very important that we should not attempt to read into the NIEC Report what is not in it. I noticed a tendency to do that on the part of the Taoiseach and on the part of Deputy Moore, when he intervened while Deputy Cluskey was speaking. What Deputy Moore was saying was not in the book. It should be remembered that we in the Labour benches have not advocated that there should not be an incomes policy. We have not said this document is wrong and we are fully conscious that prominent trade union leaders spent a lot of time in helping to compile this document and worked on many other committees in the interests of getting things right. In return, they got lectures at all times on what they should be doing but nobody has yet attempted to lecture the employers.

In regard to the problem we are presented with, it is the Government's duty to set an example and the Government have failed miserably to do that. For many years we have been promised an improved Industrial Relations Act but we have not got it. The present Minister for Finance, when Minister for Industry and Commerce, promised it. The present Minister for Industry and Commerce has promised it but we know what is happening. Many people are talking inside and outside the House about industrial disputes and the importance of adjusting the Labour Court system but nothing has been done. That is the Government's responsibility.

The Government have done absolutely nothing about manpower policy, other than produce a White Paper These things matter a lot to people in the trade union movement who are being told to preach restraint and tell their people not to look for £1 a week but to forget the £1 a week. That is what Deputy Booth says. I suggest in all seriousness the Taoiseach should attempt to put that across to trade unionists and see what will happen. I invite Deputy Noel Lemass who has spoken about being a delegate to the Dublin Council of Trade Unions to put down a motion of that kind and see what comes of it.

We also heard talk about the 12 per cent and the National Wage Agreement. We know who created all the difficulties. They are the people to whom the Government extended increases of a kind that were more in the week than many a working man got in a year. That is true. That is the sort of thing we are expected to get over. We are supposed to tell our workers to forget about that, that we are all going to start off again. You can never get away with it. A classic example of this kind of thing is the recent Board of Works dispute. There was a claim and the allegation was that it would be a contravention of the National Wage Agreement if the claim by what were described as the "unskilled workers"—a horrible term —got the increase they sought, but the people who are denying it to them and who continue to make that argument against them, are people who got fantastic increases under the National Wage Agreement. I suppose "unskilled workers" are expected to stay quiet; it is a shame for them to cause a strike.

Deputy Booth spoke of the turnover tax and related his experience with a constituent. He omitted to mention that on the introduction of the turnover tax—and this is on record—the then Minister for Finance gave carte blanche to business people to create greater and greater profits. There was nothing about that. Ever since the imposition of the turnover tax, the Irish Congress of Trade Unions have advocated price control. Why did we succeed in getting 12 per cent under the National Wage Agreement? There were three reasons for it. One was to take care in some way of the increase in the cost of living that had taken place in the past three years. Another was to give the worker a share of the increased productivity and a further reason was to give the worker an improved standard of living. Deputy Booth says he would not deny these to the workers but what happened afterwards was that the Government failed miserably—I hope not deliberately—to control the cost of living. Only towards the end of last year they decided to bring in the Prices Act, locking the stable door when the horse had gone.

This afternoon the Taoiseach said one of the failures of the National Wage Agreement was the reluctance of trade union leaders to defend it in a positive way. This is very hard to understand when one takes into consideration the confusion that existed at this time. The Taoiseach spoke about fringe benefits. I should say that I had occasion to have some questions down recently, one of which was to the Minister for Industry and Commerce as to the number of times since 15th January, 1964 the Labour Court had recommended that certain classes of workers should receive improved annual holidays—a fringe benefit— the classes of workers in each case, and the numbers involved. The question was answered by the Minister's stating that he proposed to circulate the reply in the form of a tabular statement with the Official Report. We got a list of Labour Court recommendations for annual holidays.

We had the same situation regarding the five-day week. We got a list of Labour Court recommendations for a five-day week and the same situation regarding service pay. We also had the situation in which one set of workers, going to the Labour Court seeking service pay, were given it, while another set seeking service pay were not given it. The workers began to take stock and found that those who got it were those who could, to a great extent, tie up the city of Dublin. That is the kind of treatment all concerned decided to dish out to the working people.

How can we sell this idea of stalling and waiting when every trade unionist is in a position to stand up and say at a meeting: "Have we not been told, and was it not in the papers, that the country is doing well? Has it not been repeatedly said that there is no credit squeeze and that the banks are doing famously?" Deputy Cluskey read out a list of bank profits this afternoon. These are the things we have to tell the trade union members to forget about and we are expected to tell them the country cannot afford another increase. At the same time, the Minister for Transport and Power frequently avoids answering questions in this House in regard to matters affecting his Department and questions in relation to Bord na Móna and CIE are ruled out of order. It seems that this man has been left with so little to do that it has been decided to make him Minister for Propaganda. He is not making a very good job of it. He is the person called on to talk down to the working man. We have never yet heard him talking down to the employer. It is always the working man who gets the crack from this gentleman who is described as Minister for Transport and Power. I cannot understand how the Government can expect people to appreciate that there is no room for any more than three per cent when the Minister for Transport and Power and other Ministers make the statements they make while at the same time other Ministers say that we are not in a bad way, that we can afford this or that, that there is no crisis.

We must resent what appears to me to be a gang-up between the Federated Union of Employers and the Government in this matter of the tenth round. If ever there was a case of kicking the ball and keeping it in the same court, that is certainly the situation that exists between the statements made by the Federated Union of Employers and statements made by the Taoiseach and other Ministers of State. This afternoon the Taoiseach gave the figure that a 2½ hour reduction in the working week would cost six per cent. I do not know where he gets this idea. There is such a thing as productivity. It does not necessarily follow that productivity reduces in proportion to a reduction in the working week.

Everybody seems to give a great deal of lip service to unfortunate lowly-paid workers. I was interested in what the Taoiseach had to say this evening about them. When Deputy Cluskey was speaking, the Taoiseach seemed to be inviting him to come along and discuss these people with him. It brings me back to the point I made about bad example and good example. There are many Government Departments that are paying very low wages. A wage of £7 10s. a week is not uncommon and I have the documentation here to prove what I say. The Taoiseach stresses the importance of proper labour relations. Deputy Booth gave us a lecture on that subject and made suggestions as to what should be done and what should not be done. For quite some time I have been endeavouring to get an organisation described as the County and City Managers Association to agree to sit down at a table to discuss the possibility of introducing a joint industrial council for non-nursing personnel employed in the hospitals in the Republic where there are married men being given a wage of £7 10s. a week. Their reaction is: "No; we will not talk." I have written to the Minister for Health about the matter. He cannot do anything. The Minister for Local Government cannot do anything. The Parliamentary Secretary to the Minister for Industry and Commerce said the matter will be looked into. This is the sort of set-up we have. If we are to encourage people to behave in a proper fashion, it is right and proper that the Government should be the first to put their house in order.

We have been told that many things have to be done in the national interest. It is not the first time that this doctrine has been preached to the working class people. There have been many things done in the national interest by the working class people of this country. The time has come for the Taoiseach to demand that the employers make some contribution towards the national economy. It would not be infra dig to ask some employers to give a little of what they have to the workers they have taken it from.

Undoubtedly, the National Wage Agreement gave employers an opportunity to increase prices. If a check were made, it would show convincingly that a considerable number of employers made a lot of money out of the project. I maintain that in this connection the Government have been caught out because of the absence of planning in the initial stages. It will not do for anybody interested in trade union negotiations, who looks for an increase in wages from an employer to receive the answer that this must be done in a regulated way, that a copy will be given to each member and he shall read it. There will have to be a positive indication of responsibility on the part of the Government, an indication that they really intend to examine the whole situation. Perhaps the first thing they should do is to examine existing prices.

(South Tipperary): I regret that Deputy Booth has left the House because I think he was rather off the beam in some of his remarks here this evening. He mentioned some of the causes of our present economic difficulties. The first thing he mentioned was the flattening out of our industrial expansion towards the end of last year. Then he mentioned increased imports, specifically cereals and feeding stuffs which he said cost us £5.7 million. It is a fact that for a long number of years prices of cereals and barley have remained pretty stationary and it may be that Deputy Booth might like to agree that some advance in the price of these commodities for our farmers might have avoided the imposition on our balance of payments through having to import these cereals in the last year.

Deputy Booth also mentioned the fall in net capital inflow and, of course, he blamed the United States of America and the United Kingdom and the economic circumstances for that. It must have been obvious to Deputy Booth that capital inflow was something that we should never completely rely upon. Indeed, as has been pointed out by Deputy Dillon here on several occasions, when an election was well over in England and the economy had settled down, some of the money that had been passed from England to this country would be withdrawn and we would always have to face up to the position that money that had been salted away here might go as quickly as it came in.

Deputy Booth quite properly mentioned that the fall in cattle exports last year presented us with a problem as regards our balance of payments. He did not blame anybody for that. He certainly did not blame the Government. He did, however, say that the ninth round wage increase of 12 per cent had caused a considerable rise in the living standards of most people in the country. He omitted, however, to mention that this had been more than offset by an increase of some 11 or 12 per cent in the cost of living. Glibly enough, he said our present bad industrial relations are due to mere jealousy; he quietly ignored the fact that much of our bad industrial relations stem from the disappointment of those who, having got rises, find that these rises have been eroded because of no attempt being made to control mounting costs. He directed us to paragraph 45 of the NIEC Report and he stressed the word "consensus"; he stated he was not in any way optimistic that a consensus of opinion could be arrived at, which the Report suggests as a sine qua non to the production of a good incomes policy, and that there must be a unity of wills, so to speak, and a general meeting of hearts to get people to accept income differentials, which are part and parcel of our society and, indeed, of all societies.

Again, Deputy Booth forgets to draw attention to the fact that an across the board 12 per cent increase of necessity increases differentials in incomes and increases the stresses which differences in incomes have already engendered. I have never thought that an across the board percentage increase is a satisfactory method of advancing incomes because it invariably means that those who are already well off benefit to a much greater degree than do those who are lowly paid. Any increase of that nature —it is a simple matter to say five, six or 12 per cent—increases the differences we would all rather see reversed if we are genuine in our ambition to bring about a more contented society.

He is very helpful when it comes to settling industrial relations. He speaks of what he describes as a salutary discipline. This is really good. He does not believe in legislation, but he says the answer is quite simple. All you have to do is have a strong union and strong employers. After that Bob's your uncle. Surely he has heard of the immutable force meeting the immovable object. If we have an iron-strong union and iron-strong employers, I should think that would be the position in which one could never get agreement. But he is convinced that the Irish Congress of Trade Unions are satisfied that he is right and he feels that all we need do now is give the Congress teeth and they will bite and bark exactly as Deputy Booth wants them to bite and bark.

He deals with company profits and he says it is impossible to reconcile control of company profits with an incomes policy. Perhaps I am overstating the case when I say he says it is impossible, but to all intents and purposes that is what he did say. He blithely advocates a holding policy for the present year where salaries and wages are concerned.

The Deputy who followed him adverted to this NIEC Report—paragraph 62 dealing with income taxation and possible evasion by people engaged in trades, professions and vocations. I think this paragraph is at once an over-simplification and an overstatement of the case. It is true that many professional incomes are less touchable than fixed salaries and wages, but it is quite incorrect to make the statement that was made. It presents an exaggerated and distorted picture. I am a professional man. I am familiar with how other professional men fare under income tax legislation and regulations. The paragraph to which I have already referred detracts from the general level of the Report which, in many ways, is otherwise good.

About this time twelve months ago, if we are to believe what the Government told us, we were a very affluent society. I have here the Progress Report for 1964 on the Second Programme for Economic Expansion. Apart from reviewing 1964 the Progress Report devotes a special chapter to “The Outlook for 1965”. This Progress Report is generally circulated around Budget time. It is for the guidance of the Government and of this House. Paragraph 63 states:

In accordance with the National Industrial Economic Council's report on procedures for continuous review of progress under the Second Programme, consultations on the projections for 1965 were held with the Departments of Agriculture and Industry and Commerce, the Central Statistics Office, the Central Bank and the Economic Research Institute. These bodies expressed themselves in broad agreement with the trends disclosed by the prejections.

Not all the projections are wrong, but a number of them are. In fact, most of the projections are, in my view, unwarrantably optimistic. It starts off by prognosticating a growth rate of four per cent when we know now that if our growth rate turns out to be three per cent, we shall be reasonably lucky. It forecast a rise of £5 million in the national income. I do not know whether that figure is correct or not. It forecast a rise of £12 million in farmers' income based on a volume increase of three per cent and a price increase of four per cent. We know that in the event our cattle exports were down by £8 million or £10 million and our prices were down by £8 or £10 per head. Therefore, I do not think any farmer will accept the notion that farmers' income was increased by £12 million. In fact, none of them believed it even at the time it was written. We were told also in that paragraph there would be a rise of £30 million in non-agricultural employees' remuneration. I do not know the exact figure of that increase but I doubt if it approached the £30 million prognosticated here.

Then they came to tell us about the balance of payments. The predicted deficit in the balance of payments was £30 million which was likely to be covered by a net inflow of capital. It was not very long until we were speaking of an anticipated balance of payments deficit of £50 million. It was not very long until the net capital inflow of £36.6 million which we had in 1964 was being spoken of in terms of £25 million. We all know that our external reserves began to fall precipitously after this book was printed, touching, in the autumn of the year, somewhere around £200 million. We were also told that the ratio of savings to gross national product would again increase. It was 9.4 per cent in 1963; it was 11.2 per cent in 1964; and the expected figure for 1965 was 11.8 per cent. What is the actual position? The actual position is that there has been a decline in total savings from £18 million approximately in 1964 to £15 million in 1965.

It was also anticipated, according to this booklet, that our trade gap would remain substantially the same as it was in 1964, that there would be £20 million extra in respect of imports and £20 million in respect of exports. We know, of course, that our import excess steadily increased, advancing from about £125 million to about £150 million.

These projections were given to us before the Budget. By the time this booklet was put into circulation, we were two or three months into 1965, and in the first three months of that year there was also a drop in our exports of around £5 million and also an increase in our imports of £4 million or £5 million. In other words, there was sufficient writing on the wall to lead us to suspect that the rosy prognostications adumbrated in this Report might not come to fruition. A little later, in seven month's time, our imports had increased by £16.2 million and our exports had gone down by £9.1 million as compared with the previous year. That was a worsening of the trade gap to the tune of £25 million, and that position had been roughly maintained up to the end of 1965.

It seems rather inexplicable to me that a Department of State or several Departments of State working together should produce so erroneous a chaper as is written into that booklet, the progress report on the Second Programme for Economic Expansion for 1964. It was a type of projection which eminently suited the Government Party at that time. It painted a glowing picture, a very important image to give to a Party planning to face a general election. We were informed here today that in respect of 1966 we are shortly to have another attempt at forecasting. I hope it will be a little more modest and attempt a little more realistic approach than the past erroneous attempts at forecasting.

I am often asked, and I am sure Members on the opposite side are also often asked, what happened to the economy. They ask: was it not all right before the election; was everybody not saying, to use Mr. Macmillan's expression, we never had it so good? How did all this happen so suddenly? I submit it did not happen suddenly, that this position had been gathering for a number of years and that there had been, despite Government pronouncements, certain obvious defects in our economy which the Government must have or should have known of, but, for some reason or other, which the people as a whole did not grasp or did not wish to grasp. Repeatedly from this side of the House warnings of difficulties ahead were sounded but we were always greeted with derisive laughter. We were called Jeremiahs.

(South Tipperary): Several names. If we examine some of the trends now, in retrospect, it will be obvious that the Government should have been alarmed at the position earlier and taken earlier action. I have mentioned capital inflow. It must always be a rather precarious type of income on which to depend. Our invisible exports—tourism and emigrants' remittances—are sufficiently precarious perhaps in some cases but capital inflow, of necessity, is something we can never depend on.

We have the figures going back over the years. In 1960, the capital inflow was £0.9 million; in 1961, it was £13 million; in 1962, £23 million; in 1963, £25 million; and in 1964, the last year for which we have figures, it was £36.6 million. Any prudent Government in 1964, having seen a capital inflow of £36.6 million, would say it was too good to last, it was too much like a windfall and would have been sufficiently alerted to take the necessary steps not to leave the economy dependent on that type of capital inflow or to dwell in the foolish hope that it might increase.

Certainly it was foolish to think it could be maintained. In the event, it probably has fallen to £25 million. With our trade gap of £150 million odd, we are left with a projected balance of payments deficit of £30 million. Lower figures are spoken of now. I do not know whether those lower figures are based on a knowledge of capital inflow not available to me, whether it is in the background of the loan expected from the International Monetary Fund.

Here was a picture gradually unfolding itself in a five-year period which should have brought home to any Government that they were sailing into shallow waters. The trade gap itself, a basic thing, in 1960 was £74 million. Then it became £82 million, then £100 million, then £110 million, then £126 million—a steadily deteriorating position. Always it was felt in this country that any trade gap that went above £100 million got the country into potential difficulties; yet here we had a Government glibly sailing unperturbed into a trade gap of £126 million. To control this fall-off in our position during the past two years, our invisible exports did not materially increase. They advanced from £94 million to £100 million and all the time we were satisfied because we had a few pounds in the bank, because our external reserves had not yet been raided.

There was another development in our economy which again should have brought home to the Government the difficulties we were facing and which again they completely ignored. It is well known that while our external assets were for the greater part of the period maintained, our import excess was increasing, and if you take the import excess or the trade deficit as a proportion of external assets—those of the commercial banks and the Central Bank — one will find a steadily deteriorating picture. In 1960, the external reserves-import ratio was 35.86 per cent.

Which is good for the banks' liquidity.

(South Tipperary): I shall come to that in a moment.

I hope the Deputy does.

(South Tipperary): In 1961 the ratio was 36 per cent. In 1962 the ratio advanced to 42.4 per cent, in 1963 to 46.8 per cent and in 1964 to 53.2 per cent. This year, with our external reserves last November at £235 million and with a trade deficit of £150 million, it will be somewhere about 64 per cent.

Yes, it is about a rational figure.

(South Tipperary): The Deputy is very rational now, is he not?

I am quite rational. The Deputy's economic scalpel is a very poor one.

(South Tipperary): Other factors which should have brought home to our indolent Government the impending economic crisis, if we are allowed to call it a crisis as yet, were our production costs Deputy Lenihan may have seen the little graph at page 27 of the NIEC Report which shows the Unit Wage Costs and how they have fared from 1960 to the present time. A copy of that graph is in the annual Times Review under the name of Garret FitzGerald. It shows that between 1961 and 1962, and again between 1963 and 1964, there was a precipitous rise in unit costs production in this country. Mind you, the second one corresponded to and followed the ninth round wage increase.

These developments and the corresponding consumer price index during the same two periods were ominous and would have brought home to any Government that our credit position was steadily declining. Of course, no action was taken and no action could be taken until the general election was over and Fianna Fáil was safely entrenched in office for another term. In fact, no action was taken until the 13th July, 1965. Now, Deputy Lenihan is interested in banking liquidity.

(South Tipperary): The formula I am going on here is the ratio of national external assets of the commercial banks and the deposits in the Central Bank to the deposits and current accounts within the State. Banking liquidity is mentioned in the NIEC Report. One of the difficulties we had here, economically, was inflation. When the ninth round wage increase was introduced about £50 million went into circulation without a corresponding increase in goods and services, which meant, in effect, so much extra money was pursuing a limited number of goods and services. That meant that the purchasing power of money fell and our competitive position disimproved. Our export position was thereby disimproved. Increased bank liquidity, at the same time, increased the amount of money in circulation, adding to the inflationary trend. The figures, which are available to any Deputy who visits the Library, show that the ratio in 1953 was 45.8 per cent. In 1957 it had gone down to 30.2 per cent. In 1961 and 1962 it remained about 31 per cent. In 1963 and 1964, it dropped to 27.4 per cent. In 1964 it dropped to 27.4 per cent in January and then to 25.1 per cent in December. In 1965 it was 24.6 per cent in January, 19.9 per cent in May and June and 22.6 per cent in November.

That is a reflection on the other figures the Deputy quoted.

(South Tipperary): That was a sign to the Government that the monetary situation was becoming too fluid and that the inflationary trend was putting our competitiveness in a very serious position.

I am sorry for interrupting the Deputy but if he looks at page 14, paragraph 7, line 9 there is something there which should round off what he said on bank liquidity. Let him start where it says: "If the Central Bank's advice to the commercial banks..." That illuminates what the Deputy has just been saying.

(South Tipperary): Yes, I have marked it here. It reads:

If the Central Bank's advice to the commercial banks regarding the growth of total bank lending had been strictly complied with and had taken immediate effect, loans and advances to the private sector and/or lending to the Government would have been reduced.

That certainly explains a lot of things.

(South Tipperary): Deputy Booth shed crocodile tears about the capital inflow.

The Deputy has left Deputy Lenihan.

(South Tipperary): I mentioned already that our capital inflow had reached a very high level. It was unreasonable to expect it to continue. It was particularly unreasonable to expect it to continue in view of the position in England, even after the election. For a long time Britain has been in difficulties with her currency and with her trade but at no stage did the British Labour Government ever suggest or ever agree that they would devalue the pound. The devaluation of the pound was one of the reasons the last Labour Government went out of power and it was, therefore, most unlikely that the present Labour Government would repeat that performance. If they did not devalue, they had to deflate. Britain is the country with which we do most of our business and it should have been obvious to the Government, if they had studied international trends, that once Britain began to deflate, which she would have to do if she were to continue to get money from the International Monetary Fund, we would have to tighten our belts. Yet we went on living high, wide and handsome, never having it so good, spending more than we could afford, until the eleventh hour. Here again was a lack of economic and political foresight on the part of the Government.

This review mentions a certain paucity of statistical data and a certain delay in the production of statistical data. That is probably true. It also mentions our import and export figures not being available for a couple of months. I put down a question yesterday about our imports and exports last year and they are not yet available. It seems strange that on 26th January we cannot get the official figures of the number of store cattle exported in 1965. One would imagine that it was not such a difficult matter to count the few thousand cattle we exported. That should not present a formidable difficulty. Such figures should be available within a couple of weeks of the end of the calendar year. I admit that provisional figures are published in the newspapers but when one puts down a Parliamentary Question in this House, that is the answer one gets— the material is not available.

Similarly the report complains that the quarterly statistics on industrial output, employment and earnings are not available for three months, and that the wholesale price index number and hire purchase data are not available for two months. Our external assets figure is usually available about the third Tuesday after the end of each month. These figures should be readily available to the Government and, indeed, to every Deputy.

The recommendations mentioned by the Minister for Finance here yesterday were mostly taken from this Report. He mentioned first, control of aggregate demand. Oddly enough, it seems this aggregate demand control is to be applied more to John Citizen than to the Government who are laying down the moral code for us. The Minister mentioned credit policy and said he would not deal with that. Apparently the Minister did not wish to deal with such matters as capital inflow and Exchequer Bills. The Government have been the greatest offenders over the past 12 months in the issue of Exchequer Bills. However, I will come to that later.

This document makes one suggestion which I think is well worth attention. It deals with the building industry and advocates some form of licensing and a more adequate control of building in the State.

On what page?

(South Tipperary): There was probably a very good reason for that. In fact, one of the biggest forms of expenditure on the part of the State is aids to building of one sort or another. I want to direct the attention of Deputies to page 51 of this Report in which it is stated:

A particular problem arises in relation to the building and construction sector, which bulks large in both public and private investment. It has already been pointed out that the rapid expansion of demand in this sector in 1964— some of it the result of speculative projects of doubtful economic benefit —contributed to the country's difficulties in 1965, and that one consequence of these difficulties has been a levelling off, and possibly even a decline, in building activity.

Encouraged by the banks. See page 14. It refers to what I told the Deputy before.

(South Tipperary): When the Taoiseach came before us here on 13th July with his various admonitions about the economy, he told us the various steps—I think there were ten different steps—he proposed to take to correct our economic difficulties. One of the things he stressed was the question of excess of expenditure. The restriction on Government expenditure was one of the ten points he laid down to correct our economic difficulties. That was in July. Subsequently the levies were introduced. It is interesting to see how example and precept fail to coincide so far as the Government are concerned. Between March and July, 1964, bills, loans and advances from the banks had increased by £15 million. Of this, £12 million went to the private sector of the economy and £3 million went to the Government. For the corresponding period in 1965 we find that bills, loans and advances from the banks had increased by £25 million, and here the position is completely reversed. Of that, £5 million went to the private sector and £20 million to the Government.

Read paragraph 10 on page 15 and you have the answer.

(South Tipperary): A reply to a Parliamentary Question put down by me showed an increase in Government borrowing to the tune of £30 million, and a decline in private borrowing to the tune of £10 million since the credit squeeze started.

They were the best investors.

(South Tipperary): Now we have it.

They were the best investors in housing and everything else.

(South Tipperary): From 1st April, 1964, to the end of the last calendar year, State borrowing from all sources was £218 million.

Debate adjourned.
The Dáil adjourned at 10.30 p.m. until 10.30 a.m. on Thursday, 27th January, 1966.