Dáil Éireann díospóireacht -
Thursday, 10 Mar 1966

Vol. 221 No. 9

Committee on Finance. - Resolution No. 12: General (Resumed).

Debate resumed on the following Motion:

That it is expedient to amend the law relating to customs and inland revenue (including excise) and to make further provision in connection with finance.

—(Minister for Finance).

The Taoiseach

I have not a great deal to add to what I have already said. During my speech before Questions I gave the justifications for the Budget proposals, which appeared to the Government to be reasonable. I tried to indicate the alternative courses on which the Government had to take a decision; the options which were open to them; the choice there was in closing the gap between revenue and expenditure by increasing the revenue or cutting expenditure. I commented upon the failure of the Opposition Parties to face up in a constructive and realistic way—so far in this discussion at any rate—to the Budget problem of the country in this year. I then proceeded to discuss the economic prospects for the year as they could now be forecast and I referred briefly to the good prospects as well as to those which are not so good. I tried to relate the Budget and this economic forecast to the international situation into which the country is now moving. We realise very well that the changes which are required, not only in our economic organisation but in mental attitudes at all levels of activity, are considerable, even revolutionary. But we cannot achieve the high targets at which we are aiming by pettifogging for the adjustments. We have to prove ourselves to be as well fit to live in the conditions of the future as any other Western European country, and as well able as they are to adapt to new circumstances.

I want to emphasise that in the opinion of the Government there is no reason for pessimism about the future. We envisage a rate of economic growth this year, notwithstanding all the difficulties of the year, higher than many other countries in the world will attain and a great deal higher than was attained before the introduction of the Programme for Expansion. If we do achieve, in very difficult circumstances, the rate which has been forecast as possible we can be fairly certain that conditions will continue to improve and permit us to maintain this rate of growth in the future.

It cannot be achieved, and I want to say this as deliberately and solemnly as I can so that the mind of the Government on the subject may be well known to everybody, unless the guide line set by the Government in respect of overall income increases is maintained. A serious breach of this guide line could result in a set-back to all our hopes and to a serious worsening of the national situation. This is not new. I have said this here before and I repeat it in order to make it clear to everybody who is seriously interested in the welfare of the people, whether farmers or workers or any other section occupied in this country, so that they will recognise this and seek to act accordingly.

If we should fail in the test it will not matter very much on whom we will place the blame. That is not very important. What is important is that the reality of our situation should not be obscured so that every section of the people, farmers, workers, businessmen, industrialists and managers should know clearly with what we have to contend and should be willing to co-operate to every possible extent. It is the Government's duty to publicise the facts of the national situation and never before in our history has there been such a spate of publication of details in this regard. We have done everything possible to publicise the course of action which in our judgment can best help the country in this period of difficulty. This is what we have done and this is what we are trying to do.

The conditions which are essential for the nation's material and social progress envisage increasing competitiveness in every sort of activity, the raising of production both in industry and in agriculture, the expanding of exports so that we can pay our way in the world and sustain our living standards during the period necessary until our external balance of payments can be brought again under control. If we cannot get it under control, we face a grave economic crisis. All this has been said before, but it must be said over and over again until the truth of the situation penetrates to every mind.

The forecast for economic expansion this year is based on various assumptions. Not all these assumptions, such as those relating to normal weather for agricultural production or the withdrawal of the British import surcharge, can be altered in any way by our own actions but others can be so affected and those include the cooperation of all concerned in keeping aggregate incomes in line with the increase in the national production and the avoidance of grave industrial disputes. I felt a sense of frustration when I heard Deputy Corish relating this three per cent overall increase in incomes to the man with eight or ten pounds a week and trying to calculate what that increase meant for him in weekly terms. If there is a desire that workers in the lower income groups should get reasonable increases, the possibility of giving such increases depends on the willingness of the people in the better off sections to refrain from looking for increases for themselves.

We have fixed a line at £1,200 and we have asked that people over that limit should be willing to forgo seeking any increases in this year so that the benefits of the three per cent growth rate should be confined to those who most need it. The only means by which the Government can make this assumption of growth of production come true, apart from continuous explanation and exhortation, is price control. This instrument of price control is at the best a very uncertain and haphazard instrument but it is our intention to use it. Prices have been stable since the spring of last year because since then the rise in productivity has outstripped the rise in incomes. This is a position that can be maintained throughout the year and which will be maintained if everybody will co-operate with the Government in bringing it about.

Deputy O'Higgins and Deputy Corish yesterday and Deputy Cosgrave and Deputy Tully today said that the Government have made mistakes. I would not have the arrogance or complacency to say that the Government have not made mistakes. In the past we have made many miscalculations and mistakes and probably will do so in the future but I do not think we have made any mistake about the aims we have set before the country. These are to put this country into good economic shape, to increase efficiency in every sector of industrial activity so that it can live in the highly competitive world in which we have to live, in which the old methods of tariff protection are no longer appropriate, to stimulate the growth of our national resources through the expansion of production and exports in agriculture and industry so that our people can seek and get increased standards of living.

We do not intend to allow these aims to be frustrated by irresponsible actions on the part of any section of the community so long as it is within our power to prevent it. We mean to ensure that these objectives will be achieved by keeping our national finances in order, by making sure that the Budget is balanced. All these conditions are essential to our progress. That is why I say that this is a good Budget and one which will contribute to the welfare of the State. That is what we set out to achieve and that is what I believe we have achieved.

Mr. Donegan

The Taoiseach has vacillated between generalisations and petulant attacks on Deputy Cosgrave, Deputy Corish, and other speakers. I suppose when someone has a bad case, that is the best he can do. When someone is on defence, I suppose the thing is to attack, but it is necessary to attack with suggestions of policy and steps that will improve matters, and not with petulant criticism and bad-tempered snappy sayings which characterised the Taoiseach's contribution here today. The line he took on at least three separate occasions during his speech was: "What would the Opposition do if they were there?" No less a person than Deputy P.J. Burke has taken that line in every Budget debate since I came here in 1954. His suggestion was that if we voted against the changes, we were voting against increases for old age pensioners. Well, this is 1966, and that dog will not fight because this is not a Budget in respect of which one can talk about the day on which it was decided to take certain measures.

This Budget has been decided by the Government as a result of their own steps, their own efforts, and their own decisions over the past three or four years. It is like getting married. If you get married, you have to stay with it. If the Government make wrong decisions and political decisions to preserve themselves in office rather than for the good of the country, then when it comes to a Budget such as the 1966 Budget or the 1952 Budget, they have to live with it. When a man gets married, he has to live with his wife, and in this case unfortunately for the Government, it is not a happy marriage.

The Government can be proved to have had many advantages over the past 24 months and they could have guided the ship of State towards calmer waters and towards the goal which the Taoiseach suggested has pride of place. If one looks at the figures in page 32 of the NIEC report, Comments on Department of Finance Review of Economic Progress and Prospects for 1966, one finds that from 1963 until 1965 the national income increased from £830 million to £1,015 million. The projection for next year is that it will increase by a small percentage, if one takes the percentage per year, to a figure of £1,070 million. That means, in fact, that there was a larger cake from which a slice could be taken by the Government, a slice that would pay for current expenditure and capital expenditure which could be regarded as investment in the future. The Government did not take that opportunity. The terms of trade were right. Over the past three or four years, the things we had to sell did not decrease in value to any appreciable extent, and the things we had to buy did not increase in cost to any appreciable extent.

I want to point to the difference between the situation in which we found ourselves in the economic crisis in 1956-57, and the economic crisis which the Government find themselves in this year. The terms of trade at that time had gone completely against us. The things we had to sell were going down in value. Cattle were selling at £5 10s a cwt. While the price of cattle is not as good as it was last year, owing to the credit squeeze in England, you can get £8 a cwt. for cattle today. I got it yesterday. Therefore there is no question about that.

Mr. Haughey

Deputy L'Estrange attacked the price of cattle last week.

Mr. Donegan

The price of cattle is down since last year. I should like now to discuss the disreputable campaign of the present Minister for Transport and Power in 1956-57 when I sat here as a much younger Deputy, and day by day the then Deputy Childers came in here with a brief case in each hand and asked question after question about the price of cattle. The Irish Press gave him headlines, and all over the country, cattle prices kept going down, and down, and down. He had as much regard for the people of the country who might lose their jobs, and as much regard for the Exchequer which might find itself without money to do the things which needed to be done, as flies walking on a wall. That is relevant to this debate.

Today there is a decent Opposition on this side of the House, an Opposition who should not have been railed against by the Taoiseach in an effort to blind the people, and to completely camouflage the position which he him-self—and I intend to prove this—and his incompetent Ministers have brought about. We were blessed in the past few years with a fair balance of trade, and this was an advantage to the Government which we did not enjoy, but it is an advantage of which this Government did not avail. During this entire period, the national income was increasing, the terms of trade were right and we had this wonderful "Let Lemass lead on" feeling. What was happening? Total employment was constantly decreasing.

Let us remember that we have not yet anything like an industrialised nation, but we have the greatest mine of wealth of any country in Europe and, that is, that we have the best labour force, in our boys and girls who are leaving the technical schools and even the national schools, available in Europe today. The position is that total employment is decreasing. Let us look at the Progress Report for 1965 on the Second Programme for Economic Expansion. On page 98, Table 5, we find that whereas our total labour force in 1961 was 1,108,000 people, while that figure increased in 1962 and 1963, and in 1964, reached 1,115,000, in 1965, it decreased by 7,000 to 1,108,000 people.

If you want to say, as has been said by the Taoiseach today in a poor defence of his beggarly situation, that people are leaving agriculture, let us examine the position in relation to agriculture, forestry and fisheries. From 1964 to 1965, the numbers decreased from 352,000 to 338,000 and —let us be fair to the Government— that was a decrease of 14,000 people. The best we could do while pouring money out in grants and loans, while the finest labour force in Europe was constantly available, while the terms of trade were right and the national income was right, was to lose 7,000 people. We had 7,000 fewer people to pay taxes and the Government and the officials who prepared the Budget had to see to it that those who were left would pay more. I am reminded of a few lines of poetry:

Ill fares the land to hastening ills a prey,

Where wealth accumulates and men decay.

That is what Fianna Fáil have done for us. That is our present position with them. The only other thing I felt was that there was hope because they say: "Those whom the gods would destroy they first make mad." Let us now realise that to buttress the strain on our economy, to make real industrial expansion and to employ our people, we have got to have a constantly expanding agriculture and a constantly expanding agricultural export. If there are fewer to eat the produce of agriculture it would seem to be easier to have more to export.

What are the facts? I am glad the Minister for Agriculture is sitting opposite. If one turns again to page 108, Table 70, of the Government's Progress Report, one finds that during 1965 we had to import all the things we could have produced here, if the Minister for Agriculture had done his job and if the Minister for Agriculture knew how to do his job. We had to import cereals and cereal preparations to the value of £7.1 million, wheat, at a time when a 14 per cent decrease was recorded in the acreage of that crop, to the value of £6.9 million. We had to import maize, which could have been entirely substituted by Irish barley, to the value of £2.6 million. When we come to animal feeding stuffs we were not even able to show any reasonable performance in the feeding of our animals. We had to import £6.8 million worth of animal feeding stuffs to feed the animals we rear on our farms.

What is the position then? The Minister for Finance—I quote from his speech—said with regard to the rise in the import of farm materials that there was a reduction in agricultural production. I do not know about that, but the position is that net agricultural output fell by 1 per cent below the level of 1964. I want to say again that the first need and the first prerequisite in expanding industry is to expand agricultural produce and agricultural exports. This will ensure that we will not reach the beggarly position we are in today, in which we cannot support any more the capital budget necessary and the capital expenditure necessary if we are to employ our people mostly in industry here.

The Minister, in introducing his Budget, said in relation to agriculture and many other things that he had nothing to give because he had given it all already. That is not much use when the real fact is that the person working in agriculture has, in fact, a far lower income than the person working in any other sphere. He said, on page 17 of his circulated speech, that he hopes that the ratio will be preserved. What does this mean? Does it mean that the people—they are leaving agriculture at the rate of 14,000 a year—will now be left by the Minister for Agriculture in a situation in which they have far less than people in any other activity in the country—a situation which will be preserved in 1966? Surely this is the hub of despair. Surely this is a situation in relation to which the Government have entirely failed. If the Minister for Finance were not blatantly, with the hard-neckmanship that is now the trade mark of the Fianna Fáil Party, saying something that is obviously untrue, then things might not be so bad.

I would like to turn now to the Progress Report again, to Table 21, page 116, where we find that in the projection for 1966 it is hoped that agriculture will get £7 million more income and the remainder of the community £30 million more. If according to Table 5 the numbers employed in agriculture are 352,000 and the numbers employed in other activities are 705,000, then surely there will be twice as much an increase for any other section of the community as there is for agriculture. As long as that situation exists and as long as that basic flaw runs right through the whole economy, so long will we not succeed in employing industrial workers who will ensure for this country a decent state of livelihood where there will be £1 for everybody and not an outflow on the emigrant ship to the tune of 17,000 as happened last year. Those are facts which cannot be refuted. Those are facts which are a complete condemnation of the Government. They did not have the terms of trade or opportunity against them. I wonder now what did my very good friend, and the Minister's very good friend, Mr. Rickard Deasy, say to the Minister yesterday afternoon. I wonder now what is the position of the NFA who withdrew their rates campaign and who now find themselves sold out by the golden boy who was going to produce sovereigns? What were the terms and what were the undertakings given? There is an old expression to the effect that you can cod some of the people some of the time but you cannot cod all the people all the time. I do not want to say that so august a body as the NFA were codded.

Mr. L'Estrange

They were.

Mr. Donegan

Certainly they were led into pastures that were not as bountiful as the Minister for Agriculture would have them believe. However, let us hope that the Minister for Agriculture in future will mend his ways but it becomes hard for him to do so because, like myself, he is not getting any younger. At the same time, maybe the old rod can be bent in this case as easily as the younger one.

This Budget, of course, fails entirely because it has no regard whatever for the humanities. I heard the Minister for Finance yesterday suggesting there would be a one per cent rise in costs as a result of this Budget. In fact, I heard a backbencher of the Fianna Fáil Party interrupt to say, when Deputy Michael Pat Murphy said that the oldage pensioner was entitled to his half-one: "You could have no sympathy for anyone who takes a half-one." When people reach an age—they may have reared a large family, which is perhaps scattered to the four winds because God has not been as kind to them as to others—where they find themselves without savings or personal income and they have been used to having a bottle of stout, a cigarette or, like the Minister or myself, a half-one, it is quite improper, quite incorrect and quite inhuman to suggest, that because there is financial stringency here, there and everywhere and because the Government have made mistakes to the extent of £3 million in relation to applications for industrial grants, these unfortunate old people are not to have any of the little comforts of life any more.

I do not believe there will only be an increase of one per cent in the costs, which the Minister for Finance says this Budget will bring, because he has been extremely clever in a political way and has spread the impost like jam on bread, all over it. The impost will not appear so savage until three or four months time. In regard to old age pensioners, last year Fianna Fáil made a circus ring approach to their problem. They gave an increase of 10/- but it was paid only to old age pensioners whose income was less than 10/- a week. As a politician, I am a GP as far as filling in forms of old age pensioners is concerned. I do not know if the Minister does it.

Mr. Haughey

Indeed I do.

Mr. Donegan

Up to the last Budget, when we were filling in forms, our purpose would be to ascertain whether a person had less than £53 15s. a year income. If he had, he was entitled to full pension. When you asked Maggie if she had 38 hens and a pig, she told you: "Sure, the inspector will be around". You then put down a figure of £38 and found it extremely hard, after the inspector's adjustment, to guarantee whether the person would get a full old age pension. The files of the Department of Social Welfare are chock-a-bloc with forms filled in by Deputies saying that people's incomes were between £10 and £53 15s. We were all caught out because after last year's Budget if they had more than £26 a year, old age pensioners got only 5/-.

Mr. Haughey

Ah, well——

Mr. Donegan

If the Minister can disprove what I say, I will be amazed.

Mr. Haughey

I am agreeing with the Deputy. I was trying to say that five bob was not bad and ten shillings was the highest ever given.

Mr. Donegan

Who got it?

Mr. Haughey

The people who needed it most.

Mr. Donegan

It was the people whose forms were filled up in a certain way. Only a minority of old age pensioners, people who have absolutely no funds, no income of any kind, get a full pension. We know what happened in the Budget last year. Now I come to the present Budget. If an old age pensioner has any income at all, he will not get the 5/- increase. Any Deputy who has helped pensioners to fill in their forms will in future not put in a shilling but will allow the argument to proceed between the inspector and the applicant. The Minister for Finance has told us that all this will cost £250,000. That is the total sum this increase will cost in a Budget which will make this country considerably poorer. This Budget will lose Fianna Fáil a bag of votes.

Let us examine the cost of increasing old age pensions during the past few years. Before the contributory old age pension was introduced, the cost of a halfcrown increase was £1.2 million. The contributory old age pension was introduced, properly, and it reduced the cost to £700,000. I do not think anyone will dispute the fact that on this calculation a 5/- non-contributory pension increase would cost £1.4 million. We have been told it will cost £250,000. Arithmetic is my strong point and I can tell the people of the country that they need not have any arithmetic to tell to how many this £250,000 will give increases in pensions. I am delighted that Deputy Burke has arrived. This time he cannot wonder whether we will go into the lobbies and vote against the old age pensioners. Only one out of five will get this increase.

Mr. P.J. Burke

You took it off.

An Leas-Cheann Comhairle

Deputy Burke should not interrupt from the stairs.

Mr. Donegan

The Minister said we were faced with a hard choice. He said either we must raise taxation to close the gap in the current Budget, however distasteful that might be, or cut down on the public capital expenditure, which, in turn, would mean unemployment and lack of social development. In other words, we are to kill the fatted calf for the prodigal son who has gone out and drunk the proceeds. During the past four years Fianna Fáil have squandered the kitty. Do they expect that we, or the Labour Party, or the trade union movement will now say: "We will not look for any more increases. We will put on our white garment and cleanse ourselves"?

Mr. Haughey

The Deputy is in powerful form this afternoon.

Mr. Donegan

I am giving the Minister some of what we got from Fianna Fáil in 1956. What we are giving them now is a very mild facsimile because ours is constructive and theirs was destructive. Of course that does not bother Fianna Fáil. They have destroyed most of what was good in the country We do not quarrel with the argument that the Minister has a choice. The mistakes were his and so were the bad housekeeping and his decision to settle improperly a wage claim pending two by-elections, trying to ride a beaten horse and succeeding. It was his decision that put up prices. Now he comes along to the Labour Party and the trade union movement and the unfortunate man trying to keep his family on £10 a week but to whom the employer cannot afford to pay much more, and says that all he can get is three per cent.

Let us examine this three per cent. A single man earning £10 a week is paying on £3. 15. 0. a figure of 5/3 under PAYE instead of a much smaller sum. I must be careful of my figures since the Minister is an accountant. Does he expect the trade union movement to go hat in hand to that man and say: "You must not look for more money, even though it is extremely difficult to pay these increases."? I am not naïve enough to believe the union will not seek these increases or that we should all wash our hands and go away saying: "We shall do with a little less." The job of the trade union official, to my mind, no matter what the Taoiseach said this morning by way of gilding the lily, is to get better terms and more money for his members and he does not do the job properly if he does not make an effort to do that.

Mr. Haughey

But not regardless.

Mr. Donegan

No; I am coming to that point. He can have his opinions as to what is a fair share substantiated by those who are employed by trade unions nowadays to work out the figures. They employ quite a few economists. He can have his opinions as to what is a fair share. So can the employer and so can the Government and they will meet and bargain and look for more. When it is all over, the trade union official will have got for his members that which they are paying him to get, which is the optimum he can get.

We must face the fact that this three per cent the Taoiseach talks of, the business of doing this for Ireland, wrapping the green flag around us and invoking Kathleen Mavourneen is all eyewash. When you come to the negotiating table, you find the trade union officials who are decent friends of yours and you are on the other side and it comes down to hard bargaining and that is that. The Taoiseach need not think that it is anything else. I can see Deputy Tully agrees 100 per cent with me.

Mr. James Tully

I sure do.

Mr. Donegan

At least somebody told the truth.

Another point that must be faced is the treatment by the Government of the Agricultural Credit Corporation and the complete failure of the Minister for Agriculture to get for the farmers that with which they could have ensured more jobs in industry and more prosperity for the people. I know the Minister will not contradict me because he knows that what I am about to say is true. In the last financial year, the Agricultural Credit Corporation having been greatly expanded —let it be to the credit of the Government—was heading towards a projected total lending of £7 million. At the same time, certain bank managers down the country were trying to push over people who were good clients largely to the Agricultural Credit Corporation, people who wanted to fund their bank debts or to buy land. Let us also give the Government the argument that this was placing too great a burden on the Agricultural Credit Corporation. I do not quarrel with the idea of the Government saying at that stage: "You should not give money to purchase land or fund bank debts," but I quarrel with the fact that in a year when the projection was £7 million; when an institution was at last about to do a job for Ireland that was unparalleled we had the position whereby, first, the Minister for Finance instructed them to do the same as in the previous year, plus £1 million or a figure of £5.7 million, and having done that, we find that the amount allowed to the Agricultural Credit Company in 1966-67 is £3.6 million or a reduction of £2 million.

Let us accept that the corridors of Leinster House for the past month know that the Minister for Agriculture and Fisheries and the Minister for Finance were hopping mad at each other. Let it be to the credit of the Minister for Agriculture and Fisheries that he was hopping mad but devil the much he succeeded in doing about it in what is always an anti-agricultural Fianna Fáil Government. It is quite easy to realise that the people who work in the hat shop in Grafton Street or make castings in a steel foundry or those who go down the quays to work in Gouldings and all industrial workers depend for their livelihood and for a continuance of the Friday pay packet on the expansion of agriculture. In this industry the capital sum invested was given some years ago by Deputy Dillon as £1,000 million, which figure, I may say, he now agrees is quite out of date and far too small. This is the industry that has been denuded of one source of capital, the one thing that could have seen that two blades of grass, in the words of the late Paddy Hogan, would grow where one grew before, that would mean money for Ireland and a future for the country and it has been completely lost by this Government who, let us hope, just do not understand. Any other thought would be too horrible to contemplate.

What does this threat of an autumn Budget mean? As far as I can see it means that industrial workers and those who are organised can be told: "Get into your rabbit-holes and say nothing and, unless you do that, we will have an autumn Budget."

You can use a mallet to kill a fly. You can have a pyrrhic victory, and that is what will happen in regard to putting this economy right. The Government are doing a blood-letting operation on a patient, one-half of whom—if you could divide the patient in two—requires blood-letting and the other half requires a massive transfusion. The Government are doing this in the knowledge that if it does not work and if we do not all behave ourselves, and if the great whip the ringmasters are now cracking does not bring results, we shall have an autumn Budget. The thought is quite ridiculous; I cannot understand it.

I have instanced the fact that the increase in industrial employment in a state which is only in its infancy, and in which we have this glorious work force that I regard as the best in Europe, has been halted. Let us face the fact that in our encouragement of industry we have had some notable failures. On the Board of An Foras Tionscal, and among the officers of the Industrial Development Authority, we have excellent groups of men. I know most of them and they were appointed by the Government, and I want to say from this side of the House that I can think of no better men to select. But in the particular industrial enterprises where politicians, in the shape of Government Ministers, have intruded themselves, they have been spectacular failures. We on this side of the House have come to the conclusion that a serious reappraisal of the situation in relation to grants for industry must be undertaken, and this must take the form of an arrangement whereby the property in respect of which a grant is given will, by some means or other, remain in the hands of the Government. I have deliberately refrained from using names of industries in my questions here over the past six or seven weeks, where I thought that public mention of a name would have any effect on their future progress, so that nothing can be said about the Opposition as far as affecting individual industries is concerned.

I want to charge the Government that in respect of most of these operations, it is notable that where those involved have been seen with Cabinet ministers, have been associating with Cabinet ministers, and are well-known friends of the Government, they have been failures to the extent of some £1,319,000. One company was granted £113,000 and no information was given to us in relation to any form of Government loan. To one industry, in which it is well known the members associated with the Government, there was a grant of £120,000 and there is no information in relation to that. There was an industry which received a grant of £120,000 and a further injection of a loan of £96,000, and again there was a well-known association there.

One wonders at the propriety of this matter. One wonders what pressures were brought to bear on Government Boards, on the Board of An Foras Tionscal, or on the Industrial Development Authority, in regard to these failures. I know that it is fair comment for the Minister for Agriculture to say across the floor of this House to me, as he has done: "You are doing them nothing but harm by doing this". I have not used their names, except in one case, and that is public knowledge, but let us realise that this is the Parliament, that these matters will have to be examined, and that the expenditure of £3 million properly applied would certainly have made up the difference of 8,000 jobs that should have been there if we were to provide the same labour force in 1965 as we had in 1964. I blame the Government and nobody else because theirs was the decision and theirs was the mistake.

May I say again that I find myself amused and bemused by this suggestion that there should be restraint by everybody? The Prices Stabilisation Order of the Minister for Industry and Commerce has failed lamentably. It is impossible to control prices generally. This has been proved in every country in Europe. It is possible in wartime when you have rationing and fixed sources of supply, to do this, but when you have a change in quality, when you have a change in the size of the container, when you have several different brands of one particular commodity, the thing becomes so completely impossible that it would require a Department as big as the Department of Supplies, which we used have at Ballsbridge, to carry out an inquiry and examination into prices. Prices have gone up since the Prices Stabilisation Order was introduced. Everybody knows that; it is common knowledge. They will continue to go up, and there is nothing you can do about it, and costs will go up. If that is to be the way, then surely the trade unions, the employers who have to pay higher wages, and everybody else, are entitled in their own private capacity to see to it that their ship does not founder on the rocks.

I find this three per cent suggestion one of the most ridiculous things ever sought to be put across. It savours of Kathleen Mavourneen and Wrap the Green Flag Round Me, Boys, but that line of thought is as dead as a dead duck. Let us consider how some increases in the Budget will affect costs. Let us consider the position in relation to the PAYE taxpayer. Trade unions are going to seek to recoup the losses he will experience. I will say nothing more about that because I have already spoken about it. Take the question of diesel oil. As a kind of sop to Cerberus we have the exception in the case of buses. Let us consider that our heavy lorries of today carry far more goods around the country than any other mode of conveyance. They are carrying more than goes by rail. Every diesel lorry, whether owned by CIE or privatelyowned, will pay the extra tax on diesel oil and that is going to make a very serious difference to costs.

Take the cost of sending goods to the west of Ireland. Take the cost of sending heavy materials such as animal feeds, or material such as fertilisers for the fields, which the Minister for Agriculture should be looking after. These costs are going to be charged in. Let us face it, nobody bears these costs in industry. You charge them up. That is the way it goes. Life is like that. The Minister is an accountant and I am a businessman, and we know that, and the trade unions know it, too. It is quite simple: you just cannot bear these things any more. In respect of diesel oil, we are going to bear a very heavy impost. In respect of petrol, there are commercial travellers' cars which at present are doing an annual mileage of 30,000 or 40,000. I know one traveller who is doing 40,000 miles a year

If there is to be an increase of 4d a gallon on petrol, do you think that that is not going to be charged in? Of course it is. That is all going to increase the cost. Let us take the unfair and despicable action in relation to the road tax. Let us take the view that the man who had the money and taxed his car for 12 months from January is not going to pay any increase this year. The Minister for Agriculture need not direct his beady eye at me.

Mr. Haughey

In the financial year he will—everybody will be caught.

Mr. Donegan

He will be caught in respect of the last three months. He would not be caught in respect of the months in 1966.

Mr. Haughey

When he comes to re-tax.

Mr. Donegan

When he comes to re-tax. I made it quite clear that I was referring to the gentleman who had the money and paid his cheque across the counter in the first days of January. He will be free from this tax until 31st December and he is largely the man who is doing the big mileage, who has his car for business purposes. Surely if you do 30,000 miles in a year, you expect that you are going to make some money in doing it? That is your job and you will not be long travelling around if you do not. Think of the unfortunate worker who lives some distance from his employment. I am going to give an example which will bring it home to us and make us realise just how badly off he is.

Four miles down the road from me, there are 700 or 800 people employed in the GEC factory in Dunleer. The managing director of that factory told me that the girls employed there might travel from five miles around, perhaps going with a brother in a car, but the boys would travel ten or 20 miles, maybe four of them in an old van. That van or car is used for that purpose only. I estimate that van will travel 5,000 or 6,000 miles a year, but there will be no PAYE relief in respect of the expenses involved. Those boys are going to have to pay a 25 per cent increase in tax. This is a far greater impost than the import on a company car in the same car park which does 30,000 or 40,000 miles a year. Why was this tax not apportioned in a different way? Would it not have been fairer to put another ½d. on petrol all around so that the man doing 30,000 miles a year would not be treated on the same basis as the industrial worker? They have to be at work on time. They lose a quarter of a day's pay if they are ten minutes late.

Mr. Lalor

They were not there in 1957.

Mr. Donegan

The Parliamentary Secretary is not noted for his interventions in this House. That was a rather unfortunate intervention. They were there in 1957, for the very good reason that when the factory was not going so well a few years before that, a good Fine Gael man in the village paid their wages week after week and took shares in the company. That is why they are there today. It is no thanks to the present Government. The Parliamentary Secretary should know where he is sticking his oar before he does so. There were just as many of them there in 1957, may be more. I do not want to follow up this scheme. It would be unhappy for the Government to follow up a situation in which a company received £300,000 in grants to set up another new factory 11 miles away and six months later the factory was closed. The Government had failed to put in the codicil we say should have been put in to see to it that the factory would remain the property of the Government and would be re-opened again.

Mr. Haughey

It will.

Mr. Donegan

We hope it will. We have done our best for it. This industrial worker has to pay 25 per cent extra on a car doing 5,000 or 6,000 miles a year.

Mr. Haughey

The poor farmer has to walk to work.

Mr. Donegan

If I had not the flu, I would be better at replying. The impost on the worker will be six or seven times as much as the impost on the company car doing 30,000 miles a year. That is the way you did your Budget mathematics. You are being told now what you should have done.

The provision in respect of children over 11 years of age reminds me of the old age pension provision. You have to restrict them somehow. A child will be entitled to income tax relief from 11 to 16, that is, five years. Out of every 16 children, five will benefit. Again we have the advertising value of something which will turn out to be a pale shadow of what was hoped.

I do not think anyone breathed a word of sympathy for the dancehall proprietors. I am now going to do so. It has not been fully appreciated how savage the tax is. There are two very large costs involved in the running of dances nowadays. One is the band. They will not come for any old band at present. The other is——

Mr. Haughey

My singing with Dickie Rock.

Mr. Donegan

Yes. I understand Ministers of State sing with Dickie Rock at the Airport. There are those who criticise the Minister for so doing. I do not. I would have done the same myself.

Mr. Haughey

I was on the same plane with him.

Mr. Donegan

More power to you. If you want to sing with him, I will not look for any votes from you for doing it.

Mr. Haughey

He comes from my constituency. They are a fine old Donnycarney family. I am proud of them.

Mr. Donegan

I have got somebody in my own constituency. If I met him at the Airport I would sing with him. However, it is of some interest that in the days preceding the savage Budget of 1966, the contribution of the Minister for Agriculture to the matter is to sing with Dickie Rock out at the Airport.

Dr. O'Connell

In the rain.

Mr. Donegan

Let us immediately turn from the ridiculous to the sublime and consider what the Minister for Agriculture has succeeded in doing for the small western farms. His Parliamentary Secretary who is, I believe, in charge of that section of the Department, is also present. In talking about the Budget, the old line was not to talk about anything less than £2 million or £3 million, or you would get no notice. But here we have the opposite procedure. The Minister for Finance devoted almost two pages of his Budget speech to the small western farms and at the end he proceeded to give them one-tenth of a penny on cigarettes.

If we leave the West go, whether we like it or not, the East will largely become a suburb of London and Liverpool. The unfortunate fellow going down the road with a donkey and two creels gathering turf to keep himself warm, will remember, when sucking the butt he can ill afford, that he got one-tenth of a penny on cigarettes. The pair of you should resign. You are the most hopeless lot ever perpetrated on an agricultural people. Eight or nine years ago the Minister started off knowing nothing about agriculture. Most of his knowledge since has been gained from falling into ditches out with the Wards. I know nothing about the man behind him, except that, like the Minister, he is a decent fellow. But as far as grasping opportunities is concerned, and making real progress for the unfortunate people of the West—and the opportunity is there if it could only be grasped—the best they could do in the Budget was to give them one-tenth of a penny on cigarettes.

Let us pass now to the Taoiseach and his conversion to a prices and incomes policy. It is not, however, the prices and incomes policy of Fine Gael. We would never dream of putting our names to what the Taoiseach is suggesting at present. But certainly in regard to the concept of a prices and incomes policy, we again have government from Opposition, which the Minister for Agriculture assured me some time ago he likes. We have converted the Taoiseach to the idea that a proper prices and incomes policy, with guideposts for the future and fair play for the industrial and agricultural worker, will obviate the difficulty in which we now find ourselves, where the unfortunate people are trying to get back what the Government have taken from them, and the Government say: "You should not do it and we shall give you another Budget if you do."

During the general election campaign, after which the present Government were elected to office, almost sneering references were made by the Taoiseach to the suggestion of a prices and incomes policy. He said then it was ridiculous. He was not very long in office until he realised this was something worthwhile. However, by then the damage was done. Real employment in this country depends on private enterprise. Surely our present state now tells us you cannot create money by employing people through Government sources, that you cannot intrude into the private sector. The Government are limited in the amount of money they can get; they had to go to Germany and pay a colossal sum of interest, 7 per cent, and pay a further sum of 2½ per cent on the entire loan. During the last year, the Government and the local authorities took 99.1 per cent of the new money coming forward in the banking system of this country. Let us take that to be 100 per cent and forget about the .9 per cent. The position is that the only new overdrafts that could be given to an industrialist here to employ people at a profit—and that is the only way they can be employed —was the money that was taken back in reductions in overdrafts from others who could ill afford it.

What is the projection for 1966/67? The projection is that where they took £31,500,000 last year, they are playing safe and taking £28,500,000 in the coming year. They took £20 million from the funds of the Central Bank. I want to tell the Minister for Finance and the Government that for the first time the principal factor in that £20 million is not included in this Budget and to say that the Central Bank funds, which are the reserves of this country, were raided to the extent of £20 million would be a valid charge. Such was the extremity of a profligate Government that they had to do this. Next year we do not know what new funds will be coming from the banking system, but we know what the Government will take if they can get it.

One of the ways in which the propagation of industries and of employment can be assisted is by leaving funds available for the private sector. They do not borrow this money to go to America on their holidays, because it would not be very long before the bank manager would tell them to come home. The private sector can employ more people and create permanent employment. This profligate Government, by their ridiculous approach to the economy, have created a situation whereby they must again raid the banking circles of this country, the money coming forward, to the extent of only £3 million less than they took last year.

We are told by the Minister for Finance on page 37 of the circulated version of his speech that there must be restriction of credit. If there had been a selection of credit by the Government in the years past and if they had conferred with the banking system and saw to it that credit was applied in the right place, there would be no need for restriction of credit today; the small western farms would not be neglected, and the Agricultural Credit Corporation would not be left with £2 million less than they had last year. There would have been a hope for a forward movement and for forward thinking, bringing some hope of more employment to our people in the years to come.

In page 39 the Minister says in an apologia that all the giving had been done already and there was nothing more left to give. If Fianna Fáil are prepared to prostitute themselves at the time of a by-election or at the time of a general election, if they are prepared to put power and office before everything else, then there comes the day when at the conclusion of his Budget speech, the Minister for Finance must say: "I have nothing to give because it has been given already." The unfortunate fact about this is that decisions taken at these times and in these circumstances are almost always the wrong decisions, and we say to this profligate Government that the sooner they resign the sooner will come the day when the people of Ireland will get the opportunity of putting them out of office. They were put out in 1952 and in 1947. This time in the Budget they have spread the jam on the bread more evenly and it will be three or four months before the people of Ireland realise that, even though there is not 6d on the glass of whiskey and 4d on the bottle of stout, their pockets are so much lighter. When they realise these things, they will surely put Fianna Fáil out of office and my advice to the Government is: Go.

Minister for Agriculture and Fisheries (Mr. Haughey)

In speaking to the Budget, I think it would be better if I confined my remarks to the sector of the public expenditure for which I have responsibility. It would be tempting to follow Deputy Donegan down the many by-ways which he trod——

Mr. Donegan

Main roads.

Mr. Haughey

——and to rebut many of the unrealistic arguments he put forward. However, if this debate is to be of value and is to have some focus, it would be better that we should, as individual contributors, confine ourselves to particular aspects of the Budget and of the economy. I intend, therefore, to speak about the Votes for which I am responsible, but I would not like the House to take it that because I do not specifically rebut the many nonsensical charges which my good friend, Deputy Donegan, has made, I am therefore acquiescing in them.

Deputy O'Higgins said here last night, and Deputy Cosgrave repeated it this morning, that there is nothing in this Budget for agriculture. That is just nonsense. The Vote for Agriculture for the coming year is £35,309,000 —the largest ever. We are providing in this Budget over the whole range of agricultural services, aids and incentives the full amount which will be required to maintain them at the highest possible level of activity attainable during the coming year. Under every heading that matters in the Vote for Agriculture and Fisheries, more money is being provided than was voted in the current year to meet the increased demands that we anticipate will be made on these services next year. Price support alone in the coming year will require £15 million and that is £3.3 million more than was voted in the current year. Every aid to production and every incentive to increased efficiency will be expanded during the coming year and considerably increased amounts of money will be made available to meet and finance this expansion.

There is more for farm buildings, for land reclamation, for research and education, for surveys and inquiries, for lime and fertilisers, for breeding programmes, and for all the other services which are administered by my Department and which contribute to increased productivity and greater efficiency in agriculture. There is a greater amount provided under every single one of these heads for the coming year than was ever provided before. The votes for which I am responsible illustrate quite clearly, I think, the Government's decision, despite the particularly difficult budgetary situation in which we find ourselves this year, that money for productive purposes will be fully and adequately provided where necessary.

As the Minister for Finance indicated in his speech, the Government would have liked this year to take additional positive measures directly to increase farmers' incomes but we were prevented from doing so by the serious Budget deficit which we had to meet. We did not, however, simply wish to leave matters at that and we examined the whole position in detail to see if, within the narrow limits of the budgetary situation with which we were faced, we could do anything to help the farmer to get a better return. We looked as sympathetically as possible at a number of suggestions and proposals which were put forward by the National Farmers' Association and, as a result, we have decided on a number of steps which we feel can be taken now, all of which will contribute to the objective of improving agricultural output and income.

As many Deputies know, we have for some time now in my Department been making a very special study of the problems of the small western farm. As a first step, I established in the Department some time ago a special Small Farms Division. I also set up a consultative council for western agriculture to advise on the various, difficult and complicated aspects of this problem. I appointed a high-ranking officer of my Department to a post of Western Regional Officer with special responsibility for the agricultural problems of the west. In each of the pilot areas in the 12 western counties and in Glencolumbkille practical solutions to small farm problems are being tested out at grassroots level. We have now decided that the next step in this process, the result of all these investigations, will almost certainly be the initiation of a variety of special schemes to help the small western farmer overcome his production and other problems. Accordingly we have decided to provide in this Budget, despite the difficult financial circumstances obtaining, a token sum of £100,000 which will be available to launch whatever new special schemes may be decided upon.

As Deputies know, we secured in the Free Trade Area Agreement with Britain an extension of the British guarantee payment system to 25,000 tons of our beef and 5,500 tons of our lamb in any year. In order to provide the firmest possible base for this very important industry of ours, the dead meat trade, and to enable our farmers to plan their fattening programmes with the maximum possible amount of certainty, we have decided that all exports of beef and lamb to Great Britain, even quantities in excess of those for which the British payments will be received, will be supported to the same extent.

I was pressed very strongly this year by the ICMSA and the NFA to do something about milk. I would very much like indeed to have been able to accede to these requests, particularly in regard to quality milk. Unfortunately, however, as the Minister for Finance and the Taoiseach have explained, it just has not been possible to do anything. The trouble is, of course, that to do anything at all for milk is very, very costly indeed. To give an extra penny a gallon, for instance, this year would cost somewhere in the region of £2 million and, even as matters stand, with no increase at all, milk will cost the Exchequer over £12½ million this year. Because of the fundamental importance of the milk industry to the whole livestock trade, and indeed to the whole economy, that burden of £12½ million is one which we must unhesitatingly accept, but let us all admit realistically that it is a very intimidating figure with which to have to grapple in the context of any Budget and particularly in the context of this year's Budget. It is idle to suggest that this is some sort of an irrelevancy which does not really benefit the dairy farmer. In fact it is a corner stone of the whole industry at this time and, without it, the whole industry would collapse in chaos.

I should point out that an increase in the price of milk is only one of the ways in which the dairy farmer can increase his income. Better milk yields, better prices for calves, the control of mastitis and contagious abortion and other diseases can all make a very significant contribution and we will spare no effort to achieve such progress as we can in all these directions during the coming year. I have already pointed out that, if we can get rid of mastitis alone, for instance——

Dr. O'Connell

Is this relevant to the Budget debate or would it be more relevant on the Vote for the Minister's Department?

Acting Chairman (Mr. James Tully)

It is relevant.

Mr. Haughey

I have already pointed out that, if we get rid of mastitis alone, that would bring in an extra £6 million or an extra £7 million to the dairy farmers whereas an increase of one penny a gallon on milk would only bring in about £2 million.

It is also abundantly clear that, if the creamery industry can be reorganised in a sensible and rational way, this very reorganisation itself can in time provide positive financial benefits and higher returns to the creamery milk supplier. It may emerge in certain areas that, in order to enable a satisfactory reorganisation to be effectively implemented, some financial assistance from the State may be required and the Government have decided, in principle, that such assistance will be made available, if necessary, in certain areas, provided it is in the context of an overall national plan which is fully approved by me as Minister for Agriculture and Fisheries.

Since 1960 new farm buildings and improvements to existing farm buildings have enjoyed remission of rates for a period of 20 years. The Government have decided that all such buildings will in future be completely and permanently exempted from rating. We hope this concession will help to stimulate the provision of adequate and efficient modern farm buildings because, in many cases, this is probably the greatest single thing we can do to improve productive efficiency on the farm.

Sheep and pigs are important lines of production in most areas of the country and we are looking to them especially to procure the build-up we need in western farming. We have decided to give some additional assistance to the small farmer who is anxious either to go into pigs or expand his existing operation by increasing the grants available for farrowing, rearing and fattening houses. For farmers whose holdings do not exceed 50 acres or who have a poor law valuation of £25 or less, the rate of grant will be increased by a half, that is, from 4/- to 6/- per square foot. The new rates will apply to the first 500 square feet of covered farrowing and rearing accommodation and the first 500 square feet of fattening accommodation, provided that farrowing and rearing accommodation is already adequate.

To help get rid of the last vestiges of sheep scab special grants to meet the cost of sheep dipping and handling facilities were introduced a few years ago. To help get the scheme off the ground the grants were fixed at one-half the cost for the first few years and were due to be reduced to a level more usual for this type of grant, that is, one-third in July of this year. It has been argued that for one reason or another the scheme has not really got under way and that extra time should be given. We have, therefore, agreed to maintain the 50 per cent grant rate for another two years.

As the Minister for Finance announced in his speech, the tax on co-operative societies' tractors will be reduced to £2 10s. which is the rate applicable to farmers' tractors. This concession has been sought by the NFA during the recent Annual Review discussion and I am very glad that it can now be agreed to.

We are providing more money this year also for both the sea and inland fishing industries. In particular the grant-in-aid to An Bord Iascaigh Mhara is being increased by over £150,000, from £290,000 to £441,500. The fact that the total provision for the fishing industry is increased may not be readily apparent to Deputies, because in 1965-66 for technical reasons, it was necessary to include a provision regarding the writing off of old advances from the Central Fund.

The Government regard the Annual Review with the NFA as important and useful and indeed necessary. It provides an excellent opportunity for me and my advisers to discuss the whole position and prospects of agriculture, including income aspects, in a constructive and co-operative way. It is of particular value in bringing to the Government's attention the problems that farmers regard as of special concern at any given moment. I am always anxious also to meet and talk to the other farming organisations and discuss problems and prospects with them. In an industry which is so complex and subject to such change as agriculture, a continuing dialogue of as comprehensive a nature as possible is essential.

The Government accept the view of the NIEC that decisions about the current level of support for agricultural incomes should be taken at the same time as—and be recognised as an integral part of—decisions concerning non-agricultural money incomes. It is the Government's policy to take whatever measures are practicable to narrow the gap between farmers' incomes and other incomes. Present indications are that this year there should be a rise of some £5½ million in toal family farm income, with a maintenance of the relative position of farmers in the economy—and possibly some slight improvement—provided, of course, that our agricultural projections, as agreed with the NFA, are not upset by such unpredictable factors as weather and price movements, and above all that there is no immoderate increase in earnings in other sectors. This is essential for the avoidance of a new disparity between farmers' and other incomes. Without it farmers would have grounds for complaint and if their income position should deteriorate during the year the Government will review the situation in the light of the circumstances prevailing.

I believe that the general outlook for our agriculture is good. There are record numbers of cows, other cattle and sheep, and when it is remembered that the products of our livestock industry account for the bulk of our agricultural output, I can claim to have solid evidence for this belief. As regards tillage, it is too early to say yet what the trend will be this year, especially as tillage operations were delayed because of the exceptionally wet February, but the increase of 10/-a barrel for wheat will I hope provide a very direct incentive to farmers to grow more wheat this year and help to arrest the worrying decline in the tillage acreage in recent years.

The Free Trade Area Agreement with the British which comes into operation on 1st July will open a new chapter for our agriculture. Instead of the uncertainties and anxieties of the past in regard to our principal export market, we are now entering an era in which we will have assured conditions of access to that market, together with participation in the British deficiency payments scheme for carcase beef and lamb, as well as for store cattle, store sheep and store lambs. Our biggest single export item is store cattle and as I was not satisfied that this important and complex trade had been sufficiently studied and reviewed for the purpose of further development, I am arranging to set up a very competent study team to examine all aspects of it. Our dairying industry also can now plan its production with confidence as it knows that the basic quota for butter will be nearly double what it was previously and that we will also have satisfactory access arrangements for other milk products.

Our horticultural industry which is gradually building up a sizeable export trade is for the first time assured of full and continuing access to the British market. The same is true of the fishing industry. Our future agricultural, horticultural and fishery export development can, therefore, proceed on the assured basis provided by the Free Trade Area Agreement. It would be difficult to exaggerate the importance of this fact. Our country is more dependent on agricultural exports than practically any other and our agricultural development would be held up unless we had these assured exports outlets for our products.

When I say that agriculture is our greatest industry, I mean not only that it is physically our greatest industry but that those engaged in it are among our best and most progressive workers, who have made a greater advance in productivity per head in the past ten years than any other sector of the community.

During the coming year every effort will have to be made to increase output and income. This budget is making available the finance necessary for the operation of a variety of schemes directed to this purpose and covering every aspect of farming. It is my wish that these will be fully availed of by progressive farmers all over the country to increase production, as this is the best and surest way of improving their income and standard of living.

From my point of view, this is a good Budget: it gives me in both the spheres of agriculture and fisheries, the financial resources I need to implement the various schemes I have on hands. We would have liked also to have been able to give some immediate and direct increases in farm prices but that was not possible and, within that qualification, this is an excellent Budget. I have no doubt that it will commend itself to the people and, in particular, to the farmers of this country.

Dr. O'Connell

In referring to this Budget, I should like to say that, far from being a good Budget—we know of course it is not a popular Budget— it is the product of an unimaginative man who has not seen fit to look into this matter more closely or to have, perhaps, a reappraisal of the methods of collecting tax. He has sought to confine himself to the same sources of revenue once more this year. We find that, although it was thought we had reached the limit a year or two ago, he is now trying to persuade us that these sources can be used once more for taxation purposes.

I take objection to one thing, that is, that the Minister came into this House with these new methods of raising taxes and did not study this problem. Indeed, it would seem he was all at sea yesterday. He could not answer questions and looked to his left and right for advice. It is not good enough for a Minister for Finance to come in here and ask this House to vote on these Financial Resolutions, realising that the taxes which would be announced in the press, would, in fact, go into operation almost immediately. Misinterpretation was, of course, obvious and the public would suffer. Indeed I think the Minister had every right to study this problem a little more before he came into this House to disclose the new taxes. He should have had a more detailed knowledge of the subject in order that he could give us a proper explanation of the taxes.

There is no doubt whatsoever that these taxes will increase the cost of living and if we take into account the fact that salesmen—

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

Dr. O'Connell

As I said, the new taxes are certainly not by any means imaginative. They represent just further increases on the same sources as before, and no effort has been made by the Government to seek alternative sources for taxation purposes.

The increase of 4d per gallon on petrol will have its effect in increasing the cost of living and, for those whose livelihood is made in travelling—salesmen, commercial travellers—this will represent an increase of 10/- per week, if we include the 25 per cent increase in the motor tax.

Last year the Minister said our balance of payments problems would be very much improved this year; this he said ten months ago in his speech on the Budget. No doubt he was advised by the OECD statement on our balance of payments problem. The OECD said at that time:

There is a limit beyond which it would be unwise to allow the current deficit to rise if only because it would increase the degree to which the economy was bound to change in external conditions. The Second Programme envisages a deficit of £12 million to £16 million by 1970. This would imply a rather sharp contraction of the deficit. It would appear reasonable, over the next few years, to aim at a reduction from the present level.

We know that the level in 1965 was bad, and this year it is considerably worse. We find that the Government did not seem to be aware of the economic situation, or became aware of it a little too late and then employed panic measures to try to correct the adverse economic situation.

Certainly last year was a bad year for this country, although we might be inclined to compare it with a year that is not to be taken as a standard, 1964. The NIEC Report on the economic situation states that it would not be advisable to compare 1965 with 1964 because 1964 was an abnormal year in which our economic progress was beyond normal. While we had a drop in employment in the agricultural sector of 14,000 people we have only had an increase of 1,700 in the industrial sector, and that means that our unemployment has been very high in the last year.

We will have to make up our minds either to scrap the Second Programme or to revise it considerably. The OECD Report, which has just come to hand, advises that we revise it, although I am advised that we should not pay very much credence to this Report as the information in it is supplied by the Government. It has been suggested that the Second Programme should be revised as there is no prospect of attaining the targets set out in it. How we will find employment for 15,000 people per annum in the next five years in this country is beyond comprehension when we have had such an increase in unemployment in the past year.

We talk about our plans under the Free Trade Agreement. We concluded the Free Trade Agreement without making any provision for the unemployment and redundancy that will arise under it, and the White Paper on that Agreement was as vague and nebulous as many of the other papers issued by the Government. We cannot hope to increase employment in this country unless we adopt a more vigorous approach to the situation and Government policy at present does not give us an opportunity to do this.

We had frequent discussions about the wasteful expenditure on industries which were not successful and about which adequate information was not given to this House. We have the case in which over £½ million was invested in the GEC factory in Dundalk. If we have many failures like this there will be a loss of confidence in our industrial development. This situation calls for a more cautious approach to the problem of investing in industries which are of no benefit to this country. Looking at a list of these industries quite recently, I was surprised to see that some of them were obviously foreign to our way of life and that they would be in no position to create supplementary and ancillary industries. There is no proper effort made to establish industries suitable for this country. We cannot create a demand for plastic balls in this country. I know of an industry established here for this purpose and I doubt if any effort was made to investigate the possibilities for it. No business has been done in that industry, there is no production and they are living on the grant received from the Government. I am prepared to give details of this if necessary.

This shows an unimaginative approach by the Government to the whole problem. There is no purpose in Financing industries such as this. Little wonder we have failed when money has been thrown into such undertakings.

Last year the Government denied that there was a credit squeeze. They denied that money was not available and only under pressure did they admit that the situation was bad.

Mr. Gogan

Tell us what the Labour Party would do with the Dundalk factory?

Dr. O'Connell

We will give the same answer as Deputy Lemass gave to the then Taoiseach in 1957, that it is not our purpose to give you any details of how you should manage the country, that you should find that out for yourselves. We of the Labour Party say that we are not obliged to give you the answer as to how the country should be run. The Taoiseach asked this morning what alternatives the Opposition had to offer. We have these alternatives but we are not obliged to give them to the Government in office. We believe in extra taxation and we have not denied that extra taxation should be imposed but we believe it should be proper taxation.

We believe that income tax should be increased to 7/6 in the £. We will support the Government on that but we will not support the Government on taxation which is not equitably distributed. The Taoiseach said that we have voted against increased taxation and that, at the same time, we want to see the social services and other services continued and expanded. We want to see the social services continued and improved but we do not agree that the taxation brought before the House is the proper method of taxation. Consequently we oppose it. I am very much opposed to the increased tax on drink, despite the fact that I do not drink. I know that drink is the relaxation of the working man.

Progress reported; Committee to sit again.