I move:
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.
Committee on Finance. - Financial Resolution No.12: General.
The gravity of the present position requires no emphasis from this side of the House. The very phraseology of the Minister's Budget indicates that the country faces a most serious situation. In fact, in the first few paragraphs he makes the extraordinary, and certainly unusual, statement that this year we are dealing with a supplementary rather than a new Budget. That follows ten months after last year's Budget. This statement was followed by the plaintive inquiry: "What went wrong with the Budget introduced last May?" The Minister then set out the facts of the situation and a statement in relation to the deficit and other factors affecting both capital and current expenditure.
I believe that the Budget and all the facts disclosed in the numerous documents presented to the Dáil, including The Progress Report for 1965 and the NIEC comments on it, all proclaim the failure of the Government and indicate clearly Government mismanagement in respect of the economy and, in particular, financial mismanagement in regard to the capital programme and current expenditure. We said before— and I want to repeat it now—that the economy of the country is fundamentally sound but the Government have mismanaged events and the Government alone must accept responsibility for that mismanagement in 1964 and 1965.
The economic and financial position in 1964 was one in which there was unlimited credit available for all kinds of purposes, even some highly speculative operations. That situation was encouraged and fostered by Government speeches, by claims that the economy was buoyant, by assertions that prosperity was readily available, that everything was rosy in the garden and that all people had to do to ensure a continuance of that situation was to vote Fianna Fáil. We expressed, in the early part of last year, concern at the trend of events, recognising from the figures which were published, and the facts which were disclosed by them that the economy was facing a difficult situation. The financial and economic indices did not warrant the confident assertions or the buoyant hopes that were so freely expressed.
Prior to, and during the election campaign, we expressed the view that the time had come when the Government should adopt a definite role in regard to credit policy, that credit policy should be operated through the Central Bank and that, if necessary, additional powers might be required by legislation to strengthen the role of the Central Bank and give the necessary authority to act in the manner in which central banks elsewhere operate and have operated. When that policy was published and during the election campaign very heavy criticism, undoubtedly criticism designed to scare people, designed to create the impression that we were in some way or other after the people's money, was expressed in most of the speeches, including a speech by the Taoiseach in Castlebar reported in the Irish Press of March 29th in which he said:
If a Fine Gael Government were elected and its declaration of intent already made to control banks and bank credit that was the day when the flight of capital from Ireland would start.
He went on to say:
As Head of the Government for the past six years I know of no circumstances existing which would justify the Government taking control of the issue of bank credit.
Fianna Fáil were re-elected and without any policy. In fact because no direction of control of credit was issued from the Central Bank until it was too late not merely has there been a flight of capital but, for the first time in six years, the sterling assets last year dropped by £18 million.
It might well be and we have expressed the view that in certain circumstances it would be in the national interest for productive purposes to deplete the sterling assets or to draw on external resources for those purposes but last year the reduction in those assets was not for that purpose but was to pay, or to help pay, Government debts and help to provide financial assistance for industry, agriculture, and in particular, and almost exclusively, to sustain the very heavy borrowing undertaken in order to maintain the public capital programme.
There is now convincing evidence that not merely was our view correct but that on May 13th the Central Bank issued certain directives to the Chairman of the Irish Banks Standing Committee. Those directives indicated that the aggregate amount of credit extended by the associated banks should not expand in relation to our resources within the State as rapidly as during the year ended 31st March, 1965. We had pointed out during the election and prior to it that all the indices warranted some action either by the Government or by the Central Bank. For no purpose other than the political consequences involved in an election, the Government delayed taking action, refused to take the necessary remedies until July. The Central Bank directive went on to say that the net external assets of the associated banks in 1965 as a whole, together with the deposits in the Central Bank in respect of current and deposit accounts in the State, should not be lower than 22 per cent.
In the Second Programme, it was laid down that the level might alternate between 27 per cent and 31 per cent. Without any prior announcement or warning, that ratio was departed from. The shortage of capital invested last year and the difficulty of securing loans show a complete lack of confidence in the Government. One of the criticisms made was that that lack of confidence started a flight of capital. Without the policy being implemented, the Government last year found that not only had they difficulty in financing the programme but that they had, in fact, to seek loans on the most onerous of terms.
I direct the attention of the House to the fact that the failure has not been on the part of any of the non-Government sectors in the economy. The failure is due to the Government's failure to conform with the headlines laid down in the Second Programme where it was stated in paragraph 102, that the primary responsibility rests with the Government for creating the condition conducive to the achievement of the programme. What has happened? The community have done their share. Employers and workers have agreed on the principles of an incomes policy to which the Government have recently become converted but have so far done nothing to implement. Productivity has risen faster than that required by the Second Programme; savings, forecast in the Financial Report at Table 25, are expected this year to reach £127 million compared with £82 million in 1963. an increase of more than 50 per cent in three years compared with an increase in national output of 29 per cent. This situation has resulted from Government mismanagement and the fact that the Government misjudged the indicators.
I do not know, and I suppose it will never be told—certainly not for some time—what happened in the last 12 months. As far as one can judge, there are two wings lending advice to the Government and the Minister for Finance, an economic section and a financial section under the Department of Finance. The economic section deals in a watertight compartment with the economic indicators, the steps necessary and the requirements to be fulfilled in order to implement that programme. The financial section is solely concerned with raising money. It does not matter how onerous the taxation, how severe the rate of extraction, how exhausting the operation may be as far as any sector of the economy is concerned in order to achieve the maximum revenue without any regard or consideration for the effect on the economic aspect of that operation.
During all that time, while the Government have been free in offering advice to different sections, the Government have allowed in recent years the capital and current expenditure to outstrip the resources available to pay for them and quite recently directives were issued, in particular by the Minister for Health to health authorities, to wipe out deficits that have accumulated, to take steps to repay these deficits forthwith. At the same time, the Government, in which Ministers have collective responsibility, have had an accumulation of Budget deficits in recent years. In 1960-61 it was £730,000, in 1961-62, £710,000, in 1962-63, £4.8 million, in 1963-64, £2.2 million, in 1964-65, £4 million and this year £8 million—a total for the last six years of £20.5 million, an average during the last four years of almost £5 million per annum. Is it any wonder that the people lack confidence, that they have become anxious and have taken steps to withdraw their savings, that one of the problems facing the Government last year was a fall in small savings of £5 million? There was also a fall in Departmental funds of £4 million and £5½ million had to be repaid for Exchequer bonds, all indicating a heavy draw and the fact that sections of the community had to get money in order to finance the agricultural, industrial and business operations under their control.
One of the very serious situations that have arisen is the fact that last year, of a total of £28.4 million of additional credit created, £28 million was hogged by the Government and local authorities. One of the facts that are disclosed when one reads the profusion of documents from the Department of Finance with comments on them by the NIEC is that the Government themselves do not pay any attention or do not advert to the advice given in these documents.
One of the factors disclosed in the Capital Budget is that National Loans yielded £21.3 million of £68.1 million, leaving £46½ million to be sought from the banking system and foreign sources instead of £20 million or so as had been expected, a figure already above the outside figure of £18 million envisaged in the Second Programme. The statement goes on to say:
Payment of interest and repayments of principal increase the debit side of the Balance of Payments and exports must be correspondingly increased in order to avoid adding to the balance of payments deficit. In having recourse to external borrowing, the Government will be concerned to ensure that the proceeds are applied to productive investments and not consumption.
That is not so. The dollar loan sought in the US and the Deutschmark-Sterling loan sought in Germany on the most onerous terms sought by any Government on any occasion in any financial market in the world have been secured solely for the purpose of repaying debts and not for productive purposes, so that the advice given, the comments made with all the weight that should be attached to a Department of Finance publication, the views expressed by the Central Bank, are all ignored so far as the Government are concerned, but circulars are sent round to health authorities and local authorities that they are to confine the deficits that are arising. Why have these deficits arisen in local authorities? Because of the effect of turnover tax on their financial needs, on their expenditure, on the cost of running these authorities.
Hear, hear.
One of the justifications which were advanced and, which in fact, had a very impressive ring when the turnover tax was introduced, was that the traditional sources of revenue were incapable of carrying any more taxation, that revenue from such traditional sources as beer, tobacco and cigarettes, spirits and petrol, was exhausted. Deputies will recall—and it is not too long even for the shortest memory—that the turnover tax was introduced in 1963 and that tax is now bringing in £14 million or £15 million a year. But in the 1964 Budget, within six months, this was the additional taxation that was imposed on traditional sources of revenue: £1¼ million on diesel oil; £2 million on tobacco; £1.1 million on beer and £400,000 on spirits. That was £5 million extra revenue within six months from the traditional sources that were already exhausted.
In the 1965 Budget they got another crack, although one-and-a-half years earlier they were supposed to be exhausted. We had 3½d on 20 cigarettes; 2d on a glass of spirits; 1d on the pint of beer and 1/- on a bottle of wine, or £5.5 million extra in respect of traditional items. That was £10.5 million inside 12 months. This year there is over £6 million in respect of traditional sources and a total of £12.5 million altogether.
Beer, which was supposed to be exhausted two years ago and could not bear any more, is taxed to produce £2.25 million this year; spirits, £1.1 million; tobacco, £1.1 million; diesel oil and petrol, £2 million, not to mention the effect—to which I shall advert later—of the increase in income tax.
One of the reasons the turnover tax was introduced, we were told, was that these traditional sources were exhausted. The position now has been reached that we have this colossal additional burden which is unwarranted and not justified. Here again, I come to the observations of—if ever there was a misnomer it is this—the Progress Report for 1965, when progress in every direction was downhill. The Progress Report said, in looking at the outlook for 1966:
In making this projection, existing Budgetary policies are assumed, since one purpose in making the projection is to help to determine what budgetary changes may be required in 1966.
It goes on to say—and this is the very important conclusion reached:
The projected increase of 1¾ per cent in consumer prices is arrived at on the following basis. The consumer price index in the first quarter of 1965 rose from 177 to 181 and it remained stable for the remainder of the year. If it remains stable this would involve an increase of about threequarter per cent over the average of the four quarters of 1965. In the non-agricultural sector as a whole, the projected rise in output of four per cent and in total money incomes of five per cent would result in an increase of about a ½ per cent in the general price level. In addition, import prices are expected to rise by about 1½ per cent and, since imports account for about one would involved a further rise in the general price level of about ½ per cent. The combined effect of these factors would be a rise of about 1¾ per cent in the general price level.
The conclusion which was reached in that Report and the comments made on it by the NIEC all accept that a rise of that amount could be sustained and might be justified, but, on top of that, the Government have now imposed as a result of the taxation involved in yesterday's Budget, a further increase of one per cent. Is it not obvious that here again the Government have indicated guidelines, given advice freely to employers, trade unions, to traders and other groups in the community that prices should not rise? The Government ignore that recommendation, refuse to accept the indices that are supported by the documentation issued by the Department of Finance and confirmed by a unanimous advice tendered in the Report and comments issued by the NIEC.
One of the matters recently engaged in by Government spokesmen is the giving of free advice to different groups in the community, suggesting to the trade unions, employers' organisations, chambers of commerce, farmers, industry and to local authorities by circulars and directives issued by particular Departments, what should be done or should not be done. Is it any wonder that any group in the community refuse to accept that advice and refuse to be influenced by it when the one group in the community who ignore all advice are the Government and the one group in the Community who are freer in giving advice and expressing comment to every section of the people are the Government and when they give advice to themselves in the form of a document published like this, they immediately afterwards ignore it in their Budget Statement?
One of the factors that have been the subject of recent comment—indeed a great deal of concern has been expressed about it—is the state of industrial unrest or industrial relations. Recently, the Taoiseach went to some Fianna Fáil gathering in the Shelbourne Hotel and delivered himself of a number of ponderous platitudes on the industrial situation. Nobody could take exception to the views he expressed or the comments he made, but one of the factors in the recent wage round discussions, one which was adverted to yesterday by Deputy O'Higgins is that the discussions between the Irish Congress of Trade Unions and the employers' organisation indicated that so far as the claim made by the Trade Union Congress was concerned, it was made with an indication of a responsible attitude to the problems which affected the country, a recognition that the country could stand only a certain increase and that in that situation the claim made was made on a reasonable basis. It may be that for individual industries, for individual trades, for particular undertakings, the claim naturally will have to be revised, and detailed negotiations and discussions may result in a different pattern of wage and salary adjustments in respect of that particular claim.
One of the proposals we made during the last election which has been the subject of a very lengthy debate here as well as a very detailed and exhaustive recommendation by the National Industrial and Economic Council, was the introduction of a policy on prices and incomes. We did that for the precise purpose which is recognised now by employers and workers and trade union representatives, that an orderly growth in wages and salaries was in the interests particularly of those directly concerned but also in the general interest of the economy. During the election the Taoiseach, in a very emphatic manner, said that he wanted Fine Gael to explain their incomes policy. In the Irish Press of 6th April, 1965, on the very eve of the election, there appeared the following report:
The intention of Fine Gael, if elected, to introduce a system of regulating wage and salary increases, was strongly criticised by Mr. Lemass, in Mullingar, last night.
He went on to say:
We of Fianna Fáil do not believe that any system of this kind is workable. It has never been successfully operated in any country, except the Communist countries.
I do not know what effect that had on the audience. I imagine the only things influenced by it in Mullingar were the heifers. Certainly it did not affect the audience. The report continues:
I want to make it clear that we are definitely against this. If we are in Government we will not apply it. If we are in Opposition we will oppose it strongly.
Only once in this country since we achieved freedom was there a wage freeze. That was instituted by Fianna Fáil during the war. The only other occasion on which there has been any attempt to indicate a wage or salary regulation was the recent directive issued on the eve of the Budget that people at a certain level are not to receive increases. There may well be— and I do not deny it—a justification for a ceiling or for regulation in these matters but the only people who have sought to introduce regulation are Fianna Fáil. The only criticism that can be made of the decision to do it is that the action in respect of incomes, wages and salaries, was taken too late. Obviously it is not understood properly by the Government because of the protracted and postponed introduction of it until a situation has been reached in which prices and incomes are chasing each other in an ever-rising spiral. This is due to the fact that the Government when they introduced the turnover tax gave the green light in respect of wages and salaries and made no attempt to control prices. Price control was introduced only when it became obvious that the price rises had entirely exhausted themselves.
One of the factors responsible for the lack of confidence that has arisen here are the measures taken by the Government in recent years in respect of investments, in respect of certain Finance Act proposals. In the 1963 Finance Act, a proviso was introduced for the first time which made it obligatory on the banks to disclose details of deposits and to make a return in respect of interest earned. Views have been expressed that this has had a deterrent effect, and although no precise figures can be given, there is a general view amongst bank managers and others in banking institutions that it meant a withdrawal of deposits. This brings me to the point I have already mentioned, that the Revenue side of the Department of Finance, and the Government institutions, are concerned to extract the last penny and when the taxpayer has been bled white, to think up some new method to dehydrate what is left.
The 1965 Finance Act introduced for the first time a proposal to aggregate insurance policies and other assets for death duty purposes. Is it any wonder that the effect of these penal measures—measures which are entirely penal in so far as they affect all our people—at a time when one of the great problems at present for business men, farmers, and traders is the need for additional capital, for additional credit, in view of the inflationary effects of price rises, the cost of raw materials and the ordinary cost of running a business or enterprise, is to restrict the amount of capital which will be available? Because for the first time insurance policies and other assets are aggregated for death duty purposes. Is it not obvious that all these factors, the 1963 Finance Act provisions and the 1965 provisions regarding insurance policies and other assets, have all combined to leave no other way out for the private sector of the community but to reduce their operations and to seek elsewhere to get either an adequate return on their investments or an adequate method by which to finance their operations? One of the claims made for previous Budgets was the fact that the money was raised to pay for some specific service or undertaking, to give some benefit to some section of the community. That cannot be said on this occasion. If there is one thing for which at least the Minister for Finance deserves credit it is for a disarming honesty in presentation. It is not very typical of Fianna Fáil.
Hear, hear.
This Budget provides nothing extra for agriculture. There is a gesture of £100,000 for the west of Ireland.
If the people are there.
If any practical proposal were involved in this, it would have our support. If the Government had decided that extra moneys were required to assist the west of Ireland, had decided to revive the Local Authorities (Works) Act to provide employment in the off-season, or enable the drainage problem to be tackled even on a limited scale, they would have been justified. There is nothing for health, although we have been through an exercise in recent weeks of discussing health even to the extent where people might be convinced that there is a proposal or some prospect of an improvement in the health services, and reluctantly the Government have come to accept the idea of a health scheme based on insurance. This year, faced with the extremely high rise in rates, the only relief—although it is not really a relief —is the proposal to transfer the added burden in respect of health charges to the central Exchequer. There is nothing in the Budget for education.
Then there is the final insult to the social welfare recipients. On page 13 of his speech the Minister, again with refreshing candour, said:
Though prices have not risen since May last, when I announced substantial increases in benefits in the budget, some social welfare recipients, particularly pensioners, would find life harsher as a result of this budget if no gesture of relief were made.
What significant words—"No gesture of relief." And this gesture is postponed until November! Some of them will not live to get even the gesture.
The facts disclosed in the Second Programme for Economic Expansion indicate that any measures taken which would have a depressive and disincentive effect on the economy were not justified, that the assumptions were made on the basis of existing budgetary policies being continued. That was formulated after a careful assessment of the situation and the recommendation was made that they should continue.
Probably the most striking condemnation of the Government's failure has been in respect of employment. Table 5 of the Department of Finance Report gives the figures for employment. It is hardly necessary to remind Deputies of the Fianna Fáil plan and promise to provide 100,000 new jobs. Subsequent to that, after the Government had been re-elected, with all the statistics, information and data available to them, the programme was slightly revised. The number of new jobs to be achieved by 1970 was 87,000.
Now let us look at what has happened. Table 5 indicates that employment has now dropped to the lowest figure ever in the history of the country. In a year in which we celebrate the 50th anniversary of the 1916 Rising, we have fewer people employed than ever before. Not merely is that so, but the flight from the land has risen to more than twice its former level. There was a drop of 24,000 between 1963 and 1965 and a further drop of 14,000 between 1964 and 1965. The NIEC comment, at pages 24 and 25 of the document, is that the total number expected to be at work in 1966 is approximately 1,046,000 compared with 1,056,000 in 1963. Instead of providing additional jobs, we have lost 10,000. Either the target was wrong— but this was never admitted—or the plans made to carry it into effect were defective. The Report goes on to say that if the target is to be reached, it will require an increase of 22,000 jobs a year.
I have asked before and I want to repeat: When is the Second Programme going to be revised with some advertence to reality and some adherence to the facts? To quote from page 29 of the Progress Report:
Past experience suggests that it will be extremely difficult to increase employment at this pace.
Surely this is the understatement of the year—"to increase employment at this pace." When they cannot keep the people in employment employed, how can be it increased?
As far as emigration is concerned, the rate of increase is about 10,000 per annum more than anticipated in the Programme. This document states:
It is clear from this review of progress in the first three years of the programme that the growth rates required in the rest of the period to meet the targets will pose a number of formidable difficulties, especially in the case of employment.
The significant comment is made that although employment has increased in the Six Counties, although it has increased in Britain and the plans operated in these cases have resulted in increased employment, here, although the community has done its share— productivity has risen, savings have increased and employers and workers are generally agreed on a wages and incomes policy—everyone in this country except the Government have done their part, yet employment is still declining, emigration is increasing and the indices are that the numbers at work will further decline in the period ahead.
One of the facts disclosed in the recent figures is that revenue was down, that there was a failure for savings to increase and to have a general buoyancy in revenue. Although savings increased over and above what was projected in the Second Programme, those who had their money in the Post Office Savings Bank and in savings certificates withdrew it. The Minister proposes to consider in the future a report of some committee or group to advise him on the matter. Until then the only change proposed is an increase in respect of saving certificates.
One of the serious effects of this Budget—contrary to the advice tendered in all this documentation—is the increase in taxation, in particular the increase in respect of income tax. The burden of taxation becomes greater on relatively static incomes. The increase in income tax under PAYE is in fact the equivalent of a wage cut. There might well be some justification for an increase in income tax, if there were relief in respect of personal allowances, the married allowance, the dependent relative allowance, the housekeeper allowance or any of the other allowances under the income tax code. These allowances have been the subject of much discussion in recent years on Finance Bills and on Budget debates. There was a general acceptance and recognition by previous Ministers as well as Deputies on all sides of the House that the present rates of relief in respect of these allowances required to be revised. There is justification, because of the rise in the cost of living since these rates were last revised, for an absolute as well as a relative revision of them. But this Budget imposes heavy additional tax in respect of income tax without any relief, with one small exception, a child allowance for children over 11 years of age. The cost of that is trifling.
I believe the proposal to increase income tax will have a deterrent and negative effect with consequences for the nation. I adverted recently in this House to the need for a carefully planned order of priorities. Here again the recommendations of the NIEC and the Progress Report on the Second Programme as well as pointing out the difficulties of financing the capital programme stressed the urgent need for an orderly approach to the arranging of priorities in respect of public expenditure.
Some years ago a Building Advisory Council was established. So far nothing has been heard from that except that a complicated questionnaire was issued to the building trade. That advisory council was established not to represent the industry concerned or aspects of the industry. Those appointed to it did not represent or were not authorised to speak for those whom they are supposed to represent. That is no reflection on them. Many of them are eminent in their own way. But they were hand-picked and not for the purpose of representing the industry.
One of the problems affecting the building trade and the economy generally is a succession of stop-go policies. We have the situation in which there is unlimited credit for building construction or any type of enterprise for a period. Then, contrary to all the Government speeches about unlimited buoyancy in every aspect of the economy, whether in the public or private sector, builders, those engaged in the construction industry, those engaged in industry and agriculture, found a rapid and severe restriction of credit without notice, without warning, without any regard to the problems involved or to the repercussions on the industry or those employed in it.
The Government now have, and certainly the country has, some idea of the gravity of the situation in respect of the capital programme, of the difficulty of securing sufficient money to pay for the programme of public expenditure. Remember, it was the Government exceeded their own limits in defiance of the targets laid down in the Second Programme. If that programme requires to be revised, then it should be revised. It should be publicly revised and not revised piecemeal, revising the capital end at one stage and finding then, after a few months, the employment targets have not been achieved.
The effect of the attempts of the Government recently to secure sufficient money to finance this programme indicates general lack of confidence. Many of us remember some years ago when we availed of and used the Marshall Aid loan, used it for productive purposes, used it to drain land, used it for the purpose of the Land Reclamation Scheme, used it for the purposes of expanding employment and schemes like the Local Authorities (Works) Act, and we were criticised. One of the advertisements published by Fianna Fáil was the sign of the pawnbroker to suggest that the country was in pawn. Never in our time in Government, no matter what the difficulty, had we to hawk the credit of this country in every financial market in the world and then accept the most onerous terms a Government in this country ever had to accept, not for productive purposes, not for the purpose of putting people into employment, not even for the purpose of trying to keep them in employment, but for the purpose of paying debts accumulated by the Government.
One of the recent developments so far as Government activity is concerned has been the quite remarkable growth of the Civil Service machine. I have always expressed the view, and I want to repeat it, that I believe in paying adequately all public servants. It was we introduced Civil Service Arbitration and Conciliation for that purpose, in order to give a proper system of wage and salary adjustments to those employed in the public service. However, in the state of this country with a declining population, with fewer people in employment, is there any justification for the Government to take, all over the city, the most expensive buildings in order to house more civil servants to direct fewer and fewer people, to administer the affairs of this country, with fewer people in employment, in order to provide services for those who are still here? There is one justification. These buildings are being provided mainly on what is described as the "never-never" system. We only pay the rent. The capital cost is provided by other means, but it indicates a general approach of a reckless kind to the problems which affect the country, in so far as we are prepared to get other bodies to provide accommodation for increased numbers of civil servants in defiance of a very emphatic, very clear and a generally welcomed statement in 1957 by the then Minister for Finance that he was reviewing the Civil Service machine in order to see how it could be made more efficient and how the numbers could be reduced.
There were leading articles in the newspapers complimenting the Minister on his foresight and on the manner in which he approached this problem. Now after nine years we find the numbers have increased. There is a promise somewhere in this Budget Statement that the Minister for Finance intends to get some group together to consider the position. I gather he intends to get the services even of some of those who have retired——
It is on page 31.
——to consider the problem. Whatever about what has been done in respect of the Building Advisory Council, if this is to be effective, let people be selected not on any personal basis but on the basis that they represent established organisations in the country and that because of their business experience, because of their standing in a particular industry or trade they have been selected by those in it to represent them or to act as chairman or in some other capacity for the coming year or whatever the period is. Let it be done on a proper basis. The suggestion that this can achieve a reduction in the number of civil servants is not warranted because the indications are that the policy of this Government is to festoon themselves with advice of every type, to bring out more and more data, advice, comments, recommendations, and having got them all, to ignore completely every recommendation and every advice.
One of the pieces of advice that were given in the CIO reports was to take steps to rationalise industry. I want to express appreciation of and commend the progressive approach of the distilling industry in this matter. The recent announcement that three distilleries have decided to amalgamate brings to the forefront the fact that many groups in the community—and this is the latest example—have taken energetic measures and taken the necessary action to rationalise their procedure and to improve the industry concerned with a view to marketing, selling and, in particular, exporting. Very often attention is directed to investment in industry. The distilling industry is one long-established that provides very valuable employment. It uses native raw material that sells a product of the highest standard, and all financed out of their own efforts and their own energies. The fact that they have taken this decision is an indication of their awareness of the need to modernise and streamline their efforts, particularly with a view to the export trade.
I have personal knowledge of the efforts these companies have made individually, by sending trade missions to the United States, to develop an export trade. Occasionally comments have been made that sufficient effort was not made because of a lack of an energetic approach, a sufficient determination to seek new markets, without advertence to the fact that the principal competitor, Scottish distillers, with very large capital resources, have very considerable sums available for promotional activities and for advertising, and that relatively small individual concerns have to compete with these undertakings. I believe that this proposal is one that indicates a progressive approach to the problem and a determined effort to seek new outlets. It is for that reason that I regard the additional taxes in this Budget in respect of spirits and also in respect of beer as detrimental. In regard to beer, here again we have native industries using native raw materials, dispersed throughout the country and paying good wages, in the main, to male workers. These are the industries which are now being taxed without any relief.
One of the recent inquiries into the price of drink directed publicans to reduce prices by 2d, even though, in many cases, prices had not been increased. That inquiry was dishonest in the light of the recent Budget decision. It was dishonest because it meant only a temporary postponement of the increase and that increase is now being garnered not by the people immediately involved in the trade but by the State for revenue purposes.
One of the facts disclosed by all the information that has been published and the recommendations contained in the NIEC comments, as well as the Department of Finance report on the Second Programme for Economic Expansion, is that the economy would and could right itself if it were left alone. If no depressive action were taken, if no additional penal taxes were put into effect, if there were no interference at Government level with the recovery that could and would take place, if the Government stood aside, then the economy would right itself. That is the basis of the recommendation made and the basis of the advice given.
One of the facts evident from recent Government activity is that they have mismanaged the economy and that they have misjudged the indicators and the indices. They have failed to give the lead. They have failed to provide the incentive. They have failed to give that air of confidence so essential if this country is to right itself. I have repeatedly expressed the view—I repeat it now—that our people are capable of rising to the challenge, and not only the challenge of the present but of the future, and they are as capable now, probably more capable than ever before, of meeting difficulties and surmounting them. Many of them are better educated, better trained, better equipped than ever before. Our people have now as good a sense of patriotism as they ever had in the past and they are prepared to apply that to the needs of the nation as well as to the needs of their particular locality.
One of the excuses and one of the justifications for this Budget will be balance of payments difficulty. That will be followed by the phrase: "Well, you know, the same situation has developed in Britain; they are having balance of payments difficulties, too." The unthinking may fall for it, but there is a very clear distinction: British balance of payments difficulties are due almost exclusively to heavy defence commitments east and south of Suez.
Hear, hear!
Although now stripped of an empire, the remnants are still there and the trappings are not easily abandoned. Indeed, how seriously that view is held was shown recently when the Labour Minister for the Navy resigned and a number of Service chiefs followed his example. All that involves heavy expenditure of an unusual and exceptional character. There is no similar commitment here.
Deputies
Hear, hear !
We cannot even train the FCA for a fortnight.
Deputies
Hear, hear !
We cannot even train for a fortnight a body of men prepared to devote their leisure to training, prepared to travel long distances, men who indicate by their dedication to the Force of which they are members that they recognise the need for national discipline and are prepared to play their part in furthering the interest of that Force, probably the cheapest defence force in the whole world. But, although we have not comparable defence commitments, we cannot even train them.
I want to suggest now that the lack of confidence which pervades this country at the moment and which is of quite serious dimensions in many spheres, which has been demonstrated by the withdrawal of private investors, by the need for the Government to repay Exchequer loans, by the feeling that there is a lack of leadership, has been engendered by the clear demonstration that the Government feel frustrated, frustrated in face of mounting problems, frustrated by their own futility to deal with them. We can give, and we will, what the country needs —the leadership necessary and the direction and purpose so essential for progress. If it gets that, the country can surmount its difficulties and the people can be assured that we can go forward to a higher standard of living, to better prospects, to confidence not merely in ourselves but confidence too that an independent Ireland can provide its people with all that to which they are entitled.
Deputies
Hear, hear.
I am quite sure that in the years to come this Budget and the people who framed it will be known by many different names. We have had Budgets in the past—the Hairshirt Budget, the black Budgets, the grey Budgets, and many others. This Budget is characterised by nothing so much as its absolute colourlessness. Apart from the fact that, as Deputy Corish said yesterday, the Budget is being used as an instrument to collect more taxes, there is no attempt in the Budget to try to direct the nation, to try to point the way for the nation and, in fact, improve its position, or get it out of the sorry mess into which the present Government have led it.
The amount of money required to run the country in the next 12 months is truly staggering. The method by which it is proposed to raise the extra money needed can only be described as scandalous. Apparently the Government have reached the stage where they feel that, so long as they protect their own interests, they no longer have any responsibility for explaining to the country that the proper running of the country is a matter of interest to them. It is an extraordinary thing that when one goes through the list of taxes, one finds that the items which are taxed, with one or two exceptions, are ones which a few years ago the Government said should in no circumstances be asked to carry more taxation.
One remembers the many stories spread by Government Ministers and, indeed, by the Taoiseach himself over the past 12 months: first, the wonderful country we were living in, the fact that everything in the garden was lovely and we did not need to worry about our future. That was in March and April of last year. That was followed by the doleful statement that things were getting bad and the one bright spot all along the way was that the Minister for Local Government continued to say there was plenty of money for housing. Now we find there is no money for anything.
The most extraordinary thing about the whole Budget statement was the fact that the Minister made no attempt of any kind at any stage to refer to the question of employment or unemployment in this country. It almost seemed as if those were bad words, words which, in no circumstances, he should introduce into his Budget lest he might be questioned at a later stage about the facts or figures he gave. So he gave none at all. He hopes, of course, that everybody else will, like himself, avoid the issue. But he can be assured that the issue will not be avoided. He can be assured that we want to know what has happened. Why has the situation deteriorated so badly? Why has the Second Programme for Economic Expansion gone completely on the rocks? Why was there such a lack of foresight when this Programme was being prepared? In this House I stated that I did not consider the Second Programme a real programme; it was something like Old Moore's Almanac; somebody wanted to make a few shillings and so somebody sat down and predicted —inaccurately, of course—what might possibly happen within the next 12 months. The only difference was that, in this Almanac, the period was extended until 1970. One after the other of the projected targets in the Second Programme for Economic Expansion has come to grief. The best thing to do now would be to forget that it ever existed.
The situation where we had a proposed expansion of industrial employment to take up not alone the numbers leaving agriculture but, in fact, to absorb extra people before 1970 has now been completely reversed. The number of people who are leaving agriculture has increased so rapidly that the people who have been absorbed in industrial employment represent only a fraction of those who are being forced to flee from the land because of the Government's inept handling of agricultural problems.
Lest there be any idea that the next 12 months holds anything for agriculture, let me refer to Table 5 of Current Budget Tables, 1966, in which it is made quite clear that the estimate of Government expenditure in relation to agriculture for 1966/67 is down by approximately £1½ million and, in fact, that subsidies on butter, milk and milk products are the only items in relation to which there is any substantial increase, an increase of £1,906,000. However, we note that bacon is to come down considerably. Have we decided we will not be able to sell bacon any longer in Britain? Have we decided that the pig must be forgotten, along with all the other Fianna Fáil promises? In fact, the figures for the calved heifer scheme have dropped by £345,000. There is a bit of a fiddle there. I am quite sure the Minister and the Government were thinking of it when this was being prepared, because the original amount put into the Budget for the calved heifer subsidy, when it was being introduced, was something around £345,000 and, by some miscalculation, the figure was exceeded by over £2 million. Now, the figure of £2,500,000 is left in. I am quite sure the Taoiseach knows, the Minister for Finance knows and definitely the Minister for Agriculture should know, that the figure of £2,500,000 is not realistic and that, by the end of the year, when he comes to calculate, he will have a nice little bit on the side which he can use for something else.
We have been hearing an awful lot about arterial drainage, from the draining of the Shannon and various rivers. According as Deputies died, the schemes moved from county to county and from constituency to constituency. The only one which seemed to hold its place was the Boyne. May be we are a bit healthier there. Not many of us died but at last we reached the situation where the Boyne was to be started in February 1966. We now find that that cannot be done. Some time in 1967, it might possibly start. However, it is rather significant to see, in the figures here, that the amount which it is estimated will be spent on arterial drainage is down by £260,000 for the year. That does not look as if there will be any improvement or any increase in the amount of our arterial drainage to be done.
Similarly, grants for poultry houses and equipment are down by £9,000 and forage harvesting equipment grants are down by £16,000. Departmental capital expenditure on land and buildings is down by £169,000 and rural electrification is down by £650,000. The gem of them all, capital for the Agricultural Credit Corporation, Limited is down by £2,148,000. Is that because the Agricultural Credit Corporation have been told they are no longer supposed to look to the Government for money to lend to the farmers? Must they now go out to farming and business interests in the country and attempt to borrow it themselves? Is that why this has happened or have we reached the stage where the Government will now try to foist their own responsibilities on somebody else and ask them to carry them for them?
Over the past six months, we have had a spate of speeches from Ministers, from Parliamentary Secretaries and from an occasional Fianna Fáil Deputy who ventures out into the deep water of industrial relations in this country and all of them have been stressing that there must be some way of settling the wage problem, that there must be some way of settling industrial disputes and, above all, that there must be some regulation by which the workers of this country will not be allowed to take more out of the national kitty than is in it. After all this advice had been given, and after a number of discussions had taken place between what Deputy S. Flanagan, Parliamentary Secretary to the Minister for Industry and Commerce, referred to, the other evening, as the "ICTU"—he did not refer to the other group as the "FUE", the Federated Union of Employers—the Government stated that the economy of the country could not carry more than three per cent for the low-paid workers. Everybody was wondering who came into that category and, the day before yesterday, the Government decided that the category was from £1,200 down. Those in receipt of £1,200 up were not to be included but those in receipt of £1,200 down were to have not more than three per cent.
I do not know whether those who talk about these things at dinners, dances, and so on, really appreciate the situation. I do not know if they really know what it means, in cold cash, when one talks about a three per cent increase. I am quite sure that there was a feeling among the £4,000 to £6,000 a year people who were recommending that this should be done that they were definitely saving the economy of the country. They were telling the Government what should be done and were ensuring that those horrible people who, in their view, were ruining the economy of the country by attempting for a number of years to get a living wage out of it would not succeed. Could we not try to make the people responsible for this recommendation realise that there are hundreds of thousands of workers in this country whose wage is less than £9 per week? A very big number of them are working for between £8 10. 0. and £7 10. 0. a week. Their social welfare stamp increased by 1/5d per week with effect from 1st January, representing about one per cent of their income. If the Government say that they are to get only three per cent, it means, in real cash, only two per cent because they have already handed over one per cent of it to the Department of Social Welfare.
Furthermore, since the last increase was granted, there has been an increase in the cost of living of almost 11 per cent. If those people who are attempting to live and rear a family on a week's wages must now accept three per cent—and the 11 plus one is 12—they will be ten per cent worse off than they were when the ninth round of wage increases was negotiated. It must be awfully difficult for people who never knew what it was to have to count what money was required to run their house for the week to understand that those on a low fixed income have to count every penny and that 1/5d out of their wage packet is a substantial sum. It means that in that week and for the weeks in which it has been taken, members of the family had to do without something which they needed in order that it could be paid. Then the ridiculous nonsense we have from Government Departments speaking from the lofty heights, people who, as I have said, never knew what it is to need a week's wages, are prepared to pontificate and talk about the workers of the country ruining the economy.
The position is—and the Minister for Finance might as well face up to it—that before the Budget was introduced, the three per cent which the Taoiseach was laying down was ridiculous. After the Budget was announced, it was doubly ridiculous because there is not a chance in hell of the workers accepting three per cent for what they lost over two years and what he has imposed upon them within the past few hours. We might as well face up to facts because it appears in this country, if we get people in high enough places to talk about things, the people will believe it will come true. Now the cloud cuckoo land in which many people have been living is about to burst over their ears if they are not prepared to face up to the fact that the workers of this country are entitled to a decent living. If they are not going to get that decent living, then the Government have another think coming.
The whole question of whether or not the budget was imposing extra taxation on certain sections was discussed briefly last night. Let me just run over this. First of all—income tax. I do not know whether or not the gentlemen who were responsible for presenting this Budget to the House went to the trouble of checking on the figures which were available to them as well as to us over the past few months. I put down a question here about income tax, which was answered last May. I had a further question recently. In May of 1938 some of my predecessors asked a question, and right down through the years, we can get the comparisons which are necessary to prove whether or not the ordinary worker in this country is paying his fair share, more than his fair share, or less than his fair share of income tax.
The information we glean from those questions, together with other information which we got from other sources, was used in a debate here recently on a suggestion that the Budget should make some preparation to ease the tax burden on the lower-paid workers. Apparently the people who prepared this income tax section of the Budget did not bother their heads checking the facts because they are simply these, that right along the way it has become very evident that the Government have deliberately increased the impost of income tax on the lower-paid, the least able to pay who have been asked to pay a bigger amount than those who are really well paid. Perhaps that is human nature; perhaps the well-to-do will ensure that the less well-to-do, who have no influence on this, will be made to carry more than their share and, in that way, save themselves from paying their rightful share of tax.
The 6d in the £, which in effect is what it means on ordinary PAYE, will be a very heavy impost on the people to whom I am referring here today. The man who is earning £6. 5s. 0d. per week will, in effect, have to pay, in future, 5/3d in the £ on all he earns over that figure. Let me refer to the classical example—the man from the country who drives into the city every morning, leaving home around 6.30 a.m.; works a very hard day on a building site—and works on a job at which many people in this House would not last for one hour—and goes back home in the evening, reaching home at maybe 7, 8 or 9 o'clock. If he is lucky, he may get from his employment at the end of the week a wage packet of £10 or £12. He is a single man, possibly he looks after his mother who is not 60 or 65 years of age, and is not ill. Maybe there are younger brothers or sisters who are not working and are still at the age when they require attention. What does he get above £6. 5s. 0d. per week? He pays income tax on every pound. The fact that he has to run a car into the city does not seem to matter; he gets no rebate on that. Just to show that the Minister for Finance has not forgotten him, he has added 4d per gallon to his petrol and 25 per cent to his road tax.
That is the way the Government are prepared to treat the ordinary people. That is the classical example. Anybody who likes to go out to the building sites in this city or in any big town will find hundreds of those people to whom I have referred. If they do not work there, what happens them? They go back on the labour exchange and then they are a charge on the State; but, while they are working, the State takes its pound of flesh and, apparently, is prepared to continue to do so. The increase in the price of petrol is covered there also.
To go back to income tax for a moment, the only thing which has been allowed is an extra £30 a year given as an allowance to the person who has a child or children, over 11 years of age, those who are attending school and those who are apprenticed to a trade. Again, I do not know whether the Minister has taken into account what this means. A sum of £30 at 5/3d in the £ is worth around £8 per year. I wonder what extra it is proposed that such a person can do with £8 a year, particularly if it is the man to whom I have referred who has to drive in and out of town each day. He will already have to pay most of it on his increased motor tax for the year.
Tobacco has been referred to and yesterday evening we had the greatest example of government-by-muddling I have seen for a long time in this House. We had the Minister making his statement. The Minister, I am quite sure, is a very decent man—and somebody referred to him as such here yesterday evening; we all know that— but even decent men can do things in a stupid kind of way. He presented here yesterday evening, first of all, his Budget Statement and then the Financial Resolutions. The Budget Speech was in ordinary plain language that anyone could understand and, without any shadow of doubt, there was a reference to the price of cigarettes and tobacco. Cigarettes were increased by an equivalent of 2d per packet of 20 and a corresponding level on manufacturers' stocks, it was supposed, would bring in £1.1 million. During the debate later on yesterday evening, the Minister was not quite sure, when he was asked, if this was 2d per packet, particularly when it was pointed out to him that in the cork and filter-tip cigarettes, there is very much less tobacco than in the ordinary cigarette. Deputy Booth, anxious no doubt to be helpful, pointed out that it was the Financial Resolutions we were debating. He was perfectly right but he seemed to think that was the only answer to it.
What we wanted to know and what I want to know now is who gets the difference? The Minister mumbled that it was 1.3d on the cork-tipped and, if this is true, there would be about three-farthings dropping to somebody else. Do we take it, because of a classical piece of Government muddling, the tobacco manufacturers will pick up three-farthings per packet of 20 cigarettes? If anybody says it was not intended to be so, I may say that I got a copy of the Evening Press, and not alone did they have the increased prices of the various commodities but they had a picture of an open packet of cigarettes, with a caption saying that they were up by 2d and these cigarettes were cork-tipped. Somebody was either making a mistake or trying to be very smart. This kind of thing should not be allowed in this House. No Minister for Finance should come into the House with a Budget and ask the House to support it when he does not know what is in it.
The Evening Press did it very well. They had a heading: “Pension increase of five bob”. Does the Government remember what happened the last time a similar heading appeared in the newspapers, when we had unfortunate people from all over the country writing to Deputies and Senators and everybody else they thought had any influence, asking why they were not getting the pension increase which was promised to them and which appeared in the newspapers? There are still people in this country who evidently believe that because a thing is printed in the newspapers, it must be the truth, even if it only appears in the Evening Press.
The only people who will get this small increase are those who have no means. What did the Minister say about it in his speech? He said:
Though prices have not risen since May last, when I announced substantial increases in benefits in the Budget, some Social Welfare recipients, particularly pensioners, would find life harsher as a result of this Budget if no gesture of relief were made. I cannot, however, do very much with the extremely limited means available to me in spite of the increase in taxes. The £¼ million, which is all I have available, will, however, finance an increase of five shillings a week, from 1st November next, for persons with no means, in non-contributory old age, blind and widows' pensions and in the personal and adult dependant rates of unemployment assistance. It will also cover a similar increase from that date in the infectious diseases and disabled persons' maintenance allowances administered by the Department of Health.
What the Minister said was that those who have an income, according to his Department, of less than £26 5s. a year and who are applicants for non-contributory old age pensions will get five shillings per week from 1st November next and that nobody else will get anything from this Budget. When people are printing items in the newspapers they should take great care that they should not cause hurt and annoyance to the unfortunates to whom five shillings is a lot of money.
The people in receipt of unemployment assistance and non-contributory widows' and blind pensions and those in receipt of infectious diseases and disability allowances, those of them who are still alive on 1st November, will be very grateful to get the additional five bob but the offer of five bob to a small section of Social Welfare recipients in a Budget which imposes taxation of the magnitude imposed here and which will make life harsher for those people can only be described as scandalous. The hardship imposed on these people who will qualify for this five shillings must also be imposed on people who are in receipt of more than £26 5s, on the people who are in receipt of contributory old age pensions and who are in receipt of unemployment and disability benefit. There is nothing given to them. They will only have to struggle on.
The Minister only had a £¼ million and the way in which he used it shows what the priorities are in the minds of the Government. When everything had been done and everything they could take had been taken they suddenly discovered that a £¼ million could be given to some people. They gave it to people who have nothing. That is what we have been getting from this Government over the years.
With respect to the increase in the tobacco tax, we tried to get the Minister to agree that those who smoke plug tobacco should get some consideration but the Minister was not prepared to consider that. He felt that they were not any worse off than the people who smoke flake. I am quite sure that everybody in this House will realise that a normal working man will smoke 20 cigarettes a day. That is an extra shilling a week which represents another one per cent of the three per cent increase in wages which the Taoiseach has been recommending. His three per cent is getting very small.
He goes on then to increase the taxation on what Deputy Seán Dunne referred to many years ago as the poor man's pint. I am a Pioneer myself, as most Deputies know, but because of that, I do not believe that nobody should take a drink. Any man who can afford to drink, who can pay for it and who enjoys it should be able to have a drink in moderation. I do not see any reason why he should not but the suggestion that the man who likes a pint and wants to have it should have to pay extra for it, the suggestion that the Government should decide that they can find money in no other way than by taxing that very small luxury, is one that should not be made.
You are going to be caught with the lemonade.
I am coming to that. The question of raising taxation by such methods is one of the things we have objected to down through the years. We believe it is wrong to have this type of taxation. I am sure the Taoiseach has not moved so far away from his constituents that he does not appreciate the fact that there are very many of them who enjoy a pint. If these people have only one pint every night, they will now think a lot less of him because they have to pay extra for it. The money could have been raised in some other manner.
The tax on spirits has been increased. There may be some justification for that but I am informed by those who know more about it than I do that this increase is likely to have an effect on the amount of spirits consumed and on the production of spirits in this country. If that happens, it will be a very ill thing for the country in general. The tax on table waters has been increased and this is on a par with the turnover tax on the ice cream and the box of matches some years ago. When the turnover tax was introduced, Deputy MacEntee, who was so very noisy in this House last night, had a solution in so far as ice cream was concerned. He said there was no reason why the amount of ice cream could not be reduced. He said the same with regard to the box of matches. He also said that matches could be dealt with by taking a few matches out of the box and again that advice which was not good was taken. You cannot take a little out of a bottle of lemonade or a bottle of mineral waters. It is like taking pennies from children's pockets.
I have no comment to make on the tax on wines. The firearms duty appears moderate. The extra taxation on mechanically-propelled vehicles makes it appear that the Government are determined to push up the price of motoring to an extent where once again no one will be able to run a car except the wealthy. At present we are very glad to know that most workers who have to travel any distance to work use mechanically-propelled vehicles. It is a big struggle for them to pay for those vehicles but they must either have them, or not work. I do not think the Government are helping those people in adding on one-quarter.
I wonder would the Minister try to explain the justification for this increase? Why was it put on? He must know. All these people who run cars—and I am sure he meets as many as I do—complain that the taxation on a car, not taking insurance into account, is often more than the actual value of the car. These people buy an old car. They spend their spare cash on it, and then try to make it roadworthy. Now, for their pains, the Government say they must pay an extra quarter in taxation.
We are in agreement with the Government in regard to the dancehall tax. We were opposed to the Government when the Taoiseach, who was then Minister for Industry and Commerce, told the dancehall proprietors that he was against a tax on dancehalls. The Leas-Cheann Comhairle drew a very fine line today between whether this is a dancehall tax or a turnover tax on dancing. I feel that commercial dancehalls should be asked to pay this tax of a few shillings. I see no reason why they should not.
I was rather surprised to find that the amount which it is estimated will accrue from this tax is £150,000. That appears to me to be a small sum. I feel that someone has miscalculated. I am not "with it". I do not like the type of pop music which seems to draw crowds to the dancehalls, but despite that, I travel around and I see that the dancehalls are crammed with thousands of people who do not pay the 2/6, or 3/-, or 4/-, which the Minister referred to, but who pay as much as 10/- and 12/6, for the doubtful pleasure of squeezing into these halls and standing there all night listening to someone who cannot sing attemping to put across the most recent addition to the pop charts. As I say, I am not "with it", but it seems to me that the number of people, and particularly the number of young people, who pay to go into these dancehalls would represent a far greater amount than £150,000. There is already a tax of 2½ per cent so this is an addition of 7½ per cent.
The fact that the Government are now going to get some money from that source should not blind them to the fact that, in many cases, the law is being contravened, and 3,000, 4,000 or 5,000 people are crushing their way into dancehalls designed for less than half that number.
The number who congregate in the dancehalls is a matter for another Minister.
While I agree with the ruling of the Chair, of course, I think that intervention was hardly necessary.
Since the Deputy was out of order, the intervention was very necessary.
I do not think it was out of order, but I will not argue with the Chair.
It does not arise.
I remarked earlier that for some reason the Minister in making his speech seemed to fight completely shy of the situation in which this country is badly affected by unemployment and emigration. I do not know whether or not that was deliberate. The Minister seemed to think it might be a good idea, that if he said nothing about it, no one else would bother.
The position is that despite all the talk we have had about incentives and improvements in the employment position, we find that the opposite is the case, and that the number of people leaving the country is again going up by leaps and bounds. The position about employment is that over the past few years, overall employment appeared to be growing a little, but at a much slower rate than was envisaged in the Second Programme for Economic Expansion, but this year there has been a striking change for the worse. During 1965 overall employment decreased by 7,000. That means that 7,000 fewer men and women were in jobs here in 1965 than in 1964. It is estimated that in 1966 we will probably see a decline of another 4,000. That means there will be 4,000 less jobs in 1966 than there were in 1965. It is only a short time since the Taoiseach and the Government were talking about all the jobs that were to be created. I am sure the Taoiseach will remember that a figure of 7,800 extra jobs per year was envisaged.
Between 1963 and 1966, we lost roughly 100,000 people through emigration. That means there are 100,000 fewer people in the country than there were in 1963. This happened before free trade conditions started to operate. What will happen after next July? I am sure the Taoiseach will spend many a sleepless night if he thinks about these things. If we cannot maintain the job position before free trade conditions set in, what will happen after they do set in? The Second Programme for Economic Expansion envisaged a progressive reduction in emigration to a figure of about 10,000 a year by 1970. What is the situation now? In 1962, the figure for emigration was 21,000; in 1964, it was 26,700; and in 1965, it was 27,300. I challenge contradiction on those figures. I do not think the Government have anything to cheer about when these things are brought to their notice. There does not seem to be any hope of an improvement and, as a matter of fact, things seem to be getting worse.
When things appeared to be going reasonably well a few years ago, the Government claimed that that was a result of good government and when things began to go badly they told us that was a result of economic conditions abroad. I am rather at a loss to know why, if they want to take credit for things which turn out well, they are not prepared to take the responsibility when things turn out wrong. I can assure the Taoiseach that many people in the country are as anxious as I am for an answer to that question.
I do not know what Government thinking on the cost of living is. They want to take credit—and incidentally, Deputy Cosgrave who made an excellent speech seemed to want to take credit, too—for the fact that there is a type of price control in operation. It seems to be conveniently forgotten by everyone that for years we have been trying to force the Government to have some type of price control set up, and the fact that eventually it was very reluctantly set up should at least be admitted by the Government. They now say there has not been any price increase since last May.
They seem to imagine they will be able to hold prices, with the exception of the Minister for Finance who said that an increase of 1¾ per cent might possibly happen as a result of his Budget taxes. Now, I think the Minister for Finance was speaking with his tongue in his cheek. He either did not know what he was talking about or he was trying to cod the country again because everybody knows prices have been going up and everybody knows that since the increase in the price of petrol is bound to increase the cost of distribution and with the increases in the various other items, beer, cigarettes, spirits, tobacco, to mention a few of them, those increases will be reflected in the cost of living and it will be only a short time until we have much more than the 1¾ per cent which the Minister said was likely to have to be paid out by the people who are trying to live on very small incomes.
Since the last wage increase was granted, we know, according to the Government's figure, in June, 1965, the workers were able to buy four per cent less goods with their wages than in June, 1964, and in June, 1966, he is asked to accept a wage increase of three per cent. I do not know whether the Minister or the Government have bothered their heads trying to work out all those things or whether they just put their fingers in the air and said: "This figure we have; we will just do with it and see what it will be like," without actually considering what is to be done with the money.
The Minister for Health has been telling us he is going to introduce a new health scheme. He tells us it will be introduced, according to the White Paper, in November, 1967. Surely he must be aware that, in order to maintain the existing services, he will require money now? Surely he knows what the situation is or does he again think, by bluffing, that the Government will allow the services to deteriorate and nobody will notice it? The Minister for Education has been having a wonderful time arguing with himself whether or not he should have one or two-teacher schools or bigger schools.
Those are matters which are appropriate to an Estimate debate rather than to this debate.
I should like to point out to the Cathaoirleach——
Acting Chairman
The Cathaoirleach wishes to point out to the Deputy that he should not point out something to the Cathaoirleach. The Cathaoirleach has ruled that what he is now saving is appropriate to an Estimate debate. That is a ruling of the Chair.
The Cathaoirleach is entitled to give a ruling but he is not entitled to stop me in the middle of a reference to something. I have not dwelt at length on any subject. I am sure the Chair will appreciate that I am entitled to refer to those things in passing. It is a new procedure in the House, let me say, if the Cathaoirleach or the Ceann Comhairle is to stop somebody because he thinks he is going to say something.
It is a good Chairman who can foresee that.
I could make a comment on that but this is not the place.
This morning we were told we could bring everything in.
We have been told that the balance of payments is the cause of most of our evils. Let me refer to something on which I am sure the Cathaoirleach will not be able to rule me out. As far as the balance of payments is concerned, the price of cattle in Britain until now, whether it goes up or down, has had an effect on whether our balance of payments is on the right side or on the wrong side. I am sure the Taoiseach is as well aware as anybody else who takes an interest in these things that a new element has been introduced and that we will shortly have exports from our mines which it is estimated will, inside the next few years, represent almost as much as our cattle trade is bringing in at the present time. If this results in our balance of payments being on the right side, does that mean that everything in the country will be grand or what excuse will the Government use for things going wrong then? Will they be able to find something new to rely on?
Reference was also made by the previous speaker to the fact that when the balance of payments is wrong in Britain it is wrong here and the fact that the defence commitments in Britain were such that they were responsible for the big deficit in the balance of payments. Again, here we cannot claim any such thing. As a matter of fact, we seem to be prepared to save money on our defence budget this year. According to the current table, the defence budget is being reduced very considerably from £11,910,000 to £10,802,000. I do not know whether that is to be saved on the FCA or whether it is to be saved on the reduction of the number of fat fellows in the Army? The Taoiseach is aware, I am sure, that anybody who is overweight at the present time is politely told to get down his weight or get out of the Army.
Acting Chairman
These are certainly matters for an Estimate.
I do not want to get into an argument with the Chair. Most certainly I believe in order in the House, but we are discussing the Estimates with the Budget and we are entitled to raise and discuss other items which are mentioned here. If the Cathaoirleach wants to rule me out on matters of this kind, then I will have to exercise my right to ask the Ceann Comhairle to give a ruling. I do not want to be at cross-purposes with the Chair but I am not going to let any Cathaoirleach rule me out of order on matters to which I am entitled to refer.
Acting Chairman
I want to point out that going into detail, as the Deputy has done on defence, is something that is appropriate to a debate on the Estimate.
When the Leas-Chathaoirleach was in the Chair, this matter was discussed at length by Deputy Cosgrave and without any intervention. I resent very much an intervention by the Cathaoirleach on matters which I am entitled to discuss.
We have had nothing at all about the Army. Deputy Cosgrave did not say anything at all about it.
It is the one thing he missed out on. He mentioned the LDF and a lot of other things, too.
There will be very few fat men left after this Budget.
I do not want to get into quarrels with the Chair. With regard to the employment position, no official figures of overall employment in 1965 have yet been published but it is a fact that the number of persons at work has fallen but the number of males—this is the important thing— engaged in farm work in 1965 is estimated as having been 14,000 less than in 1964. The average number of persons engaged in transportable industries for the first three quarters of 1965 was only 1,700 higher than in 1964. The changed appearance, as far as the country is concerned, is caused by the fact that the Government have lost complete control of the running of the country. They are now sitting back, hoping like Mr. Micawber that something will turn up.
I used to listen, in my earlier days, to the Taoiseach referring to the fact that prosperity was around the corner. I remember the Dublin Opinion cartoon with the Taoiseach making that statement on the pier at Dún Laoghaire and the people rushing for the mailboat around the corner. The Taoiseach, of course, was right. There was prosperity around the corner but he was not assisting our people in getting it.
We in the Labour Party are prepared to stand up, as we did last year, for anything we consider to be fair and reasonable, but on this occasion the Government have made an attempt to put across on the country a Budget which is possibly the worst since the State was formed. There has been no guideline given to the country as to how we are to get out of the morass. We have been told the country is in a bad way and the people with very little are being asked to pay more, but the well-off, the friends, are all right. They are leaning heavily on the people struggling to earn a living and in order to ensure that those people will not be able to express themselves as they often do, the Government have postponed the local elections until October and, I feel sure, they will again be postponed until June of next year. The sensible thing for the Government to do is to admit: "We have not been able to run the country; We have made a bad mess of it and we want the people to decide". I suggest to the Taoiseach that along with the Presidential election he hold a general election to decide if the policy which he attempts to put across on the House and the country is acceptable.
This debate on the final Budget Resolution has begun today, somewhat later than we expected, mainly, I gather, because Deputy Dillon was anxious to deprive the Leader of his Party of the opportunity of making the opening speech on the general Budget debate. Of course, none of us now in the House is very much concerned with the internal feuds of the Fine Gael Party or the discourtesy they think appropriate to their Leader except when they erupt here and interfere with the business of the House.
The financial measures announced by the Minister for Finance in his Budget Statement yesterday are in the opinion of the Government, essential for the economic and financial welfare of the State during this financial year. That is the justification for them and it is the only justification they need. That is what makes this a good Budget. I do not mean good in the sense that it is popular. Taxes never are. I mean good in the sense that it is a sound Budget. If the Government had for reasons of political expediency failed to take the measures on which we decided, then we would have failed in our duty and the situation this time next year would be very much worse, almost, perhaps, at the point of being catastrophic.
Deputies Cosgrave and James Tully today, like Deputies T.F. O'Higgins and Corish yesterday, seemed to suggest that the Government were imposing new taxation for the heck of it. Governments never or very rarely impose taxation unnecessarily and in our circumstances in this year, we do not think unnecessary taxation would be justifiable. We are not budgeting for a surplus as was asserted in a headline in a morning newspaper. We can, we believe, rectify the unfavourable trends which have developed in our national economy without the deflationary device of a Budget surplus. The purpose of the higher taxes which have been proposed and of which the Dáil has now provisionally approved is to raise money to meet the estimated cost of essential and desirable public services. These taxes will raise all the money which is needed to meet the cost of these services in this year, and no more. The alternative would be to cut down the scale of these services.
I do not know if that is what the Deputies who have spoken on the Budget already are urging or whether they are just failing to face the realities of the problem facing the Government and the country at this time. As far as we know from any firm declaration made on behalf of either of the Opposition Parties, neither of them want to cut down the scale of Government services. Certainly, no Deputies from either side have openly advocated this, whatever their inner feelings may be. In our view, it would be bad national policy to do so and there should be no ambiguity about our position in that respect.
Neither are we budgeting for a deficit. The revenue estimates which we have prepared are realistic and it is intended to avoid any significant addition to the expenditure now estimated for any of the Departments during this year. Because of the realistic way in which the Budget was prepared, no provision for over-estimation would be justified in this year. In circumstances where the Government's capital programme requires in this year that all the capital funds we can hope to raise in or outside the country are required for the purpose of that Capital Budget, a deficit on the Current Budget would involve cutting down the scale of capital expenditure now envisaged—expenditure on housing, schools, hospitals, agricultural and industrial investments—and this, we do not think would be good policy. We know we have framed the Capital Budget on fairly optimistic assumptions as to the capital funds that can be raised and we have so stated in the document published in the House. This, of course, is another reason why a deficit or the risk of a deficit on the Current Budget would be unjustifiable.
The Opposition Parties were aware in a general way, from the documents which the Government supplied to them, of the nature of this year's Budget problem before they heard the statement of the Minister for Finance yesterday. They knew there was a gap of about £12½ million between expected revenue and the outlay envisaged in the Book of Estimates. They had plenty of time to decide what their attitude was to be to that problem. I do not know what procedure either Opposition Party adopt when deciding on their attitude to a Budget. Maybe they meet together and consider the character of the problem and the line they will take. Maybe they do not. Maybe it is every man for himself, but on the reasonable assumption that some number of Deputies in both Parties meet to look at the documents supplied by the Government, it was reasonable to expect that some consistent line of policy would emerge. They could have either advocated cutting down Government expenditure further than we did by reducing the scope and scale of the services to be provided by the Government this year in order to avoid taxation, or they could have continued in their old course of advocating still further increases in spending, realising that it would involve even further taxation than the Government intended to propose. They could instead have recognised the need for additional taxation in this year to balance the Budget.
In effect, they did not take any of these courses. They decided to gallop off in all directions. This lack of policy, lack of consideration of the problem of the Government, was disclosed immediately after the Minister for Finance sat down yesterday by Deputy T.F. O'Higgins. It was disclosed further today in the speech of Deputy Cosgrave. Deputy O'Higgins began by denouncing the taxes proposed individually and collectively, then turned to criticise the Government for not proposing to spend more money on education and health and other services and ended up by asserting the necessity for a balanced Budget. Do they know what it means? If we are to have this type of discussion, one Deputy arguing against taxation to pay for the existing services and another arguing for an increase in the cost of these services, then no intelligent debate on this Budget will be possible in the Dáil. You can only have an intelligent debate——
What about your own promises in the last general election?
I am going to remind the Deputy of some of those he made. I shall start on the first promise: "Let Dillon lead." Why did you not?
We never said that. "Let Lemass lead on"—where is he leading on to?
You can only have useful debate on major matters of public concern such as arise on the occasion of the Budget, when there is some clear divergence between the proposals of the Government and the ideas, if not the policy, of the Opposition Parties. If they have no ideas or no policy, then no effective discussion is feasible. So far at any rate from the two speakers we have had from the Fine Gael Party and the Labour Party, we have not got any disclosure of ideas of practical significance in relation to the problem of the Budget or any conception of a method by which the Budget problem could be reduced or avoided. We had only negative and misdirected criticism. If not the taxes proposed by the Government to meet the Budget gap, what taxes? If we are not to close the gap between revenue and expenditure by new taxes, what expenditures are we to reduce or what are we to cut out of the Book of Estimates?
I do not expect any Deputy of either Party to answer either of these questions. That would be taking too responsible an attitude. I do not expect they could even agree among themselves as to the answers they would give to either of those questions. Taxes on alcoholic drinks, on tobacco, petrol, motor cars and dances are legitimate. All these things are legitimate sources of Government revenue and have been so regarded for a very long time. The only questions that arise for consideration by the Government or by the Dáil on the occasion of the Budget relate to the rate of tax which is most efficient, the rate of tax on these commodities which will bring in the most revenue with the least consequences on the sale or use of these commodities.
The sale of alcoholic drinks and petrol and of motor cars have been going up steadily in recent years in this country. No doubt there are some people who are concerned for social reasons about this upsurge in the amount of alcoholic drink consumed but I do not think the taxes now imposed by the Government are likely to pull down consumption of drink at all, or certainly not to any extent.
The popularity of these public dances to which the turnover tax is being applied at a higher rate throughout the country is well known. Deputies who in the past were arguing for the solution of Budget problems by raising income tax, Deputies in the Labour Party, this year voted against the increase in income tax. Deputies opposite say, of course, that they are concerned about the effect of income tax upon the take-home pay of workers. The level of income tax, even at this new rate, is still well below the rate considered appropriate by the Coalition Government in which these Parties combined. Ten years ago the standard rate of income tax was 7/6. Did any one of them then bemoan the effect of that high rate of tax on the take-home pay of people paying it? Not at all: they thought that was a justifiable rate and opposed, on occasion, the measures taken by this Government to reduce it.
We have had little constructive discussion on this Budget from any source. I read the papers this morning and I found two ideas expressed there concerning alternative taxes that the Government might consider—an absurd idea from the genius who writes the leading articles of the Irish Times that we could have balanced the Budget by taxing icecream and, incorporated in a very intelligent comment on the Budget by Mr. Rory Roberts, one of the joint secretaries of the Irish Congress of Trade Unions, a suggestion for a capital gains tax. A capital gains tax would be a legitimate taxation device and operates in many countries but I think we shall need to give very careful consideration to its suitability in the present circumstances in this country in the light of the need to stimulate a rising volume of private investment in productive activities of all kinds. It would, in any case, yield no revenue in this year and therefore is irrelevant to the current Budget problem.
When will you consider it?
We shall make our decision known in due course. Deputy Cosgrave appeared to be concerned, if that is the right word, about our decision to have recourse to foreign borrowing to maintain the level of our capital programme. Foreign borrowing for development purposes is a normal activity of every country and the alternative to having recourse to foreign loans for the purpose of capital development is to cut down the programme. We do not think this would be a wise policy. We know capital throughout the world at this time is scarce and dear, but so far as the Government are concerned, it is our policy to have recourse to external loans to a limited extent, to whatever extent is necessary, to maintain the capital programme until the growth of our internal resources of capital makes this unnecessary.
I listened with considerable boredom to Deputy Tully. Nobody of course expects consistency in any speech from a member of the Labour Party because they show themselves quite capable of demanding reductions in taxation and vast increases in Government expenditure in the same speech. I was, however, surprised to find that the Labour Party attitude has changed upon one matter which they consider of fundamental importance, the tax on lemonade, because this tax which is now being charged is an increase on the tax imposed by the Coalition Government in 1956 which they voted for. Their attitude to lemonade has changed fundamentally in these ten years. It is a matter of some interest to know that they can take some decision on some aspect of Government policy.
Before the Government decided to finalise the Budget, we went very carefully through the Estimates for every Department and we cut down each Estimate on the basis of applying three principles. The first principle was that of confining each Department to the minimum amount required to cover in this year the cost of committed expenditure. The second was the principle of reducing expenditure in each Department only where the consequences upon economic development would be minimal, and the third was that we would undertake no commitment in this year either for new services or new expenditures involving substantial cost in this or subsequent years.
Even on the basis of these existing commitments to which I have referred, the cost of the main development and social services will, in this year, be higher than they were last year, considerably higher than they were when the Budget of last year was being presented to the Dáil. Disregarding in this context any Supplementary Estimates introduced during the course of the year, in this year the Government had to provide for an additional £4½ million for agriculture; approximately £3 million to meet the higher cost of the milk price supports and £500,000 for price supports for bacon; an additional £1 million approximately in respect of the agricultural rates relief.
The educational services are up in this year by £3½ million and health is up by £2 million, in each case the higher cost arising this year being a consequence of the normal growth in the scale and cost of these services. The Industry and Commerce Estimate is up—I hope, temporarily—because the increase there is primarily due to the measures taken by the Government to offset the effects of the British import levies. The main increase, representing more than half of the total additional amount which the Government have to find this year, arises, under the social welfare services. Last year we decided upon substantial changes in the social welfare services. Some of these came into operation on 1st August and some on 1st January, but this year the cost of these changes in the social welfare services have to be met in respect of a full year, which means that we have to find for that purpose an additional £6¾ million or else pull back these changes in the social welfare services that we adopted last year. I interpreted the votes which the Labour Party and the Fine Gael Party cast in this House last night as meaning that they would rather pull back these services, take back the money which we gave to the old age pensioners and to other social welfare recipients, rather than incur the political odium of providing the taxation which would make their continuation possible.
They were simply votes of no confidence in the Government.
You can explain it any way you like but that is how I interpret it. It is because these five items that I have mentioned—the higher cost of social welfare services, the growth in the cost of the education and health services, and the provision that has to be made for agriculture, as well as the higher amount in the Industry and Commerce Estimate—total up to £18 million, and represent a greater amount that the Government have to provide by taxation, because the balance is being met by the normal growth of revenue, which is technically called revenue buoyancy.
Deputies should understand clearly why higher taxation is necessary this year. The alternative to providing these amounts to meet the higher costs of these services was to cut down these services. Which do the Opposition think was the right course? We have no doubt in our mind; there is nothing but confusion and ambiguity in theirs. It is true that administration costs have gone up, but the amount of the increase in administration costs would have been met within the limits of the growth of revenue, the revenue buoyancy, so that no new taxation would have been required because of it. Indeed, if we were to maintain the level of the existing development and social services as we set them last year, then higher taxation would have been needed, even if there had been no increase in administration costs. The pressure in the Dáil and throughout the country is always for higher spending on these services. As I said, the increase in the cost of these services this year is consequent upon decisions taken last year, and in earlier years, and they were taken without dissent from any Deputy here. As far as the Government are concerned, we believe that that was the right thing to do even if Deputies opposite are now getting cold feet about them. We do not believe they should be reversed; on the contrary, we believe they should be made effective by providing the money to implement them.
In operating the general policy of undertaking no extension in existing services, or establishing no new services which would add substantially to the cost of Government in this or subsequent years, the only exception we made, and it was a modest one, was in respect of social welfare services where provision has been made for an across the board increase of 5/-per week for adults without means, to operate from 1st November. Deputy Tully was quite contemptuous about this. Let me remind him that when his Leader, Deputy Corish, was Minister for Social Welfare, one half-crown over six years was all these people ever got, and no increase was given in any of the social welfare services except old age pensions.
And there were food subsidies.
Sixteen million pounds.
The Minister for Finance tried to make it clear yesterday that the Government would find it difficult to assert with confidence that the Budget he presented represents the total of the tax and expenditure changes that may arise during the course of this financial year. Circumstances may necessitate a re-examination and the adjustment of the position during the year. These circumstances are, first, the possibility of further rises in administration costs by reason of wage increases during the year, for which the Budget makes no provision. If such higher wages should seriously distort the accuracy of the Estimate for any Department, then further taxation proposals will be brought to the Dáil to meet them. The second is the possibility of the development of further inflationary pressures during the year which would threaten the rectification of the external payments situation.
The principle of an annual Budget, the annual presentation to the Dáil of the national accounts, the Estimates for the various Departments and the Government's proposals for taxation to cover the cost of these Estimates, is a sound one but in our present circumstances it would be foolish to tie ourselves too tightly to that principle so as to restrict our freedom of action in circumstances where serious national damage could be caused by delay or by inaction. Because the Government consider that this year will be crucial, crucial in regard to the country's future progress, we will take in this year whatever action is required, in our judgment, to make the future secure and we will run no risks that it might be otherwise.
The best action would be to resign.
Run away, the same as you did in 1957.
Deputy Cosgrave said or implied this was the most difficult Budget ever presented to the Dáil by a Government. It is not so. The Budget in 1957 was a far more difficult Budget to prepare and present. The 1957 Budget represented our legacy from the Coalition Government, the members of which, when they saw the difficulties of the Budget they had to prepare, decided to get out of office rather than face the problems presented. They went into the election in 1957 knowing they were going to be beaten. They took that course rather than face up to the problems they had created. We will not do that. In so far as the people of the country gave us the responsibility of guiding the country through this difficult patch in our history we will endeavour to do that to the best of our ability without regard to the political consequences to our Party, hoping that when it is all over history will at least record we took the right action and by our action preserved our national economy and opened a better future for those who live in this country.
In 1966 the Government are forecasting a rise in the value of national production of about £55 million, and a consequential rise of about £28 million on personal expenditure, of about £15 million on capital formation and a reduction in the external payments deficit to about £28 million. The rate of growth of national production which we envisage this year is respectable by international standards. It represents a higher rate of growth than is expected in some of the countries in Europe which have attempted to make similar forecasts. But it is less than would be required to realise the targets of our development programme. If the targets set for 1970 are to be reached we will need a growth rate of about five per cent per annum for the remaining years of the decade. This is not impossible, provided general conditions turn in our favour and we manage our internal affairs in all departments properly.
These forecasts for 1966—let me emphasise they are forecasts, not prophecies and certainly not promises —are based on various assumptions, assumptions which are reasonable enough but which are unlikely to be uniformly or fully realised. Like other countries, we are still only in the process of developing the techniques of economic forecasting. Some fairly wide margin of error must still be allowed.
It is true, notwithstanding this expected rise in the volume of national production in this year, we are unable to forecast a rise in total employment, the fall in the numbers occupied in agriculture being likely to equal if not exceed the rise in the number of people employed in industry and other non-agricultural occupations. This is, perhaps, the most serious aspect of our national situation. Even if the picture presents a continuing rise in overall productivity in the output per head of persons employed, which is of course essential to improve the level of general efficiency prevailing in the national economy, for its future development and to assist future wage increases, rising productivity must always mean that output will rise more rapidly than employment.
Deputy Corish asked yesterday why is it that this movement of people out of agriculture is continuing. This is of course, a problem on which many views have been expressed and which has been the subject indeed of many expert inquiries. It is a phenomenon noticeable in all European countries, not merely here. Indeed, the annual decline in the number of people occupied in agriculture in Ireland is less than it is in other Western European countries. It is occurring at a time when most farmers will tell you they have work on their land for agricultural labourers, if they could get them but they cannot. It is to some extent an economic problem no doubt, but it is also a social phenomenon.
A more rapid rise in total employment must be a main aim of national policy, not merely in this year but continually. This rise in employment must be achieved entirely it seems, in non-agricultural activities. Government policy must always be directed to this aim. But the aim itself requires for its realisation a total national commitment to it, a commitment that transcends all sectional aims. To bring it about to the fullest extent possible would require that the money that will be made available to the national community this year by rising national production should be utilised entirely or almost entirely to finance further developments in agriculture and industry rather than improve the income position of any section of our people.
This country needs more capital for its development, and capital is made available simply by the process of not spending. This, of course, is a counsel of perfection and is unlikely to be realised. It is important, however, that everybody should attempt to understand that you cannot have it both ways at once and that rising personal incomes of all kinds mean a slowing down of the rate at which employment can be increased by new investment. This of course raises a question of national priorities which has not yet been fully settled or perhaps sufficiently debated.
It is sometimes asserted as a criticism of the Government that we are not ruthless enough in restraining undesirable trends developing in the economy, particularly pressure to increase personal incomes or profits unduly or any other developments which might prejudice the expansion of employment and the realisation of other desirable national aims. It is certainly true that we as a Government have been relying to a very considerable extent upon securing general consent for our development policies, on a widespread understanding and acceptance of the national goals as they have been defined by the Government, on the assumption of reasonableness in pursuing sectional demands, and an understanding of the need for higher investment to bring about future prosperity as well as a general willingness to make all sectional policies conform to overriding national needs.
If this way of doing the nation's business does not achieve the results we all desire, I admit that this policy heretofore followed by the Government will be open to question. It is, however, the policy in which we believe and which we wish to keep on applying. If a more ruthless policy, involving a wider extension of the area of activity coming under direct Government control and regulation or a strict regimentation of sectional behaviour in accordance with some predetermined national plan, is desired by the people, this has not been made apparent. It would be in conflict with the democratic principles in which the Government and this Party believe and in which, as far as is known, other Parties also believe. As a general arrangement for managing the affairs of the country, an extension of the area under Government control would be most unattractive and probably unsuccessful. This does not mean we will not do whatever is necessary to influence or regulate developments within the national economy. I cannot now assert with any confidence that the aims of the Government in the present situation can be achieved by advice and exhortation alone. Everybody in the nation knows we are passing through a difficult period. Everybody realises that the Government have a difficult task in guiding the nation through this period. We are not being helped in this task by the irresponsible attitude of the Opposition Parties.
That is moonshine.
What did Fianna Fáil do in 1956?
Methods of persuasion must, however, be utilised to the utmost extent before they are deemed to be inadequate and have to be supported by other methods, however temporary this support may be. Controls of any kind, even price controls, which are inconsistent with the normal working of a free market economy should be always considered to be temporary and should be relinquished, even at some risk, at the earliest possible time. The policy of the Government is to maintain a free economy here and to create the conditions which will enable it to function normally.
These remarks apply particularly in the field of industrial relations. The settlement of conditions of employment of workers by a process of negotiation between trade unions and employers is accepted as the desirable procedure. This does not mean, of course, and should not be thought to mean, that the Government can be indifferent to the outcome where a danger is created that, by reason of unrealistic demands or reckless use of economic power by either side, the employment of many workers could be prejudiced or the prospects of increasing national production could be delayed or eliminated. Free negotiations should mean negotiations governed by common sense and with due regard to the interests of other workers as well as of the community as a whole.
The arguments sometimes advanced that the Government should adopt an attitude of total indifference to what happens in this regard is absurd, the idea that we should merely sit around to pick up the pieces and take the blame if things go wrong, which is occasionally advanced by some speakers here and elsewhere. I do not know if those who make this argument are ever serious about it. Certainly if they have given any thought to the functioning of democratic government in a modern State, they will realise how groundless it is.
The significance of this year's Budget is that the present level of national production is not yet sufficient to give us in this year the prospect of a major advance in the field of personal incomes in the public sector or a further advance in the social services, welfare, health, housing or education, without our being willing to give up, through taxation, some additional proportion of the national income to pay for them. If we wish to reduce the pace of development in respect of these services to an extent that will match the normal growth of revenue and, therefore, avoid the necessity for any tax increases, we shall have to slow them down considerably, slow down the growth of all the charges upon tax revenue, including the level of wages and the level of salaries in the public service. Certainly so far as the social services, in the widest meaning of that term, are concerned, we do not consider it would be good policy. It is not the policy of this Government.
It is not unreasonable that a slightly higher percentage of the total national income should be taken by taxation for the financing of the development of Government services. The proportion of national income taken by the Government for these services in this country is still well below the average for other Western European countries. However, if it is necessary to take a higher proportion in order to bring about a more rapid increase in production in future years or a more rapid elimination of the social evils that persist in our community, then we think it should be done, provided it is recognised that the extension of our educational system, of our health arrangements, of our housing system, all these things are themselves improvements in relation to our people's standard of living and that improvements in their standard of living can be better brought about by an extension of State activity in these fields rather than by higher individual spending made possible by lesser taxation.
In one of this morning's papers there is a statement by the President of the Irish Transport and General Workers' Union, Mr. John Conroy, which says it is the aim of what he classed the Establishment to depress workers' living standards. So far as he may be thinking of including the Government within that term "Establishment", this statement is not true. Our aim is to bring about a steady, continuing rise in the living standards of our workers as of every other section of our people, and our intention is to prevent this process being disrupted by unwise policies on the part of either employers or unions.
It is sometimes suggested by people who take only a superficial view of our situation that our people, like others, lack any firm sense of national purpose or that national purpose is not being sufficiently clearly defined or is unduly obscured by individual and sectional considerations. I do not believe that this is true. I believe there is a much more widespread understanding of the work which has now to be done on the national plane than is sometimes assumed, as well as a much more widespread awareness amongst the people than there appears to be amongst members of the Opposition Parties in the Dáil of the dangers which shortsighted policies could create for the country at this time.
The work that has now to be done, as we see it, lies mainly in the area of economic expansion, and it is our conviction that success in this work is essential to the development, even to the survival, of this nation and to the realisation of every national aim, certainly our social aims. The major task facing the nation this year and for the coming five years is to get ready to take our place in a Western European system of free trade so that the adjustments can be made without undue difficulty and so that the prospects for further development which are held out will be fully utilised. We are not ready for this now and we would be deluding ourselves if we asserted that we were. We never will be ready unless there is a wider understanding and a wider acceptance of what is required to be done now by industrial, trade union and farm leaders and by all other elements of the community. There is too great a tendency to divorce the intellectual recognition of the requirements of the situation from positive action to cope with it.
This situation is not going to pass away, nor is free trade in the European context something from which we can draw back if we feel like it. The consequences of trying to opt out would be even more disastrous and could indeed mean total defeat, leading to the disintegration of our nation or reliance upon international charity to keep us as a museum piece for some time. We are not prepared to contemplate this future for our country and, as far as we are concerned, we will do everything in our power to avert it.
Progress reported; Committee to sit again.