Dáil Éireann díospóireacht -
Wednesday, 18 May 1966

Vol. 222 No. 12

Finance Bill, 1966: Second Stage.

Minister for Finance (Mr. J. Lynch)

I move that the Bill be now read a Second Time.

The main purpose of this Bill is to implement the Budget proposals and Financial Resolutions. It also contains certain other provisions which are of a non-contentious nature and to which I shall make special reference in the course of my review of the contents of the Bill. As in previous years, I propose to keep this review short and in fairly general terms since the memorandum circulated with the Bill explains the various sections.

Part I of the Bill contains provisions relating to income tax, most of which were mentioned in the Financial Statement. In addition to the usual charging clause for income tax and sur-tax, which this year increases the rate of income tax from 6/4 to 7/- in the £, provision is also made to raise from £120 to £150 the allowance in respect of a qualified child over 11 years of age.

In section 3 it is proposed that a company may submit its accounts and other appropriate particulars for any year to the Special Commissioners of Income Tax who will be required to indicate within a limited period whether the company will be called upon to account for sur-tax on its undistributed profits.

Sections 4, 5 and 6 are designed to meet the new situation, following the introduction of the British Corporation Tax which will apply to the British profits of Irish companies. Section 4 provides for the granting of relief against Irish corporation profits tax and income tax in respect of the British corporation tax. In the Budget Speech I said that the cost of this relief would be recovered by an appropriate increase in the rate of corporation profits tax and that the corporation profits tax would be allowed as a deduction from profits for income tax purposes.

I did not announce the new rate of corporation profits tax in the Budget speech, because at that time the rate of British corporation tax was not known. This has now been fixed at 40 per cent. It is proposed, therefore, to raise the rate of corporation profits tax from 5 per cent to 7½ per cent on the first £2,500 of profits and from 15 per cent to 23 per cent on the balance in excess of £2,500. By virtue of the proposed allowance of corporation profits tax as a deduction for income tax purposes, Irish companies carrying on business in this country only, will suffer no additional tax. A Financial Resolution will, of course, be required and will be moved before the Committee Stage of the Bill as a preliminary to the introduction of a new section by way of an appropriate amendment. Section 5 of the Bill authorises the allowance of corporation profits tax as a deduction for income tax purposes and section 6 is a consequential provision.

Sections 7 and 26, which were not referred to in the Budget Speech, provide for the granting of tax allowances in respect of commercial glasshouses. Section 26, which is in Part VII of the Bill, secures that capital expenditure incurred on or after 30th September, 1956, on buildings used for the purposes of growing produce in the course of a trade of market gardening will qualify for initial and annual allowances at the rate of 10 per cent. Section 7 is concerned with similar expenditure incurred prior to the 30th September, 1956, and secures that a "repairs" allowance of one-third of annual value will be allowed in respect of such expenditure.

Part II of the Bill implements the Budget increases in the customs and excise duties on beer, spirits, hydrocarbon oils, tobacco, table waters, firearm certificates and motor vehicles. In addition, the sections relating to tobacco, table waters, Irish wines and motor vehicles commence the process of eliminating the protective elements in the duties on these items in pursuance of the Free Trade Area Agreement. Section 16, which deals with motor vehicle duties, also implements the Budget proposal that the proceeds of the increases in duty should be used for general Exchequer purposes and not paid into the Road Fund.

Part III of the Bill, which deals with death duties, contains two sections. Section 17 makes liable death benefits which are paid under the provisions of superannuation schemes or arrangements but in relation to which no enforceable right at law exists. Payments under the Superannuation Acts come within the scope of this provision. The section also repeals section 5 of the Finance Act, 1945, which exempted from duty, in connection with the death of a member of the Defence Forces, certain deferred pay and gratuities granted in respect of his services.

Section 18 extends the relief from estate duty provided by the Finance Act, 1965, in the case of benefits passing to the widow or dependent children of the deceased. The limit on the value of estates within which the relief operates is being advanced from £15,000 to £25,000, with appropriate marginal relief. The amount of the abatement of duty, in the case of a widow, is being increased from £250 to £350 and in the case of each dependent child from £150 to £250. It will be noted that these improved reliefs will take effect as from the passing of the Finance Act, 1965.

Part IV, which contains only one section, is concerned with stamp duties. Its purpose is to permit of the compounding of the stamp duties on certain foreign bills and notes. Part V also contains only one section which secures that the provisions of the Agreement of the 18th May, 1949, between the Government and the Government of the United Kingdom should apply to British corporation tax as it has heretofore applied to British profits tax. The section also contains some consequential amendments of the rules governing the computation of credit relief under the Agreement.

Part VI contains four sections relating to turnover tax.

Section 21 imposes a 10 per cent rate of tax, with effect from 1st May, 1966, on payments made for or in connection with admissions to dances, and lays certain obligations on promoters of dances and proprietors of dance halls to ensure that adequate notification of dances is given to the Revenue Commissioners. The increased rate of tax will not apply to a dance where the price of admission does not exceed four shillings and attendance is limited to one hundred.

The remaining sections in this part of the Bill relate to the administration of the tax. Their purpose is to align procedures for turnover tax as closely as possible with those already in operation for income tax. The powers of the Revenue Commissioners to make estimates of turnover tax are extended and there is a corresponding extension of the taxpayer's right of appeal to the Special Commissioners of Income Tax and to the courts. Provision is also made to control the admission of late appeals and to facilitate the collection of tax from corporate and unincorporated bodies.

Part VII of the Bill deals with miscellaneous items. Section 25 contains the customary provision with regard to the Capital Services Redemption Account. I have already referred to section 26 which provides for the granting of capital allowances to the commercial glasshouse industry.

Section 27 brings within the scope of "exports" relief profits arising to an Irish company from processing goods on behalf of a foreign owner where the materials are imported into the State for processing and the finished goods exported.

The registers of certain Government securities are now held by the Central Bank of Ireland. It is therefore necessary to extend to that institution certain of the existing statutory provisions relating to the management of Government stocks and securities. Section 28 does this.

I have now summarised the main provisions of this Bill. It is a rather technical measure which is particularly suitable for Committee Stage discussion and I shall be glad to deal with points of detail on that Stage.

Mr. Sweetman

A Finance Bill of some sort is necessary, and to that extent we must have a measure before us. The measure the Minister for Finance has brought in is, as he said, technical in some degree but one must also consider this technical measure against the background of the taxation being imposed with the economy in its present condition. This Bill implements the harshest Budget any Minister for Finance has ever introduced: it implements greater increases in taxation than we have ever had before. Not merely did it introduce greater increases in permanent taxation but the Budget was the forerunner, the fore-announcer, if one may use that word, of further increases. In these circumstances I am not surprised that the Minister for Finance, at the end of his speech, tried to avoid a Second Reading discussion on his taxation policy, that he tried naively to put this discussion on taxation over to the Committee Stage.

It is not appropriate on a Finance Bill to discuss the economic position as a whole in the same way as it may be discussed on the Budget, but one must discuss the general taxation policy of the Government and the background against which we have these detailed provisions. I do not think the Government know where they are going. Certainly, the country does not think they know. Their aim and hope seem to be to avoid any discussion of the serious economic position in which the country is as a whole. The Minister is the person peculiarly responsible to the Dáil and the country for that economic position. He is responsible for it in the first place because he is the successor of the Fianna Fáil Minister for Finance who started the whole of this disastrous spiral when he introduced the turnover tax. He is responsible for it secondly because it is the responsibility of a Minister for Finance in any Government to have particular regard to the condition of the economy.

Yet, at a time when the nation was outraged by economic stoppages, strife and difficulties of all sorts, we find that the Minister takes the view that he is not, unlike his counterpart in Northern Ireland, called upon to take any steps whatsoever to endeavour to bring the parties together in the bank strike which is one of the things particularly appropriate to his Department. It is difficult in the circumstances to avoid the conclusion that the Government do not know where they are going. Certainly, in so far as this Finance Bill is concerned, it implements a taxation policy of taking more and more out of the pockets of the people and, I fear, taking it out in a way that will not provide any of the things that should be provided. The manner in which the increases in taxation are being imposed without providing for some of the big improvements necessary, say, in our educational field, is something that shocks people who look ahead and hope to see some progress in the future.

The other day, the Central Statistics Office issued their economic indices for April and virtually wherever one goes among the 68 headings under which the indices are given, one finds a sad story, a story that is depressing, whether in relation to the latest figures available for the terms of trade which have gone down two per cent by comparison with 12 months ago or for exports of cattle, or the consumer price index, the agricultural price index, the prices of stocks of all sorts. The only rise there appears to be on any side is the undesirable one of more being taken out of the pockets of the people by the Revenue Commissioners on the instructions of the Minister for Finance and greater Exchequer expenditure. It is marked, at the same time, by a drop of no less than seven per cent in the price of Government Exchequer Stock, a drop to 91¼ during the past year.

In the unhappy situation we have on every side, we find the Government and the Minister for Finance apparently completely complacent and not worrying about it at all. Perhaps it is not fair to say they are not worrying about it at all; perhaps they are worrying in private and just do not know what to do. The reason we see no public evidence of action by them is that they have not got any idea of how to cope. Certainly their efforts in the country to avoid a discussion at present on the economic chaos and the economic condition to which they have brought the country gives everybody the impression that the real answer is they do not know what to do or where to turn. The tragedy of it is that it could have been avoided and that it was all started by them in the inflationary spiral of the turnover tax two and a half years ago.

So far as the details of this Bill are concerned, as I say, it imposes the highest taxation we have ever had. In his speech on television on the Budget, the Taoiseach made it clear, not merely that he saw no immediate relief, but, so far as the policy of Fianna Fáil is concerned, he was confident and sure that taxation would go on rising and increasing in the years ahead. It is a pretty unhappy vista and it is one of the causes of the present discontent throughout the country.

The first part of this Bill as usual deals entirely with the provisions as regards income tax. The provisions as regards income tax have meant an increase in the standard rate of tax of 8d and an increase in the PAYE rate of income tax of up to 5/3 from 4/9d, and that from a Government who went so far as to issue a White Paper saying they did not believe in direct taxation. The rates of income tax, particularly the rates of PAYE, must be judged and gauged against the value in monetary terms of the tax free allowances.

The value of money has decreased to such an extent that these tax free allowances now are only worth a very small proportion of what they once were. The decrease in the value of money has had the effect of pitching the real point at which income tax becomes payable very much lower than it was.

The effect of Part I of this Bill is that the Minister for Finance will get out of the income tax payers another £4½ million this year, £4,555,000 to be exact. The details of the provision are so small that they can be discussed quite easily on Second Reading. They are purely the raising of the standard rate of tax by 8d in the £ and the raising for everybody employed and paying tax under PAYE to 5/3d from 4/9d.

But apart from what is in this section, some of us are quite flabbergasted at what is not in it. I read the Dáil debates, and I saw the Minister for Finance standing up here and saying he had no complaints about the incidence of Part VII of the Finance Act of 1965. I do not understand how he could take that view. The town is reeking with people who are finding difficulties in its analysis and its provisions. All of us were quite clear that the Minister should have last year adequate provision to make certain that what one might term a building developer would not be able to devise a method of avoidance of tax. We warned the Minister at that time that the method he was adopting in the Bill was in effect a capital gains tax, although he did not call it that, and so it has turned out in practice.

Let me give the Minister one concrete example which I think is outrageous. A public company in Dublin has been building houses for letting for 30 to 35 years. Their policy always has been to build and to let and in so doing provide a very badly needed service for the people. Following the rent restrictions legislation, when houses became vacant, it was sometimes desirable that they should be sold and the money realised by the sale ploughed back into the building of more houses. How has that been affected by Part VII of the Finance Act of 1965?

It now means that assessments have been made on that company on the difference between the cost of building the houses in 1937 and the sale price in 1966. Everybody knows that what has happened in that period is that the value of money has gone down and that company, and, therefore, the people—and they are mostly small investors in that company—are paying a capital gains tax in the depreciation in the value of their money between 1937 and 1966. Even the British Labour Chancellor of the Exchequer, when he brought in the capital gains tax, started in point of time on the 6th of April, 1965, and when the tax came to be collected in Britain, a person was not taxed on the depreciation in the value of his money before April.

But, as I say, the Minister has chosen a different point of view and it is an iniquitous one. It has no basis in morals. It is retrospective taxation of the worst possible kind. This has meant, and will mean, that that company will be able to build fewer houses because the Minister is putting his hand into the company's pocket for this retrospective capital gains tax.

The sale of property has been so affected by Part VII of the 1965 Act that nobody really knows what the position is. You have eminent counsel vainly considering the effect of it. They all tell one the same thing: no man can say with certainty how it operates, how it will operate, or how it will be operated. Yet, the Minister for Finance only a short time ago got up here and said that he had heard no complaints. But it has defeated everybody in the country with any experience of the utterly impossible working-out of that development taxation.

It puzzles me how the Minister could make such a statement. Everybody was entitled to expect that there would be in Part I of the present Bill a new clarifying section, or sections, doing away with the retrospective effect of the capital gains tax imposed last year and providing a proper means of ensuring that development profits could not be siphoned off while, at the same time, making certain that the genuine case would not be caught. One of the essentials in relation to taxation of any kind is that it be certain in its application. This tax has failed completely in that respect. It has caused a great deal of upset and a great deal of uncertainty. It has meant that the building trade, already hit badly by the credit squeeze, is hit once again because the profits made, not during 1965-66 and in the current year—I would not object to that—but the profits made in the 30 years before that are affected by this capital gains tax. A house built for £1,200 in 1937 and sold now for £2,500 is now 30 years old; there is no justification for an assessment on the increase in value between 1937 and 1966 of £1,300. But that has been done.

I am quite certain that the Minister and the Revenue Commissioners must be able now from what I have said to pinpoint the company concerned. If there is any doubt about it, I am quite willing to give the name in private. It is not desirable, I think, to give it here across the floor of the House. To tax a company providing houses for letting, a company supplying an acute need, on the depreciation in the value of money in the 28 years between 1937 and 1965 is utterly outrageous. There is no moral justification for it at all. The fact that it has no moral justification is pin-pointed and highlighted by the action of the Chancellor of the Exchequer who, when he was introducing a capital gains tax, provided that it would be only on capital gains over and above values in April, 1965. I regret to say that Part VII of our Finance Act last year introduced this immoral and unjustifiable retrospective capital gains tax in this country.

People are also surprised that there are not some provisions in relation to the manner in which Part VIII of the Act of last year deals with professional and other people in business where the personnel changes during the course of the year. I agree this is a technical matter and one to which reference will have to be made on Committee Stage. Suffice it to say now that people who had received their tax assessments, and had paid what they believed was their full liability suddenly found themselves subsequently with an additional liability in respect of the particular period because of the method devised last year of taxing successors in a business. I know that it arose out of the provision: one taxpayer, one charge, but it could have been very simply dealt with by a saver to ensure that no taxpayer would be hit inadvertently. It probably was inadvertence, but it has a most undesirable and a most unfair effect.

Part II of this Bill deals with the various increases imposed by the Minister in his harsh Budget. The words "harsh Budget" cannot be too often repeated. I refer to the extra customs and excise duties. I refer to the increase in the price of beer which will bring into the Minister's pocket this year no less than an additional £2,250,000. I refer to the increase in the duty on tobacco, the increase in the duty on spirits and the increase on even the bottle of lemonade. I remember a previous occasion on which one of the Minister's colleagues in Cork city, who has now gone to his reward, waxed most indignant on the Fianna Fáil benches because of an increase in table waters. But the Minister has not hesitated to take a swipe this year at table waters and to ensure that children drinking lemonade, and so on, will contribute an additional £220,000 into his maw.

Bad and all as these taxes are, a more unpleasant one still for the community as a whole is the increase on petrol, or hydrocarbon oil as it is technically known. The effect of that is to give us the doubtful privilege and the unpleasant reputation of being one of the dearest places in Europe for petrol. As far as I can see, the only place in Europe where petrol is as dear as in Ireland for tourists— and we are all agreed we must extend the tourist trade if we are to succeed in keeping a balance in our payments —is France. In Italy, they have, perhaps, a dearer basic price for petrol but they have a tourist voucher system which means that about 1/6d a gallon is saved and that the price in consequence to a tourist in Italy is only 4/5d compared with some 5/7d to 5/10d here. According to the information I have been able to obtain, premium petrol in Austria is 4/8d; in Belgium, 5/3d; in Denmark, 5/4d; in Finland, 5/6d; in Greece—I beg the Minister's pardon—in Greece, the price is higher than in Ireland, 6/3d. In West Germany, it is 5/2d; in Holland, 4/10d; in Luxembourg, 4/9d; in Spain, 5/5d; in Norway, 4/11d; in Sweden, 5/2d; and in Switzerland, 4/7d. Everybody who buys petrol here knows that premium grade ranges from 5/7d to 5/10d. And, of course, the reason it is dearer here is the higher rate of tax on it than in other countries. The cost of distribution and production of petrol everywhere is virtually the same. The Minister has not merely ensured that the price will be higher here for the home user; he is deliberately setting his face against any tourist attraction by way of tourist vouchers for petrol and in the Budget he has quite deliberately increased substantially the distribution overheads of industry.

In this Part of the Act also, we have a rose by another name. From time to time members of Fianna Fáil wept bitter tears, declaring that never in any circumstances would they dream of raiding the Road Fund.

Mr. Dillon

Hear, hear.

Mr. Sweetman

Now the Minister has put an extra 25 per cent into the Road Fund and is taking it out again.

Mr. Dillon

Hear, hear.

Mr. Sweetman

If anybody suggests it is not a raid on the Road Fund, it is only a rose by another name. We have this happening at a time when so far only one county council, so far as I know, has yet been advised of the cut that is coming to it in road grants. Cork County Council apparently were told their figures the other day and I suppose other county councils will get them in the next fortnight or three weeks in the same way.

The provisions for the extra 25 per cent in section 16 are nothing but a raid on the Road Fund and an increase by the Minister for Finance purely for his own Exchequer purposes. There is no use in the Minister for Local Government or anybody else trying to deny that this is not a negation of every principle for which Fianna Fáil pretended to speak before. Bad and all as that is—that they should go back on their announced policy on which they sought votes in previous elections—it is worse that the effect of this will be to increase still more the high costs we have in the distribution trade and to make certain that the cost of living will go on increasing and that we will have to face consequent further unrest in the community as a whole.

I am sorry Deputy de Valera has left because there is one section in the Bill that will certainly go down as the de Valera section, section 17. In that section there is a tax on something that has never been the subject of attack before, that is, gratuities to be paid by reason of the death of a bread-winner. The effect of section 17, which was introduced by the Minister as a direct result of the advocacy of Deputy de Valera last year—aided and abetted as well as I can remember by Deputy Booth—is that now for the first time, under the de Valera section, as I have called it, we shall have death duty taxation on gratuities received by five classes of people: civil servants, the Army, the Representative Church Body, those who get pensions for working in mental treatment institutions and supplementary pensions, that are given in certain cases over and above the contractual pension. These are five entirely new classes of people that are caught by this death duty provision as a result of the advocacy last year from Government benches.

I hope the Minister now realises what he has brought in this section. I think he did not realise last year what he was doing in relation to the changes in death duty taxation which he introduced. It is certain that the next section, section 18, makes it clear beyond question that he now realises that he was wrong last year when he introduced those provisions and he is now trying to make it good as from last year. I am glad the Minister, in relation to that section, has impliedly by this Bill admitted that he was wrong. It would have been better if he had done it in a more openhanded way and would have created a better impression for himself, but regardless of how he acted and of whether he has or has not acknowledged it, section 18 at least does acknowledge by its retrospective effect that the Minister and his Party were entirely wrong last year.

As far as I can see, looking back over Finance Acts, this is the only case in which such a retrospective provision has been introduced giving a benefit except in a case where the Minister for Finance for the time being candidly stated he was making it retrospective because he realised that his earlier action had an effect which he did not intend.

Whether the Minister does realise it now or not, under section 17, every civil servant must now face the fact that he is being brought into this taxation net because of the de Valera section. Every person who gets a gratuity or whose representatives, his widow and family, get a gratuity under the Mental Treatment Act, whether he is serving in a mental treatment institution or working for a mental treatment authority, will now find that he is brought into the net or, rather, that his wife and family are brought into it because of the de Valera section. Army officers who get a gratuity for their widow and family are also brought into the net as a result of this. The widow and family of a person who is allotted a gratuity by the Representative Church Body will also suffer as a result of this section. The additional gratuity that is given, or was given when the banks were open, by banks to bank staffs, when someone died, is brought into the net as a result of this section.

As I said, I am sorry that Deputy de Valera is not here. I wonder does he realise that this section, introduced at his behest, will have this effect?

Mr. Corish

The Deputy has given him enough publicity this morning, anyhow.

Mr. Sweetman

This general taxation Bill has brought taxation to the point at which many of the economists in the country believe that we have reached the point of diminishing returns and certainly it has brought us to the point of adding substantially to the unrest throughout Ireland.

I do not think the Minister for Finance is playing his proper part in the Government. I do not think he is contributing as a Minister for Finance should towards the moulding of Government policy along lines that will ultimately benefit the economy. He is apparently satisfied to fall in behind the Taoiseach, to agree and to take the line that our taxation will continue to go up and up, not merely in its total amount but also as a percentage of production, as a percentage of national product and in individual rates. This is bound to have a disincentive effect on production and on productivity and is bound to add to the difficulties with which our people are faced here at home and as a result of which many have gone away even during the past couple of weeks.

Mr. Corish

Unlike the Finance Bill of last year, this appears to me to be a pretty straightforward Bill and certainly is not of the same dimensions in volume or content as the Bill the House had to discuss for quite a long time last year.

There are some sections in the Bill which could be and will be further questioned on Committee Stage but, by and large, apart from the Budget proposals which were announced on 9th March, there does not seem to be anything revolutionary in the proposals of the Minister for Finance. Apart from the actual proposals in the Bill, we could for some short time talk about the state of the economy. It is now nearly two months since the Budget debate. I think the Minister's supporters behind him recognised when he was introducing the Budget that the message he had for the country was a pretty gloomy one. The Government could have been much more frank and honest with regard to the situation that existed, and is existing, when the Minister for Finance spoke on 9th March.

The Government should accept full responsibility for the situation that now confronts us. There seems to be an effort by the Government to blame various sections of the community and to disclaim responsibility. I should like to remind the Minister for Finance that one of the essential parts of the Second Programme for Economic Expansion was the statement that the primary responsibility for its success rested on the Government. It did go on to say and made it quite clear that the community's outlook on such factors as productivity, incomes policy and savings would largely determine whether or not the growth target was achieved.

There can be valid criticism of sections other than the Government but I want to stress today that if we have the situation in which unemployment is rising, in which emigration is rising, in which there is under-employment, the bulk of the responsibility must be accepted by the Government.

The NIEC Report produced last February indicates quite clearly that as far as production is concerned in industry and in agriculture, it does not seem that, if we go on at the rate we are going now, the target for 1970 will ever be achieved. Similarly, in respect of employment both in agriculture and industry, all the indications are that the targets will not be achieved.

I should like to draw the attention of the House to a particular paragraph in that Report, paragraph 36, in which it is stated that we are short of the target in employment by 34,000. It also says that we have 10,000 fewer in employment than in 1963. From the point of view of Opposition criticism, we could take other years to demonstrate that employment has fallen considerably as compared with a year like 1957 or 1958.

We are furnished with certain unemployment statistics week by week and there we have the evidence that, compared with last year and the year before, unemployment is still rising and is greater by 3,000 or 4,000 than it was in a similar period in 1964 and 1965.

Despite several questions over the past six or seven months to the Minister for Local Government, it can be said that the Government have not been entirely honest and frank with the House and with the country with regard to the moneys available, or rather, should one say, the moneys not available, for such important matters as housing, water supply and sanitary services. The situation may be bad now, for a variety of reasons, perhaps one in particular, but I believe that about the month of July, August, or maybe September, we will find the situation as far as industries are concerned, that there will be a big increase in unemployment. If the Government were much more honest and said frankly that we have no money, there might be greater understanding by county councils and various other public authorities of that sort of situation but to try to pretend that we have more money than last year when all the evidence is there that we have not, to try to pretend that employment will increase in these sectors when we know it will not, appears to me to be somewhat dishonest.

The Minister for Local Government is pretty skilful in answering questions and is certainly skilful in handling supplementary questions, but he broke down rather badly recently when he told the House that the provision of money was not his responsibility, that this was the responsibility of the Minister for Finance. This was the first abject confession of failure I heard from any Minister for Local Government when questioned about the availability of money for matters over which he, as Minister, has control. The Minister for Finance more than anybody else has been reasonably frank with the House in describing his efforts to borrow money for capital purposes. We know his difficulties in that respect but if the real situation is to be cloaked by the Minister for Local Government, then the Government can only expect the type of criticism they have been getting from local authorities and Members of this House for quite a long time past.

I have said that the NIEC report forecast a decrease in employment for the year 1966 of about 10,000. I wonder, in view of what happened in February of this year—and I do not want this to happen—whether that forecast will show a further increase, because at that time the NIEC did not understand nor was it indicated to them that in regard to building houses and the provision of sanitary services, water supplies and such matters, less money would be available this year than last year and in previous years. In view of that, it seems to me that we may have a considerable increase in unemployment in the autumn, and particularly in the winter of next year. It was heartening for us to hear this morning that the figures for the balance of trade had improved in the first four months of this year but whether that development will have the effect of making more money available for capital development purposes within the immediate future I do not know.

The local authorities are also concerned about the relatively small amount of money available to them for road work. I would agree with Deputy Sweetman in his criticism of the Minister for Finance for increasing the road tax, paying it into the Road Fund and then taking it out again for current expenditure. This is something for which another Government were severely criticised on another occasion. The Minister and everybody else must appreciate that if we are to keep our roads up to the standard which industry requires, which the ordinary motorist and the tourist require, we will have to ensure that all moneys collected by way of the road tax will be put into the development and repair of these roads. It must also be remembered that due to the particularly severe winter, unusual damage was caused to the roads and whether or not the county councils, out of their own resources, will be able to provide sufficient moneys to restore these roads is anybody's guess. There is also the problem of the increase to those working on the roads. If this increase is conceded, and all of us trust that it will be, it will mean that there will be less money available for this important work.

I am reluctant at this juncture to talk about industrial relations but I did notice in the NIEC report, in their comments on the Department of Finance Report on Economic Progress in 1965 and the prospects for 1966, in paragraphs 42 to 44, they refer to industrial relations. Mark you, they were a little more rational than some members of the Government and some of the critics of the trade union movement, both inside and outside the House. It should be appreciated that despite publicity given to what appears to be bad industrial relations, for the past three years there has been relative peace. It will be remembered that the last wage agreement was negotiated and became operative from January, 1964 and for practically two years there was relative peace. There was certainly absolute peace as far as industrial employment was concerned. Between the eighth and the ninth round, a span of about 15 to 18 months, there was also peace in the industrial field.

I do not think it unreasonable to expect that there would be some unrest in a situation where after 2½ years workers sought to compensate themselves for an undue increase in the cost of living. This increase was in the main the responsibility of the Government because of the introduction of the turnover tax and certain other Budget proposals. There are other people who are responsible for getting this country, in present circumstances, a bad name in the matter of industrial relations. We see headlined, pinpointed and listed, in all the national newspapers strikes which are taking place here, there and generally all over the place. This is inevitable in certain circumstances. Yesterday, the Minister for Industry and Commerce indicated to the House that, in his view, strikes were legitimate on occasion. That, of course, is also our view in certain circumstances. However, while strikes get headlines, successful conciliation and negotiations do not appear to get any headlines at all. I would say that in many parts of the country the tenth round, in accordance with the resolution passed by the trade unions, has gone through with relative ease. There are outstanding cases which I suppose at present could be regarded as sub judice but despite the efforts of many people the increase has been conceded by many employers.

The Government must take their share of responsibility for industrial unrest because in very vague, ambiguous terms, the Taoiseach and certain of his Ministers—I cannot remember which—spoke in terms of a wage increase of three per cent. My interpretation of the Taoiseach's statement was that a three per cent increase in all incomes was as much as the economy could afford. I would dispute that. Employers negotiating with trade unions and workers seeking increases quoted the Government and nearly accepted as a Government direction that only three per cent could be given. I have one concrete example of that. Mark you, all due credit must go to the Labour Court. They interpreted the economic signs properly and they conceded that the resolution passed by the trade unions was a reasonable one. This increase has been conceded by hundreds of employers and tens of thousands of workers are now in receipt of £1 per week.

As far as the Budget proposals are concerned, we discussed these at great length in the general Budget debate. They will be discussed again on the Committee Stage. Frankly, we were very disappointed that the Minister did not concede more in the matter of allowances for personal income tax. The increase for children under 16 is indeed welcome but the Minister must agree the other allowances have been there for so long now that they bear no relation whatever to the present value of money. The Government indicated that as far as a national incomes policy was concerned, they endorse the views of the NIEC. However, all the evidence in recent times is that they want to apply an incomes policy to wage and salary earners only.

I do not see any new proposal in this Bill to prevent the undoubted evasion of payment of income tax. This is something to which the NIEC referred in paragraph 62, page 45, of their Report on Economic Situation, 1965. Perhaps the House would bear with me while I read that paragraph and comment on it. It states:

Professional earnings do not form one homogeneous category of income and within, particular professions earnings vary widely depending on age and standing. Dissatisfaction with the behaviour of professional earnings within the context of dissatisfaction with income distribution in general, exists in part because of a belief, which may be real or imaginary, that it is easier for this category of income to evade income taxation. At present those who are engaged in trades, professions and vocations are not obliged to keep records in order to prove their income. While there are severe penalties for failure to furnish a proper income tax return, it is difficult to secure that a proper tax return has, in fact, been made if adequate records of receipts and expenses have not been kept. The position in regard to professional earnings contrasts sharply with that of wages and salaries, where the possibility of tax evasion is generally negligible. We, therefore, draw attention to the recommendations in the Seventh Report of the Commission on Income Taxation, that there should be a statutory obligation on all who carry on a trade or profession to keep a correct record of business and professional transactions and that these records should be available for inspection by the Revenue Commissioners. Moreover, special thought requires to be devoted to benefits in kind in order to ensure that these are properly taxed.

From time to time here we set up commissions and get various bodies to advise the Government. We have too much of this idea of saying that we accept the Report—we accept the Report of the NIEC or we accept the Report of the Commission on Income Taxation—and then do nothing about it. It is high time the Minister, in accordance with the recommendations of the Commission on Income Taxation, insisted that certain self-employed and professional people be required to keep proper records. This is one of the things that annoy, to put it mildly, a man in receipt of £10 per week and who cannot avoid paying income tax down to the last halfpenny. He knows other people are getting away with the loot. I do not know how widespread this is. I do not know how honest or dishonest are certain people in the category I have mentioned, but there is a statement by the NIEC and in the recommendation of the Income Tax Commission that there is this evasion. I do not know how much money could be got if the law were tightened up; but at least there would be more money and it might not be necessary for the Minister to tax lemonade or to tax cigarettes and tobacco to the extent they are taxed in this Budget. It would get some money and some money is badly needed at present. The Government should look at this recommendation in the Seventh Report of the Commission on Income Taxation to see if there is any method of ensuring that those who are getting away with the loot will pay their due share of income tax.

When introducing his Budget on 9th March, the Minister indicated it might be necessary to introduce a supplementary Budget in the autumn. I do not think he gave an adequate explanation to the House as to why it was necessary to introduce this supplementary Budget. It has now been announced by the Pooh-Bah of the Government, the Minister for Justice, who seems to usurp everybody's function, that we are going to have another Budget in the autumn. What new factors have now emerged that the Minister for Justice can say positively we will have a Budget in the autumn? Introducing the Second Reading of this Bill this morning the Minister himself did not give any indication as to whether or not we would have a second Budget, but it seems clear from statements of various other Ministers that we will. What information did the Minister not have on 9th March that he has now which forces the Government to have a second Budget? At that time it was known there was bad weather and that there would be late sowing. On the other hand, the Taoiseach, in a recent speech in support of the Presidential candidate, said things were looking up. If things are looking up, is a second Budget necessary? Are we to have the second Budget in order to give more assistance to the agricultural sector? If we are to have a second Budget—I know it cannot be indicated at this time —are those who have been taxed too much in the past to have a further burden placed on them?

The Government have been messing in all this. This is not such an emergency that we must have a supplementary Budget. I believe the Minister could have made his plans for the economy for 1966-67 on 9th March. Perhaps it is that he is influenced by certain events which will happen this year. Maybe it is that the Budget intended for the 9th March was to be much more severe. In any case we will await this with interest. I want to assure the Minister that if he persists in pursuing the policy of increasing indirect taxation and lowering direct taxation, he will have the opposition of the Labour Party.

Deputy Dillon rose.

Mr. S. Dunne

On a point of order, I should like to mention, with your permission, Sir, I wish to raise on the Adjournment the matter of the new scheme of differential rents introduced by the Dublin City Manager and sanctioned by the Minister for Local Government, with particular reference to the position of tenants who took up occupancy in newly-wed type houses some years ago and who are now required to transfer.

An Leas-Cheann Comhairle

This is scarcely a point of order. If the Deputy wanted to raise the matter, he should have raised it at 10.30 this morning or should raise it on the adjournment of this debate. It is not in order to interrupt the debate.

Mr. Dillon

If the Deputy had asked me to give way, I would have done so.

Mr. S. Dunne

I must apologise to Deputy Dillon. I consulted with what I considered to be the appropriate authorities of the House, who in turn consulted with the Standing Orders of the House. I understood, and do understand that it was not essential to raise this matter at 10.30 a.m. but that it could be raised at any time before 3.30 p.m. according to Standing Orders.

An Leas-Cheann Comhairle

The Chair will communicate with the Deputy.

Mr. Dillon

Deputy Corish was referring to labour unrest. Inflation is the source of labour unrest. As the value of money falls, the value of people's incomes falls, and they seek to compensate themselves for it. What a lot of people forget is that the trade unionist and others who are organised can, as Deputy Corish pointed out, with or without the consent of the Government get the compensation requisite to restore their financial position. But what we are all very liable to overlook in considering a Finance Bill of this kind is the progressive crucifixion of the defenceless. They are the sections of the community for which few people concern themselves, the pensioner, the old lady living on a fixed income, all of the individuals whom we here in this House have, down through the years, exhorted to invest their savings in national loans.

It concerns me to look back on the day when we urged our people as a patriotic duty to buy national loans bearing an interest rate of 3¾ per cent when I realise that, as a result of the subsequent machinations of the Governments in this country, not only have they received no return on the money they invested but they are suffering loss because the rate of inflation that has proceeded over the past seven or eight years is such that the interest on the money they lent their own country has been absorbed and part of the capital to boot.

What is wrong in this country at the present time is that we are moving steadily and relentlessly along the road of inflation. The question arises: at what stage are the people to be warned? I have always believed that the proper course was to tell the people the truth, however unpalatable it might be, at every stage and let them decide. I told them the truth about what was going to happen when I spoke in this House on Wednesday, 1st July, 1964. I want to tell them the truth now.

The Finance Bill is the annual device employed by any Government to raise revenue through taxation for the purpose of public services. But that is not the only instrument the Government employ to raise revenue. How many people know that the Government owe the banks £60 million in Treasury bills? How many people know that when the then Deputy Dr. Ryan, as Minister for Finance, began the issue of Treasury bills, these issues were accompanied by an assurance to any individual or bank holding an Irish Treasury bill who, for the purpose of its own business or the bank's business, wished it to be discounted, that the Central Bank could do so on request? How many people know the joint stock banks have been "requested" not to exercise that right and not to seek discounting by the Central Bank of the £60 million of Treasury bills which they hold for the Irish Government? How many people know that the last National Loan issued by this Government failed to fill? How many people know that when we are told the Government were taking up £4,500,000 of the last National Loan from Departmental Funds, that statement misled this House and the country? The fact was that the Government, finding that the loan did not fill by £4,500,000, announced the balance would be taken up by Government funds, but in fact it was taken up by the Government making a further issue of Treasury bills to joint stock banks, the proceeds thereof filling the loan.

How many people realise that when the unfortunate Minister for Local Government is bombarded from every part of this House by Deputies representing every constituency because he is unable to provide the money to carry on the essential service of house building and the provision of other public amenities, he has to face that bombardment with lips sealed because his problem is that he has no money and he cannot get it; and he cannot get it because the Minister for Finance has borrowed every penny that the joint stock banks are in a position to lend him? Furthermore, the Minister for Finance is unable to borrow in the United States of America and what he did borrow in Germany he spent before he got it to balance last year's Budget.

How many people know that the people dealing with the joint stock banks at the present time and depending on the traditional accommodation which they have for years secured, are now being informed that that accommodation is no longer available, and on asking in astonishment why, they are told: "Because we have not got it. The Government have taken it"? There is a limit to what the joint stock banks can lend. I am not going into the elaborate formula to establish what that limit is. It is all cod to be saying the banks are lending their customers money, et cetera. The banks are in this country the accepted channel through which the total credit of the country is provided for production and other purposes for which it may legitimately be used. However, that machinery works within certain defined limits unless it is to break down. The position now is that the banks are lending to the very extreme limit that what we call safety permits; that of that lending, £60 million is being made available to the Government and that of all the increased lending of the past 12 months, I think I am right in saying, over 90 per cent was absorbed by the Government.

How many people know that we stand at a point at which the Government can borrow no money from the banking system, for it has no more to lend? How many people know the Government stand at a point at which they are unable to raise a loan in the American financial market or the British financial market for the reasons which I pointed out to them on 1st July, 1964? At column 1364, volume 211 of the Dáil debates, I said:

The plain truth is, to anybody who studies these matters, that on the right of us and on the left of us, pretty brisk inflations exist at present in the USA and in Great Britain. We know perfectly well the reasons for these inflations: both countries have general elections pending at the end of the year and both are quite resolved that in no circumstances will there be any restrictions on the expansive tendencies which have been so sedulously promoted for electoral purposes. In that atmosphere, our capacity to compete is made all the greater by the relative inflation which is proceeding in our two principal markets. If, as is highly likely, at the conclusion of the general election in Great Britain, a different atmosphere obtains, unless we can control the rising cost of living and the tendency for our industrial costs to rise, our competitive capacity in our principal market, in Britain, is likely to disappear. If it does, Nemesis will come upon this country.

We are now faced with the fact that these events have transpired and, over and above the contractions which occurred in this country, there have been strict limitations placed, not only by the United States of America but by Great Britain as well, on exports of capital. We find ourselves in the condition which I have described, that this country is a country gone bust. We cannot get the revenue to do the things we need to do. When you say a country has gone bust or bankrupt, you do not mean the country is going to sink under the surface of the sea. A country cannot go bankrupt for the simple reason that its assets are not available to its creditors for realisation. What happens when a country goes bust is you do not house the poor. When a country goes bust, it means you do not provide the educational facilities your people ought to have; what happens when a country goes bust is that in a city like Dublin you find that instead of having a large surplus of houses over and above the demand which exists for them, you have a situation in which nobody who has less than four children will even be considered for housing but is told: "You must go on living in a tenement room or wherever you can find a roof to cover you."

That is what going bust means and that is what is happening in this country at the present time. It means that when a young married couple go to a local authority for a Small Dwellings Acquisition Act loan, they are told that the local authority has no money to give such a loan. They go thence to the bank and the bank says: "We have no money to lend you because the Government have taken it all." They go then to the building society and the building society says: "We have no money either." The young married couple must move into their parents-in-law on one side or the other with all the social disruption that involves. That is what going bankrupt means. Going bankrupt means that I am told by a constituent of mine: "I have an afflicted child who has been two, three or four years in our family, who has been certified as requiring institutional treatment not only for its own sake but for the sake of all the other children in the house but the country council tells us all the institutions are full, that they cannot provide any more.

I am not pretending that the Minister for Finance is coldly, savagely and brutally indifferent to these problems. I have no doubt that floods of correspondence pour in on him, too. I have said more than once in this House that the only indignation of Deputies seems to me to impinge the Minister for Local Government. Why slag him; he has not got the money; he cannot do it and he has not got the sleeky, oily approach of the Minister for Health who publishes a White Paper saying he is going to do the devil and all some fine day, who has not the slightest intention of doing anything but provides himself with an alibi, when he is providing nothing—as all of us know—in the acute crisis which exists all over the country.

Let us not forget that we have a diagnosis of the reasons for this situation. It was not provided by me, although God knows, I have spoken on this subject often enough. Let it be known it was provided by a Minister for Finance of the Fianna Fáil Party who asked leave to speak in the Irish Times of Saturday, March 12th, 1966, for the reason that he had introduced himself 11 Budgets in this House. He wrote:

In your editorial criticising the new Budget you ask how we got into the mess that ties Mr. Lynch's hands so firmly.

We are all sympathising with Mr. Lynch, the Minister for Finance, sitting beyond with his hands tied firmly—so Deputy MacEntee says about this deplorable condition. Deputy MacEntee goes on to say:

May I, who was Minister for Finance from 1932 to 1939 and from 1951 to 1954, and have been responsible for eleven Budgets, answer that question?

Yes, I think he is entitled to speak with some authority on this matter. He knows; he is a member of the present Minister's Party and he knows his agony in bearing the handcuffs which Deputy MacEntee says so harshly chafe his wrists. Deputy MacEntee goes on in his letter:

Outstanding among the chief culprits, I place the economic astrologers and soothsayers who deluded our people with fantasies of the affluence which awaited when they got to the end of the rainbow some years hence. Unfortunately we converted that roseate future into an opulent but fleeting present and spent prematurely the wealth which we had not produced and, even today, are not beginning to produce.

They are interesting words. They were not prophetic words, for I spoke in July which was by way of promise of what was about to come and what might be done then to stop the things happening which have subsequently happened. These words are not the words of prophecy. Deputy MacEntee's words are the words of Jeremiad, though he sat silently basking in the sunshine of the inflation his colleague was promoting, according to his own letter, knowing full well that his colleague had no better ground to stand on than that of the soothsayers and astrologers.

Deputy MacEntee's letter continues:

Next in order of malign influences I rate those who were responsible for what has been euphemistically styled a National Wage Agreement. It is true that this instrument did not initiate the inflationary trend—that was done by a long series of deficit Budgets—

Note the words. He is writing after seven years of Fianna Fáil government, and he says:

It is true that this instrument did not initiate the inflationary trend— that was done by a long series of deficit Budgets—but it accelerated it enormously. The agreement—or in view of the differences which arose in regard to its interpretation, should it be disagreement?—injected an enormous quantum of new purchasing power, uncovered by production, into the consumption sector of the economy. Moreover, far from encouraging an increase in production it retarded one. Tied up as the workers felt themselves to be, it led to demands for shorter hours and for uncovenanted, sometimes even previously unthought of, benefits of one sort and another, resulting in prolonged strikes in essential industries.

That is the ex post facto lamentation of the man who professes to be the Fianna Fáil expert on matters relating to Finance but this was ex post facto. Where is he now, because we have taken another step since then? Remember, next in order of malign influences he rated those who were responsible for what had been euphemistically styled a national wage agreement which he went on to describe. Since then we have had another one.

Now the Taoiseach, the Minister for Finance, and all the members of the Government came into this House and said that, fortified by their astrologers and soothsayers, they were now informing this Dáil, the country, and the people at large, that the economic foundations of the State were in imminent jeopardy if there was any general increase in wages in excess of three or 3½ per cent. Within a fortnight, the Trade Union Congress had said that they were looking for an increase of £1 a week for everyone. Shortly afterwards the Labour Court in a rather remarkable document endorsed that. We have on record what the soothsayers and the astrologers told the Government, and we have on public record the acceptance by the Government of the advice and counsel of the soothsayers and astrologers, and we have a solemn declaration on record in the Taoiseach's warning to everyone that the Government were the protectors of the economic foundations of the State and that 3½ per cent was the extreme maximum. Lo and behold, three days after the Labour Court announcement, all engines are reversed, and we are told that for precisely the same reasons as the National Wage Agreement was fixed at 12 per cent two years ago, it is now desirable to fix it at six or seven per cent, whichever you estimate £1 per head for everyone to be.

I suggest to the House that a Government who allow themselves to get into that kind of chaotic confusion, flanked on the one side by the soothsayers and astrologers, and on the other side, by ex-Ministers for Finance who present a picture to us of the present Minister for Finance handcuffed and helpless, are in a pretty desperate plight. I want to say that in my considered opinion we are cheerfully tramping along the road to inflation which leads eventually to devaluation of currency. What appals me is that that solves nothing. It simply starts an appalling dialectic in which we rob the defenceless—so long as they have anything left to rob—and ultimately shuffle incompetently down the hill to economic confusion and chaos. Remember, we have object lessons before us all over the world.

When I first entered this House, a characteristic term of obloquy was to compare our circumstances with those of the banana republics of the South American continent. I think the economic conditions of the banana republics at present are a great deal sounder than the economic conditions of this country. I am glad to observe that the trade figures for the past four months, at great cost, have been made to show better results. I do not know what the balance of payments figures are over that period. I do not know where people other than those in the Department of Finance can have access to them. It is manifestly true that you can cut down imports by stopping building, that you can cut down imports by the imposition of levies, but you cannot cut down imports effectively if you are to allow demand to rise in excess of our capacity to supply, and controlling or attempting to control prices will do nothing to help.

It makes one almost despair when one realises the complexities of these problems and the slowness of the public at large to understand them. It horrifies me to think that our own Government are misleading the people, as Deputy MacEntee manifestly thinks our Government have done during the past five or six years, with his help and support in this House, because if the Government will not tell the people the truth, it is very hard for anyone else to communicate it to them.

Our present situation is alarming, and no one wants to believe alarming news. If you issue a note of warning, everyone looks around to find someone to say a consoling word, to say: "The situation is not as bad as he says it is." If it comes from the Government themselves, who will blame the trade unions, or who will blame anyone for saying: "Ah, it is all phantasmagoria. It will all come right in the end." I wonder has the Minister for Finance in his ivory tower in Merrion Street ever thought in terms of the individual case. I often heard it said that the only time banks are prepared to lend you money is when you do not want it. If you have large assets and an expanding business and you go into a bank, they are pressing money on you. If you have a bad patch, you cease to be the honoured guest and become the poor relation.

I know a man in rural Ireland—I do not know the details of his business—who had a business, a grocery shop, and who sold seeds and manure as well. He went to his bank about 18 months ago and was told that they wanted him to reduce his overdraft by £6,500. He said he could not do it. They said: "It is not a question of whether you can or cannot. It has got to be done." The man said: "Very well; I will sell the grocery shop. That is all I can do. I will keep the seed and manure business and carry on." He then went to an auctioneer and sold the grocery shop. He went back to the bank and paid off the overdraft. The bank manager received him and said: "That is very nice. There is a document here we would like you to sign with regard to the balance of your overdraft. It is a debenture." In fact what they really meant was: "You blooming well better sign it." The poor man signed that debenture.

About two months ago, this man got a letter to say they wanted the balance of his overdraft. He received the letter on Monday morning and they wanted the money before Wednesday at noon. He went to the bank manager and said that he was amazed at being given only 48 hours to pay the overdraft. The bank manager said that it was not his doing and that it was not his signature on the letter. He said it had come from head office. The man said it was nonsense and it could not be done. The bank manager said it would have to be done.

That man went home. On Wednesday morning a respectable gentleman with bowler hat, umbrella, dark tie, well-designed suit walked in the door and addressed himself to that man's staff. He said: "I am the receiver appointed by the bank under the debenture deed signed by Mr. X. I fix you with notice, you will not take your instructions from anybody but me." He said: "Mr. X now understands that all the property in this establishment is now under my control." This man addressed letters to all the creditors and to everybody else to the effect that credit would not be given without instructions from him. He told the members of the staff that he would now proceed to liquidate the property and that anything over and above what was due to the bank Mr. X would get. He closed the premises, put a padlock on the door and proceeded with the liquidation.

It may be that the financial history of Mr. X was pretty rocky but I believe that was substantially due to the fact that the bank was acting on the directive of the Government who when they went to them and told them that they must provide the £60 million which the Government now wanted were told by the banks: "We have not got the money." They were then told by the Department of Finance: "If you have not got it, go and get it from your customers." They then went and got it from their customers.

I always remember a former Taoiseach sitting over there in the seat in which the present Minister is now sitting, shaking down a lock of his hair, which he used to do when he got real tough, and saying: "You cannot have omelettes without breaking eggs." I was then sitting in my seat in the front bench where I used to sit at that time and I said: "That is a beautiful doctrine, provided you are not the egg." I do not know whether I am peculiar in this House. I am a long time here, nearly 30 years, but I have never been able to dissociate myself from the individuals of the country. The longer I listen to people who sit in Government, the more impressed I am by the fact that they deal in generalities and how fundamentally their thinking is dominated by the concept that you cannot have omelettes without breaking eggs.

I always think of the man who has a few children in secondary schools. He may have a daughter in a convent and a couple of boys in Clongowes, Rockwell or some other secondary school. He suddenly goes home to his wife and says: "Take the children home. We are poor. The business has gone and I will have to go out and look for a job. I cannot pay the children's school fees. They will have to come home and look for jobs themselves. We will want all they can earn." That is a ghastly situation. I know what I am speaking about. There are hundreds of small businessmen up and down the country at the present time who are suffering the agony of that crucifixion. Not one of them will utter a word that they are under pressure of the most ferocious blackmail that can cross any man. If they breathe a word that they are under pressure by their bank managers, they will find every commercial traveller who supplies them forming a queue outside their door presenting their bills.

There are hundreds and hundreds of small businessmen in this country who have no asset at all but their credit as creditworthy men. When they are given credit, they get on. When their credit is stopped, they have nothing. They then become unemployable. They are unemployed. Nobody seems to give a damn about them. I would ask the House to consider a man of 40 to 45 years of age who at the present moment cannot get a night's sleep because he is thinking: "Did the bank manager mean what he said to me when he said if I did not pay the overdraft, I would be closed up in the morning? Did he mean what he said when he said he had got instructions from headquarters to close on the overdraft? Have the banks got no money because the Government took it?"

Nobody cares about all that suffering and human misery which will be created in the homes of the decentest people in this country just because, in the words of Deputy MacEntee: "It is the soothsayers and astrologers who led us where we are." I want to say again that I believe the root of all this horror is the accursed turnover tax which the soothsayers and astrologers sold to this country. It created in the minds of the Fianna Fáil Government the illusion that here was a new Golconda which was open to them and this resulted in the sky being the limit. It leaves us at the mercy of the wealthy entrepreneurs from Great Britain and abroad who can watch their neighbours gradually perish as they carry the losses of what they call “developing the market.” I have seen many small businessmen wiped out by large foreign combines who came in here and avowedly sold below cost as part of their steady programme for acquiring the market, writing that off cold-bloodedly against the profits of the future to be derived from the obliteration of the small businessmen, their competitors, my neighbours. They are the anonymous money barons of the world who are doing nothing illegal but who do not give a damn as long as the net rate for the capital invested does not fall below seven per cent in the long-term.

The question has been raised on many previous occasions as to whether anything could be done to assist the families of those who meet heavy hospital bills and sickness costs in any given year. I have heard the Minister for Finance on more than one occasion explain the difficulties of dealing with that specific problem. If it is insoluble by way of income tax relief, may I suggest to the Minister that in this context he may have a special obligation to direct the attention of the middle income taxpayer to the possibility of providing that protection for himself through the medium of the Voluntary Health Insurance Board and to the fact that under existing legislation full allowance is made for subscriptions to that association by the income tax authorities?

It is a source of astonishment to me how frequently I come across cases of people who are crippled by uncovenanted commitments of that kind and who have not made any provision and who feel a deep sense of grievance that their outlay is not a permitted expense for the purpose of the income tax code. I see the problem but I think the Minister for Finance would do a great deal to help that situation if he charged himself with the special responsibility of making more widely known the availability of the services of the Voluntary Health Insurance Board and the readiness of the Department of Finance to make the appropriate allowance as an income tax deduction for subscriptions made thereto.

I wish to direct the attention of the House again to a fact that people are turning their backs on. I believe in individual liberty, in democracy and in a free enterprise system. I reject socialism not because I have not sympathy with many of its objectives but because I believe it does not work. I believe the most precious thing we can have is individual liberty; then I believe in democratic institutions, and thirdly, I believe in free enterprise because experience has taught me that the free enterprise system generates the national income that makes it possible to provide the kind of social climate that a Christian society should aspire to. I have been told that somebody said that to Lenin. Lenin looked at him cynically and said: "Free from what?" I know what I want freedom for. I want freedom to think, freedom to speak. I want freedom to protest against injustice within the law.

I am told by some of my Labour friends that I should look about Europe and there I will find many socialist societies providing a higher standard of living than any of the affluent free enterprise societies. That kind of affirmation very often serves to deceive. Sweden is produced as one of the classical socialist States which have acquired the highest standard of living in Europe. How many people in the House know that Sweden calls itself a socialist State without a single nationalised industry in existence in the country? One of the facts of life with which we have to live is that the Communists twist words, that a Communist tyranny is always described as "the democratic socialist republic of so-and-so". It means that everybody has a ball and chain around his ankle and a noose around his neck.

The most conservative, ruthless capitalist society in Europe is operated by the Social Democratic Party of Sweden because there they have discovered that it is by operating a tough, ruthless capitalist society that you can generate the immense national income off which you can skim a very high standard of social services. But we get into the fantastic position that by attaching arbitrary labels to a special situation the whole public mind becomes hopelessly confused. If our Labour colleagues mean by a socialist establishment something corresponding to Sweden, my answer is that Sweden is much too Tory a country for me. I think the Parliamentary control of money power in Sweden is not sufficiently effective but I acknowledge that in Sweden it has produced a flood of gold which the money power there is wise enough to see can be made most useful by pretty general redistribution in a system of social services about which we could have an interesting discussion if permitted.

I much more admire the United States of America which does not claim to be a socialist society. It has power in Parliament to control the abuse of capital which the Swedes have never dreamt of——

An Ceann Comhairle

The Deputy seems to be wandering beyond the scope of the Bill.

Mr. Dillon

No, no.

An Ceann Comhairle

The Deputy may say "No, no", but the Chair is troubled about the relevance——

Mr. Dillon

Of what?

An Ceann Comhairle

——of the Deputy's remarks on the Bill.

Mr. Dillon

I am discussing the methods of raising taxation.

An Ceann Comhairle

That is too general. This concerns particular taxation.

Mr. Dillon

Where can I do that?

An Ceann Comhairle

The Bill sets out particular taxation.

Mr. Dillon

Surely I am entitled to discuss the financial policy of the Government? In any case, I do not give a fiddle-de-dee. I have said what I wanted to say.

I want to see here a freedom of enterprise system; but I am warning you that the Taoiseach, in commenting on the Budget, stated, I think, as usual at some dogfight in Limerick or elsewhere—never in Dáil Éireann—that he wanted to warn the people that there was no prospect of a reduction in taxation in this Budget or in future Budgets. Now, mark the words "in this Budget or in future Budgets." Does the Minister for Finance remember that statement made in Limerick?

Mr. J. Lynch

It was in a television speech.

Mr. Sweetman

Television on the Budget.

Mr. Dillon

I want to direct the attention of this House to this significant fact. That is not an economic decision; that is a political decision. If that is to be the policy of the Government of this country, the inevitable end of that policy is that we and our children and our children's children will ultimately become servants of the State. If everybody who earns has to look forward to the prospect that his earnings will be taken from him in greater and greater degrees, none of us is going to break his neck earning income. We shall all end up as silent servants of the State, going through the solemn pirouette of receiving income for the work we do for the State and having it taxed from us in such a proportion as the State thinks suitable. What does that mean? Is it not the position obtaining in Russia or China today? Do we want that? If we want that, the way to get it is to announce in every Budget that there will be more taxation. If we do not want it, is it not time to say so, and to say to the Minister for Finance: "This Budget has vastly increased taxation"?

The Minister has already announced that it may be necessary to introduce another Budget in this year of already unprecedented increases. What is he trying to do? Is he trying to change the whole social and political basis of this country? Has he accepted the doctrine that profit is a disreputable word? Is he determined to put an end to profit and to convert everybody in our society into a salaried servant of the State? If that is his purpose, he ought to tell the people because, so certainly as we are standing here, if Government policy is that every Budget is to increase taxation every year, that is the inevitable end as I have described it.

If I believed that the Government had any political philosophy, I feel there would be some hope for the country and they could be challenged. I would venture to say that I feel the Minister for Finance will indignantly repudiate any such intention as I have suggested to be inevitable from the policy initiated by the Taoiseach on television. The real reason is they are not aware of it; they do not know where they are going.

I think every line of this Finance Bill presents the deplorable situation that the Government of this country are simply living from Tuesday to Friday and from Friday to Tuesday, trusting to God that something will turn up. People outside who are not familiar with the process of Government in this House may ask: "Why did I say from Friday to Tuesday and from Tuesday to Friday"? These are the days the Government meet.

What is wrong with our country at the present time is that we have no Taoiseach. Mind you, I have a certain sympathy with the Taoiseach. The substance of my indictment, Sir, is that the Taoiseach is trying to run the Department of Finance and the Department of Industry and Commerce instead of doing the job he is paid for. I heard him with great sympathy say at the King's Inns some five or six weeks ago: "If I consulted my personal preferences, I would never have been Taoiseach; I never wanted to be Taoiseach; I would have been much happier in the Department of Industry and Commerce." I entirely sympathise with the Taoiseach. I never wanted to be Taoiseach. I wanted to spend my administrative life in the Department of Agriculture. Some people do not understand that, perhaps. They feel the natural ambition of man ought to be to reach the top. I never wanted it. Should this Party have been returned to power, I would have liked to go into the Department of Agriculture, before I decided to retire from the Front Bench of this House.

I was interested to hear the Taoiseach say six weeks ago: "I never wanted to be Taoiseach; if I consulted my own wishes, I would be in the Department of Industry and Commerce still for it was there I felt my vocation was." That was said in public. I am not quoting anything from private conversation.

What is wrong with this Government is that we have no Taoiseach. I am sorry to say, without any personal disrespect for the Minister for Finance, for whom I have admiration, that we have no Minister for Finance as we in fact have no Minister for Industry and Commerce. What we have is a man who is, instead of acting as Taoiseach, trying to fill the gap, trying to run the Ministry of Finance and the Ministry of Industry and Commerce at a distance and failing to take the decision it is a Taoiseach's duty to take. So we live from Tuesday to Friday and the Government meet under a Taoiseach who does not want to be Taoiseach, under a Taoiseach who still yearns to be where he used to be and who shuffles off his own real responsibilities. But I condemn his failure to do his incontestable duty as Taoiseach, requiring members of his Government to do their job, and not undertaking to do his own. So there are no decisions taken at Government level on Tuesday and when they come up for review on Friday, they are put off again. So we are staggering along in this strange haze so elegantly described by Deputy MacEntee:

Unfortunately we converted that roseate future into an opulent but fleeting present and spent prematurely the wealth which we had not produced and, even today, are not beginning to produce.

How long does the Taoiseach intend to go on? It cannot go on long the way it is going. If free institutions are to survive, I warn that the economic situation must be brought under control. Eighteen months ago, two years ago, it was our economic sovereignty that was in balance. We have let that go and we are now with our hats in our hands looking to what are called popularly the "Gnomes" of Zurich for the money to balance our last year's Budget. We have called in the World Bank experts to survey the country to see can we raise any money there.

Remember, I was present when Mr. Black's institution was first established. I represented this country as Minister for Agriculture in Washington at the time at a meeting of the FAO. I remember Mr. Black coming before us and telling us he was now going to be at the head of a big international bank to make big money available for the development of our various economies. "Of course," he said, "you will understand that an institution such as ours must be satisfied that the money provided is prudently employed." I heard a whole row of Ministers for Agriculture say this was the loveliest thing that had ever happened. And I was the sore thumb; I said: "Mr. Black, what did you mean when you said that, of course, your institution must be satisfied that the advances you will make will be prudently employed?" He said: "We would, of course, have to get a specific undertaking from the Government in regard to their financial policy and the purpose to which they propose to turn any moneys advanced by us." I asked him: "Do you seriously believe that a nation like ours, which has spent seven centuries trying to get an alien government out of its territory, is now going to sell for your blooming loans the freedom that cost them seven centuries of struggle to secure?"

He was quite shocked that anybody should ask him this question and I did not conceive it to be possible then that a banker would have the effrontery to come inside our jurisdiction and, in the classic words of Bernard Shaw to Mrs. Patrick Campbell, say: "Crackle, crackle, crackle," if you are prepared to toe the line. But they are here. They are here investigating our financial circumstances to see whether they are prepared to do what the American money market will not undertake, what the British money market will not undertake and what the Continental money market is no longer prepared to undertake, namely, to bail us out of the financial mess into which we have got ourselves.

Do you want that to happen? Do you want the World Bank, or whatever the institution is called, to have an authority superior to Oireachtas Éireann? I remember saying in Ballinasloe: "The day the ultimate power of decision leaves Dáil Éireann, this country ceases to be free. The day we cannot meet our bills and must accept foreign loans on conditions binding upon us, then the ultimate power has left Oireachtas Éireann and gone elsewhere." Do you want that to happen? Maybe I am old-fashioned. I suppose one gets old-fashioned and out of touch. Or has there grown up— I see one or two young chaps now in the back benches of Fianna Fáil—in the last decade or 15 years a generation that wants to make the choice exactly the opposite to the choice our fathers and grandfathers made? Our fathers and grandfathers made the choice of being free, even if that meant being relatively poor. Has there grown up, unknownst to me, a generation today which would prefer to be affluent and bonded rather than free and poor? Have we with us today a generation which, faced with the surrender of the incorporeal ecstasy of freedom, prefer the corporeal, the money they can finger, to the freedom they are in danger of forgetting how to feel? It will, I suppose, take time for that sentiment to prevail. I hope I am wrong in suspecting that it is present amongst us here and I hope to die before it takes over in this country.

Sir Anthony Esmonde

In the light of the circumstances in which the country finds itself and the acknowledgment by the Government that there is no money available to carry out the ordinary work that any Government should do, I think the Minister should have made a more comprehensive statement on this Bill than that with which he favoured us this morning. What the Minister presented to us this morning was a slight augmentation of the White Paper on financial policy. Recently in this House we have had innumerable questions designed to extract from the Government when money for absolutely essential services would be available. The recipient of most of those questions was the Minister for Local Government. In the final analysis, he is dependent in relation to the moneys he gets on the Minister for Finance. Every bill paid in every State Department has to go to the Department of Finance to be sanctioned there before it can be paid. It is the same story everywhere. We all recognise that we are up against it in trying to get the Government to meet bills and there is the widest apprehension throughout the entire community. People who know nothing about finance, who never took any interest in major finances, are today wondering what is to happen and where the country is going.

I should like to direct the attention of the House to the fact that our present financial condition is due to the successive Finance Acts we have had over the past few years. It is aided, augmented and abetted by the turnover tax. I happen to know that the then Minister for Finance was given very strong advice by those who were in a position to know against the imposition of this turnover tax—and it is from it that our whole troubles emanated. The turnover tax was the beginning and end of all our troubles. Then, when the difficulties accrued and when the tax itself was not successful in procuring the money and was not successful—far from it; it did the very opposite—in providing the necessary finances, we had a series of Finance Acts to try to collect the money.

I want to put it to the House that at the present moment in the world— particularly in the sterling area, which is maintained by the United Kingdom as the principal participating nation in the sterling area—there is a considerable shortage of capital. This has not been created overnight. This has not come in the past year or so. I do not know who has been advising the Minister for Finance or what opinions he has been seeking but he must have known that there was a growing shortage of capital within the sterling area.

The United Kingdom, our principal trading partner, found herself in financial difficulties and had to borrow £900 million overseas. Difficulty was experienced in maintaining the sterling area and, as a world power or, shall we say, an ex-world power, Britain was committed to sustain and maintain the aid schemes that were necessary in many parts of the world. Money was freely available to the world at large two years ago in the dollar area. It was possible for money to be procured within that area in which were and are considerable resources but it became increasingly obvious that the strain on the dollar area was greater than ever before and that the United States of America were largely committed to military schemes which were not, as had been thought, reducing but were extending. They had committed themselves to overseas support of military forces. As well as that, they were perhaps the biggest donors of aid to the underdeveloped countries which is an essential support in the world today.

Therefore, it was very evident to the Minister for Finance and to those who advised him, or it should have been evident to them, that there would be a growing shortage of capital and, that therefore, it was desirable that we should maintain in this country any capital we had and should encourage the inflow of capital into the State. I should like to point out that the successive Finance Acts that have been brought in by successive Ministers for Finance in this country have had the directly opposite effect. One of our major difficulties and troubles in Ireland today is that we have had a flight of capital. I have heard the Minister for Finance indicate in this House and I have heard and read reports of speeches he has made elsewhere that he does not agree with that point of view and that his financial advisers optimistically tell him there is no flight of capital from this country.

The first act of irreparable stupidity created in a Finance Act here was to force the managers of banks to disclose the deposit accounts of their customers. That was one of these things which are a kind of civil servant's dream—that, by doing that, we would get the money which was required. As sure as I am standing here, there was a flight of capital out of this country within a few months and that was not limited to £100 million. I do not care what denials there may be from the official side or from the Minister for Finance, what I say is the truth. That is what happened and that flight has been going on ever since.

Mr. J. Lynch

The Deputy should substantiate his assertions if he does not accept official denials.

Sir Anthony Esmonde

Will the Minister answer one simple question now? Was there or was there not a flight of capital from the banks when that law came into existence? I do not charge the Minister with bringing it in: his predecessor did it. Was there or was there not?

Mr. J. Lynch

The Deputy made an assertion that there was a flight of £100 million or more. He ought to substantiate that, at least.

Sir Anthony Esmonde

I have not got financial advisers at my elbow nor have I the inside information available to me that the Minister has. I am telling him what I have been told in banking circles. I know that quite a lot of people have transferred capital outside this country. If the Minister expects me to substantiate everything I say in this House, is he not placing me at a disadvantage, as a Deputy, to express an opinion? He has all that information available to him free of charge. I have not a research department of my own.

Mr. J. Lynch

The Deputy made an assertion which he said could not be challenged, no matter what official denial was made.

Sir Anthony Esmonde

If the Minister will give me the sum, I shall accept it now. The Minister has never accepted the fact—nor his advisers, I gather—that any capital has left this country. Does the Minister now say that it never left the country?

Mr. J. Lynch

There is always an outflow of capital.

Sir Anthony Esmonde

I shall withdraw my figure of £100 million if the Minister says it: I understand he says that nothing has left?

Mr. J. Lynch

For many years, there has also been an inflow.

Sir Anthony Esmonde

And there is also an inflow, which is very desirable. Perhaps the Minister would tell the House if the inflow is greater than the outflow?

Mr. J. Lynch

It is, without any doubt.

Sir Anthony Esmonde

Would the Minister be kind enough to send me some statistical proof to that effect because it is not the considered opinion in banking circles, as far as I hear? If there is an inflow of capital, as against an outflow, why do we find ourselves in the parlous financial condition in which we now find ourselves—or do we? Have we plenty of money to burn? If we have an inflow of capital and if we have plenty of capital available why can we not carry out the ordinary simple things of life? Why is everything held up? Why is it that every Department one writes to sends the same answer that, owing to financial considerations and credit restriction, there is no money for anything?

If there is a greater inflow than outflow of capital would that money not be available for essential purposes? Of course, it is not available. There is not a shilling here today. In his Budget Statement, the Minister said we were £28 million short in our capital Budget and that the money has to be acquired from banks and other sources. Is it to be acquired from the inflow of capital, which does not exist?

I am surprised to hear the Minister suggest that the inflow of capital is greater today in this country than the outflow. If it were, we should have no difficulties at all. We should be passing this Finance Bill and congratulating the Minister on his financial policy. I appreciate that the Minister inherited a pretty mess. He became Minister for Finance after the last election when we were told, up to the very date of the election, that everything in the garden was lovely—plenty of money available for capital expansion and anybody who wanted grants or loans could get them—but the day the election was over, black night descended on the financial situation. That was when the Minister took over. If I say hard things about the Minister and his financial policy, I say them with the reservation that he inherited one of the greatest financial messes anybody could inherit. I still maintain that he is not going the right way about encouraging capital into the country and I propose to tell him why.

First, I should say that the financial policy is sounding the death note of the middle classes and as soon as you wipe out the middle classes and the financial power they have, you wipe out a source of savings and financial stability. Our estate duty policy, or death duty policy, is farcical, and that is the only word for it. If a man saves money today, it depreciates due to excessive taxation in the first place, and secondly, anything he saves and leaves to his widow when he dies, even an annuity, has to be capitalised and is taken in estate duty. Does the Minister really believe, with the enhanced values that estates have today, due to the lower purchasing power, that £8,750 is sufficient as a figure for remission of estate duty in the case of a widow and family? Any middle class person, a member of a profession, civil servant or anybody living on a salary may be living in a house he has bought by hard saving throughout his life. Perhaps he has saved some money which is put into an annuity to be passed on to the widow. Does the Minister think it is satisfactory financial policy that he should pay death duties? What will happen in the majority of cases is that the house must be sold and not only does the family lose the breadwinner but also the roof over their heads through this futile tax policy.

It is time we had a financial policy of our own, out of alignment with other countries. I understand we have some reciprocal arrangement with Britain with regard to estate duty and for that reason we have taken on this absurd financial policy in which estate duty is nothing more than a capital levy on financial investment in this country. If the Minister had the courage of his convictions—he wants capital—he would get the capital if he adopted a proper estate duty policy. In the Federal Republic of Germany, they tax people when they are alive, not when they are dead. We tax people when they die. A widow with one child is exempt up to £10,200. What does it take to get £10,200 nowadays? Anybody who is enjoying a good salary and has bought a house, is thrifty and has saved money could reach that figure and this estate duty policy means that if such a person is suddenly struck down, all his savings will be taxed as soon as he dies. There is no sense in such a policy and it is not in the national interest. As Deputy Dillon aptly put it, we are becoming a nation of serfs.

In the case of a widow with children, the figure is £13,750. How is she to educate her children and maintain the same standard of living as she had before if, as soon as she has buried her husband and paid the hospital expenses—for which she gets no relief although there have been repeated requests in this House for such relief—she has to pay estate duty? The same applies in the case of farmers. The Minister knows the value of land probably better than I do. If he is not a farmer as I am, at least he has financial advisers to tell him these things. Any sizeable farm at all today will exceed in value the sum set out here. Despite the importance to our economy of the farm community, not only has the widow lost her husband but she will have to pay estate duty as well.

As far as I can see, there is no argument for maintaining estate duty in this country. It does not suit our economy and I should like to see it abolished. On Committee Stage, I propose to put down an amendment to that effect. I do not expect the Minister to accept it but at least I can argue the case and perhaps the germ of an idea may get into somebody's mind that what we are doing by continuing this estate duty policy is gradually but irrevocably wiping out our middle classes.

I want to refer briefly to the turnover tax. It was opposed tooth and nail by everybody but the Government went through with it because they were assured by those who advised them that if they imposed turnover tax, they would have no further financial troubles. While, as in the case of £100,000 flight of capital, I cannot present it to the Minister signed, sealed and delivered, I am advised that advice was given to the Government. The turnover tax was supposed not to affect the economy greatly. There would be a slight rise in the cost of living but otherwise no material disturbance. I do not know whose brainchild it was but I understand it emanated from the Minister's financial advisers and I understand the economic advisers did not agree with it and that they warned of the dangers and difficulties inherent in such a tax.

It was forced through against the wishes of the majority of the people. We had three by-elections at that time, one just beforehand which we won and two afterwards which the Government won. They were the dearest by-elections ever won by any Government. It was after that that the rot set in: the cost of living started to soar and pressure came on the Minister from every section of the community for increased income. It was then the Government should have taken strong action to control the cost of living but they failed to do so and from there the spiral has continued ever since.

If they had any policy, they would realise the turnover tax is the root of all the trouble, but on the tail of the turnover tax, when every shopkeeper was made a taxgatherer for the Government, shoals of inspectors were sent throughout the country to see that the tax was collected. I should like to tell the Minister these inspectors were never more active than now. I am being approached by people regularly who say that their books have been taken in by the Revenue Commissioners to see if they are sending in the correct amount of tax. That is what goes on. That is the root of all the trouble in the country today. This should have been evident to the Minister. He should have realised in the very difficult situation he inherited, the repercussions of this tax, which has wrecked the country and put us in the position in which we are today. But that did not happen.

This was a desperate Government taking desperate financial measures to keep themselves in existence and balance the Budget. On top of all that, we now find that they have not balanced the Budget. We find that this Finance Bill which is to give legal effect to the recent Budget is not sufficient to do so. We hear ominous mutterings and sounds, mainly from junior Ministers, about the fact that increased taxation may be necessary. There was no attempt in the Budget to meet the quite obvious demands that would come from the agricultural community who, it was quite obvious, had a depressed standard of living. It was clear that the Government would have to move sooner or later in the matter.

In the Explanatory Memorandum with the Bill, there is one solitary indication of forward thinking, that is, the remission of the tax on glasshouses. The weather being as it is, if we want to remain in horticultural production, it is essential in order to keep alive, to extend production under glass. That is a forward move on which I congratulate the Minister. There is nothing else in the Bill but a continuation of the struggle from day to day. The Minister intervened, very courteously, as always, in the early part of my speech to say that the inflow of capital here is greater than the outflow. He apparently admits that there is some outflow. Where is the inflow coming from? Is it by the sale of national assets or is it coming in for the setting up of industries here or for investment in the State? Is it coming in on those lines or simply by the sale of national assets, as I fear? With many others, I fear that we are selling something for which people fought dearly in the past, our national assets, and that the land of Ireland is still being sold and that a great deal of money is coming in for that purpose.

I am not an expert on finance and do not claim to be. In my view, the country is in a more disastrous condition than it has ever been before. I do not think there is any hope for the future in a continuation of the present financial policy. I would earnestly exhort the Minister to take another look at it and to try to produce for us a financial policy that will create an inflow of capital because, as I have already said, it is not possible to borrow as it was heretofore. There is only one place where we have a chance of borrowing money for national development. We cannot borrow money in the sterling area because we will not get it: they have not got it. We cannot borrow money in the dollar area: they have not got it or, if they give it to us, may make conditions so heavy that we would be unable to pay. The only place we are likely to be able to borrow is in the hard currency area. The Minister knows what that cost us the other day when we went to the Federal Republic of Germany.

That brings me to the relations that exist at the moment between this country and the United Kingdom. It seems to me that the Government have banked their all on trade with the United Kingdom and Ireland. It is bad to go back on the history of the past but, 20 years ago, that would have been a very secure, sound and stable policy. Things have changed considerably since then. There are possibly only two countries in Europe today with capital to export. One is the Federal Republic of Germany. It is the economic miracle of this century, the way they built themselves up. They dedicated themselves to private enterprise and to having good industrial relations. The other is the United Kingdom. The United Kingdom have recently made what I consider to be another very unjust attack on us, in that they are restricting the export of capital to this country. In effect, that is what the last British Budget will do. The Minister recently in answer to Parliamentary Questions in the House, indicated that it did not affect a great many different types of capital. I should like him to tell the House when replying to the debate, what are the restrictions and what do they mean to us. I should like him also to tell the House when the British Government informed him or the Taoiseach, as apparently they did, that they were imposing these restrictions and we protested very strongly against them, what was the answer to that when there is supposed to be a special agreement and a special understanding between the United Kingdom and this country.

It was not wise to consider it politic to tie ourselves so securely to the United Kingdom by way of treaty, possibly to the exclusion of export markets which we might have sought elsewhere, having regard to the 15 per cent levy imposed by the British Government against us. It was recognised by every European paper that Ireland was being worse served than any other country in Europe or any other party trading with the United Kingdom. These are things that ought to be borne in mind.

It should be borne in mind also that there seems to be a theory in governmental circles that if the United Kingdom decide to go into the Common Market, we have only got to walk in the door behind them. The Minister must be deep in the councils of any negotiations that may take place in this respect. It is most important in relation to our financial policy and outlook to bear in mind that a Government who have imposed a 15 per cent levy on our exports and a further restriction on capital exports to this country should be very closely watched to see that they do not walk into the Common Market while we find ourselves sitting on the doorstep with a financial treaty made with them possibly not even operative. They may be in and that treaty may be torn up before it comes into effect.

We need a complete overhaul of our whole financial policy because, quite obviously, we cannot go on on a day-to-day policy. I challenge the Government that they have adopted a day-to-day policy, simply gathering in further taxation to try to balance the Budget. In other words, unless somebody does something about it quickly—I hate to have to say it publicly in Dáil Éireann —we are heading for financial chaos.

Mr. P. O'Donnell

When Budgets were introduced in the past, the principal reason was to give us a fairly accurate estimate of expenditure during the following financial year and down through the years, the Budget or the estimation has been fairly accurate, until the last few years. The Minister this year in introducing the Budget to which this Finance Bill will give legal effect, posed the question: What went wrong with the Budget introduced last May? That was May of 1965. Has he not already posed the question: What has gone wrong with the Budget of 1966? If he has not posed it, members of the Government have posed it already. They have told us that the estimation was completely wrong and that some time in the back end of the year a further estimate or Budget will be necessary and more money will be required.

The total Budget, current and capital, for the coming year was estimated by the Minister in March last at £362 million. One million pounds per day we are spending in this State on capital and current account. Since then we have had a number of petty budgets introduced—we have had a Fisheries Bill which is going to bring in practically £1 million in the year— and we even have had a cut-back on expenditure. The Minister in his Budget appealed to the public for savings. As we all know, for the past ten days, there has been a bank strike but one bank is not on strike, that is, the Post Office Savings Bank. A most peculiar thing has occurred within the past week. Dividends on national loans have become payable and warrants have been issued by the Government for the dividends. The Minister's bank, the Post Office Savings Bank, has refused to accept his own cheques. They will not accept the dividend warrants issued by the Government. I had the unfortunate experience of finding clients with these warrants unable to cash them and unable to lodge them to their credit in the Post Office Savings Bank. They found themselves in the position of having to cross the Border to lodge the warrants in post offices in the Six Counties.

Surely the Minister could persuade that branch of the Department of Posts and Telegraphs to accept these warrants to the credit of depositors, pending the settlement of the bank strike? There is a method whereby some money could be saved, or perhaps the Minister is quite satisfied to issue slips of paper to subscribers to the national loan and say to them: "You can do without your money until the strike is over". Will the Minister deny these people the opportunity to save that money by lodging it in the Post Office Savings Bank?

Mr. J. Lynch

I just cannot understand it. I know that dividend warrants are readily accepted in the Post Office.

Mr. P. O'Donnell

I had the unfortunate experience of lodging my own dividend warrant the day before yesterday and having it returned to me by the sub-postmistress who informed me that her instructions were to accept no cheques for lodgment in the Post Office Savings Bank. I explained that this was not a cheque, that it was a Government warrant issued by way of interest on investments in the national loan and should not be treated as an ordinary cheque. It was pointed out that it was headed "The Bank of Ireland" and therefore on the instructions of the Minister, was unacceptable in the post office. The Minister should look into it.

Mr. J. Lynch

It is the first I heard of it. I am surprised that it occurred.

Mr. P. O'Donnell

The Minister may take it that I am giving him my personal experience.

Mr. J. Lynch

I am not denying that.

Mr. P. O'Donnell

It would be in the interests not only of the depositors but of the State if these dividend warrants were accepted by the Post Office Savings Bank. I would appeal to the Minister to take up the matter with his colleague, the Minister for Posts and Telegraphs.

As I pointed out, on capital and current expenditure we are bound to spend a minimum of £362 million, or £1 million per day, for the next 12 months. That is in addition to another budget which the Minister says he may require for £28 million in the autumn and if the price of milk is increased, he says there may be a further Budget. What is happening to all this money? The Minister rightly pointed out that owing to the shortage of money, he had to introduce his Budget this year two months earlier than usual. He gave as one of the reasons for doing this the 1916 Jubilee Celebrations but he said that that was not the sole reason. The main reason was that additional money had to be obtained. But where is this money going? Ministers of State will tell us that there is ample money for houses, hospitals, roads, capital development and so on, but when you come to seek the money, it is not there. Those of us who are members of local authorities are aware of circulars emanating from the Department of Local Government allocating money to us for houses and for roads and explaining to us that owing to the capital shortage, we have to cut back on our expenditure, despite the fact that we are spending at the rate of £1 million per day under this Finance Bill.

The Agricultural Credit Corporation which depends for its capital on the Minister for Finance has no money to lend. Admittedly, there is a limited amount available, sufficient to keep the cogs greased and the wheels turning, but only sufficient to do that. The amount of money which was available in former years to the farmers is no longer available. Where is the money going? That is what we want to know. We were told yesterday that as a result of local authority expenditure £3 million more will be collected this year in poor rates than was collected in any other year. We were also told yesterday that since 1957 over 200,000 people have emigrated. Since 1961, 104,000 have emigrated. That was said here yesterday by a Minister in reply to a question. Yet here we are spending £1 million per day on capital and current expenditure. We are collecting £3 million more in rates and we are promised another £28 million of a blister in taxation at the back end of the year. Still we have no money for the various services which I have mentioned.

Any Deputy who is a member of a local authority knows how we have to cheesepare to try to get little pockets filled with less money than was available to us. Where is it going? The old age pensioner is not getting it. The recipient of unemployment assistance is not getting it and certainly the people in receipt of social welfare are not getting it. Each day every Deputy makes representations to know why so-and-so is not being paid his unemployment assistance. This morning I had a letter from a man who said he is proving unemployment for the past 16 weeks, that he has a wife and family and that unless he is paid by next week, he will have to clear out and join the other 200,000 who have left here since 1957.

What is wrong? If one is seeking a Local Government grant for the building of a house, all sorts of excuses are made before, eventually, possibly four or five months after one qualifies for the grant, the money is paid. Does the Minister realise that the people building houses have to pay for the material going into those houses? They have either to pay for it or obtain it on credit. If they obtain it on credit, they generally have to pay interest on the credit. If the Minister could make available to the Minister for Local Government a steady flow of capital out of this £1,000,000 per day which he spends, it would be a relief to the public, to house builders, builders' providers and others who make credit available to these people.

Again, one qualifies for an old age pension. One should then be automatically paid within at least one month of the date of the application. But what do we find? Investigations go on for a period of three months and sometimes four months. Eventually, the applicant is informed that the appropriate Minister is now satisfied that he or she is entitled to a pension and the pension book is issued. But there may be a wait of another six months before the arrears of pension are paid. Surely there is something wrong somewhere? I dread to think what is to happen when the Social Welfare Bill, which abolishes workmen's compensation, becomes law. Another section of the civil service will be set up to administer it. The wheel will be clogged up again, grinding slowly, and unfortunate people will be waiting for money from the Government to which they are entitled.

We have been told by other Deputies about the Government's borrowing of money. I believe sterling capital is still available if attractive rates of interest are paid for it. It is most discouraging to natives of this State to be offered 6¾ per cent by the Government on a national loan when a subsidiary, quasi-State body like the ESB can offer seven per cent and when we know the Government are going to West Germany and borrowing money at eight, nine and ten per cent. Why cannot these attractive terms be made available to citizens of this country? If they were, capital would become more readily available—the capital which has not already fled from this country as a result of the banks being compelled to disclose their deposits.

We see what Britain is doing. They have put a credit squeeze on us at the moment. They are curbing the inflow of capital to this country, although we were led to believe after the Free Trade Agreement that we were going to become another Six Counties as far as trade with Britain was concerned. Still, when it suits Britain, she clamps down. We now find the voluntary inflow of capital from Britain curbed. That will have serious effects.

The big trouble about the present Government is their complacency in this time of crisis. I want to refer particularly to the Minister for Finance. He has been very open about all this. His Budget speech was one of the most candid speeches I have read. We know what he inherited. We know the blisters left to him. We know the honest man he is. It is quite evident from his Budget speech. But why cannot his Ministers, particularly his junior Ministers, be straight and say there is a financial crisis in this country instead of saying there is ample money for housing, sanitary services, water schemes, ample money for social welfare, ample money for this and that? Why can they not be honest and follow the example of the Minister for Finance? We would all assist them in every way we possibly could if they would only do that.

We have an opportunity during the Presidential election campaign to discuss the economy of the country, but the Taoiseach fights shy of it. He says that when all the hullabaloo of the election is over, he will tell us what the position is. But the people want to know now what the position is. They want to be able to endorse the policy of the Government or express their displeasure with it. This is a golden opportunity for doing it. If there is one Minister in the present Government I regard as being honest about it, it is the Minister sitting opposite me at the moment. He has told us the position in which he finds himself. Unfortunately, he gives us very little assistance by way of advice as to how we can get out of this unfortunate position, other than by taxation.

I have said many times that I heard the now President of Ireland when sitting here as Leader of the Opposition say, when Deputy Sweetman as Minister for Finance was introducing his Budget: "We have reached the limit of taxation." The then Deputy de Valera said that with emphasis. I am sure, were he to study the financial position of the country today, he would have reason to scratch his head. We discuss these matters in the House, but between elections, we do not have an opportunity of explaining them to the people. Now in this Presidential election we are given that opportunity. Why are we fighting shy of it? We have two political candidates in the field. We are giving the policies of the political Parties in support of the canditure of these two gentlemen. Why are we afraid to discuss it? I think that is a bad thing. I hope it will be discussed.

We are now at the entry to another tourist season. As Deputy Esmonde has pointed out, no person can blame the Government or anybody else for the climate we have. Unfortunately in recent years we have had a smaller percentage of sunshine than we have had in decades past. We have to put up with that for the time being. What are we doing to make our country more attractive to overseas visitors? I remember at the end of the war we had visitors from all over Britain and the Six Counties flocking to this country. One of the great attractions of that time was the superabundance of food. intoxicating liquor, cigarettes, tobacco and petrol at reasonable prices. God took the weather away from us but the Government in various Budgets took from us all these other attractive commodities that brought tourists here. At present businessmen along the Border who depended on the sale of petrol for a livelihood have been driven out of business completely.

There was one thriving business in my part of the country, that of the smuggler. He has gone, too. The Government gave equality so far as he is concerned on both sides of the Border. He brought a certain amount of revenue here and we often connived at that. People frown on the idea of smugglers and smuggling but I suggested at one time in this House that were we to take £1 off the excise duty on a bottle of whiskey, we would sell twice as much whiskey, bring in the same amount of revenue, and possibly double the number of tourists coming in here. I was asked in the House: to whom would we sell this cheap whiskey? I said one of the ways we would sell it was by having it smuggled out of the State, and some old warriors on the Government benches held up their hands in holy horror at the suggestion that we should connive at the smuggling of whiskey out of the State.

One of the most thriving businesses we have in this country and one of the greatest projects ever initiated here is the Hospital Sweeps. Where are we selling the tickets? We are smuggling them out of the country. I can see no difference whatsoever between smuggling out Sweep tickets and smuggling out a bottle of whiskey. I believe we would create and secure more revenue if we could slash the excise duty on cigarettes and whiskey. We would sell more cigarettes and whiskey in the State by attracting more visitors and at the same time, increase our exports by getting the goods out whatever way we possibly could, not ourselves but whoever wanted to get them out.

The Budgets in recent years have done a considerable amount of damage to the tourist industry. There was a time when sunshine on our beaches did attract people here. No person is going to blame the Government for the reduction in the percentage of sunshine we have, but we certainly do blame the Government for taking away the other attractions, namely, cheaper entertainment, cheaper food and cheaper spirits, tobacco and cigarettes. Make no mistake about it, to the middle class and working man and working woman of England these were attractions.

I remember the time in my own county after the war years when there were literally thousands of these working class people from Glasgow, Edinburgh and Liverpool, flocking over and buying cheap commodities which we had at our seaside resorts at that time. Unfortunately, those people are gone and are being replaced today by a completely different group who are spending much less in the country. Taxation is one of the things that will do most damage to our tourist trade.

I conclude by appealing to the Minister at this stage to intervene in the bank dispute. I know he will tell me he has set up machinery whereby that dispute may be settled. That is quite possible. However, they have such machinery in the North but it did not prevent a Minister of State up there intervening and endeavouring to settle the dispute. It is too bad that the Six Counties should set the headline we would have to follow. A golden opportunity was given here to a Minister of State to intervene and to endeavour to settle this dispute with the banks, which is hitting commerce, which is hitting the tourist trade and which is hitting the working man. Something will have to be done and this is the time for the Government to shake themselves out of their complacency, to display initiative not only in settling the bank strike but in endeavouring to settle the other disputes. The Government should settle them because it was the Government who introduced the turnover tax and the unfortunate 12 per cent which was necessary as a result of the turnover tax and which has left this country in the condition in which it is today.

Seán Ó Ceallaigh

Ni raibh fonn da laghad ormsa mo ladhar a chur isteach sa dhíospóireacht seo go dtí gur labhair an Teachta O'Donnell. Dúirt sé gur imigh breis agus céad míle duine thar lear le cúig bliana anuas. Admhaíonn cách gur imigh tuairim is fiche míle nó ós a chionn in aghaidh na bliana, ach cad é an mhaith bheith ag chur síos ar na daoine a thréigeann an tír? Má bhionn fonn ar dhaoine imeacht, ní féidir linn srian a chur ortha.

Rinne an Teachta O'Donnell tagairt don mhoill fhada a bhí ann ón uair a chuireann sean-phinsinéir isteach ar an bpinsean go dtí an lá a dháiltear airgead air. Dúirt sé go bhfuil gach Teachta sa Teach ciaptha, cráite ag na sean-phinsinéirí ag teacht chuige is ag eighleamh an pinsean fháil dóibh. Is minic a thárlaíonn sé, áfach, gurab iad na dlíodóirí is cúis leis an mhoill. Nuair a theastaíonn ó shean-phinsinéir pé gustal nó gabháltas a bhíonn aige a thúirt dá mhac nó dá iníon is minic a thógann sé breis agus sé mhí sul a chríochnaíonn an dlíodóir an teideal a chuirfeadh ar a chumas an pinsean d'fháil.

Dúirt sé linn freisin go mbíonn moill an-fhada sul a bhfaigheann daoine a thógann tigh nua, a leasaíonn seantigh pingin ar bith ón Rialtas. Buíochas le Dia ní bhíonn an scéal amhlaidh i gContae an Chláir ach ar aon chuma is annamh muintir an Chláir ag cannrán faoi chúrsaí den tsaghas sin.

Ba bhrón leis an Teachta O'Donnell go bhfuil cosc le smuglaeracht de bhrí gur cuireadh cáin ro-throm ar uisce beatha, ar tobac agus ar toitíní agus rudaí mar sin. Dúirt sé linn go gcuireann na cánacha sin cosc leis na coigríochaigh, leis na rúcaigh a thagann ar saoire chugainn. An é atá uaidh go mbeadh na rudaí sin saor ó cháin d'fhonn na slóite do mhealladh isteach chugainn? Ba bhaol dá leantaí é sin go n-íosfaidis ar fad sinn.

D'imig sé ón smuglaeracht go toghachán an Uachtaráin. Ba chreach leis ná raibh Fianna Fáil ag dul sa coimhlint le Fine Gael ag plé cúrsaí cánach agus rialtais i ngach paróiste ar fud na tíre. Tá a fhios ag na daoine go léir cad tá i dtreis sa toghachán agus táim cinnte nuair a thiocfaidh an chéad lá Mheitheamh go gcuirfidh siad a dtuairimí in iúl trína gcuid vótaí. Cá tairbhe a rinne an clampar agus an cáineadh atá ar siúl ag Fine Gael don iarrthóir atá acu féin agus don tír ar fad? Is olc an nós é bheith i gcónaí ag iarraidh cur ina luí ar chách go bhfuil an tír seo briste, brúite. Sin a bhfuil le rá agam.

Mr. Harte

I feel that at a time like this many aspects of the economic situation of the country could be examined. In examining these aspects, I am afraid the present Government must stand and accept full responsibility for the desperate financial situation this country is in, the situation in which businessmen and industries find themselves and, particularly, in which the farming community find themselves.

It is well to remember that, long before I was born, a certain course was set in Irish history by Irishmen, despite what the previous speaker has said. Just as true an Irishman can speak the language of an alien and he does not and should not be classed as a second-class Irishman if he does not speak or has not been taught the Irish language by his mother.

An Leas-Cheann Comhairle

Surely the question of the Irish language does not arise on the Finance Bill?

Mr. Harte

It may not; I deviated only to prove my point. The people who may not have spoken this language as fluently as Deputy Ó Ceallaigh from Clare in the 1920s were equally as good Irishmen as the Irishmen who could speak it fluently and had Ireland as close to their hearts as the people who spoke it fluently.

Seán Ó Ceallaigh

Ní raibh mé ag tagairt do dhaoine nach raibh i ndan Gaeilge a labhairt.

Mr. Harte

These people set about building a State and they built a Civil Service, an Army, a police force. They laid the solid foundations of this State. It is only right to remember these men, to remember that when they handed over government to another Party, the State was free of national debt, despite the fact that during those ten years as a new State, they had to fight and combat a Civil War which cost this country £30 million. The present national debt is £714 million, which represents, on a quick calculation, an approximate deficit of £20 million per year in the past 35 years, during which the country's affairs were controlled generally by the Party at present in Government.

During all that time we had the different leaders and the different prominent spokesmen of that Party telling us of the great prosperity the Fianna Fáil Party could and were offering this country. Very often when I see a particular programme on television I compare the artistes with the present Fianna Fáil Government—the Beverly Hillbillies living in a make-believe world. That is what Fianna Fáil have been doing—leading the Irish people into believing, in the past seven years, that they have been living in a world of make-believe.

Less than 18 months ago their slogans were: "Let Lemass Lead On; The Big Step Forward; The Best has yet to Come; Do not Change Horses in Mid-stream; Keep the Wheels of Industry Turning; Vote Fianna Fáil and Protect your Job". What has happened in the past 18 months? Has it been such as made Deputy Sweetman make a bitter attack on their programme this morning; has it been because of what Deputy O'Donnell has just said, or is it because they have been making the Irish people believe that they have been living in a world of make-believe, just like the Beverly Hillbillies? That is what Fianna Fáil are like—playacting at the expense of the Irish ratepayers and taxpayers.

Deputy Ó Ceallaigh may get up and I admire him for having such nice Irish; indeed, I support him——

Seán Ó Ceallaigh

Why then did the Deputy object to my speaking in Irish?

Mr. Harte

I have not objected; in fact, I admire Deputy Ó Ceallaigh for his fluency in the language, but speaking the Irish language will not feed the hungry children in the constituency of North-East Donegal or build houses for them.

An Leas-Cheann Comhairle

The question of the Irish language is not open for debate on the Finance Bill.

Mr. Harte

I submit to your ruling, but if we could get our two feet on the ground and stop all this ballyhoo and nonsense——

Seán Ó Ceallaigh

Is it nonsense to speak the Irish language?

Mr. Harte

When Deputy Ó Ceallaigh was speaking, I did not interrupt him but, if he wishes to continue this interruption, I will combat him.

The present Government have lost the confidence of the Irish people. Any other time they got themselves into a corner by some freak circumstances, by hook or by crook, they could manoeuvre themselves out of that position by bribery in many directions. I suppose it is hard to prove a statement like that but let us take just one point.

Not so long ago when the turnover tax was introduced by the Minister's predecessor, the Government were confronted with two by-elections. One they refused to contest in the city of Cork, and the other they were forced to contest in Kildare. A few months later they elected to contest the by-election in Cork with the by-election in Kildare. Deputies do not need to be reminded by me of what took place in the three or four weeks immediately before those two by-elections. The Taoiseach stated—and is on the records of this House as having said— that he did not mind paying a premium for a good deal, that he did not mind giving the workers an increase of 12 per cent, that he did not mind giving the judiciary £1,500 a year on top of their £4,500 a year, because it was all part of the cake of prosperity, and was in his words, a premium for a good deal.

Was it a good deal? If it was, what is the reason for all the strikes we have today? Why are the banks closed? Why have certain workers in the ESB found it necessary to put the gun to the head of the Government? Why is it necessary for farmers to come up here to be treated like convicts when they protest in the only manner left to them to protest? Was it because the Taoiseach had a good deal in 1964, or was it because the Taoiseach was more anxious to buy the votes of the people of Kildare and Cork to win those by-elections? I do not think I should have to answer that question. The answer is all too obvious.

As I was saying earlier on, when certain people prominent in Irish life set about building the nation during the Twenties, they encountered certain difficulties. They handed over a nation free of national debt. Our national debt has now reached the astronomical heights of £714 million. Is that progress? Was it not right that these men, believing in their convictions, advocated that certain policies should be strictly adhered to—policies which at that time appeared to be very unpopular? Some of them gave their lives in defence of those policies. The only argument against them was high national spirit and patriotism of a kind which was popular in those days. That was the only alternative policy.

When the Fianna Fáil Government took over the reins in 1932, one of the major issues was a divided Ireland. I was born within 200 yards of the Border. Most of my schoolboy friends lived in the Six Counties. Most of the people I grew up with were from the Six Counties. I suppose if I met some people in Dublin who live in Tyrone and we were both asked where we came from, we would probably say spontaneously: "From the same place". In those days the Border was but a political inconvenience to both Nationalists and Unionists if I may be allowed so to describe the two sections of our community in the North of Ireland.

An Leas-Cheann Comhairle

I am at a loss to know how this is related to the Finance Bill. The question of the Border does not arise.

Mr. Harte

If you will bear with me, Sir——

An Leas-Cheann Comhairle

I have borne with the Deputy for a long time. The financial policy of the Government is the subject under debate, the question of taxation and expenditure.

Mr. Harte

With respect, I should be allowed to develop my argument, and that is what I am doing. When this Government took office in 1932, the Border was but a political inconvenience. The policies of the Government Party were so blinded, in those days, by promises of national unity, of labhair Gaeilge, and all things anti-British that brought them to power, that the first move of the then Taoiseach was to refuse to pay the land annuities. The British Government retaliated by saying: "You refuse to pay the land annuities. We will put an embargo on your agricultural produce and exports to Great Britain." At that moment the Border was established as an economic Border. No longer was it but a political inconvenience to our people. It was established beyond all doubt. One of the things which brought the Fianna Fáil Government to power was the promise of the unification of this country but they established the division more firmly.

An Leas-Cheann Comhairle

That question cannot be discussed on the Finance Bill. The Deputy must come to the Bill before the House. If he does not, I will ask him to resume his seat. The Chair has been very patient with Deputy Harte. He has referred only briefly to the Bill before the House. Most of the things he has mentioned are outside the scope of the debate on this Bill.

Mr. Harte

I do not want to dispute your ruling, but I am pointing out to the House the main theme of the Government Party. I may say that I resent these interruptions. I should be allowed to make my case the same as Government Deputies.

An Leas-Cheann Comhairle

Government Deputies were allowed to make their case if it was relevant——

Mr. Harte

We had Deputy Ó Ceallaigh talking about anything but finance.

An Leas-Cheann Comhairle

Deputy Ó Ceallaigh referred to finance——

Mr. Harte

About twice. I am going back over this, lest some of my age group might forget certain things.

An Leas-Cheann Comhairle

That does not arise. What happened 40 years ago does not arise.

Mr. Harte

I contend that I am in order in discussing this.

An Leas-Cheann Comhairle

The Deputy is not, and if he persists, he will resume his seat.

Mr. Harte

I do not wish to cause any friction in the House. Our relations are harmonious, I hope, and will remain so, but I still contend that I should be allowed to make this argument.

An Leas-Cheann Comhairle

The question before the House is taxation and expenditure and the financial policy of the Government now, but not 40 years ago.

Mr. Harte

The financial policy of the Government has changed in the past two years. That is the point I was going to make, if you would bear with me.

An Leas-Cheann Comhairle

The Chair has borne with the Deputy for a long time and he has not come to financial policy.

Mr. Harte

I recognise that it is difficult for you to listen to this.

An Leas-Cheann Comhairle

It is not difficult for me to listen to, but the rules of order prevent the Deputy from talking about everything under the sun except the Bill.

Mr. Harte

If the rules of order prevent me, the same rules of order should have prevented Deputy Ó Ceallaigh, the Fianna Fáil Deputy from Clare.

An Leas-Cheann Comhairle

Deputy Ó Ceallaigh was brief and in order.

Mr. Harte

I submit to your ruling, Sir, under very strong protest. I may say that I will deal with this matter on another occasion. Since those days which the Leas-Cheann Comhairle does not wish me to refer to, the Government have stayed continually on a wrong course, so much so that they now find themselves in such a financial mess that the Minister for Local Government has promised Donegal County Council £8,000 to lend to people who might want to build houses for themselves in this year 1966-67. He has promised £36,000 to Donegal County Council to build houses themselves. He has promised £1,000 to Letterkenny, the largest town in the county. It would not clean the spittings off the houses.

An Leas-Cheann Comhairle

This is a matter for the Estimate.

Mr. Harte

The money is not being provided to the Donegal County Council.

An Leas-Cheann Comhairle

This is a matter for the Estimate. Donegal County Council may not be discussed on the Finance Bill.

Mr. Harte

You, a Leas-Cheann Comhairle, are chairman of the General Purposes Committee of Donegal County Council, of which I am also a member. You know this to be quite true. The manager of Donegal County Council now tells us that no houses will be built. No houses will be built in Ramelton, Carndonagh, Moville, Castlefin or any other village in the county. The only houses to be built in that county in the coming year are 14 SI cottages. Ten of those will be built in Stranorlar. The brother of the Minister for Local Government insists, to save face, that certain houses coming into the category of small farm houses will be built in the Lifford area.

An Leas-Cheann Comhairle

I am sorry to interrupt the Deputy but a detailed discussion of the affairs of Donegal or any other county is not relevant on the Finance Bill. Those are matters for the Estimate and not for the Finance Bill before the House.

Mr. Harte

I cannot understand why you are so harsh in pulling me to order when every other Deputy has been allowed to go into detail.

An Leas-Cheann Comhairle

They are not allowed to go into detail.

Mr. Harte

Deputy Corry was allowed to go into detail.

An Leas-Cheann Comhairle

The Deputy should not argue with the Chair. I am pointing out to him that a detailed discussion with regard to housing in Donegal or any other county is out of order. If the Deputy proceeds in that way, I will have to ask him to resume his seat. Those rules apply to every Deputy.

Mr. Harte

I do not dispute the ruling of the Chair. If this applies to me, it should apply to every Deputy. I heard Deputy Corry talking about buying socks in a Grafton Street store.

An Leas-Cheann Comhairle

Deputy Corry has not intervened in the Finance Bill which is before the House at the moment.

Mr. Harte

Some weeks ago he spoke on the same subject. I feel the state of the country is such that even the Special Employment Schemes have practically folded up.

An Leas-Cheann Comhairle

That is another matter for the Estimate.

Mr. Harte

In case other Deputies find themselves in the same confusion in which I find myself at the moment, would the Leas-Cheann Comhairle say what is in order on the Finance Bill?

An Leas-Cheann Comhairle

The question of taxation and the question of expenditure generally, but not in detail, are in order. The Deputy is going into detail.

Mr. Harte

The Special Employment Schemes now find themselves about to fold up. This is what is happening in Donegal.

An Leas-Cheann Comhairle

This is a matter for the relevant Estimate.

Mr. Harte

I feel the Special Employment Schemes are folding up. I am glad the Parliamentary Secretary to the Minister for Finance is in the House because during recent weeks certain very pertinent questions have been addressed to him by Members of both the Labour Party and the Fine Gael Party. The Parliamentary Secretary has denied that there is any slowing up of expenditure by the Special Employment Schemes Office. He is nodding his head now in consent.

Mr. J. Gibbons

The questions were replied to accurately and in detail.

Mr. Harte

I do not doubt that and I do not doubt the ability of the Parliamentary Secretary to use the English language to take himself out of a corner. I would like the Parliamentary Secretary to come down to my constituency, or better still, I would like him to go to the constituency of the Leas-Cheann Comhairle and tell some of the people at the cumainn there that there is no money being spent by the Special Employment Schemes Office. I hope he will be as successful at the meetings at Glenfin and other places in the Leas-Cheann Comhairle's constituency as he is in this House. He gets more attention here in Dáil Éireann than he would at some of those Fianna Fáil meetings.

Mr. J. Gibbons

More money was spent by the Special Employment Schemes Office last year than ever before.

Mr. Harte

Would the Parliamentary Secretary tell me how much of it was spent in Donegal? It is a cinderella county as far as the Parliamentary Secretary is concerned.

Mr. J. Gibbons

It never has been. It has always got special treatment.

Mr. Harte

There were a lot of promises made by the Minister for Local Government in my constituency before the last general election about the cleaning of drains and small rivers but nothing has been done since.

Mr. J. Gibbons

A considerable amount of work is being done in Donegal.

Mr. Harte

I would be obliged if the Parliamentary Secretary would come down to my constituency and see for himself.

Mr. J. Gibbons

The Estimate will be up before the House shortly and I will tell the Deputy all then.

Mr. Harte

I will listen attentively. I can assure the Parliamentary Secretary I will listen more attentively than some members of the Fianna Fáil cumainn listen to some of his colleagues in Donegal. This will be evident when the election takes place on 1st June. I feel, despite what the Parliamentary Secretary has said, that the Office of Public Works has folded up. This is again because of the credit squeeze and because of the bad form of taxation which the Government have initiated and brought in. One of the acid tests of any country's prosperity is not the success of the television programmes, not the success of the propaganda in a particular national newspaper, not how well Ministers make speeches at functions throughout the entire country and not here where they should make them, in Dáil Éireann. The acid test, in my opinion, is the population.

It is well to know that when this country got its independence in 1922 the population was approximately 3¾ millions. The population of the Six Counties was about 1½ million, between 1¼ and 1½ million. The population of the Six Counties has remained static in the past 45 years, whereas the population of this part of the country has fallen rapidly since 1932. I emphasise the word "rapidly". Those are not my figures. They are the figures issued by the Census of Population, which is the responsibility of the Office of the Taoiseach. If the population of a particular section of this country, namely, the 26 Counties or the Republic of Ireland, has fallen rapidly, it is not because fathers or sons wanted to emigrate. It is not because fathers wanted their families to grow up in a foreign land. It is not because we chased them as a people; it is because as a Government you chased them.

This Government have failed to provide a means by which people could earn a decent living in this country. They have failed to build houses so that people could live in decent housing conditions. They have failed to provide social services which would give the poorer sections of our society some form of confidence and protection in their older years. The Government have failed to honour the promises made by the first Government led by a Fianna Fáil Taoiseach, even the promise to reunite the country.

It has been my duty by way of Parliamentary Question to try to clarify the position, but I have found that the Government Party, who boasted in the past of their readiness to abolish the Border, are the only people at the moment who keep rigid control of cross-Border traffic. I have to cross the Border every day of the week and every week on my way home from Dublin and I should like to stress one point for the benefit of people unfamiliar with it—most Fianna Fáil back-benchers come into that category. If a person from Donegal travels to the capital city of this country and if his departure homeward is delayed to a late hour, unless he has made arrangements with the Irish customs authorities, he will not be allowed to travel through customs on the night——

An Ceann Comhairle

The Deputy knows, of course, that we are discussing the Finance Bill.

Mr. Harte

I am referring to taxation. Is this collection of 2/- not taxation?

An Ceann Comhairle

It has no relevance whatever to the Finance Bill.

Mr. Harte

I submit to your ruling, but I should like to say that the British customs authorities allow free travel across the Border at all hours of the day and night and I do not think it is too much to expect that the Government of this part of the country——

An Ceann Comhairle

I hope the Deputy will not continue to cross the border of relevance by prolonging this discussion.

Mr. Harte

Many people find it necessary to cross the Border to buy cheaper petrol and I think that has relevance. We find petrol is 8d to 10d per gallon dearer in Donegal than in Tyrone or Derry and people are compelled to cross the Border, not because they wish to evade taxation on this side but because they find it necessary to buy cheaper petrol so that they can live. Less than eight years ago, immediately before the Suez crisis, the trend was in the opposite direction: people from the Six Counties came across to the petrol-filling stations convenient to the Border and queued there to buy cheaper petrol. Why has the position changed?

On the evening of the Budget, the Taoiseach indicated to the House that though the price of petrol was to be increased here by 4d a gallon, in all probability petrol would be increased in the British Budget as well. That has not happened, with the result that the price of petrol now is 8d to 10d per gallon dearer in the Twenty-Six Counties of Ireland than in the Six Counties. It means that the average person driving the average car subscribes between 10/- and 17/6 per week in additional taxation more than his counterpart in the Six Counties of Ireland.

Not alone did the Minister increase the price of petrol but he increased the road tax. A 14 horse power car, until recently taxed at £26, has had its tax increased to £32 10s. Od. per year. The same car can be taxed in the Six Counties for £17 10s. Od. How does the Minister imagine this type of taxation in the Republic will help workers to compete with fellow-workers who earn higher wages in the Six Counties? I know the Minister is a Corkman and that he finds it very hard to appreciate the point I am making but I assure him I am in close proximity to the Border and know there is a shuttling of workers across the Border, particularly those who wish to carry out small contracts. Small contractors in the Donegal side now find it impossible to compete with their opposite numbers in the Six Counties. I realise the Minister inherited a poor book-keeping system in which there was more red ink than black ink. Like Deputy P. O'Donnell, I should like to pay just respect to the Minister for Finance. He is a fairminded man who recognises the truth. Unlike some of his colleagues, he admits the truth. When the Minister for Justice, for example, denies a credit squeeze——

An Ceann Comhairle

We are not discussing the relative merits of Ministers. We are dealing with the Finance Bill.

Mr. Harte

——yet finds it necessary to get rid of the Garda Band——

An Ceann Comhairle

I have told the Deputy this has nothing to do with the Bill.

Mr. Harte

The reliefs in this Budget are not anything to be proud of. I note that Government Deputies are most reluctant to speak about them at local cumainn meetings. The relief given to old age pensioners is a scandalous effort on the part of a Government who purport to be Christians, to be people aware of the situation in the country, aware of the dire need of certain sections. They boast of the fact that they take the necessary steps to adjust taxation to allow these people a certain proportion of the taxation to alleviate their burden. I know, Sir, of many cases in my constituency, and I have said it in the House before, of people, particularly old people, who go to bed early to keep themselves warm. They cannot afford to buy fuel and they are in all probability to weak or sick to go out and collect sticks or timber to light a fire. I know of families——

An Ceann Comhairle

I am sorry to interrupt the Deputy again. I do not see what relevancy this has to the Finance Bill.

Mr. Harte

It has relevance to the allowances to recipients of social welfare benefits.

An Ceann Comhairle

Home assistance, blind pensions, and so on, have nothing whatever to do with the Finance Bill. It is no use arguing.

Mr. Harte

I do not wish to argue with the Chair. I want to ask the Chair, on a point of information, am I not allowed to point out to the Government their lack of foresight in not having more benefits for these people?

An Ceann Comhairle

The Deputy is entitled to point anything out to the Government that is relevant to this Bill, nothing else.

Mr. Harte

I would like members of the Government to be as loud in their praise, or in their condemnation, of this Finance Bill as they have been in their praise of other things in the recent past. As I said at the outset, it is not long since we heard the slogans of Fianna Fáil speakers: "Let Lemass Lead On"; "The Best is yet to Come"; "Do not change Horses in Midstream."

These were all the slogans painted on the roads of rural Ireland. These were all the slogans slapped up in poster form by people who then believed what they were being told by the Fianna Fáil leaders. What has happened? Where will all this lead us? Has the Taoiseach been misled or did he mislead the people? If he has misled the people, then he comes into a category in which I would not like to be classed If he has been misled, then he is a simple fool and should not be Taoiseach. I do not know which it is but this I do know: many people are disappointed with the performance of this Government; many people are wondering when the Government will allow more money for housing.

I know, Sir, that many people in my constituency are most anxious that the Minister for Local Government should tell us when more money will be available so that the county council can build more houses.

An Ceann Comhairle

If the Deputy does not get down to the matter before the House, I shall have to ask him to be seated.

Mr. Harte

I shall conclude by saying that the cost of running this country has increased from £106 million in 1956 to £262 million in 1966. All the programmes promised by the Government have, in my opinion, collapsed and failed. It remains now for the Taoiseach to do the honourable thing and if he was misled, admit it to the people. If he was not misled, then he should be honest with the people and admit that he misled them.

Mr. Jones

The Finance Bill is the instrument by which the Minister raises the necessary finances for the services he mentioned. These services have to be carried on, and the methods of raising taxation which the Minister mentioned in his Budget Statement are somewhat in doubt because of his various pronouncements in regard to the amount of money which will be needed for the coming year and the estimates which he made at Budget time and which he said were on a strict and tight basis. He was not budgeting for surpluses; he was just budgeting for a balance.

In the meantime, we have had various indications and ministerial pronouncements that it might be necessary—and the "might" has changed to "will"—to meet the kind of contemplated expenditure by further taxation. This is the situation in which this Finance Bill is being discussed. The Minister said at Budget time that his estimates were on a tight rein, providing just exactly what he needed to meet his requirements without having anything available for future commitments or for any contingencies that might arise. Already, several contingencies have arisen, several contingencies for which the Minister did not make provision and for which he will evidently have to make provision.

The recent agitation in regard to agricultural conditions in the country certainly puts the obligation on the Minister of finding the extra money. Equally so, the provisions made immediately after Budget time by which pay rises were given to certain sections of the public service, and evidently one for which the Minister has not budgeted, were the kind of benefits for which provision was not made in the Budget. Perhaps the Minister hopes that in the meantime, having had another look at it and with the provisions contained in this Finance Bill, he will be able to give us further comfort regarding the financial situation in his reply to this debate.

One of the things that agitate a number of minds at the present time is the apparent lack of money for the various services for which the Minister is responsible. The Minister is the custodian of the moneys collected by way of taxation and it is through the disbursing of this money through the Department of Finance to the various other Ministries that he is in the position either to supply the money to the Departments to carry on or to curtail their activities.

At the present time in so far as the Department of Local Government is concerned, on which we had a question yesterday, there seems to have been a curtailment by the Department of Finance in regard to the granting of money to the Department of Local Government for the servicing of local authority services. One of the matters agitating Deputies and the people generally is the question of housing. When the Minister states that there is not as much money this year as there was last year, it creates the impression that something has gone wrong somewhere, either that the Minister is not responsible or the Department of Finance is not able to provide the moneys needed to carry out the housing programme. The Minister for Local Government is well aware of the situation. Housing projects put before his Department have been severely cut. Local authorities have been so advised. They cannot carry out their housing programmes because of lack of finance. This is a grave disappointment to many.

The Minister is being realistic about the situation in which he finds himself, but this is a situation for which the public were not prepared. It does no good to pretend we can have the same kind of housing programme this year as we had last year. In actual fact, the payment of grants was delayed last year and the moneys provided this year have been earmarked for works already carried out. The housing authority in my area planned something like £140,000 worth of houses this year. Now they will not be able to carry out that plan. They will be able to do only about one-third of their programme.

Again, there has been a curtailment of the moneys provided under the SDA. That will mean a decline in the private building sector and people who would normally provide their own houses will now have to postpone this operation. For those who had already entered into certain commitments, this is a very grave disappointment indeed. The information with regard to supplementary loans is very misleading and I do not think local authorities have told the public as clearly as they should what the position is. There is now a kind of means test in operation in relation to supplementary grants. That is something people do not understand. It is something that requires clarification.

The Minister has found it necessary to take a proportion of the Road Fund for the purposes of general revenue. This is being reflected in the information now filtering down to local authorities, so far as main and county roads and, indeed, sanitary services are concerned. What this will mean in terms of employment at local level, in terms of delay in schemes of improvement in regard to both main and county roads and in regard to the layout of local authority housing cannot, at this stage, be calculated. I am sure the Minister is aware that any interruption of this kind cannot be picked up on immediately. This kind of delay begets delay. This kind of slowing down can lead to a complete stoppage. In the papers today, the Building Federation refer to the difficulties being encountered in the building trade at the moment. That is something which has brought home the true situation to many people. Nothing brings home so much to people what the situation really is as personal involvement in the situation.

With regard to income tax, the standard rate has been increased to 7/- in the £. Nothing has been done in regard to allowances. These have remained static for a very long period and only those who are very familiar with income tax legislation know how long it is since personal allowances were last revised. The Minister has increased the allowance for a child from £120 to £150. I welcome that. That is something for which people will be greateful. It is a gesture in the right direction. But it does not meet in any degree the increased cost of maintaining children beyond the age of 11 at school. The emphasis today is on more education and I am sure the Minister will be the first to agree that an allowance of £150, while it is something, falls far short of the kind of recognition required of the problems parents have who send their children to secondary school and to university.

The allowances for a married man are not in keeping with the depreciatio tion in the value of money and the rising cost of living. In this connection, widowers feel very much aggrieved. They have family commitments. They are deprived of their partners and they must employ people to replace those partners. The allowance for a house-keeper is really derisory. This is a matter that calls for the Minister's attention and I am disappointed — this matter has been brought to his attention on previous occasions — that he has not done something to give some further relief to this section of our community. These allowances call for revision. Since the Minister is anxious to be realistic in other directions, is it too much to ask that he should introduce a little realism into his approach in this particular matter? If we are to be realistic in regard to the necessity for increased taxation and for increased provision for various sections of the community then the Minister did not see fit to take this factor into account so far as these allowances are concerned. We cannot but be aware of the anomaly which exists at present in relation to the personal allowance and particularly the married person's allowance.

Debate adjourned.