Dáil Éireann díospóireacht -
Tuesday, 24 May 1966

Vol. 222 No. 13

Finance Bill, 1966: Second Stage (Resumed).

Debate resumed on the following motion:

That the Bill be now read a Second Time.

Mr. O'Leary

I remarked on the last occasion that if the Government were sincere in their attempts to implement or bring towards implementation the idea of an incomes policy, the present legal formation of companies would need to be revised and their taxability simplified. I said it was important to be able to set out in a clear fashion in advance what will be the tax situation in the context of any company. I spoke about the necessity for clearing up the problem between dividends retained and those ploughed back by individual companies in reinvestment policies.

Other Deputies have taken advantage of this occasion to refer to the number of industrial disputes throughout the country, and the Finance Bill brings us back more and more to the debate which has more or less been taking up the time of the House in recent months on the economic position of the country. Other Deputies referred to the number of industrial disputes and brought forward different proposals to end this unhappy situation. The attitude of my Party is that these disputes owe their origin to one basic cause, the soaring cost of living and the discontent felt by the majority of workers at the low standard of living.

People may become interested during the current election campaign and conjectures may be made about the votes to be cast for either candidate in the election. Throughout the course of the year, men and women throughout the country have been voting on their feet for an improved standard of living and I suggest the Government had better take notice of this realistic election that has been going on throughout the country throughout the year, even among their own supporters who have voted on their feet in different disputes. They have indicated their discontent in no uncertain fashion.

There are no frivolous reasons for their doing this. They do not get extra income during a strike. Strikes only bring hardship to those on strike and to their families. One of the most significant speeches on this situation was made last Sunday by the President of the Irish Congress of Trade Unions when he directed attention to the revolution that is proceeding which, he said, was inspired by the outlook of James Connolly which, apparently, sought a higher standard of living, an outlook that will brook no delay in the achievement of that standard of living. Different proposals have been brought forward and we shall probably hear more during this session about ending this spate of strikes and disputes.

People have spoken in favour of a stronger legalised framework that would bring the law into present industrial relations. My Party have warned against this development and have indicated that we see no easy solution to the situation by bringing a judicial concept into employer-employee relationships. Last year the record in the United States and Canada, especially Canada where the law has been brought in, was far more serious than in this country. Instead of looking for global solutions to this problem, it would be far more constructive to look for improvement in day-to-day negotiations at the level of individual firms.

We have asked for the introduction of a recognised grievance procedure in all firms. It is still a difficult matter in many firms to bring a complaint before the foreman. Either he is not available or there is no machinery for doing it. Last year a great and continuing proportion of our disputes were concerned with conditions of work — conditions in the sphere of personal relations with managements. A proper grievance procedure would remedy this. We in the Labour Party consider that possibly the greatest contribution the Government can make to more peaceful industrial relations would be through their own economic planning — to generate more economic activity. We consider that work in this direction is far more valuable in the long run than bringing in short-time panic measures to this House to coerce the trade union movement in its wage negotiations.

We are extremely disappointed to see that at this point there has been no forward move, or declared policy or aim, by the Government in its declared favouring of an incomes policy. I mentioned in the debate here recently that at last year's Irish Congress of Trade Unions conference a resolution was passed calling on the Government to bring in an incomes policy. They had, if you recall, based their main argument on the need to improve the position of the lower-paid worker, and called upon the Government to bring in realistic policies and suggestions in the area of incomes. I am afraid that at its conference in July a situation of no progress will have to be reported on the previous intention in regard to an incomes policy.

It is regrettable because throughout this year, more so than at any other period in the life of this Government, people are talking about the different income groups. There is far more information available now of the actual incomes position of different groups in our community. Since this position obtains, practically every man and woman in the State, and wage earners in general, are interested in this idea at the moment, and it would have helped the debate and certainly would have helped the Government in giving serious advice on our economic situation, had they advanced a little on the road to the implementation of an incomes policy.

This Government labour under the extreme disadvantage of presiding over an economic position that has become increasingly serious in that its messages seem to be one-sided. They seem to be becoming more and more an employers' Government, a big business Government. Since they labour under this disadvantage, it would have helped them had they spelled out what exactly it would mean for the company director just as much as the wage-earner, the manual worker.

The Government bear the major responsibility. The Second Programme for Economic Expansion never shirked its major responsibility in saying the Government had that responsibility. It shares major responsibility in the actual achievement of the targets under the Second Programme. None of the reports that have come out at intervals have denied this obligation. A modern Government does not seek to evade their responsibility. Yet, on the acid test of employment figures, there is a really serious case now for an investigation of the entire Programme. From the employment figures of last February, we are 34,000 down. This, therefore, means that one of the main objectives of the Second Programme is now in ruins and it will take more than economic genius and more than the economic miracles this Government are capable of to make up for these lost targets before 1970.

Productivity has dropped but I think the more serious thing is that employment has dropped and there does not seem to be any possibility of making up this drop. One can choose between selective periods and between one year and another and say that when that Government were in office more people were in employment but now that this Government are in office there are fewer people in employment.

Leaving all political charges aside, we can see that over the past few years there has been a drop. This cannot but help to make the present industrial impasse worse. We cannot expect the agreement of all trade union workers to increased productivity plans if in fact they see that such increased productivity puts them out of a job. No European country that I know has in fact sought or been able to get the comprehensive agreement of the trade union sectors in their country against a pattern of falling employment, and, indeed, any kind of bubble prosperity that occurs against the background of falling employment is not a secure basis for looking for trade union cooperation in the future. At the Trade Union Conference this year, I have no doubt this will be one of the charges and accusations against the present Government. One particular aspect in our country is that employment has been dropping during recent years and we are told that our economy has to go forward at a predetermined rate.

One considers it a strange mistake of emphasis to find some Deputies concentrating all their fire on the days lost through strikes. They should consider the number of man hours lost to the country in extra employment by those who are out of work through no fault of their own. They should consider, again, that the number of man hours lost through industrial illness, or industrial injuries, is far in excess of any loss incurred through industrial disputes.

In this year of industrial relations, I would direct the Government's attention to improving factory legislation which is in great need of revision and modernisation. The present factory law is completely out of touch with the present factory situation. We have many complaints from the trade union movement about factory inspectors who work in collusion.

An Ceann Comhairle

I do not think this is relative to the Finance Bill.

Mr. O'Leary

I am only referring to the general economic situation of which industrial relations form an important part.

An Ceann Comhairle

Alterations in the Factory Acts are irrelevant.

Mr. O'Leary

With all due respect, in a helpful manner, I was directing the Government's attention to an area where their energies would be better exploited.

An Ceann Comhairle

I am concerned with relevant matters only.

Mr. O'Leary

This I consider a relevant matter to industrial progress in the country.

An Ceann Comhairle

I am sure every Deputy would.

Mr. O'Leary

Yes, I am sure, but I do not intend to dwell over long on it but we are aware of complaints by industrial workers that factory inspection does not take place in an impartial fashion and that factory inspectors work——

An Ceann Comhairle

I cannot allow that discussion to proceed.

Mr. O'Leary

This is a serious situation. During the Committee Stage of this Bill, we will have a greater opportunity to go into some of the problems arising out of company law, and we should like the Government to consider our representations at this stage — they are not a drastic formulation at the moment — and as I said, to get a surtax direction as it is open to debate whether it is legal or not. The British Labour Government are undertaking the task in Britain of bringing company law up to the 1960s and 1970s. We will need to do it here also. I know the Government are getting their best legislation from Britain and I think that admittedly they may take the less labour sections of the Labour Government's legislation.

Mr. J. Lynch

We are in advance of British company law here.

Mr. Booth

I feel disappointed in this debate so far, in that it has been used for a very general discussion on matters which are affected only indirectly by the Finance Bill. This is possibly due to the fact that the Bill is somewhat shorter than its immediate predecessor and so much easier to understand. I do feel that some Deputies here have tended to waste the valuable time of the House by going over the Budget debate again.

Deputy Sweetman did make some effort to discuss the Bill itself. I should like to refer in particular to one part of his speech on Wednesday last as set out at column 1893 of the Dáil debates. He was referring to section 17 of the Bill and he made certain comments on the fact that this section was entirely inspired by Deputy de Valera "aided and abetted, as well as I can remember, by Deputy Booth." I think Deputy Sweetman will probably remember, if he cares to make an effort, the discussion we had on the Finance Bill. The point which Deputy de Valera and I were trying to make was that while we did not at all like the taxation which was being introduced in respect of benefits passing to widows and children which had been provided by a very provident father, we felt that if this taxation were introduced at all, then all death benefits should be treated in a uniform fashion.

It was clear at that time that there were certain exceptions. Certain gratuities and death benefits were being excluded, not specifically and not openly, but nevertheless excluded. That was something neither Deputy de Valera nor I was happy about. We felt there must be justice done and that justice must be seen to be done. The fact that certain senior civil servants would not be affected seemed to us to leave a rather unpleasant smell. This was no reflection on the civil servants but it certainly put them in a very embarrassing position. It was for that reason we pleaded so strongly that, if the Minister was going to introduce this provision, it should be complete and uniform in all cases. Deputy Sweetman has done some further research and has drawn the attention of the House and the Minister to various other gratuities which will now be included under this provision. I have not been able to confirm that his facts are correct but I do not imagine he would have spoken as he did unless he had done very careful research. If his allegations are correct, that strengthens the case Deputy de Valera and I made originally on the 1965 Bill for a reconsideration of this whole matter.

This taxation was introduced in order to catch in the tax net the few who were practising tax evasion, possibly on a large scale. I do not believe that the number was large and, in that case, I am afraid the method used was somewhat akin to taking a sledgehammer to kill a fly. I believe a great many people who the Minister never intended should be affected are being affected. I trust the matter will be kept very carefully under review. I know that there has been retrospective provision made whereby increased tax-free allowances will be made in the case of widows and orphans. That is a big improvement and absolutely in line with the undertaking the Minister gave last year. I am very grateful to the Minister for this. I knew that, having given an explicit undertaking, he would carry out that undertaking strictly. I can well imagine that it must have needed considerable effort on his part to bulldoze this provision past the watchdogs of Revenue. I do not know whether there is any precedent for such retrospective allowances. Perhaps there are. This is a shining example, however, of a Minister who was himself doubtful about the wisdom of a provision, wished upon him to a certain extent in the peculiar circumstances of last year, doing the big thing by honouring his undertaking and giving retrospective relief. I am not sure that this is the answer and I hope that solicitors will keep this whole matter under very careful review and report either directly to the Minister or to some members of this House any cases of hardship that arise. I know that certain cases have arisen. I referred one case to the Minister. I believe that, if we can substantiate our suspicion that considerable injustice is being done and grave hardship is being caused by this provision, the Minister will act further in the matter.

In principle generally, I am still opposed to this taxation provision. It affects in particular the family of a young man who makes provident insurances to safeguard his widow and children in the event of his premature death. It is not in the public interest that such providence should be discouraged. The family of a young man who takes out really adequate insurance to provide for his dependants will still be severely penalised. I hope the Minister will keep that aspect under consideration and I hope that anyone who knows of such cases and can substantiate them will report them without delay.

I was disappointed at the lack of any provision for the purpose of amending Part VII of the 1965 Finance Act. That is the Part dealing with the taxation of capital profits arising from the development of land. This, I regard, as ill-considered taxation. I know perfectly well — we all do — the people the Revenue were trying to catch. They were trying to catch the speculative builder and developer, buying land and selling land purely as a speculation and, in this rather inflationary situation, making considerable profits in the process. There is something to be said for taxing the speculator but, once provision is made to tax genuine developers, there is grave danger, as we stressed last year, that we will make it more difficult to provide land for desirable development.

Cases have arisen in which wellmanaged estates have had to dispose of certain lands in order to pay death duties. The profits from the sales were remitted in toto to the Revenue. Claims are now being put in by Revenue for taxes arising from the increase in the value of the lands from the notional value a few years ago to the actual value in 1966. I have referred a particular case to the Minister. There is another case in relation to a very old charity in County Dublin which owned considerable property. Finding itself in straitened financial circumstances, the charity sold a considerable acreage to a builder purely for the purpose of keeping the charity going. Now a claim is being put forward by the inspector of taxes for tax arising from the sale of the lands for development. That is not what the Minister or the House wanted at all.

I believe that in one of the Scandinavian countries they have a somewhat similar provision for taxation but that, in that case, the provision specifies that tax will become payable only where land has been sold within ten years of the date of purchase. That, quite clearly, is a confirmation of what I said earlier, namely, that the person to be taxed is the speculator who is trying to get in and to get out quickly. Anyone who has land for ten years or more and subsequently disposes of it for development purposes should not in fact be taxed at all. The increased value of his land may be quite illusory and may be due entirely to the decreased value of money. The actual purchasing power which he will have by disposing of the lands this year may be almost exactly the same as a very much lesser sum ten years ago so that, in that case, no actual real profit arises.

I do know that it has been announced in the press that the Revenue Commissioners have now set up a separate office to deal with queries arising under Part VII of the 1965 Finance Act. I think this is very wise and I hope people will make use of that, in view of the Minister's renewed assurance that he will keep the operation of Part VII of the 1965 Act under review and that if it calls for reform then that reform will be retrospective. I think the attitude of the Minister here is a very wise one. I should have liked him to act more quickly but I think, on reconsideration, he is probably relying on his legal training and decided he will not make reform until he knows precisely what the problem is. I may have a fairly clear idea in my own mind as to certain cases which should be excluded but other cases may arise also. I think, therefore, it is probably wiser to defer the amendment of Part VII of the 1965 Act until we have, if not all, at least most of the facts before us. But, here again, this is something which deserves the greatest publicity. I hope that solicitors, in particular, will take their cases to the officers of the Revenue Commissioners, who have been set apart specially for this job, to work out their particular problems with them.

I still feel, however, that, unless Part VII is very radically reformed and revised, we may have a situation here similar to the situation which has arisen in the United Kingdom with the capital gains tax. Everyone is always anxious to see tax raised from people who are getting easy quick money and that is what is behind the capital gains tax in England. But the situation has now arisen there where it has been announced in the press and on the radio that the officials of the Inland Revenue in Great Britain have decided that this tax is "black" and that they will not handle it. The junior officials, who would normally examine these cases in the first place, have had to admit that they do not know what the provision really means: they do not know how to enforce this particular tax. They do know that it will have to go to their superiors for final elucidation and, so, they have said perfectly clearly: "We do not understand what this is all about and so we shall not touch it in the first place. Let the senior men deal with it". This can create a crisis in the whole taxation code. I feel exactly the same will happen in regard to this tax on land development. It was crudely drafted in the first place. It has caught a number of people whom it was never intended to catch. I think it is very doubtful whether it has really penalised any of the wicked speculators whom the Revenue had in mind because people who are indulging in that sort of activity have probably, by now, found some way around it. It is only the innocent who still flounder and get caught.

I appreciate very much that the Minister has already, this year, repeated his undertaking to keep Part VII of the 1965 Act under review and that, when reform is found to be necessary, he will make the reform retrospective. Generally speaking, I think this Bill is a tidy Bill. It is understandable and it is a great improvement on its predecessor. I believe that it reflects a new attitude, due to the fact that the Minister for Finance has now definitely taken charge. I must say that previous Ministers appeared to me to be the mouthpieces of the Revenue. Now, I feel that when the Minister makes his statement he is speaking for himself. He is making his own decisions and I think they are all the better for that.

I am grateful for the Bill in its present form. I am particularly grateful for the retrospective relief which has already been granted. I hope that Part VII of the 1965 Act will be reviewed and amended very drastically at an early date.

Mr. L'Estrange

The Finance Bill we are discussing here today seeks to extract from the Irish taxpayer an alltime record sum of over £262 million, despite the fact that the Taoiseach, when Leader of the Opposition in 1956, and also Deputy MacEntee, stated at that time and made the promise that if they were returned to power, they would not increase taxation. They have kept that promise to the Irish people by increasing taxation from £106 million, as it then stood, to £262 million today, an increase of £156 million. They have also borrowed over £400 million in the same period. At that time, when they were in opposition, they pointed out that, so far as taxation on certain items was concerned, they believed we had reached the point of diminishing returns. As far as loans and borrowing are concerned, this country now seems to have reached the end of the road and certainly to have reached the point of diminishing return.

I think it can be agreed by all that things are very bad in this country today. Things are definitely bad in Ireland because the Fianna Fáil Government have used taxation as a bribe and they have used it to buy the people's votes over the past six or seven years. Indeed, things are so bad in Ireland today that two eminent churchmen have had to speak out their minds in the past few days and to warn the people of Ireland of the frustration that exists today and of the national crisis, and indeed the anarchy, that lie ahead, unless the Government are prepared to govern or at least to give a lead.

Mr. J. Lynch

It is completely untrue to say that two eminent churchmen have said that. I do not know where the Deputy gets that kind of jargon.

Mr. L'Estrange

One of them said, as reported in the Irish Independent of Monday, 23rd May, 1966:

The country is in a rather bad way at the moment. Industrial unrest is widespread and there is a stirring among small farmers who find themselves being liquidated at the rate of 10,000 a year.

Mr. J. Lynch

Why not go on and see what they said about this Government, the good things?

Mr. L'Estrange

He went on to speak about the public debt of more than £700 million and the fact that we had come to the end of living by loan and that all in all there was a feeling of national frustration and national crisis such as there had not been since the 'thirties. He said that it was a dangerous period and that there would have to be an end to this situation right away. Another eminent churchman spoke a few days ago, and indeed after all the warnings issued, I think everybody knows that frustration stalks the land. There is no denying that Irish people are ground down with taxation, national and local, and as one of the eminent churchmen said, not since the 'thirties or, indeed one might say, since the days of the Economic War has there been — I want to say this to the Minister because I have been travelling through the country recently — such poverty as exists today among the small business people and small farmers.

The business people and farmers on whom the Government could, or should, depend to increase production in this difficult period are being crushed between increasing rates and taxation and soaring costs and, especially in the case of the small farmers, reduced prices. Perhaps people have become so accustomed to mounting taxation under Fianna Fáil that they have become like punch-drunk boxers and can absorb punishment without seeming to be affected by it. The Minister and the Government should realise they are very seriously affected, and like the boxers, the small farmers especially are losing ambition and initiative and, what is also very important, the competitive instinct. They have become mere animated punchbags for the twofisted attacks of rates and taxation. It can be truly said that the taxpayers are more battle scarred and are pumping out more blood than the British heavyweight, Cooper. The only difference is that Cooper was allowed to retire but the taxpayers must remain in the ring and endure the buffeting of our Cassius Clay, the present Minister for Finance.

The time has come when we should appeal to the Minister and the Government even if there is a Presidential election in the offing, to tell the people the truth and the whole truth. They are not being told it and have not been told it for the past 12 months. If they were they could overcome their difficulties. There have been difficulties in the past but the Governments took the people into their confidence and when important statements were made, they were made, as they should be, in this House. Even at this late hour, if the Government took the people into their confidence there would be hope for the nation. Even if the people had to be promised blood and sweat and tears and if the Government told them that is what faces them for the next couple of years, the people could gear themselves to meet their difficulties in the hard times ahead.

It is opportune to ask ourselves what has produced this situation. Even the Minister in his Budget asked that question to which there is only one answer: it was due to the deliberate inflationary policy of the Government since they took office. The Government seemed determined to pursue an openly inflationary policy. The evils that would flow from that policy were pointed out on this side of the House by Deputies Dillon, Sweetman, Cosgrave and O'Higgins and other speakers on numerous occasions but the Government disregarded their warnings. Deputy Dillon in the years 1964 and 1965 issued such warnings and told the Government about the dangers that lay ahead if they pursued the policy they were pursuing. These warnings went unheeded and the Government carried on, with the result that we are in our present plight.

On 30th October, 1964, Deputy Dillon according to the Irish Independent said that the present economic situation of the country was highly critical. As he pointed out to the Government on the debate on the adjournment in Dáil Éireann on July 1st, the inflationary trend in Great Britain could not long continue after the general election and that the post-election period in Great Britain would create new and formidable problems for this country. He said that our Government, apparently, had been taken by surprise by this development and they were entitled to a reasonable time to demonstrate what steps they proposed to take to meet the new situation but if, as he suspected, they had no plans to meet what could only be described as a crisis, it was high time for them to get out.

Not until July, 1965, did the Government take any action to deal with the situation. On 16 other occasions, Deputy Dillon warned the Government and we now have had an admission from no less a person than the Minister for Transport and Power, who on March 23rd said in this House that we had inflation in the country since 1962 and that inflation was a dirty word and it was time people came to realise that fact. If we had inflation since 1962, why did it take the Government three years to act? Surely they should have made up their minds earlier? Was it— I think it was—because they had two by-elections facing them and also a general election? And, of course, they were prepared to put the Party first and to hell with the country. That is what has brought our nation to the present state. The Government are prepared to use the people's money to buy votes to keep themselves in office.

If we want further proof of that, we can quote from the Irish Times of 12th March, 1966, when no less a person than Deputy MacEntee, who is also very vocal at present, in a letter in the Irish Times answered the question the Minister for Finance had asked: What had gone wrong with his Budget of the previous year? Deputy MacEntee pointed out that he had been Minister for Finance from 1932 to 1939 and again from 1951 to 1954 and said:

Outstanding among the chief culprits I place the economic astrologers and soothsayers who deluded our people with fantasies of the affluence which awaited them when they got to the end of the rainbow some years hence.

We are all aware that those who were responsible for that more than anybody else are the present members of the Fianna Fáil Party. They were the people who gave the impression of prosperity to the people at that time. Deputy MacEntee continued:

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—but it accelerated it enormously.

When Deputy MacEntee had all this knowledge, I wonder why he did not whisper into the ear of the Minister for Finance or of the Taoiseach and not allow the country to drift into the state in which it is today?

The same gentleman, Deputy Seán MacEntee, who was Minister for Finance for six or seven years, continued:

No less detrimental to the national interest than the foregoing have been those irresponsible politicians who demanded increased expenditure on virtually every public service while refusing to accept any share of the responsibility for paying for it.

That also includes many members of his own Party, as those of us who are on local authorities know quite well.

The accusation has been made against the Government that the country is heading towards anarchy. It is the Government's duty to govern. It is the Government's duty to control the economy, to balance all factors, one against another. It is the Government's duty to lead. That is what they have been elected for. There is no denying that they are not fulfilling their duty today. The Government are the only people who, at least, should know the facts and they should be able to provide against successions of boom and slump. The Government have failed to do their duty. They took a gambler's chance on our gaining admission to the Common Market to cover up all their faults and failures. They have failed in that. Then, of course, they made a Free Trade Agreement with Britain, under which the majority of the advantages are with Britain.

The more one looks at the sad history of the past few years, the more one realises the Government's responsibility, and their responsibility alone, for our present trouble, and the more one realises that it is the duty of the Government to take the Dáil and the people into their confidence. When the Government have statements to make about the financial situation, they should be made in this House. If that were done, there would be a chance of gaining the confidence and co-operation of the people, which are so vitally essential if the Government are to get out of the present crisis.

It is difficult for the Taoiseach and Ministers of the Government to explain to the people the reason for their somersault and for the Government's utter disregard for the sacredness of truth. We have been told in the House, as indeed we all know, that the dead hand of Fianna Fáil is falling on health, education, housing, the Garda Síochána Band. Yet, when we ask questions, particularly in regard to housing, we are told that there is money for this, that and the other, that there is ample money, that there was never more money. At the same time, those of us who are members of public bodies know that we have not one-half—in some cases we have only a little more than one-third—of the money to meet our present commitments.

There is an obligation on every political Party who seek office to tell the people the truth and not to mislead or to fool the people. They should tell the people how they would use power if it is entrusted to them. Things are bad here today and the Government are keeping the full truth from the people. There is one thing certain: their election deceit has been exposed for all and sundry to see.

We all know that a financial crisis exists in Ireland today, with all its evil results. The Taoiseach, Dr. Ryan and other members of the Government falsely denied the existence of a financial crisis before the general election. It is now revealed and officially acknowledged and is felt by all. Deputy Dillon could warn the Government over two years ago, one and a half years before that general election, that we were heading for a financial crisis.

We all know that Britain has her difficulties today but they are due, perhaps, to her huge commitments abroad. It cannot be denied that our difficulties are of our own Government's making. We all remember what the people on the far side of the House had to say about the financial crisis that existed in 1956, how they badgered the Government of that day. Unlike the position in 1956, when cattle were selling at £4 a cwt., our present difficulties are being experienced at a time when our exports are selling at a nearly all-time high, when cattle are fetching double the price obtainable in 1956 and 1957. In 1956 and 1957, cattle were selling at £4 and £4.10.0 a cwt. Today they are selling at £9, £9.10.0 and in some cases £10 a cwt. We remember all the questions the present Minister for Transport and Power asked at that time about cattle prices and the gloomy headlines in the Irish Press and the reports that the bottom had fallen out of cattle prices. They were prepared at that time to do anything and everything they could to harm the Government of that day and cared very little about the national interests.

It is only right that we should trace the reasons for the present mess. The Minister asked in his Budget Statement: What has gone wrong? The roots of the current economic stresses and industrial unrest go back to February, 1963. In 1963, the Fianna Fáil Government issued a White Paper, Closing the Gap, the purpose of which, we were told, was to underline the dangers of living beyond our means. Our people were told that they were spending too much money. The White Paper pointed out that it was clear that we could not maintain the then existing level unless we earned more abroad. Accordingly, the White Paper urged Departments, local authorities, State-sponsored organisations, trade unions, and so on, to make no more demands for higher wages until we had increased production and exports.

That exhortation invoked a reasonable response until the autumn of 1963. It cannot be denied that we had stability, that wage demands were few and strikes were fewer. Then the Government introduced its iniquitous turnover tax, a new tax imposed for the first time in the history of our country, a tax on bread, butter, tea, sugar, fuel, meat, medicines, clothes, and all the necessaries of life. The Fine Gael Leaders pointed out at that time the bad effects that would flow from this ill-conceived policy, how such a tax on the necessaries of life was bound to increase the cost of living, how it would again enkindle the flames of inflation, with all its harmful effects. Fine Gael speakers pointed out in this House that it could do, and would do, irreparable harm to the economy.

All our forecasts have proved right. Everything that Deputy Dillon, Deputy Cosgrave and Deputy Sweetman said at that time has now, unfortunately for this country, turned out to be correct. There was a sudden jump in prices and the cost of living immediately started to rise. While the Government were calling for restraint, the workers' pay packet was not going as far as before. Fianna Fáil speakers in this House and throughout the country argued that the turnover tax would have only a minimal effect on prices. I should like to ask: were Fianna Fáil so innocent as to believe that a policy of restraint could be maintained in the new conditions of higher prices which they had created? I believe it was a major and tactical error and the starting point of the present chaos.

The next move was a very clever political move by the Government. As far as politics and political moves are concerned, they are very clever. Indeed, if they were as clever in regard to governing the country as they are in regard to political moves, things would be much better for the nation. As I said, their next move was a very clever political one. The death of two TDs suddenly closed the gap. The Taoiseach changed horses in mid-stream. He took up his pen and wrote a letter and the gap between spending and income had suddenly and mysteriously closed. He quoted no figures, nor have any of his Ministers quoted figures since, to show how the gap had been closed so quickly. He simply wiped out the picture he had been painting during the year and painted a brilliant new picture in bright Fianna Fáil optimistic colours and so we had the famous 12 per cent increase as a bribe to the electorate of Cork and Kildare to win two by-elections. They won the two by-elections but at what a cost to the country.

Having won those two by-elections, the Taoiseach switched horses again and proceeded to sound dire warnings through the spring and summer of 1964. The 12 per cent, he stated, was more than we should have given. He was now back with the employer's point of view. We had taken a mortgage out on the future, he stated, and productivity and exports would have to go up to cover it and, he said, there must be no more wage demands. The argument may have been valid from the point of view of statistics but it did not seem logical in view of what the Taoiseach and his Government had been saying before the Cork and Kildare by-elections. Once again he was contradicting himself but of course as far as the Government were concerned they did not give two hoots about the country. They had won the two by-elections and that is all that was worrying them at the time. They were determined to stay in power and to use the people's money to purchase votes. They did that and the circus continued. The people saw through them and their promises and they returned Deputy John Donnellan in Galway East, Deputy Joan Burke in Roscommon and Deputy Mrs. Desmond in Mid-Cork.

The economic crisis was then getting worse. The Fianna Fáil Party knew the full facts about the economy and about the economic recession that was about to come upon us and they knew it would get worse. If they had been statesmen, they would have tackled it and they would have told the people the truth but they did not do that. The Taoiseach called a general election. Instead of telling the people the truth about the situation that existed, they were more concerned with getting back into power. They knew that we were going to have this economic crisis and recession which would last for two or three years. They knew that they had been successful in keeping the truth from the people and the Taoiseach said: "Now is the time; we will call a general election and if we get back into power, we may be able to weather the storm for another five years."

The Fianna Fáil Party again changed horses and they showed they were prepared to stoop to anything in order to remain in power. Overnight, in the spring of 1965, the country became more prosperous. The message was preached at every crossroads, on the radio and on the television and in innumerable speeches by the Taoiseach and his Government. Even the present Minister for Finance promised 75,000 or 80,000 new jobs in industry before 1970. He made that promise in Dundalk but there has been no sign of that promise materialising. However, it was good propaganda in an industrial town and would certainly get the industrial votes.

It might be no harm to recall the Taoiseach's statement on the eve of the election in April when he said that the main task of the next five years would be to maintain the momentum of the country's economic progress which had now been built up and the nation's progress was now moving forward as never before in history. We are entitled to ask what has happened since Fianna Fáil returned to power? In a full page advertisement in the Sunday Press on 14th April, 1965, one found in huge type the words, “This is no time for a change.” What a change took place as soon as Fianna Fáil came back to office! We also heard this statement: “Our recent prosperity is not yet strong enough to withstand the shock of a change of Government.” Now we know it was not even strong enough to withstand even a further four months of Fianna Fáil Government.

They were just four months back in July of 1965 when the Taoiseach admitted that we were getting into financial difficulties and we were told that we must ensure that Fianna Fáil were enabled to carry on with a working majority and that the economy should be given a chance "to continue expanding without confusion, delay or indecision". How nice is that phrase—"to continue expanding without confusion, delay or indecision"— today for the extra 5,000 or 6,000 who are unemployed, for the unfortunate people who cannot get loans to build or reconstruct houses, or for the people who have done reconstruction work or are building houses and cannot get money, for the unfortunate builders who, according to last week's papers, have their machinery rusting in their yards, and for the unfortunate eight or ten builders in my own county who this week are emigrating to Canada or Britain. How well those lines read for them and for the small businessmen and farmers and those others who are the victims of this Government's induced crisis.

I use those words deliberately because they did nothing to head it off or to tackle it in time. With his 12 per cent in his pocket at that time and with prices still to catch up, the Fianna Fáil message sounded reasonable enough to the man in the street and they were returned to power. Safely back in the saddle, the Taoiseach last July changes horses again and wipes out the picture he had been painting for the previous five months during the general election and draws a brand new picture in pessimistic colours. Once more the Taoiseach and members of the Government are contradicting themselves. Of course, what of it? They are back in power again and Fianna Fáil and their friends are still enjoying the fruits of office.

The Finance Bill we are discussing here today is the result of this year's Budget which, it is admitted by every section of the people, was a cruel, harsh Budget. It was also deceptive. Because of Government pronouncements prior to the Budget many people were expecting it to be tough, but the Budget surpassed their worst expectations. It is a grab-all Budget. It is designed to take the money out of the people's pockets. It can be truly said that never in the history of this country was so much taken in one fell swoop and so little given in return. The Budget imposes £12 million in extra taxation. The only concession in it is that the destitute poor, and they only, will get a 5/- increase on 1st November if they are lucky enough to live that long. That is all they were promised in that Budget. We do not know what shocks the Minister may have even for those unfortunate people in the next Budget.

This is the 50th anniversary of 1916 and the men who gave their lives for Irish freedom. Many people are inclined to ask: was it worth it all? Did they die in vain? Have they been let down? Have the dreams of those who sacrificed their all come true? Unfortunately for the Irish people, Fianna Fáil have been in office for 28 of the past 34 years. Far from cherishing all our people equally, Fianna Fáil policy is to make the rich richer and the poor poorer. We know they gave an increase of £15 a week to people who already had over £120 a week. We know the Minister's colleagues in Cork County Council spoke out strongly yesterday against the attitude of the Government in giving more to the rich than they are entitled to and much less to the poor. That is reported in today's Independent. The men of 1916 gave their lifeblood for Ireland, but Fianna Fáil are today sucking the lifeblood of the Irish people.

This nation of ours is bled to death. We are living on borrowed money and on borrowed time. In the past nine years, the cost of running this country has risen from £106 million in 1956 to £262 million this year, an increase of £156 million. During that period we have also borrowed over £400 million. Last week I asked for the amount of the National Debt and was told it is £714 million. A day or two afterwards I asked for the amount of money borrowed by local authorities and was told it was a further £195 million. The total comes to £909 million. It costs almost £70 million per annum to service those debts. This year it is well known that the Minister will have to borrow money to pay the interest on the money this country already owes. As the eminent churchman stated in yesterday's paper, I think we are coming to the end of living by loans.

Many of us can remember the unfair and unjust propaganda engaged in by Fianna Fáil in 1951 when the Government of the day borrowed money to build houses. Houses were built at that time. In my own county as many as 252 were built in one year, whereas in the past nine years under Fianna Fáil not even 80 were built. At that time we built hospitals and the then Government cured the scourge of TB. Fianna Fáil Deputies and their henchmen had their men outside every polling booth as the people went to vote, and the words whispered into their ears were: "Put them out. They have the country in pawn. The country is up to its eyes in debt." The National Debt then was only one-sixth of what it is today. That shows the unfair and unjust propaganda Fianna Fáil were prepared to indulge in to put out the Government at that time. But when they get back into power they change horses completely in order to stay there.

We have today record rates of over £30 million collected from the people as well as record taxation of over £102 for every man, woman and child in the country. The cost of living is at a record 181 points, due to the Fianna Fáil high taxation policy, the abolition of the food subsidies and the introduction of the turnover tax. It may be no harm when talking about the cost of living to state what Deputy Lemass, now the Taoiseach, stated at Waterford on 28th February, 1957:

Coalition leaders are threatening the country with high food prices and a lot more besides if Fianna Fáil becomes the Government. A Fianna Fáil Government did not intend to do any of these things. How definite can we make our denials of these stupid allegations?

The present President of Ireland, then Taoiseach, speaking at Belmullet on 28th February, 1957 said:

We did not want the price of bread, so important an article in the diet of the poor, to be increased.

It is a little over twice now what it was at that time. That is how Fianna Fáil kept those promises to the Irish people, just as they kept the promises they made in the past about reduced taxation.

Last year we also had an adverse trade balance of £147 million and a deficit in our balance of payments of £45 million. This is the Government's fourth consecutive year to have a deficit in the balance of payments. Surely the Government knew where they were going for the past four years? Surely they would have taken action were it not for the fact that there were by-elections and a general election pending? Surely they would take action now and tell the truth were it not for the fact that there is a Presidential election on 1st June? They still do not want to tell the people the truth. They do not mind what happens the country if they can contrive to keep the full facts from the people and fool them until after that day.

Let us talk about the deficiency in the balance of payments. In 1962 it was £13 million; in 1963, £23 million and in 1964, £31 million. Therefore, the danger signs have been on the horizon for the past four years. The Minister for Transport and Power told us during his speech on the Budget debate in March that we had had inflation since 1962, that it was a dirty word and that it was time the people realised that. If he knew that and if Deputy MacEntee, who has written to the Irish Times, knew what was going on, did the other members of the Government not know it? If they did know it, as they should have known it, why did they not take action and why did they wait so long?

When the Minister for Finance was innocently asking himself what went wrong, anyone could see that Fianna Fáil were living on borrowed money and borrowed time. Any man knows you can get out of your depth by borrowing too much money. The Government should have known that because the signs were there to be seen since 1962. Fianna Fáil mismanagement is responsible for the position the country is in today and they, and they alone, must take the blame. I believe that as a constructive Opposition with the national interest at heart, we have not only the right but the duty to ask ourselves what lasting value we have got or will get from this huge expenditure, or where this little country of ours is heading today.

If with the vast outlay of public money, the growing burden of taxation, £162 million, and a National Debt of £714 million, we were in a position today to say that emigration had been stopped, that unemployment had been substantially reduced and that the number of people working in Ireland had greatly increased, we would all have some cause for satisfaction and for pride. Far from these things being true, we have exported in the past nine years over 400,000 of our boys and girls. The flower of our youth have had to emigrate and to earn their living abroad. They are still going at the rate of 40,000 a year, and this despite the fact that the same Party said in 1956: "Wives, put your husbands to work." The wives did not think at the time they were going to put them to work in Coventry, Birmingham, London and other places abroad, but that is what has happened. This Government came to power by false pretences. You remember all those Fianna Fáil slogans, such as "Let us get cracking." You also remember a Fianna Fáil advertisement of 16th February, 1957: "No Government policy is good enough which does not give a fair chance of working in Ireland for all who need it for their livelihood."

How was that promise to the people kept? It has been kept by exporting 400,000 of our boys and girls to England since then. The then Mr. Lemass, now the Taoiseach, put on the biggest bluff when he said on February 2nd, 1959: "Unemployment and emigration are the acid test of policy, and the Fianna Fáil Government will measure the effectiveness of its working by those standards." He went on to say: "Fianna Fáil's immediate task would be to get work for the unemployed. The unemployed would not be expected to wait until long-term production plans brought benefits." I do not blame anyone for voting for Fianna Fáil on those promises, but the Government have not kept their promises. They are entitled to tell the people why they have not kept the promises they made. Apart from the huge taxation bill we have before us today, there are over 55,000 people unemployed and there are 167,000 people fewer at work than there were in 1951. I asked the Taoiseach a question in this regard and his Parliamentary Secretary gave me the answer. The figures are: in 1951, there were 1,217,000 people at work; in 1965, after the Fianna Fáil Party got cracking, after they told the wives to put their husbands to work, after all those promises that were made to the people, there were 1,050,000 people at work in Ireland, a reduction of 167,000 people compared with 1951. Those figures are there in the Dáil Debates and in the official statistics and cannot be denied by anybody from the far side of the House.

The Government should remember that the safety valve of emigration may not always be there. What would happen if England closed her doors to Irish emigrants? Only for the safety valve of emigration, there would be almost 460,000 people unemployed in Ireland today. It must be remembered that we also have the record low population of 2.8 million people. Surely Pearse, Connolly, Plunkett, and all those other great men who sacrificed their all in 1916 never envisaged this black picture we have in Ireland today? We must all admit that this Government have not lived up to the ideas or the ideals of those great men.

Those of us who are travelling through the country at the present time, whether electioneering or whatever else we may be doing, will have to admit that never have there been such complaints from people as we are getting today. The people are ground down with taxation, both national and local. Never do I remember meeting such frustration amongst small farmers. I met small farmers last night and I met them last week, some in the west of Ireland, others in County Longford, and they told me they cannot live at the present time with the high taxation and the low prices they are getting for their produce. They told me they will have to sell their little farms and emigrate. I met an unfortunate farmer with six children who told me he had even put up his farm for sale a month ago and could not get a £1 bid for it.

As I stated earlier, Fianna Fáil, when in opposition, have always promised to reduce taxation. Even when they came to power away back in 1932, they promised to reduce taxation by £2 million and to grant complete derating to the farmers. At that time general taxation was something like 18 per cent of the national income; today it is around 27 per cent, which represents £102 to £103 per head for every man, woman and child in the country, or roughly £410 for the average family.

With such a burden of taxation and with chronic emigration and unemployment, is it any wonder that incentive is lacking and that money for investment is scarce? How could it be otherwise? Carrying the dead weight of taxation is heavy enough, but when there is added to it a lack of encouragement by the State to enable industry to expand and a lack of generosity on the part of the Government in their depreciation allowances on plant, fittings and on vehicles the penal aspect is all the greater. It is extraordinary that more inducements are offered to outside industrialists to come in and establish themselves here than are given to native industrialists to purchase machinery, to increase their output and work their way up to the top.

This country has at its disposal a highly effective weapon which, if properly used, can create and expand wealth internally and also attract wealth from foreign sources. I refer to the use of taxation. So far, taxation has been used by Fianna Fáil as an instrument for dissipating, destroying and discouraging wealth instead of attracting it into this country and building it up. That can be said very truly of the Fianna Fáil budgets of 1963 and 1965. I welcome the Government's conversion to proposals in which taxation is being used to encourage industrial enterprise. We proposed that —the late Deputy Norton and Deputy Gerard Sweetman when he was Minister for Finance—in 1956 and, of course, at that time the Fianna Fáil Government vigorously opposed it. Indeed, the present Taoiseach said at that time that, even at some time in the future, he might be in a position to do away with the proposals made in the Dáil then but when he got back into power we were all glad to see that he did not and that he learned the wisdom of the measures introduced. The Government should continue to pursue and expand those measures so as to build up the wealth of our citizens and attract more outside capital for investment here.

Unless that is done in a dramatic way there is no hope of building up an economy which will produce the goods we require for internal consumption, for export, employing our own people and giving them a high standard of living in their own land. That should be the aim of every government but it is my opinion that too much of our taxation at present relentlessly sucks and dissipates the energies of our people, which makes saving almost impossible. As a final blow, death duties destroy and scatter life savings of many thrifty citizens in this country.

In this capital-starved State by an enlightened use of taxation we could build up the economy, enable citizens to save money, attract capital, private capital and capital for investment in industry, in trade and in agriculture. There is a great need for it at the present time, especially in agriculture which is crying out for capital. According to the rumours afloat—I am not certain whether or not they are true but it has been stated—the money which the Agricultural Credit Corporation got and were about to loan out to farmers has been taken by the Government; they stretched out their hands and have taken much of this money from them. I believe that is the case; I believe it is true. That is a wrong policy. Agriculture is starving for capital and the more capital that this or any Government put into agriculture the greater the return we will have and the quicker we can increase our exports.

Our present taxation policy, especially the present rating system, is a cancer in our economy but it is a kind of cancer for which there is a cure. Some Government, sooner or later, will have to perform a major operation in thinking, planning and in action. The sooner this is done the better. There is nothing in this Finance Bill and, indeed, in the Budget for the farmers of Ireland. They have been betrayed, let down, disillusioned by the "Golden Boy" if you like to call him such. The farmers of Ireland cannot afford the kind of progress Fianna Fáil proposes for them. There is no denying that Fianna Fáil policy, especially their high taxation policy for the farmers of this country, has been a failure; a pie in the sky or promises of some crumbs in the future are no use. People cannot live on promises alone. Unfortunately, in this country, due to the high taxation policy of Fianna Fáil, over 300,000 farmers have been driven from the land. Those figures should frighten any Government but not the present Goverment; they do not seem to have any effect. We all know that the farmers, representing around 33? per cent of our population, are responsible for 75 per cent of our exports and yet get only about 20.3 per cent of the national income. That is unfair and unjust.

An Leas-Cheann Comhairle

A debate on agriculture does not relevantly arise on the Finance Bill.

Mr. L'Estrange

But they are paying this high taxation and they are not getting any benefit from it.

An Leas-Cheann Comhairle

It is a matter for the Estimate which will shortly be before the House.

Mr. L'Estrange

For many years we had warnings, from official Government spokesmen and others, that the burden of taxation was too high. Fianna Fáil in 1932 promised to reduce taxation by £2 million. The Taoiseach promised to do so in 1956. In 1956 also Deputy MacEntee, saying he spoke on behalf of the whole Party, stated that they had taken a firm decision not to increase taxation. But, of course, we know that the moment Fianna Fáil got back into power public and local expenditure started careering upwards. Of course, Fianna Fáil are living only true to form. I believe—and I think many people in this country believe— that the usual arguments produced in this House each year at Budget time against the upward swing in Government taxation failed to reflect the real gravity of the crisis. The crisis is with us now, it is a grave crisis and it is the Government's duty to give a lead and to tell the people of Ireland how to get out of the morass they are in today.

Never in the history of the country was it more desirable and necessary to have a period of stability than at the present time. Let the people sit back, ponder and think of where we are going or what will happen us if we continue in the mad escapade which both the Government and the people seem to be indulging in today. We need a period of stability so that the producers, whether they be farmers or industrialists, can prepare and equip themselves for the more competitive period which, undoubtedly, lies ahead in the free trade area. The only way in which tax revenue can be increased without causing inflation, without increasing the cost of living and without leading to bad industrial relations, is by a growth in the national production which would provide a larger taxable income. The time has come when the Government will have to lead, govern and say to all sections of the community: "We want to bake a larger national cake and we want to distribut that cake as equitably as we possibly can, but no longer will we stand for certain sections, whether well organised or not, stretching out their hands to get a slice of the cake before it is baked."

The time has come when the Government must govern, must rule or get out. If they do not, the country is doomed, and no one on either side of the House wants to see this little country of ours go down. At the same time, we all believe it is the duty of the Government to lead, not from behind but from in front. It is an inescapable fact—and the Government must know it—that if public spending maintains its upward course, as of recent years, it will outstrip the real growth of the economy, and I think that is happening at the present time.

I spoke earlier about the turnover tax and its effect on taxation. Indeed, it is interesting to remember that before the turnover tax was introduced, we had Deputy Lenihan, then Parliamentary Secretary, now Minister for Justice, assuring his listeners at a meeting that if that tax were introduced, it would be on "furs jewellery and expensive motor cars", and that food and clothing would not be interfered with in any way. We all know how that promise to the Irish people was kept.

We further know that in this Finance Bill the price of beer has been increased by 2d, the price of spirits by 4d a glass and the price of tobacco by the equivalent of 2d per packet of 20 cigarettes. Road tax has also been increased. We remember that when Fianna Fáil were introducing the turnover tax, they told us—and I quote from column 82, volume 202 of the Official Report of 23rd April, 1963:

It is not safe to rely for substantially increased revenue on the duties on only four commodities— tobacco, beer, spirits and oils—the yield from which is liable to be seriously affected by changes in demand.

The Minister introduced the turnover tax, because we were told, those four commodities had been taxed to saturation point, but by a strange coincidence, having got the turnover tax geared and working smoothly, the Minister now comes along in 1965 and 1966 and taxes the very things he told us in 1963 had reached the point of diminishing returns.

Mr. J. Lynch

Is the Deputy quoting me?

Mr. L'Estrange

I am sorry; the Minister who introduced the turnover tax told us.

Mr. Harte

There was collective responsibility.

Mr. L'Estrange

There was collective responsibility in any case.

Mr. J. Lynch

Be accurate.

Mr. Harte

The Minister spoke with many tongues.

Mr. L'Estrange

There is increased tax on petrol and diesel oil and this is unfair and unjust because, as the Minister knows, there are many workers who have to have cars to go to work with Bord na Móna, and other workers who have to travel long distances, and this tax has a crippling effect on them.

The Minister has also robbed the Road Fund, and every county council has got word to the effect that the county road grants are being cut. This is sheer lunacy in the financial crisis which is confronting the country. If the Government want to cut any grant, they should cut the arterial road grants, the bulk of which is being spent on huge machinery. Anyone who knows anything about rural Ireland knows that in every county there are boreens and bad roads. Children and their parents have to walk in a foot of water to get to school, to Mass, or to their place of business.

It is outrageous for the Minister to cut the grants for county roads this year. The grant has been cut in my county, and I daresay the same applies in all the other counties. We have appealed to the Minister, and I appeal to him even at this late stage, in view of the financial crisis existing today not to cut the grants for county roads but to cut the grants for arterial roads. These roads are tarred, and they are wide enough, unless we want to have roads on which the road hogs can travel at 70 or 80 miles an hour and kill one another, as seems to be happening at present. It would be much better if the Minister allowed the different county councils to transfer the money from the arterial to the county roads. It would be money much better spent.

In any case, with the increased taxation we have had over the past eight or nine years—an increase of £156 million in nine years—the bald truth is that we are pricing ourselves out of the markets today. If this policy continues, our industries will not be able to hold the Irish markets when the tariffs are reduced or abolished in another seven or eight years. There is very grave danger that this could lead to economic disaster. It is time that a national campaign to bring this warning home to everyone was launched, because otherwise we will slowly but surely commit hara-kiri.

As I have said, it is the Government's duty to lead in the crisis confronting us today. The Government more than anyone else are responsible for the industrial unrest in Ireland today because last year they gave status increases of £14, £15 and £20 a week to people who already had over £100 per week. Having regard to that, can the Minister or anyone else blame another section of the community if, having been told last year before the election that everything in the garden was rosy, and that all they had to do was to stretch out their hands to get what they wanted, they are now looking for £1 or £2 a week or whatever increase they may be looking for? Something will have to be done about the chaos that exists today in industrial relations. Industry must be saved from unrest if our economy is to be viable under the Trade Agreement which was signed by the Government a few months ago.

The Government must lead and, if necessary, coax employers and unions to accept changes, in their own interest and in the national interest. We can no longer afford to allow irresponsible masquerading as an exercise of democratic liberty by either side. In this century, people should be prepared in the national interest to devise some agreement to save themselves and to save the country. If they do not, we will all go down. The economic conditions today, the ever-rising cost of living, severe credit restrictions, delay and uncertainty in every business, industry and construction project, all emphasise the need for a properly planned economic and social programme.

During the past year, the country changed from a position in which there was unlimited credit for every type of undertaking. Before the general election last year, it was pointed out that people could get money from the Agricultural Credit Corporation to buy Mercedes cars and in some cases for what can only be described as highly speculative operations. That has changed to a position in which capital and credit are short, especially for agriculture. Credit is short for agriculture, for industry, for housing and for schools. The delays and the uncertainties caused by this confusion show that the economic approach of the Government is haphazard and ill-considered. There seems to be no proper planning on capital schemes and no order of priority.

Indeed, there is a great need for economic planning in order to promote economic expansion, not for the purpose of controlling, directing or dictating to any section whether in agriculture, industry, or any other interest, but in order to guide in the right direction the available financial resources. Such planning will achieve more than all the pious exhortations we have heard from Ministers and from the Government in the last few years. Indeed, the chickens of Fianna Fáil are coming home to roost. It might be no harm to quote Macbeth, Act I, Scene 7, when he said:

In these cases we still have judgment here; that we but teach bloody instructions, which being taught, return to plague the inventor; this even-handed justice commends the ingredients of our poison'd chalice to our own lips.

Those words are very true today. The chickens are coming home. Indeed, the Government have a large gap to bridge. It will take more than a Cadbury's snack to bridge the gap the Government have to bridge.

As I have already pointed out, the National Debt is £714 million. Service of the debt in 1960 was £16,800,000. In 1963 it went up to £25 million and according to the figure which the Minister gave me—I am open to correction as I have not got the exact figure with me—it is reckoned that in 1966-67 service of the debt will cost £55 million.

Last year we were exhorted to: "Let Lemass lead on." Where did he lead us or where is he leading us now? The people are entitled to know. Fianna Fáil hawked the credit of this country around England and America. They were refused it in those countries and it was only when they went to Germany, a country which was battered and beaten after two world wars, that they got the credit they needed. Certain people said they were keeping us out of the war for the good of the country. Where did it get us? If we were kept out of the war where is the prosperity which should be in the country today?

We are ground down with taxation. We had to go to Germany which was battered and beaten after two world wars to get the credit we needed. That country had to make the machinery in 1945 to get the wheels of industry turning. Her people worked hard and they set an example to the rest of the world. If we got that lead in the past perhaps we would have got somewhere. The difference between Germany and our country is that they had a Government which were prepared to lead. They had a Government which were prepared to work themselves and the people had confidence in them. We have a Government which are not leading us. They are leading us from behind. They have made so many promises to the Irish people in the past, which they have broken, that the people have no faith in the Government.

It will be hard for the Government to try to convince the people that they were consciously telling the people the truth when they said a few years ago that everything in the garden was rosy. It will be hard to tell those people now that they will have to do without certain things. It is time the people realised fully that this Government have been going along with their heads in the sand. They have been travelling with their heads down for the past two or three years or, as the Minister for Transport and Power stated, for the past four years, since 1962, with their heads in the sand. All the indications were that some steps should be taken two or three years ago. Instead of doing that they said that this side of the House were creating a scare.

That is what they told us two years ago. That is what they told Deputy Dillon. We on this side of the House were trying to be as constructive as we possibly could. We were doing so for the benefit of the country, irrespective of whatever Government were in office. We warned the people and the Government but they did not heed us. On 15th July last year the Taoiseach, at column 1548, vol. 217 of the Official Report, said:

For my part, I am confident that we have not moved to check these adverse developments too soon or too late. I think the time is about right.

I wonder is he as confident now as he was then? That was 15th July, 1965, ten months ago. Further on, he stated:

The policy of the Government in the situation now existing, the situation which may be developing, is to do the minimum we think will suffice, and in this way to avoid repetition of the mistakes which we think the Coalition Government made in the circumstances of ten years or so ago.

I agree entirely with him when he said "to do the minimum". The Government are doing the minimum. They are not leading. They are not guiding the people or getting us out of the mess into which they have got us. The Taoiseach said he was afraid of making the mistakes the previous Government made ten years ago. The present Government have made many more mistakes and the country is in a much worse position now. In fact, as an eminent churchman stated in the paper yesterday, "Not since the 1930s was the country in such a state."

Mr. Andrews

Dr. Lucey of Cork?

Mr. L'Estrange

Yes.

Mr. Andrews

I was getting the record right.

Mr. L'Estrange

It is not any harm to get the record right. It is good to see independent people in the country who are prepared to speak their minds before the ship of state goes down. The disaster of Fianna Fáil lies in the seeds they have sown in the past. The people of this country are burdened by the heavy taxation imposed on them. The prosperity of a country depends on industrial and agricultural development. The greatest evil in the country is the high taxation imposed by Fianna Fáil, despite all the promises they made when they were in opposition.

The overriding, and the most urgent problem, that has to be dealt with is the disastrous height to which taxation has been raised. All classes of the community are being crippled by it. It has had a far-flung effect on industry. I have already mentioned its impact on the farmers of this country.

An Leas-Cheann Comhairle

I am afraid the Deputy is repeating himself.

Mr. Harte

So have the Government.

Mr. L'Estrange

It might be no harm if I quoted from what the Taoiseach said in the past about taxation but perhaps I had better not. In any case, as I said already, the greatest danger facing this country today is the high taxation rate imposed on it. Leaders of this Party have stated many times that we believe in a proper incomes policy. Fianna Fáil, led by the Taoiseach, vigorously opposed such a policy up to one or two years ago. We believe in an incomes policy which would give everyone a fair share of the national cake. Under the Government's financial policy, the weaker sections of the community are going to the wall. It is only the well off who are getting anything worth talking about from the Government.

As I stated earlier, the policy of the Government is deplorable, particularly in the matter of cutting back on health and education. They are the things that should be on top of our priority list. Money spent on education is investment in the future. If we are to hold our own in the internationally competitive period before us, if we are to build up our country, making full use of our natural resources, our youth must be provided with the best possible education the country can afford.

Minister for Finance (Mr. J. Lynch)

I do not think I have ever heard such repetitious clichés as I have listened to during the past hour and a half. It was not just simple repetition. It was repetition three or four times out of Deputy L'Estrange's hat, as quickly as he could pull our quotations. One would think from the speeches of Deputy L'Estrange and others that the economy was breaking down. To create an impression of this kind is to do harm to the country not only in the eyes of our people at home but in the eyes of people abroad who may have some interest in expanding the economy of the country.

It is entirely and deliberately misleading to suggest, as has been done here, that the country is going downhill fast, that there is no hope for the country. For the reason that these assertions are blatantly dishonest, the main part of my reply will be devoted to indicating briefly how dishonest, inaccurate and exaggerated these impressions are.

Mr. L'Estrange

The Presidential election.

Mr. J. Lynch

As everybody in the House and throughout the country knows, in the ten years prior to 1958, the rate of progress of the country, the average annual rate of increase in our gross national product, was in the region of one per cent. In 1958, the First Programme for Economic Expansion was brought into effect. It envisaged an annual rate of growth of about twice that one per cent during the ensuing five years. In fact we achieved a growth rate of not less than four per cent per annum—it was 4.23 per cent. That continued right up to 1965 when, due to many adverse circumstances arising from home and foreign conditions, the four per cent fell back to 2½ per cent.

I should like to emphasise that that decline was shared by other member countries of the Organisation for Economic Co-operation and Development. The rate in the current year is expected to be 3½ per cent. Even in 1965 when the growth rate fell, it was still two and a half times the rate that obtained in the ten years up to 1958. I have every confidence, and the Government have every confidence, in the belief that this rate will increase again to 3½ per cent in the current year.

When I presented my Budget in 1965, I made no secret of the fact that certain discouraging trends were emerging. There was evidence that the balance of payments was not going well and that our balance of trade was also moving against us. This was, of course, the result of a combination of adverse factors to which I have referred. As far as the balance of trade is concerned, the outstanding factor was the imposition of the British surcharge and, notwithstanding that the Government came to the assistance of exporters to the extent of 40 per cent of the surcharge on consignments for export, it did not prove sufficient to maintain the expansion in our industrial exports to the British market. In many cases many exporters felt that the fat had gone our of the market and even with the 40 per cent assistance—it was 50 per cent in some cases —most of them only sought to hold their own.

The immediate steps taken by the Government, in the form of market development grants, to which I have referred, did not prove enough to reverse that trend. One of the main factors in that trend was the decline in cattle exports in the early part of 1965. In the months immediately preceding, cattle prices were very bouyant, with the result that farmers and cattle-dealers generally were selling whatever cattle they had available to take advantage of these buoyant prices. The result was that the numbers of saleable cattle on the land declined very significantly. There were young cattle not immediately saleable and that again affected our balance of trade problems.

There was another factor against us at about that time. Our industrial production rate began to decline vis-à-vis that of Britain. As a result of these factors, inflationary tendencies set in in our economy. In the 1965 Budget, I tried to take cognisance of these adverse tendencies and endeavoured to correct them. The measures I took did not provide an early remedy and shortly afterwards further measures had to be taken, as announced by the Taoiseach during the debate on his Estimate. In July 1965, steps were taken which were designed to bring our trade and our payments into better balance and to reduce the inflationary pressures that threatened us. The remedies then were not easy or popular. Neither the Government nor I anticipated that these measures would be successful overnight but they were necessary in the long-term interests of the country and the economy and it was necessary to employ them at that stage.

I am glad to say that the successful results of these steps are now beginning to be felt. We have achieved a remarkable degree of price stability. The Consumer Price Index has risen by only one point since May of last year. There has been a marked improvement in the balance of payments recently and the balance of trade in the past few months has been going well. There are grounds for believing that this welcome trend will continue during the coming year despite the gloomy predictions we have heard from Deputies in the opposite benches.

I referred to the inflationary tendencies that set in last year and I realise that the level of Government expenditure and public expenditure generally was a contributory factor. For that reason, in the Estimates for the current year, both current and capital, very serious efforts were made to reduce these Estimates so as to minimise the additional taxation that would be necessary, so as to avoid, if at all possible, a deficit in our current payments this year. There is an increase of only three per cent in total Government expenditure above last year and that is below the expected rise in the volume of production during this year. I was particularly conscious of the impact of the capital public programme on this inflationary trend also. There has been a rapid growth in recent years in public expenditure and that, unfortunately, contrasted with the less buoyant state of the resources available to finance the public capital programme. This underlined the need for urgent vigilance and control of expenditure and the maximum possible degree of forward planning.

Experience last year showed that existing procedures were not adequate to highlight in time the remedies that ought to be taken, and for that reason I have set up a new system in the Department of Finance which is designed to ensure that public expenditures and the resources to meet these will be kept under constant review in the future. The system that has been set up will cover all the capital expenditures and resources of Government Departments, local authorities and State bodies. It will cover too the current expenditure out of the Exchequer. The aim is to ensure that this expenditure, both capital and current, will be kept within the resources and the allocations made out of the Budget from year to year. This is necessary in order to ensure that expeditious and effective action can be taken to adjust the expenditures and programmes where necessary.

The normal resources that we have available to finance our capital expenditure, including funds in the hands of State bodies and local authorities, national loans, Departmental funds and small savings, yield about three-quarters of our total capital requirements. This year the total capital requirements amount to something in excess of £106 million. Therefore, the three-quarters we need to finance out of our resources will be about £78 million. The balance, about £30 million, will have to be found from the banking system and from foreign borrowing. There was, as the House is aware, a White Paper published last October on capital expenditure. It indicated that it was necessary to contain the growth of capital expenditure in order to allow the resources we had at our disposal to overtake the expenditure.

This document and the capital Budget paper published in February stressed the importance of restraining the demands of the public sector on the banks' resources. It was necessary to ease the demands of the public sector in order to ensure that sufficient moneys were available to the private sector. When Deputies complain about insufficient moneys being available for one or another of their pet capital programmes, they must realise that the private sector also generates a degree of employment and I do not deny that the Government took up an undue share of the credit available in the banks last year. For that reason, I hope that this year the steps I propose to take will be sufficient to ensure that sufficient money will be available for the private sector.

On the question of foreign borrowing, again we must get our sights clear. Winding up the debate on the Budget, I referred to the fact that far from putting our country in pawn, far from damaging the credit of our country, the successful flotation of bond issues on the foreign market was a mark of the credit-worthiness of our country. I said that in this respect we were in the good company of such countries as Australia, Denmark, Austria, Japan and others, all of whom have had recourse to the bond market from time to time. New Zealand was in the same market.

Mr. Sweetman

At what rate?

Mr. J. Lynch

At a fraction of a point less than the terms we were getting but New Zealand was a long-established customer in the international market. I should like to stress that we were not refused a loan in the United States of America or in the Euro-Dollar market. We did not go to the USA for a loan. The funds we sought and the loan we intended to float were a surplus of American dollars in Europe that were not being repatriated to the USA. Unfortunately, at the time we went for the Euro-Dollar loan United States firms with international reputations were encouraged by the USA to get after this money and many of them did. They did it all on the type of terms that would be available to us but they were given the right of transfer to the equities of their companies at the end of a set period. That was a difficult competition for us to try to meet in that market. However, we were advised by the managers of the loan both in Britain and in the United States, that, by reason of the pressure, and there was pressure on that market at the time, that was not the time to go and that it ought to be postponed.

Mr. Sweetman

The Minister was advised that he had not a hope of getting it and, in those circumstances, he very properly withdrew.

Mr. J. Lynch

There were a lot of other people also advised at that time.

Mr. Sweetman

The Minister was advised he had not a hope of getting it. I know what happened.

Mr. J. Lynch

The Deputy does not know all that happened.

Mr. Sweetman

No, but I know enough, not from this side of the Atlantic but from the other side of the Atlantic. I know what happened.

Mr. J. Lynch

The Deputy may be interested to know that the European Steel and Coal Community were contemplating a loan at the same time and were advised not to proceed.

Mr. Sweetman

The Minister was advised in July he would have to make it slippy in order to get through, and it was not made slippy.

Mr. J. Lynch

That is not true. There was no such advice given to us in July. We were not advised that there was any likelihood of any pressure coming on the Euro-Dollar market.

Mr. Sweetman

I know other people who say it was given to the Minister, and financial houses at that.

Mr. J. Lynch

I am saying that no such advice was given. We were advised in July that that was the time to go and steps were then taken to go.

Mr. Sweetman

The Minister was advised in July that was the time to go and that he should get through by the end of October.

Mr. J. Lynch

We should get through?

Mr. Sweetman

Yes.

Mr. J. Lynch

We were advised that, if we started in July, by the end of October the loan would be through, but there was no advice given to us with any element of urgency in it. They said now is the time to go; that was the time deemed to be necessary to get the preparations made for October. It is not correct to suggest that we were advised and did not apparently take the advice. We took the advice given to us and that advice was given at the time without any sense of urgency.

Mr. Sweetman

The Minister knows I had some contacts in this market and I know what the contacts told me.

Mr. J. Lynch

I referred to the necessity there is in the Capital Budget to help the financing of our capital programmes, where our home resources are not sufficient, by having recourse to foreign borrowing. I do not think there can be any reasonable objection to foreign borrowing provided it is done on a moderate scale for the purpose of financing our domestic programme, and provided this programme includes an adequate and suitable amount of productive expenditure. The amount we can prudently borrow from abroad should be determined by our existing balance of payments deficit and should have reference also to the likelihood of getting money on acceptable terms.

We enjoy a reasonable inflow of foreign investment capital and our short-term objective in this respect is to bring the deficit in our external payments down to the level of that inflow. Our foreign borrowing in the next few years will have to be kept within a moderate annual limit because of the scarcity of money in the foreign market and also because of the consequent cost of borrowing in conditions of a world capital shortage.

I referred to the attempts made to reduce current expenditure and the capital programme expenditure and my purpose in this year's Budget was to ensure that there would not be a deficit on current account because, and I readily admit this, that would have inflationary effects and would reduce the amount of capital available for investment. I stated quite explicitly that the additional taxation was necessary to meet our estimates as known, and no more, and I want to repeat now that I was not budgeting for a surplus, as has been alleged from the opposite side of the House. I stated also that if further expenditure, for which provision had not been made, should arise during the year it would be necessary for me to come before the House with proposals for the taxation required to pay for that. Deputy L'Estrange talked about being honest with the people. Surely nothing could be more honest than to indicate that the taxation proposed was sufficient to meet only known expenditure and that any new expenditure would have to be met by additional taxation.

Opposition speakers have suggested that it was known at Budget time that extra expenditure would have to be provided for the farmers because of the bad winter and the worse spring. When the Budget was introduced on 9th March it was still early days in spring and there was still time, if the weather improved, as we were reasonably entitled to expect it would, to make the normal preparations necessary to maintain the level of income envisaged for the farmers this year. Immediately after 9th March we had some very good weather, notably on Saint Patrick's Day, but the weather very quickly deteriorated again. Even had we been able to anticipate the weather it would still have been impossible to anticipate what the reduction in farmers' income might be compared with what had been expected. It would have been imprudent and wrong for me in those circumstances to budget against current expenditure of which I was not aware and could not possibly have been aware.

Deputy Cosgrave said that it was bad budgetary policy not to deal with the full year's expenditure in the annual Budget. In my Budget speech I said that, in a time of unsettled conditions, which I readily admit we have, it is scarcely reasonable to expect that budgetary arrangements made in March or April will continue to meet requirements throughout the year. In Britain, the Chancellor of the Exchequer has regulatory powers to change certain taxation within a tolerance of 10 per cent in order to meet changes. I had no way of making a firm estimate of possible extra taxation to cover possible extra expenditure when I introduced my Budget and I could not, therefore, propose further taxation with any confidence that it would not have been either too much or too little. I decided that the proper course was to tax only to the extent which could be firmly estimated and to tell the House, as I did, that if further money were required I would have to come back to the House for it. In our present circumstances I am convinced this is the proper course to follow.

Just before the Budget it had been estimated that the farmers' income for the current year would increase by about 6 million or roughly the same increase per head as was estimated for the non-agricultural sector. This estimate was, of course, agreed in consultation with the National Farmers Association. Since then it has been thrown out because of the bad weather conditions but I do not think it is valid now to suggest that the bad winter and spring should have indicated at Budget time that the projected increase in farmers' incomes would not be realised. An increase of three per cent was projected for incomes in the industrial sector. That was indicated in the NIEC report. If the projected increase of 3½ per cent in our economic growth is valid, and I believe it is, then, provided we can avoid a series of strikes, or prolonged strikes, the three per cent rate of incomes increase in the non-agricultural sector would also be a valid projection. In the event, however, the Irish Congress of Trade Unions advised their constituent organisations to seek increases of up to £1.

Mr. Larkin

Quite rightly.

Mr. J. Lynch

That was endorsed by the Labour Court but that endorsement did not in any way invalidate the projection of 3½ per cent increase in our growth rate. Neither did it invalidate the advice given by the NIEC that income increases ought to be within a 3½ per cent growth. Nevertheless, the Labour Court in its advice specifically said that lower increases might be given in industries that could not afford the increase of £1 and, where the £1 increase was given, that efforts ought to be made by the workers to increase productivity in order to offset the increases that the £1 would represent over and above the 3½ per cent expected growth rate. They also advised, as Deputy Larkin is aware, that the £1 increase might be taken in certain sectors in two instalments, one of 13/-now and one of 7/- later in the year.

The court recognises in its statement that not every firm can afford the £1 per week increase. However, the advice was given with these reservations but also in the knowledge that a series of strikes, a series of withdrawals of labour, a series of prolonged periods of decline in industrial and other production would have serious effects upon the economy as well. It was in order to avoid these strikes that the court made that recommendation but imported into the recommendation the admonitions and qualifications to which I have referred. These are not mine: these are the Labour Court's. These reservations by the Labour Court underline the necessity for a sense of responsibility and realism in our industrial relations.

It is one thing to claim compensation for loss in the real value of money: nobody will blame any trade unionist for doing that. However, too many claims nowadays are coming forward for the preservation of so-called status differentials. I do not think anybody can deny that if claims like this are conceded for no reason other than that somebody else in another class has moved ahead, we shall find ourselves involved in another round of leapfrogging which only perpetuates the dissatisfaction which workers in different employments must logically feel and, therefore, nobody will want that experience again.

As I said, in this leapfrogging, the only effect is to push up prices. If the purpose is only to match somebody else who has succeeded in getting an increase or to maintain the differential as against somebody else, then we are only creating more inflationary trends and therefore putting up prices and achieving a situation that will solve nothing for us. It was thinking like that that led me to ask the Dáil and the Seanad to set up a tribunal on clerical wage rates last November. I realised that there was a certain amount of this status race going on between the different employments in the private and public clerical sectors and that it was setting a bad example and doing nobody any good, not even the clerical workers themselves, in the long run. I was hoping that this tribunal would have reported by 1st March but I realised that I had given them a fairly substantial task in covering employments that involve 6,000 to 8,000 workers, employments in semi-State bodies and the Civil Service and outside it. This included job evaluation.

The tribunal has now completed its task and I was presented with the report last Friday. I hope to lay it before the House to-morrow and it should be available for publication in the press of the country on Thursday. I shall not comment on the report. It is an objective report. I shall not issue any statement with it. The country, the workers involved and other workers whom the report will affect will have the opportunity of studying its contents.

I do not think it is only in the sphere of industrial relations that we need to have this sense of responsibility at the present time. It seems to be lacking in public life also. Opposition Deputies complain on the one hand about the limitation of expenditure and on the other hand they advocate greater economies. They ask for public capital investment to be increased and at the same time they object to borrowing from abroad even though they know that our home resources are not sufficient to meet the public capital programme as projected in the White Paper, much less the level of capital expenditure that the Deputies themselves would seem to desire.

Deputy L'Estrange referred to a reduction in the amount of money being spent on the roads. I am not denying nor could I deny that the increase in motor taxation this year is being used for Exchequer purposes. Nevertheless, the Road Fund, compared with last year and, with the same resources for income, is higher this year. Last year, £9.4 million was paid into the Road Fund. The amount paid for 1966/67, at pre-Budget rates of tax, is estimated at £9.75 million. Therefore, there will be available for expenditure on the roads an increase of some £350,000 this year.

Mr. M.P. Murphy

That does not apply to Cork County Council where there was a definite reduction from last year, and it is the same with some other county councils.

Mr. J. Lynch

I should like to look into the figures for Cork to see what happened.

Mr. M.P. Murphy

So far as the county council is concerned, there is a definite reduction. I do not know about Cork Corporation.

Mr. J. Lynch

Similarly, complaints have been made about the expenditure on housing. As I have said and as the Minister for Local Government has said on a number of occasions, the expenditure on housing this year is greater than it ever was. It is no harm for Deputies to be referred to the figures as they are.

In 1961-62, the figure for local authority housing, including the SDA loans, was £11.96 million. That rose gradually through 1962-63, £13.45 million; 1963-64, £16.25 million; 1964-65, £19.39 million; 1965-66, £23.77 million and, this year, the provisional estimate is £24.38 million. By and large, this has been the same story as far as our total capital programme is concerned. The figure has been increasing very steadily over the past ten years or so.

Mr. M.P. Murphy

It is not fair to include the SDA loans in that summary because they are not a charge on public funds.

Mr. J. Lynch

I am talking about the capital programme, and they have to be found for that purpose as well, but, even on local authority direct housing schemes, there has been a considerable increase in recent years.

Mr. M.P. Murphy

For the Minister's information, there is not £1 available now to Cork County Council for building any more houses this year in any part of the county.

Mr. O'Hara

The same position applies in Mayo. We put a notice in the paper to tell the people not to apply.

Mr. J. Lynch

Let me give the figures for the local authorities' own schemes, excluding the SDA loans. I said that the total amount of moneys available increased from £11.96 million in 1961-62 to £24.38 million in the current year. The figures for the local authorities' own schemes were £2.77 million in 1961 and they rose to £10.11 million in 1965-66 and to £11 million in 1966-67.

Mr. Sweetman

Why is Kildare County Council told that it can build only six houses this year?

Mr. J. Lynch

I am not familiar with individual details——

Mr. Sweetman

Deputy Murphy says Cork; Deputy O'Hara says Mayo and I say Kildare. We cannot all be wrong.

Mr. J. Lynch

The figures are unchallengeable.

Mr. Sweetman

The instruction which has gone down to Kildare County Council is also unchallengeable.

Mr. J. Lynch

These are matters between the county councils——

Mr. M.P. Murphy

The money is not there. The money available for housing in Cork is nil.

Mr. J. Lynch

I do not know what has happened to the £2.77 million compared with £11 million available for housing this year. Somebody must be putting it in his pocket.

Mr. Sweetman

It is the Minister who has said that. I know what would happen if we said it.

Mr. J. Lynch

I am not making any allegations.

Mr. M.P. Murphy

But it is interesting. If this money is there, it should be made available. The Minister states the money is there.

Mr. J. Lynch

I am not announcing these figures for the first time.

Mr. M.P. Murphy

The county manager says there is nothing there.

Mr. J. Lynch

These figures have been given systematically and openly in the publications issued in connection with the Budget.

Mr. M.P. Murphy

The money must have been lost in transit.

Mr. Sweetman

How much has the Minister for Local Government buried in the mud of Ballymun?

Mr. M.P. Murphy

Evidently he is not burying anything in County Cork this year.

Mr. J. Lynch

Deputy Sweetman, like many other Deputies, bemoaned the estate duty provisions of the Finance Act last year but he seems to cavil at the fact that whatever reliefs are being given are being made retrospective under the 1966 Act.

Mr. Sweetman

Because the Minister made a botch of it last year.

Mr. J. Lynch

No, let us look at that again. Even Deputy Booth did not seem to understand that benefits arising on death as a result of superannuation schemes have always been liable to estate duty. There was a doubt as to the liability of benefits arising on death from non-contributory superannuation schemes, that is, liability to estate duty, but these were always liable—and so held—to succession duty which was more onerous than estate duty. The Revenue Commissioners permitted people who had liabilities for such payments under non-contributory schemes to be taxed on the estate duty rather than the succession duty.

Mr. Sweetman

To break the law?

Mr. J. Lynch

No. There was contention. The Revenue Commissioners believed they were liable to estate duty and even to succession duty but they were certainly liable to estate duty, but because the Revenue Commissioners believed they were liable to succession duty and estate duty, they gave the tax-payers the benefit of the more favourable rate of taxation.

Mr. Sweetman

But if they believed they were liable to both, they should have paid both. That does not hang.

Mr. J. Lynch

It is not a question of being charged both; it was one or the other and I think that, quite rightly, they gave the person liable the benefit of the more favourable rate from that person's point of view. What happened last year was that it was highlighted, possibly for the first time in this House, that persons who were in receipt of benefits arising on death in respect of which they had no enforceable right were considered to be free from payment of death duty in respect of these amounts, the theory being, of course, that they may not have got them, that the deceased might have changed his mind or something else might have happened but the most notable class was the civil servants whose pension scheme or superannuation benefits are at the will and pleasure of the Government and in respect of which civil servants have no right of enforcement.

There was general agreement on all sides of the House that this obligation should extend to everybody and it was to meet the general wish of the House, and not subject to the whim of Deputy de Valera, that I introduced a section in the Bill this year in order to do this. What I want understood first is that death benefits were always liable to duty. There was a doubt as to which death duty, whether estate duty or succession duty, benefits arising from contributory schemes were liable, but benefits arising out of non-contributory circumstances were not considered to be liable and now they are.

Mr. Sweetman

How will they be valued?

Mr. J. Lynch

We can deal with that in more detail later on.

Mr. Sweetman

You are going to make these liable: why not make it universal? Why leave some people out?

Mr. J. Lynch

We have included others besides these and if the Deputy has any other group to propose, let him do so.

Mr. Sweetman

Why not examine the Third Edition of Diamond, page 61?

Mr. J. Lynch

I am not as up-to-date in these references as the Deputy must be.

Mr. Sweetman

The Fourteenth Edition is the up-to-date one but I did not expect the Minister to reach that standard. Let him have a look at page 61.

Mr. J. Lynch

I shall take the Deputy's advice there.

Mr. Sweetman

It has particular application to the Minister.

Mr. J. Lynch

I should like to take this opportunity to refer to some of the criticism I saw levelled against me, possibly by mistake, in connection with taxation in some of the Sunday newspapers. The suggestion was that the 1965 Finance Act brought in the obligation to disclose bank deposits for the first time. In fact it was the 1963 Act and the 1965 Act brought an easement of it.

Mr. Sweetman

Backtracking on previous mistakes.

Mr. J. Lynch

I am always prepared to admit a mistake. I never brazen it through as Deputy Sweetman and other Ministers for Finance before him may have done.

Mr. Sweetman

The Minister drove the money out of the country, whether brazen or otherwise.

Mr. J. Lynch

We had a complaint from Deputy Esmonde that £100 million went out. These extravagant claims should not be made unless they are substantiated.

Mr. M.P. Murphy

Will the Minister state in what way there was an easement so far as the disclosure of bank deposits was concerned?

Mr. J. Lynch

By doubling the amount of interest a person could receive from a deposit account which he need not disclose or which the bank need not disclose under that Act.

Mr. M.P. Murphy

Would the Minister state that again?

Mr. J. Lynch

If Deputy Murphy had a deposit yielding £25 interest in the year, there was an obligation to disclose that. I doubled that amount of interest, from £25 to £50. There was an easement to that extent.

Mr. M.P. Murphy

The Minister will agree that even where the amount of money in the Post Office is less than that which would yield £25 in interest, it has to be disclosed.

Mr. J. Lynch

That has gone up also.

Mr. M.P. Murphy

I know, but one has to submit the information. The Revenue Commissioners can demand the Post Office book and other documents if you have £300 or £400 in the Post Office.

Mr. J. Lynch

We seem to have gone into a Committee Stage debate.

Mr. M.P. Murphy

I do not see any easement.

Mr. J. Lynch

We shall discuss that in more detail later. There is an easement certainly.

Mr. M.P. Murphy

It does not seem that some Revenue Commissioners or their agents are aware of the easements.

Mr. J. Lynch

I want to get back to Deputy Sweetman who alleged that we were avoiding debates on public issues in this House and certainly on economic issues. He said that the object of the Government was to avoid discussion on the economy of the country. I suggest that never in the history of Dáil Éireann has there been more discussion in open forum on the economic position of the country. The fact is, of course, that the Government have no desire to avoid such discussion. I should like to remind the Deputy that the House has had five major debates up to this on the general economic situation over the last ten months. If I exclude the Budget debate last year, we had the debate in July, 1965, on the economic situation through the medium of the Taoiseach's Estimate and the Prices Bill. In November, 1965, we had a general debate on the economic situation. In January, 1966, we had a debate on the Free Trade Area Agreement which introduced to a large extent a general economic debate. In January/February, we had the debate on the Report of the NIEC on the economic position and the debate to which I am now replying is the sixth such debate since last July. I cannot understand how any Deputy from the other side of the House can say, as Deputy Sweetman said, that the object of the Government is to avoid discussion on the economic position of the country.

Mr. Sweetman

Why have this Government set a record by its Ministers making important statements at dog-fights instead of in Dáil Éireann? Because they do not want to have discussion on them here. No Government have ever made so many statements outside this House as this Government have.

Mr. J. Lynch

Statements outside the House, or even statements in the House, would not be open for discussion in the ordinary way.

Mr. Sweetman

They make them at meetings and dinners or, if they cannot, at the Agricultural Committee of Fianna Fáil.

Mr. J. Lynch

I remember, when Deputy Dillon was Minister for Agriculture, there were many startling announcements in the Sunday Independent that were never mentioned in this House or even in public but, possibly, privately by Deputy Dillon to some Independent reporter. Deputy Sweetman will remember many of these pronouncements made from time to time.

Mr. Sweetman

I do not, candidly.

Mr. J. Lynch

I can remember several of them.

Mr. Sweetman

Let us have them trotted out.

Mr. J. Lynch

The famous Connemara scheme was one I remember very vividly. He was going to push the Twelve Pins into Galway Bay.

Mr. Sweetman

If one is going to make a speech about a particular area, it is normal to make it in that area. This was made in Connemara.

Mr. J. Lynch

Deputy Dillon was not in Connemara at all at that time. In any event, Deputy Sweetman knows well that Ministers are invited all over the country and from his experience in his own time, he will accept that they have to refuse about three out of every four invitations they get and it is not easy to think up something new to say at all these dinners, chambers of commerce meetings and other functions.

Mr. Sweetman

I can understand the Minister and all the Ministers finding it difficult to think out something new.

Mr. J. Lynch

Even at this time, it is not very easy. Let me not criticise Deputy Dillon for what he did ten years ago while he is criticising us for doing the same thing during the intervening ten years but I would say, to Deputy Dillon's credit, that he showed to some extent a sense of realism in the course of this debate by making a helpful suggestion in regard to this whole question of non-relief of income tax for medical expenses. While Deputy Dillon did not absolve me for not creating such relief, even though no other Minister for Finance has done it since the State came into being, he did recognise that people have not taken sufficient advantage of the Voluntary Health Insurance Scheme and he encouraged me to give it whatever publicity I could. I certainly would like to endorse what he said and to publicise the very excellent facilities offered by the Voluntary Health Insurance Scheme.

Mr. Sweetman

Set up in the teeth of Fianna Fáil opposition.

Mr. J. Lynch

In particular, I should like to direct the attention of the tax-payers to the fact that they are entitled to have payments made under this scheme taken into account in connection with income tax relief. Deputy Sweetman himself possibly did that and I acknowledge it as something worth while doing. I am only acknowledging what Deputy Dillon says, that the attention of the public ought to be directed to this relief.

Nevertheless, I cannot relieve Deputy Dillon of something of which I accuse Deputies generally — these extravagant statements about the condition of the economy. Statements such as Deputy Dillon has been making, that the country is going downhill fast, that the country is "bust"—are not destined to help the economy. They do the country grave damage, even though I believe it is not the intention of the Deputies who make such statements to do the country damage in the long term but they make them for the purpose of narrow political advantage. They make these statements in the House when they know quite well that the contrary is the case. The making of extravagant criticisms like these, unsupported by facts, which members of the Opposition indulge in rather freely, inside the House and elsewhere, can do nothing but damage. I have indicated at the start of my speech that the recovery has commenced: our balance of payments has improved; our balance of trade has improved——

Mr. Sweetman

The terms of trade have moved against us.

Mr. J. Lynch

——our gross national product has again begun to increase from the 2½ per cent which it was last year which, may I remind the House again, was 2½ times that obtaining up to 1958, and will be increased to 3½ per cent this year. The country is doing all right, if we do not bemoan it and decry it too much, if we give it a chance and do not, by Opposition speeches, knock the heart out of it.

Mr. Sweetman

That is the greatest piece of complacency I have ever heard. The Minister knows he has not a "bob".

Question put and agreed to.

Committee Stage ordered for Tuesday, 7th June, 1966.