Dáil Éireann díospóireacht -
Tuesday, 26 Nov 1968

Vol. 237 No. 7

Committee on Finance. - Financial Resolution No. 4: Wholesale Tax (Resumed).

Debate resumed on the following motion:

(1) That, with effect as on and from the 1st day of January, 1969, wholesale tax imposed by section 2 of the Finance (No.2) Act, 1966 (No. 22 of 1966), shall be charged, levied and paid at the rate of ten per cent in lieu of the rate of 5 per cent specified in sections 7 (1) and 11 (1) of that Act.

(2) It is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1927 (No. 7 of 1927).

— (The Taoiseach.)

Mr. Gilhawley

It is not my intention to delay the House very long because I understand there are other speakers who wish to get in before the debate concludes this evening. A few moments ago we heard a discussion on the implications of the British Budget and we saw what has been talked about here for many weeks past, the Minister for Agriculture taking the case out of the hands of the Taoiseach. I just wondered who is in control in the Government. Since I spoke here last week events have been happening rapidly in Europe, events which made Britain introduce a hair shirt Budget which affected very much our economic position but it must be remembered that no monetary crisis hit this country from outside at the time that we introduced our maxi-Budget. Our present economic and financial difficulties are due solely and entirely to incompetence, lack of foresight and political wrangling within the Fianna Fáil Party and within the Government. That, to my mind, is the cause of our economic crisis today.

Before I reported progress last week I said I thought there was arising in this country two classes of society, the affluent and the social welfare benefitciaries. It is easy to see that the affluent society is coming on very quickly, led, of course, by the Taca organisation. They are the people who are trying to garner all the big jobs in industry and in other spheres. At the bottom of the list we have social welfare beneficiaries. The middle-man is fast fading out of existence in this country. The small farmer in the west of Ireland has lost hope. The Government have said that they came to the aid of the small farmer in the West by granting him dole — unemployment assistance — but they forgot one thing, that the method of assessment for that was changed a year or so ago. Now, £20 income is put against £1 valuation. They also forget that in the rural areas of the West many of the small farmers are unmarried and consequently do not qualify for this. The reason they are unmarried is that it is becoming increasingly difficult to get a girl to come into a small farm in a backward place in rural Ireland. Consequently a large number of the small farmers are not eligible for social welfare benefit. Then we have the middle-man with a £20 to £30 valuation. He has been squeezed out. He does not qualify for any social welfare benefit and qualifies for very little other benefit. Quite a number of them are living on fragmented holdings and a great deal of time is absorbed in travelling from one holding to another. As well as that, they cannot keep up with the pace of increased taxation.

The small shopkeeper in the west of Ireland is practically out of business with the rates going up year after year and the income falling due to supermarkets and all the rest. The gap between expenditure and income has now become a yawning chasm. In the foreseeable future the small shopkeeper will go out of business.

There is no incentive in this Budget or in previous Budgets towards hard work. One of the things we will have to do in this country, if we are ever to balance our economy, is to work harder. There is instead, I think, an incentive towards laziness. If I may give an example, I know of a widow with one child who was drawing a widow's pension. She had nothing else except about two acres of land which was unused. She had not money to work the land and she let it run into common. She went out on domestic work at £3 a week and declared to the social welfare officer. Because she went out to work and declared to the social welfare officer that she was earning £3 a week she lost her widow's pension. Her case was appealed and the appeal was lost also. Where is the incentive to work there?

An Ceann Comhairle

That seems to be a matter for the Estimate for the Department of Social Welfare, Deputy.

Mr. Gilhawley

I bow to your ruling but I thought I was in order in dealing with incentives and encouragements or lack of incentives in this Budget. However, I shall pass from that.

We know that our basic ill is unemployment. There is a deplorable lack of employment opportunities today, especially in the west of Ireland. Due to that lack of employment opportunities we have a very high incidence of emigration. We have asked here time and time again for productive employment that would keep our people at home and swell the coffers of the Revenue Commissioners through income tax. All those please have gone in vain. The Government have turned a deaf ear to the position in the West and the economic ills which exist there.

I should like to refer to a statement by the Taoiseach about clouds on the horizon. Of course, those clouds had been on the horizon a long time and practically all the clouds in Ireland appear to follow the sun into the West. Today you have a rich east coast and a poor west coast. Any economist will tell you that a rich east coast and a poor west coast will never make for a balanced economy. You have a pampered east coast and a neglected west coast, which will never make for a balanced economy, through the wilful neglect — and wilful it was — of the Fianna Fáil administration in this country. They are the Party who have been longest in power. Economic decay has set in in the West and the only solution is to put more people into productive, taxable employment. It must be remembered that the best source of wealth in any country is its human flesh and blood.

If we examine the west of Ireland from this point of view we see from the records that 44,000 people, young boys and girls, left the Province of Connacht in the last ten years. Not so long ago we saw Fianna Fáil posters plastered all over the place about 100,000 new jobs. The 44,000 people who left the Province of Connacht in the last ten years could have got some of those 100,000 new jobs but when the posts were promised by Deputy Lemass he apparently misled the people into believing that they would be available in this country. These jobs were found in the large industrial cities of England, in Manchester, Birmingham, London and Liverpool. That is where the jobs were found, not in this country.

I have been to Swinford, and, perhaps, this is symbolic because during the time of the Famine several uncoffined bodies were buried in the work house yard in unknown graves, and I saw on the wall of this building the words "Let Lemass lead on". Somebody came along and added just two words "to Holyhead". That is exactly what Deputy Lemass and the Fianna Fáil Government did, and what the present Fianna Fáil Government are doing, to the west of Ireland. We are told that the transfer of the Department of Education to Athlone and the Department of Lands to Castlebar will help to revitalise the West. The transfer of these Departments will not open up closed doors. The transfer of Departments will not bring back the 44,000 people who emigrated from the Province of Connacht in the last ten years.

I have been pleading since I came into this House over seven years ago for heavy industrial development in the West, heavy industries which would give male employment. I have fought here for 6 or 7 years for an industrial estate in Sligo. I hope I will have a comeback yet and that favourable news will be circulated as soon as the result of the Buchanan report is circulated. That is a must because we are situated close to one of the most depressed areas in Ireland.

I accuse the Fianna Fáil Government of being guilty of the rape of rural areas and the west of Ireland. I accuse them of wilful neglect of almost an entire province. I accuse them of being responsible for the economic chaos there. I accuse them of being responsible for waterlogged land, land which, as it is, would not provide money and employment for the remnant of the population should they stay at home.

The unjust taxation in this cruel Budget will, I think, react mostly on the rural sections of the community. The never-ending spiral of taxation which we have had in two Budgets in one year — nothing new to Fianna Fáil of course — will weigh most heavily on the poorer section. Anybody who knows anything about the economy will know that the wholesale tax will slow it down. We know it will slow down house building. In the towns of Ballysodare, Tubbercurry, Ballymote and Collooney, in my constituency, the people are crying out for housing but this wholesale tax will slow down this house building. There has been no word of an increase in reconstruction grants. There has been no increase for years in spite of the fact that the cost of materials and labour has increased considerably.

I should like to refer to the price of milk. Much has been made by the Minister for Agriculture and Fisheries of the penny increase in the price of milk. I am sorry he is not here to hear what the position is in my county. I do not know whether the same applies all over Ireland. The position in my county is that the price of milk with the penny added will be the same as it was in 1967. There is proof of it in the returns for September, 1967 and September, 1968. This is worth listening to. In 1967 the test was 3.65; in September, 1968 it was 3.65; the same test. In 1967 the price was 23.53 pence per gallon and in September, 1968 the price was 22.58 pence per gallon, that is, one penny down from 1967 to 1968. Therefore, the increase of one penny brings the farmers in my constituency back to the price they had in 1967 in spite of the fact that the cost of feedingstuffs and the cost of labour has increased. The farmers in my county will be much worse off with the one penny per gallon added than they were in 1967. If the Minister for Agriculture and Fisheries were present I would say more to prove to him that the farmer today with the one penny increase in milk price is worse off than he was with the 1967 price. No allowance is made for the increased cost of feedingstuffs.

Mr. James Tully

The Minister for Labour is making notes.

Mr. Gilhawley

This hits the poorer section of the community most of all. In my constituency I can see the change coming whereby the people will no longer be able to bear the burden of taxation, and the housewife will not be able to balance her budget. People who would never dream of looking for social welfare benefits are coming to me in their thousands day after day and week after week for advice. That is a sign of the times. The increase on cigarettes, tobacco and beer, of course, hits the poorer sections of the community. The Government may call these commodities luxuries. If they are luxuries they are very small luxuries for the poorer sections of the community. These things are mere necessaries which make the struggle to stay on the land a little less onerous. In the west of Ireland this taxation which is depriving people of those comforts will be an incentive for still further emigration.

To old people eking out their final years a pipe of tobacco or a pint of stout can make life a little easier. Now, these small luxuries are placed beyond their reach. Is the Minister being cynical when he describes this attempt at curbing expenditure as one of the excuses for the savage imposts of the maxi-Budget particularly where elderly people and those on low incomes are concerned? He has hit their only relaxation.

There is no incentive to save because whatever little money people might save is taken in death duties. Of course, there will be no money for the poorer sections of the community anyway. Savings should be encouraged but the incentive is lacking.

There are other matters to which I should like to refer but many others wish to speak on this Budget. In passing, I wish to refer to rates. Small business people will no longer be able to clear the rates and in rural areas where land is not derated up to £40 valuation the holders will not be able to pay. They have no productive opportunities. Although we have had in Sligo the Owenmore and Arrow Drainage proposal mooted for the past 40 years and although 117,000 acres of land are affected, the Government would prefer to spend the money on a useless effort to change the Constitution rather than look after the interests of the people in the west of Ireland.

We appear to be travelling along a very bumpy road into the future and into Europe. The Government are doing nothing more than merely filling in the potholes and the cracks in order to deceive the people. They should get out and allow Fine Gael to take over the country so that they may try to reduced the bumps and fill in the cracks.

Minister for Labour (Dr. Hillery)

The previous speaker said we are on a bumpy road. I presume he did not expect that this country's economy could escape the vicissitudes that have visited and afflicted other countries allowing us to travel on without much effort and making no sacrifices and, as the former Taoiseach said, slide our way down to prosperity. This is not possible. Nobody owes us a living and we shall not reach prosperity sitting here groaning.

Listening to the debate I wondered what this House has to offer the country at present — recriminations from the Opposition, fault-finding, placing the blame, challenging each other to have another election to see who will win. Could we not take a look at our problems in the hope of making a contribution towards their solution? I say "contribution" because in the kind of democracy we have large freedoms are allowed and Parliament and the Government can offer only a contribution. The solution of our problems depends on the co-operation of almost all sections of the community. If we are to achieve this we could set out in this House to find an understanding of our problems and a reasonable approach to their solution. I realise the difficulties. Reason has no chance in a battle against emotion and we have reached the era of dealing with each other through headlines and slogans. I should like to impress on the House that slogans quickly thrown out or headlines easily read without study in depth of the real problems and the processes of solution will not get us out of our trouble and nobody will get us out of it but ourselves.

The method of opposition in every democratic country and at all times is to undermine the Government in the hope of replacing it. This is done by accentuating existing grievances and producing artificial ones, if possible causing a general feeling of gloom and despondency and, if possible, self-pity. But our Opposition, as has been pointed out before by other speakers in the course of the long campaign on the referendum, have taken all the steps open to them to prevent them becoming a Government at any time. If they cannot in this House offer the country an alternative Government they should at least make it possible for us to discuss alternative policies which might be implemented to solve our problems.

One of the major factors which made the Government's financial proposals necessary was the round of salary and wage increases which has worked its way through various employments this year. What is now called the 11th round was initiated in 1967 when a number of pay settlements were made which seemed at that time to be generous, although I suppose those who benefited then may regard them as being on the modest side now. The general pattern which emerged in the 11th round in industrial employment was of pay increases on a phased basis of 30/- to 40/- or, in percentage terms, from about ten per cent to 20 per cent with increases spread over two years and in two or three instalments.

As the 11th round progressed there was a tendency for the amount of the increases to go higher. The increases became higher and the element of phasing and of time became shortened and compressed. The upper limit of 20 per cent was breached in certain settlements and the average increase has now moved much nearer 20 per cent than ten per cent and, as I said, in some cases over 20 per cent has been given. At the same time, other costs increased — items such as reduced hours, service pay, longer holidays and a wider range of employment. More recently, pay adjustments in the public sector and in salaried employment have moved into the centre of the picture and there have been some trendsetting awards by arbitration tribunals which have considerably upset the pay situation. All these happenings have brought a series of settlements giving pay increases far in excess of the expected growth in national product for this year.

Everyone is now complaining bitterly of the price increases which have now been put on the community but I cannot see what else we can expect in view of what has happened in salaries and wages during the past 12 months. It is yet somewhat early to say what the precise outcome of the 11th round will be in terms of overall increases in cash incomes. The latest index of wages available is that average earnings in transportable goods industries for the June quarter show an increase of 8½ per cent over the corresponding quarter in 1967. There is little doubt, too, that the last quarter of 1968 will show an increase of as much and probably a good deal higher. This, coupled with the fact that the average number of hours of work tends to drop, indicates that we are paying ourselves a good deal more for less work.

If national income goes up by four or five per cent a year and if salaries and wages go up by something in the region of ten per cent or more, prices simply must rise. I know that other factors such as the devaluation of the pound contributed to the price rises, but there is no use in adopting an ostrichlike attitude in this association between pay increases and the inevitable harvest of rising prices.

As I said before, nobody owes us a living. The effects of the incomes increases on domestic prices are manifest. I wonder if anybody links these increases in domestic costs with what is happening at the same time in our export position. If costs go up at home, they must also go up for our goods abroad and our export position, therefore, is being endangered. The economic shocks which have been experienced by our neighbours in Europe during the past few days should have at least one lesson for us, namely, that we can continue to exist and develop in a modern world only if we can expand and diversify our export markets.

We have Government organisations for seeking out markets, for developing markets and for advising exporters. We also have the private activity of our own manufacturers, but I repeat that a strong export position depends heavily on competitiveness. One sure way to kill our competitiveness is to insist on getting salary and pay increases which are not justified by improved output and productivity.

All that has been happening here has been happening in our system of free negotiations. The Taoiseach spoke of clouds on the horizon but I would deny the statement of the last Deputy that we have a crisis. All these clouds arise with the faults in the system of free collective bargaining and free negotiation for wages and salaries. By and large, we are fixing our own salaries. We did it by vote in this House. In different sections of the economy, perhaps, people fix their own salaries. Well-organised workers are fixing their own wages by industrial action and, except for the weak sections of the community, we are, in this context of free collective bargaining, fixing our own incomes.

As I say, all these faults go with the freedoms of our system and those who would criticise the faults should be prepared, if not to put up an alternative method of dealing with them, at least to discuss the alternatives. I do not believe anybody in this House will accept the extreme alternative but we may as well go over what we could do as an alternative way of managing our wage and salary situation. The first alternative is what we are doing. We are operating a system of free bargaining with the Government taking no stronger action than merely giving guidelines to those who are running the negotiations, those who are fixing the wage and salary levels. We have set guidelines based on the expected national growth. We have given guidelines in the form of ministerial statements and this has been the system in operation with all the faults which we see.

Another system which is being tried in other places, but not here, would be a system of voluntary control — a freeze if you like — done voluntarily by responsible people. This, as I say, is being tried in other places and we watch it with interest. There is also the alternative of statutory control which I do not believe anybody in this House would want. Again, there is another way of dealing with the problem but this would require a great deal of co-operation, that is, to have a prices and incomes board.

If we study any of these, we will find that, associated with the theory and especially with the practice of them, there are much worse disadvantages than those associated with free collective bargaining. The Government have decided on what we are doing nowfreedom of action for the negotiators with guidelines offered by the Government and by such bodies as the NIEC and, a couple of years ago, by the Labour Court.

Having said that, we must realise that if we are leaving the system of negotiation to be operated in freedom, those operating it must understand that their actions and decisions have an influence on other people in the community. Up to now, people have taken decisions and have made agreements without having any regard for other citizens in the country. I would suggest that, rather than bemoan what has happened in 1968 to wages and salaries, we should resolve that from this point on we adopt a new approach —an approach based on productivity.

The 11th round offered a wonderful opportunity for linking productivity measures with pay increases because on this occasion, as distinct from earlier ones, the agreements were negotiated on an industry by industry or on a firm by firm basis. The opportunity which was offered to us was almost completely lost. As a community we are committed to these phased pay increases I spoke of, which mean further increases in 1969, and this as a result of agreements already negotiated. What we need above all now—we cannot go back—is to determine, as a people, to improve our productivity to pay for the increases which we have given to ourselves and to seek further productivity improvements as a basis for increases after 1969 so that pay increases after that time will not have the inflationary results that salary and wage increases are having now.

I mentioned the people who can fix the level of their own income. Apart from the need for the Government's financial proposals now, apart from the threat to the economy, which, incidentally, is expanding well—we need not be gloomy about it—apart from the deficiencies in the use of our free negotiating system, there are other undesirable effects. There are the effects on the lower paid workers; there are the effects on the unemployed who want to get employment in this country; there are the effects on the youngsters leaving school who have a right to expect to be employed at home; and there are the effects on the disabled, who can only hope for employment if we can increase the number of job opportunities. While we continue to pay ourselves more than we can afford, these people will be left out of the picture and will be made to suffer.

The problem of the lower paid worker has been the subject of many public statements from different spokesmen who, in spite of the system being a free system and in spite of all the evidence about the power of the Government in this field, think that the Government can solve it. The Government have been frequently urged to help to improve the situation of lower paid workers. I should like to assure Deputies that the Government want to do something in this field, but it is very difficult for the Government to do anything effective unless the trade union movement itself pushes the interests of the lower paid worker. It must be clear to everybody that in a free society where power of position is the only criterion, the lower paid worker, the unorganised worker, will suffer.

The trade unions and the Government acting in co-operation could help the lower paid worker, but it is no help to the lower paid worker if he is only used as a base for all the differentials which would start another round and leave him, perhaps, worse off than when the round started. Those of us who are better off—and this includes better-off people in all sections— should be prepared to let the lot of the lower paid worker improve without making demands for maintaining differentials. Anybody dealing with this question is aware of the difficulty of persuading people not to take what they think is their due.

Anybody who examines the various settlements in the 11th round will agree that practically nothing was done by the negotiators to help the lower paid worker, and I lay the blame for this at the door of the trade unions. They have made various pious statements in this matter, but that is as far as they have gone. The interests of the powerful and the well-organised have predominated and the lower paid sections have made various pious statements in The Government would have preferred if the opposite had happened; they would have co-operated fully in any move to help the less well-off, and will co-operate in any effective move to help them.

Mr. S. Dunne

What about the lower paid workers in Government Departments? Surely the Government have the opportunity there?

Dr. Hillery

If the trade union movement co-operate with us, we shall take care of the lower paid workers, but we must ensure it does not lead to another round right through the economy.

Mr. S. Dunne

The Minister is avoiding the question.

Dr. Hillery

If the better-off people are willing to let the wages of the lower paid workers come up a bit without making this the base for their own claims to keep their differentials, then the lower paid worker can be helped.

Mr. S. Dunne

There are 50,000 of the lowest paid workers in the country employed by the Government and the Government has not yielded to the trade union pressure to help them.

Dr. Hillery

The pay of Government employees in the lower paid categories compares well—I have gone through them—with that of lower paid workers in the private sector. What I am saying is that it is almost impossible to help the lower paid worker by action of the Government alone. Others must be willing to allow the lower paid worker to get the benefit of his increase and not erode its value by having all their differentials restored.

Mr. T.F. O'Higgins

There is precious little restoration any worker can get when bus fares are put up, the price of bread is increased——

Dr. Hillery

We must not pay ourselves more than we earn. Every one of us in this House and right down through the whole working force has taken more out of the economy than he earned, and when you are doing that you cannot keep down prices. It is a nice doctrine to preach that we can get everything for nothing, but it is not realistic. Nobody owes us a living; we must earn what we get. If we pay ourselves more than we earn, prices will go up. The day we start looking at it that way we can start doing something to remedy the situation. If any other Party would produce an alternative, if they would put up a proposal for discussion or as a policy at election time we would be on the road to having a very active political strategy which would not frustrate the electorate——

Mr. T.F. O'Higgins

The Minister is talking in riddles. Surely it is up to the Government to give a lead?

Dr. Hillery

Since free collective bargaining is the system we have decided on here——

Mr. T.F. O'Higgins

The weaker sections fall by the wayside.

Dr. Hillery

This has resulted in the weaker sections falling by the wayside.

Mr. T.F. O'Higgins

That is the responsibility of Fianna Fáil.

Dr. Hillery

No Party has decided they would adopt any other system, although they blame the system for the situation that exists. I shall continue to give advice and guidelines to those operating the system and ask them to think of the people who are left by the wayside. If people think there is a better system there is a duty on them not to frustrate the electorate but to propose that other system.

Mr. T.F. O'Higgins

I would be ashamed to be a member of a Government which would adopt such a laissez-faire attitude.

Dr. Hillery

I would be ashamed to be a member of a Party that would criticise a system and not be able to suggest a better one. I deplore this Annie Oakley attitude: "Anything you can do I can do better." People must be willing to go to the country with an alternative system of doing this job and saying to the people: "I will do it in this way; it has disadvantages, it reduces freedom but it has those other advantages." Until somebody is willing to offer an alternative to the public we can have nothing but frustration and stagnation.

Mr. T.F. O'Higgins

There is an alternative in Fine Gael.

Dr. Hillery

Are they offering the alternative of a compulsary freeze?

Mr. T.F. O'Higgins

No.

Dr. Hillery

What is the alternative.

Mr. T.F. O'Higgins

A Fine Gael Government would not permit a situation in which the lowly paid worker is forgotten.

Dr. Hillery

This means there should be a freeze system. You will not get the support of Labour in that.

Mr. T.F. O'Higgins

Maybe we do not need it.

Dr. Hillery

We are going into the field of complete hypothesis altogether. I would welcome it if somebody proposed another way of doing it instead of sitting there and saying what is wrong. You are not supposed to be paid for groaning.

Mr. S. Dunne

The Minister is saying the very opposite to what I recall Deputy Seán Lemass saying. When he was in opposition the very same thing was said by the Taoiseach of the day and he said: "I am not helping to solve your problems."

Dr. Hillery

I am explaining why the financial proposals of the Government are necessary but I am also saying that you are looking for help. If you want to face the public on this matter you will have to offer them an alternative to what we are doing.

Mr. S. Dunne

We are looking after that.

Dr. Hillery

I am glad to hear this. I am saying that, if we continue to give this nation the freedom which everybody claims, I think there are things which a Government can do in relation to those sections of the public, the unemployed, the youngsters leaving school and the disabled. We are spending public money on the educational training of those people. The changes in the educational system over the last few years have been visible to everybody. They have been discussed widely but, in addition, the Comhairle Oiliúna—which was set up under legislation by this House—training programme is now moving into top gear and the first training centre at the Shannon Industrial Estate is already in operation. A second one will be opened in Waterford next week, and a further one will open in Galway in the New Year. The year after I hope to have a major centre of training opened in Dublin suitable for the training of about 400 people at a time. In the same way the traditional apprenticeship is being up-dated and during next year a number of major industries will be brought within the scope of the Act, which we passed here, that is, the levy grants system will be applied to them.

Those schemes are intended to stimulate management to make a greater effort to undertake training within their own individual undertakings and to spread the cost of training more equitably throughout the firms in each industry. As I say, this training programme is aimed at developing the skills of our people. We cannot lose sight of the fact that economic progress depends on the contribution made by people in all walks of life. The chief fruit of economic progress should be the welfare of the people of the nation—more jobs, education and training of the people to do their jobs well and to develop all their talents more fully. Those are serious aims of our economic and social policies. We have had, I must acknowledge, full co-operation from both sides of industry in this so far.

I have been for years dealing with this area where the Government comes in between the two sides of industry. A few years ago I was hearing a lot of talk that the Government should do something. Again, nobody mentioned what it was but what they meant was something which they themselves would be afraid to offer as a solution to this problem. I have discussed this at length with both sides of industry, but more particularly with representatives of the Trade Union Congress and with trade unionists I know personally and I have made myself as fully aware as possible of the problems

I have often said legislation is not the cure for the problem of industrial relations. Particularly was this necessary to say two or three years ago when many people, even people well informed in other fields, felt that all you had to do was to pass a law and everything would be all right. I must acknowledge over the last few years there has been a much deeper understanding of and fuller thought given to the problems in this field so that those facile solutions are no longer offered as we go about our day's work. That is not to say that the field of industrial relations is any better. It does not say there is anything to be proud of about the way it is proceeding and it does not mean we have nothing to worry about. It means we have a wider understanding of this very sensitive area.

I mention this because it is a very sensitive area requiring very delicate intrusion by those who want to speak on it. In recent times we have had to meet difficulties within that field where people think that any legislation produced in this field would be repressive. Various Opposition spokesmen have used this word "repressive". I want to nail the allegation as firmly as I can and refute as strongly as I can that repressive legislation is contemplated. It certainly is not contemplated and I might add that, if it were contemplated, it would not work.

Mr. S. Dunne

You know that now.

Dr. Hillery

The proposals I hope to have in this House soon for legislation emerge from very long discussions, as I say, with representatives of employers and workers' organisations, and the Irish Congress of Trade Unions were given every opportunity to bring their strong influence to bear on the proposals. The Congress have had a substantial influence in reshaping the proposals with which we started off three years ago. Everybody knows that Congress some time ago, at very short notice and with a great deal of publicity, withdrew from the talks. I have never seen or heard any statement of their reason for so withdrawing. They certainly have not come out in the open and said that they withdrew because they regarded the proposals as repressive. Has anybody, any spokesman for the trade unions or the Opposition, who is man enough, come out and said in what way they find them objectionable? I announced publicly the main features of the proposals during the course of the referendum campaign in the hope that people would get down below the headlines and read what was proposed and not be influenced by this talk of repressive legislation. No one has taken up the challenge which I issued at that time to show where indeed in the proposals there was any repressive measure. I can only add, again, that they did not take up the challenge because there is no repressive measure.

There is no truth whatever in the allegation that the legislation is repressive. It is a sensitive area. Those who want to cause trouble seem to deal on the basis that people read only the headlines and deal only in slogans. After all the discussions I have had with the representatives of those concerned, I am convinced that we have to have changes. The changes have to be gradual and have to be acceptable. However, if this campaign, which started in the political field, continues, nobody can bring about an improvement in an area where we all agree an improvement is badly wanted.

There is nothing in the way of compulsion or repression in what the Government have in mind. We base the legislative proposals which are now being printed on the principle of continuing, indeed buttressing, the present system of free collective bargaining which is the corner-stone of industrial relations. A number of proposals are designed to facilitate the better operation of the system. There are also some proposals in the Trade Union Bill—the two Bills were introduced together—designed to strengthen the trade union movement, to put it in a better position to deal with moves to set up splinter groups or break-away unions and to discourage unofficial strikes. I promise that these two Bills will be before the House in the very near future. I can assure the House, in the meantime, that this is not antitrade union legislation. In bringing it forward, I am certain I shall be criticised for what some people in the community will call being "too soft" with the unions. I have spent three years studying this. I do not want to do anything that will hinder the worker on his way towards improving his position. Almost all the solutions which offer in this field have disadvantages in that line. Therefore, we shall be concerned with putting up with the criticism of those who will say we are not doing enough or that we are being too soft.

I suppose all the Parties have support from workers, but the basic support on which I depend is the workers'support. I would not do anything that would not be favourable to the workers but, at times—Deputy Dunne mentioned something — it is necessary to protect the workers from the automatic activity of a free-wheeling mechanism and this we should not be afraid to do in this House. Nobody need deny the need to improve ourselves in the field of industrial relations. It is a very sensitive area where suspicion is always present. If any attempt to improve it is to be labelled and made the subject of emotive slogans, then the chances of improvement are small—and improvement in this area means improvement for the trade unions and, in the long run, protection for the workers.

During this debate we have been looking on the gloomy side. They have had a pretty gloomy time in most of the countries neighbouring us, if you regard the difficulties of controlling the economy as matters for gloom. But we should also consider the advantages of this free system—the freedoms which we all cherish—freedom of association, freedom to negotiate and all the other freedoms which are not available everywhere in the world. We should look to the improved educational system, which is still far from the ideal of giving everyone opportunity according to aptitude and skill; but we have improved our educational system and certainly we have improved our social system. Opportunity is now much more widespread in education than even five or ten years ago and full opportunity, in so far as can be provided by a Government, is coming nearer and nearer.

The Government's aim is to secure that there will be no boy or girl lacking opportunity through lack of funds or social position. We should count our blessings in having a training authority, An Chomhairle Oifiúna, with the full co-operation of employers and trade unions forging ahead at such a speed, because we started far behind other industrialised countries. We are now on the road to providing training and skills for our own people. In spite of the fact that the number of new jobs being created is not as great as needed, we should not lose sight of the fact that we are creating a big number of new jobs. According to the Minister for Industry and Commerce, this year appears to be better than ever. This is an area where, again, Government initiative has proved of great value. The other areas where we find difficulty are those where the balance lies between freedom and Government action. We already have had workers' legislation in this field—training legislation and redundancy legislation. I do not think anyone will deny that, for the bulk of the population, the standard of living has improved at a rate far beyond what many of us expected. The growth in the economy last year was four per cent: this year it looks like being five per cent. It is a high rate of growth by any international standards. I deny the idea—as one of the Fine Gael Deputies mentioned—of crisis. We have a developing, expanding economy. But the one central problem is how to handle our wages and salaries situation and to keep the freedom of bargaining, the freedom of negotiation.

The Government have decided to stay on this system of freedom and to offer guidelines, relating to the growth rate of the economy. From that on, we are depending on those who are participating in the negotiations— those who are making the decisions through their industrial strength—so to negotiate and reach agreement that will not damage the lower paid worker, the unemployed or the people leaving school, or the disadvantaged. I think it is well worth giving it a trial and I think this House could give a lead.

Mr. T.F. O'Higgins

The Minister for Labour who has just spoken, strayed somewhat from the general discussion on the Budget Resolution. I can understand why he did stray. He is a Minister for whom I have a very high personal regard but I have been wondering what he has been doing over recent years: we hear nothing of him. We know that he has a Department somewhere is the city and that, presumably sitting in an office in that Department, he is weaving plans, drawing blueprints for the great day when he will announce a policy of industrial relations, a policy on trade unions, a policy in relation to incomes, a policy in relation to the things which, unfortunately, up to this, have been causing difficulty and concern amongst ordinary people. It is great to hear from him again. It is great to learn from him that eventually the mountain, which has been in labour, is going to produce, whether it will be a mouse or something else we will have to wait to see. Meanwhile I suggest to the Minister that he might use some of the sentiments which he expressed in this debate on his colleagues in the Government and ask them what is their concern in relation to the present situation.

The ordinary people who have to carry on irrespective of what Government may be in office are becoming fed up to their back teeth with drastic changes in the value of money every month and every year. Sometime ago the pound had a nominal value for a reasonable period, a period of three, four or perhaps five years, but now that is no longer so. The pay packet of the ordinary worker is eaten into every six months by direct Government action. The Minister for Labour was talking quite happily about the lowly paid workers but he might have referred also to those who have to live on and depend on social welfare assistance of one kind or another. In effect he says they are no longer to be the concern of his Government; if somebody else does not look after them the Government certainly are not going to do it.

Dr. Hillery

I suggested that the trade unions, with co-operation, can——

Mr. T.F. O'Higgins

It is the responsibility of the Government to see that social justice is established and I can assure the Government——

Dr. Hillery

How do you do it?

Mr. T.F. O'Higgins

——the Fine Gael Party will see that this is established.

Dr. Hillery

It is the Fine Gael method I am interested in.

Mr. T.F. O'Higgins

I want to say this, and I will not be diverted from it, that we are discussing today a Budget, the second Budget in this year, which has imposed in a full year some £19½ millions in fresh taxation. It may be of interest to the Minister, although he probably knows it, and it may be of interest to the Fianna Fáil Party and to Deputy Dowling who is in the House and who in certain circumstances talks a great deal about the trade union movement, to know that this Autumn supplementary Budget, once referred to as a mini-Budget, has imposed the highest amount of taxation ever imposed by any Budget in the history of the State. This mini-Budget, this supplementary Budget, has imposed £19½ millions which is a record taxation increase. The previous highest taxation was imposed by the Budget which introduced the famous turnover tax. This £19½ million has been imposed by this Budget which apparently was introduced as an afterthought, in the after-wash of the referendum. We know from Ministerial speakers at dinners and banquets and so on that money does not grow like apples on the trees. We know because Ministers have told us so often that their dark locks are going grey worrying about where money is going to come from for different things. We know, of course, that ultimately the money has to come from the ordinary people. £19½ million as an afterthought, as a by-the-way just before the financial year ends, is being taken from the people and it is being from the people who will pay it as they buy the things which they are told are luxuries. They will pay it on the pint, on tobacco and on the ordinary things people wish to buy, through the wholesale tax and so on.

There is no regard in this enormous increase in taxation for the lowly paid worker. Let him just suffer on. There is nothing in it for the old age pensioners, they will pay just the same as the best, well-off member of Taca. This is the Government we now have, the Government that I am going to suggest do not know what social justice means. This burden of new taxation, this £19½ million, is imposed on the backs of the ordinary people, on the backs of the largest number of people where the base is wider. We are expected to accept this. I do not know the basis for this Budget. This debate ends this evening as it began, with utter confusion amongst ordinary people as to why this Budget was necessary.

There are those on this side of the House who are sufficiently uncharitable—I do not know whether I am one of them or not-to suggest that this Budget became necessary because the spring Budget, the ordinary Budget, was a dressed-up facade of a Budget designed to make straight the way of the referendum. That may be so and it may not be so. If it is not so, then it seems to indicate that in the spring of this year the Government of which the Minister for Labour is a member presented a Budget orientated for a 12 months period, designed to shape the financial policy of this State for 12 months, and they did not know what was necessary. It is not surprising that the Minister for Agriculture and Fisheries—I am sorry he is not here now because he spent the whole of his turgid speech on the Budget talking at me—apparently did not know in the spring of this year that all the arable land of Ireland was being broken up to sow wheat. He did not know that. Of course, it is not surprising that he did not know it because he had not got a farmer friend in the country. No farmer would talk to him. If he had a farmer friend who knew anything about agriculture he would have told the Minister that we were in for a record year as far as wheat was concerned.

But that was not known and so one puts that down to what might have been. One "might have been" that might have been, had there been a Minister for Agriculture in the spring of this year en rapport with matters agricultural, would have been that the Government would have had sufficient advice to make proper arrangements in regard to wheat subsidy requirements and in regard to milk. Apparently our Minister for Agriculture and Fisheries did not know what every farmer in the country knew, what even the Minister for Finance knew because he referred to it in his Budget Statement; every farmer in the country and the Minister for Finance knew there would be a dramatic increase in milk this year. But the Minister for Agriculture and Fisheries did not know that and, accordingly, the Government did not know the score. In regard to these two headings there was under-budgeting to the extent of close on £6 million. That is, perhaps, understandable. Any Government which has to suffer the present Minister for Agriculture and Fisheries, because no one has the guts to boot him out, will go from crisis to crisis and from difficulty to difficulty.

What about the £9 million for civil servants? Did the Government not know about that? It is hard to believe that in the spring of this year no one told the Government that wage and salary increases were, in fact, already taking place. Apparently, no one did and we have in office now a Government so far removed from what is taking place in the country they are supposed to govern that they did not know that in this financial year the salaries and wages of public servants would increase to the extent of £9 million. Everybody else knew it, but the Government did not know it. I find it very hard to imagine these 13 or 14 gentlemen, entrusted with the Government of this country, displaying such sheer incompetence that they proceed to budget in regard to our economy not knowing what is happening in agriculture and not knowing what is happening in the State service, the service they themselves are supposed to be running.

I doubt if that is the truth of the situation. While the choice may be between incompetence and dishonesty, one is driven towards the conclusion that the spring Budget this year was a deliberate makeshift Budget, a makebelieve Budget, designed to cod people into thinking that budgetary requirements did not necessitate any significant increase in taxation and that everything could carry on with the Minister for Finance in the role of Fairy Godmother. Whatever the real motive was, we have had a result which is most unfortunate for the country. This Budget, coming at the time it does, is bound to have a deflationary effect. It is bound to depress the economy. It is bound to lead to another spiral in wage demands and no amount of Ministerial tut-tutting will prevent that happening. This Budget is bound to increase the cost of living by at least 4½ per cent. It is bound to increase the anxieties and the difficulties of those with slender means, pensioners, social welfare recipients, people at the very lowest point in the income grouping. All these will suffer. This Budget is bound to arouse a sense of social justice on all sides of this House. It is bound to increase the demands that will fall to be made on the Exchequer in the next few months. These demands will depress the economy still further. This Budget will shove up costs of production. It will make our export trade much more difficult and much less competitive.

This comes at the end of the period in which we have put behind us two miserable years of deflation. The year 1966 and the first part of 1967 were periods in which the workers and the less well-off sections of our community were forced to pay bills entered into by an incompetent Fianna Fáil Government in the inflationary years of 1964 and 1965. The inflation of those years had to be paid for in 1966 and 1967. It was paid for by the people. It is they who always have to pay. It was paid for by those who were thrown out of jobs. It was paid for by increased unemployment and increased emigration. It was paid for by increased taxation.

The tragedy is that this year and in the latter half of last year—the Minister referred to this—the economy was beginning to recover. The Minister said the economy is fundamentally sound. It is, thanks be to God. It has withstood the assaults of successive Fianna Fáil Governments and, after a little medication, it has come up smiling again. I am sure it will come up smiling again even after this Budget but, in the latter part of 1967 and this year, the economy was beginning to advance. We were beginning to get the kind of significant growth so absolutely essential for a small country such as ours, if we are to survive. It is in these circumstances that we have now a fresh dose of deflation introduced deliberately by this Government as part of their policy, some £19½ million of additional taxation imposed on the economy at a time when the economy was beginning to surge forward once more I do not know what the outcome will be. Not only have the people to face these additional taxes but the taxes themselves are being followed up by an increase in bus fares, by an increase in the price of bread, and, apparently, by a complete collapse in the control of the Government over the stresses facing the country. At the same time, the Government are out of control over what is happening in the country at the moment.

The Second Programme for Economic Expansion was buried some six months ago. Nothing was put in its place. The evidence of that lack of plan and policy is now clear to the people. It is bread one day and bus fares another. It is a Budget one month and another Budget the next month. One does not know now from week to week what crisis is likely to face the people.

The Minister for Labour talks about collective bargaining. Is it not clear that one of the difficulties that has faced the country over the past two or 2½ years has been the complete lack of any policy by the Government in relation to incomes and prices? For the past 2½ years we have had a succession of wage rounds which seemed sometimes to come of their own momentum, and sometimes to be triggered off by direct Government action. We have had wage round after wage round. Now we have a situation in which the 10th round is chasing the 11th round and in which we will have a merging of wage rounds. At the same time, you have one causing the other, and one does not know which is the causa causans. But at the end prices go up.

May I remind the Minister that two years ago in this House we had a debate on a prices and incomes policy. The difficulties were recognised by every Deputy. The aim behind such a policy was also recognised and appreciated by every Deputy. The motion in relation to prices and incomes which was moved from the Fine Gael benches was passed unanimously by the House. It was accepted by the Government. That did not mean that to achieve an incomes policy would be easy. No one expected that it would. Now 2½ years have gone by with nothing whatsoever done in furtherance of what was the unanimous view of the House. That is a significant dereliction of duty on the part of the Government.

The Minister talked about difficulties. Of course there are difficulties, but I should like to know what the Minister for Labour and his colleagues have been doing about getting a policy of that kind off the ground. I have no doubt that in a country as small as we are, a country that has the difficulties we have—we must export to survive— if we do not get some reality, some constancy, some normalcy in our earnings, we will have a recurrence of the type of difficulties we are now experiencing.

Prices must be related to production, as incomes must be. There has to be a general understanding between the business people, the entrepreneurs, those who hazard capital and management generally, and labour, and the Government have a responsibility. They cannot sit on the sidelines and say: "It is up to the pair of you. Tell us what the result is and we will see it is enforced." That will not do. As long as that continues, as the Minister himself has recognised, the lowly paid workers will continue to suffer and the social welfare recipients will continue to find that whatever measure of social welfare help they get is eroded and destroyed by rising prices. The entire economy will continue to suffer from new incursions on the value of money spiralled off by increases in the cost of living and prices generally.

The Government have a responsibility and they cannot shrug it off by saying it is a difficult and a dangerous task. Of course it is. These are dangerous days, and if we have not got a Government willing to live dangerously and act, the country will not survive. We in Fine Gael believe in an incomes and prices policy. We stated that in the general election of 1965. We announced it before they endeavoured to introduce it in England. We still believe in it. We think it is the only salvation for a country such as ours, and we expect some action by the Government in this regard.

Before I conclude I want to say a word about the situation now confronting this country. It is unfortunate that we have had this Budget. The way in which it was introduced and the taxation it imposes were bad enough, but it is particularly unfortunate that this Budget should have preceded the developments in recent days in Europe and in Britain, particularly in so far as they effect us.

Reference has been made to the Free Trade Agreement between this country and Britain. I do not want to debate the terms of that agreement but I should like to remind the House, through you, Sir, that when the Free Trade agreement was debated here a little over two years ago, we on these benches had considerable reservations about the benefits claimed for that agreement. In the first place we deprecated the fact that the agreement which was concluded by our Government appeared to condone and accept the import levies which the British Labour Government had imposed on our exports some short while before. What has happened in the past few days indicates the validity of the reservations which we expressed then.

In my view the 50 per cent deposit now required by the British Government in relation to exports from us is in clear and open defiance of the provisions of the Free Trade Agreement. That agreement does permit either country, in the event of a balance of payments difficulty, to impose quantitative restrictions on imports from the other partner. What the British are now doing in effect is taxing or imposing a form of levy on exports from this country. It is not within the terms of the agreement. It is in open defiance of the agreement. They are doing it unilaterally and doing it because they apparently feel they can get away with it.

When one remembers that this agreement which was supposed to give such tremendous help to the agricultural industry—I will not go into the claims made for it two-and-a-half years ago— and the great expectations that were entertained in relation to that agreement when debated and when one looks at the score since, one begins to realise that there were some defects in the negotiations for the agreement itself.

In an exchange of letters between the then Minister for Agriculture and the British Minister of Agriculture Deputies will recollect that the British, at the time of this agreement, said that they were going to take all our creamery produce and all our creamery exports in the sense that the target set out in the Second Programme would be absorbed by them. What has happened since? They have cut down on butter. Last year they grudgingly allowed imports of some minor amount in excess of 1,000 tons of butter. They are now threatening our chief exports. Indeed, three or four days after the announcement of their plan to make Britain selfsupporting in agriculture the British Minister of Agriculture—I do not know his name—when speaking to British farmers said that the Free Trade Area Agreement caused some difficulties in relation to the British Government's new plan but when it came up for revision the British Government would remove these difficulties. He said "when it came up for revision". This agreement is supposed to be irrevocable and it is supposed to be a permanent statement of our trading relations with the British but a member of the British Government describes it as something temporary and says they will remove the difficulties in it when it comes up for revision.

I should like to suggest to the Minister that he might convey the view to his colleagues in the Government that we should tell them first it is coming up for revision here and now. They have broken it in the last two or three days and their breach is merely a repetition of the way in which it has been disregarded when it suits British purposes in the last two years. We made these reservations clear indeed. This agreement was debated and I certainly feel so far as this country is concerned that we have not got from this agreement the kind of benefit we were led to expect. There will have to be new thinking on our trading relations with Britain. In saying that I have no doubt that what will be done in that regard by the Government will be adequate and necessary. In relation to any representations that will have to be made and any point of view that will have to be expressed, I have no doubt that the Taoiseach or whoever may meet the British Ministers will represent fully the point of view of most people in this country.

Before I conclude there are one or two other things I want to say. I am sorry Deputy Andrews is not here. I saw him here earlier. I was interested to watch him on television last night serving a certain notice on the Fianna Fáil Government. One could call it a challenge. I wonder will it be taken up? We have had a surfeit in this country of Government by dictatorship. A very good example of what I have in mind is now coming to take his seat in the House, the Minister for Local Government. People of this country have reacted violently against ministerial dictators who have paraded themselves around the country saying: "You take it from me."

Mr. Boland

We do not bring the wife and kids with us.

Mr. T.F. O'Higgins

In the referendum the fact is that the people did not take it. We heard last night that at least one Fianna Fáil Deputy is going to react in a very positive way against this handing down of decision by the Fianna Fáil Government. I wonder will there be others who will do it? This Budget is a good example. Every member of the Fianna Fáil Party has an opportunity now to react against the weight of this taxation and to react against the Government that suddenly decides that this kind of thing has got to be done. Deputy Andrews is going to vote against the Criminal Justice Bill. I am not going to discuss the Bill. I am merely discussing what is involved in a decision of that kind. How many others of the Fianna Fáil Party are willing to take that kind of independent attitude? I have little doubt that there is reaction inside Fianna Fáil against much of what has been going on, against the failure to consult people generally, against the situation in which ministerial decisions are handed down and against the way in which the Party is run by the few. I am told that there is a marked line now in Fianna Fáil, a cleavage between the more nationalistic minded members of the Party and the newer type of Deputy.

Mr. Boland

The Deputy should not believe all he is told.

Mr. T.J. Fitzpatrick

(Cavan): We did not believe you anyway.

Mr. Reynolds

I think the action of the Minister for Local Government has come to an end.

Progress reported: Committee to sit again.