Dáil Éireann díospóireacht -
Tuesday, 1 Jul 1975

Vol. 283 No. 1

Financial Resolutions, 1975. - Financial Resolution No. 3: General (Resumed).

Debate resumed on the following motion:

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

—(Minister for Finance).

Mr. Lalor

I was dealing on Friday last with the contribution of the Minister for Finance when he introduced this amazing budget. He did a certain amount of referring back to what he had already said when he introduced his January budget. He built into his contribution on Thursday last a statement he had made in January when he said that his budget was carefully expansionary and that it was designed to preserve employment and maintain living standards. It can truthfully be said that his January budget failed to do either. I do not have to deal with the fact that employment has not been maintained. We now have the highest rate of unemployment this country has had since the breakdown in the former Coalition regime.

The Minister in his speech said:

Unemployment, which is a chronic and a corrosive evil with deplorable social effects, is an inevitable consequence of inflation.

Such a statement by the Minister for Finance cannot be allowed to go without comment. It is an outlandishly stupid statement for a man in his position to make. Inflation at a slow or a fast rate has been taking place all over the world over a period. That sort of situation does not necessarily mean increasing unemployment. For a Minister for Finance to make such a statement establishes beyond yea or nay that he does not know what his job is all about. The Minister went on to say in regard to inflation:

Unless it is swiftly reduced, this could be a recipe for unemployment on a scale previously unknown and intolerable living costs at home.

That statement is an indication that the Minister for Finance has given up the ghost from the point of view of trying to get the economy back on a proper footing. An indication of the fact that the situation has almost got completely out of hand and, left in his hands, will, in fact, get completely out of hand, is the statement he made that 20 per cent of the expenditure that has to be provided for at present is needed to fund the national debt. That is an indication of the manner in which this Government have been selling the country down the drain.

I recall, as a comparatively young Deputy, 15 years ago, listening to Deputy O.J. Flanagan, my constituency colleague and a man who is renowned for flinging mud right, left and centre. He was pointing to the Sliabh Bloom mountain and saying that in a very short time due to Government borrowing, the forest and the mountain itself would be owned by the Germans. It is rather pitiful that a Government backed by that gentleman have brought us to the point where we are well on the way to having our island owned by foreigners. This is a direct result of the maladministration of this team of geniuses who were brought into the Government two and a half years ago.

We had the extraordinary admission from the Minister for Finance that £76 million had been spent over and above the estimate that was prepared in January. We are further in hock to that extent and, according to today's newspapers, it seems that even that was an underestimation of the actual position. The Minister, using the services of his advisory staff in the Department of Finance, four or five days before the end of a six month term deceived this House and the public by not being up to date with the financial position of the country. He had to admit that tax revenue was running lower than the rate expected. We can see from the six months statement of accounts that revenue does not measure up to what he expected in January. Everybody recognises that as Minister for Finance he has a vested interest in inflation because in its own way it improves the tax revenue position. It fell short under the straightforward tax revenue heading, excluding motor vehicle duties: it fell short of expectations under the heading of motor vehicle duties and in the non-tax revenue end it was on a par or slightly exceeded the expected revenue for the six month period which was £11 million.

It is a desperate situation that any Minister should have to come into Parliament and admit that he has so misconducted the affairs of State that the rate of foreign borrowing has risen fivefold in the last two years. That is two years of the two-and-a-half years the Government have been in office. That is the greatest condemnation of any Government. It did not come from the Opposition. It came from the mouth of the man who has to handle the financial affairs of the country. It is an establishment of the fact that he is the most unfit Minister for Finance this country has ever had.

It is rather sad that the Minister had to say:

The Irish economy does not have an unlimited capacity either to borrow resources or to repay them —a fact no less apparent to our creditors than to ourselves.

That is a significant statement coming from the mouth of the man who had been traipsing all over the world during the previous week. It was all right to say that the Irish economy does not have an unlimited capacity either to borrow resources or to repay them, but to have to admit publicly and openly here in Parliament that this fact had become apparent to the countries to which he had travelled in an effort to borrow further to keep the country going is a very serious matter. That very significant addendum to a sentence appeared in the budget presented here last Thursday by the Minister for Finance. If it were not so serious it would be a laughing matter for the Minister for Finance to come in here and state, on behalf of the Government, that there is no question of reneging on or abandoning the national wage agreement. He went on to say that, if the modifications are inadequate, the Government would be obliged to consider revoking the price reliefs. Who is the Minister trying to fool? He clearly calls categorically for the abandonment of the national wage agreement and then goes on to say that the purpose is to maintain the real value of incomes which, in the absence of Government action, would be further eroded by inflation.

Why are the Government afraid to take positive action? Why the necessity for turning to these blackmailing tactics operated by the Minister for Finance? He established beyond yea or nay the criticism in the leading article in last Sunday's Independent that this Government is a spineless and leaderless group. Deputy Colley stressed on Thursday last the fact that one of the principal problems the country has is lack of confidence. One of the things that breeds a lack of confidence is being leaderless and that is exactly the position with this Government at this moment. This morning, a Cheann Comhairle, you yourself witnessed the leader of my party asking the Leader of the Government a straightforward question, asking if the Taoiseach would make Government time available to discuss a very serious situation that has developed due to mishandling by the Minister for Defence, with the connivance of the Taoiseach, and the Taoiseach had not the guts to say “No”; all he could do was shake his head.

Here is this leaderless Government we heard so much about 2½ years ago. I was a member of the last Fianna Fáil Government put out of office by popular vote 2½ years ago. I have a clear recollection of Government meetings almost every Tuesday morning and the then Taoiseach of this very silent Government, which is what we were accused of being, coming down the steps of Government Buildings any time between one and two o'clock, and often three o'clock, from a Government meeting and a microphone would be shoved under his chin and he would be asked questions on current affairs and would be expected to answer those questions. Week after week he did just that. He answered questions from the Press, television and radio with regard to whatever the problem was at the moment.

Has the Taoiseach ever been interviewed on the steps of Government Buildings? It is a tribute to the Director of the Government Information Services that he has not. This Government have a way of presenting the news without a Minister ever being responsible for actually making a statement. Recently the Minister for Industry and Commerce was interviewed on television. The interviewer asked him was it not the case that such and such had been discussed that day, as indeed had already been announced by a Government spokesman, and the Minister for Industry and Commerce laughed, which was rather unusual, in a rather sarcastic way, which is rather usual for him, and said: "I read in the paper where the Government have been today discussing this, or today discussing that, or yesterday discussing something else, and it is far removed from the truth". This was a new development on the part of this open Government because up to this official Government sources, the Government Information Services, were coming out ex cathedra and making what purported to be actual starightforward statements. Over the last fortnight or three weeks this has changed. The mouthpiece for the Government has been contradicted by a Government spokesman. The Minister for Industry and Commerce let the Government Information Services, which has stood the Government in good stead, down very badly. Mark you, when the ship is sinking we all know what happens with the rats.

I was dealing with the statement made by the Minister for Finance in which he claimed that the Government were not reneging on the national wages agreement but were going to see to it that it was buried in some other way. He went on to say that really what it amounted to was that, if the Employer/Labour Conference failed to play ball with his formula, other steps would have to be taken. I can picture here one appearance of a Government Minister on the steps of Government Buildings. It will be the Minister for Finance, Deputy Richie Ryan, standing on the steps where the present Taoiseach should have stood and met the media, and, like Pilate, he will send for the water and the towel and and wash his hands publicly and say to the people: "Do not blame me. I am innocent."

Today is the first Tuesday following on last Thursday's budget and we have a rather remarkable situation. The Minister for Finance promised last Thursday that the price of milk would come down by 2 pence per pint. Yesterday, the 30th day of June, the Minister for Industry and Commerce made an Order maintaining the price of milk at its existing level for the month of July. That is one of the promises already gone up the spout. Headlined in today's papers is the fact that despite the promise made by the Minister for Finance last Thursday regarding fuel prices, there will be an increase of 3 pence per bail in turf briquettes, an increase of £12 per cwt. sanctioned by the Minister for Industry and Commerce. Instead of the removal of VAT bringing down the price of electricity we will in fact have an increase of 8 per cent in electricity charges. It has been categorically stated over the weekend that the Minister for Transport and Power has refused CIE permission to reduce rail charges.

What is going on in this Government? The Minister for Finance says one thing and the Minister for Industry and Commerce does the other. So does the Minister for Transport and Power. In to-day's paper there is an amazing recommendation by the Prices Commission, which is being adopted by the Minister for Industry and Commerce, legitimising a charge of an additional 4 pence on the pint of milk if the shopper does not bring an empty bottle. I do not condemn that but I do condemn the Minister for Industry and Comerce for sanctioning a charge of an additional 4p on the bottle of milk if the purchaser does not bring a bottle, unless he also makes an arrangement whereby a refund of 4p will be made to the purchaser who brings back the bottle. This is a thing that is being and has been exploited in this city. That has been the situation for some months but nobody tells the Minister for Industry and Commerce anything.

I recall hearing the Minister for Industry and Commerce say in the debate on the Estimate for his Department just before the Christmas recess that if he had any complaint to make it was that he did not get enough complaints. I was criticised as Minister for Industry and Commerce but I always heard the complaints and nobody was louder in his complaints than the present Minister for Industry and Commerce. Not alone did he complain, he promised remedies. I do not think we have experienced the operation of these remedies.

One observation made by the Minister for Finance in his financial statement which passed very much unnoticed was the threat to have a repetition of what happened in the last Coalition Government, in the 1956-1957 period, implied in the statement that when the money allocated for grant schemes was used no more money would be made available. I can confidently prophesy that a great many householders, particularly farmers, will face a rather bleak Christmas this year. I can see myself as a Deputy for my constituency having to make representations to the Department of Local Government regarding the payment of reconstruction grants or new house grants and to the Department of Agriculture and Fisheries in connection with farm grants. It has been stated categorically by the Minister for Finance that money will not be made available once the initial provision for grants has been exhausted.

There is an arrangement, a Cheann Comhairle, as you know, whereby until the Estimate has been passed a Department can use only three-fourths of the amount provided in the previous year's Estimate. I had an urgent call from the Government Whip in the middle of June. He asked that all the Estimates be cleared before the end of June as every Department was running out of money on the basis of last year's Estimate and in order to maintain the flow of money it was urgently required that all the Estimates be cleared by the end of June. That indicated that three-fourths of last year's provision had been spent by all the Departments. I realise that in that case it was only a nine months period and that the provision would be much lower than for this year.

The statement by the Minister for Finance last week that so many more millions would be required in order to keep the ship of State afloat for this year is a clear indication that from September onwards there will be very little money in the kitty to pay the grants to which the public have become accustomed and to which they are entitled. I foresee a very bleak Christmas for our people.

The Minister said that consideration would also be given to making realistic charges for public services which are either provided free or are charged for at uneconomic rates. This is another statement which did not seem to get the notice it deserves. I am interested to see the Parliamentary Secretary to the Minister for Education and the Minister for Industry and Commerce in the House. I see involved in that statement a severe curtailment of an already curtailed school transport service. I see a curtailment of free transport for old age pensioners, a curtailment of the provision of free electricity for the same necessitous group. The Minister went on to say:

Exchequer subsidies to various bodies which should more appropriately be supported from other sources will also be looked at critically.

That puts paid to the possibility of the restoration of amenity grants in the coming year, the need for which has been felt throughout the country. It puts paid to the local improvements scheme grants. It puts paid to any prospect of State help for the social welfare groups who have been expecting and some of whom have been receiving State help. It puts paid to any progressive youth policy programme, if such a thing could be expected from the Parliamentary Secretary to the Minister for Education.

When will the Taoiseach correct the mistake made last week by the Minister for Finance when he suggested that the Minister for Labour would come into the House to explain the operation of the £12 employment premium scheme? The Minister for Labour came into the House but he did not explain. The faithful Government Information Services have again come out with documentation to try to explain but the matter is left very clouded in the Guide to the National Manpower Premium Employment Programme as to how the potential employer or expanding employer will get the proper type of assistance. As I said on Thursday last, I am in favour of this scheme but there is a great deal of vagueness about it.

I was intrigued to hear the Minister say that an approach had recently been made to the EEC Commission to make arrangements to regulate the flow of imports of footwear. Why only now? I notice that in the script which the Minister handed out the statement was: "an approach had been made". When the Minister was reading from the script, being the clever operator he is, he put in the word "further"—"a further approach had been made". He added the word "further" in order not to give the lie to the statement made by the Minister for Industry and Commerce before Christmas of last year when he conveyed that he was endeavouring to do something about the footwear industry and promise an early solution. The Minister has faithfully promised an early solution for the past two-and-a-half years. It has not been forthcoming.

This is extraordinary behaviour on the part of the Minister and the Government in view of the fact that the footwear industry is in such a dreadful position. The textile industry also is in a dreadful position. Why was the further approach, or the approach—whichever one likes to take—which was to be made to the EEC Commission with a view to the adoption of remedial arrangements which would enable the flow of imports of footwear to be regulated in the interests of employment in the industry, not made also in connection with textiles in respect of which the situation is as serious?

There is a beautiful vagueness in the Minister's statement dealing with the extra £27 million from the public capital programme. He mentioned £10.5 million for housing. Other speakers have dealt with that more adequately than I. The Minister for Local Government was saying that there was no problem with housing; there is no scarcity of money; and who are the Opposition trying to fool? He has now been contradicted by the Minister for Finance who found it necessary to make this extra provision and to do business with the banks to also make extra provision. This proves that the Minister for Local Government has been trying to blind the country to the situation while he smiles and whistles his way past the graveyard.

An extra £8 million is being provided for telephone development. I recall large black headlines in the press in February last year about the extra £75 million which that Minister had extracted from the Government for telephones and that everything in the garden would be rosy. Yet the telephone waiting figures like the unemployment figures, continue to increase. As long as we have the present Minister for Posts and Telegraphs, this situation will continue. He is obsessed with so many flak operations that, in my view, he never has time to do what he was appointed by the Taoiseach to do, and that is, do something about the Department of Posts and Telegraphs.

The Minister for Finance blew bugles because he was providing an extra £5.2 million for the development of industry and commerce, until he got to the stage that £4 million was being provided for the rescue service, Fóir Teoranta.

Nobody knows, least of all the farmers, how the £3.4 million will be channelled into agriculture and so far, nobody from the Government side has given any indication about it. I realise that I have not very much time but, as a former Minister for Industry and Commerce I must spend some time dealing with that Department and the complete, abject and utter failure of this Minister for Industry and Commerce.

Everybody knows there are three Departments of State which have the responsibility to generate the finance to keep this country going—Industry and Commerce, Agriculture and Fisheries, Posts and Telegraphs. Every other Department is dependent on the work done by these three Ministers. When I was Minister for Industry and Commerce I remember fighting at the cabinet table for my slice of the cake. I had to continuously remind my colleagues of the importance of my Department. The Minister for Transport and Power has a very serious function to perform. He is responsible for tourism.

The big failure in the present Government is the Minister for Industry and Commerce, who, on the one hand, should be developing industry and, on the other trying to make a serious effort to control prices. He was left a Department with an ever-increasing number of new jobs being generated annually. The IDA and CTT were all-go, fully backed by IIRS and SFADCo. The Minister complained recently about being left with an empty cupboard because the former Minister left no ideas. Every Minister has come here with files and flung accusations at their predecessors. When the present Minister for Industry and Commerce could not find anything derogatory to say about his predecessor, all he could think of was to say that I had left an empty cupboard.

The Minister for Finance went on record as saying that the Minister for Industry and Commerce could not get into the Department when first appointed because the Department were inundated with applications for price increases. If there were, the present Minister cleared them very quickly. If anybody cares to look at his record from a legislative point of view he will see that the Minister has done nothing since he took office except, in my opinion make a mess of mining. His big complaint was that I had not commissioned experts to make reports telling him what to do with our mineral development.

I want to make a confession; I gave consideration to all that. I am not an expert on resource and development but one of the things that worried me was if I commissioned experts from the United States, Canada, Norway, Britain or anywhere else in Europe, would those experts be working solely for this country or in cahoots with an already established business?

What has he to show for the reports he had on his desk when he took office? What has he done about the Acton Report on textiles? He has allowed the industry to fall around his ears. We had negotiated a special deal for the motor assembly industry in Europe and it is now in chaos. Why? I seriously suggest it is because it suited the smallmindedness of the present Minister for Industry and Commerce to join in undermining the motor assembly industry by telling the workers that I had sold them out before he learned the hard way that I was providing suitable alternative jobs for them.

In late 1971 I travelled at the head of a small business delegation to Bulgaria. As a result, we sold £300,000 worth of goods to the Bulgarians in 1972 as against £100,000 imported from them, a three-to-one balance in our favour. This year, four years later, the present Minister, who could not get a visa to the United States until he became Minister for Industry and Commerce, led a power-packed delegation to Moscow and returned gloating and smiling, because he got an order for £150,000.

I created the National Prices Commission to help with price controls. While in office I accepted full responsibility for any price increases. The present Minister uses the Commission to cover his failure. The National Prices Commission saved this country a great deal of money. The Minister is using this body as a smoke screen for his own inactivity, incompetence and failure.

Nothing has been done about motor insurance—although Committee reports are on his desk—consumer protection, or the Bill on mergers and takeovers which was to improve the mining position. He failed to operate the restrictive practices, letting the big combines dictate to the small man. All this from our socialist Minister. The Minister's greatest capacity is to monitor. He spends all his time monitoring, studying up-swings and down-swings, up-turns and downturns. All we have had are up-turns in prices, up-turns in unemployment, and down-swings in the national wealth.

The Parliamentary Secretary to the Taoiseach said we have had too many debates. We have had quite a number. Last Thursday Deputy Colley pointed out that we have not been obstructive in Opposition. It was established beyond doubt on Thursday last that the Fianna Fáil Opposition have been most constructive. If our advice had been accepted it could have been effective. The advice we gave at the end of last year and the beginning of this year was the proper advice but, as the Leader of our party said, what the Government are doing is too little and too late.

The Parliamentary Secretary also said that the standard of living of our people has risen so much that people are now travelling to the Black Sea for their holidays. He said he was not jealous of this. Jealousy does not arise. Possibly I would love to be at the Black Sea on holidays at the moment. The reason our people are going abroad for their holidays is that, due to the inaction and inactivity and the misdeeds of the Government people can have cheaper holidays abroad than at home.

Some people on the Government side of the House think this is a good budget. We were threatened with a shocking budget and with disaster. We have achieved disaster. Some of the more eloquent orators on the Government side may be able to sell to the people the erroneous idea that we are so well off that we can hand out the goodies which were handed out last week without paying for them. I would ask the Taoiseach to call a general election immediately.

Parliamentary Secretary to the Minister for Industry and Commerce (Mr. Bruton)

A Cheann Comhairle, you will be glad to hear that my speech will be short. It is important to recognise that this budget is a deliberately planned strategy to tackle the problem of inflation. It is based on the recognition that, in the most recent 12-month period, a situation has developed wherein inflation is largely home generated and generated, in fact, by increases in salaries and wages which far exceed increases in production. You cannot have increases in wages and salaries which exceed increases in production without inflation. We are, if you like, causing our own problems in that respect. Since the last war people all over the world have become accustomed to a rate of growth in production linked to increases in world trade and technology which in historical terms, was unprecedented.

In Ireland we have become accustomed to rising living standards. Over the past two years, as a result of the energy crisis, it was no longer possible for western economies to increase production at the same rate as they were accustomed to increasing it in the years since the Second World War. In Ireland we did not adjust our expectations of increased incomes to the fact that the production to generate those income increases was not increasing at the rate at which it had been increasing in previous years when we had acquired those expectations. The Government want to demonstrate this clearly to the people and to secure agreement from them for an adjustment downwards in their expectations in order that we can get the economy back on an even keel and stop the spiral of inflation and we can have a competitive economy.

Recently I contributed to a debate on the shoe industry in Private Members' Time. There was one rather interesting statistic which I discovered in consultation with officials prior to that debate. It was projected that, under the terms of existing national wage agreement, wages of workers in the Irish shoe industry would exceed the wage levels of their colleagues in the British shoe industry by about 26 per cent. Quite clearly Irish shoes are competing with English shoes and, if the Irish shoe industry have to pay wages which are 26 per cent higher than the wages paid by their competitors, Irish shoes will be significantly dearer than British shoes. Therefore, it will obviously be very difficult for Irish shoes to compete. We will lose export markets and we will also lose ground on the home market as well. A similar situation could be shown to exist in many other industries.

The plain fact of the matter is that increases in incomes are jeopardising jobs. People in secure jobs who insist on income increases which are in excess of the general increase in production in the economy, are putting at risk the jobs of their compatriots who are in the types of employment which are more susceptible to international competition. Many of those who are, if you like, leaders in demanding increases in incomes which are in excess of the general production capacity are in jobs which are relatively secure. They are not losing very much by insisting on increases in wages which are in excess of the norm the country can afford but, in so doing, they are putting the jobs of other workers at risk. This is a natural enough thing for people to do. We cannot expect anybody to be altruistic to an undue extent unless the clear implications of what he is doing are explained to him. This is what the Government are seeking to do in this budget and in this economic debate.

It is very important, therefore, to recognise that the budgetary strategy is designed to secure a modification in the national wage agreement. The Minister said:

If on the other hand modifications of the National Pay Agreement should be refused or if they should be inadequate, the Government would be reluctantly obliged to consider revoking the price reliefs which are a signficant feature of this budget.

The most innovative aspect of the budget is undoubtedly the employment premium designed to tackle the combination of the increased number of unemployed and the fact that there is substantial spare capacity in many industries. This will subsidise employers who recruit from the live register net additions to their full-time work force. The words "net additions" need to be given a certain stress so that one can understand exactly what is involved. The employment premium scheme, which I heartily support, shows that the Government are prepared to think inventively about the problems facing us. This is a totally new and unprecedented scheme and it indicates that instead of doing, as perhaps the Opposition might have done —I do not wish to cast any undue aspersions—and go back to some old reliable scheme which might work but not very well—the Government were prepared to adopt a completely new approach. I am confident this premium scheme will be a very great success and, as a Deputy opposite said, it may cost no money. If people can be taken off unemployment benefit and given full-time work the saving in unemployment benefit will exceed any expenditure represented by the payment of the subsidy to those people while they are at work.

The Government have also indicated their intention to review Government expenditure, something that has been half-heartedly criticised by Deputy Lalor. The relevant sentence in the Minister's speech says that existing expenditures are being reviewed to identify those that might be curtailed or eliminated. My experience in Government over the past two years indicates that this is something that should be done on a regular basis. Very often schemes are introduced to meet a particular need but because of a combination of official inertia and vested interests a scheme continues long after the objectives it was set up to meet have been fulfilled or are no longer relevant to our needs or, if they are relevant, are no longer of the highest priority because a higher priority objective has superseded them. I welcome the review of Government expenditure because we must realise that all these schemes, as all those who are agitating for new expenditures should realise—they do implicitly but never explicitly—must be paid for by the Irish taxpayers, and we must be rigorous in our review of public expenditure.

It might be well if, automatically in respect of any new scheme introduced, there should be a review every five years or so on the basis of clearly defined criteria. When a scheme is first introduced its objectives should be very clearly defined in writing and, if possible, in a quantifiable form and at the end of a five-year period or whatever period is relevant, a scientific review should be made to see to what extent the original objectives have been met. If these objectives have been quantified this should not be unduly difficult. The question whether there are other schemes which should take priority should also be considered. Such a system of automatic review of all public expenditure should be initiated and would be of great benefit. The Government's indication in this budget that they are now undertaking such a review is very welcome, and as a taxpayer representing taxpayers I heartily support this.

The Opposition have adopted a rather binary approach to the budget: on the one hand they say that not enough money is being spent on food and other subsidies and that the cost of living is not being sufficiently reduced; on the other hand they say there should not be such a large budget deficit. We cannot have it both ways; you cannot spend more without having a deficit. This is self-evident, but usually the Opposition have one speaker saying one thing and therefore he does not contradict himself but you have another speaker saying the opposite and unless you compare one speaker with the other you will not see the contradiction; you will not find it in the individual speech. I suppose this is a legitimate Opposition tactic, and we may have tried it when in Opposition, but it does not really contribute to a useful debate. We must recognise that a budget deficit can often be a very sensible strategy for a Government to adopt. There are many in the House who are abreast of modern farming principles and they realise that it is often sensible for a farmer to go into debt if he has spare capacity on his farm in order to get that capacity fully used. No doubt in this economy there is spare capacity and there is every justification for a budget deficit——

Ruairí Brugha

On current expenditure?

Mr. Bruton

——and going into debt to ensure that capacity is used to the full. In the long run the economic development of the country depends not so much on our physical resources or the flow of money here or there but on the skill and capacity of the Irish people to work. In that respect the Government have much to be proud of because the investment in AnCO and in industrial training and re-training has far exceeded anything undertaken by our predecessors. That investment will yield long-term dividends because we are developing at present a work force which will be equal in skill to any in Europe. The Minister for Labour is to be heartily congratulated on the work he is doing in this field. It may not be spectacular work or work yielding immediate results; he is not able to produce impressive statistics immediately, but the re-training programme which is so generously supported represents exactly the right priority and will yield great long-term dividends.

Ruairí Brugha

I have been interested in the Parliamentary Secretary's references to the Minister's remarks concerning a review of Government expenditure being something new, but this is something that should have been going on. Considerable damage has already been done by the Government. He mentioned the estimate he gave of the wages of shoe workers being 26 per cent above——

Mr. Bruton

That is a projection of what it would be by the end of the year on the basis of the national wage agreement.

Ruairí Brugha

I do not want to get involved in an argument with the Parliamentary Secretary. Where there may be industries which are not very efficient, one of the major causes of the creation of a situation where wages are excessive has been the example set from the top, from the Government, in the very wide area of public services. A couple of months ago the Minister for Finance warned that if wages were not curtailed more people would lose jobs and more would have to emigrate. Therefore, there must be good example from the top, and it is no use decrying the needs of those in competitive industries if prices and wages are permitted to go up in public service industries. Wages in that area have to be paid by the taxpayers, and apparently nobody has ever asked how much the taxpayers can afford if one goes on increasing charges right along the line. Even from the point of view of the employer-labour national awards, the bulk of the bill ultimately returns to the taxpayer and the Government find themselves having to borrow from abroad to pay these rates.

The onus is on the Government to set an example, and, as the Minister for Finance said a couple of months ago, if wage rates are not controlled industries in competitive fields will lose export markets. As I have said, the onus comes back to the Government, to the example they have set and will set.

This budget is the second this year and if there is in it, as there appears to be, the first sign on the part of the Government of an effort to face up to reality, I welcome it. I hope it may begin to slow down the disastrous spiral of wages and prices, of inflation, because what has been happening is in effect potentially destroying our economy. Despite the lateness of the Government's decision in this area, even a temporary arresting of the inflation spiral is better than the Government's laissez faire policy in the past 18 months or two years.

It is right also to welcome the injection of capital into the building industry, but here I would sound a note of warning to the Government. If our industry generally is not helped to be competitive we will not need housing. The Parliamentary Secretary is a bit younger than I and would not recall what I do when I was canvassing in the Crumlin area of Dublin in the late 1950s and finding every third or fourth house empty. There was recession in those days, there were no jobs, and people had to leave. One of the difficulties I see this time as distinct from then is that people without jobs will have nowhere to go. That creates a new and perhaps a welcome situation.

I should like to refer briefly to the £12 premium. I do not want in any way to discourage any effort to create employment, but having been engaged in business for the most part of my life, I can look only at the realities. A considerable area of business has been and still is in difficulties as a result of inflation and other factors. There have been redundancies. As a businessman, I cannot forsee many competitive businesses employing people they do not need and whom they would have to pay £45 or £50 per week, including social welfare stamps, just because they would get a £12 premium per employee. In competitive industry employment will be given only where it will pay to employ people. Perhaps the premium will reduce the number drawing social welfare but I doubt if it will encourage many competitive business people to employ more. In this connection it might be desirable if the Minister would consider using the premium in the farming and local authority areas of employment—I suggest special schemes of local authority employment if ratepayers can support them.

As I have been pointing out, the Government have completely failed to introduce any kind of discipline into the service industries under their control, such as CIE. In the case of CIE there is a major subsidy being given to reduce fares to their previous level, but this is only a sort of stop-go policy. CIE fares had to be increased because of wage increases. There is a similar situation in relation to the Department of Posts and Telegraphs, and television licences. I am trying to point out the need for discipline in relation to the cost of services, and this discipline has to be introduced from the top, from Government effort and decision.

Last autumn both the Minister for Finance and the Minister for Foreign Affairs spoke of inflation and of the rising costs of living and they called for a tightening of belts. In the light of what has occurred since one must ask whether these two Ministers were merely indulging in small talk. Were they indulging in the type of insincerity that encourages cynicism in Irish politics? Since then there has been a major increase in petrol prices. There have been the additional post and telegraph charges, increased television licences fees and increased charges in respect of CIE which at that time had a deficit of about £14 million, a deficit which increased in the meantime but which will now be reduced by this budget. Then, there was the January budget which created the highest ever current deficit of £125 million. According to reports this morning, in the first six months of this year current expenditure was £90 million in excess of revenue.

What happened since those warning speeches were made in September last? Was the Minister for Finance, as well as the Minister for Foreign Affairs, out of the country, because one would have expected that immediately after those warnings had been issued the Government would have taken some decision? I can only conclude that the Minister for Finance forgot there was a serious crisis on hands in relation to inflation and prices. At any rate, the Government allowed the economy to continue in that state until now. Apparently, they were unable to decide what action to take while all the time shops and factories were closing. The Parliamentary Secretary need only walk around this city and see the empty premises to realise what I am talking about and to realise what has occurred in the past six months, mainly as a result of inflation.

These problems resulted from the fiscal policy being followed by the Government from as far back as 1973. I could spend much time quoting from what was said by many of us during the past couple of years but I shall confine myself to something I said in this House on the 30th April, 1974, as reported at columns 440 to 442 of the Official Report for that day:

The budget does not indicate fundamental thinking or planning. I believe it is on a day-to-day basis because the Government have not got long-term plans. The Minister and his colleagues fail to realise that the object of a budget in a developing economy should be, as the Leader of the Opposition said, when he spoke on this debate, to signpost future development and expansion. In 1973 we warned the Minister against over-heating the economy and against the price spiral which would follow the increase in VAT and the increase in a dozen other taxes. These price increases would have come about even if we did not have the oil crisis...

...The fiscal policy of the Government this year is the same as that enunciated last year when the Minister in the budget abolished the £70 tax-free deposit with the major banking system. We regarded this as a major blunder. Although it might not have been known at that time, the building societies were feeling the shortage of money and the effect of this pronouncement by the Minister was to cause money to leave the country...

I continued, although this is not strictly relevant here, to discuss the White Paper which I said was:

...one which encourages people to believe there will be great increases in taxation on property. One member of the Government says it is only a discussion document but another says it is a firm commitment by the Government.

I believe this White Paper was introduced by people who are totally ignorant of the facts of life of a small economy and one which is still developing. The Government seem to be obsessed with the idea that our economy is at the level of highly-industrialised countries with the benefit of full employment and all the other things these countries enjoy. They are blind to an intelligent understanding of the principle that the creation of wealth can be a good thing for all and to discourage it or drive it away is to reduce the economy to economic stagnation and cause emigration...

...The way the White Paper reads to people is that the result of years of effort may be taxed. This discourages the will to survive in an economy and is against the interests of our economy at the present time because it is an expanding one—we are trying to arrive at full employ-ment—and I believe it is also contrary to the beliefs of most intelligent Fine Gael supporters. I do not believe the trade unions in this country want anything like the sort of policy set out in the Government White Paper. I believe it has already done damage to our economy at a time when we badly need capital.

I believe this budget it not a long-term, well thought out document but is mainly a window-dressing operation designed to pay lip service to socialist lobbies. The result is that our economy will get the worst of both worlds in order to hold the present Government together. I am afraid the Minister's eye is on the electorate and not on his duty to our economy.

I have no wish to be one of those who says "I told you so" but we have been proved right since then. I could quote many other warnings but, irrespective of who is in Government, warnings from the Opposition are never palatable. People will welcome the subsidies on food although they may be only in the short term but they will provide some relief. I am sure hard-pressed housewives will feel relief for a short time, but what bank will lend them money with which to buy food? The hard reality is that the Government at present are borrowing money abroad for current expenditure purposes with which to subsidise the price of food. The question arises: where, when one runs out of lenders, will one find the money with which to pay next year's subsidies? Previous Governments had subsidies on food but they were paid out of tax revenue.

The sort of deficit about which we now speak was never heard of up to two years ago. There has been a jump from a record over-expenditure of approximately £90 million in 1974 to a proposed £240 million approximately this year in current over-expenditure. The Minister for Finance, having forgotten his autumn speech about belttightening, introduced his January budget and gave—the other evening on television—as a reason for failure to do this duty in January, an expected improvement in world trade in the second half of 1975. The question one must pose to the Minister is this: what had that to do with the current economic situation here? In January the Minister for Finance knew that our inflation rate was virtually beyond control. And, if he has any understanding of economics, he must have understood that, even if there was a recovery in trade internationally—of which none of us was aware and now we know there will not be—then Ireland, because of its inflation rate, would not be able to hold her own in world markets. The reason for not dealing with that situation in January last had nothing to do with whether world trade would improve. It simply had to do with indecision, inability to face up to the question of economic survival. The whole key to economic survival for a small country such as ours is that political leadership sees to it that the rate of inflation is got down to, or below that, of countries in which we have markets. Otherwise— and here again I am quoting the the Minister of approximately six weeks ago—Irish industries will lose out and Irish workers will have to pack their bags, as they had to do in 1956, because jobs no longer exist for them.

On previous occasions I have described the Minister's budgets as placatory—the Minister introducing them with one eye on the electorate. Despite the short-term relief this budget will afford. I must describe it as a political party placatory budget. I hope it will do some good. But the opportunity existed at present for the Government to be firm, to call for real sacrifice to revive our economy; to set an example in the public sector where they have a major influence, in the service areas, in the semi-State areas, in local authorities and in this House. I fear that what has been decided is merely a political effort based on the need to placate people and retain their support for the Coalition parties. I am convinced that the performance of the Government over the past two-and-a-half years has been a disaster. Within a week of their election, I said that a change might be good; that it could be good for a party a long time in Opposition to have a chance of experiencing what it was like to shoulder responsibility. On the other hand, I said it was not a bad thing for a Government many years in office to be in Opposition, to take a look at themselves and the results of their time in office; especially, in our situation, to take a look also at the kind of society and way of life that had developed over the past 16 or 17 years as a result, certainly in economic terms, of successful Fianna Fáil Government. I still believe that functional democracy requires fairly regular changes. But I am beginning to think the performance of the Coalition parties, their indecisiveness, their failure to give strong public leadership will leave behind them such a bad memory that, once there is an election, the majority of people will not want to hear about them for a long time. If I am correct, the reason will be that their performance in government has not been responsible, because they know of no way in which to function except with an eye to their own popularity and prospects of re-election.

I believe this country deserves something better. People who made efforts over the centuries and helped us to break away substantially from foreign rule did not do so in order that Irish Governments would be afraid to face up to and make decisions. In the past they carried their burdens because they believed we would be fit to do a job here, as the Germans are doing a job for Germany and the French for France. Our people would welcome real leadership from the Government; they do not welcome weakness, indecision and vacillation, which is what we have had for the past two-and-a-half years.

Mr. Brennan

One might easily repeat some past speeches made in the House by individuals, word for word, as suitable comment on what has overtaken this country recently with the performance of the Government. While one cannot always succumb to the temptation of saying: "We told you so" and repeating various things we have said, one would hope that what we say here might be helpful in getting the Government to really adopt the stance of serious, earnest Government, doing something for the country rather than being guided entirely by what are regarded as platitudes to the electorate. Democracy has many weaknesses as well as rather favourable and commendable facets. One of its weaknesses is the tendency to play up to the electorate, to be led by what one interprets as being public opinion rather than do what logic demands to be the correct thing, in the long term, in the governing of a country. It is this weakness in democracy that may eventually destroy it if permitted the free play such as we have witnessed here in the last two-and-a-half years. It is sometimes justified by those who overindulge in it. All Governments indulge in it to some extent, but this Government have overindulged in cosmetic administration, playing up and doing things that appear to be nice. It is sometimes justified by the Government saying: "We are an open Government, we are consulting the people and doing what the people want us to do."

Nobody would go to the dentist or doctor if they were not interested in what the outcome of the painful operation is. It is the long-term health of the body that is more important than the putting off from day to day of the hateful decisions which the inherent weakness of a coalition government make it impossible to face up to. That is why we are discussing a panic measure by the Government when it was too late to take it and likely to be ineffective when taken. I do not think the Press have been helpful to us. Most of us cannot claim to be experts in the field of economics but on many occasions we gave warnings of what would happen. We did not get much publicity for it but that is to be understood. The Government parties are more likely to be of the Press and more news than the Following the introduction of the 1974 and 1975 budgets I warned that one day we would be taking measures to improve the situation when it would be too late. I pointed out that the measures would be preventive rather than bringing about the cure. It was obvious to even a person with an elementary knowledge of economics that the Government were doing things which they would have to undo in later times.

When in Government we were given advice in regard to the economy. There is no shortage of advice to any government. The best advice is available from every Department, particularly the Department of Finance. I am sure the Department of Finance did not change from the time I sat around the Cabinet table when we were being exhorted, particularly in relation to monetary and fiscal matters, to take a certain course. We were warned of the dangers that lay ahead if we did not follow that proper course. We were taking action in relation to every Department. Programmed budgeting had come in at this time and we were taking it seriously. It was a means of monitoring the economy. We were told to keep a tight rein on all proposals for increased capital expenditure and to be careful about inflicting any wounds on those responsible for production. I am sure the same advice was available to this Government. We were made aware of the course things were likely to take if we did not at every opportunity and without doing damage to employment dampen inflation. It is an unpopular course and one for which one would not get kudos handed out daily. It is one which could make a Government suspect but it is one which in the long-term would prove to be the correct policy.

It was pointed out to us that a certain amount of inflation was not bad but when we have the repercussions of inflation the danger signal is shown. We were striving to hold inflation at the least dangerous level but when this Government took office it appeared as if they had discovered a gold mine unknown to everybody. It appeared that they had an endless pool of money, that the evils we were warned about no longer existed and that all the dangers were overcome by a mere change of personnel in Government. This amazed me but I could see what was happening and I could understand the reason for what was happening. The governments are serious and bad for a country and economy. When one has two ideologies that are not harmonised or orchestrated in their outlook one is bound to have the worst of a mix. That is what is happening now.

Whenever we gave a warning the Government adopted the strategy that our speeches were calculated to destroy or do great harm to our economy. The members of the Government said that our warnings were not we were accused of economy if we said that inflation could and should be trolled. I am not saying that Government did not know of the serious situation and certainty I am not saying that there were not people behind the Government who could advise them as to the best course to be adopted. However, two different factions had to be satisfied and the action necessary was not taken in the hope that something would happen that would obviate the necessity to take action. That action has been taken now in a feeble way. We have already heard that some of the actions taken, such as the removal of VAT from fuel, will not reduce prices. This has happened because increases have been sanctioned and these increases will more than account for the amount that has been released by the zeroing of VAT. In the case of bread, price increases were sanctioned before the budget. The Minister has put his toe in the water but he is afraid to get in. His action was taken for the purpose of demonstrating that something is being done when, in fact, the process will not be worth a candle.

Another reason the action taken now should be definite and firm is to sell to the trade unions the need for their cooperation and to demonstrate to them that there is something worthwhile here to dismantle the national pay agreement. Unless there is the co-operation of the trade unions we will have serious trouble in over this difficulty. I do not wish to be too loud on this point because the package depends on what the trade unions will do. It is the unions who are responsible for going through or House. I would not like to say anything that would prejudice what I hope will enable the trade unions to see that they have a huge part—in fact the whole part—to play in ensuring that this is an acceptable package and that it will have some effect in slowing down the rate of that self generating inflation, which has been allowed to run unbridled in the country. Increasing price and increasing wages are as a result of inflation action of the Government up expenditure to meet costs and continually pointing out from their benches: "Look at what we are spending this year as compared with what Fianna Fáil spent" has not done anything to improve the situation. Their behaviour has necessitated bringing up expenditure to try to keep step with increased inflation. This is rapidly eroding the value of money and making it virtually useless even to those who are on social welfare benefits.

Some serious action must be taken to hold at some reasonable figure the money in one's pocket. If this is not done the Government will have to go on dishing out money and keep on saying: "See what we are spending, as compared with what Fianna Fáil spent. We are spending twice as much as they spent". If they had an expansion programme they would have to spend four times as much. The foundations of an expansionist economy were laid before they took over the disastrous manipulation of the economy which we have experienced in the last two years.

This is a very serious time. It is a matter for contemplation for everybody concerned. The country has been led to the brink of disaster. Everybody in the country, and especially in the should do what he can to the country in which our and future generations will grow up will be saved from the brink of ruination or at least saved from being brought to the pitch from which it will be so difficult to retrieve it without leaving a permanent scar. That is exactly what is happening today. Every Deputy on this side of the House can read speech after speech where it was pointed out what would happen and the action which needed to be taken. Backbenchers on the other side used to get up and say: "We believe in this cabinet. They have great ability and everything will be all right". While they were saying this we were rushing headlong to disaster.

While everybody can read what Deputies on this side of the House said over the past two and a half years we were not the only people who gave warnings. If the Government, for mere political chicanery, did not want to be guided by the Opposition they had other advice available to them from resources which were deeply researched. I refer to many of the statements from the Central Bank, the CII and other such bodies. I refer, in particular, to the speech made in 1974 in Killarney by the president of the Irish Management Institute at the annual management conference. That speech was seriously researched and all the expert knowledge of that man, in particular, was put into it. He gave a stern warning that unless something was done quickly we were heading for disaster, that uncertainty was surrounding everything that was being done and people did not know where we were going. He emphasised that enterprise was becoming a dirty word in the country. It was being made synonymous with some sort of hijacking or unnecessary illicit commercial practice. We must make up our minds that we are a free private enterprise economy with a profit motive and that with reasonable guidance and proper functioning the economy will get every possible opportunity and assistance to produce wealth in the country. Everybody in the country, especially Members of the Government knew that the producer, whether in the factory, the field or the services, was an important factor in the economy at this serious time when inflation was taking such a toll. Everybody must have known that the producer needed some protection.

Why did the Government not come to the assistance of the producer in the last budget instead of making him pay for the entire social welfare stamp? Why did we not think then that this was where the State could come to the assistance of the man who, because of a serious liquidity position, was on the verge of having his name put in Stubbs? Why did the Government not see, when they clapped 15p on the price of petrol, that they would scourge employers in the country? Why did they not see that increased transport and freight charges were yet another imposition which would increase the burden of producers and make it barely possible for them to carry on? Why did they slap on increased postal charges of a few hundred pounds on every employer? I know of a small firm in County Donegal where the extra postal charges cost them £1,400 a year. Why do the Government say they are coming to the assistance of those people now when so much damage has been done that many of them have reached the irretrievable position where they will not be able to continue?

So far we have not heard any speech from the Government side of the House to explain why the Government took the action they did over the past two years to oppress those people. They are now coming into the House to try to save the economy by allowing exports to continue. We all know that when exports decline and our competitiveness is eroded there is nothing much left for us. I would like to hear an explanation for the action the Government took over the last two years. Why were preventative measures not taken sooner rather than come in when the position was so bad that they felt the corrective measures could be sold to the people?

The producers as well as having to pay VAT, PAYE and all the existing taxes will now have to pay capital gains, inheritance tax and wealth tax. The urgency in the House every day was a new tax Bill at a time when the economy was shivering like an aspen leaf. Nobody can justify the action that was taken. The only honest answer is that the Government were not in a position to do what they knew should have been done for the reasons I gave at the outset.

Every week I have four or five meetings with constituents. Most of them ask me: "When are you getting them out?" What can we do about that? They have a majority and their backbenchers will go into the division lobbies to vote for anything the Front Bench proposes as long as it preserves their time here. The public know that. There is no action we can take, short of going over and beating them out the door, which will terminate what is going on at present.

Mr. O'Kennedy

We could agree to give them their pensions in advance.

Mr. Brennan

No later than Sunday people were saying: "The Opposition could do more to get the Government out." All we can do is expose and protest and depend on what publicity we may or may not get in our efforts. We may try to get the impetus of public opinion against what the Government are doing, but that is the most an Opposition can do, and it is most unfair when things are going wrong to blame the Opposition rather than the Government. It is about time the blame was placed where it rightly belongs. Many people in the country still think that we have it in our hands to manipulate affairs in a better way. We are not the Government; we are the Opposition.

The Government have for a long time been dodging their responsibilities. Minister after Minister has said in this House: "Inflation is due to factors beyond our control. It is imported and there is nothing we can do about it. There is a blizzard blowing. We must lie low until it passes over, and after that everything will be rosy." Some time last spring the Minister for Finance and a few other Ministers took it upon themselves to predict without any foundation whatever that the economy would be on the upturn by autumn, at a time when they knew well they would be bringing in the fifth budget in two years and possibly another before October is reached or whenever the recess is over, because, although I hope it will not be necessary, if this budget is not effective, this is what will happen.

The Government know perfectly well that the major factor contributing to inflation in this or any other country is wages chasing after prices and prices chasing after wages. The first thing that the Government should do is to make sure they are not guilty of increasing prices and, secondly, they should sit down with the Employer-Labour Conference and get those people to realise that they have an indispensable role in damping down the economy by only seeking such increases as are sufficient to catch up with the cost of living index. That type of prevention is better than the cure we are trying to apply here which is not really a cure. Not only have we not applied a cure but we have told the people it would not be necessary and that inflation is due to outside factors and beyond our control. The Government's major responsibility is to look after the cornerstone of our economy, namely, our financial affairs. There was a time when Governments did not have as much influence over the economy as Governments have now, when they did not take so much of the people's money to redistribute it one way or another. Now that we take such huge proportions of the people's income we cannot shirk our responsibility as to what we do with it.

Advice in the past such at that in the warning speech at the Irish Management Institute Conference and, indeed, the succeeding conference, were sufficient to make any Government examine their conscience and ask: "are these people right or are they not?" Do they keep on saying: "We shall take a chance and everything will go right yet"? That is not Government. The Minister for Industry and Commerce is the key man as regards responsibility for economic matters. We are sick listening to his LP record and we are all waiting with interest to hear what is on the flip side of the disc he will be spinning if he comes in on this debate. We have our own Government, and if we have to be entirely influenced by what is happening outside the country, then let us abandon the idea of having selfgovernment at all. We have our sovereignty and cannot be completely guided by outside influences. Nobody denies that the prices of imported goods, services and materials have an effect on the economy, but the major responsibility for control of the economy rests with ourselves and requires the exercise of great responsibility by those who have the pleasure of being in employment, to those who are on the dole.

Until such time as we get the proper relationship between the social partners we shall not make any worthwhile progress. When I was involved in bringing about the national wage agreement I thought we had taken a major step towards the marriage of interests of the social partners, that we had made a great breakthrough. We were making rapid strides and could have made twice the progress if industrial relations had not bedevilled the economy and if we had had industrial stability at the time which was necessary in order to take full advantage of the flowing tide to which we were giving impetus by every measure we were taking in Government at the time.

The national wage agreement is now undergoing a testing time like other things on which the Government have ratted. If they had sat at the table at the right time and said "Here is what we intend to do. We are not going to increase fares or petrol. We are not going to increase public transport or postal charges. We are going to keep these things down and give a better tax free limit to workers," then when the national wage agreement was being hammered out we could, although it would have been a difficult thing to do, have pulled back from the brink. It may be possible, and I hope the people on the floor will accept the advice of those at the top, to dismantle or renegotiate the agreement or at least amend it in some way in order to make some contribution, however small, to the task which the Government have at last reluctantly undertaken and make some kind of gesture towards the serious problems facing the country. However, after this overt action of the Minister—which he said was the greatest undertaking of any Minister for Finance we ever had, which is baloney, of course—if prices continue to rise dramatically, if employment is not restored to an important degree and if prices do not ease in many other fields, then we shall be in a serious position; then we shall really have to look around to see what action can be taken.

Members of the Government should forget about what is popular and what is not popular with the electorate and spell out to the electorate, through the admirable information service they have set up, what the tough measures in relation to the future of the economy are all about. A number of people spoke about what Fianna Fáil would have done, the scourging the people would have got if Fianna Fáil had been in power to take the necessary action to bring the economy back into line. This is an admission that the present Government are not doing anything that might be unpopular, therefore, doing nothing. The action to be taken, whether it is piecemeal, whether it is taken as a preventive measure or as a panic course, as is being done now, is unpopular or a least does not increase the popularity of the Government that take it. That is why the Government have shirked their duty for so long. It is not a question of giving the people what they want. It is a question of giving them what is good for them. That is the idea that should guide any Minister or Government.

When the employers found themselves faced with increased charges they did the obvious thing. They paid off some workers in order to keep their payrolls at existing levels. What a producer is producing now should have been sold six months ago. When employers have something heaped on them unexpectedly, such as the heavy burden of the social welfare charges which was thrown on to them in the last budget, the only action they can take is to curtail expenditure and whether they have 10 workers or 400 workers the simple way to do that is to let 3 per cent or 5 per cent of their workers go. They must do this in order to sell at the prices they have quoted. It is not always possible to write price variation clauses into selling contracts. Anybody who is in commerce internationally will know how impossible it is to have price variation clauses built into sales contracts. The goods must be delivered at the prices quoted six or 12 months previously. These things were not taken into account when the Government imposed penalties on producers which could easily have been avoided if they wanted to use the fiscal and monetary devices at their command.

I said at the outset that democracy has many weaknesses which could, in some cases be the ultimate downfall of democracy. One of the inherent weaknesses is the tendency to use the system to play up to the electorate and rather than do what is good do what is popular. That is a weakness which can bring democracy to the stage where that lovely thing called ultra-socialism takes over and then the people who advocate great liberalism find themselves in a position where they have little say in anything. In a democracy we can change the Government if given the opportunity. Shortly after this Government came to office I spoke in a debate at Coleraine University. Some of the students tauntingly posed the question to me: "How do you feel after being thrown out of Government last week?" I said: "The beauty of the Republic is that we can change the Government. Whenever the people feel a change is necessary they make it. It does not happen everywhere in the world. Nearer home certain monolithic institutions are not easy to move." In that regard, when will the people get a chance to change the Government? The answer to that from the Government side will be 1977.

Mr. M.P. Murphy

1978.

Mr. Brennan

Indeed, the Parliamentary Secretary would make it 1979 and he would not give a damn if the country bled white in the meantime so long as they stayed in power until then.

Mr. Staunton

That is unfair.

Mr. Brennan

This Government presented to the people 14 points which I claim is their contractual obligation to the people. They have reneged on every one of them. Therefore, I claim they no longer have the people's mandate. It behoves them now to ask the people what they think of their stewardship. They said they would reduce prices. Fianna Fáil were blamed for the 3 or 4 per cent increase in prices. They gave a solemn pledge they would reduce prices. I know the Government will not ask the people to pass judgment on them. They will stay there as long as they can. They must be getting the message from their own supporters that it is time to consult the people as to whether the action they have taken has the approval of the people or not. We have been talking about consulting the people in regard to changes in the Constitution. There is a much greater need to consult them now as to whether they approve of the way the Government have handled the economy in the last two-and-a-half years and how they propose to do it in the time ahead. They cannot say what they propose to do because of their complete lack of policy. The complete lack of guidelines leaves people in a state of uncertainty. We are like shepherds in a mist hoping there will be a break in that mist.

If our advice means anything then the best advice we can give the Government is to consult the people now. They should be the final judges in this serious situation, so different from the situation in which they were elected. Their mandate no longer exists. If they have confidence, and if that confidence is not just whistling past the graveyard, then they should not be afraid to ask the people if they have done right by them, to ask them whether or not they approve, and, despite the Minister for Local Government's jigsaw exercise in regard to constituencies, the people will tell them very emphatically what they think about them.

Parliamentary Secretary to the Minister for Agriculture and Fisheries (Mr. M.P. Murphy)

One would think, remembering the position Deputy Brennan holds——

Mr. G. Fitzgerald

The circus is not dead yet.

Mr. M.P. Murphy

——which, as I understand it, is deputy leader of the Opposition, that he would analyse the Minister's statement last Thursday and give us a factual appraisal of the position, as he sees it, and tell us what his party would do if they were in power. His approach was completely negative and one could see how annoyed and frustrated he is that he is over there and not over here. That is understandable because Fianna Fáil were here from 1957 to 1973, 16 continuous years in Government.

Mr. G. Fitzgerald

And growth.

Mr. M.P. Murphy

They seem to think they should stay here forever. The change came about in 1973, a change which should have come about far earlier. Deputy Brennan spoke about the mandate given to the Government. We got that mandate on 28th February, 1973, on the basis of the policy put before the people jointly by the Labour and Fine Gael parties. I believe the people accept the fact that we are honouring the commitments we entered into on that occasion. It is no harm to remind Deputy Brennan that because of the untimely deaths of some Members in the intervening period we have had opportunities of consulting certain sections of the electorate in different parts of the country. It so happened that the parts in which we got the opportunity of consulting the people were parts not favourably disposed towards the National Coalition Government.

What happened? The people in these areas accepted that the National Coalition Government are doing a good job and the percentage vote for the National Coalition candidates in all four areas increased.

Mr. G. Fitzgerald

The Labour vote was excellent in some of them. Would the Parliamentary Secretary care to go through the figures? What was the percentage of growth?

Mr. M.P. Murphy

The percentage increased so much that, despite the fact that Fianna Fáil got two out of the three seats, in the Monaghan constituency in 1973 the National Coalition candidate was successful in the by-election.

Acting Chairman (Mr. Moore)

The Chair would like the Parliamentary Secretary to come now to the budget.

Mr. M.P. Murphy

As the Chair is aware, it is normal procedure here to comment on statements made by previous speakers. Deputy Brennan referred on numerous occasions to the mandate of the Government and I am just giving him a few reminders about the fact that the Government did consult the electorate.

Mr. G. Fitzgerald

Moving from Monaghan to North East Cork, the Labour man did very well there, did he not?

Mr. M.P. Murphy

The National Coalition Government did very well— put it that way. Everybody knows what happened in Galway. The Coalition vote increased sharply in the two constituencies. That was some three months ago and it can be said, therefore, judging by the results of the by-elections, that if one were to have a general election now the National Coalition would be a much stronger force numerically.

Mr. G. Fitzgerald

Then why not have it?

Mr. M.P. Murphy

There is no need to have it. We have a mandate for five years and we will travel the five years. We do not have to run away as Fianna Fáil had to do because of the in-fighting in the party in their last period in office.

Mr. O'Kennedy

If the Parliamentary Secretary would turn to his script it might be more newsworthy. This excursion into past history is scarcely relevant.

Mr. M.P. Murphy

The only script I have is some notes I made. Deputy O'Kennedy said he would like an election. Deputy O'Kennedy has a pleasant personality and I would not like to be in any way offensive to him but I do not think an election now would do him any good. I doubt if he would like an election now. We will leave it at that.

Mr. O'Kennedy

No doubt the Parliamentary Secretary has inside information about North Tipperary. Perhaps it is relevant to the budget too.

Mr. M.P. Murphy

Deputy O'Kennedy's constituency in the last general election helped to change the Government, and for that we are grateful to the people of North Tipperary. Deputy Brennan said the Government were afraid to bring forward unpopular measures. He made that statement again and again. His criticism of Government measures was confined to the increase in petrol and other taxes essential to implement the Government's proposals. I believe people generally agree with the Minister's budgetary outline of the country's position, and I believe there is generral agreement that the Minister's proposals are both fair and reasonable to meet the difficulties of the moment. One would think that such difficulties were brought about by the inactivity of the Government. There is no need for me to recount what is happening in Britain and other countries. There is an international recession. The Irish people are fortunate in that they have a Government who are capable of dealing with that recession far more effectively and efficiently than their predecessors, Fianna Fáil.

Money does not fall as manna from Heaven. It must be got from the people's pockets. To meet our requirements we must collect money by way of taxation or, alternatively, by way of borrowing. The Minister has indicated the position so far as collecting through taxation and collecting through borrowing is concerned.

The revolutionary changes made by the Government in regard to large sections of our people necessitated expenditure of large amounts of money. It is no harm to refer to this again. Everybody knows that it was one of the chief policy statements in the National Coalition programme prior to the February election that we were dissatisfied with the position of large sections of our people, those retired from active service by virtue of age, those who are sick or incapacitated and unable to eke out a livelihood from their own resources. We considered that the State was particularly obliged to help such people. We indicated in our programme before the 1973 election that to do so would require large expenditure.

That promise has been honoured in full. Big changes have come about, despite the inflationary trend, in the incomes and way of life of many old people and others who more or less were neglected or ignored under the Fianna Fáil administration for 16 years. We have injected a spirit of well-being and happiness into their lives.

Old age pensioners are often referred to, but I want to refer to them now in the light of the statement made by Deputy Brennan. When this Government took office two short years ago on 14th March, 1973, it was very difficult for a man of 70 years of age to get the old age pension of £6.15 a week if he happened to own his own house. If he had more than £25 in the bank his allowance was reduced by 25p. If he had a few thousand pounds in the bank he was almost cut out completely. We changed all that. It may seem out of place to make such statements in this House repeatedly but in the light of the present position and in dealing with our society as a whole, it is no harm to remind ourselves of the many measures introduced by the National Coalition Government through the Parliamentary Secretary to the Minister for Social Welfare, Deputy Cluskey, which have helped many sections of our people.

I do not want to go into facts or figures but I do want to take into account the inflationary trend that has obtained since the Government took office in comparing what happened under this Government and what happened under Fianna Fáil. Take a man without any money who qualified for £6.15, old age pension. Under Fianna Fáil, if that man were married and if his wife was under 65 years of age, she was entitled to no allowance. For the first time, the National Coalition Government recognised that a noncontributory pensioner's wife was entitled to an allowance and we are providing a reasonable allowance for this section.

It is hardly necessary to mention the change we brought about in the qualifying age limit which had not been changed since the British Government set it down at 70 years of age in 1908. It took the National Coalition Government to change that. In the space of two years we have reduced it from 70 to 67 years of age. That involved a great deal of money. If we had not done that, the Minister for Finance, Deputy Ryan, need not have imposed additional taxation on petrol or on some other goods. In fairness to this section we felt that these measures were justifiable.

During my years in Dáil Éireann I made many pleas that the age limit should be changed. It is no harm to remind people of these things in view of the statement of Deputy Brennan that if the people got the opportunity, the people who, allegedly, are badly off as a result of the activities of this Government, would change the position. These people would not change the position. They are perfectly satisfied that the Government are doing a good job and that the Government have stood firmly and solidly by them.

I will give another illustration. Between 1970 and the election of 1973 I pleaded for a change in the means test assessment system for the purposes of the disablement allowances. In my view it was wrong that the family or household income should be the basis for the means test as a result of which persons suffering from physical or mental disablement did not get one penny from the State. It was our view that these people were entitled to special consideration. Therefore, we eradicated that means test system. As a result a number of these people are drawing £8.50 a week, which the taxpayer must find. If we had continued the policy of Fianna Fáil, this money would be saved to the State.

I do not want to mention the benefits provided for other sections of our people—the £25 per month payable to the parents of retarded children who qualify, between the ages of two and 16 years; the single woman's allowance and all the other allowances. We changed the position and that was more or less finalised last week when the Parliamentary Secretary, Deputy Cluskey, got his recent Social Welfare Bill through the Dáil.

We have honoured our commitments in full and have done more than was anticipated for that wide section and it is the Government's intention and proposal to continue their efforts in this respect. Naturally, we in the Labour Party are not favourably disposed to a situation where able-bodied men and women would have to go to a labour exchange or a Garda station to sign on for unemployment benefit or unemployment assistance. The Government are endeavouring to provide industrial employment, productive employment. That is our aim and objective. I am quite satisfied that the Government are approaching this major problem, particularly having regard to world conditions, in the most effective manner possible.

Reference has been made to the Minister responsible for industrial promotion and employment. The previous speaker had adverse comments to make on the capacity of the Minister for Industry and Commerce to carry out his job effectively. It is generally recognised that we are very fortunate to have such a man at the helm on our industrial development. Fianna Fáil do not have a Member in this House who could compare with him.

Everybody must accept that there are big problems confronting the Irish people at the present time. We must all agree that there is an obligation on us to try and find a solution to these problems. What kind of cooperation are we getting from Fianna Fáil? When difficulties arise and industrial action is threatened they are gleeful. That is a deplorable attitude. Is it not true that any group, whatever case they make, who look for money from the Exchequer, automatically have the backing from Fianna Fáil, not because they believe in the wisdom of their claim but because they are hopeful that it will create disruption for the Government? That has been true recently when powerful pressure groups tried to get a bigger slice of loaf than they were entitled to.

At a time like this, the Minister's appeal should be taken seriously by most citizens. We all appreciate and realise that the cake is only so big. If one section, through an unfair advantage, get a bigger slice of the national loaf than they are entitled to, it follows automatically that another section must do with a smaller slice. I believe trade unions, farmers', fishermen's and all types of organisations have a responsibility not only to their members but to the nation as a whole to ensure that in critical periods and in times of universal recession their demands are fair, reasonable and just. That is all the Minister was asking in his financial statement.

Despite the problems caused by inflation it is an indication of the Government's special care and attention for the community that the Minister proposed to reduce the price of essential commodities, butter, milk and so on by introducing subsidies. There has always been a difference of opinion in this House on the value of subsidies. The Government's main aim in introducing subsidies on essential foods was to reduce the inflationary trend and make it easier for the public to buy such commodities. We all know that the textile and footwear industries need help. It is not unreasonable to say that circumstances beyond our control are responsible for that position to a large degree. When we became members of the EEC we realised that while there would be advantages there would also be disadvantages. The removal of VAT from footwear and clothing is another indication of the Government's concern for such industries.

I will not delay the House much longer because the Minister's clear-cut statement and memorandum, principal features of budgetary measures, will convey to the public a clear indication of the problems confronting the Government and the remedies taken by the Minister. Workers, farmers, fishermen and our townspeople, particularly shop assistants may find the going reasonably heavy, particularly where there is a likelihood of a reduction in employment, which, unfortunately, has obtained to some degree in recent months. That has been off-set by the introduction of the pay related benefit system.

It is a welcome feature. It will tide such families over a period. I am a firm believer in trying to provide work instead of benefits for our able-bodied people. I am satisfied the Government are bending over backwards to bring that about. During all my years in the Dáil I said the Government and outside bodies should have the common aim of being able to offer productive employment to all our people in a relatively small State like this with a population of three million.

I cannot anticipate what Deputy O'Kennedy will say. I would advise him to steer clear of an immediate election. I would not like to see the House being deprived of Deputy O'Kennedy. He was an exceptional Fianna Fáil Minister in that he was approachable. As we say in West Cork, he is not a bad type.

I am satisfied that the different sections of our people are conversant with the problems confronting the nation today. I travel around Ireland a great deal. From here to Schull is a reasonably long journey. I met various people over the weekend. The Irish people who voted for the National Coalition, and many who did not and who have now changed over to the Coalition, are fully satisfied with the budgetary proposals of the Minister for Finance and the work of the Government in general.

Mr. O'Kennedy

I find myself somewhat at a disadvantage due to the charming comments made by the charming Parliamentary Secretary in his own typical personal and Cork style. I hope he does not take as a personal retort from me the very strong criticism I intend to make of the Government with which he is associated.

The Parliamentary Secretary to the Taoiseach is reported as saying that people generally and members of the House—he said as instanced by their attendance in the House—are becoming quite tired of budget debates. Possibly they are. There may be very good reasons why they should be. It may be because we trot out the same clichés but I suggest it is due to the fact that we are having more budget debates than the proper management of the economy would warrant.

There should be a pattern of a fixed annual debate. If a departure from that pattern is required for specific reasons, the House would concede it is the responsibility of the Government through the Minister for Finance to introduce corrective mechanisms. As is acknowledged by everybody, we had general debates on the economy arising out of things the Government have done or have failed to do. We had the petrol price increases, the January budget and now this budget. In his budget statement the Minister signposted the way to the possibility, if not the likelihood, of another budget.

The Parliamentary Secretary to the Taoiseach seems to be concerned that we may not discharge our responsibilities in this budget debate. He is a constitutional lawyer and we might have expected from him some reference to the constitutional position which is being highlighted. It is rather unusual to quote from the Constitution in the course of a budget debate. Article 28.7.1º of Bunreacht na hÉireann provides:

The Taoiseach, the Tánaiste and the member of the Government who is in charge of the Department of Finance must be members of Dáil Éireann.

Subparagraph 2º provides:

The other members of the Government must be members of Dáil Éireann or Seanad Éireann....

Why is that built into our Constitution? Because the Minister for Finance must be answerable to this House and through the House to the people. As keeper of the nation's purse, it is his function to see that the decisions which affect the national economy are taken by him and him alone. Those decisions cannot be placed on the shoulders of any other section of the community.

Apart from his incapacity as Minister for Finance, the Minister has shown a terrible lack of awareness of his constitutional responsibilities. In a democracy the Minister listens to advice and suggestions and then takes firm and effective action. That is recognised as the essence of the executive function. It is the justification for the executive function. You must be amenable to advice and then you must be capable of taking a decision. What have we seen recently from a Government who have shown themselves to be inadequate in discharging their responsibilities in the economic sector? They are unaware of their real function. We have hardly ever had a Government who were more constantly and urgently advised by the various sectors of the community who have a real stake in the well-being of our nation.

Why should the trade unions, the farmers, the employers, the industrialists, the National Economic and Social Council or the latest addition, the working party on the economy, per diem in diem, every day on the day, feel it necessary to advise the Government, to cajole them and to persuade them on every aspect of the economy? I suggest they feel very strongly that the Government have no firm plans and, even if they have they lack the conviction to put them into effect. They lack the basic justification for any Executive, the capacity to take decisions. There was always the possibility that the last voice heard would be the voice most heeded. We have had this flood, almost, of advice from all these sectors displaying their lack of confidence in the Government's capacity.

In the Minister's budget statement we got the standard clichés thanking the various sectors for their involvement, their advice and their assistance. Thanks were due. Much less would be due if the Minister were capable of taking the decisions which it is his responsibility to take under the Constitution. The original author of the two nations theory, Disraeli, said the greatest of all evils is a weak Government. We see very clear signs of how great that evil is here at the moment.

Never before did people have such an anticipation of the sacrifices which they would have to make as they had in the run up to this budget. Never before was the scene set so carefully by Ministers and by the Taoiseach himself over a period of three or four months to convey the notion that great sacrifice would be sought from the people, that the country needed national effort so that all of us were tensed in anticipation of what this national effort would demand from us. The people were ready for a national effort because of the conditioning process to which they had been subjected in the past few months. What has happened? I suppose the great national effort called for is to be satisfied with the fact that a sector of the income tax payers, those on 35 per cent or over, have had an extra 10 per cent surcharge imposed on them. This is the one direct imposition of this budget; this is the sacrifice and all who thought of double taxation on motor cars or of any other type of tax can forget about it. They were not asked to make a sacrifice. The Government of all the goodies have dished out the goodies again and failed to face their responsibilities.

Mr. M.P. Murphy

Is the Deputy disappointed?

Mr. O'Kennedy

Deputies can comment on my speech afterwards. I hope that others outside this House will discharge their responsibilities in a way this Government cannot do but that is not the way to run a democracy. It is no wonder, as the Parliamentary Secretary to the Taoiseach said, that there is a lack of interest in budget debates here. How could it be otherwise when the Government he serves so loyally in the sweat rooms, as he says have such a clear lack of conviction of their obligations?

I charge this Government with cowardice. I have sometimes wondered in the past few days whether I am blinded by the fact that I sit on the Opposition side; possibly I am influenced by it but, I hope, not blinded. I charge the Government with cowardice and falsehood—cowardice in that when they already had a National Economic and Social Council for the purpose of advising the Government on behalf of what have been called the social partners to some extent. The trade unions, the industrial sector and the agricultural sector were represented on that council as also was the State sector and the State service. God knows why they had more than adequate opportunity to advise in the past few months but the Government, to hide the fact that they are not capable of taking decisions on the basis of the advice they get, set up a new organisation which contains the same elements as the National Economic and Social Council, the working party on the economy, an ad hoc committee comprising the trade unions and the farm and industrial sectors.

What is the purpose of this working party? Is it there so that if the Government had the guts to take a firm decision they could lean on the social partners as they call them and say: "You took the decision with us" thereby sheltering themselves to some extent from what they felt would be the opprobrium they would face for taking unpopular decisions— one thing this Government do not like doing.

Mr. M.P. Murphy

The Government took unpopular decisions when it was essential to do so. Deputies opposite criticised the tax on petrol and so on but when it was necessary and justified the Government took unpopular decisions.

Mr. O'Kennedy

Anybody who got a copy of the NESC report just before the budget found it included a welcoming slip from the GIS welcoming the contents of the report. The report was well based and argued and this slip again set the scene for what we all thought would be the steps the Government would take. This was the Government again hiding behind a responsible organisation and failing to do the task with which they are charged. When the decision is now eventually taken it is not the type of decision that a Minister for Finance under our Constitution, Article 28 (7) (1), should take, a final and binding decision. It has to be, in the nature and the manner in which he has done it, contingent on agreement being reached outside the House by the social partners, if you like, who are in no way answerable directly to the people. Those of us who are in this House should be the social partners in this country. Any introduction of Wilson-type clichés will not cure that fact; we are the social partners with the responsibility which we cannot pass to people outside the House. We create the climate in which they can and—hopefully will—reach agreement but in the final analysis we make decisions, the Government make decisions on the basis of the agreements reached or not reached by representative groups such as the Employer-Labour Conference.

I charge the Government with cowardice because unfairly they have placed on that conference a responsibility which should not, in equity, be placed on that conference. The Government have asked them to do something which they may not be capable of doing especially in the case of Congress until such time as they get authority from their trade unions. Let me qualify all this by saying that I strongly support all the prayers of the Government and the call from this side of the House to the Employer/ Labour Conference in asking them to be responsible where the Government would not be responsible. I hope they will respond to the needs from which the Government ran away. In fairness to them—some of them have noted this—they should never have been put in that position. The Minister must know that. Had he done as we asked, advised and cautioned him to do in January, what he is doing now belatedly and introduced food subsidies—that was impossible; apparently, he thought it was just an easy Opposition suggestion—reduced VAT as he as done in certain respects and had he injected into the building industry the capital he is now injecting and had he done some of the commendable things now being done, the wages agreement of April could have been signed on the basis of what had been done by the Government and the social partners would have taken a responsible position in the light of what they knew the Government's attitude to be.

But that was not the Government's position then and the conference took the decision in the light of the only facts available to them. Now they are being asked by the Government to renegotiate. Perhaps the Government are influenced to some extent by the renegotiation success of the Government across the water by which they seem more than usually impressed. Even if we have a renegotiation—I hope we will—of the national wage agreement a disservice has been done to our responsibility here and the responsibility of Government that cannot be undone. It has been done by a Government that did not have the guts or the conviction or I suppose, the awareness of their responsibilities, to make their own decisions and finally bind them.

The social partners are now being advised. Indeed they are not being advised. "Conditioned" is too weak a word and "intimidated" is too strong, but certainly their options are being presented to them in a very strange manner. I will quote from page 34 of the Minister's budget statement in which the partners are being charged, if they do not perform as the Minister asks them to do, of being guilty of undermining the institutions of the State:

It is essential that the discipline inherent in the economic package I have presented today should be accepted by all sections of the community. There are substantial rewards to be gained from such discipline. Its rejection would condemn us to economic decline and social upheaval——

These are very strong words:

——which would imperil the very institutions on which our existence as a free democratic nation depends.

The Employer-Labour Conference are being told by a Government that could not take a decision that if they do not follow the course requested of them— I hope they do—they will imperil the very institutions on which our existence as a free democratic nation depends. I say to the Minister who has inserted that in his text: "The confounded cheek of you. You, being afraid to face up to your responsibility as Minister for Finance, placed on you by the Constitution, are now implying that those who may for one reason or another consider rejecting your advice will be guilty of undermining the institutions which you yourself have turned your back on". If that is not crass hypocrisy I wonder what it is. I will come back to this later. Apparently it has not been noted by anybody who has read the Budget speech. I had the opportunity to read it seriously during the weekend.

The National Pay Agreement is and must be an essential part of our economic planning, but where there is no plan, what price the agreement? The Government do not have a plan. I hope the renegotiation of the pay agreement will meet the requirements of our present dire situation, but what is to happen the next time? Surely this must fit in as part of an overall national economic plan? The Government still sit back from such a plan in the same way as they sat back on the formation of the agreement last April. We have all become accustomed to the notion that a week is a long time in politics, but there is no doubt, from the performance of the Government in this budget, that two months is an eternity in politics. Two months ago, in April, this agreement was negotiated and signed and the Government sat back from it. They let it happen, they even welcomed it, and it was hardly dry on the paper when they started to turn to the partners and said: "Would you go back?"

Could any worker be blamed for feeling a lack of confidence in a Government who are supposed to be sensitive to human needs? Could one blame any employer for feeling a lack of confidence in a Government who have no central plan to guide him in his development? It is very strange indeed to find a Government going back so soon. The Taoiseach said in his intervention in the debate—I find it hard to understand the logic of his argument—that we in Fianna Fáil would have required them to intervene before the pay agreement occurred, that we would have asked them to set clearly before the parties to the pay agreement the conditions which should govern their decision. He said that when we did that, successfully, in the last decade that was the beginning of the inflation spiral. He asked us would we expect the Government to do that now. I have not heard him justify why he said that was the beginning of the inflation spiral.

Mr. Staunton

It was.

Mr. O'Kennedy

We heard all about inflation when they were in Opposition. We did not know how to spell the word by comparison with all we know about it now. If it was, I suppose they will also charge us with causing the tempest of inflation——

Mr. Staunton

It was the start of the system through which wages must follow cost of living increases.

Mr. O'Kennedy

The agreement is an essential part of our national economic planning and the parties to it have proved down through the years the need for the Government to be sensitive to national needs and to respond to national opportunities. I shall now come to some of the other gems that appear in the Minister's opening statement. At page 11 he states, and I do not know whether this is a carrot or a threat:

If there is an adequate response in terms of pay restraint to the Government's initiatives the Government will take steps to impose a corresponding restraint on dividends and professional fees.

Supposing there is not an adequate response, will the Government then take steps to impose restraint on dividends and professional fees? If there should be restraint on dividends and professional fees, that should be irrespective of whether the pay agreement is renegotiated. They are saying to one group: "If you do it, if you suffer some little discomfort, then we will make damn fine sure that the others who are not involved will suffer too." If this Government have any guts or consistency they will say that if this is right it is right anyway and it should not be conditional on whether there is a response to the Government's initiatives. There is more to follow in the Minister's speech:

If on the other hand modifications of the National Pay Agreement should be refused or if they should be inadequate, the Government would be reluctantly obliged to consider revoking the price reliefs which are a significant feature of this budget.

What happens then? Do we let the thing roll on? Where do we go back to then? We are told the price reductions will be a major element in the control of inflation which has bedevilled us in the last 12 months. Is the Government's approach to be that if A happens they might do B and that if B happens they might do A? Surely a Government must take decisions in the light of what they know should be the national interest and not in the light of what other parties might or might not do. Where do we stand? What is the Government's thinking, what is their reserve policy? What long-term plans have they?

If T.J. Maher, Senator Mullen, John Carroll and company are to be the ones who are to get the ultimate responsibility from this Government, then those people should have the perks as well as the responsibility— they should have the State chauffeured cars. This Government should all follow the example of the Parliamentary Secretary to the Taoiseach and walk to work and learn a little about sweated labour. They cannot have it both ways. If they want to be a Government with the perks of Government they should respond, and if they do not want the perks they should transfer them to those whom they are asking to respond.

In concluding his well-prepared speech the Minister said, and I quote from his brief:

It is essential that the discipline inherent in the economic package I have presented today should be accepted by all sections of the community. There are substantial rewards to be gained from such discipline. Its rejecttion would condemn us to considerable human misery as a consequence of economic decline and social upheaval. Its rejection would imperil the very institutions on which our existence as a free democratic nation depends.

These are the same words, ipsissima verba, as the ones to which I have referred already and which were uttered by the Minister when he issued the call to the national colours of sacrifice and dedication. We are getting nothing but mere words from this Government. There is nothing in the Minister's speech but clichés and exhortations. Surely it would have been sufficient to have said once that in the absence of a response there would be social upheaval and an undermining of our democratic institutions but it was repeated within another couple of pages of the same speech. This is evidence of something less than diligence on the part of the Minister in reading his own speech. It is evidence of an attempt to heighten the scare as to what would be the consequences of this package not being supported fully. We are all concerned for our democratic institutions and we are well aware of what is our responsibility, but it is no part of a Government's function and, in particular, of the function of the Minister for Finance, who ignores his own responsibility in terms of the Constitution, to come in here shouting “wolf” and to talk in terms of undermining and imperiling our institutions. Do we want the country to respond in fear, terror and apprehension? Surely it should be the prime responsibility of the Government to have the country respond to their leadership, their plan and their conviction rather than to arouse this kind of apprehension which is no part of overall Government responsibility.

The Taoiseach says that we must attract capital to this country, that if the level of profit is insufficient employment will suffer. Apparently the Taoiseach has refound the heart of the old party of which he is such a significant part—the Fine Gael conservative tradition. What had the Taoiseach to say when the Government were preparing the Wealth Tax and Capital Gains Tax Bills? On the evidence of the Minister for Finance, there is no clear indication as to what the wealth tax will yield. This question must have been considered by the Taoiseach who says now that we should have a guaranteed sufficient level of profits. Did the Taoiseach remain silent at those Cabinet meetings in the same way as he remained silent when the contraceptive issue was being discussed? Is this the Taoiseach's idea of leadership? What price the wealth tax now? Have some of the Taoiseach's friends finally reached his ear and conveyed their concern for future business and industrial development? We are told by the Taoiseach that the objectives of this budget will depend for success, above all, on confidence. I agree because confidence is the very foundation of democratic government but, unfortunately, confidence is the very element which this Government lack. How can they have the confidence of the people when they have changed their stances so often, when we have heard so many different voices from them on the tax package, for instance? One is in doubt yet as to where they stand in regard to these tax proposals. As the Leader of the Opposition said, the Government should have been concentrating on these matters instead of using every opportunity to divert public attention, such as the issue of rebroadcasting the BBC—something which can never be—or the Taoiseach's home guard plan of which we have heard nothing since it was mentioned first.

Confidence is an essential element of any Government's performance, but because this confidence is lacking in so far as this Government are concerned the people must be given a clear, consistent plan to which they can respond. The Government who are asking them to respond have not themselves a clear idea of their responsibility.

Let us take, for instance, those who are to be brought within the PAYE system. Only a few months ago these people received from the Revenue Commissioners forms setting out in great detail what their new obligations would be, what would be the new qualifications and so on, but they are now to receive from the same overworked officials new forms indicating that the system is to be changed. How can people have confidence in a Government that behave like that? The Government have not got even the consistency to acknowledge that they may be wrong on occasions. We are told that because they have available such a reservoir of talents they do not have to be aware of what the public may think of their efforts. In other words they think they can rely on personal judgment, knowledge and expertise in the various areas.

Nobody is being fooled by the much-publicised Government meetings that have taken place within the past few months on various issues. I suppose the Parliamentary Secretary to the Taoiseach will tell us that never before have a Government given so much time to, for instance, the Northern Ireland issue or to the question of the economy. Who could contest such a boast? However, rushed and regular meetings of the Government are no proof of their effectiveness. The much-publicised late night and early morning meetings to which Ministers are recalled from the four corners of the earth will not fool anybody. It is because there is a failure to reach agreement or consensus among the Government that these meetings occur day after day, week after week. Let not the Government think that the public are satisfied to know merely that all these meetings are taking place. That is not the concern of the public. The public want to know what they are doing at these meetings, what emerges from them and how they intend implementing whatever decisions they may take. Hence the hastily-convened meetings, due entirely to the fact that they have not got the capacity to reach a conclusion to which they will adhere. It is not surprising; it is not merely the difference between the Fine Gael and Labour social partners in the Government; it is the difference between the Fine Gael Party and the Fine Gael Party in the Government.

Mr. G. Fitzgerald

Hear, hear.

Mr. O'Kennedy

We did not have to wait for a commentator to mention this; I wonder how much the Taoiseach shares the views of the Minister for Foreign Affairs on the management of the economy; I wonder just how much he shares his views on many things for that matter. I wonder what has the Minister for Finance in common in his tax proposals, with the Minister for Defence. I wonder who are the persuaders in this Government. There seem to be a lot of strong, silent men, after the style of the Taoiseach himself, a lot of articulate persuaders, most of whom, if not in those benches, might feel happier in them. One of them is the Minister for Foreign Affairs, or the Attorney General or the Minister for Finance. At least as long as people know what people represent, we can have policies. But Fine Gael supporters at present are asking themselves—not has there been a change of policy but is it happening by decision of the party or simply because the persuaders are doing so without the party being aware of it. That is what is happening with the late night meetings and why we have had so many of them.

The Parliamentary Secretary to the Minister for Agriculture and Fisheries invited us to analyse the Minister's speech. I am not sure how much time I have left——

An Leas-Cheann Comhairle

The Deputy has approximately 20 minutes.

Mr. O'Kennedy

I shall undertake some little analysis of the Minister's speech. A budget is important not merely for what it contains and the precise measures it presents but also as indicating an attitude of mind on behalf of the Minister for Finance in an overall plan. Many spokesmen from this side already have offered views on what the Government have done in these measures. While that exercise might be more important than the one in which I now engage, I shall not comment on it. I see my most useful function at present to take a somewhat different line, and that will be to analyse the Minister's speech.

The Minister's opening lines set the trend for what was to follow, when he said:

We have witnessed and are still seriously affected by the most dramatic turnabout in the economic fortunes of the western world since the late 1920s.

—thereby setting the scene "It is not our failure: oh, no, it is not our failure, it is due to the ‘dramatic turnabout in the economic fortunes of the western world,' the most significant since the 1920s". We find some inherent contradictions there. The scene is set; the Government are not responsible, but they shall do the best they can allowing for the tempest raging all round them.

The Minister continues to speak in terms of the strategy of his careful, expansionary budget, where he says:

In short, the budget was intended to float the economy——

listen to this for a magnificent metaphor

——over the rocks of recession into the flood-tide of world economic recovery.

There is one thing about which the Minister and our party are in agreement—we are indeed on the rocks, the rocks of recession. His budget early this year was intended to get us off the rocks but we are now even more firmly planted on them and we show no signs of getting back out into the flood-tide of world economic recovery. Like the mariners of old, we sit in the midst of the storm, waiting for favourable winds, hoping the storm will subside and that, when it does, we will find ourselves in a safe haven. The Government have not even got the capacity to chart a plan into the flood-tide of world economic recovery the Minister so earnestly wishes. If we look to the countries that apparently have caused our inflation, we are told by the Minister:

Other countries including our partners in the EEC have taken action, in some cases——

wait for it

——quite drastic and unpopular action, to curb inflation.

What the Minister has done, apart from passing the responsibility on to the Employer/Labour Conference could not be called "drastic and unpopular action". If we need to check our inflation rate with that of the countries meant to be injecting inflation into ours, why do not we at least have the same guts and determination to curb inflation? Is this an acknowledgment that others are succeeding where we are failing?

Listen to this in that connection— and this from the Minister who spoke in his opening lines about the "dramatic turnabout in the economic fortunes of the western world since the late 1920s", all of which is supposed to affect us, again I quote from the Minister's speech:

At the moment, our inflation rate is about twice the European average:——

that is not bad for starters

——next year, with the increasing success of other countries in bringing their inflation under control, it could easily be three times that average.

That, from a Minister who talks of the effect on our economy of world inflation, now acknowledging that the rate of inflation in other European countries with which we are associated, is moving to a point where it will be, on average, a third of ours. Where is the eye of the inflation hurricane? It is centred in this House on those benches, in the seat of the Minister for Finance who is not prepared to face up to his responsibilities. It seems to me the only time we can feel immune from what was once called, by the Minister for Industry and Commerce, in a memorable phrase "the raging tempest of international inflation" is when we get back out into those international waters. In our territorial waters we are in a raging tempest of inflation. It is in international waters we can look for peace and a haven and if I may use the cliches employed by, in turn, the Minister for Finance, the Taoiseach and the Minister for Labour "wind down the inflation spiral". If we can follow some little way behind perhaps we shall have, to some extent, come out of the raging tempest which blows right around our shores.

I shall continue, I hope, showing a theme of my own and a lack of consistency at least by a Government Minister who could present such a speech when we hear this gem:

It is not so often realised that this kind of inflation

—the general inflation in which we are involved—

can have profound effects in the public sector too.

A lot of people are wondering whether the public sector suffers the profound effects of inflation or whether it is, itself, an active agent in the inflationary spiral.

We had soft words from the Minister yesterday, in Kimmage, addressing a Fine Gael branch saying there was an appropriate time to examine the structures of Government. That time has been appropriate for some time, and what have the Government done about it? What about the semi-state bodies established at a different time? Have they been reviewed; have they been pruned; have they been checked or re-examined to restore to them the sense of urgency they had, because some of them had indeed become fat?

Mr. Staunton

CIE announced plans ten days ago.

Mr. O'Kennedy

There are a lot of others besides CIE and Deputy Staunton knows that. When redundancy is occurring everywhere and there is belt tightening most of those who are secure are in the semi-State sector. I am not saying that those people and those in the public service have not got a commitment. They certainly have, as well as a dedication, and they deserve better than they are getting. I am simply saying that the Government have not even begun to look to see where pruning could be made. Take, for example, Bord Fáilte. In the light of our tourist position, is the amount of money that is being spent by that organisation warranted? Would they see if it could be put to better use?

In relation to AnCO a large sum of money is being spent. We know it is being used for retraining, but for what? AnCO and Bord Fáilte are essential, but in the light of our present condition is there any pruning? We are told the public sector is affected by inflation but I wonder which is the cart and which is the horse? It is not surprising, in the light of that, to hear that there has been a total of £76 million extra expenditure since last January and that the public sector pay and social welfare expenditure have been increasing faster than inflation in recent times. The Minister said that these two comprise about one half of current public expenditure.

Let the Government not charge us with not wanting to see adequate social welfare benefits. We want to see social welfare benefits for those entitled to them. We want to see less people relying on them. This is the response from the Government, who approach it the other way.

When we come to the cost of servicing the public debt we are told that this trend cannot continue because we now need to provide a further £10 million in this budget to service the public debt. The reality is that while we are borrowing abroad, the Government have failed to acknowledge although they could ask any bank manager who may have advised his clients, or any accountant, how much money at home is being sent abroad. We are borrowing abroad at high rates. It is not surprising that we find the cost of servicing the public debt so significant.

The Minister told us that the rate of foreign borrowing has risen fivefold during the past two years. That seems, by any standards, an enormous change in the direction of Government planning. During this time the export of money from the country has probably increased at the same rate. The Government apparently cannot sit down and see how to approach this fact. We are told that there are sound economic reasons why this trend should not and indeed cannot continue indefinitely.

In relation to the sound economic reasons we are told that a compelling one is that the raising of money on the scale required would simply not be possible. That seems to me to be a sound factual reason. Why is it not possible? The Minister said in his speech:

The Irish economy does not have an unlimited capacity either to borrow resources or to repay them— a fact no less apparent to our creditors than to ourselves.

Does it mean basically, when you remove the verbiage, that we have got the brush off from our bank managers in international banking or we have been advised that we have extended our credit? This fact is no less apparent to our creditors than to ourselves, but we are still persisting with our taxation package while our creditors and ourselves recognise that we have not an unlimited capacity either to borrow or to repay.

The Government are closing their eyes to the reality. There are some beautiful gems which followed in the Minister's speech. The Minister said:

Last January we attempted a "holding operation" to cope with the situation until general worldwide recovery enabled a more fundamental restructuring of the economy. That operation, while successful in preventing a worse situation than the one we find ourselves in, has not been enough, largely because the recovery in the world economy has not yet taken place.

Why was it successful? It prevented a worse situation than the one we find ourselves in. I have to say: “Gloria alleluia”.. I would not like to think what would have happened if the operation was not successful. What would have happened if the operation was a failure? Would all the dire premonitions the Minister warned us against now of social upheaval, and undermining our institutions, have come to pass? We have to be satisfied it was successful and things are better than they would otherwise have been. The Minister went on to say:

I may be pardoned for recalling that last January I pointed out the limitations of an annual budget in a period of great instability and said that further corrective measures might be required if the global and home situation did not improve throughout the year.

The one correct forecast the Minister made was the limitations of an annual budget in a period of great instability. We will give the Minister kudos for that. He was right about that. I suppose he will come back in October or November and say that he may be pardoned for pointing out in June the possibility that if the Government did not get the response they expected, we would have our third budget.

We are asked to respond to a Government who have no clear sign of where they are going. Before I induce depression on myself and I hope not too much depression on the public, when they think they have to respond to a Minister who is so lacking in courage and confidence, I want to say there is a feeling of defeatism running right through the Minister's speech. He tells us that external resources will contribute less than 20 per cent of our inflation and that the rest of the wound is self-inflicted. Eighty per cent of the wound is self-inflicted. The weapons which hurt us now are not those of international inflation but those manufactured in our own industry and by our own Government.

The Minister tells us that the situation is now extremely grave. It certainly is. We have had ponderous solemn warnings and ponderous solemn threats. When one allows for the hyperbole which runs through the Minister's speech and allows for the repetition which runs through it maybe it is not ill-placed. While I charge the Government with cowardice and lack of conviction and decision I hope they will get to the point where they can see it. I hope there will be a response from the public, a response which the nation needs and deserves, a response which this Government does not deserve but badly needs, and a response which this Government can never have because of the divided councils within the Government, and not just within the two elements of the Government. I should like to go back to the lines of Pope, the satirist: "For forms of Government let fools contest, that which is best administered is best".

By those standards the fools can contest for socialism or conservatism as long as they like but that which is best administered is best in the national interest. We hope we will see some sign of that in the Government's response to that which they have asked from the "social partners". Those of us who do not enjoy the talents, these benches and this party who do not have the personal capacity and personal projections of the members of the Government, have a little conviction, determination and guts and that is what our country needs.

Mr. Staunton

I have listened with interest to Deputies Brennan and O'Kennedy. There is a false tone running through this debate. We are being attacked by the Opposition and we are getting a wide range of advice which, in some circumstances, tends to be inconsistent. Deputy O'Kennedy, who spoke for an hour and who berated the Government, suggested we were negligent but during that hour he did not with any precision suggest what the Government might do in present circumstances. We hear generalisations and the evoking of philosophical tones, but no precision.

Mr. O'Kennedy

I did that intentionally and I gave my reason for doing so. Other speakers from this side clearly indicated what should be done and I saw no point in repeating the sound advice they were giving. I took my line independently.

Mr. Staunton

Deputy O'Kennedy mentioned sur-tax and increasing upper limits and suggested that the announcement of the Minister should have been more penal. He said that apart from the fact that the Government introduced the sur-tax increase for people in the middle-income or upper income bracket there was nothing. Even that two days ago was in a script issued by a member of the national executive of the Fianna Fáil Party. This, which Deputy O'Kennedy said was part of what was needed but not sufficient, was criticised as being penal of the middle classes. Where are we going where the Opposition are concerned? In one breath we are told there must be penal measures. We have had sweeping generalisations, speeches of a philosophical theme, but when we get down to the nuts and bolts of precision a member of the national executive of Fianna Fáil berates the Government for the fact that terribly mild taxation is levied on people in the middle income group. As far as the middle income group are concerned they are getting their subsidies on milk, bread and butter, as every other member of the community will get.

Mr. O'Kennedy

I did not say that more should have been imposed on that section. The Deputy is misquoting what I said.

Mr. Staunton

I am stressing that the Deputy pointed out that that was the area where when penal measures were necessary something was done. I was pointing out the inconsistency within the Fianna Fáil Party where in one breath they infer that this is what is needed while, at the same time, a member of the national executive of the same party criticises the Government for implementing it. This is one of the problems of Government. We are sitting in the middle and we are being berated by the Opposition and by different elements in the economy.

Deputy O'Kennedy's contribution was naïve to a large extent in the sense that it tended to suggest that all of the options rest within this House between the Government and the Opposition. It is not as simple as that. Deputy O'Kennedy said it was not fair to place responsibility on the Employer-Labour Conference. I disagree because I see no reason why responsibility should not be placed on the Employer-Labour Conference. Options in Government are limited. We know that today the economic crises that are blowing around the world are causing trouble and pressure on democratic governments. A grouping with which I was associated, the Trilateral Commission, published a lengthy paper last month, "The Governability of Democracies", and this paper concerned itself with common interests of Western Europe, Japan and North America. Options are limited in a modern democracy unless one wants to introduce a dictatorship. We can see what is happening in Portugal, in Greece, in some of the Middle East countries and in South America.

If we want a hard-line Government and a situation under which the Government can spell out edicts from the Cabinet table which will be automatically implemented, we need to revert to dictatorship. While this might be a corrective measure for two or three years, God help this country for generations hence if we resorted to that type of activity. The Government can give a lead, exhort and attempt to channel the capacity in the minds and the good sense of our people to doing things, but the Government cannot dictate. The Minister for Finance is correct in placing responsibility on the Employer-Labour Conference because they are the leaders of the labour movement here. They are the leaders of the various employer groups such as the Confederation of Irish Industry and the Federated Union of Employers. They have a major role to play in the running of our country.

The options of Government are limited and there is a wider range of activity at different levels. There is responsibility resting on all these groups, as well as the Government, and on every individual. This nonsense of having a debate here and giving the impression that the Indians are on this side and the cowboys are on the other side, that we have the good boys and the bad boys is not that simple.

Mr. G. Fitzgerald

Why did the Minister for Finance not take action when he should have? Why did he not take action when any reasonable man would have done it?

Mr. Staunton

This Government succeeded a Government who were in office for 16 years and they inherited procedures, policies and approaches under which at lesser levels than Government there was an approach to solving the contentious items such as the crucial issue of wages. This Government inherited the system under which wage agreements and wage increases apparently automatically follow cost-of-living price indexes. This was not the creation of the present Government. It was the creation of the Fianna Fáil Government. Any Government needs a certain amount of time to play themselves in, to consider options and to look in depth at what is needed but in addition to having to do that this Government ran into the unfortunate blizzard which has been affecting the world.

At one stage during the debate last week Deputy Fitzgerald interjected to suggest that Fianna Fáil should be put back and that this would be the answer. In other words, there are problems throughout the world and to sort out these problems Fianna Fáil should be put back into office. The day of lesser levels of education here are past and so also is the day when people will respond to these catch-cries. We should look at this in a more sophisticated way.

Deputy O'Kennedy said that in the area of finance and investment the Government had been given the brush-off from bank managers abroad. He referred to the Minister's statement that there was no limitless capacity within this country to borrow here or abroad. This is true and our capacity to borrow abroad depends on how we run our house, on the collateral we have, on the resources we have and how we develop them. To suggest that this Government got the brush-off from the bank managers of the world is irresponsible and runs counter to the information we have at present. There has been a substantial increase in foreign borrowing which has, unfortunately, been necessary. However, the Government have not had any problem in getting the necessary finance from outside sources when they sought to get it. There has been a much greater than expected investment in recent Government security issues, particularly from outside this country. Running through this very period when we are being pilloried by the Opposition for mismanagement we have had probably the highest level of British investment in this country in any year in the history of the State.

Mr. G. Fitzgerald

Thanks to Brendan Halligan.

Mr. Staunton

There is outside documentary evidence, which does not relate to vested political journalism, to prove this. A fortnight ago The London Times in its investment page carried an article showing the very substantial level of British investment in this country in Government securities. We have preachings from the Opposition about private enterprise, about capital, about confidence, about industry and about what our wealth tax is supposed to be doing. Mercury is the barometer for weather. There is an equally simple barometer of confidence in the financial community, and that is money and the investment of money. The investment of money within this country has been substantial and continues to be substantial. It is coming from outside sources, and this shows that there is basic security, political stability, collateral of substantial proportions in the form of natural resources and indeed of human resources. Of course we have problems but we have the capacity to overcome them. Some of the ill-considered speeches from the Opposition benches are not helpful. There have, in fairness, been speeches that were more acceptable.

Deputy O'Kennedy referred to the question of running the country and said that if we are delegating the running of the country to the trade unions and to the employers and to their joint conference we should hand over the trappings of the State. Of course we are not. We are handing them responsibility but we are not handing them what he described as ultimate responsibility. Ultimate responsibility rests with this Government and will continue to rest with this Government, particularly with a Taoiseach of the calibre of Liam Cosgrave and what we know of his tenacity, traditions and basic interest in this country.

Mr. G. Fitzgerald

For the next two or three weeks anyway.

Mr. Staunton

I referred to the question of investment and the level of British investment within the country, and this is the indicator of basic health. I am glad the Minister chose to refer to this matter. He said:

A refreshing development has been the recovery in the inflow of funds to the building societies.

He referred to the fact that in the first five months of the current year the net inflow was £20 million compared with £7 million in the same period in 1974. He referred as well to the fact that the banks are prepared to make available £40 million over two years for house purchase loans. Along with the Taoiseach, who made an excellent speech on this budget, I would like to welcome the announcement that the banks are prepared to make available this £40 million because it will be a substantial injection to the economy and coming from the associated banks means it will not drain unduly the resources of the building societies.

Again it suggests confidence because the banks are in the business of returning an investment to their shareholders. This is their first priority. Their second priority may be the betterment of this country which is in their common interest and the support of sensible measures by the Government of the day. When the chips are down, if there is an underlying economic reason why they should not advance funds or if there is a lack of confidence they will simply not do it. This investment is particularly welcome at this time for this reason.

We should point out this level of investment because we have been under a welter of criticism in recent debates in the area of capital taxation, in particular when we have been speaking about the wealth tax. The Opposition have attempted to suggest that the implementation of the wealth tax is ruining investment. If we are talking about manufacturing industry investment, it is a fact that wealth tax is in no way imposed on limited companies, public companies or multinational companies. When we suggest to the Opposition that the capital taxation measures of the Government are to attempt to get funds for the Exchequer from a source which is lost because of the Government policy of abolishing estate duty their retort is that estate duty could be got around. Equally where the wealth tax is concerned, with the redistribution of wealth between individuals, it is possible to make certain provisions.

The Minister referred to investment from abroad. He said:

On the resources side, sales of Government securities on the Irish market have been very buoyant, showing investors' belief in the underlying strength of the economy and I think I could now reasonably expect some £40 million more from that source this year than I expected in January. In addition, I can expect an increase of £15 million from sales of securities to the commercial banks.

This underpins what I have been saying.

Last year most speeches which were made about this problem referred to what was happening outside the country and suggested that we did not have many options here. It has become fashionable more recently to throw it back on what we can do ourselves. Before dealing with the domestic inflation factor it is necessary to point out again the reality of the environment in which this country finds itself at present economically. We are a small country with an open economy. We are extremely dependent on exports, on imports and at times we have also had a certain dependence on employment opportunities outside this country for our people. It is very important to take cognisance of what is happening outside these shores to put Ireland's problems in perspective. They have been very cogently put in the Department of Finance booklet of June, 1975. At section 73 it states:

It will be difficult to achieve economic growth this year. The recession which affected the industrialised countries in the second half of 1974 and this year has proved much deeper than was originally anticipated while its duration has been longer than seemed likely earlier. For most of 1975 the external environment will continue unfavourable. In the United Kingdom official forecasts suggest that the economy will not reach an annual growth rate of 1 per cent before mid-1976, while the number of unemployed could rise to one million by the end of this year. In the United States there is likely to be a substantial fall in the volume of GNP and the unemployment rate, at present, 9 per cent, could go higher.

The Taoiseach, in his excellent speech last Friday, referred to the American situation where there are between 8 and 9 per cent of people unemployed at present. There is great concern where their economy is concerned. The report continues:

In West Germany the forecast for real economic growth in 1975 is between zero and 1 per cent, with unemployment averaging about 4 per cent. The prospects for the economies of our other EEC partners are, in general, similarly discouraging.

This is the environment within which this country finds itself and you have our opponents in Fianna Fáil coming in an telling us the issue is so simple to correct and all we have to do to improve the economy, not alone of our own country but of the world, is put Fianna Fáil back into Government.

I referred to barometers: the barometer for the weather is mercury and the barometer in the area of investment and finance is money. Despite the barrage we have faced over the past few months in regard to the wealth tax and the allegations that we are running away from our responsibilities in relation to the economy, there is at the moment a more substantial level of investment than there has been for a very long time. There is substantial British investment in Irish Government securities, in the building societies and in the country generally. The primary interest of the commercial banks is to pay a return on the capital of their shareholders and they would not open their coffers to the extent of lending the Government £40 million for housing unless they have some confidence in the underbelly of our economy.

Deputy Brennan berated the Government for their wage agreement. I agree with much of Deputy Brennan's championing of the private enterprise sector but where the national wage agreement system is concerned, whereby the Government allow wage increases to follow fairly automatically on cost-of-living index increases, what has happened has not been of the making of this National Coalition Government who came into office two years ago. No Government, having been in the wilderness for 16 years, can overnight change the fundamentals of the State and it is not nearly so simple, as Deputy O'Kennedy suggested, to have decisions made by the Government supported by the Opposition. We must delegate responsibility. Deputy O'Kennedy accuses us of delegating power to the Employer-Labour Conference. Deputy Brennan's party were the Government who actually provided the system, a system with great weaknesses where free enterprise is concerned. What is socially desirable is sometimes in total contrast with that which is economically feasible and prudent. One of the problems we have had is that, whilst in the area of Government Departments and semi-State bodies the State has had the capacity to pay either through borrowing or increasing taxation, the system introduced by the Fianna Fáil Government has probably been the greatest single disadvantage in the private sector. The private sector is suffering because of procedures and systems this Government inherited. At this late hour we are beginning to grapple with them and come to terms with them. It is important that that should be said.

Deputy Brennan said there was a time when the Government did not have much influence—I am paraphrasing his words—and not much could be done; he says the Government now have much more influence because of more money being spent. This is untrue. The Government had more options a generation ago than they have today because there are wider and more specific international obligations through involvement in the European Economic Community. In a relative sense the Government today have fewer options than in the past.

Deputy Brennan also suggested the Government should have intervened in CIE, Posts and Telegraphs and so on. He champions private enterprise. What does he want? Does he want increased taxation? The Minister has arranged a substantial reduction in CIE fares in an effort to break the inflationary mentality. We are doing what we can. Deputy Brennan said private enterprise are dirty words. In his speech last Sunday the Taoiseach referred in no uncertain terms to the fact that private enterprise is necessary and most welcome; he is committed to it. These flippant phrases, such as private enterprise being dirty words, mean nothing and they are less than worthy of people who sat around the Cabinet table in a previous Government. These should have the capacity to offer more than they are offering.

There are two types of inflation: inflation due to external causes and domestic inflation. Domestic inflation is not nearly so simple to get to grips with as some would try to argue it is. It is not simple because of a number of factors. To illustrate, in the agricultural sector we have had very substantial price increases in the last two or three years, with a resultant increase in the farmer's income. In the national interest that makes good sense because we have the highest proportion occupied in the primary sector than has any other country in the EEC. Levels here run up to 30 or 40 per cent; in Britain it is 3 to 4 per cent and in the other EEC countries it is 7, 8 or 9 per cent. A cheap food policy makes sense in countries like Britain, Holland and Belgium, but it makes nonsense for this country. It is, therefore, State policy to arrange as far as possible substantial increases for the farmers in the interests of the greater national good. In the publication to which I referred earlier we note that on average food prices in 1973 went up by 16.5 per cent; in 1974 they went up by 14.7 per cent. That reflects the removal of VAT, which was disputed by the Opposition. A major factor in domestic inflation has been the increase in the price of food. This makes good sense for this country; in 1972 farm income increased by 38 per cent and, in 1973, by 31½ per cent. So, when we are talking about domestic inflation we want to be a little more precise. If you are talking about domestic inflation you are in effect trying to put a brake on farmers, which we cannot do. In other words, a certain level of domestic inflation has been unavoidable if sanity was to prevail in the Irish Government because of the fact that there is a huge proportion of farmers in the country.

In joining the European Economic Community we stepped on to a plateau because the level of economic activity within the country had been at a lower level than is the case in the European Economic Community and the level of prices had been lower. While it gave us advantages it also created temporary turmoil and upheavals within the country which in the enthusiasm of the time when entry was being debated had not been reflected on sufficiently.

When we stepped on to the plateau of the EEC, when there were such substantial increases in the price of food, the Government if they were to have a social conscience had to have a commitment to the underprivileged. I say this as somebody who is firmly rooted in a free enterprise system and who believes in it. At a time when farmers were benefiting and food prices were increasing by 30 per cent over two years the Government had to have a commitment to the underprivileged because of inflation running as it was.

If the Government did not have that social conscience and commitment to the less privileged the gap between equality and inequality would have widened rather than narrowed. This is the reason for the very substantial increase in social welfare benefits, which took cognisance of the cost of living and other factors. It is not because the Government are committed to a system whereby people will be on social welfare rather than working. I am glad that the Minister has introduced a stimulus in the nature of the employment premium, to which I will refer later.

Sometimes from the business community we get criticism of the Government's social welfare policy. If we go to the less well-off parts of the country the increasing levels of payments by the Government have led to a substantial increase in purchasing and spending and to a very considerable extent the business community has benefited from that activity.

I quote the remarks of the author of the Department of Finance publication about the present outlook for 1975 where other countries are concerned. The Minister has spelled out what that means for the man in the street. I would like to re-echo what the Minister has been saying. It is regrettable that in debates in this House there is too much polarisation and it becomes too simply a matter of the good fellows and the bad fellows. It is important to indicate the problems facing us. It is a question of what is happening outside the country. Inflation is critical for a number of reasons. The fact that it is happening outside the country affects us greatly, first because the level of foreign investment in this country may be reduced substantially not only because of inherent problems in this country, such as inflation, but because the evils we are talking about within our own country—inflation, depression and unemployment—are present in other countries and there is enormous Government pressure on industrialists to create employment in their own countries. There is also the fact that foreign markets are depressed and there is less buoyancy and less purchasing power and more chauvinism in other countries and people are asked to buy their own products. This has put tremendous pressure on Irish exporters to world markets and they are encountering greater resistance than they have had.

At other times when we experienced economic recession our people had outlets, particularly in the English-speaking world, Britain, the United States, Australia. Our people could get in those countries the employment which was not available here to the extent that we would have liked. The present position is exacerbated because there are fewer jobs available outside the country than there had been. We are being hammered on about five or six different levels.

Deputy O'Kennedy spoke about the cowboys and Indians—paraphrasing him—that the Government were the source of all foolishness and that the Government had all the options. The options are extremely limited. The Government and the Minister for Finance have been right to place responsibility on the trade unions and on the employers because they are our partners in running the country. Responsibility, in the situation we are facing, rests not only with the Government but with Deputies, with employers' organisations, with trade union organisations, with farming organisations, with individuals. It requires participation. This serious situation we are experiencing should help us to get a better understanding of what the country must do in order to secure higher levels of employment and to get the man-in-the-street to realise the work which must be done at local, individual and national level, and by the semi-State sector. Recently the Government gave a directive to CIE to tighten its belt and to become a bit leaner and to prune employment in the areas where it is vitally necessary to do so. Last week CIE made announcements implementing the Government's decision. This, in the long run, can be helpful to us.

The Taoiseach said recently that we are not short of advice, that we have had advice from the Opposition, advice from economists. Where economists are concerned, it is not so simple because there is not a single economist who tends to have the same views as anybody else. When Robert Menzies was Prime Minister of Australia he was asked what he thought about economists and replied that he had great respect for economists because they represent such a diverse consensus of opinion in the community. That has been a problem the Government have had. They have been listening to advice from so many quarters.

The Minister has been right to throw some of the responsibility on to employers and trade unions. Ultimately we will have anarchy or we will have discipline and sacrifice. To attempt to leave everything at the door of the Government and to break the Government is less than acceptable. In an age when educational standards have improved and people are more enlightened the catchcries we have been listening to will not influence the thinking of the mass of the people.

I should like to refer briefly to the problems which will arise in the educational field. I would refer to an article which appeared recently in The Irish Independent, written by Dr. James McCabe, who works with UNESCO and who had been chief executive officer of County Sligo Educational committee. Dr. McCabe refers in his article to a matter which is of very serious concern to the boys and girls leaving school this year. He refers to a matter to which I referred in the budget debate last year and which should be given serious consideration, that is, the question of having closer relationship between educational policy and the capacity of the country to employ school leavers. There needs to be a closer relationship so that a more equitable situation will exist.

Debate adjourned.