May I say that, in my view, this Bill offers an opportunity to Senators to discuss a somewhat wider subject than that just now discussed by Senator Ryan. I should like, first of all, to ask Senators whether they feel the proposition that is behind this Bill—that is the proposition contained in the Budget—can be defended indefinitely: the proposition that this country, in its present circumstances, can provide for public expenditure an annual sum of approximately £70,000,000. That is really what we are discussing. We are concerned here with the raising by way of taxation and rates not merely the amount provided for supply services, nor even for supply services as set out in the Book of Estimates, plus the Central Fund services, but rather for the supply services plus Central Fund services, plus the Supplementary Estimates which are coming every other day before the Dáil, plus local rates. All these sums amounting in the aggregate to £70,000,000 must come out of the current production of the country. If the several items are totted up, it will be found, I think, that what we are required to do in the current financial year is to provide for the spending, by public authorities, of £70,000,000. That is approximately one-quarter of the total national income. It may be argued that the State and the local authorities can, in fact, spend the moneys derived from taxation to greater advantage than the individual themselves can do it. I do not want to go into that.
I can see a case being made that money collected by the Government or by the local authority from certain citizens will be spent to better advantage by these authorities than by those citizens themselves, but that is hardly admissible in relation to the whole run of taxation—taxation by which we lift money in the form of duties on tea, tobacco, cigarettes and spirits from the ordinary citizen as well as the money collected from those who pay income-tax and supertax.
There is also this other aspect to be considered: If we are to continue collecting from the community one-quarter of the total national income of the State it seems to me that there is not going to be much left for capital expenditure—let us say on agricultural development, on housing, on the replacement of the damage wrought during the past six or seven years of neglect of machinery and equipment.
Some time ago, in an article, I think, in Studies by Dr. George O'Brien, he calculated that it would cost £100,000,000 to overtake the arrears in capital expenditure due to the neglect of the war period, or “the emergency” period. It has been calculated in other quarters that £150,000,000 will be needed now to put agriculture on an economic basis. In a White Paper published by the Government last year, there was an estimate of £100,000,000 for building and constructional work. These three items together suggest that we must find, in the near future, a capital sum of £350,000,000 for the re-equipment of our economy and I am drawing attention to the fact which must be present in the minds of members of this House that it is not easy to see where it is going to come from unless we pare down taxation.
Of course, it will be argued, and I think, probably with justice, that there is a very substantial nest-egg lying to our credit, in foreign exchange for instance. I would be very glad if the Minister would devote some time in the course of his reply to discussing that question because it is one of tremendous importance. We are at the moment—it seems to me at any rate— living very substantially on our external balances, even at a time when we are not able to get more than 50 or 60 per cent. of the commodities we require. Last year, for instance, we expended £12,000,000 in dollar currency countries. We supplied to these countries £600,000 worth, so that our expenditure in 1946, in the dollar currency countries, exceeded our income from these countries by £11,500,000, roughly speaking.
I do not know where we stand in relation to foreign purchases in the future, and I am sure it would be of considerable importance and considerable interest to the members of this House, and to the community—the farming community, as well as the business community—if the Minister would tell us exactly how we stand in relation to the purchase of goods for capital development, and for current consumption outside the sterling area. We cannot continue to buy outside the sterling area at last year's rate unless by an arrangement with the British authorities.
As it is, it seems to me that we are buying from Britain, and from the sterling area, 100 per cent. of our current exports to that area. If that is so, it would appear there is nothing left over for buying essential commodities outside the sterling area, unless we are permitted to use up existing sterling balances, the balances built up during the war period, during the period between the two wars, and between 1914 and 1918.
It was calculated some years ago that the sterling balances to the credit abroad of this country in 1938 amounted to about £350,000,000. Can we utilise these balances? Can we avail of them now to buy tobacco and films in America, and will we be permitted to do that freely at a time when Britain refuses permission to her own people to utilise sterling—the American loan—for the purpose of buying tobacco and films in America? These are questions of considerable interest, because if there is to be a crisis, if there is to come a time when we are going to be short of these things which we are accustomed to buy abroad, it is better that we should be told of it in advance, better that the Minister would tell us that there is not going to be smooth sailing, that there will be a tightening of our relations in foreign markets and that we will not be free to spend as we like outside the sterling area. It is better that we should be told now that there are difficult times ahead, so that we would not be taken by surprise eventually. I think it is obvious that the difficulties are likely to arise.
That brings me to another point which seems to be of considerable interest. When these sterling balances of ours were being created, money had certain purchasing power. In other words, in 1937-38, if we exported 10,000 cattle we could have got 250,000 tons of coal in exchange. If, in any particular period, we did not desire immediately to import the coal, steel or cotton, or whatever else it might be, and so allowed the currency which was realised for these 10,000 cattle to lie to our credit in Britain, that added so much to our sterling balances, and normally, the average citizen would feel sure that come what might we could get the 250,000 tons of coal later on as it was required. That, however, is not the position now. You will require now to surrender for 250,000 tons of coal not the sum realised in 1938 by the sale of 10,000 cattle but the sum realised for 85,000 cattle. Therefore, from the point of view of immediate purchasing power, the sterling balances have depreciated enormously. They are not going to get for us now the volume of goods they could have got in 1937 or 1938. They are going to get a very much less volume of goods, even in the sterling area, and much less still outside the sterling area in view of the considerable increase in prices on the American export market.
I would like also to refer to one other point which seems to be overlooked. A very large proportion of this £70,000,000 which will become payable in the current financial year in respect of taxation, direct and indirect, and rates, will come from a section of the community who have suffered greatly during the last seven or eight years by reason of the fact that their incomes have not kept pace with the increase in the cost of living. It is notorious, of course, that in this country a very substantial proportion of the nation's revenue is derived from indirect taxation, say taxes on tobacco, spirits, food, clothing, cinema seats and various other things in general use. A very much larger proportion of our national revenue is derived from indirect taxation than, let us say, is the case in Great Britain, Australia, New Zealand or Canada. The people affected very largely by that fact are wage-earners and others with small incomes including the recipients of home assistance and public assistance.
The Minister, like his predecessors, for some reason is very sensitive when it comes to the demands for tax relief of the wealthier elements in the community. He is, like his predecessors, less sensitive when he is dealing with the protestations of those with slender incomes. For instance, take the case of the recent increase in the tax on cigarettes. A man who smokes a packet of twenty cigarettes a day—and I am told that that is not heavy smoking— will have to pay an extra 1/9 a week over and above what he was paying before. I calculate that the average cigarette smoker's contribution to the nation's revenue to-day is in the neighbourhood of 10/- a week and the average pipe-tobacco smoker is contributing 6/- or 7/- a week to the nation's revenue. In the case of the wage-earner this is a substantial contribution. It may be argued, of course, that tobacco is not one of our essentials, that you can do without it. That is probably true. We probably could do with two meals a day. People have existed for long periods without taking any food. But it has become part of our social life that men, and even women, smoke, and a very substantial contribution is demanded from them in taxation.
Then see the other side of the picture. Take, for instance, the practice which obtained up to very recently that only a prescribed number of people were allowed to travel in a bus. There was supposed to be a seat for each person travelling and tax was paid on the seating capacity of the bus. Since the creation of our transport monopoly in the custody of Córas Iompair Éireann, that practice seems to have disappeared. There is now almost no limit to the number of persons who may be carried on a bus and I understand that the police have instructions not to interfere with Córas Iompair Éireann, no matter how many passengers are standing in one of their buses. Do not forget that Córas Iompair Éireann does not pay extra tax in respect of the extra passengers carried. The regulation is made permitting the company to carry six or seven standing passengers and there has been no adjustment in the taxation. The £6 15s. 0d.—or whatever the company is supposed to pay per seat—is saved in that case and there is no attempt made to require the company to pay additional taxation by virtue of the privilege granted to it to carry a number of passengers for whom there are no seats.
Another aspect. The Minister made a statement in his Budget speech in respect of the rebate that has been given in respect of hard-pressed tobacco. As far as I have been able to calculate, the additional duty imposed on hard-pressed pipe tobacco was about 2¼d. per ounce. The Minister for Industry and Commerce made an Order permitting the manufacturers to charge in some cases, I am told, an extra 4d. per ounce. Who gets the balance? The Revenue gets 2¼d. The consumer has to pay 3½d. or 4d. an ounce. The retail tobacconist tells me that he gets none of the added price, that it is a frame-up between the Government and the manufacturers in order to make the manufacturers happy about the increased taxes on tobacco. The retailer assures me that he does not get a brass farthing out of the increase in the selling price of tobacco permitted by the Minister for Industry and Commerce.
It seems to me that, discreetly and well-concealed, there is an attitude in Government Departments to make things easy for those who are well-circumstanced and to make things hard for the poor and those who are seriously affected by every change in the volume of taxation. It has been the practice of Ministers to suggest that those of us who are associated with the Labour Party should never complain about income-tax. Personally, I think income-tax is a very fair form of taxation. I am strongly in favour of the direct method as against the indirect method of levying taxation because I think it is proper that every citizen should know the total sum he is paying in taxes or rates. But I want to draw attention to the fact that, because of changes which have taken place in the last couple of years, particularly in the last 18 months, very large sections of people are being brought into the arena in which they are required to pay income-tax who were not formerly liable to income-tax and I think its assessment is unduly harsh in their case.
I have in my mind one individual whose circumstances if understood by the House will probably illustrate what I have in my mind The person is a carpenter living in Dun Laoghaire, seven or eight miles outside the city. His present wage is £7 per week. He is unmarried, living with his mother, who is an old woman, and two sisters one of whom is an invalid. The other sister acts as housekeeper for the household. I have been trying to find out what his assessment will be under the present Finance Act. His total earnings will be roughly £365 for the current year, assuming that he works a full year without broken time or illness. On this there is an earned allowance of £73 and a personal allowance of £140, and an allowance of £25 in respect of the mother, leaving £127 or £128 as taxable income. Portion of this will be taxed at 6/6 in the £ and the remainder at 3/3. The total tax being £16 5s. 0d.
But a couple of years ago this man was compelled to leave his house and early this year he bought the house in which he is now living. In 1937 or 1938 it was sold actually for £900 but because of the happy times in which we are living it was sold this year to the present occupier, the person with whom I am concerned, for £2,500. Its poor law valuation is £24 and to that is added one quarter for the purpose of income-tax assessment, so that really the taxable valuation is £30, and the total sum this man will be required to pay in taxation is £34 12s. 0d.—13/6 per week in taxation out of a wage of £7 per week.
The balance is left to him for the maintenance of himself, his mother and two sisters. In the meantime Córas Iompair Éireann have increased his transport charges by 25 per cent. in the course of the last six weeks and the Minister has increased the cost of his tobacco and his beer. There is not much point, perhaps, in referring to this case unless we make a comparison with this man's position before the war. At that time he was earning £245 a year; he had 2/- per hour. Earned income allowance then was £49, and the personal allowance £120; there was an allowance for his mother of £25, making the total taxable income £51 which at the rate of 2/9 in the £, meant he paid £7 per year in taxation before the war. He did not own his house at that time but if he had owned it, the taxation on it would have been £3 6s. 0d., making a total of £10 6s. 0d. as against £34 12s. 0d. this year. But in the meantime this man has in fact lost in income the equivalent of £50 per year because if his wages had increased to the extent that the cost of living increased they would not be £365 but £416, so that he is £50 per year worse off in terms of purchasing power than before the war and on top of this his income-tax has increased from £10 6s. 0d. to £34 12s. 0d.
The net effect of the whole policy underlying the Finance Bill and the Budget statement is that we have a declining population, which is kept at its present low level very largely by artificial methods adopted by the Government to prevent emigration. One may say that the conditions in Britain are not better than they are at home. I do not know. I do not desire to express any view on this point, but I want to draw attention to the fact that the people are prevented from emigrating only by artificial methods adopted by the Government. And there is no place where we can see the effect of this emigration more clearly than in agriculture. Now, it is generally conceded that agriculture is the main industry of the country; the country's mainstay. It is the source from which the greatest portion, in fact, practically all our wealth, is derived, and the position is that during the last ten years the number of male persons employed in agriculture has decreased by 41,000. The number of male persons engaged in agriculture in 1936 was 560,000; in 1946 the number was 519,000, a decrease of 41,000 in our main industry, notwithstanding compulsory tillage and everything that has been done during those ten years to boost agriculture. And bear in mind that this exodus from the land of 41,000 persons is not entirely or even mainly an exodus of wage earners; of this 41,000, no less than 25,000 represented occupiers and their relatives, the small farmers' sons leaving the land. It may be that they are not leaving Ireland, but if they are not, they are ceasing to be independent proprietors and are being transferred into proletarian wage earners.
Sixteen thousand men, wage earners, have left the land, but this is less serious than the loss of the other 25,000. What I think is the greatest condemnation of the economic policy pursued in this country during the past ten years and, of course, during the previous 20 years is the fact that our main industry is deteriorating in volume of production. There is no doubt it is deteriorating in relation to its power to absorb the young men and women of the country and that seems to me to portend something for which we are not ready.
Looking at the agricultural scene as a whole, it is a most depressing picture. Our output per 100 acres is £365. In Denmark it is £1,260 and in Switzerland £1,560. To put it another way, while the average output per man engaged in agricultural production in these Twenty-Six Counties is £70, the corresponding figure for Switzerland is £120, for Denmark £140. What is the cause of this disparity? Why should our production in terms of man-yield or per-acre output be less than in Denmark or Switzerland? It seems to me that the disparity is due very largely to the fact that, in most other countries in which agriculture is a predominant economic factor, scientific attention is bestowed on the agricultural economy. Money is expended on implements, drainage, afforestation, reclamation, the building of houses, co-operative marketing—none of which is being done here.
We have been told: "Well, what can one do—there are no fertilisers?" That is probably true. I am not denying that there is a scarcity of fertilisers, but I want to point out that thousands of tons of organic manure are being wasted for the want of tanks and receptacles connected with the byre or farmyard; there is no proper method of collecting organic manure, it is allowed to go to waste instead of being used for restoring the fertility taken away from the soil by intensive tillage. Had this been attended to the absence of artificial manure would not have been felt so much.
We are told frequently that we have 12,000,000 acres of land. Yet we are not able to provide for 3,000,000 people enough butter, eggs, bacon, milk or fruit. In European countries there is an argument proceeding as to whether it requires to maintain an individual an acre, a half acre or three-quarters of an acre. Goldsmith in his time believed that "every rood maintained its man". If every rood were to maintain its man now, the Twenty-Six Counties of Ireland would be capable of feeding 40,000,000 people. As it is, with the present system of organisation, we are unable to feed 3,000,000. There are shortages of many dairying and agricultural products notwithstanding that exports of dairy produce ceased years ago.
I came across recently some newspaper cuttings and found this report issued six or seven years ago to the Dungannon Board of Guardians by their clerk. It had relation mainly to the workhouse farm maintained by the Dungannon Board of Guardians. The clerk said in his report that "the workhouse farm of six acres showed a profit of £170 for the year". That is a farm of six acres run in connection with an institution. Many people are inclined to say that institutions of that kind are not the best for running a farm; yet they are making a profit of £30 per acre per annum. On that basis and assuming those figures can be repeated throughout the country, a 25-acre farm in Meath should have no difficulty in showing a profit of £750. If that is so, some more careful attention must be given to the form of our agricultural economy. I do not wish to devote more time to it, as there are others more competent to speak on the subject of agricultural reorganisation. I merely pose the question, as it is one that seems to me to be of vital importance, lying at the root of our national economy—how are we to operate our agriculture so as to make a profit adequate to maintain the people on the land? This is not being done at present.
I want to refer to something else which is closely linked with the monetary policy outlined by the Minister in his Budget speech and crystallised in the Finance Bill. I want to draw attention to what seems to be the mistaken policy of the Government in relation to wage levels. If we are to have a profitable home market for our industries and agriculture, that can only be achieved by a high wages policy and not by a low wages policy. If low wages would ever have made a country prosperous, Ireland under the British régime should have been flowing with milk and honey. Back in 1910, a farm labourer was paid 6/- a week and given his food; a man on the old Midland Great Western Railway, to my knowledge, was being paid 13/ a week; agricultural workers maintaining themselves in their own homes and working on large farms and estates were getting 9/- a week. If low wages could bring prosperity to any country, Ireland should have been the richest on this earth, but it has been proven that the contrary is the case, that the countries which provide high incomes for wage earners become prosperous, as they provide a substantial home market for themselves.
Whatever other people may do with their income, the wage earner spends his promptly, usually in buying food, which in our case is produced in the country; or in buying clothing, a large portion of which also is produced here; or in providing himself with a house, in educating his children, in doing the things which we all would like our people to do and which they cannot do unless they have an income sufficient for that purpose.
What has been the history of wage rates in Ireland during the last seven or eight years? A return which became available to me yesterday was made recently by the International Labour Organisation at Geneva, on the Index of the General Level of Real Wages, and is published in the International Labour Review for May, 1947. That return shows that, taking the year 1937 as the base and valuing 1937 wages at 100, the last figure for Éire is 86, that is, the wage level has dropped from 100 in 1937 to 86 in 1945 and the beginning of 1946. On the other hand, the figure for Sweden increased to 104; for Switzerland, to 105; for Canada, to 109; for New Zealand, to 119; for the United States, to 130; and for Great Britain, to 146. There are a number of other countries in which conditions are probably less favourable, but the countries I have mentioned are those of which we hear a great deal and some of which correspond to our set-up in many ways, particularly Sweden, Switzerland and, to some extent, New Zealand. They are countries which have very much the same kind of living conditions as we have. It seems to me extraordinary that, in every one of these countries, there is a shortage of labour—in other words, full employment, not enough people to do the work which needs to be done—and that in every one of them the level of real wages—I speak of real wages and not money wages—is higher to-day than it was in 1937. With us, the level of real wages is substantially lower—14 per cent. lower—than before the war and we are not able to provide employment for the 2,970,000 people left in Ireland after all these years.
Worse than that, there is a very unsatisfactory feature about the way in which the net value of the product of industry is divided. I examined the clothing and textile trade recently to find that, in 1938, the wages paid to workers in that industry absorbed 52 per cent. of the gross profit, but that, in 1945, they absorbed only 42 per cent. of the gross profit, so that the balance has notably shifted. In 1938, 52 per cent. of the gross profit of this industry was distributed in wages, while 48 per cent. went to rent, interest and profit, but that has now been changed and 58 per cent. goes to rent, interest and profit, only 42 per cent. going to wages, that is, to the people who will spend the money immediately on consumer goods.
What has happened with regard to prices and what has been the policy of the Minister and the Government with regard to prices? I think the Minister's policy has been to allow prices to soar, so that he will get a greater cut in income-tax and surtax. I do not think he minds very much how prices go, but that is a short view, and, in my opinion, a disastrous view in the long run, because it is going to affect the whole economy and to mean that the people who want to spend money on consumer goods will have less, while those who want money to invest or to spend on luxuries will have more.
Again, I examined the manner in which food prices have moved in a number of countries. I have already referred to six or seven countries and have shown the relationship between their pre-war and post-war wages, and I want to look for a moment at the manner in which food prices have moved in this group of countries. The easiest way to examine it is to take a £5 note and see how it is being spent, or, at least, see what it can buy in a number of countries with which we are more or less familiar. I am taking the figures compiled by the International Labour Office, and I take them from their most recent publication, the May issue of the International Labour Review circulated in Ireland yesterday. I find that in the United States it is costing £5 7s. to buy the basket of food which can be bought here in Ireland for £5. In Norway, it takes £5 4s. to buy the same basket of food, but, in Sweden, our £5 basket of food can be bought for £4 12s.; in Belgium, for £4 3s.; in Canada, for £4 2s.; in Denmark, for £4 1s.; in Holland, for £3 19s.; in Great Britain, for £3 10s.; in Australia, for £2 16s.; and, in New Zealand, for £2 10s. So that notwithstanding their higher wages in Britain and in Australia, New Zealand and Canada, the cost of their basket of food is less than it is here.
I have heard and read some of the retorts of the Minister to statements with regard to the attractions of other countries. I do not want to paint other countries in vivid colours or to make them appear attractive. I want us to make our own country attractive. I want us to provide a standard of living here which will induce Irish men and women to remain at home and induce them to work here for the benefit of our community rather than fly away to seek jobs elsewhere. There is no use in telling me that distant fields are green. The fact that our people are going away, that they are going into the Six Counties in order to get away to Britain without permits, is a clear indication that, whatever we may say to the contrary, the people both in the towns and the country here are convinced that they can do better by going away. I want to change that. I want them not merely to remain at home but to feel quite confident that they can do better by staying at home, and I urge that that is the direction in which the State should proceed through its budgetary and other financial operations.
While our prices are high and while wages are low, what was the experience during the war of companies engaged in manufacture? I took three cases at random, three well-known firms—I do not intend to list them here, but one is a wholesale firm in Cork and the other two wholesale firms in Dublin—all three in the drapery trade. Their total profits, the profits available for distribution in 1938, were £22,920. In 1946 the corresponding figure was £44,450, that is to say, the profits of these three firms alone increased by 94 per cent. between 1938 and 1946. One well-known firm in Dublin which was in a rather low state some years ago has been doing so well that almost every year there has been a uniform 15 or 16 per cent. increase over the year immediately preceding. In 1946 its net profits were 17 per cent. more than in the previous year. In another case the increased profits were 10 per cent. These are drapery firms.
Now, take food. I had before me last night the balance sheet of a well-known bakery firm in Dublin. We know the restrictions, controls and other devices availed of by the Government to restrict profits, but this firm, notwithstanding a very successful year in 1945, showed an improvement of 14 per cent. in 1946 over the previous year's figure. Let us take, say, the case of Mooney's. Its profits in 1946 were 33 per cent. above the 1945 figure. In the case of one textile manufacturing firm, its profits for 1946 were 42 per cent. greater than in 1945. These are all net profits. The profits of the whole of the textile manufacturing group were 120 per cent. higher in 1946 than in 1945. The Minister talks about excess profits, surtax and income-tax, and he is satisfied. These figures, I submit, are an indication that the investing public are getting a growingly greater proportion of the net profits of industry than the average wage-earner is getting. The people who are going to spend money on luxuries or probably invest it in India or in Japan—the people about whom Senator Ryan was speaking—are getting more than the people who would spend money on consumer goods at home. The latter are getting less and the others are getting more. In one case there was a drop of from 52 per cent. in 1938 to 42 per cent. in 1946. We hear all this talk about emigration, poverty, destitution. The Government talks about providing money for the relief of poverty. There would be no need for us to spend £12,000,000 or £13,000,000 on social services if we had full employment for our people, and if the workers were being paid a proper wage, if the people had a proper income and were properly fed, housed and clothed. The truth of the matter is that we have the most inadequate social services, and are spending rather fantastic sums on them because we refuse to adopt proper remedies to get rid of poverty.
I remember reading many years ago what I thought was one of the most hopeful statements that I had heard expressed in public life in Ireland for a very long time. It was hopeful because it was not a speech made at the chapel gate or at the cross-roads on a Sunday morning. It was a speech made by the head of the Government in Dáil Éireann; that was what gave it value. I want to give a quotation from it. The speech was delivered by the then President de Valera in Dáil Éireann on the 29th April, 1932, and will be found at columns 917-18 of the Official Debates. Mr. de Valera said:—
"I say we are a solvent community. We have potential capacity to produce wealth. We have the capacity to meet all our needs. All we want is to begin properly. We do not want to go off without a general idea of the direction in which we are going. We want to examine the situation, and I promise, just as I am firm when I think we are right, in dealing with England or anyone else, I am going, as long as I occupy the position, to be firm that the people who are entitled to get a living in this country will get it."
Later, he used the following words which seem to me to be very significant:—
"It may be that under the present system we cannot do the full work we should like to do, but we are going to try. I am going to say this, that if I try within the system as it stands and fail, then I will try to go outside the system, and I will go to the country and ask them to support me to go outside the system."
There have been several general elections held since that speech was made, but I cannot remember that any member of the Government has asked for a mandate from the people to get rid of the system which is causing poverty, destitution, emigration, low output in agriculture and high profits in industry and to substitute for that system one of full employment which would inspire our people and induce them to remain at home to produce wealth in Ireland and increase our national income. I do not think that any member of the Government has asked the country for that mandate. What I would urge on the Minister is that he might persuade his friends to harp back to what was outlined in that speech 15 years ago, and urge that it might be implemented now, because I have no doubt whatever that if the country was asked for that mandate it would give it. I think that if the country is not asked for that mandate that, in five or ten years' time, it may be too late to make a permanent improvement in the conditions of life in this country. These are the observations that I have to offer to the Minister on the Finance Bill.
