The form of this measure is as usual and allows for the issue of a certain amount of money to cover certain Supplementary Estimates not already covered by legislation and— this is the main object of the legislation—to cover the amount of money to be granted to make good what is taken as one-third of the Estimates for the year as a Vote on Account to carry the services up to about the end of July, while the Estimates are being discussed in detail in the other House.
This year, there is a special clause, Section 4, dealing with the American Grant Counterpart Special Account. Senators will remember that previously there was in one of the finance pieces of legislation a section to establish a special fund or account. This time we are making this new establishment in respect of this special account and this, in fact, corresponds with the section in previous legislation which was to allow for the receipt of certain moneys which were derived from the sale of goods purchased with dollars which came through Marshall Aid. Senators will notice this year that a change is being made with regard to a part of the fund which we are getting through the benevolence of the American nation. Up to this year any moneys which we got we received by way of loan, and arrangements had to be made with regard to the use of the moneys derived from the sale of goods financed by dollars in the United States. Recently, we have been given a certain amount of money, no longer on loan but as a grant. Moneys which come on grant from Marshall Aid funds are subject to different conditions and circumstances from those relating to moneys which come by way of loan, and it was clear that a new account had to be opened corresponding to the old one. These two accounts have to be kept, to a certain degree, separate. The conditions attached are not very onerous, but it is necessary to have the two accounts in separate forms. We are setting up here a special account for such moneys as we have received, or may hereafter receive, through American aid by way of gift and not by way of loan.
The main purpose of the legislation is to envelop the moneys voted on account to meet such part of the public services as one-third of these moneys will carry on until about the end of July. The Book of Estimates on its face carries a distinction in the types of these moneys which are being asked this year. Provision is made, for the first time, in the Book of Estimates as between capital services and other services. With regard to the "other services", there are increases in quite a number of Votes, but the important ones are those to which I draw attention immediately. My comparison is as between the Book of Estimates now and the Book of Estimates without supplementaries about the same time last year. The Health Vote shows an increase of something over £1,250,000; the Vote for Primary Education is up by £1,070,000; the chief Vote for Agriculture is up by £393,000; the Vote for Posts and Telegraphs is up by £371,000; the Vote for Public Works and Buildings shows an increase of £280,000; the Vote for the Department of Defence is up by £271,000; Supplementary Agricultural Grants show an increase of £238,000; Old Age Pensions and National Health Insurance between them are up by something short of £250,000; the Department of External Affairs shows an increase of £151,000; the Garda Síochá na Vote shows an increase of £105,000, and the Vote for the Department of Local Government is up by £60,000. These increases are a little short of £4,500,000. There are other additions, of course— I am neglecting for the moment any increase less than £50,000 over last year.
With regard to some of these Estimates, a word or two may be valuable. The Health Estimate shows the largest increase over last year, an increase of the very heavy amount of £1,269,000, and this is due to the fact that additional grants have been made for health authorities, including grants under the mother and child service. This is one of the Votes, and the way in which it was run is one of the matters, that make the process of budgeting very difficult for any presentday Finance Minister. I will refer to these in connection with certain other Votes which show increases which are somewhat out of the control of the central authority. The Vote for Primary Education, which is up by £1,070,000, is up because of the increases given to teachers in respect of pay and pensions. The Agricultural Vote shows an increase of £393,000, due to increased provision for subsidies. The increased provision for subsidies is, in the main, in respect of butter. The increase of £371,000 in the Posts and Telegraphs Vote is something of a fiction because, although there is an increase and although it is by way of outlay on engineering materials, conveyance of mails and telephone capital repayments, the revenue to be derived from the Post Office, partly due to this increased expenditure, will also show an increase. Whether it will meet the £371,000 is something in respect of which we shall have to wait and see, but that increase is not so alarming as some of the others because it is met by increased revenue derived from the Post Office itself.
The Public Works and Buildings Vote increase of £280,000 is due principally to an increase in new works. Last year's Vote for Public Works and Buildings is considerably increased but a great deal of the increase is one which I am neglecting in taking that figure of £280,000, because a considerable amount of the increase is such that I am entitled to regard it as capital services. The increase in the Vote this year was rather surprising. For years it has been the practice to devote a fair amount of money to a particular sub-head of the Vote for new buildings and new institutions and then to make an arbitrary deduction in respect of buildings that would probably not be completed during the year. Very heavy deductions have been made from year to year in the gross total arrived at in connection with that Vote. Supplies were difficult for many years and although the provision for voting money was there, it was found that it was never expected that anything more than a fraction of the money would be spent. Supplies became easier last year. There is a tremendous arrear with regard to public buildings, more particularly with regard to school buildings. As supplies got easier, the Board of Works became faster at work and so in fact outran the moneys voted for them last year and two Supplementary Estimates had to be taken. The £280,000 I am referring to now is an increase in new works not regarded as capital services. Such works as are regarded as capital services and are both numerous and costly are to be found in the segregated items in the Book of Estimates.
The increase in the Department of Defence is due to increased pay and the Garda Síochána Vote increase is also due to increased pay. The increase in old age pensions and national health insurance has a double reason— one is that a larger number of people are coming on the pension list and, secondly, there is increased expenditure on the benefits. The increase in respect of External Affairs is due to expansion of staff and offices and the Local Government increase is due to an increase in housing loan charges to local authorities.
I want to refer to the Votes for the Departments of Health and Agriculture; and to the Supplementary Agricultural Grants, which are up by £238,000. These, with others, make the task of budgeting on an annual basis extremely difficult, because some of them are not at all under the control of the central authority. For instance, Supplementary Agricultural Grants show in the coming year a rise of £238,000 over last year, due to the fact that local rates are expected to go up and as they do so the demand made upon the Central Fund rises, and there is no way out, as legislation stands at present. The same result arises on the Vote for Agriculture, that it to say, in respect of the increases in subsidies. So far as flour and bread and sugar are concerned, there is some degree of control in the hands of the central authority, since one can make arrangements centrally as to the amount of wheat to be imported or the amount of sugar to be bought, but the subsidy on butter depends on the amount of milk produced and turned into butter. If that goes up, the amount demanded from the Central Fund goes up; if it falls, the amount is correspondingly reduced. Senators will notice that the increase this year is £339,000. It may go higher, if something is not done about it.
Similarly, with regard to grants to health authorities, the provision under the Act of 1946 or 1947 is that local authorities may incur certain expenditure and pass on the bill as to 50 per cent. to the central authority. This makes the matter of annual budgeting very difficult from the point of view of the State, much more difficult than it was in olden times. It may be that some change will have to be made with regard to these and other matters, so as to bring them more definitely under the control of those who, in the end, have to find the greater part of the money.
An innovation has occurred with regard to the presentation of the Estimates, mainly in regard to classification. This year, a distinction is being drawn between capital services and other services. I spoke in a somewhat detached way before in regard to this development, which I had foreseen as likely to occur, and the Taoiseach very definitely spoke on one or two occasions, particularly in his speech to the Institute of Bankers in November, 1949, when he referred to the desirability of indicating clearly to the public, by means of a distinction between the annual revenue budget and the capital budget, the Government's policy of capital investment for productive and social purposes. That was not entirely breaking new ground, however, as since 1922/23 it has been the practice when Budget day arrives to make a certain deduction to show that there are in the Supply Estimates certain items of a capital nature. These were taken rather arbitrarily and some deduction made from the money to be found from the taxpayer. You had the gross estimates presented with the addition of the other services and from that there was made a deduction of the amount said to be chargeable against current revenue.
The amount of money of a capital nature to be spent has increased enormously over the last couple of years. It was thought it would be not clarifying the issue, but rather befogging the issue before the public, to follow the old procedure. That was all right when a sum of £600,000 or £1,000,000 fell to be subtracted from the annual Budget; but when we reckoned as capital services some of the services which were put into the Book of Estimates last year, we found the capital services last year were in the region of £7,750,000 and that they had been in the region of £2,000,000 in our first year, and were running at £1,250,000 or so in the year before that, and it was clear that the segregation now done would have to be done. It was decided, therefore, in preparing the Estimates this year, to indicate quite clearly to the public what was happening. That machinery is, first, on the cover of the Book itself, where you have a division between capital and other services. In each of the Votes in respect of which any capital deduction is made, at Part 2 of each Vote reference is made to the amount of the deduction and the sub-heads which indicate the individual items are given.
For the purpose of reference, it was decided to put immediately inside the cover a two-page statement, a note regarding capital services, which Senators will find there. The statement itself says:
"In view of the considerable expansion in expenditure of a capital nature provided for out of voted moneys, it has been decided——"
And then reference is made to what I have referred to:
"to draw special attention to capital items by means of a note appended to Part 2 of each Estimate in which they occur. For convenience of reference a summary of these capital services is given below."
I want to stress what follows:—
"For a full account of capital outlay financed by borrowing, regard must of course be had not only to the capital services included in this volume—
That is, the segregation of items totalling £12,130,000—
"—but also to the direct issues from the Central Fund, for advances to the Electricity Supply Board, the Local Loans Fund, etc."
Senators will be familiar with the White Paper which is published each year and which gives an estimate of the Receipts and Expenditure, and they will remember that there is what is called the "under the line" services. I am quoting now from last year's issue of the document, the Estimate of Receipts and Expenditure for the year ending 31st March, 1950. Capital and Other Issues are segregated in last year's account under the headings of Telephone Capital Account, Electricity Supply Board, Tourist Traffic, Local Loans, National Stud, Turf Development, Transport and certain others. The amount of money which will appear in the corresponding pamphlet to be issued on the eve of the Budget this year has, of course, to be added to this £12,113,000 for which provision is made, these items being taken from the Book of Estimates. The amount of money for capital investment is added to the £12,000,000 or whatever the sum may be—and it cannot be less than £16,000,000 or £17,000,000 in the year ahead—as sums which will be spent by way of capital development also under the heading of Telephones, Electricity Supply Board, etc. I have said that in previous years the habit was at Budget time to make a deduction for these capital items. Generally speaking, the deduction made in previous years had reference to such things as the acquisition of land for airports and constructional works in respect of airports. There were from time to time deducted as capital items in various years advances as grants for harbours or, say, in respect of mineral development. From time to time, there have been deductions in respect of fisheries, for the provision of boats and gear, and small sums have been taken for forestry. Under all of these headings money will be found in this Capital Services portion in the Book of Estimates this year. The big items are under the heading of either housing and buildings, agricultural development or the Local Authorities (Works) Act.
Probably what made us more speedy in segregating these items and in coming to a conclusion this year, were the two items, the Land Rehabilitation Project and the Works Act. Senators will remember that last year for the first time there was foreshadowed considerable expenditure under the Land Rehabilitation Project which quite clearly is a project of a capital nature. No one will ever consider that that was money properly to be put on the backs of the taxpayer and levied off the taxpayer from year to year. It was the same with the Local Authorities (Works) Act. When it was going through, it was indicated that the moneys to be expended would be found from the Counterpart Fund in respect of American moneys or by some other type of borrowing. These two sums as estimated for the coming year are: the Land Project, £3,100,000 and grants to local authorities under the Works Act, £1,750,000, making a total of £4,850,000 between the two. The big expenditure will be in respect of housing and buildings. On page two of this note, under the heading of Local Government is, apart from the grants to local authorities under the Local Authorities (Works) Act, a sum of £1,635,000 described as grants under the Housing (Financial and Miscellaneous Provisions) Acts and the Housing (Amendment) Acts; and also a small sum of £50,000 for grants to local authorities under the Housing (Amendment) Act, 1948. To that must be added, associated with Vote 49, Gaeltacht Services, grants under the Housing (Gaeltacht) Acts, the sum of £40,000. I want to join with that the two items associated with Vote 10, which are under the inapt heading of Employment and Emergency Schemes, £56,000 and £184,000. They are taken from this Vote for Employment and Emergency Schemes and one is described as Urban Employment Schemes and the other as Rural Employment Schemes and both have reference only to Sanitary Service Works. In so far as they are associated with that—and they will be associated with that and that only—they are then part, so to speak, of the housing programme. It has been the practice for many years past that when a local authority decided to engage in expenditure of this central service type in association with housing, they did not raise the money in a single year but funded it and got it paid or raised over a number of years. We are adopting, as from the side of the Central Fund, the same practice.
Vote No. 10, the two items in No. 8 and the item in Gaeltacht Services can all be related to the development of the housing programme.
In addition, there is Vote 9—Public Works and Buildings. There is a variety of headings there. Two are in relation to building proper but building not of the real housing type. There is A—Purchase of Sites and Buildings, £100,000; and B—New Works, etc. (new buildings and works of reconstruction), £800,000. That £800,000 is not the full amount of the Estimate for new works and buildings to be found in the Office of Public Works Estimate this year. It is such part of it as is, in our mind, properly to be looked on as a capital service. The concrete application of that is this: there is a tremendous arrear, not merely of ordinary houses but of school buildings. I have been advised by the Department of Education that there are quite a number of buildings still ranking as schools which were never built. as schools but were built for other purposes. I am told that certain places were built as stables. I know one that was built as a church. Some are as old as the year 1816. There are quite a number of buildings which are in a very derelict condition. There are a very big number indeed which can be saved by a quite expensive process of repair or something amounting to reconstruction. If these buildings were to be taken in hand at the slow pace at which progress has been made up to date it would be, not merely a quarter of a century, but something approaching a generation and a half before any improvement would be made in the conditions.
There is, I think, general acceptance of the view that school buildings are buildings that should not be delayed. They may have to take their place in an order of priority in certain circumstances which will not allow them to get first place. Human habitation will probably get preference even over school buildings but the school-building programme is an urgent one and the expense associated with it came clearly before the minds of the present Government this year when, supplies becoming easier, it was found that the pressure that came from managers and the Department of Education with regard to the completion of school buildings was such that we had to take two Supplementary Estimates for the Board of Works this year, not all, but almost all, in respect of school buildings. The £800,000 is not all school buildings but by far the greater part of it is school buildings, and it is intended, if we can get supplies and if there are no evil effects of the expenditure of these moneys by way of capital services, to go ahead with the programme so that the school-building position will be very definitely improved with much greater speed than was expected.
The rest of the items located under Vote 9, Public Works and Buildings, are of the nature of drainage. There are surveys for arterial drainage, construction works for arterial drainage and purchase of engineering plant and machinery. One is as big as £231,000 and another is £395,000. There are two small items, one connected with the River Fergus, a special drainage matter, and surveys for arterial drainage that I have already mentioned.
The other matters that are in this summary of capital services are ones that Senators can see for themselves. I am calling attention to the important ones but under agriculture, as well as the land reclamation scheme, there are two other items—improvement of poultry and egg production and the farm buildings scheme. I do not think there will be many people to query whether these are properly capital services or not.
There is Vote 28—Fisheries. There again the sub-heads, I think, justify themselves—repayable advances for boats and gear and also for general development.
I have dealt with Local Government and, so far as housing is appropriate to Gaeltacht Services, I have dealt with that also.
Under Vote 50—Industry and Commerce—there are advances to the Mineral Development Company. It is a small sum and a sum that is not likely to be repeated. This year we have taken out a sum of £250,000 in respect of grants for harbours, for permanent improvements to these harbours.
I think the only thing I have not mentioned in this list is the matter of forestry. While there have been many and diverse opinions current in the country as to the rate at which progress might be made or is capable of being made in respect of forestry, I do not think there is any but the one opinion as to the necessity for making such progress as is possible, and speedy progress, in the better afforestation of the country.
There is the important sum of £2,000,000 in respect of the last item— the Transition Development Fund. That is a fund established under the Finance Act, 1946, by borrowing at that time a sum of £5,000,000. I think it was to provide moneys which were to be paid to State and local authorities in order to ease the burden of the increased costs attached mainly to housing but also to such other works as they might finance. As the name shows, it was intended to be transitional.
When it was announced first it was said that it was likely to be called upon only for a period of two years. That was extended for a further year and I extended it and it now lasts until the end of this financial year. No draw can be made upon this sum of £2,000,000 until such time as the legislation re-establishing the particular way is brought in. That will be taken in conjunction with the ordinary financial measures for the year.
It is hoped that no great provision in any other year will be required. The particular work financed out of this fund involves that commitments have to be made ahead of the year in which the expenditure is likely to fall. When the matter was examined quite recently it was discovered that, while there was only about £1,500,000 in the fund, the commitments that had been made would run to the sum of £3,500,000. Therefore, the sum of £2,000,000 is to bring the fund up to the full amount of the commitments already engaged but I hope that a new procedure will be adopted with regard to expenditure of that type for the future.
Lest there be any mistake about it, what I have put in the Estimates does not end the whole matter with regard to these capital sums. When budgeting, provision has to be made, of course, for the repayment of such capital sums as are involved in these below the line services. A similar provision, but on a much more extensive scale, will have to be made. This year's Budget will start it but the sum will grow as the years go on and as these capital services develop and as the money expended upon them increases. Provision will have to be made to take from the taxpayer year by year such sums of money as will amortise over a particular period the borrowings that have been incurred or will be incurred in future. The object, therefore, is to see that no permanent addition to the national debt will be involved. There will be an addition over such periods. Supposing we decided to amortise in 20 or 25 years, there will be an addition being repaid to the national debt over that period but it is hoped to have that repaid by the provision that will be made over, say, a period of whatever the number of years is.
What we attempt to achieve by identification of these capital services and the charging of the outlay involved to borrowing is a more equitable distribution, over time, of the burden of housing, of land reclamation and of other works of lasting benefit to the community. What we are doing with regard to housing is trying to catch up on the terrific arrear that we found left because of the impact of two wars and of the indifferent attempts to catch up on these arrears that were made in the in between period.
The procedure we are adopting—and I want this remarked upon—ought to ensure that financial considerations will not impede the undertaking and the rapid completion of those works which we regard as of urgent national importance. I have to make a reservation about that which I will speak of in a moment.
In the other House, when this was debated, there was not much criticism, certainly no damaging criticism, of our segregation of these items. Certain people complained that some few items were not properly placed but there was not very much criticism along those lines. The general pity was that this had not been thought of before and by other people. But, there has not been very much real criticism of the particular matter that has been separated out.
There may be difficulty in regard to getting the moneys that are required. There will not be much difficulty in the beginning because it is proposed to finance this by borrowing from the American Loan Counterpart Fund and certain other funds that are at my disposal and, eventually, there will have to be an approach to the public looking for further subscriptions to further national loans. It is expected that the money will be secured. It certainly can be secured right away but that is only the first step. It is the provision that will have to be secured from the public that, naturally, will be the main way in which this will be financed.
I want to finance these capital works at home and hope in that way to promote the best development of whatever we have in the way of resources, both of manpower and money. In that way we may remedy the defects that have been consequent on under-investment in this country in the past.
I have said earlier that I had to make one reservation with regard to all this. I may as well make it now as in reply. It cannot be said that we have left the period in which inflation is to be feared. Some people would argue that the danger of inflationary pressure causing a burst is not so serious this year as last year or the year before. There may be varying views about that but there is still danger to be feared in that way. It can be said indeed that in the last couple of years we have taken a risk with regard to the expenditure of money, particularly for capital purposes, in this country, but the risk that has been taken has had no untoward results so far and it is proposed to risk still further on the basis that these moneys will be well spent and also on the ground that we are getting more goods produced so that, even though there may be more money in circulation in the next year or so, there ought to be more goods to sustain the drive that more money causes. However this is a matter that has to be very carefully watched and while I am very keen, with my colleagues, on having as many capital services as possible brought to completion as early as possible, I think at the same time that it is hardly likely that all the moneys here provided for can be spent within the next 12 months. I doubt if it is physically possible. There will be difficulties with regard to labour and difficulties of all sorts. I have, however, arranged with certain of my colleagues that we are going to establish an order of priority for these schemes so that if, because of inflation becoming more of a menace than it is at the moment, some projects have to be curtailed we will have that done along a line of thought and progress of our own so that there will be no scurry to stop something because we have to stop spending generally. The inflationary danger has no doubt to be very carefully watched and the way we intend to do that is by putting these matters in a particular order of development. It may well be that we will have to test out the expenditure of certain moneys to see the reaction and have the signs read before we loosen further moneys.
All going well and with no further menace of inflation, we put forward that these are necessary works and can properly be financed in the way we have set out. They are capital services and we will have to meet the cost, very heavy costs mounting from year to year, for the service of the debt incurred for these things. We hope, however, that the national income will show greater increases in years to come as it has shown an increase in recent years and by raising the national productivity we hope that there will be a better return from such taxes as are at present imposed or even from such lesser taxes as it may be found possible to-have for the community. We hope to get public thought and concentration on this development and to get the public alive to the danger of spending more money in the ordinary way. It will also be a task of some difficulty hereafter to make the public, particularly the saving and lending public, so well aware of what is on and so confident of the outcome that they will freely give us of their savings so that we will be able to finance this from the savings of the people, current savings as far as we can get them, and by drawing as may be wise and prudent from the accumulated savings of years past.