Léim ar aghaidh chuig an bpríomhábhar

Seanad Éireann díospóireacht -
Wednesday, 15 Jul 1953

Vol. 42 No. 5

Finance Bill, 1953—Second Stage.

Question proposed: "That the Bill be now read a Second Time."

The main purpose of this Bill is to give effect to the Financial Resolutions passed by Dáil Éireann following on the introduction of the Budget. The relevant sections covered by those Resolutions are Section 1, which provides for the charge of income-tax and surtax at the rates already in force, Section 4, which relates to the new scale of entertainments duty, and Section 12, which is designed to combat evasion of the stamp duty by means of the exchange of lands of an unequal value.

A further matter covered in the Bill, which was referred to in my Budget speech and which did not call for a Financial Resolution, is that dealt with under Section 14. That section provides for the refund of stamp duty in certain cases where persons paid on conveyances or leases at the rate of 25 per cent. and subsequently ascertained that they were Irish citizens at the time of executing the instrument and accordingly need have paid only at the lower rates.

Advantage has also been taken in the Bill to provide for certain other financial matters. As the Bill is very simple and, I think, does not require any discussion of a general character, it would be better if I were briefly to review the purposes of the several sections. I have already referred to Section 1 and I assume that the purpose here will be self-evident to every member of the Seanad.

Section 2 increases the rate of relief in respect of premiums on insurance policies taken out after the 21st of May, 1953, with any insurance company or friendly society registered, managed and controlled in the State. The rate of relief in such cases will be up to two-thirds the standard rate of income-tax, instead of the former maximum of half the standard rate.

Section 3, which will operate within a very narrow field, authorises the granting of a measure of relief in respect of foreign income of certain persons who, though formerly resident outside Ireland, have settled down in this country. The proposed relief is confined to foreign incomes where, in any case affected, the total tax both here and abroad on the foreign income is shown to be greater than the tax which would have been payable on it had the taxpaper been solely resident in the country of origin of the income.

I have already referred to Section 4, but I may say here that this section, as will be seen, gives effect to a new scale of cinema entertainments duty in lieu of the scale now in operation. The current scale is highly anomalous at several stages in its graduation. The new scale, while removing these anomalies, avoids increasing the duty on any current admission charges, and, in fact, affords some relief on the lower levels of charge.

Section 5 provides for exemption from entertainments duty on amateur exhibitions of basketball and cycle roller racing, promoted by the respective controlling bodies or affiliated clubs. This exemption, of course, is confined to amateurs and is already enjoyed by many other amateur sports.

Section 6 relates to entertainments duty payable in respect of cinematograph performances. In this case it provides for the repayment of one-half of the entertainments duty paid in respect of entertainments which are wholly cinematograph performances and which, while not qualifying—that is the important feature of this—for the existing exemption in respect of films which are wholly of an educational character, can be said to be educational in the sense that they encourage the study of languages or facilitate it. It provides for that relief where at least one-third of the entertainment consists of films in Irish or where at least one-half of the entertainment consists of films in, for example, a continental language.

Section 7 is designed to alleviate a hardship arising from the fact that in certain areas the last census indicated that the population in certain rural areas has increased. It provides, accordingly, that where exemption from the entertainment duty in rural areas ceases to operate by reason of a change in population, such exemption shall not cease abruptly on the publication of a new census but shall be continued for two years more. It will be seen that in the present case the two years will run from the 1st September next.

Section 8 provides for the extension of the special reduced rate of duty in respect to tractors used for haulage in connection with agriculture to tractors used by hospitals, schools and religious institutions which own farms and work them.

Section 9 extends for a further period of three years the temporary exemption from corporation profits tax which has hitherto been afforded to certain public utility concerns like docks, canals or undertakings which operate railways and to building societies and the Agricultural Credit Corporation, Limited.

Section 10 provides for the postponement of the payment of income-tax on foreign income where the income-tax payer is unable, because of currency restrictions in the country where the income arises, to remit the income to this country. Section 11 is merely a construction section dealing with that particular part of the Act.

Section 12, to which I have already referred, is designed to combat the evasion of stamp duty by means of the exchange of lands of unequal value, the difference in value being paid over in cash. Under the existing law, a transaction of this nature is not a conveyance on sale and consequently escapes the increased rates of stamp duty imposed some years ago.

Section 13 extends to all receipts for wages, salaries and similar payments the existing relief from the 2d. stamp duty which is limited at the moment to receipts for wages and salaries under £4.

Section 14 is another section to which I have already referred. It provides for the refund of stamp duty in certain cases where persons have paid stamp duty on conveyances or leases at the 25 per cent. rate, that is, at the rate which is payable by persons who are not Irish citizens and where they have subsequently ascertained that, as they were in fact Irish citizens at the time of executing the instrument, they need have paid duty only at the lower rate in force for Irish citizens. This section is necessary in order to enable the Revenue Commissioners to refund the duty which has been paid under an erroneous conception of the taxpayer's position.

Section 15 relates to the Capital Services Redemption Account which was set up under Section 22 of the Finance Act, 1950. It was intended to give effect to the arrangements under which borrowings for certain voted services, classified as "capital," were to be amortised for a period over 30 years so as to involve no permanent addition to the national debt. The purpose of this section is (1) to adjust, for the remaining 29 years, by reference to actual expenditure, the provisional annuity for the 30 years fixed on the basis of the estimate for voted capital services last year and (2), to fix provisionally a new annuity, also payable for 30 years, in respect of estimated expenditure on such services in 1953-54. The general arrangements provided for are similar to those in operation in previous years.

Section 16 has been drafted to enable effect to be given to a condition which formed part of the terms on which the last National Loan was issued. In the prospectus for that loan, the Government undertook to arrange that stock of the loan would be accepted at its face value, with due allowance for any unpaid interest thereon, as the equivalent of cash in satisfaction of death duties, subject to certain conditions. This section implements that undertaking.

Under Section 2 of the Public Revenue and Consolidated Fund Charges Act, 1854, the latest date for presentation to Parliament of the Finance Accounts for the previous financial year is the 30th day of June, if Parliament should happen to be sitting on that date, or, if Parliament be not sitting, then 14 days after the next meeting of Parliament. It has been found, year after year, that it has not been feasible to prepare the accounts by the 30th June and it has been customary to present them to the Oireachtas in "dummy". It is proposed to depart from that practice and it is hoped that, by extending the date for submission to the 30th September, the true accounts will be presented by the due date.

Section 18 is the customary section placing the taxes and duties under the care of the Revenue Commissioners.

Section 19 is the section dealing with the title, construction and commencement of the Act.

If a visitor from another country, who happened to know enough English to understand the Minister, were here to-day, he would surely get from the Minister's speech a most absurd idea of what the Seanad is being asked to discuss. This is a Finance Bill in much the same terms as last year's Finance Bill, which added enormously to the burden of taxation on the people and which had serious effects on the economic and social life of the people. The Minister chooses to deal with it on the Second Stage to-day by giving us, in an undertone, a number of routine Civil Service explanations of various sections as if this were the simplest thing in the world and as if the Bill had no meaning except that it was necessary to introduce it and as if it had no significance for the people at all.

The Minister said that Section 1, which deals with income-tax, is "self-evident". Surely it is self-evident. But what is self-evident about it, and about the whole Bill, is that last year the Minister imposed an immense burden upon the people: that was in 1952. The Finance Bill which we are now discussing—the Finance Bill of 1953—leaves that burden untouched and unlightened in every shape and form. What is self-evident, apart from income-tax which is surely self-evident, is unemployment. An immense rise in prices is self-evident. A lack of relief in this Budget for the people who were hit by last year's Budget is self-evident. The restriction of credit that resulted from last year's Budget, and from the Minister's policy, and the restriction of enterprise are also self-evident. For anybody living upon a fixed income, and indeed for every class of citizen, the reduction in purchasing power resulting from the Minister's policy and last year's Budget—which this Budget leaves untouched—is surely self-evident.

Perhaps the Minister, instead of dealing with these sections as if we were in Committee and were asking for an explanation of their terms, might have given us something in general terms on the Second Stage of this very important measure. This Bill is the legislative form of the 18th Budget introduced by the Minister or by one of his colleagues on behalf of the Party to which he belongs. In practically every single one of these Budgets from the beginning, demands made were higher than the demands in the previous one. Every Budget was introduced into the other House with the same claptrap—which the Minister did not give us to-day—about the corner to be turned, the immense plans that the Fianna Fáil Party have for development—plans which, if the Party is left in office for another year, will surely come to fruition and bring prosperity to everybody and so forth. Always, of course, you have, in every single one of these Budgets, a discussion on the iniquity of those who do not agree with them. If you agree with them, all other things are added unto you. You get a national record, an understanding of finance and a completely sound national position.

Everything that has been said in the other House this time last year was said on many occasions before. There are always plans verging on fruition. There is always employment to be given in the future. Always, costs are to be reduced some time—but, of course, not now. The truth is that this Budget places the seal, the eighteenth seal, if I may mix my metaphors, upon an immense record of failure. At the same time, that failure has been accompanied, and is accompanied in this Finance Bill, too, by an increase in the national burden on the people.

I am old enough to remember the Minister's first Budget and his naïveté, his ignorance of the functions of the Bank of Ireland and of the simplest things in the Finance Bill placed before him. Then, as now, he blamed his predecessors in office. He tells us that he was never in favour of Marshall Aid, although he did not object to it when it was brought before the Dáil. It should be emphasised that this is the eighteenth Budget introduced by the Minister or his colleagues, that the burden of taxation is an immense one, that it has had the effect of increasing the cost of living upon everybody, of increasing unemployment and of leaving every one of our national problems unsolved.

Every single thing that we hoped for one time in the Sinn Féin movement from an Irish Parliament has been left worsened by these years of Fianna Fáil Government. Employment has not increased and emigration has not been stemmed. Neither has our national spirit been improved by the curious partisan methods which the Minister and his colleagues have adopted. Surely we should be able to say that, with this enormous expenditure—the biggest expenditure ever presented to an Irish Parliament—we are on the way to solving some of our problems; that our agricultural production was increasing. That is not so. The great claim is made that there has been an industrial drive. There has been an industrial drive, but for every person put into employment in industry a person has gone out of employment in agriculture.

Look at how they went out during the Coalition period.

They went out during 18 years of the Fianna Fáil Government. There is no doubt at all about that. They are going out still, and they are going out in spite of the fact that the Minister is in office and that his Party have been in office for 18 years and always had plans which were going to bear fruit. We are not more prosperous, more settled, more united or even more Irish now than we were 20 years ago. The Bill contains some provisions about films, which are to be educational, and which are to affect the Irish language and continental languages. I wonder is the Minister satisfied with the progress made with regard to education and the Irish language.

I should like to put it—it is the only point I want to make—that, having placed enormous burdens on the people, having given us immense loads to carry, the Ministers who have been responsible for Government in all that period have not succeeded on any front —agriculture, employment, production, cost of living, education or anything else. The Minister has not even succeeded in achieving one of his greatest ambitions which at one time was to have his political opponents spat upon. They have not been spat upon; they are waxing in strength, so that, even there, the Minister has not succeeded. There is no ground for treating this Bill as a routine Bill and preventing the people from understanding that sorry story and the miserable condition of things which indicate a mismanagement of our financial and economic affairs and which leave us in the position that our only hope is the removal of the Minister from office. The sooner that is achieved the better.

Under this Bill?

I quite agree with Senator Hayes that this Bill cannot be treated as a routine Bill. It is fashionable nowadays for the Budget in every country to be a grand inquiry into the whole financial and economic position of the country. The debate in the Dáil ranged over such a very wide area that I think we are entitled to touch on a few of the matters dealt with in that debate here. So far as I am concerned, I propose to touch on very few aspects of the many matters which properly arise in connection with this annual review of the taxation system of the country.

It is fashionable in other countries to-day to regard the Budget as the regulator of the economic system. Almost in the way in which a tap can be turned on and off, activity can be generated by deficits and checked off by surpluses. That talk is very fashionable everywhere to-day. I think it is important to point out that that type of programme has only a very limited application in the circumstances of this country. A new adjective has been coined in recent years to describe this type of programme, after the name of the inventor or populariser of it, namely, the late Mr. J.M. Keynes. That adjective is Keynesian. I suggest that Keynesian programmes are not particularly relevant in Irish circumstances. The essence of the Keynesian programme is to generate new incomes to provide a demand for unemployed resoures. The problems in this country are not problems of unemployed resources so much as problems of undeveloped resources; these problems are not so much financial as physical; the type of unemployment we suffer from is not so much cyclical as what might be called structural. Therefore the generation of money incomes by means of Budget deficits and checking off of incomes by Budget surpluses is not so relevant as in other countries where there is a much greater development, far more resources, a greater state of progress and —as I will come to point out in a moment—far less constant preoccupation with the external balance of payments than we have.

The Keynesian programme became well known during the depression in the United States in the 30's. There is no question at all that the Keynesian policy and the Keynesian analysis were appropriate in that country, where there was a great depression and no preoccupation of any kind with the balance of payments; but the programme put forward by the Keynesians of the United States in the 30's has been seized on by inflationists all over the world and has been publicised and advocated in countries and in periods far different from those in the United States in the 30's. Inflation is always a popular policy, a policy for which politicians like to have a justification, and one of the troubles about the Keynesian analysis is that it does seem to provide some sort of respectable justification for inflationary policies even in times when these policies are not appropriate to the situation.

I have said that the characteristic of the United States economic system in the 30's, and still more to-day, is that American statesmen are free to make their programmes without much regard to the balance of payments. I should like in that connection to quote from what is generally recognised to-day as the most important and authoritative annual economic report, the Report of the Bank for International Settlements for the year 1952-53. On page 38 of that report, great emphasis is laid on the point I am trying to make now, and, in order to give stress to what I am saying, I propose to quote a paragraph from that report. That paragraph reads:—

"One thing which is often forgotten in connection with Keynes's analysis is that this analysis presupposes the conditions of a ‘closed economy'. When a country is as large as the United States (and moreover has ample monetary reserves) it may not be too unrealistic to assume that these conditions are present; but if European countries were to base their thinking on the subject of investment on this assumption, it is quite certain that they would overlook very important aspects of the programme. Thus, those who argue that a credit expansion leads either to the utilisation of ‘unused economic resources' or, if such resources do not exist, to an inflationary rise in prices are only too often leaving out of account one further possibility—namely, that the increase in monetary purchasing power may produce a gap in the balance of payments. Where this happens the additional monetary purchasing power may well be drained off through the purchase from the Central Bank of the foreign exchange required to pay for the surplus imports, and in these circumstances there may be no rise in prices nor, in the end, any undue increase in the volume of money. If the fiduciary credit expansion is not compensated by loans or grants received from abroad, the country's monetary reserves are bound to be reduced, as has been shown by the experience of so many European countries in the years since the war. That this should be the case is only to be expected; investment, whether in buildings, plant or equipment, or in stocks, uses up both raw materials and labour; the employment of additional labour will lead to an increase in the demand for consumer goods, and neither these goods nor the raw materials needed can be made to appear just out of the blue; they have to be provided either out of that part of the current national product which is not used for current consumption (i.e., from savings in one form or another) or out of resources obtained from abroad or from reserves".

I suggest that that quotation is one that ought to be borne in mind when dealing with the Irish financial system, because it has been characteristic of this country ever since the Treaty, with the execption of the few years of the war, that our balance of payments has been either barely in equilibrium or out of equilibrium.

It is fashionable to-day to talk about the repatriation of our external assets. We have already debated this so many times in the Seanad that I do not feel justified in taking up the time of the House in arguing the matter again. I will simpy say that there seems to be a general agreement amongst all Parties that such a process of liquidation of external assets can be justified only in order to build up productive investments yielding an equivalent return. A country which gradually uses up its external assets without replacing them by truly productive investment at home can be, I think, likened to the man who gradually eats into his inherited fortune. At the beginning of his life his income from investments provides a considerable part of his total income. As he gets older he liquidates his investments bit by bit and he has to rely for a larger part of his total income on his current earnings.

That is precisely what is happening in this country, which has been paying for a smaller proportion of its total imports from dividends drawn from abroad. In that way it becomes more and more imperative for it to rely upon its current output and exports to pay its way. In connection with this point, I should like to refer to an article in the Financial Times on the 12th May, based on an impor tant study by a well-known original thinker on financial matters, Mr. A.H. Abbati. The point of this study is that, owing to the liquidation of its external assets in the course of the war, Great Britain has now to rely to a much greater extent than it did before on the current earnings of its own population. All the generalisations in this article are equally valid for our own country. It points out:—

"Now it is a matter of elementary economics that the possession of overseas assets not only benefits the direct owners of those assets but also the economy at large of which those direct owners are members."

Well, Mr. Abbati is out to measure the number of people we, in the not so very different circumstances on this island, have been able to support because we use the income from our overseas investments to pay for food and raw materials. Disraeli wanted to destroy the idea of two nations, Mr. Abbati, heads one of his chapters: "The Concept of Two Populations"; one population we support by using indigenous food and raw materials; the other relies on imports, part of which are "free" imports.

The article then goes on to give figures showing that, owing to the loss of external assets, the section of the population which can rely on dividends drawn from abroad which used to be something like one-fifth of the total population of Great Britain, is now something like one-eighth. Similar calculations in this country would give a similar result and would make us pause before we embark on a policy of balancing out current accounts by the dissipation of the savings of past generations.

There is a certain amount of misunderstanding on this matter caused by the way in which it is frequently discussed. To advocate the retention of the savings of the past is not to urge that our savings should be lent to a foreign Government at 1 per cent. as the matter is frequently put. The alternatives are not between having the assets and having consumption. The consumption very largely depends on the possession of the assets. If the assets are not available the consumption must fall. It is only a very small part of our external assets which is lent to anybody at 1 per cent. Part of the assets held in the commercial banks and a greater part of the assets held in the Central Bank are invested in the London Money Market in securities which are so liquid that the rate of interest is very low. Those securities form an essential part of our external reserves. They are not only necessary for our liquidity, but in the long run, for our solvency, and to dissipate those assets lightly simply in order to pay our way from year to year would be to swap one asset for another and not necessarily for a better asset.

There is a passage in the report of the Bank for International Settlements on this matter which is so cogent that I make no apology for quoting it:—

"Consequently, when domestic saving is inadequate and the deficiency is not made up by foreign loans and grants, the new investment, ostensibly ‘financed' by credit expansion is, in reality, paid for by drafts on the monetary reserves. The country concerned has merely exchanged one type of asset for another. Only very rarely can such a course be advisable, for the purpose of ‘reserves' is, after all, that they should be kept in store to help withstand the exceptional financial strains which may occur in connection with the accumulation of commodity stocks and to provide for unforeseen circumstances in addition to meeting the demands resulting from ordinary seasonal disequilibria. Should the reserves be so slender that their further reduction could prove prejudicial to the maintenance of confidence in the currency or adversely affect the regular rhythm of trade and production, then there can be no doubt that the loss in reserves will more than outweigh the advantages derived from the possession of a few more public works or whatever other investments have been built up by means of the drafts made upon them."

I wish to come closer to the actual Finance Bill which we are discussing. What I have been attempting to suggest is that inflationary policies will produce disequilibria in our balance of payments, those disequilibria will lead to the loss of external assets and that the loss of the external assets in the long run is a process not to be endured. That brings me to consider whether the current Budget is inflationary or deflationary in its general tendency. Is the taxation imposed by the Bill now before the Seanad calculated to produce a pressure on the balance of payments of a kind which registers inflation in this country?

I think we can say right away that the Budget is not deflationary. The 1952 Budget was deflationary. I am not going to enter into any of the controversial questions as to whether if it should have been deflationary, how deflationary it was. We are all agreed that it was a deflationary Budget. This Budget is not deflationary. It imposes no new taxes. It reduces no subsidies. It does nothing to raise interest rates to a higher level. Assuming that the consequences of the deflation of last year's Budget have now worked their way through the system—and, I think, that is probably correct—we can say that the situation confronting us as a result of the Finance Bill is certainly no more deflationary that it was before.

It is difficult to say whether it could be described as inflationary. Perhaps the correct description would be to say that it has a potentially inflationary effect. To the extent to which it is unbalanced, of course, it tends to be inflationary. To the extent to which any deficit which it may provide for is not made up by new savings, it tends to be inflationary. The question we really have to ask ourselves is: to what extent is the Budget probably unbalanced? One could reasonably say that one is entitled to regard it as unbalanced until certain questions are asked. The first question is: are these economies which have been promised by the Minister in the Dáil really going to take place? The £3,500,000 reduction of expenditure still remains somewhat nebulous. The public, I think, would like to have some further details of where these economies are going to be made.

Another question on which the House is entitled to an answer is the future course of public expenditure. Legislation is at present proceeding through the other House which, if it passes, will, in its very essence, impose an additional burden on the taxpayer and on the ratepayer. Finally, we are entitled to be informed to what extent the capital programme envisaged in the Budget is truly productive in the sense that it provides the means of its own repayment and will not involve the country in any further deadweight debt.

The capital programme must also be examined in regard to its effect on the export position. Looking at the programme contained in the Budget speech—I do not want to weary the House with figures, but merely to quote a few—I see that the total amount in the capital Budget is roughly in the neighbourhood of £40,000,000. Looking over the main items of that, I see the first item is housing, over £10,000,000. This is a form of expenditure which, whatever its justification may be, does nothing to help exports. It is also only fair to say in passing, although it may not be strictly relevant to my argument to-day, that it is the most inefficient of industries. Housing is an industry which has been least mechanised, least brought up to date. If a certain volume of resources is to be spent in any direction, housing is the direction in which the Exchequer probably gets the least good value.

In this list, the only items that could be described as helping exports are: agricultural development, £4.7 million; turf development, £1.2 million; afforestation, £.6 million; fisheries, £.1 million; transport £4.4 million; and electricity, £8,000,000. Adding them all up, the total of the investment which may have a good effect on exports is about £19,000,000, roughly speaking, half the total. From the point of view of the balance of payments, that is a position that seems to require some justification.

That brings me to a matter which I dealt with in this House earlier this year, the necessity for a greater degree of control and planning of State investment. The Minister dealt with this matter in his Budget speech in the Dail—if I may say so without any disrespect—rather summarily. At column 1199, Volume 138, of the Official Debates of 6th May, 1953, the Minister stated:—

"Before leaving the subject of capital investment, I think it is necessary to deal with a certain proposal of which you have been hearing a lot of late. It relates to the establishment of a board to decide investment priorities and watch the effect of total investment on the balance of payments."

He then goes on to say:—

"Against our economic background, in which the basic limitation on national development is the low level of current savings, it is surely a misplacing of emphasis to give pride of place to a proposal for controlling and disposing of the nation's savings when the true national need is to induce our people to save as much as possible. From that point of view, indeed, the introduction of a formalised control of investment would be harmful; for interference with the investor's freedom of choice would discourage private saving."

Further on the Minister says:—

"Apart from interference with the freedom of individuals and firms to use their own moneys according to their own desire, we may take it that directives would be issued to banks, insurance companies, building societies, etc., as to the manner in which they should hold their assets. I cannot think of anything more calculated to discourage savings and to undermine confidence in the institutions through which savings are accumulated."

The comment I would like to make on that statement is twofold. In the first place, I suggest that there is a certain confusion in the whole of this discussion between the volume of saving and the direction of investment. Everybody is agreed that the total volume of savings in this country is insufficient. As I said earlier, savings are discouraged by the system of direct taxation. The volume of saving seems to me to be a matter which is related very slightly, if at all, to the existence of the type of investment council which I had in mind when I spoke on the matter before. I did not envisage that people should be controlled in the use of their own savings or that companies should have to seek permission from anybody for investing their savings in their own business. I did not even foresee the possibility of private investors and borrowers having to submit to Treasury permission before going to the market.

I am prepared to admit that at the present stage in regard to the investment of private savings by their owners, whether the accumulators or the borrowers, the test of profitability in a free market may still be the correct test for the best type of investment. However, what was in my mind and what was certainly in the mind of the Banking Commission in 1938, where this matter was discussed, is some more conscious and deliberate control of public investment than that which takes place at the present time. A larger and larger part of the total investment in the country takes place either through the Government or through Government-controlled corporations. At a time when the absolute volume of savings is scant, when private investment leaves a great deal to be desired, when the rates of taxation are so high as to discourage the production of risk capital, when the margins left over from the very large national Budget are getting smaller and smaller every year, it seems to me that investment by the Government should be very consciously directed towards improving the balance of payments situation.

I do not think that anybody who knows me in the Seanad or elsewhere could accuse me of having socialistic leanings, but I do think that the most extreme individualist at the present time must concede that every country with balance of payment difficulties must exercise some control over the nature of investment with an eye to keeping the balance of payments right. I suggest that the passage in the Budget speech which I have quoted does not dismiss the necessity for this degree of control.

This whole discussion regarding investment would, of course, be quite idle and quite pointless if the savings were not present to finance the necessary volume of investment. The connection between balance of payments and the maintenance of an adequate flow of savings is becoming more and more understood in every country to-day. On this matter I would like to refer to an article by an Irish writer of authority which has appeared in the Three Banks' Review of June 1953 and I would like to put on record the passage which is so relevant to our affairs. Talking about deficit financing, which I mentioned at the beginning of my speech, it says:—

"Thus, it may not be too optimistic to hope that in process of time each country can work out the particular mixture of plan and compensatory finances most congenial to it. For this to be successfully achieved, however, two things are necessary: first, international equilibrium must somehow be ensured in the sense that major balance-of-payments crises can be avoided; and secondly, equilibrium between the present and the future must be secured in the sense that a sufficient volume of savings will be engendered in the economic system, not merely to maintain the national capital intact, but also to ensure that the accommodation does not fall behind in the race for the application of new techniques. These two necessities are obviously interdependent, in the sense that a failure as to the second would continually endanger the first."

That is true of this country. The failure of sufficient savings to enable our agriculture and our industry to keep their costs down to the point where they could compete in the modern world would push our balance of payments into a permanent disequilibrium. Therefore it is a matter of the most extreme urgency now, at a time when foreign aid in any form is no longer available and when there is general agreement that the liquidation of external assets cannot be indefinitely tolerated, that savings at home should be encouraged to the maximum degree.

A great many people think that the present system of income-tax which is repeated in the Finance Bill will not have this effect. The Minister has at least conceded part of the claim which was made in this House in December, when he was asked to inquire into the system of income-tax. In the Budget speech he stated that:—

"Arrangements are being made to set up a committee to consider the question of the incidence of direct taxation on production."

That is a statement which we must all welcome. But while welcoming it, I think it is only fair to say that there are other aspects of income-tax in this Finance Bill which will not come within the terms of reference of this committee but which nevertheless call for a certain amount of inquiry and revision. I do not wish to repeat what I said in December, but in general I wish to remind the Minister that, owing to the very small section of the population on which this tax falls and the differential method of assessment on different classes of the population, the fixed income groups bear more than their fair share of the burden of the tax.

There are two grievances in connection with income-tax. The first grievance is its purely economic effects on savings and production. The second grievance is the injustice which it imposes on certain classes of the population. The inquiry which the Minister proposes to set up may tend to remedy the first evil of the tax, but there is nothing in the terms of reference to remedy the second evil of injustice on a small section of the population. I quote from a memorandum which, I understand, the Minister has already received from the Conference of Professional and Service Associations, where this point is pungently made:—

"The hardships which an iniquitous and anomalous tax code imposes on heads of families and their dependents does not, apparently, deserve priority of investigation to the incidence of direct taxation on the capital requirements in industry itself. One wonders what influences were brought to bear on the Minister to convince him of this, and is his decision in the matter another example of political expediency taking precedence over human rights and civic justice?"

Now the reason I mention this matter is that I think it is peculiarly the function of the Seanad to draw attention to the anomalies in the income-tax code because the very essence of the injustice of the tax is that only 1/17th of the population pays it and that therefore any attempt to improve the situation will attract only 1/17th of the population and may arouse the suspicious of 16/17ths. The number of people who pay tax is only 1/17th, therefore the number of people who could benefit by any change in the tax system is only 1/17th, so that the 16/17ths of the population who do not pay tax are always liable to find themselves worse off as a result of any change. Therefore it is a matter in which there is no expectation of popular clamour. It is not a matter in which there is a great deal of voting strength, and it is because of these very peculiarities that I consider it the duty of the Seanad to repeat these matters over and over again whenever we have the privilege of the Minister's presence in the House.

It may be said that the present Budget does not make things worse, that there is no change, that it is neutral; but if you have a disease which is slowly eating into the system the fact that there is no change from year to year in its gradual corrosion does not necessarily say that the treatment is neutral. A mere policy of no change where there is injustice is not neutral. It is perpetuating injustice, perpetuating an injustice that ought if possible to be repaired. However, as I have said, my principal reason for referring to income-tax is its effect on saving and on the balance of payments. I know that it is a fashionable theory in other countries to-day, although it is going out of fashion slightly, that private savings now can be very largely dispensed with and their place taken by forced savings of one sort or another.

In the Soviet Union, savings are obtained by a high purchase tax and by compulsory loans. In other countries, they are obtained by high direct taxation and Budget surpluses. These are the fashionable methods of providing savings for production in countries where, owing to egalitarian policies and a reduction in the standard of living of the richer classes, the flow of private savings can no longer be relied upon to provide enough capital for industry. On that, I would like again to draw attention to the Report of the Bank for International Settlements, where this matter is discussed. I will not quote the whole paragraph, but simply refer to page 68. The report points out that Budget surpluses tend to be spent on current consumption, that Ministers of Finance who find themselves with Budget surpluses, instead of using these surpluses for the repayment of debt or for true capital investment, tend to be pressed by their followers and politicians to increasing the national expenditure. It also points out that Budget surpluses can only be obtained by high direct taxation. This taxation undermines the flow of private savings, which are a much more desirable source of the finance of investment. The forced saving which results in Budget surpluses may simply transfer purchasing power from one pocket to another without providing any new funds for investment at all.

The outstanding aspect of our direct taxation, which is perpetuated in this Finance Bill, is the high system of progression. That high system of progression has been inherited from British models and these models in their turn have been based on various rather outworn social philosophies which have not been widely adopted in other countries in Europe or elsewhere. We have taken over high progressive taxation almost as something which is self-evident. We have assumed, ever since the beginning of this State, that direct taxes—income-tax, surtax and death duties—should be levied at a rate which brings about a considerable equalising of distribution of income of the population. That is a principle which is not self-evident. It is widely adopted in Britain to-day as a reflection of a long inheritance of socialist policy; but the rate of progression in our taxation system is a great deal higher than that in almost every other country to-day.

All I want to suggest is that, whether this progression is justifiable or not, it must not be taken for granted. There was recently an event in Czechoslovakia which aroused considerable comment. There was an exchange of a new currency for the old and the exchange was on a basis that wealthy people obtained a smaller amount of new currency in exchange for old currency than the poorer people did. In other words, there was a differential calculation in regard to people's rights, according to the amount of wealth they possessed. That transaction has been regarded with horror by commentators everywhere in the free world; yet I myself fail to see in what essential respect it differs from what the Minister for Finance in this country is doing every year in his Finance Bill. The people of this country are being taxed at different rates simply because some of them have the misfortune— shall we say?—to be better off than others. That may be a valuable principle of taxation; it may be one which, on the whole, produces good results; but it is one that seems to me to require a further justification than the mere fact that it has entered into the philosophy of a British egalitarian socialist mode of thought.

I would like to ask the Minister, if he has a moment, to study the paper by Sir Roland Nugent, the ex-Minister of Commerce in Northern Ireland, read before the Statistical Society, in which he pointed out that the whole system of income-tax taken over from Great Britain is inappropriate for Northern Ireland conditions, that the system of forced saving which this tax is meant to effect may be all right in Great Britain, where the Budget surpluses are used for the repayment of debt and in that way provide real savings, but that it is quite inappropriate in Northern Ireland, where Budget surpluses go elsewhere. This gentleman went so far as to say that the whole system of income-tax in Northern Ireland requires fundamental revision. If that is so in Northern Ireland, may I suggest that it is equally true in this part of Ireland?

Before I leave income-tax, I want to refer to one other small matter, that with which I dealt last December—the income-tax allowances for disease, illness and operations. I wish to congratulate the Minister on one section in the Finance Bill, where the principle of remission of taxation for life insurance policies is carried rather further than it was. That is definitely a step in the right direction. I suggest that insurance policies against illness might receive a somewhat similar differential rate of tax. The urgency of this matter has become greater since I spoke here before. If the new Health Bill passes into operation, people with under £600 a year will receive certain benefits free, which people with over £600 a year will still have to pay for. If people in the higher income groups could receive some sort of income-tax concession for the provision that they themselves make against the risk of illness, the pressure for the widening of the classes included in the Health Bill would be, I suggest, considerably reduced. As it is, the people with over £600 a year who are income-tax payers will now have to pay more than they did before in order to help to provide the benefits for the favoured classes in the Bill. I suggest to the Minister that there is a case for consideration there.

There are two small matters to which I would like to refer before I conclude. The first is a certain amount of concealed taxation which is going on at the present time. I am not referring to the rise in postal rates. I think it is right that the Post Office should pay its own way. I also think that that principle of the Post Office paying its own way might be extended to Radio Eireann. A small increase in the licence fee would produce such an additional revenue that Radio Eireann would be entirely independent financially. That, I think, would be from many points of view a move in the right direction.

The concealed taxation to which I refer is a payment which is still exacted from large classes of women, of 9d. a week for widows' and orphans' pensions. The Social Welfare Act enables the Minister to exclude certain classes of people from its operation and he has, in fact, done so to a very large degree; but there is one payment which still remains even on the excluded class and I have been asked by certain people who suffer from it and by their representatives to raise the matter to-day. A great many classes of women lose their employment on marriage and for those women—civil servants, national teachers, local authority officials, bank and insurance officials—to have to pay 9d. a week for a risk which is exceedingly remote, really amounts to a form of concealed taxation. It is very severely felt by the organisations representing these professional classes and I have been asked to raise the matter and to call the Minister's attention to it.

I come now to the matter of the Civil Service award. As I understand the Minister's position, his refusal to implement the award in the course of the last financial year was based on his ignorance of the amount of money that would be available. He stated that, in these circumstances, it was "in the public interest" to withhold the implementation of the award. The point I want to make is that every Exchequer and every Minister for Finance must always, to some extent, be in the dark regarding the future course of revenue. If ignorance of that kind could always be pleaded as a reason for not giving effect to an arbitration award involving additional expenditure, it seems to me that there would be no point whatsoever in having any type of arbitration between the Government and its own servants. It could always be pleaded that the award could not be brought into operation because the Minister did not know the future fiscal position.

Surely the Senator has overlooked the fact that the scheme of arbitration does not provide for the automatic implementation of the award and that the question as to whether or not the award will be given effect to has to be considered in relation to the Exchequer position? That is part of the scheme.

I entirely agree that it is not automatic. I will not press the matter any further except to suggest that, in relation to the general Exchequer position, it can always be termed in such a way as to justify the postponement of implementing the award. As the Minister is the sole judge in the matter, perhaps it is slightly unfair to the other party.

But the Minister's judgment may be questioned.

Certainly. The Minister's judgment may be questioned

A general rise in State expenditure is not a reason for inflicting hardship on individual State servants. The argument that the general burden of expenditure and, therefore, taxation is rising, is no answer to the just claims by people who derive their income from the Exchequer.

I do not accuse the Minister of holding two opinions which are held by certain people and that are very wrong and very unjust. The opinions I refer to are that civil servants, because they are paid out of taxation, should accept less than the current rate of payment for similar services rendered elsewhere. Another opinion which is current, is that because civil servants derive their revenue from the Exchequer they should, therefore, cheerfully contribute to the Exchequer by means of direct taxation. I do not suggest that the Minister shares those views but they are views that many people hold. All I suggest is that they are not sound views and they are views which, if they were held by the Minister, could lead to a great deal of injustice.

The Government must always not only do justice but must appear to do justice. Any action which causes discontent or disappointment or disgruntlement in the Government's own servants is not in the national interest. I should like to point out that the award of which I am now speaking affected a number of people other than civil servants, in the narrow sense of the word. The Civil Service organisations argued the case and the civil servants bore the brunt of the day, but other classes of persons have reaped consequential gains arising out of that award. It was stated in the course of the debate that the award would cost the Exchequer £2.4 million a year. While not questioning that figure for a moment, the whole of that £2.4 million does not go to the extra pay of the civil servants. I am informed that the civil servants derive about £1,000,000 and that the other £1.4 million is paid to other people who benefit by the award. Therefore, the suggestion that the Civil Service is costing the country £2,500,000 more as a result of the award is misleading.

I apologise for having kept the House so long, but on the rare occasions on which we have the privilege of the Minister's presence, I think we must take every opportunity we can of stating our grievances.

I should like to follow Senator O'Brien over many of the interesting issues which he raised. I should like him to clarify some of the points he made, but I find myself in the position that I have to deal with the Minister's Budget speech and the Minister's tax policy. I have something to say on this measure which I want the Minister to hear, because I want to hear his replies.

I do not think that the Minister, any more than any other member of his Party, can feel particularly happy about the policy of taxation which he and his Government have pursued since they returned to office. There is much evidence in the country of dissatisfaction. The nonchalant manner in which the Minister introduced his Bill this afternoon would tend to give one the impression that we had peace, order, progress and contentment all around us. We know quite well that that is not the situation and that, underneath, there is a considerable degree of tension, dissatisfaction and lack of confidence in the present and the future. A great many of our citizens, and very worthy citizens, are not quite clear as to how they stand and as to what the outlook is. I suggest that that situation has been brought about by the Minister's Government and especially by the Minister himself.

When the Minister came back to office, he made a number of very foolish speeches. When he introduced his Budget last year, of which this Budget is a repeat, he imposed considerable burdens on the country as a whole. The types of speeches he was making about the plight of the country and about its being almost on the border of bankruptcy, so disturbed the minds of a great many people, that there has been a slowing down in the velocity with which money was circulating and, in addition, there has been a considerable drawing-off of money that could wisely be spent in the country. That contraction is showing itself in every walk of life in this country to-day. The Minister could not walk half a mile through any of the streets of this town without running against dozens of people who are affected by his policy. What is most regrettable about the whole situation is that there is no sign of appreciation on the part of the Minister, or the Government, of the situation, and no evidence of any change of policy or any hope for the future. I am quite convinced that that is why the country is expressing itself as it is in the ballot boxes when it gets the chance.

One of the urgent problems to-day, according to ministerial statements, is unemployment, but Senator Hayes told us, and rightly so, that ministerial declarations always point to the sunshine around the corner. We just have not reached it yet, but there is always relief in the distance. There are a great many people hoping for relief quickly and we see nothing in governmental plans to give them justification for confidence. There is considerable unemployment in the country. There is unemployment in the cities, but it is to be seen in the country towns as well and I propose to speak frankly about it. Perhaps I do not know as much about it as people living in the city, but I am trying to observe.

I believe that the present Government's policy in relation to this whole question of unemployment from the beginning was unsound. They introduced a policy of unemployment assistance years ago when they came into office and it did more to create unemployment than any other single act of any Government since the State was founded. They have produced a situation to-day in which there are a great many people unemployable who would have been good workers if their original policy had never been introduced. I have a good deal of sympathy with the Government in this matter. I believe they were originally at fault and I do not see them, in regard to the administration of the plan as it is, making any effort to make amends.

They are suffering to-day and the country is suffering for their sins of the past, but when one looks at the situation all over the country at the moment, one sees that there is an attitude towards work in the country which will have to be changed if the country is to survive. The Government did a great deal to disorganise working people and when I speak of working people, I refer not to people in cities or towns, but all over the country. We have a situation now in which work apparently is available for able-bodied men not at their own doorsteps, but they are not prepared to go out and take it. That whole situation is very deplorable and very regrettable, but my judgment is that that situation has to be faced up to. It is not a very popular thing to say and it is not going to be a very easy problem for a political Party to resolve, but unless the political Parties in the Parliament face up to the situation which is being created by wrong judgment in the past, I do not think we are going to get thousands of people working for whom work is available to-day and who do not want to work because they can find something else.

The net result of all that is that taxation is pressing very heavily on the number of citizens who are producers and who, in the main, as primary producers, have to find the wherewithal from which all others pay their taxation. The number of producers is nothing like the number of consumers we have, but the number of people who are to-day burdened with taxation out of proportion to what they ought to bear is entirely different from what it might be if the citizens faced up to their obligations as they ought. When I was the age of some of the young men in the country to-day, I was out in the fields between 6 o'clock and 7 o'clock in the morning. I came into my breakfast after 8 o'clock and went back to the fields. I came back to my dinner and finally came back from the fields between 6 o'clock and 7 o'clock in the evening. Many of these people are not prepared to do this sort of work to-day and when we hear complaint about the burden of taxation, we have to take cognisance of the fact that the people who work have to find the taxation which these people are paying when they smoke cigarettes or attend the pictures, despite the fact that they are not producers at all.

This sprang originally from the policy pursued by the Government and there is no sign of our facing up to that situation. Until we do, this country is not going to be able to enjoy the standard of living which many of our people want for themselves and which some of us are entitled to have, but cannot have, because the burdens of taxation which the Minister imposes on us who work are out of all proportion to what we ought to carry because there are so many others who will not work. I think it was the Minister's colleague, the Minister for Industry and Commerce, who said recently—I am sure the Minister for Finance has said it too and, if he has not, he will say it before this debate has concluded—that we are practically out of the wood, that he has straightened out finances and that the bankrupt situation which he inherited when he came into office has now been put behind him, due to his wisdom and careful handling of the nation's resources.

So the Senator recognises that?

The Senator wants to say that he would wish very much that that were true and wants to point to some signs which he sees which rather frighten him, signs which the Minister should be studying or should have somebody studying, if we are to meet the situation which is going to confront us when the Minister or some successor of his produces the next Budget. It may not be the Minister, if the people get a chance.

It will—let the Senator have no doubts about that.

I had hoped that somebody like Senator O'Brien, who is more deft and skilful in the matter of handling figures than I, would have dealt with this.

And skilful in changing places.

I did not hear what the Senator said. I do not think that any speeches we make here on the Minister's taxation policy are of real value, unless we can hitch them up to the concrete everyday problems which confront the nation in its ordinary affairs and in its task of trying to balance production with the purchases we require for our everyday needs.

Some figures were produced recently which indicated that 75 per cent. of our total exports last year came from agriculture. The Minister can contradict that statement, if it is not a fact, but I think it is. I want to suggest to the Minister that I do not regard the prospects for the coming year as being anything like as hopeful as they were in the past year. Senator O'Brien referred to the position which we are maintaining of equilibrium in the balance of payments and I should like to have heard him applying his mind to this and analysing it to see what he thinks of the prospects of the future. I regard this as all-important and I ask Senators to keep in mind the figure I have given of 75 per cent. of our total exports coming from agriculture. Here is what the Minister says about it in his Budget speech dealing with the potentialities of agriculture:—

"The Government have provided incentives in a more direct and useful way by guaranteeing high prices for agricultural produce, by arranging markets, by draining, reclaiming and fertilising the land, by making credit available for the purchase of stock and machinery and by providing educational and advisory services."

The Government did not do anything that was not done before they came into office.

An Leas-Chathaoirleach

Would the Senator give the reference?

I am quoting from the Minister's Budget speech of the 6th May, column 1185 of the Dáil Debates. I do not think we are doing anything like enough in this matter at all. What prices have we guaranteed? We have guaranteed the price of wheat. There is some guarantee in regard to the price for barley for malting, but not for any other kind of barley as far as I know. There is a guarantee for the price of cattle, pigs and pig meats exported to Britain. If the British Government go back to private trading again, have they stated in this agreement that there is no guarantee that the prices written into the agreement will be paid to us? I understand that is the position. In another 12 months they hope to have meat derationed and go back to private trading. When that stage is reached, apparently we will have no security as to what price we are going to be paid. I am not surprised at the British acting like that. That is what they have always done. They have not signed the International Wheat Agreement. They have their reasons for that. What is our attitude in that matter? Have we signed that document?

I am glad to hear that that is so. As far as I can see, the British are pursuing a policy to break agricultural prices all over the world. If there is evidence of more meat being available on the world market this time next year, I do not think we can be quite sure that the prices which were written into the last trade agreement are going to be paid to us. Even if they are, the prices that were there were made by the Minister's predecessor in office with some slight change.

They were not.

They were not.

The origin of that agreement is in 1947.

It was in 1948 when the trade delegation went over from the inter-Party Government. They made that agreement then but you condemned it when they came back.

There is not an article changed in that except the 6d. per cwt. additional which we are supposed to get in regard to the differential price between our cattle and what is sold in the Six Counties or Britain. Actually, the prices to-day are above the prices fixed in the agreement, so that that is of no great consequence at all. I am pointing to something that I regard as serious and dangerous for the future. Earlier in his speech, the Minister said:—

"Last year, for the first time, exports exceeded £100,000,000. The actual total was £101.5 million or £20,000,000 more than in 1951. Of the rise in value, only £2,500,000 can be attributed to higher prices; most of the increase was due to greater volume. Cattle, dressed meat, tinned beef and the products of new industries, such as sweetened fat, showed the largest increases."

These were the figures he gave in regard to 1951. He said there were increases in volume more than in value. It is true that there were increases in value, too, but the Minister says there were increases in volume. I want to suggest to the Minister that he is not going to have as much available for export this year and that the volume available to him was the product of what his predecessor in office had left for him. We cannot quarrel about that. That is the fact, as the figures will show.

Will the Senator quote the figures? Could the Senator quote the figures to support that assertion?

I will try to give you something. If the Minister will permit me to continue my dissertation, it will serve to educate him a little, if that is possible, in regard to some of the problems about which he ought to know more.

The Senator ought to be helpful to everybody and quote the statistics on which he has based his opinion.

The Minister said:—

"Of the rise in value only £2,500,000 can be attributed to higher prices; most of the increase was due to greater volume. Cattle, dressed meat, tinned beef and the products of new industries, such as sweetened fat, showed the largest increases."

These are all the products of the cattle industry as the Minister will realise.

The Senator said that we are going to have less to export this year and I would like him to substantiate that.

If you exported two-year-old or three-year-old cattle in 1952 they would not be cattle born in 1950 or 1951; they would be cattle born in 1948 or 1949.

It would be during the Fianna Fáil régime that they were born, then.

I think the Fianna Fáil Party went out of office in the spring of 1948. You cannot have bullocks or heifers without having cows. Perhaps there are some people in the Fianna Fáil Party who appreciate that fact. I have figures which were given in reply to a question asked in the Dáil the other day in regard to the number of cows in the country.

An Leas-Chathaoirleach

Would the Senator give the reference?

The figures were given in reply to a question asked by Deputy Finucane. I have not got the date. I am quoting from the Irish Farmers' Journal.

Would the Senator give us the date?

Yes. They cover the years 1922, 1923, 1924, 1925, 1926, 1948, 1949, 1950, 1951 and 1952. Is that enough for the Senator?

We would like to know the date in respect of the figures you will read out.

In 1922 and 1923 we had 1,298,000 and 1,269,000, respectively. That went down in 1948 to 1,133,000. In 1949, we had 1,175,000. In 1950, we had 1,208,000. In 1951, we had 1,189,000, and in 1952, we had 1,159,000, the lowest number of milch cows on record in this country for I do not know how long.

As a result of the offer of the then Minister for Agriculture of 1/- a gallon for milk.

I know as much about farming as the Senator, I am sure.

I doubt that.

That was in 1952, and in 1949, 1950 and 1951 the figures were greater. What I am pointing out to the Minister is that from these cows you are going to have fewer calves and fewer cattle for export.

Surely the Senator knows that those are not exact statistics and that you cannot take them in the same way as you would take a census in regard to humans.

These are the statistics supplied by a Government Department and surely the statisticians do their job reasonably well?

The Senator knows that the census of cattle population is not an exact census. The Senator knows that well.

What are the statistics in regard to live stock, including pigs and sheep?

An Leas-Chathaoirleach

Senator Baxter should be allowed to proceed.

I was dealing with cattle because the Minister made a reference to them in his Budget speech. Senator O'Callaghan, if he so desires, can go to the Library and discover the statistics he seeks.

I want to urge on the Minister very strongly that this is what I fear the country will be up against and that it imperils our position very greatly in regard to the balance of payments. The Minister may choose to ignore that, but he will do so at his peril. I am quoting from column 1183, Volume 138, of the Dáil Debates of the 6th May, 1953, where the Minister said:—

"Cattle, dressed meat, tinned beef and the products of new industries, such as sweetened fat, showed the largest increases. In the last quarter of 1952, however, the rate of expansion slackened. Nevertheless, there has since been no falling back and, indeed, exports in March of this year were the highest ever recorded for a single month."

I suggest to the Minister that those exports of March of this year are exports which probably we will not see again. This is a serious prospect for our balance of payments. A very big proportion of those exports went to the United States of America, for which we received dollars. That market is gone. It will not be available to us in the coming March, nor perhaps again for a very long time. Anybody who is following the immense rise in the figures of the cattle stocks in the United States of America and in Canada is quite clear about that. As far as I can recall, our exports to the United States of America were something over £3,500,000. A great deal of that was shipped in the month of March last year. There are other people in the House who can speak with, perhaps, more knowledge and authority than I and they will agree that this will raise rather serious problems in regard to our capacity to purchase from the United States of America.

There is another problem which seems to me to be a very urgent one in regard to the whole question of our exports of live stock in the future. I am glad to see Senator O'Donovan in the House. He can speak with more authority on this than I. It is a number of years since he raised this question first, and I have to confess that I did not realise the significance of the problem then as he saw it.

I am glad you have changed your mind. You said I was fouling my own nest and the farmer's nest. I am glad you see the light.

Perhaps that is how it looked at the time. What I want to draw the Minister's attention to is that in Britain to-day—by Britain I mean Scotland, England and Wales— there is an intense drive going on for the eradication of T.B. in their herds. I am quoting from the Farmers' Weekly of some weeks ago, of which I have not the date. They say:—

"By the beginning of April 41.4 per cent. of the 9,000,000 cattle in the country were in attested herds compared with 34.3 per cent. a year ago. More than 500,000 cattle have been brought into the attested herd scheme during the year, bringing the total to 3,855,738. Attested herds have increased from 79,500 to 100,000."

There is much more said here on the subject, but I need not read it. It is sufficient to bring the attention of the Minister and the House to the kind of problem with which we will be confronted in the not too distant future. The Minister, in part of his speech, drew attention to the increased number of store cattle which we exported last year. I have given some evidence to indicate that the number of stores available for export this year will be fewer. I doubt if the price will be as high as it was last year, and unless we can increase the number of cows we will not have more stores either for export or for building into mature beef for export.

This is a much more serious situation when you realise that in a very short time 50 per cent. of the cattle in Britain will be in attested herds and no beasts will be brought on any of those farms where this stock is unless they are free from T.B. Will the Minister tell us what we are doing about that? Will we be up against the situation in a very short time that when our farmers bring their stock to the fair unless they can give evidence of the cattle being free from T.B., they are not going to be exported out of the country or will only be exported to so delimited an area in Britain as to depreciate seriously the value of the stock, because there will not be competition for them? That is an urgent problem about which I do not see the Minister or the Government taking any action.

There is no progressive farmer who can have confidence that the Minister and his colleagues have a policy which will enable us to get the greatest production out of the land. I see no evidence of that question being tackled as it should be. Perhaps some of the farmers here have a slightly different point of view. My view is that the full utilisation of our land, the maximum output from every acre, is what the country wants if we are to maintain equilibrium in the balance of payments.

I know there are some people here who will have a great deal to say about tillage and its value. I have never disputed the value of tillage. On the farm on which I was brought up, and in my own county, the people whom I knew were always concerned about doing a fair share of tillage. There are certain crops we could grow and there are those which we could not grow properly. Tillage is important, but we must realise that no matter what the Minister does by filling the fields with inspectors, by going down to the farmers and coaxing them, or by raising the prices sky high, there is a limit to the area that you can have tilled in this country.

There are many reasons for that. There are problems of climate and the type of soil; there are problems with regard to labour, with regard to technique in doing the job and with regard to capital equipment available. There are all sorts of considerations which decide and determine for a man what he is going to do on his farm. What I think is right for us to do is to aim at getting the maximum production out of every acre. I have here a copy of a lecture delivered in March, 1953, at the Royal Dublin Society, by Professor William Davies, Director of the Grassland Research Station, Berkshire.

An Leas-Chathaoirleach

The Senator is quoting from?

I am quoting from Agricultural Ireland, April, 1953. He gave figures of output from an acre of land utilised in different ways, and the first he gave us of the yield per statute acre at the grassland research station where he worked was from an acre of grass. From the acre of grass there was a yield of 74 cwt. of dry matter. The starch equivalent was 44.4 cwt. and the protein was 8.9 per cent. Now an average good lea will produce 24 cwt. of oats. The straw will be 36 cwt. That means that you have from the crop of oats 19.4 cwt. where from the crop of grass you had 44.4 cwt. A 25-ton crop of kale will give you 43.9 cwt. A crop of potatoes, a ten-ton crop, will give you 36 cwt. of starch equivalent. A crop of swedes will give you 28 cwt. and a crop of mangolds of 20 tons will give you 30 cwt.

There you have that whole table of an acre of land used in a different way for different crops and the heaviest yield of starch equivalent from any crop is from the acre of good grass. What I want to urge on the Minister is this, and I have tried to urge it in this House before, that no matter what we do I cannot see us passing the 3,000,000 acres of tillage, or 3,500,000 at the most, and there are 8,000,000 acres of grass left after that. That being so, I would like if the Minister and his colleagues, or some successor of the Minister and his colleagues, will apply their minds to that problem of full production from the land. They have got to concentrate upon the production of grass, and what are they doing about it?

Something else has to happen after that. You are not going to go in for that high production of grass, that high cost production of grass, to feed it to the 1,150,000 cows or their progeny. You want 2,150,000 cows, at least, and their progeny to eat that grass. There is no problem to resolve in regard to equilibrium in the balance of payments if we face doing that job, and that is what the country requires. I have to confess that I have never seen much effort on the part of the Minister to have a proper appreciation of that side of the economic life of the country, but that is not going to be done without something else being done too, and the problem of capitalisation of agriculture in this country to-day must be tackled forthwith.

I cannot go out to spend £4 or £5 per acre on the purchase of artificial manures unless I have got the capital or the credit. I know that the Minister will tell you, and I think he told you in this House on a previous occasion when I raised this matter, that the farmers have the money in the banks. Maybe some of his own farmer supporters will answer that query. I am sure that there is a considerable sum of money deposited in the banks in the names of farmers. That is probably the hard earnings of their sons and daughters who were working on the farms, the unpaid sweated labour of their sons and daughters. There are farmers, I have no doubt, with money in the banks in this country to-day, and that money could be much more profitably utilised on their own land. It is not being done. I ask the Minister "Why?"

You know what is said about the ordinary farmer—how cautious he is, how wise he is, how shrewd he is and all the rest. If the farmer knows that £200 which he has in the bank will yield him 10 per cent. if he puts it into manures to put into his land, why is he taking £2 out of the bank interest on leaving it there? Say a man may have £200 and he has nothing due to his son or daughter. Why does he leave it there? In my opinion he does not know the return he can get from investing it in his land. That is the real reason. It has not been brought home to the farmer yet how important is capital investment in his own land, even for a man who has got it. It has been brought home to some of the others and they have not got the capital and they cannot find it.

That is an urgent problem and the immediate problem confronting us, and the Minister and his colleagues may say, as he said in his speech, that by providing educational and advisory services, that is going to be done. You have not merely to increase these educational and advisory services but you have to face up to the problem of agricultural education and research in a way which is not being done at the moment.

Perhaps the Minister will tell us what is happening with regard to the plan that is gone to America, whether that plan has been approved or not?

I come to my final point. I said at the beginning that the Minister made, in my opinion, a number of foolish speeches. He frightened the lives out of people; even the conservative farmer who may have had money to put into his land was so frightened by the Minister's speech that he decided the best thing he could do was to hold on to what he had. When no one knew what was going to happen after the things the Minister was saying he felt that he might be left without anything in a short time. I am convinced that the Minister impressed these people, rather conservative, cautious-minded people on the land who might have kept money in circulation if the Minister had been more cautious in what he said.

Will the Senator give us some figures to substantiate that? He is making wild charges and has not advanced a scintilla of proof for them.

It is a matter of opinion as far as I am concerned. I can add this, that there is no businessman who does not know the problem that is facing him to-day in carrying on his business under the restrictionist policy imposed by the banking interests. I am absolutely satisfied it is the sort of speech the Minister delivered in the early days of his office that has created that situation for the businessmen in town and country. I want to say, finally, that the whole problem of providing capital for agriculture has to be faced anew. I suggest that we should send some group of people to a country that is very little talked about in this country and of which we know altogether too little, and that is Portugal.

I thought it would be Denmark.

The Minister may sneer if he likes.

I am only amazed at the Senator's analogy between this country and Portugal. If we carried through the budgetary policy that is being followed in Portugal over the past 26 years the Senator would be talking about austerity.

Well, the Minister can explain that when he is replying. I have here the bulletin of political economy for January from Portugal, and it is dealing with agriculture there. It may be that agriculture is more backward there than it is with us, though goodness knows some of our agriculture is backward enough compared with any place in the world. I can tell you—it is nothing of which we can be proud. But in Portugal where things are apparently more to the Minister's eye——

I did not say that.

I can say this, that I have had discussions on this with individuals who have travelled there and they have said that no other country in Europe has made progress such as Portugal made in the same period, and that would suggest that there are many things which we could copy profitably. We are trying to copy other people who have an economic and cultural attitude of mind and all the rest different entirely from us, and we are not succeeding, and if we looked around the corner again it might possibly be useful to us.

I was in Portugal and I know a great deal about the development of Portugal.

An Leas-Chathaoirleach

The Senator should go on with his speech.

I do not want to misrepresent the Minister at all, but I am ready to say this and I think it is of profound interest to him because I know what the rates of interest are in the East and I have met people and talked with them and they have said about Portugal "if only we could copy that." He said that, looking at this map, we can immediately see that £16,125,000 sterling is destined to go to agricultural investments, which will be made up under three heads—agricultural hydraulics, afforestation and internal colonisation. Long-term credits are afforded to the farmers through the agricultural credit banks which are at present part of the Caixa General de Deposit. At present these total about £12,500,000 at 4 per cent. interest on easy repayment terms. These facilities will continue in the same way.

Is the Minister very proud of his achievements, when the Agricultural Credit Corporation—as was given in some answer or statement recently on the number of applicants turned down out of the total applications made— have turned down so many that probably only about 35 per cent. of the people applying there get loans—and they get them at 6 per cent.? That is the sort of problem confronting us.

We are not facing any of these problems at all. We have the unemployed there because of things we did in the past. I have pointed to facts which I believe will be responsible for bringing down the volume and the value of our imports in the days ahead. I have indicated the way in which, in my view, we should face up to land utilisation and the things we require to do to make that policy effective. My belief is that we ought to go out with faith and with teachers to the farmers of Ireland and indicate to them how best they can use the land for their own sake and the nation's sake and provide the machinery to use it.

The Minister tells us in some place that taxation lies lightly on the land. I do not know about that. Senator Summerfield might give us some figures of the sales of tractors and agricultural machinery which we have been buying and what these cost to run and to maintain. The Minister's statement, of course, is not representative of the position at all. The Minister's policy has left the country in a frame of mind in which it does not know what the future holds. The Minister's land policy is such that none of us know just what exactly we ought to do to-morrow. The figures showing the fall in the number of milch cows indicate clearly the reason why we had to pay £2,000,000 to the New Zealanders last year for butter, although in the previous year we spent only £1.5 millions for the import of it. We will have to go on doing that if we do not face this situation in a realistic way. I do not know whether the Minister is the person to do it. I do not think he is.

As Senator Hayes pointed out in opening this debate, the reliefs given by the Bill we are discussing to-day are as little as they were last year. It was stated that the 1952 Budget was modelled on the English Budget, though conditions in the two countries are entirely different. The Budget in Britain this year brought certain reliefs to the people there, so much so that many were optimistic in this country that if the 1952 Budget followed on the lines of Britain the 1953 Budget here would follow on the same lines and bring similar reliefs. People who felt in that way have been sadly disillusioned.

It was also stated last year by several that the Budget was drafted on the suggestions of, or on the lines laid down by, the Central Bank. Those of us who had contacts with people identified in the fight that brought about the freedom of this country felt that freedom meant more than actually having the harp substituted on our stationery for the crown. We felt that we would have freedom in financial matters and not have the finances of the country in the stranglehold of the banks, that the Government would be able to utilise our finances for the development of our own resources and not place huge sums of money at a small interest in the banks to be used by foreign Governments for the development of their own resources.

The Central Bank in its report for 1951 also recommended the removal of subsidies. It pointed out that the removal of food subsidies would naturally mean raising the cost of living, but they also said it compensated in another way, in that it would reduce consumption—which was tantamount to a statement that the people were eating or consuming too much in this country. Anyhow, whether the Government followed the advice in that report or not, whether the following was a coincidence food subsidies were removed. In my own county last year, during the by-election campaign, certain speakers of the Opposition warned the people from the platforms as to the consequences of supporting the Government candidate, saying that they had got a very severe Budget and that it would be still worse by the removal of the food subsidies the following July. I myself heard many speakers on the Government side, among them a Parliamentary Secretary, giving the lie to that assurance, saying: "Surely you do not imagine that the Taoiseach would be guilty of such a cruel action as to remove subsidies that are making essential articles of food cheaper for the people?"

They had been removed at the time.

People had only to wait for a few days to find out that they were disillusioned. The Central Bank also recommended a change in the wage policy, saying that wages were too high. Though the removal of food subsidies would naturally make food dearer and therefore necessitate higher wages, that report was more or less followed in some cases. I think it was a most disedifying spectacle last Sunday, as reported in the Irish Press and other papers on Monday, to see a Parliamentary Secretary addressing his constituents and referring to some of the sins of commission of the inter-Party Government, stating they were responsible for agreeing to the setting up of an arbitration committee whose findings resulted in increasing the salaries of civil servants and other servants of the State and thereby adding to the present Government's financial difficulties. It is not necessary for me to point out that if those people who benefited by the findings of the arbitration body were in a position to resort to the means by which organised bodies in the labour movement agitate for wages commensurate with the higher prices that obtained— that if those bodies whose scanty increase was objected to by a Parliamentary Secretary were in a position to apply the same means as were adopted and as could be adopted by organised labour bodies—they would certainly come out of it better than being denied half of the increase to which they were legitimately entitled.

The Government have gone out of their way, since they resumed office in 1951, to justify the very severe impositions that their policy has inflicted on every section of the community. They have attributed their policy to the spendthrift policy of their predecessors, to their incompetence and to various other causes. It is unnecessary for me to point out that the people at large do not believe those charges and, when all is said and done, in the long run it is the people who count. I am quite satisfied that when the people get an opportunity they will indicate their views in no uncertain manner, as they have done in the constituencies in which by-elections were recently held. The people do not believe that the present high cost of living is justified or that the policy adopted by the Government is a proper one for this country and when they get an opportunity of expressing an opinion on the matter they will do so in a way that cannot be misunderstood.

During the debate on this Bill last year, Senator O'Brien said that the Budget is a powerful weapon to influence the economic life of the country— for good or evil, I expect, because you have good Budgets and bad Budgets. He also spoke about a Budget being an instrument of progress and said that there are two criteria by which a good Budget or progress can be gauged. He said that these criteria are a higher standard of living and an increased population. Judged by either of these two standards, or by both, I am quite satisfied that the present Government has come very badly out of the test.

I think that we can all agree on one thing, and that is, that if the Budget were extracting less, every section of the community and every individual would prefer it; it would be fine for all of us. It is very easy to say that there has been no relief in the present Budget but everybody who has said that has failed to mention one heading under which relief could have been given. The Minister could have cut the Budget by £10,000,000 if we were prepared to slash services. It is a pity that somebody did not mention what services might usefully be slashed. For instance, could you take £2,000,000 off education where the people engaged in it, even after getting the increases, are still underpaid? Other people in the service of the State consider that they are underpaid and that they are entitled to more. Must we go back, as a last resort, and take it from the old age pensioner, as was done in days gone by? If you want services you must pay for them, and if you reduce your services you will have less to pay. That is clear to anybody. One need not be a master of finance to understand it.

There has been much talk about a restriction of credit, but I fail to see evidence of it. I have not heard any complaint about it in my own county, and I have not heard any complaint about it on any of the public bodies of which I am a member. I see no evidence of a restriction in credit. The credit is there for any farmer who is creditworthy. Better still, we have reached the happy position in which fewer of our farmers require credit. I think we can be proud of that.

We could spend a month debating increased production because many aspects of it must be examined. Perhaps certain suggestions for increasing production could be put forward that might be very badly received by members of this or the other House. For instance, one way in which we could increase production would be by reducing the size of a lot of the farms in the country. The ten-acre and the 12-acre man is producing much more per acre than the 200-acre, 250-acre and 300-acre man. Consider the number of people who were migrated from the western seaboard to Meath and Westmeath. If the production per capita of the land which they work in Meath and Westmeath were compared with the production before these migrants got that land, I think it would make very interesting reading indeed.

We have heard talk about the price of money, and the Agricultural Credit Corporation was referred to. Undoubtedly, we should all like to get money at a cheaper rate. Money was very cheap when the Agricultural Credit Corporation came into existence and one would think it would be natural to say that money would be made available at about 3 per cent., which was very far from being the case. Most of us will remember the spring of 1924 when appeals were made to the then Government and the then Minister for Agriculture to relieve the people who had suffered losses. Certain types of societies were set up in the South through the creameries. You paid £1 and the Government paid £2 against that. The interest charged in 1924, when money was very valuable, was 5 per cent. If 5 per cent. was justifiable in 1924, surely it is justifiable now, and a good bit with it, considering the change in the value of money?

Senator Baxter suggested that we should increase substantially the number of dairy cows. We must examine the two sides of that statement and its implications. If we have a surplus of butter, what will we do with it? We must sell it for whatever price we can get on the British market. Are we to go back to the source of all our evils in this country and have the Minister for Finance subsidise it? Either one thing or the other would have to be done.

For the past 20 or 30 years the number of cows in this country has been approximately 1,250,000. Sometimes the figure is a little higher and sometimes it is a little lower. In 1936, during the economic war, we had the greatest ever production of butter in this country. Owing to our economic conflict with Great Britain at that time, facilities were made available for the purchase of calf heifers, and so forth, with the result that a great many of our people engaged in dairying in spite of themselves. The output was a bit down in 1937. The economic war ended in 1938 and a lot of people got rid of the cows and went back to store cattle and beef raising.

In my creamery area last year, although the second half of the year was very bad for the production of milk, because it was too dry, we were substantially up on the previous year. Limerick may be taken as the premier dairying county and I speak for one of the biggest creameries in the county when I say that we were well up last year, according to our balance sheet, in the number of gallons supplied and pounds of butter manufactured, on the previous year. Things were no better in that area and no easier than they were anywhere else, and, looking at it from that point of view, there is no terrible decline in the number of dairying cows. If we consumed as much butter to-day as we consumed 20 years ago, we would not need to import a pound of butter from New Zealand, but the whole market has expanded— it is very fine that it has—and that is why there is a necessity for the provision of so much butter. It is something we might well be proud of.

So far as tillage is concerned, no Minister expects everybody to turn up every acre of his land, but the reason we have not as much production as we might have from tillage is that not everybody enters into it in the spirit of producing a fair amount. If everybody produced a fair amount, the national pool would be very substantial, and, until it is approached in that way, we cannot expect to get results. Prices are reasonably good—far better than in any other country—for wheat, beet and such commodities and, so far as price inducement is concerned, it cannot be argued that it is inadequate. Manures are a product over which we have very little control, but nevertheless I heard a farmer in Limerick saying: "We gave £3 a ton for slag and we got 3½d. a gallon for milk." You can work out from that whether slag is worth its price to-day.

For what did he get £3 a ton?

He gave £3 a ton for slag and got 3½d. a gallon for milk. I leave it to anybody else to work out whether slag is abnormal to-day or not. These are matters over which we have very little control because we must take them at the price fixed by the gentleman who sends them in. We hope we have reached the peak of national expenditure and that, if any change comes, it will be in the taxpayer's favour. The point, however, is that there is a demand for increased services. It is the people who are demanding these increased services and you cannot have your loaf and eat it. If we want the services we think we are entitled to, we must be prepared to pay for them. If we are prepared to do without them and to have a lower standard of living, that can be done, but it is a policy which would find very little support in this or in any other country.

When the Minister replies, I should be glad if he would say a little more about the committee which it is proposed to set up. He may have made some other references to it in the Dáil which I have overlooked, but, so far as I know, all the information we have about the committee is to be found in his Budget statement, in which he said that it was contended that the present incidence of tax

"constitutes a deterrent to the modernisation and extension of productive capacity...the Government have decided that the matter should be fully investigated. Arrangements are being made to set up a committee to consider the question of the incidence of direct taxation on production."

I should like to know if it is his intention to have very narrow limits to the terms of reference to that committee, or will they be wide and give a good deal of discretion as to what the committee may report on. I should also like him to give us an idea of what type of person is to serve on the committee and when is it likely to be set up. There is a good deal of interest in the committee and many members of the public would be pleased to have further information.

On at least half a dozen occasions over the past ten years, I have urged the setting up of a committee to deal with the income-tax problem. I do not propose to repeat the arguments but I have again and again expressed my conviction that the tax, as it affects industry and commerce, is unfair, not because it is a tax on income, but because it is so arranged that it is not a tax on income only, and the effect of taxation, as stated by Mr. Hall in his survey, has meant that very few indeed of our commercial companies, whether distributive or manufacturing, have maintained their capital intact during the past ten years. I am therefore very interested in the setting up of the committee, but I am still of the same opinion as I was at the time when I dealt with this proposal in detail, that it is not practicable or wise to deal with that aspect of income-tax alone.

I am afraid that if you attempt to confine it entirely to the direct effect on production, it will be impracticable because of its close relation to the tax on individuals who take part in production, and who may be the workers in production. I am also very much afraid that it will be impossible to get any Government to deal with income-tax on business profits alone, in view of the intense resentment which may be felt by individual payers of tax who have real or imaginary grievances, but grievances which are genuinely felt, and who may think that some unfair preference is being given to business. I have never advocated anything in the nature of a preference to business profits, but I have advocated that the assessment of tax on business should be on real profits and that profits should be properly measured. At the same time, I do recognise that there is a danger that if you deal with this alone and completely ignore what seems to be the inequities in the application of income-tax to individual incomes, you may have resentment and may fail to achieve your purpose.

I therefore urge the Minister to think a second time and see whether it would not be in the public interest, and whether it would not be wiser, to give considerably wider terms of reference to the committee. It is an investigating committee which presumably will have nothing to do with Party politics, as such. It will be a committee for the provision of information for whatever Minister may deal with future Budgets, whether of this or of any other Government. It seems to me that it would be very wise indeed, when we are spending the money and going to the trouble of having an investigation, that its terms of reference should not be confined so narrowly as the Minister seemed to confine them in his Budget speech. His speech was vague and it may be that he did not intend them to be as narrow as they seemed to be.

One of the Deputies who is most regular and dependable in his support of the Government, speaking on the vote of confidence in the Dáil, said: "I do not think there is any doubt that the people are dissatisfied with the Government's economic policy." I do not think there is any doubt whatever that, rightly or wrongly, people of all kinds, rich and poor, are thoroughly dissatisfied and feel that, somehow or other, it should be possible, by means of a changed economic policy, to ease the state of business depression and the consequent unemployment which exists at the moment. It seems to me that it is not enough in a democratic country to have your taxation fair and equitable; you must have your taxation devised so that the people will feel that it is fair. That is another reason why I would urge the Minister to widen the terms of reference of the committee.

Perhaps I ought to say that, having given a certain amount of study to income-tax law, I am personally by no means convinced that a great many of the grievances felt by the public will, in fact, prove to be justified. I think some of them will, but I am convinced that there is a real underlying feeling of resentment and dissatisfaction which can only be met after a full and public investigation by people of a representative character who to the mind of the people will be detached from any Party politics.

I do not propose to follow, even if I were competent to do so, Senator George O'Brien in detail, but there is one thing to which he referred and which has always interested me and which I think should be included in any revision of our income-tax code. He urged that there should be some provision to cover insurance for health. It seems to me that it should be possible to devise some scheme by which the tax would be eased on persons who make adequate provision for their own health and, therefore, to that extent relieve the State of liabilities.

There is one particular suggestion that I wanted to make in the hope that it might possibly be dealt with as what the Revenue Commissioners call a concession, perhaps, not this year but next year. I came across a letter in the Press not very long ago—and I have since heard of one or two other cases —concerning a person suffering from infantile paralysis who was sufficiently well to be again able to earn a livelihood, but owing to the fact that that particular person is unable to walk there is a heavy expense in getting to and from work. The cost of travel to and from employment is something which, I think, is part of the cost of earning the income, and I have always thought that it should be allowed as expenses. For various reasons which I can appreciate, mainly administrative, no Minister has ever been prepared to concede that point. I would like to suggest that it might be possible to allow some discretion. It is said that hard cases make bad law, but these are not simply hard cases. They are a number of persons who through disability of one kind or another have abnormal expenses in getting to their work. It should be made easy for them to work. I think at very small cost to the State a concession of that kind might be made. Sometimes, when a matter of this kind is mentioned in public, it has led to an alteration. I put this forward as something which I seriously think might be met apart altogether from any general inquiry.

One matter upon which I do not entirely agree with Senator George O'Brien is in regard to the Post Office. There was a time when I thought it was an excellent idea that the Post Office should be made pay its way. I have changed my mind as far as that is concerned. It seems to me that in a country of this kind we must maintain some uneconomic postal services and that if we are to adopt that principle, which may or may not be suitable for the railway, in relation to the Post Office, and make it pay its own way we would have extremely unsatisfactory service in many parts of Ireland. The Post Office is not simply a business service. It is a human relationship service to-day and is of considerable value. I do not think it could possibly be put on an entirely paying basis. Whether that be so or not, the fact is that the increased postal charges are very considerable. They are paid to the State by means of stamps purchased. The fact is that the public will regard postal charges as a form of taxation whether it is put on by means of stamps or whether it takes the form of increased income-tax, petrol tax or any other tax. From a political point of view it always seems to me unwise to increase postage more than it is necessary. A friend of mine said the other day that he had a very heavy postal bill and every time he put on a stamp he thought of the Government and that he was paying a 20 per cent. increase.

The Minister for Posts and Telegraphs has a grievance if one says that the increased charges are taxation. I am quite willing to concede him that point, but am strongly of the opinion that postal charges cannot be based entirely on the departmental costs. It will have to be paid as part of our general taxation in whatever form you put it on.

Before I sit down there is just one other matter which has been on my mind. I think it is pretty generally admitted that the annual Budget has more effect not only in its taxation but in its general policy on the life of the nation than any other type of legislation. I should like to draw the attention of the House to the fundamental difference between the way in which the two types of legislation are prepared. I am not, of course, criticising any Party or any particular Minister. The system has been exactly the same as far as I know all along. When it is intended to introduce ordinary legislation the Minister approves of the idea that a Bill for a certain purpose may be introduced. It goes to a number of civil servants who prepare the proposals. These are sent to every other Department which may possibly be concerned in order that in the public interest we may have the best possible legislation. Considerable time is spent in investigation and eventually a scheme reaches the Minister. It then goes to the Cabinet. Probably it will also go to a meeting of the Party which supports the Government or at any rate the main outlines will. Once a Bill has reached the Dáil it is criticised by a very large number of persons. There is public debate and it is liable to be amended and frequently is amended.

I want to contrast that with the procedure in respect of a Budget. Because of the need for secrecy, the Minister can only consult a small number of trusted officials. If he proposes to tax a new commodity he, of course, has for his information all which the officials can give him, but that is all. It is not possible to send down proposals to all the Departments for criticism. If my information is correct, it is only almost immediately before a Budget is introduced that it goes to the Cabinet. As far as a Party meeting is concerned, I think the Parties supporting the Government know as little about the Budget on the day before as their opponents.

Having regard to the system we have at present, I do not see any way out of it. I would suggest, if not immediately before at any rate immediately afterwards, that where a tax is being put on a commodity such as petrol it should be examined as to its complete effect on business, railways, individuals, etc., before it is finally passed. This is a matter of considerable difficulty and intricacy and I put it forward as something that ought to be considered. It might be that it could come within the terms of reference of an expert committee that would be set up.

I find it very hard to speak on this matter having descended from the Olympian heights of Senator George O'Brien to the rather Dantesque inferno of other Senators in this debate. It seemed to me sitting at the back of the House that if someone came from another country he would be rather amused at the angelic qualities possessed by the people on this side and the demoniacal qualities of the opposite side. We seem to lack a great deal of balance in this House and instead of dealing seriously with a matter of fundamental importance our minds are to a great extent clouded by purely Party political viewpoints. The presentation of a Bill of this nature is of such great importance that we should not lose sight of the fact that it affects every part of our economy, every phase of our existence and that politics in the Party sense should not enter into it at all.

If I were asked whether I approved of the policy which the present Government carries on, both financially and economically, I would say that I did not. This is the only opportunity I can get to give the reasons why I disagree with that policy. It is quite obvious to anyone who does not want to delude themselves that an extraordinary recession has set into this country over the past two years, a recession of spirit as well as in money, a recession of the defeatist character in which the people say that there is nothing to live for, that there is no future for them.

Listening to Senator O'Brien, I got the impression that he spoke about money and credit as if it were an inflexible thing, something that must be related to itself only and not related to human beings. I was rather astonished at his point of view. The whole object of life is being misinterpreted by our politicians and our Government to-day. After all, the purpose of our Government and of money and credit is to see people live a full and happy life. If the Government brings into being a state of society which does not afford to people, so far as they can have it, that full and happy life, they have failed in their duty. While I would agree with a great many of the economic objectives of the Government, I cannot agree fundamentally with its financial directions. When one disagrees with financial direction one must disagree to some extent with the amount and form of taxation.

It does not need argument of mine to convince people that that particular recession of spirit, as I described it, has come to a great extent from the financial policy of this Government. Mere abuse will not solve the problems confronting us and the mere fact of my saying that Mr. MacEntee's black is not as good as my white does not solve the problem either. The time has come when we must get down and discuss our different viewpoints upon this fundamental matter of financial control in this country. I hold my viewpoint. Mr. MacEntee at one time held my viewpoint.

No. You were a Douglas credit man.

I do remember him standing at Capel Street corner, more or less making the same speech as I am making now. I am not trying to prove now that Mr. MacEntee is any of those demons that I spoke about. He is still an archangel to me. I do not intend to abuse him for changing his mind. He has a perfect right to do that. It is a very poor man who cannot change his mind at times. However, this matter is of much greater importance than Mr. MacEntee's opinion or mine. It affects the whole life of the country and our whole economic progress. This matter of financial direction and financial policy has been so twisted and misinterpreted that a person can hardly express an opinion in a straightforward way without being misquoted and without being abused even by the Minister and his associates. Such people would go so far as to call us crackpots, but it must be remembered that the crackpots of to-day are, as always, the geniuses of to-morrow.

I do not believe that the Minister in his present policy is helping to solve the country's problems. We have a growing unemployment problem. Is the Minister going to defend that? Can he explain it? Is there any reason for it? Is money and credit so inflexible that we must have these demonstrations in Dublin streets. I do not care what Party is in power. To me human beings are more important than mere terms of money, bank and credit. I am quite sure that we in this House are doing what Nero did, fiddling while Rome is burning around us. I hear a lot of speeches on this side of the House and on the other side which seem to be a waste of time; we are thinking in terms of Party politics and I hope that one day soon the country will wake up and throw all the politicians out.

It is quite obvious that business, at any rate, is suffering a great deal as a result of the Minister's policy. Industrial production and industrial employment have not increased. I am not going to abuse the Minister for carrying out that policy, if he thinks it is the right one, but I certainly do not think it is. Let me put it as a Dublin lad puts it: "Nobody is paying nobody". From the bootmaker up to the parish priest "nobody is paying nobody". There is no money in circulation. It applies not alone to the man in the street but to members of this House and for all I know to members of ministerial rank. There is a complete absence of funds for some extraordinary reason. Where has it gone to? We hear the Joint Stock Banks Committee saying: "The Government did not tell us to restrict credit." Does anybody seriously believe they have not done so or that that restriction of credit has not had a very serious reaction in the country? It has had a very serious reaction on employment and upon industrial production and from what I understand from Senator Baxter it is affecting agriculture as well.

Do not heed Senator Baxter. I will answer him.

Seeing that you are both from Northern Ireland I await the clash with great expectancy.

Business suspended at 6 p.m. and resumed at 7 p.m.