Léim ar aghaidh chuig an bpríomhábhar

Seanad Éireann díospóireacht -
Wednesday, 12 Jul 1961

Vol. 54 No. 11

Finance Bill, 1961 (Certified Money Bill) — Second Stage.

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

The Finance Bill contains the provisions necessary to give legislative effect to the Budget. The broad scope of the various sections of the Bill as introduced in Dáil Éireann is set out in the explanatory memorandum which was circulated with the text of the Bill. Some additions to the Bill were made during its passage through Dáil Éireann. These, of course, were not covered in the explanatory memorandum. Apart from a reference to these additional provisions, I feel I may confine my remarks on the Bill to a general summary of the matters dealt with in each of the five Parts which the Bill contains.

Part I deals with income taxation and covers the reduction in the standard rate of income tax, the raising of the income limit for the purpose of earned income relief and the adjustment of sur-tax rates announced in the Budget. Provision is made for an increase in the income limit for the dependent relative allowance and the housekeeper allowance is being extended to a type of case not covered by existing law. A proportion of the contributions payable by employees and voluntary contributors under the Social Welfare Acts is being allowed as a deduction for tax purposes and life assurance relief is being granted, in certain circumstances, in respect of premiums payable by persons coming to reside here who already have life policies with foreign companies.

Corporation profits tax will no longer be admitted as a deduction in computing a company's profits for income tax but because of the reduction in the rate of income tax this year no company with profits of less than £52,500 suffers any loss as a result of the change and, even for these, the loss is inconsiderable. The vast majority of companies, indeed, will gain from the reduction in income tax.

The Bill also proposes to extend the mine development allowances to open-cast mining of the minerals scheduled to the Minerals Development Act, 1940, and will relate to any expenditure on such mining incurred on or after 6th April, 1960.

With a view to simplifying income tax and sur-tax, it is provided in this Part of the Bill that one return will serve for both taxes. It is also provided that, where a taxpayer's income tax is deductible from his remuneration, he may elect to have his sur-tax similarly deducted, where practicable.

Sections 5 and 12 were added to the Bill after its introduction in Dáil Éireann. Under Section 5, the income limit for the purposes of the child allowance is increased from £60 to £80 while Section 12, in general, puts gifts made before the commencement of the Charities Act, 1961, for the provision or maintenance of graves or memorials on the same footing for income tax purposes as those made after the commencement of that Act.

Part II of the Bill relates to customs and excise matters including increases in the duties on tobacco which, of course, were dealt with in the Financial Statement and the extension from four to six years of the waiting period before increases in census population figures affect liability to entertainments duty in rural areas.

Arising out of the revision of the duties on motor vehicles, provision is made for the re-enactment of the powers conferred on the Minister for Finance to make regulations regarding the temporary importation of motor vehicles free of customs duty. A penalty clause for contravention of the regulations is included.

This part of the Bill also contains a provision for an amendment, in the nature of a concession, of the road tax on vehicles commonly known as "dumpers" and "forklift trucks" and for a proportionate adjustment of the fee for driving licences where these are taken out for periods of longer than a year.

Section 19 is another of the sections added to the Bill during its passage through Dáil Éireann. It enables the Government to authorise the continuance of Commonwealth preference in respect of goods which have ceased for any reason to qualify for such preference.

The final matter dealt with in Part II is the confirmation of the Orders made on Budget Day relating to the replacement of Special Import Levies by new or amended customs duties, including a consolidated and simplified customs duty on motor vehicles, parts and accessories.

Part III of the Bill grants certain easements from death duties. The upper and lower rates of estate duty are being reduced and reliefs are being provided in relation to gifts to the State, gifts inter vivos (known as gifts with reservation) and analogous releases of life interests. Provision is also made for the grant of relief for legacies to which Section 33 of the Wills Act, 1837, applies.

Tax avoidance in relation to gifts inter vivos is being provided against while the liability of trustees for payment of estate duty on property released from trust is being clarified. The exemption from aggregation of small unsettled estates is being discontinued.

The principal matter dealt with in Part IV is the strengthening of the existing provisions relating to the 25 per cent. stamp duty on conveyances, transfers and leases of lands to non-nationals, including a provision in Section 35, which was inserted during the passage of the Bill through Dáil Éireann, intended to provide generally against evasion devices which otherwise might not be caught.

This Part of the Bill also contains provisions for the abolition of the stamp duty on receipts, relief in the case of certain mortgages and an increase in the duty on cheques.

Section 32 is another of the additional sections to which I referred. It extends a stamp duty concession to corporate bodies which agree to deal in stocks of Irish companies for the purpose of facilitating activity in the Stock Market. The market in many Irish securities is often retarded by the absence of buyers or sellers. The existence of investing bodies which would always be ready to buy or sell would help to reduce this difficulty.

Part V deals with miscellaneous matters including the usual provision relating to the Capital Services Redemption Account. This year the miscellaneous matters also include a section removing the restriction which at present prevents the Bank of Ireland from making loans or advances to the Minister for Finance without to the consent of the Oireachtas. In another section the provisions of the Finance Act, 1960, which were designed to prevent abuse of exports reliefs are extended to cover all claims for such reliefs. It will be noted, as regards the "repeals section," that the effect of the repeal of Section 22 of the Finance Act, 1924, is to abolish as from the first of next month the duty known as customs entry duty thereby relieving importers of the obligation to affix 6d. stamps to certain customs entries.

These, very briefly, are the purposes of this Bill. The Finance Bill is, of course, a Committee Stage Bill and I shall be glad to deal with any particular point of difficulty on that Stage.

The Minister's approach to his business in this House always gives me some amusement. While he is reading his brief, one can scarcely understand at all what he is at, but when he is replying to the debate, there is no doubt at all about what he is at! As regards this Bill being a Committee Stage Bill, it is, indeed, and I think that most people will, even on Committee Stage, let it be. We have protested in this House time and time again about this constructive legislation where you graft not just one section on to another but one section on to another which has been grafted on to something else away back.

We have a good example of the other kind of legislation in the Road Traffic Bill which is the exact opposite type. The Government appear to have paid some attention to having legislation about one subject in one document. I am making the point since we are going to deal with the Road Traffic Bill subsequent to this Bill. One method of making a great deal of work for specialists, whether inside the Civil Service or outside, is this system of grafts on grafts on grafts. No person, except the people who are paid to do so, can give time to get back to base in a situation of that sort. Therefore, I think the Minister need have no fears that we will delay him unduly on the Committee Stage of this Bill.

I do not propose to speak at any great length. I propose to reserve what I have to say for the Appropriation Bill. When the Minister came into office four years ago, I said that his first year of effort, when we saw it, indicated that he seemed to have a better approach than his Fianna Fáil predecessor, Deputy MacEntee. Every year that goes by, the closer he approaches to the bad example of Deputy MacEntee when he was Minister from 1951 to 1954. The fact is that the Government at present are engaging in an orgy of expenditure. That is the fact—an orgy of expenditure.

Taxation is up since they came into office, if you take the whole of it, by about 20 per cent. The national income is not up anything like 20 per cent. We know of course that by the creation of a great deal of monetary credit, you can create a situation in which your revenue from taxation does increase for the time being. We had the reverse of that position when a previous Government, in their last year in office, were dealing in a particular way with the balance of payments problem as it then was. I refer to the time when the inter-Party Government cut down on expenditure, cut down on the creation of credit— in fact, indulged in the reverse of the creation of credit. The advances by the banks were reduced by the banks themselves and the Government monetary creation was also curtailed.

That had the result, which we heard about so often from speakers on the Government side of the House, that there was a Budget deficit that year. There would be room, in a very long debate, to dwell on whether it is better to have a deficit on the Budget or to have a balanced Budget by means of the creation of credit. I think in a very short time you end up in the very same way, whichever of these two devices you resort to. In fact, I think, according to my own observation, at any rate, that the particular splurge of credit creation we have had for the past couple of years is on its way out.

Of course, according to one member of the Fianna Fáil Party, who is busily changing his constituency, it took the present Government three years to clear up the mess they were left with. Presumably, it was cleared up in 1959 and since the end of 1959, everything has gone happily. There might be other explanations as to why we have had this admitted period of monetary prosperity in business circles in the city of Dublin but it is confined very much to the city of Dublin and to the other part of the country where there has been major expansion of effort, that is, around Cork city. The effort to make Limerick hum has not clicked yet, as far as I can make out.

If you go outside these areas, you do not find any evidence at all of an improvement of any sort in the economic situation. One of the reasons you do not find any evidence of an improvement is the fact that taxation is rising all the time. Let us take an example. Let us take the increase in tax revenue. It was about £95 million odd in the last year of the former Government and the estimate for the coming year is £111.6 million, that is, an increase of about £17 million. That is the ordinary central Government taxation. There has been a huge increase in the taxation levied by local authorities by means of rates. The figures were given in the Dáil in some detail on the Estimate for the Department of Local Government.

You also have all kinds of other increases in taxation like the social insurance contributions which were very nearly doubled at the beginning of this year. All this indicates that if there is an increase in wages, the people who get the increase in wages do not feel these contributions for a while and then they begin to feel them seriously as they are feeling them at the moment and the position deteriorates very rapidly. Moreover, it is ten years since the first inter-Party Government went out of office. The rate of income tax in theory came down this year, roughly speaking, to the same figure as it was when that inter-Party Government left office ten years ago. But, of course, it is not in fact as low at all because the allowances, relatively speaking, are not nearly as good as they were in 1951, if you allow for the fall in the value of money. So that, in fact, even income tax is up substantially in its burden on the community.

I am speaking now about the yield of income tax relative to the income of the community. It is quite obvious that we still have in the community—and this is obvious from the effects of P.A.Y.E.—big numbers of wealthy people who are escaping taxation, who do not get caught by P.A.Y.E. There is a kind of bitter feeling of satisfaction amongst certain elements of the community who have been paying their full tax for a very long time at the increased yield of income tax brought about by P.A.Y.E. But you have still these big numbers in the community who have incomes of various sorts which, on the whole, escape taxation. some of them get out of it illegally and some of them get out of it quite legally. You have legal evasion and illegal evasion. A good example of this kind of thing may be taken as the freedom from taxation of certain exports.

What astonishes anyone like myself is that people who manufacture some article, very often a simple process, the kind of thing that can be done quite easily if you have the necessary machinery, escape taxation if they increase their exports, whereas somebody who does a serious job of brainwork and makes an income out of it does not escape the taxation machine. A man who writes a very successful novel does not get out of one penny, whereas people who turn out cranes or who build ships, a thing that can be done to a blueprint, escape taxation.

To take the example that is perhaps most objectionable from the point of view of the citizens of this country, we have these foreign companies who not alone do not pay any tax on profits made from exports but who also get plenty of our money, on which we have already paid tax, or which is the proceeds of taxation, either one or the other, by way of capital. This, of course, is the most extraordinary position. It is the kind of thing on which Dean Swift would have been able to make suitable comments. There is also a great deal of income going from this country to people abroad, particularly older established foreign companies whose profits, by reason of the double income tax agreement, do not attract taxation here. The purpose of the double income tax agreement with Britain, of course, has been considerably undermined by British legislation since the war, and particularly by the British Finance Act, 1952.

I am glad that Senator Lenihan has come into the House. I thought he would have been so busily engaged in his constituency that he might not have been here today. I am glad that he has arrived because I have a particular item to which I want to draw his attention. He had a long discussion with me about the final table in one of the financial publications a few years ago, and I should like to draw his attention to the final table in this year's Central Bank Report. I am sure that if he reads the contents of this year's Central Bank Report, they cannot give him too much pleasure. I notice that although they have kept the cover white, the contents, as I prophesied last year, are not so white this year. There was not so much whitewash applied this year as last year. I suppose it is getting too near the crisis situation in the sterling area to continue using the whitewash brush.

Perhaps the Senator has this report for 1961. I wonder would he look at the last table, the balance of payments table? He will see there the summary item "Other Capital Transactions," which really of course are, in theory, the import of money, the foreign investments here. The extraordinary position arises for 1957/58 that withdrawals of capital from abroad by Irish people and investment by foreigners here came to £17.7 million. In 1959, they amounted to £15 million. In the year 1960, according to this remarkable table, they amounted to £1.7 million. Senator Lenihan, two years ago, "explained" the figures to me and said I was completely wrong. Perhaps he would be so good as to explain which claim is wrong. Is the Central Statistics Office producing rubbish, as I have so frequently suggested, or are the Government making the most outrageous claims that a great deal of capital is being invested by foreigners, or are both claims equally wrong?

Let me say this: if one final postscript were to be written to the rubbish produced by the Central Statistics Office down the years on this balance of payments situation, it would be the last line of this table and it is most suitable as the last line. We are supposed to get, in 1958, £17.7 million from withdrawals of our investments and new capital from abroad, and in the year 1959, were supposed to have got similar withdrawals and investments amounting to £15 million. By the way, the Minister for Health, invested £6.3 million in changes of external holdings of Government funds. In other words, he changed into British securities £6.3 million from the Hospitals Fund. That is only by way of postscript. It is an addendum which I add by way of levity.

The serious point I should like to have explained by the Minister, or by Senator Lenihan, or some member over there, is how it comes about, in view of all we have heard about foreign investment in this country, that according to this table the amount invested here last year by all foreigners in all these new factories was £1.7 million, whereas in 1958/59 when the moneys were coming in for the refinery at Whitegate—and a sizeable amount of money came in—there were, as I said, these figures of £17.7 million and £15 million. Which of these are rubbish? They cannot all be right. They were required to make the figures come out even. The higher mathematicians wanted to get the right answer.

Which is rubbish?

They are all rubbish. However, I do not have to explain them. As I said before, I am not responsible for them. Withdrawals of capital which we had invested abroad and new investment here totalled £17.7 million in 1958. The oil refinery cost £12 million. It is split between 1958 and 1959; you can view it from whatever way it was done; and we can add in the capital that came for St. Patrick's Coppermines. A couple of million pounds came from our good friends in Canada. I do not know how much of it they will get back.

When you have said that and look around, you have said it all. Yet we have these ludicrous figures. No matter how often I protest, they have the damn cheek to go on producing them year after year and if anybody can think of a logical answer to it, be he Chief Statistician in the Central Statistics Office, or the Chief Administrator in the Department of Finance, or the Chief Taxation Officer in the Revenue Commissioners Office, let him produce it here through the Minister or any of his advisers. There is no answer in logic; yet they will go on doing this, although it has been exposed time and again and these silly figures have been used by the Fianna Fáil Party as one of their major points in the years 1952 and 1956.

I warn them that the next time our financial system goes wrong, it will go wrong internally. The next time it will be the banks who will do their usual sell-out when they feel they have "over lent themselves". They will use this old phrase that they are "over lent". I notice that Senator Lenihan is not too keen to take part in this discussion. On other occasions, he has been ready to jump up and——

He believes in one person speaking at a time.


The Leader of the House does not give that example.

I shall plead guilty to this much: I was trying to induce Senator Lenihan to say something on this point, when he comes to speak. He looked so contented I was afraid he might not speak about it at all.

This is the one occasion on which the Seanad has an opportunity of discussing the whole financial system of the country from the point of view of revenue, as apart from expenditure. It is really the nearest thing we have in this House to a debate on the Budget. The Finance Bill comprises the Financial Resolutions passed after the Budget has been introduced in the Dáil. Therefore, it gives us an opportunity of expressing our views on the various matters that arose in the Dáil in the Budget debate. At the same time, we must limit our discussion to matters immediately arising out of the Budget and the proposals made therein.

We cannot raise, much as we would like to do so, such general matters as the Common Market, and other matters of that kind which do affect us but which would, at the same time, bring us too far afield. I think that, in so far as we discuss general economic matters, they must be related to the Budget and the Finance Bill. That, of course, still allows us a very wide field, because the Bill and the Budget must be drafted against the economic background of the country. The economic background is not only our domestic situation but also the world situation. There are very few countries which have more open economies than ours. Practically everything that happens in the outside world can affect our position here. We are not self-sufficient. Our external payments form a large part of the total transactions and, therefore, we are very sensitive to outside influences, unlike great aggregates like the United States of America and the Soviet Union, which are very much self-contained.

I read recently an article by a distinguished foreign economist on the Irish economic situation. The impression he gained from the published figures was the great extent to which the Irish economy is affected by outside influences. He went so far as to say that almost every change in the statistics in recent years could be related to circumstances outside our control. To some extent, that makes it easier for the Irish Government to bask in times of prosperity. I want to quote from The Times of 28th June on the position of Sweden. This extract is, I think, relevant to our affairs:

The more Sweden's economic growth is thought to depend on growth outside Sweden, the less credit is given to government policies encouraging growth. A trade union economist asked recently: could any government be so bad in Sweden that it could prevent Sweden's economy expanding while Europe grew so fast?

I think it is probably true that if the British and the European economies were rapidly growing, it would be very difficult for any Irish Government to prevent the Irish economy growing also. The converse is that if the British and the European economies were running into recession, even the most perfect Government in this country would find it impossible to isolate the country from the effects of that decline in our outside markets.

Our economy is so open that, if we are talking about the economic background, we cannot confine our remarks entirely to the domestic situation. The economic background at home and abroad of course influences the Finance Bill and the Budget which the Minister introduces and, of course, the Budget itself influences the economic situation. There is a mutual reaction between the economic situation of the country and the Budget each of which influences and is influenced by the other.

That is particularly true in what economists are accustomed to call the short period, because the Budget has a very important part to play in the maintenance of equilibrium in the country's external balance of payments. A great deal has been said in recent times about some distinction between the aims of Government policy on the economy, the aims of stability and of growth. If we look at the report of the Central Bank, we find that growth and stability are regarded as aims of policy in this country. I want to quote now from page 14 of the report of the Central Bank:

The object of the framers of economic policy, both in individual States and in the various international groups and associations, is the promotion of expanding production and trade, combined with full or nearly full employment and without the sacrifice of monetary stability. The pursuit of this object is attended by difficulties and setbacks even in well-developed countries possessing very great natural resources and growing populations.

One might get the impression from that quotation and from a great deal of other current literature that the objectives of growth and stability are in some way inconsistent and opposed. That is not really the case. Each depends on the other. Growth of the economy depends on the maintenance of equilibrium. If the economy were allowed to become unbalanced, deflationary corrective measures would have to be taken to meet the adverse effects created. It is, I think, a legitimate criticism of the policy of the Government in Great Britain in recent years, that disequilibrium in the balance of payments has been followed by deflationary corrections, which have slowed down the rate of growth. On the other hand, stability in the balance of payments depends on the economy growing, which depends on more production and especially a growth of exports.

It is encouraging to read the opinion of the Central Bank, as stated at page 16 of the Report:

Nevertheless, the fact that substantial progress was achieved with little price inflation and without difficulties in external payments affords a basis for confidence in the ability of the Irish economy to continue to expand in conditions of monetary stability.

Therefore, as I say, there is no real conflict between the aim of growth and the aim of stability. Each, in fact, depends on the other. At the same time, it must be admitted that the problems connected with the maintenance of stability and those connected with the maintenance of growth are rather different. The Government have, as I say, different problems which may require different solutions.

It may perhaps be an over-simplification to say that the maintenance of stability is a short period problem and the maintenance of growth a long period problem; but, just assuming that over-simplification for the moment, it may perhaps be said that the maintenance of stability depends primarily on the avoidance of inflation, and that in the short period the aim of every Government and every Central Bank must be to avoid inflation and, in doing so, to use all the available weapons which can be used for that purpose.

Those weapons are usually classified into monetary and fiscal weapons. In recent years, monetary weapons have been becoming less important than fiscal weapons all over the world.

The reason for that is, I think, partly the restoration of convertibility of currencies which has led to such free movements of funds that changes in interest rates to preserve internal equilibrium have set up undesirable flows internationally of what is known as "hot money". There seems to be a swing of opinion to avoid maintenance of equilibrium by merely monetary measures which may involve disturbances in the world as a whole which should be avoided.

I should like to refer to the Twelfth Annual Report on Exchange Restrictions published by the International Monetary Fund. I quote a short summary of that report in The Times of July 7th:

The Twelfth Annual Report on Exchange Restrictions 1961, published by the International Monetary Fund stresses that the cumulative effect of getting rid of exchange restrictions in recent years has been to restore to foreign exchange markets "their traditional function of reflecting the trend of international financial pressures". This has had two effects. In the first place as more and more currencies have become convertible and more barriers have been dismantled, exchange markets have experienced relatively smaller movements in exchange rates and relatively larger movement of liquid funds. The market mechanism has become far smoother in operation. But this in turn has led to the second development. It has meant far greater interventions by monetary authorities to offset the large switching of funds from one centre to another.

Thus as the I.M.F. gets nearer to its aim of removing all restrictions on the movement of funds (it can now say that "virtually every currency which is used in financial international trade is now convertible in terms of the Fund Agreement, and virtually all of the trade of the other Fund members is conducted in these convertible currencies"), the main problem is how to shield countries from the actions of others and how to counteract the flow of speculative funds that occasionally burst out. This report may mark the end of an important phase in postwar monetary experience. The outlines of the next phase are still being shaped by the I.M.F. and the world's leading central banks.

The point of that quotation is that the independent utilisation of monetary weapons by individual countries is leading to such international disturbances that the International Monetary Fund and other groups of central banks are engaged in damping down these effects. There has been a switch in recent times from monetary to fiscal regulations. This is not so apparent in this country because the monetary regulators have never been very effective here because of the peculiar structure of the Irish monetary system. The lack of independent interest rates in this country has made the interest rate mechanism unsuitable for the maintenance of monetary stability and fiscal controls in this country have always been of great importance. These are the controls contained in the Budget and that is why I mention them in this debate.

One of the advantages of monetary regulators is their flexibility. They can be operated frequently through the year at short notice, whereas until recently one of the disadvantages of fiscal controls has been that they can be introduced only in the annual Budget. An interesting development has been taking place in recent times in this matter. The British budget this year has introduced a number of interbudgetary controls, fiscal controls which can be operated between budgets having the same flexibility as the bank rate. The Government has the power to vary purchase tax, excise duties and insurance contributions without special legislation. The only similar control in this country is the power to regulate hire purchase contracts.

I should like the Minister to indicate in his reply if he has considered the possibility of introducing any interbudgetary controls in this country analogous to those recently introduced in Great Britain. The report of the United States Economic Advisory Committee recently recommended that the President should have power to vary rates of income tax between budgets. That of course would be a very far-reaching revolution and the reason I mention it is to show that there is a swing away from the monetary controls which have the advantage of flexibility towards fiscal controls which until recently had the disadvantage of being capable of being applied only at long intervals. I should like the Minister to tell us whether he is considering the possibility of adopting some of these interbudgetary fiscal controls adopted in other countries.

In the short period, when the maintenance of equilibrium is the immediate objective of policy, the figure that has to be scrutinised is the balance of payments. The balance of payments for the year 1960 was satisfactory. There was a deficit of less than £1 million compared with a deficit of £8.7 million in 1959.

Taking the period 1957 to 1960, the balance of payments in this country was roughly in equilibrium. Therefore, there is nothing in the balance of payments situation at present to call for a deflationary correction. This is stated by the Minister in his Budget speech. It is stated in the Central Bank Report at page 8:

There was little significant change in the country's aggregate external monetary reserves. In these circumstances the fairly considerable and continued expansion in lending and investment by the financial institutions did not give rise to concern.

When we come to make some sort of forecast for the present year to which this Budget applies, I think there is general agreement that the balance of payments situation in 1961 will not be as good as it was in 1960. In the first five months of the year, the deficit on the visible account was £6 million more than in the corresponding period last year. Even if the situation improves in the later months, as it usually does, a deficit of £5 to £10 million in 1961 is quite a possibility. If such a deficit should arise, I suggest to the Minister that there is no reason for anything in the nature of drastic deflationary correction, that the deficit in the balance of payments will be almost certainly neutralised by a capital inflow. From the point of monetary policy, the state of the reserves is the most important consideration and, if the current balance of payments is neutralised by an equivalent capital inflow, there is no reason for imposing the hardships of deflation on the country. Since I formed that view it has been clearly confirmed in the Report of the Central Bank which states on page 8:

Assuming, however, that net invisible receipts do not fall and provided that any worsening on the trade account is of moderate amount, such deficit on external payments as may be incurred in 1961 need not be regarded with anxiety, especially in so far as it may be associated with the importation of capital goods and industrial materials.

As I said, there has been a swing of opinion regarding the part to be played by monetary and fiscal controls in maintaining equilibrium. I think I am correct in saying that there has been a similar swing of opinion away from imposing deflationary corrections for short period deficits in a country's balance of payments.

In recent months, the Central Banks in Europe have been nursing sterling. They have been refraining from selling pounds in the Exchange market, with the result that they prevented a run on sterling that might have had serious consequences. In other words, the international monetary institutions such as the Bank for International Settlements and the International Monetary Fund try more and more to protect countries from the necessity of inconvenient deflations. At the same time, I think it must be emphasised that such restraint and such assistance are valid only in the short run. What they do is to give countries a possibility of taking the correct action at home. They give countries a chance of buying time.

They are exactly the same as a man who borrows from the bank in order to increase his liquidity during a period of temporary difficulty. That increase in liquidity may restore his solvency, if he takes other appropriate measures. On the other hand, if he does not do so, it may make his difficulties worse. It is the same internationally. These efforts by international monetary institutions to nurse national currencies, to prevent them suffering from the consequences of runs caused by short period deficits, are only temporary expedients and, just as a man cannot restore his solvency by additional doses of liquidity indefinitely, a country cannot do it either.

Therefore, if a small deficit should occur, I do not think that, in the present climate of opinion, drastic corrective measures are necessary. At the same time, it must be recognised that deficits cannot be allowed to continue and that if international assistance allows a country to buy time to put its affairs in order, a country has a very stern duty to do so. That brings me from what I said could be conveniently described as the short period problem of maintaining equilibrium to the long period problem of building up growth in the country.

When one comes to this longer period problem of growth, one is concerned not so much with monetary and banking figures as with the figures of production, employment and prices. The year 1960 was a satisfactory one. The net volume of agricultural output increased. The net volume of manufacturing output increased. The national income increased by something like five per cent., which is satisfactory. As far as one can forecast the present year, assuming an average harvest, agricultural output and prices should remain steady. Industrial output should increase by from five to seven per cent. Industrial employment should increase by about 7,000 people. The tourist industry is shaping very well.

There are two unknowns in the equation—one is our own harvest and the other is the state of the British economy. Assuming an average harvest and assuming that the corrective measures taken in Great Britain in the next few months will not be so stern as to damp down demand for imports, the prospects for 1961 seem reasonably bright.

When we come to consider progress in any country, prices are as important as production and employment. Continued progress depends upon the maintenance of equilibrium in our balance of payments, and equilibrium cannot be attained in the balance of payments if exports are so expensive, so dear, as to be priced out of the external markets. Ours is an unusually open economy. We have to meet competition from an unusual amount of imports at home and we have to sell a large volume of exports abroad.

I do not wish even to touch on the vast problems connected with the Common Market, but any extension of the areas of free trade or lowering of tariffs in Europe which may take place —and some such extension will certainly take place—will impose on every country in Europe the very severe duty of pruning down its costs. In the recent discussions about the Common Market and the consequences of greater integration between this country and European countries, sometimes people seem to lose sight of the fact that to some extent we are in a common market already with Great Britain; that the relations between Great Britain and the Irish Republic have many of the features which will characterise the Common Market when it is fully developed. I refer to the free movement of labour and the free movement of capital.

Already we have the experience of competing in a larger economic unit in which we cannot shield ourselves very successfully but, with the extension of the tariff-free areas, there is no question at all that competition will increase. That is one of the purposes of the expansion. Not only will our exports encounter more difficulties abroad but goods produced for the home market will encounter more difficulties from imports from other parts of the area.

Therefore, while it is true at all times in every country that the reduction in the cost of production is an object of primary importance, it is particularly true today, when we are, I am certain, entering into larger economic areas where the protection of tariff barriers both ways will tend to disappear. Therefore, taking the longer view, the duty of a Government in this country at the moment must be to try, as far as possible, to minimise costs of production, costs of production of all kinds, not merely labour costs which usually figure very largely in this discussion but costs of production of all kinds.

I should like to refer to the Central Bank Report, page 16:

With the progressive elimination of trade barriers between the members of the European economic groups, our position in the British and other markets will become increasingly difficult unless we can make our products more and more competitive in price and quality— and this is true whatever the future relations of Britain or Ireland with the European Economic Community may be. The necessary increase in our competitive power will not be possible without co-ordinated effort by management and labour. On the one hand, profits should be invested, to the maximum extent that may be reasonably practicable, in the enlargement and improvement of productive capacity. On the other hand, moderation is necessary in respect of wage and salary increases, so that the efforts to improve our competitive position may not be hampered and that economic growth may not be endangered by too rapid expansion of current expenditure with a consequent decline in the resources available for capital investment. Our dependence on exports sets a limit either to the level of wage and salary, earnings which can be achieved with as full employment as possible or, alternatively, to the volume of employment which can be achieved at any given level of earnings.

So when I refer to the reduction in the cost of production, I am not suggesting in any way that the trade unions are the only people who tend to keep costs of production up.

Every inefficiency in business, every restrictive agreement amongst business people, every restriction on competition has that effect. At the same time, I must admit that the principal cost of production is of course the cost of labour. I should like to refer to a report of the O.E.E.C. on the necessity for national wage policies in the various countries which are going to take part in the Common Market. I do not wish to quote at length from this report. It has been fully referred to in the Press but the main point is that, in many countries, upward pressure of wages has produced a cost inflation. By cost inflation, I mean an inflation which is caused by costs of production rising which involves rises in prices as distinct from demand inflation which is the result of excessive income generation within the community, caused possibly by unbalanced budgets or excessive Government expenditure.

This distinction between cost and demand inflation is very important in regard to policy because measures which may correct demand inflation, the fiscal and monetary controls to which I have already referred, may be quite helpless in the face of a cost inflation. I do not wish to digress in the Budget debate by discussing labour problems. There will be an important conference in Dublin next week summoned by the Federated Union of Employers when Dutch visitors will explain the system by which wages in Holland have been very successfully regulated to avoid inflation in recent years. On that, I would say that there is nothing sacred in any European system, that other countries' backgrounds are different from ours, but at the same time, we have a great deal to learn from what is happening elsewhere.

I think, if one were asked very shortly what was the object, the criterion, of a successful wages policy, the answer would be that increases in wages should be limited to the point where they would not cause rises in prices or unemployment. If either of those appears, an inflation has occurred and, as I said, that is an inflation which is not sensitive to the monetary and fiscal regulators which can be used to deal with demand inflation.

In this debate, we are discussing matters with the Minister. The question is: what can the Government do in regard to pursuing a reasonable wages policy? All I say on this very large subject is that the Government can at least do something negatively by resisting policies of taxation or tariffs which might put up costs in such a way as to give trade unions a claim for increases in wages caused by a rising cost of living. The Government can also refuse to raise wages in the public services and in the sector of the economy over which they have some control.

In that regard, I quite sympathise with the Minister and I agree with what he said in the Budget speech:

As regards costs it must, of course, be borne in mind that rates of pay are for the most part fixed by conciliation and arbitration machinery and that a significant influence is exercised by the level of pay in outside employment. Public Service remuneration follows, rather than sets the headline for, pay trends generally.

The reference is column 669 of the Official Report of Wednesday, 19th April, 1961.

That, I think, is reasonable and true. At the same time, I think the Government have a duty to throw their weight against increases of wages which may produce inflationary effects. Such increases may raise costs of production and prices or cause unemployment. I think, in view of the increased competition in recent years, there is perhaps no more important objective of Government policy than this and no department of policy that calls for greater courage and greater determination than to do something which may be unpopular and which may, on the face of it, appear retrograde and inhumane.

Perhaps I have wandered too far into general public policy. I now wish to turn to the Budget itself. The out-turn of last year's Budget is such as to warrant a progressive policy this year. There is no need to put the brake on the system. The Minister is perfectly justified in slightly pressing down the accelerator which is what he has done in this Budget. I think that is generally agreed. Certainly it is the opinion of the Central Bank in its latest report. The estimate for the present year seems reasonable and, as the Minister said, the small surplus which is budgeted is not the end but only the beginning.

I think we can all agree with the four objectives which he hopes to obtain from the Budget—that social welfare beneficiaries share in the improvement in the national income; that farmers should get greater help to increase production; that appropriate provision should be made against Supplementary Estimates; and that the burden of direct personal taxation should be lightened. Certainly, I cannot sufficiently emphasise my agreement with the fourth of these objectives. The Budget has shown a shift from taxation on earning to taxation on spending and that is a shift in the right direction.

Taxes on earning have a disincentive effect. They have a disincentive effect on effort and a disincentive effect on savings. They invite evasion. They cause widespread discontent. Taxes on spending are less felt and can be much more easily evaded by people changing their consumption habits, and they have less of a disincentive effect on saving. Therefore, we must all applaud the Minister for his reduction in the standard rate of income tax, which is quite substantial, and for his reduction in surtax because every single surtax payer will be paying less than he did. These are moves in the right direction.

In regard to death duties, the last of the three direct taxes, it is one in which the Minister might perhaps show a little more adventure. Death duties are an objectionable tax from any point of view. They have a disincentive effect on saving. His move in the present Budget is definitely a move in the right direction, but I hope the Minister will consider further moves in the same direction in future years.

One thing which we must all welcome is the intention to simplify and codify the direct taxation code. I should like to congratulate the Government on the White Paper which is a very important document dealing with direct taxation. It amply repays study. It shows a certain willingness to approach these difficult problems with an open mind and again I welcome the intention of the Government, as expressed by the Taoiseach, to consider the whole question of the incidence of the burden of local taxation. The Taoiseach stated at the opening of the Economic Research Institute last month that this is one of the matters which the Institute would be invited to investigate.

I think perhaps I might on this occasion publicly pay tribute to the great generosity of the Ford Foundation which has endowed this very well-endowed Institute to pursue inquiries of this kind. We have had a very excellent statistical service for many years but what the Institute will do will be to interpret the statistics and use them as the basis of forecasts. This will be of the greatest possible value to the Government, to business and to the public.

The last matter to which I should like to refer is the Capital Budget. In this, there has been a swing of opinion from the thirties when the Banking Commission Report was being drafted. I think that in every country in the world more investment by the Government and by public authorities is approved today than would have been approved then. A great deal of the investment is self-liquidating and it must be entirely approved. A great deal more is productive in the indirect sense that in the long run the assets may pay for their own production, but a great deal of it cannot pretend to be either self-liquidating or productive, except in a very roundabout sense. Educational and health services have a social justification. Other services may have what might he called a prestige justification.

In investing a great deal of capital in public enterprises of one sort or another, this country is in line with other countries in the rest of the world. Therefore, we must not be too conservative in criticising additions to the debt caused for these purposes. On this matter, I should like to refer to a valuable paper read by my colleague, Mr. Lynch, at the Irish Transport and General Workers' Union delegate conference in Galway last month. This paper deals with this whole problem of public investment and public enterprise and a number of things are said in it which I think are worth taking to heart. I will quote one or two sentences from the Irish Times report of the lecture. It stated that the lecturer believed in public enterprise as a distinctive and rewarding method of using human and material resources for the common good. The report continued:

Public enterprise had advanced economic development, it had improved the general welfare to an extent that would otherwise have been impossible, and its full potential had not yet been fully appreciated, much less realised.

It was widely used in Ireland, but it was often regarded—and described as a second-best expedient, as something to be tried where private enterprise had failed. There need be no conflict between private and public enterprise in Ireland; on the contrary, both were complimentary.

Having said that, I think it is only fair to say, before I conclude, that public enterprise must conform in many respects to the same criteria as private investment and cannot be regarded as an end in itself. Public enterprise depends on the accumulation of savings by individuals. It depends on investment and on those savings being translated into real capital goods; it depends on competent management; it depends on satisfactory labour relations. I do not wish to return to that question which I have already discussed, but labour relations in the public sector in this country are of vital importance in view of the extent of public investment. Therefore, as I said, any policy by the Government in relation to wages must attend to the question of wages in public utilities over which the Government have a measure of control. Successful public investment depends on the skill both of labour and management. It depends on the adoption of the best technical advice and it should also be, so far as possible, subjected to the accountancy test of profitability.

The lecturer said:

Public undertakings should be an example to private enterprise. They should be examples of emulation not merely to private firms but to one another. Ultimately, they should compete with one another; in this way a nationalised firm could galvanise a whole industry in innovation, research and efficiency.

The lecturer suggested that "We might use native capital and skill to promote fresh ideas without waiting for the foreigner." Having said that in favour of the large amounts of public investment provided for in the Budget, I should like to issue just one note of warning. In recent times, the idea seems to have grown up in many countries that investment is an end in itself, that, if there is enough capital investment, a country's progress is assured. That is a dangerous fallacy because investment may be wasteful. It may be wasteful either in the private or the public sector. Therefore, the modern tendency is to try to subject public investment, unless it is for purely social objectives, to the accountancy test which private industries have to face.

I want to quote from the leading article in the Financial Times of 3rd July on this subject:

There is now growing evidence to suggest that investment by itself does not necessarily produce growth. Norway, for example, devotes a larger proportion of its national product to capital formation than any other western European country; but it has one of the lowest rates of growth. The reason is that it has tended to invest unwisely, or at least in projects with a very low rate of return.

The mere amount of investment is not enough in itself. The direction as well as the amount must be considered.

That lesson from Norway should be borne in mind here especially in view of the fact that there is a capital shortage in Ireland. In his Budget speech the Minister praised the efforts of the savings associations but he pleaded for a greater amount of savings. That plea is echoed in the Report of the Central Bank in page 9:

In connection with the recent budgetary measures, it needs to be fully appreciated that reductions in rates of taxation and other reliefs in income can have the effect of promoting sustained economic growth only if the resulting increase in spendable incomes is matched by increased economic effort. Saving and the enlargement of the funds available for productive investment should be a first charge on increases in income...

As I said, the Budget itself has done something to help savings. There is a reduction in the rate of direct taxation which has definitely increased the power and the will of the community to save, and it is to be hoped that the community will respond. It must be remembered that quite a small change in the rate of saving by individual people can produce very large accumulative results. One thing at the moment which may help the Minister in his plea for increased saving is the very high rate of interest. If small savers are allowed to participate in the high rates of interest, savings may be stimulated.

Of course, an increase in the rate of interest, while it may increase savings, must make the Minister think twice before he incurs additional public debt. The British Budget this year was described as counter-inflationary. The way in which that counter-inflation was provided was that such a surplus was provided over the line as to exempt the Government from having to appeal to the capital market in the course of the coming year. The Minister's Budget, as I have said, was not deflationary or counter-inflationary. I said that, quite rightly, he put on the accelerator rather than the brake. The result is that he will have to appeal to the capital market in the coming year, and he will be appealing to the capital market at a time when the long period rate of interest is quite exceptionally high.

I think I am correct in saying that the yield on long-dated British Government stocks is higher today than it ever was in history. As the rate of interest in this country necessarily moves in sympathy with the British rate, the Minister will be approaching the capital market at a time when he will be asked to pay a very high price for accommodation. That should make the Minister chary at present of indulging in any further capital expenditure.

I should like to say a few brief and simple words on this Bill. Having listened to the Minister and read the debates in the other House, I am reminded of the terms used by the Taoiseach during the previous Government's term of office. He referred to a certain proposal as meaning "sweet Fanny Adams", that it was neither up nor down and that it was merely an as-you-were Budget, at a time when the Government were claiming it was a move forward. Everything must be put in its proper frame and everything must be taken in its context. Taking this Finance Bill in its context, I think it is a "sweet Fanny Adams" piece of legislation. In 1954, there had been some reductions in taxation and the Government had been striving to make further reductions. Since 1957, in fact, there have been no reductions in taxation. The amount comes before this and the other House in the form of the Finance Bill and it must be remembered that in 1957, the food subsidies were removed which affected the people of this nation to the extent of £9,000,000 per year. Therefore, we must, in my opinion, regard this Finance Bill as a failure.

I was greatly edified by most of Senator O'Brien's speech but I was deeply shocked when, in a passing reference, he said that we may expect to have 7,000 more people in industrial employment next year, if things go well, and that earnings and output from agriculture will be the same. That passing reference in a long speech shows to a certain extent that the thinking people of this country have got away from base and base is agriculture. From the figures I got yesterday morning in relation to a price index base in 1953 of 100, the present figure is 100. In other words, the Irish farmer is getting for his produce to-day what he got in 1953.

We must refer to the various Finance Acts which have been passed since in relation to the cost-of-living index and the various forms of hidden taxation to find out just how much of the gross amount he is getting is left to him as net profit. To say that in 1961 we may expect a rather rosy future and a little bit of improvement is, in my view, utter poppycock.

I am sorry to have to be so critical but I do feel that in the Minister's contribution, and in all the contributions, there seemed to be acceptance of the fact that agricultural Ireland is to be the under-dog, that that is a natural state of affairs and a natural consequence of the trend of events. I should like personally to say that I just do not accept that situation mildly. I refuse to look on it like a lamb, an agricultural lamb being led to the slaughter. I feel it is a horrible situation and one that should be further debated on this Finance Bill.

As an ordinary, unskilled, absolutely ignorant interpreter of economic trends, I do not find myself at one with all the things that are accepted and I have the horrible feeling that many of these financial policies are what are fashionable at the moment. When it is said that what is needed is the accelerator, not the brake, that is certainly in a certain respect so. But at the same time, does that line of thought betoken complacency or a change of view? In 1956-57, it was the view—and indeed the Government of to-day are suffering from that view held by the economic experts—that what the country needed was blood-letting. Has the economic climate changed?

It has changed.

The view of the economic experts now is that what the country needs is a blood transfusion. That is not a political point but merely a question and I have the view myself that there is something in that question. If the crisis in sterling mentioned by Senator O'Donovan occurs in greater or lesser measure, then perhaps the blood-letting at that time was to a certain extent — on the part of the economic institutions, anyway—a mistake.

The case has been made that a shift from taxes on earnings to taxes on spending was a good thing because people could be selective in their spending. I agree that people like most of us here could, but we are mostly people with education above the normal level of the working man who has not more than national school education. If we wish to change our spending habits, we can read books instead of going to the cinema, stop drinking or smoking cigarettes, take up a hobby. Our extra education would allow us to do so.

The working man's habits of consumption of goods and his general behaviour have been the same for generations. It is all very well to say, if you put threepence on the pint, that the working man does not have to drink pints. I know that is true, if you want to go to the ultimate, but the consumption of tobacco and of alcohol in the form of beer is written into our industrial, agricultural and general economic structure. A man is entitled to it. While taxes on spending allow you to avoid taxes in certain instances, at the same time, they are another weapon. They are spread widely enough over the spectrum and will catch everybody—unless you are going to retire to a nunnery if you are a lady or its counterpart, if you are a gentleman—and are just as complete as taxes on earning.

Consider the plight of the agricultural people. In the Finance Bill, we are setting out to raise the amount of money we require. It may be good policy to reduce income tax, but at the same time agricultural people can be taxed by spreading over a wide enough spectrum the taxes on the things which they must purchase. I would be extremely suspect of the entire advocacy of this shift from taxes on earning to taxes on spending. I find, after all the years which have passed since 1957, that this Finance Bill does absolutely nothing to advance the main industry of the country, agriculture.

I am sorry to disagree with Senator O'Brien on so many points but I must again disagree when he said the main cost in production was labour. I do not think so, as far as industry is concerned in this country; the main cost is the import of raw materials from abroad, so in fact it is not quite true to say that the main cost is labour. It is also, in my view, ultraconservative in 1961 — remember politics is the science not of what you want to do but of what you can get away with—to say that it is not permissible to raise wages to the level where they raise the price of the product or cause unemployment. Certainly if they cause unemployment, they have gone too far, but if a man, for the sake of common decency and family life, needs an increase, we are merely burying our heads in the sand if we do not give that increase, even if prices go up a little. That is an ultraconservative approach.

As to the period since 1957 and the posters saying "Wives, get your husbands back to work" and "Let's get cracking," the words of the Taoiseach can be thrown back in his face. The last Budget brought in in his term of office was described as a "sweet Fanny Adams" Budget. It put on nine million pounds a year by removing subsidies and this is a "sweet Fanny Adams" Budget.

The Minister, his Department and the Government in general deserve congratulations. There has been a very marked recovery in the past three years. I am not an economist, but it is very assuring to a layman like myself, if he talks to business people and others, to meet a note of confidence and optimism which was definitely missing three or four years ago. I am not taking any Party line in this at all. I am looking at it objectively. Certainly, that is my impression. It is a fine thing, too, that this afternoon when I was showing round some 25 students from overseas, I was able to assure them that at the moment the economy of the country seems reasonably healthy. If I had been taking them round three or four years ago, I do not think I could have said that.

I now propose to speak only on what might be considered, in the light of the whole economy of the country, two minor matters, but which are, in fact, fairly important and complex. I hope the Minister will give them his careful consideration.

The first is this. I greatly regret that there is no provision in the Finance Bill for a reduction in taxation on petrol. At the moment, car owners in the Republic have to pay a higher price than in Northern Ireland or in Great Britain. At the same time—and this adds to their dissatisfaction —the quality of the petrol in this country is such that the average-sized car runs two or three miles a gallon less than in Northern Ireland or in Great Britain. So I am assured by those who understand these things.

This is a thoroughly unsatisfactory state of affairs, both for car owners and for garage owners. The car owner pays more for inferior petrol. The garage owners tell me that they lose considerably in this way: if a car is going across the Border or going over to England, the driver takes the minimum petrol necessary for the journey because he knows that he can get better fuel at a cheaper price as soon as he crosses the Border or crosses the Irish Sea. The result is that garage owners, especially those near the Border are suffering on that account.

There are two factors involved here. Obviously, the first is the comparatively high taxation on petrol, and the second is the inferior quality. I should like to ask the Minister two questions on this. Will he consider making a reduction in the tax on petrol in the near future? It is not simply a matter for the car owner. It is a matter for industry and commerce in this country and it is also a matter for the tourist trade, for I hear complaints being made by visitors about the petrol, in regard to price and quality. I am not an expert on this matter, and I cannot be sure, but they also tell me that the effect of our Irish petrol is harmful to their engines. They get more of what is called "pinking" and more clogging of the engines with Irish petrol than they do with petrol which is refined outside the country. The Minister for Finance knows a great deal more about this than I do. But I should like to be assured by him that he is satisfied with the quality of the petrol and that he is satisfied with the price of the petrol. I am telling him what I know to be true, that many car owners and many people in business, and not merely in the garages, are disturbed by the present situation.

The second matter I wish to refer to is in relation to Part 4 of the Bill which refers to stamp duties. This matter was raised in the Dáil already, but that, I hope, does not mean the Minister has a closed mind on the topic. One of the main functions of this House is to enable Ministers and others to have second thoughts. If I had the time, I could quote European writers back to the time of Pindar who say that second thoughts are often best.

This is a matter which concerns the 25 per cent. stamp duty on the purchase of land by foreigners. As the Bill now stands, a foreigner who entered into a contract to purchase lands before 20th April, 1961, but who did not by that date get a conveyance of the land, becomes liable for the full 25 per cent. stamp duty, even though he is acquiring the lands through a pre-1947 company. This means genuine hardship in some cases.

Let me give one example. This man was a foreigner, an Englishman, who entered into a contract of sale on 11th June, 1960, for the purchase by a pre-1947 company of lands, the purchase money being approximately £8,000. The stamp duty on that amount at 3 per cent. is £240. My arithmetic sometimes is rather erratic, but I think I can stand over that figure. The owner of the pre-1947 company is an Englishman, and the vendor or seller—I rather mistrust a Latin word when we have a plain English word— was not in a position to close the deal before June, 1961, because clear possession could not be handed over. Proceedings had to be instituted in the courts to eject an occupier, and only last month could the conveyance be finally put through.

As this Bill stands, the purchaser becomes liable to pay 25 per cent. stamp duty, amounting to £2,000. That is £1,760 more than he bargained for when he entered into the contract in June, 1960. In fact, this particular person is rich enough to be able to pay that sum. I am not appealing on the ground of his poverty; I am appealing on the general principle. But you could have a case where a purchaser had little more than the purchase money, together with the stamp duty of £240, which he would allow for in entering into the contract. That man is bound to pay the extra duty, and he could be ruined. Hypothetically that is so and there may be such cases, though none has yet been brought to my attention.

It was suggested in the Dáil that an amendment might be made in the Bill to meet those circumstances—something to this effect—that in cases where to the satisfaction of the Revenue Commissioners, it can be shown that a contract had been bona fide entered into prior to 20th April, 1961, then the old rate of stamp duty should apply.

In other words, where it can be proved beyond the shadow of a doubt that everything, except the final step in the conveyance, had been put through, some exemption should be given: the Revenue Commissioners should be asked to allow genuine cases to go through at the old rate of duty and not to penalise such cases. We must keep in mind that one of these cases might mean bankruptcy for someone buying land, when a man is bound by contract and suddenly finds he has to pay nearly £2,000 more. Apart from the contract itself, the Revenue Commissioners could call for the correspondence and require statutory declarations to be made by the parties, the solicitors and the auctioneers as to the genuineness of the contract date. One could put an amendment into the Bill which would be foolproof. One could ensure that there would be no swindling on the basis of the amendment.

That is the position under the Bill as it now stands. I think some injustice, or at any rate, some hardship—I do not think I should go so far as to say "injustice"—is inherent in the present Section 29, and I hope that even at this late hour the Minister may see his way to amend it.

Tá an Bille Airgeadais ar cheann des na Billí gur féidir linn breith a thabhairt dá réir ar obair an Rialtais agus staid na tíre a mheas, féachaint an ag dul ar aghaidh nó ag dul siar atá cúrsaí. Is maith liom a rá gur ag dul chun cinn atáid agus nach miste don Rialtas a bheith mórálach as an ndul chun cinn sin.

Tá toradh agus teacht isteach ón dtalaimh agus ós na monarchana ag dul i méid, go mór mhór le cúpla bliain anuas, agus saol na ndaoine níos compordúla agus níos gile im thuairimse ná mar a bhí sé riamh agus is mór le rá é sin gan amhras. Ach ní hé mo thuairimse an ní ar ceart a bheith i dtaobh leis. Tá an fhianaise ann a thabharfaidh le fios d'aoinne conas mar atá gnó agus géilleagar na tíre. Tá an t-ioncam náisiúnta, ioncam na tíre, ag dul i méid ó bhliain go bliain anois. Tá na hearraí a easpórtáltar as an dtír seo go tíortha iasachta ag dul i méid agus níos mó airgid agus níos mó saibhris ag teacht chugainn isteach dá réir sin.

Tá na seirbhísí sóisialacha dulta i bhfeabhas agus na daoine gur cuireadh ar bun dóibh iad i bhfad níos fearr as. Seana-phinsinéirí, baintreacha agus leanaí go bhfuil liúntaisí le fáil acu agus daoine bochta atá ar ceal oibre, nó ná fuil ar a gcumas obair a dhéanamh, tá siad san go léir ar chuma níos fearr de bharr na mbreiseanna atá fachta acu agus bíodh gur breiseanna beaga iad ó bhliain go céile is mór is fiú iad nuair a cuirtear san áireamh le chéile iad ar feadh trí nó ceithre bliana anuas.

Tá ana-chabhair ag an Rialtas á thabhairt chó maith dos na feirmeóirí —cabhair airgid is uile, chun leasú talún, aol agus mar sin de a chur ar fáil dóibh níos saoire. Tá deontaisí maithe le fáil acu chun iothlann agus tithe muc agus cearc a thógaint agus deontaisí le fáil acu leis le haghaidh siltin, nó draenála. 'Na theannta san tá cómhairle le fáil acu anois le cabhair ón Rialtas agus é sin saor in aisce i dtreo is go mbeidh eolas acu ar conas a gcuid feirmeacha d'oibriú i gceart agus an toradh is fearr a bhaint as an dtalamh agus as an ithir.

D'réir mar a thuigim, tá an chabhair airgid atá curtha ar fáil le haghaidh talamhaíochta dulta i méid ó fiche milliún púnt go dtí fiche cúig milliún i rith an dá bhliain seo ghaibh tharainn. Is mór an méid é sin, ach ná beireadh aoinne leis gur ro-mhór é. Ní hea, go deimhin, mar is maith is eol dúinn gur ar an dtalamh is mó atá ár seasamh, thar aon ní eile. Mar adúrt, i dteannta an mhéid airgid atá le fáil ag na feirmeoirí anois, tá teagasc teicniúil le fáil acu saor in aisce agus is maith an bhail ar na feirmeoirí go bhfuilid ag glacadh leis an dteagasc sin go fonnmhar agus ag glacadh leis níos fearr ó bhliain go céile. Cuireann siad suim mhór ins an dteagasc san agus is fearr ná mórán airgid é sin. Dá mbeadh deontaisí thar cuimse le fáil acu ón Rialtas, ba bheag an mhaitheas é muna mbeadh fhios acu conus an tairgead a chur ag obair sa tslí ba thairbhí don dtalamh, muna mbeadh fhios acu conus an toradh ab fhearr a bhaint as an airgead a gheobhaidis. Beidh na feirmeóirí níos oilte ar a gcéird agus ar a ngairm feasta de bharr na cómhairle teicniúla atá le fáil acu anois.

Bítear ag gearán i dtaobh chó trom is atá an córas cánach sa tír seo ach uaireannta 'siad na daoine is mó gearán ina thaobh san is mó éileamh ar sheirbhísí sóisialacha agus seirbhísí eile Stáit. Is fíor go bhfuil na cánacha trom go leor, ach nílid chó trom le cánacha a lán tíortha eile san Eoraip. Ní hionann san is a rá nach ceart don Aire agus don Rialtas tréan-iarracht a dhéanamh ar na cánacha do laghdú. Is dóigh liom go dtuigeann an tAire Airgeadais é sin go maith agus is dóigh liom, leis, go bhfuil sé ar an mbóthar ceart nuair atá an cháin ioncaim á laghdú aige don tarna huair taobh istigh de dhá bhliain. Is ionmholta an rud é sin agus mar gheall ar sin agus roinnt rudaí eile atá beartaithe aige sa Bhille Airgeadais seo ní bheinn ach ag insint na fírinne nuair a déarfainn go bhfuil an tAire seo ag cur de go maith mar Aire Airgeadais agus go dtuigeann sé cúrsaí na tíre agus riachtanaisí na tíre go cruinn beacht.

Fé mar adúrt i dtosach tá staid eacnamaíochta na tíre ag dul i bhfeabhas agus tá dea-thoradh le feiscint agus le braithistint ar chuspóir an Rialtais. Má leantar den chuspóir sin beidh muintir na tíre buíoch díobh agus tá cuid mhór den buíochas san ag dul don Aire Airgeadais.

I do not propose to make a long speech on this Finance Bill, but, at the same time, I should like to refer to a few observations that have been made by a few speakers across the way, especially Senator Donegan. From what I could gather from his remarks, he tried to convey to us that agriculture has been relegated to the background by the Government——

Unfortunately so.

I want to point out to Senator Donegan and other Senators over there that that is far from being the case. I should like to quote these figures for them in substantiation of this point of view that I hold. In 1956-57—remember that that was the last year of the Coalition Government—the amount spent on agriculture was £7,996,000, something less than £8 million, whereas in this year, 1961-62, the Estimate for Agriculture is £16,145,000, a little more than double what was spent on agriculture in the last year of the Coalition Government. Can that be interpreted as a relegation of agriculture to the background, as the Senator tried to persuade us?

Take out £7 million for the eradication of bovine tuberculosis, for a start. The farmers do not get one shilling out of it.

They are worse off.

The farmers know exactly where they were with the Coalition Governments who came in here. They knew exactly what price they would get for their produce during the years of the two Coalition régimes. They received 1/- a gallon for milk delivered at the creameries. What are they getting now?

With the levy taken off.

They are now getting 1/7d. and 1/8d. a gallon for milk delivered at the creameries. I think the Senator had what I would call a very hard neck to stand up here and tell us that the Government are not doing enough for the farmers and for agriculture. I have quoted the figures and they are there for the Senator if he wants to get them, but I am afraid that some politicians are so prejudiced by their political affiliations that they do not even want to see these figures.

I will deal with them on the Appropriation Bill.

All right; there is nothing——

An Leas-Chathaoirleach

It would be more appropriate on the Appropriation Bill.

That is one point—the amount that is being done for the farmers. I am not saying that too much is being done for the farmers. The more done for the agricultural industry, the better for the people as a whole because we all realise it is the basic industry here and that the economy depends more on the prosperity of the agricultural community than on any other section of the people. Of course, there must always be a limit to what can be given to any section of the community but let no one get away with the idea that the farmers are being neglected by the Government——

They are.

——as these people over there are trying to convey.

Taxation was also referred to, which of course is very appropriate on this Bill. I was surprised to hear Senator O'Donovan making little of the reductions that have been granted in taxation and seeking to convey that there was really no reduction. That is very far from the reality of the case. Within the past two years, there have been two reductions in income tax. In 1959 the rate of income tax was reduced from 7/6 to 7/-, and this year there is a further reduction of 8d. in the rate, two quite substantial reductions in two years. If the Government and the Minister for Finance continue in that direction, we will have cause to commend them further. They can be proud of their achievement.

There have also been reductions in other branches of taxation. The Minister mentioned today—I shall not go into detail on all these matters— that children's allowances have been raised from £60 to £80 which of course is a reduction in taxation in itself, that is, that a child can now have as much as £80 without the allowance to which the parents are entitled being interfered with.

That is right.

That again is a second relief in that case. If I remember rightly, two years ago, there was a relief given. The amount then was as low as £40 or £45—I have not got the figure with me—but I know it was lower than £60 a couple of years ago. There was relief given then in the case of children's allowances vis-à-vis income tax and today the amount in this Finance Bill is being raised to £80. That is a concession, and as I said, it is equivalent to a reduction in taxation.

I was very interested to hear the views of Senator O'Brien and his approach to this matter of finance. His contribution on the Finance Bill was a very constructive one, although I know very well that some of his views would not be accepted by some people over there, for obvious reasons. He made a special reference to the balance of payments. I intended to refer to that myself because it is very important that the position of our external trade should be kept in order from one year to another. Senator O'Brien suggested that stability was, in effect, the preservation of our balance of trade. To a great extent that is true, but not entirely, because there must also be domestic stability and without settled conditions at home, stable Government, it will be very difficult for any country to progress. Therefore, I would differ slightly from Senator O'Brien in relation to the question of stability. In my opinion, stability at home is a prerequisite for advancement in every direction, economically, socially and every other way.

We are glad to be able to say that today we have stable conditions in the country and the people are very well aware of that. It is because of those stable conditions, in my opinion, that the industrial position is improving from day to day and that so many foreigners are willing to come in and invest their money in starting new industries. Certain politicians, of course, may not attach too much importance to that effort. They may go as far as to make little of it but I think it is a very good thing that we have these foreigners, industrialists of long standing, coming in here with capital and not alone putting money into the industrialisation of the country but also bringing technical knowledge with them which in itself is very important.

Anyhow, the main thing is that the economic position of the country is in a very healthy condition. As is stated in the Report of the Central Bank, there was an expansion of activity in all sectors of the economy during the past year. In other words, Government policy, as outlined in the Programme for Economic Expansion is bearing fruit, and even a greater amount of fruit than many people expected when this programme was first put before us. The Report of the Central Bank shows that gross national production increased by 4 per cent. in comparison with the previous year, and for the second year in succession, the rate of economic growth was considerably greater than was estimated in the Programme for Economic Expansion. In other words, the rate of progress here today is greater than the rate envisaged in the Programme for Economic Expansion.

Those are not my own words. They are to be found in the report of the Central Bank. I must say that report is very satisfactory indeed. The most satisfactory feature of the economic position here is that it is steadily and continuously advancing. It is not what one might call a flash in the pan. This economic expansion is going ahead steadily now and I am sure that, with the passage of the next few years, it will be seen to expand still more.

I do not want to go into the report of the Central Bank in detail. I just refer to it to show that the state of the country's economy today is very healthy.

Reference has been made to the growth in industrial output. That, too, has been very satisfactory. There has been an increase of something like seven per cent. in our industrial output and it is a continuing increase. I am sure that the policy adopted by the Government will mean a further advance over the next few years.

I should like to congratulate the Minister on the good job he is doing in his Department. As I have said, he has brought about reductions in taxation and especially in income tax. I hope and trust that in the years to come, he will be able to grant further concessions in that direction.

I should like to make my remarks on the Finance Bill in the context of the White Paper issued at the time the Budget was introduced in Dáil Éireann, that is, the White Paper on direct taxation which deals with the Second, Third and Fourth Reports of the Commission on Income Tax, summarises the reports and sets out the Government's attitude on the recommendations.

The Third Report of the Commission dealt with the rather vexed question of the introduction of a sales tax and by the narrowest majority of six to five, the Commission favoured a substantial switch from income tax to sales tax. I feel, and the Party for whom I speak and the trade union movement feel, that a shift of the weight of taxation from direct to indirect taxation would be unwelcome, that it would be socially unjust and that indeed at the moment too much weight is put on indirect taxation in raising revenue for central Government services.

We are all opposed to taxation, be it direct, indirect or any taxation. Naturally, we are all opposed to paying anything for anything to anyone and, I suppose, especially to the Government, but, having realised that we are obliged to pay for the government of the country, the services and other reliefs and assistance to those in need, every argument is in favour of as much taxation as possible being paid by way of income tax, which is progressive, rather than indirect taxation, which is largely regressive.

I am glad that in this White Paper the Government announced that they were not going to act on the recommendation of the majority of the Commission, but I feel, from reading what is said there, that their rejection is not unqualified. I have a suspicion that they are leaving a way open for future years. They say that many things decided them not to accept the recommendation of the six as against the five, but I think the concluding sentence should be noticed. At page 15, it is stated:

A sales tax as such would not be inappropriate to the circumstances of this country and if the necessity were to arise for a major increase in taxation it might become unavoidable. Fortunately, however, that necessity has not so far arisen.

There are a lot of question marks there. They have certainly left the door open at a later date to accept, partly or wholly, the recommendations of the six that the burden of direct taxation should be further eased by a switch to indirect taxation by way of a sales tax.

I should like to ask in view of the wording of the concluding sentence of that paragraph if we are to take it that if this Government are returned to power after the general election, very soon afterwards we may expect a sales tax? The Government have made it clear again and again and in this White Paper as well—they are quite honest about it—that they favour a switch from direct to indirect taxation. In the past few years, they have been doing it in other Budgets and again in the current Budget they are increasing the weight of indirect taxation and easing the weight of direct taxation.

It is felt, and, I think, rightly, that a smaller percentage of Government revenue in the Republic is secured by way of direct taxation than is generally the position in Western European countries and in Britain. A White Paper has now been issued by the Government with regard to O.E.C.D. We have some information in the last page of Appendix 5 about the proportions of revenue of member states of O.E.E.C., including Ireland, raised by direct and indirect taxation. That shows that, after the Federal German Republic, Ireland has the lowest percentage of revenue collected by way of direct taxation. The figures here may be correct in so far as they plot the percentages, but they do not, I feel, give us a complete picture and maybe the Minister in his reply could help us. I do not think, for example, that the receipts from payment on social security is included in the revenue. In France, for example, I think that family allowances which are pretty hefty, are paid by the firm as such, not by the State. They are a tax on the firm not collected into the revenue of the State and paid out by the State. Here the position is different and if those extra budgetary charges were counted in, the picture would be more in favour of my contention, namely, that a smaller proportion is collected here by way of direct tax than in other countries. If even those figures are a complete picture, they deal with the 1959 situation. In 1959, the Republic was second from the bottom in the table of percentages collected by way of direct taxation. Since then, in two budgets, the weight has shifted to a greater proportion collected by indirect tax.

It should not be supposed that I am advocating an increase in the rate of income tax but I am disturbed by the increasing tendency to make the ordinary person, irrespective of whether he is rich or poor, pay for the relief of the rich. The people with high incomes are the people who are getting progressive reliefs in the various Budgets. I am rather tired, and I am sure other Senators must be, too, of the plea by business people that they will not exert themselves if a portion of their profits is taken for the maintenance of State services. In effect, that is what it boils down to: "If you take some of our profits in income tax, surtax or corporation tax, we will be less inclined to exert ourselves and make a success of our business."

Personally, I greatly admire the people of real enterprise who are prepared to take risks, exert themselves to advance their legitimate ambitions, make progress in life and in so doing provide good employment for their fellow citizens. I greatly admire such people, but we might find to an increasing extent in the years to come that the pampered and protected little capitalists we are rearing here will be more a liability to us than any assistance. I hope that in the result they will be found to be a very small minority but I do think the Government and many other people are too much inclined to give weight to the pleas of the people who say they are being taxed too heavily and if taxes were eased for them, they could do more, provide more employment and advance the economy of the country.

It is true that the majority of those who favoured the introduction of a sales tax made the point that the present tax base in this country is precariously narrow and that a wider base would be desirable. In this context, let us remember that P.A.Y.E. has been very successful, successful to the extent that all wage and salary earners now pay in full their share of income tax as laid down by law. But these people—I do not think they really complain—who have to pay their share in full are always left with the suspicion that other groups in the community are not in fact paying their share, that there are too many dodgers, too many groups getting away by various devices from paying their share.

I want now to come to the second part of this White Paper on direct taxation dealing with the Fourth Report of the Commission on Income Tax, that is, on the vexed question of taxation of farmers. I have not had the opportunity—I was taken by surprise just now—of confirming this but I have a very shrewd suspicion that the Government announced their decision on that recommendation of the White Paper the day after the recommendation was published. One of the functions of a commission is to inquire into the matter referred to them, get out the details and make a recommendation. After that, the recommendation is generally allowed to be considered by the public to see how it affects public opinion, but in this case the Government were very quick off the mark.

Almost immediately after the report was published, the Government announced their decision: they would not have any income tax on farmers. I think that was largely a political decision and I am sure that the farmers generally and the people representing the farmers heaved a sigh of relief. I do not know very much about farming and may I, with the greatest humility, suggest that the people representing farmers should not have heaved any such sigh? I feel that the small farmers are, in fact, over-taxed, not by way of income tax but by way of the tax they have to meet in rates on their land and property. I think that a much better way of dealing with farmers and of getting them to pay their due and just share is not by this rating system but rather on the profits made out of the business in which they are engaged.

I think it would be found that the majority of farmers would not, in fact, have to pay any income tax because the majority of farmers are comparatively poor. Whether you say they are better off now than they were before is beside the point. The majority of farmers have a comparatively low standard of living. Generally, the people on the small farms ekeing out an existence have in most cases families and fairly large families. If they were taxed on the same basis as an ordinary wage earner with his family responsibilities, they would not be paying any at all.

Instead, they are obliged to pay tax in another way through rates on their lands, without any regard for family responsibilities and without any regard for their ability to make any profit at all out of their year's work. That seems to me like taxing a tradesman for his tools before he comes to use them at all or make any living out of them. That is the effect of what is happening. I am rather innocent in all this. I know there is some relief but not complete relief in respect of rates on agricultural lands.

Three-fifths on agricultural land under £20 poor law valuation.

That means that he still has to pay two-fifths, whether or not he makes a profit out of the land, whether or not he has a large family and whether or not he can afford to pay anything out of the pursuit of his trade in life, namely, farming. The help I am getting is probably confusing me.

I am not trying to confuse the Senator.

It is like taxing a tradesman for his tools before he comes to use them at all and before he makes any profit out of his work. It can be said that the wage earner and the salary earner also pay rates as well as paying income tax if their incomes come within the taxable limit. You will find that to a great extent the urban ratepayer is paying for services he gets. In many cases, the farmer, as such, is paying a tax rather than paying for services. He has no water or sewerage available: he probably has no good roads or footpaths outside his house. It is rather a taxation system than payment for local services.

I am glad, therefore, that the Government have indicated that they propose to ask this new body to be set up to consider the problem of taxation of farmers in the form of rates on agricultural land because I think we should more and more develop towards a system of taxation of farmers who can afford to pay taxation rather than taxation on farmers simply because they own land. We should tax the people who can afford it. What was proposed here was taxation of the very large farmers and they had the escape of showing that they have not, in fact, made a profit. That was rejected.

I hope that in this case the tendency and approach to the problem may be changed in the years to come. I do not think—and I am saying this without any criticism— that the present system is really to the benefit of the Irish farmer.

Business suspended at 6 p.m. and resumed at 7.15 p.m.

The Finance Bill gives us an annual opportunity to review the state of the national finances and the measures which are being taken to improve the financial situation of the country. In particular, this Finance Bill, 1961, represents the culmination of a very good four years' work well done by the Minister for Finance.

In this Bill, we have a situation where there are no increases worth talking about in taxation. In fact, due to the buoyancy of the revenue over the previous 12 months—and buoyancy of revenue always reflects internal prosperity—we have had some very substantial reliefs, the most welcome of which is the reduction in the standard rate of income tax. That relief is one which will be felt by many sectors of the community. It is, I think, a welcome one and one which has already been well taken in the country. Furthermore, it is welcome from the point of view of the national finances generally in that any easement of the direct tax burden is good, as Senator O'Brien said. It is good from the point of view of stimulating saving, enterprise and investment.

This measure we are now discussing represents the culmination of the progressive improvement in the national economy over the past four years. In 1957, we took over what might be called a run-down engine. We have since put in a new engine, with good oil and good petrol working it, and the motor is going well. The situation that obtained in March, 1957, is one of which nobody in the country wants a recurrence, especially in view of the serious problems in connection with the Common Market negotiations——

The Senator did not take the sludge out of the engine at all?

There was no sludge in it.

——which will have to be faced by the present administration. I am merely expressing the view of the rank and file of the people in the country today when I say that if they felt there was a reasonable alternative to the present administration to take part in these difficult negotiations in connection with the EEC, there might be a possibility of their voting for that alternative, if it were a desirable one.

What about Sligo-Leitrim?

Things are moving so fast that I think Senator L'Estrange does not half appreciate them. He is talking in terms of Sligo-Leitrim, and in terms of his restricted imagination, and the Government are moving forward to a new and better deal, both for Irish farming and for industry within the framework of a broad European market. The Government have taken the initiative in that respect by embarking on the suggested talks with the British Government and by stating positively that they are going into the Common Market when Britain has made her decision to go in as well. That is a clear-cut decision. There is no prevarication and no equivocation, about it. Any suggestion that we could do otherwise is completely without foundation, having regard to our commitments and our ties in respect of our markets in Britain.

"The British Market is gone and gone for ever, thanks be to God."

I shall return to the situation as I see it at present. It is a situation in which this financial measure before us must be set in the broader context of where our national economy is going. It is for that reason that I bring in this question of the impending negotiations with the European Economic Community. I should like to reiterate that if there is one administration, one type of Government which the people do not want to engage in these very difficult and detailed negotiations, it is the type of Government which foundered in March 1957.

Up the Republic! Wrap the green flag round me!

There is nothing demeaning about the green flag or the Republic. What I am talking about is a matter of cold factual reasoning and the people of Ireland to-day are people who will listen to cold factual reasoning. The mood of the people to-day is quite clear. They are not going to trust the sort of Government we had in March, 1957, with any negotiations, not to mention the difficult, detailed negotiations involved in working out a good deal for our Irish farmers in relation to the market of £170,000,000 which is opening up for them on the Continent of Europe, as well as working out the tricky negotiations with regard to seeking a reasonable breathing space for industrialists in the matter of the gradual dismantling of tariffs that will have to take place. A very difficult job will have to be undertaken with regard to the rationalisation of Irish industry and a detailed examination made of each trade and industry with a view to suggesting what amalgamations or mergers can best be undertaken so that production can be rationalised and common market arrangements reached between the the farmers and——

How did it become irrational?

I do not intend to go into that question because, in the first instance, we undertook the development of Irish industry when Fianna Fáil came into office in 1932. We are now going to finish the job and do it well. It has been done very well and it is going nicely and it can be completed by developing a national structure——

Did it not start rationally?

The point is that it was only in the past two years that this question of the Common Market arose and we are taking a positive stand in regard to it. I want to reiterate one positive statement again. If the people of Ireland want people to represent them who can negotiate on their behalf, they will see quite clearly—and the man in the street is seeing it quite clearly; he is not going to rock the boat—they will not have a Government divided within themselves and who cannot bargain with the leaders of Europe in the coming months.

This Bill represents the fact that in July, 1961, we have an economy that can meet the challenge of the Common Market. We have an economy now that is in every respect strong, stable and well ordered, so that we need not fear the sort of competition which will emerge in the near future. Over the past four years, there has been a progressive improvement, allied to a growing confidence on the part of the ordinary people that "we can do it", in contra-distinction to the position four years ago in which there was a mood of malaise, that “we could not do it”, that there was no future for the country, that we were going down and that we were finished. That was the prevailing mood in Ireland four years ago.

Created by statements made by the Senator's Party.

The Senator admits it, then?

I have figures which I shall quote.

There was a prevailing mood of pessimism that the country was finished and that there was no future for it. That mood was generated not by negative but by positive bad policies on the part of an incompetent administration——

"Wives, put your husbands back to work!"

——which suffered on and staggered on for three and a half years until it collapsed in March, 1957. That situation has now changed completely. We now have a Finance Bill incorporating reliefs in regard to taxation, and a Bill set in the context of a Government who are facing up to the challenge of the Common Market, and going ahead with a well-disciplined team to start negotiations for the future. That is the change in the situation now compared with the situation which obtained in the last months of the previous adminstration.

I am not talking only about vague things like moods of pessimism. There are positive things also. There is the positive statistical information which proves the incompetence of the previous adminstration. I need mention only a few. Over the past four years, we have had a Minister for Finance who, for the first time in the history of the State, has balanced his external accounts year in and year out. The situation now is that for the past four years our external accounts have balanced practically exactly. That is a completely revolutionary turn in our public finances. Since 1922, we have had the unfortunate pattern of balance of payments crises recurring every few years, followed by deflationary measures to cure them, and then after staggering out of deflation and unemployment——

Be careful.

Fianna Fáil were 20 years in office.

In 1955, they had reached extraordinary proportions under an incompetent administration.

During the Korean crisis.

The deficit in our external accounts was £35.5 million.

What was it in 1947?

In 1955, that balance of payments crisis stampeded a panicky Government into restrictive action which caused mounting unemployment during 1956.

What happened since 1954?

It caused mounting unemployment in 1956 and at that time the people had lost confidence in the Administration The situation was bad enough with the balance of payments crisis. In 1955, the deficit in our external accounts was £35.5 million and that situation was considerably aggravated and worsened. Two national loans were floated in 1956 and both failed disastrously.

And, in 1958, the same thing happened.

Every national loan floated by this Government was fully subscribed.

Yes, from the Exchequer.

I defy contradiction of that. Every national loan raised by the Minister for Finance has been fully subscribed.

Out of Exchequer funds.

Where did the Senator get that information?

At banana republic rate of interest.

I have to repeat an elementary fact. Every national loan floated by this Government was fully subscribed, and utilised for the purpose of national development.

By the public?

In 1956, the situation was that a balance of payments crisis had been left to us by an incompetent Administration. There was a deficit of £35.5 million and the panicky Government went to the banking circles and the finance circles and panicked the people who would subscribe money in ordinary circumstances, if there were a reasonable Administration in which they could have confidence.

Two national loans were floated in 1956 and in both cases there was under 50 per cent. subscription. One national loan by which the Minister sought to raise £20 million raised only £8¾ million. There was nothing as disastrous in the way of a loan flotation since the foundation of the State.

Give the reason. Britain changed the bank rate.

A sum of £20 million was sought and £8¾ million was subscribed. All that caused mounting unemployment and mounting pessimism, and the Government were very glad to escape their responsibilities in February of 1957, although they had been in office for not quite three years. It is quite obvious that the previous Government were delighted to evade their responsibilities and give over the problems to us for which they have since been castigating us.

One of the major problems about which I should like to speak is the terrible unemployment problem which was a reflection of the policies of January, 1957. Early in January, 1957, over 90,000 people were unemployed in this country. The situation now is—and this is a net figure which cannot be denied, although Senator O'Donovan would deny figures, I am sure, if he could——

He would not deny the emigration figures. It was your Minister did that when I quoted them last year.

Senators are very annoyed with this man's speech.

On page 15 of Economic Statistics compiled by the Statistics Office, we find that there are now 32,500 more people in employment than there were in 1957. During the past four years, the Fianna Fáil Government improved the situation to the extent that there are 32,500 fewer unemployed. We hope we will never again reach the catastrophic level of unemployment which existed in January, 1957.

Export them all.

That was an immediate reflection of the failure of national loan flotations, balance of payments crises being allowed to develop out of all proportion and plain incompetent administration. That unfortunate situation of mounting unemployment continued until August, 1957. We came in in March but we could not turn on a tap immediately. That did not happen. The mounting unemployment continued until August, 1957. Since September of that year, the unemployment figures have been consistently down in every month in every year. Compared with the corresponding months of the year before, There has been a reduction in unemployment of from 7,000 to 10,000.

The point is made by Fine Gael speakers that we have reduced the unemployment figures by increasing emigration. That is not the position. The figures do not bear that out. Any person arguing with me in any debate on this matter will have to agree that if unemployment figures go down and employment figures go up, then emigration must be going down. That is like quod erat demonstrandum.

Táimid leat.

Whereas the lack of confidence and pessimism produced by the situation of 1956-57 caused very heavy emigration in 1957 which continued to 1958 before being remedied, the position now is that with mounting employment and a reduction in unemployment, the emigration curve is going down.

Figures please.

I am going to produce them.

Eighty thousand people this year got work permits in England.

On page 13 of Economic Statistics, under the heading “Employment and Unemployment”— I will give the corresponding page in the Central Bank Report as well, page 33—

the total number of persons at work in non-agricultural economic activity rose by 7,000 between April, 1959 and April, 1960 due mainly to increased employment in manufacturing industry and construction.

And on page 14, it says:

the average number in insurable employment computed from stamps sold in the calendar year 1960 was 8,000 more than in 1959 which itself was 11,000 higher than in 1958.

What about the thousands who went out of agriculture.

The Senator is giving figures for economic employment.

The figures are still not available for the year ended 31st March last but judging by both the Central Bank Report and the Economic Statistics, there was a 7,000 increase in industrial employment last year and when figures up to 31st March this year are available, that trend will be shown to have increased and the figure will be 9,000 more than the corresponding figure of last year.

This pattern is one which has become evident only in the past two years. It took the Government two years to rehabilitate the national finances. The policies they initiated are beginning to show positive effect only in the past two years. The result is that unemployment is going down and employment going up. We are told that there is a flight from the land. Certainly there is a decrease in employment in the agricultural sector, but that is a decrease which has taken place in every country in the world today where statistics are available. The decrease is evident to a greater degree in France, Germany, Italy or Britain than among ourselves. With increasing mechanisation, the increasing and rightful demand by farmers for a higher standard of living, there will almost inevitably be a move from the rural area. Nobody wants a farmer who has two sons to divide his place between them. He can give the place only to one of them and that is putting it in human terms. Nobody in rural Ireland is going to accept a subsistence life, a life far worse than his friend in the town or his cousin in industry. So long as the people of rural Ireland have that up-to-date, modern, progressive idea which their counterparts in Europe and Britain have, then people will leave the land to seek urban employment. I do not see anything wrong with that, provided we keep up the total overall production from the land as we are doing.


State aid to agriculture is £16 million-odd in the current Budget compared with £8 million in the last Budget of the Government in 1956. As long as there is progress in the capital invested in agriculture and progress in agricultural production, I do not see anything wrong with the farmer's second son leaving the land to seek urban employment. It is an inevitable trend the world over. Our difficulty in the past has been that the second son has not been able to find urban employment in Ireland but has had to seek it elsewhere, in Britain, America or Australia. We have now arrested that trend in positive fashion. Industrial employment is climbing at the rate of 7,000 a year. It rose by 7,000 in the year ending 31st March, 1960. It rose another 7,000 in the past year and will rise by 9,000 in the present year. The industrial employment graph is showing an upward curve. That means that we will absorb the inevitable surplus labour from the rural areas.

That is in direct contrast with the slump conditions, the depression economics, we had in 1956 where we had unemployment and emigration going up and employment going down. That situation no longer obtains and the Minister for Finance and the Government must take a large share of the credit for that. The practical way, of course, in which that was done and the way in which we will have to face the problem of the Common Market as well is by having a competitive economy where we can produce for export and sell competitively abroad. That is the answer.

Perhaps the figures for the black year 1956 regarding exports are pertinent. In 1955 under the Coalition Government total exports were roughly £110 million. In 1956, far from the trend going up, total exports were £108 million. In other words, there was a sliding trend.

What about 1957?

Keep going.

In 1960——

What about 1957?

——total exports were £152 million.

In 1947, when you had been 16 years in office, the figure was £36 million.

We now have a jump in exports. Looking at the returns for every country in Europe—which I happen to have done—we have a higher percentage increase. No other country had a percentage increase of 50 in total exports as we had between 1956 and 1960 when the figure rose from £108 million to £152 million. That is why we have no balance of payments crisis to-day, why we have mounting industrial employment.

You realise now the value of the British market.

There is confidence in the future, confidence in our ability to face the difficulties raised by the Common Market. Our ability to compete with anybody in the world is proved to the extent of an improvement of 50 per cent. in exports and the industrial revival which was sneered and laughed at during the thirties is coming into its own now. I know agricultural exports are included but the real proof is that the major percentage increase comes from industry.

That is not true.

What about our Act to encourage exports. The Finance Act, giving freedom from income tax on profits from exports? You enlarged on it in 1956 and 1959.

I thought Senator Lenihan's Party were not responsible for 1947.

In the situation obtaining here in 1956, you could offer all the incentives in the world, you could offer free cash to manufacturers to come in here and nobody in the world would come near us. We would not be touched by any sane investor or anybody who had a penny to invest in anything.

St. Patrick's Copper Mines were established at that time.

In the situation which obtained in 1956, you would not get a single investor to invest in this country. That situation has largely changed. We now have financial institutions which will back enterprises, big and small.

They back the Germans with our money.

Our financial institutions can now see a situation where they can invest their money in the country. They can advance money to the farmers, the small business people and the bigger enterprises and they are doing so. Nobody can tell me that that is not an improvement on 1956. The situation has largely improved because we are now exporting more and a balance of payments crisis has been avoided, despite an increase in imports. Over the past 12 months, imports increased by £3.8 million. There is an increase in imports and exports resulting in economic activity at a higher and more progressive level each year and that progressive increase in economic activity means more employment at home.

That is the situation as the country is contemplating entry into the Common Market. We could not have contemplated that in 1956. We could not have contemplated entering the Common Market with mounting unemployment and in a situation where no financial institution in the country would lend money to anyone. We now have a situation, thanks to the remedying of our finances, in which we can contemplate entering the Common Market and going further ahead to make the necessary negotiations and take the necessary steps for entering the Common Market, provided our neighbour does so.

In view of the tremendous improvment that has taken place, much more than was anticipated, the time is probably ripe for some revision of the Programme for Economic Expansion. Originally, that programme set the target of an increase of two per cent. per year in the national income or the gross national product. The improvement was largely in excess of that originally anticipated over the past two years. Last year, the improvement was in the nature of three per cent. This past year it was four per cent., so that over the past two years there has been an improvement in the national income or gross national product of seven per cent. That is practically double the anticipated improvement set out in the Programme for Economic Expansion. I feel that, in view of that improvement, we might adjust that programme, set higher targets and try to achieve the object of doubling our national income in a shorter period than 35 years as was originally envisaged. We can revise the programme, bring it up to date and set targets which can be achieved, targets which were attained and which we proved we can attain. That should be largely the job of the Central Economic Planning Committee under the Department of Finance.

That group has already done very good work. In addition to dealing with the problem of rationalisation, they should also tackle the problem of revising the Programme for Economic Expansion in order to bring about a more dramatic programme and set targets which we can attain. The necessary prerequisite to any economic expansion or for the setting down of plans for the economic rationalisation of our industry is a Government who can stay there and tackle the job—a Government who will, by reason of their parliamentary support and discipline, be in a position to engage in fruitful negotiations in the economic sphere on behalf of the Irish people.

Having listened to the optimism of Senator Lenihan and having visualised the rosy picture painted by him, I am afraid he will come sadly down to earth, because when the returns of the recent census are available, it will be found that our population has dropped in five years by 100,000. Let us put that in its proper perspective. A drop of 100,000 in the population here is equivalent to a drop in the population of two million in England or six million in the United States of America. We know what prosperity these countries would claim if a five-year census revealed that situation. I am not saying that the Opposition Parties have advanced a programme that offers any greater hope of success than the one we have.

Let us face facts and realities. The true barometer of our position is our population. Alone in the civilised world we stand with a declining population, as the populations of England and all the other countries in western Europe soars. Let us be realistic also in speaking in relation to the attacks coming from one side of the House and the other that a change of Government would accomplish this or that. One would think that with a change of Government, one would have a complete change of advisers as is the case in the United States; a new team coming in to take the field; whereas the team which we must rely upon for our forward development is the Civil Service itself and those brilliant men who man it. Their advice was available to a previous Government just as it is available to the present Government. Senator Lenihan should read up something about the Suez crisis and about what happened in 1956.

Let us come down to earth and appreciate our performance of the past in its proper perspective. Last year, we had a very satisfactory increase in national income of 4.2 per cent. We had an increase of 6½ per cent., which is very satisfactory, in industrial production, but these were below the average attained by Western Europe in the same period. The net average in Western Europe was 6½ per cent. and we have just barely attained that average figure.

We have all read a copy of Italy Speaks which we received. Last year, Italian industry expanded at the unprecedented rate of 13 per cent. and the national income went up by eight per cent. so that if we have a wonderful Government, the Italians have a doubly wonderful Government.

Let us give credit where credit is due and try to deal with what is here a very difficult situation. Senator O'Brien pointed out this afternoon the open nature of our economy and how it reflects every ripple on the international economic stream. Let us realise our difficulties and face the fact that until we can show a rising population, we cannot claim that we have turned that mythical corner.

Coming to this Budget, I want to begin by congratulating the Government very sincerely on the things they did not do. First of all, they were very wise in not adopting the recommendation of the Investments Committee about a purchase tax. A purchase tax here would hit those who are purchasing most; in other words, those who are endeavouring to set up most and not those who are already established. That was a very wise decision. I hope it is a decision that will hold for a long time. The second decision is that the Government again refused the majority advice of the Investments Committee in respect of taxation of land.

Taxation proposals, as enshrined in that document, would have shown just another means of raising taxation. I am all against any increased taxation on agriculture. The farmers' burdens are more than severe enough already especially the burden imposed by the increase in local taxation. Rates went up by another £750,000 last year, and so on. In the present situation where we contemplate entering the European Economic Community, and so forth, I believe a complete reappraisal is called for in the matter of land taxation, a reappraisal that will reach out to local taxation and that will rationalise that situation.

At the moment, the agricultural community pay something like £8 million in rates a year and Irish industries pay £1½ million: it may be £2½ million. Anyway, the ratio is four or five to one. A reappraisal is called for, a reappraisal that will see in a rationalisation of taxation of land a means of encouraging good production and good practices in agriculture, so making Irish farming more competitive and more efficient in moving into the difficult days ahead. That calls for the use of taxation mainly as a means of raising efficiency. Consequently, it is a type of taxation that has to be based on notional figures rather than on any certified returns for the year because notional figures mean so much per acre. They mean that the good farmer is making more, is getting on, and so on, than he would under an accounts system whereas the bad farmer is being penalised, and rightly so.

A notional system can be justified in national policy because it is quite akin to the present position that relieves industrialists engaged in export of income tax for a number of years. After all, the highly efficient farmer who is producing more than the average is really in the export business just as surely as the industrialist who sets up a factory designed solely for export. Consequently, we can justify any reliefs of taxation he gets as being merely incentives to increased exports.

A reduction in income tax is given in the Budget. I doubt if it was a wise way to give this relief. I think it would have been far better had this relief been given by increasing the various allowances, family, wife and child allowances, and so on. That would have the advantage of holding the scales more evenly between the married wage-earner and the unmarried man. As well as that, it would probably succeed in relieving some of the lower salaried workers from income tax completely. However, we must be thankful for the relief, which has come, in any case, and, as pointed out by Senator O'Brien, any relief of direct taxation is to be encouraged when it can be used as a means of encouraging investment as saving and production in the country.

We find that the balance of payments is about to raise its head again and that things are not quite so happy as Senator Lenihan suggests. After four years of relative balance, we may have a deficit of from £5 to £10 million. That is all to the good. Any analysis of previous figures, and so on, can lead only to the conclusion that we have not had sufficient investment for expansion in our past years. We were relying to a great extent on vacant factory space or we were bulging the existing factories. The volume of investment was not, I believe, sufficient to maintain our recent rate of six per cent. increase in industrial production.

I would say that the volume of buildings and of new equipment, and so on, over the past two years was far nearer to the three per cent. than the six per cent. rate. As we aim for the six per cent. rate, as we must, an unbalance is bound to arise in our balance of payments and we must face this as something that we can tolerate as long as it achieves the objective of maintaining at least the six per cent. rate in industry.

If we look at the Table in the Central Bank Report, Table 18, page 41, we see how our gross fixed investment compares with that of other countries. Again, we see clearly there the same picture of under-investment. Last year, the fixed investment rose by 6.7 per cent.; in Austria by 8.5 per cent.; in Finland by 10 per cent.; in France by 6 per cent.; in Western Germany by 11 per cent.; in Italy by 18 per cent.; in the Netherlands by 14 per cent.; in Norway by 4 per cent.; in Sweden by 4 per cent.; in the United Kingdom by 12 per cent. Anyway, one can see the mean of those is at least 30 per cent. above our increase. Consequently, we should look forward to an increase in that figure in the coming period.

As stressed by many of the speakers here, our whole financial and economic future is bound up with this very pertinent question at the moment of the European Economic Community. In this, I think we must go forward boldly and with courage, having confidence in ourselves and in our ability to surmount any obstacles in our way. In that, I disagree with the Government policy of waiting until a decision has been taken about Britain's entry to decide whether we should enter or not. I take it we should be right in there, exploring the possibilities, seeing what conditions we can get and so having the agreement almost three-quarter ways negotiated when a final decision is reached by Great Britain.

It is obvious that the European Economic Community will not sign a final agreement with us until they have finalised the British agreement but that does not preclude negotiations going on. It looks as though the other partners in the Free Trade Area— Norway, Sweden, and so on—may be in negotiating, and if there should be a queue, it is far better to get in as early as we can to the negotiations.

Perhaps the European Economic Community may not wish to negotiate with us until they have completed negotiating with Great Britain, but if they do, we should grasp the opportunity and find out as much as we can. Our whole economic picture hangs on this and especially our industrial future and the dismantling of our tariff barriers, the helps to industries, and how they are to be dismantled in a relatively short period. In this connection we have been far too timid in suggesting that we cannot do it in the time allowed and that we need an extended period. The suggestion is that we would be prepared to whittle down our demands somewhat in regard to agriculture, to take a slightly lower position, as it were, for agriculture, if we can extend the period for industry.

I do not think we should do that. What we can do in 15 or 20 years we could with an effort do in 12 years. I would commend those people who are worried about industry and worried about whether industry can gear itself for the Common Market, to study carefully the picture of the revolution that has taken place in Irish agriculture over the past 12 years. Cast your minds back to 1947 and 1948 and think what the picture was then. Since then we have had the tremendous growth in mechanisation in Irish agriculture. There has been the advent of electricity on the farms and the increased use of motor cars and so on, for the farmer's family. There has been the development of farm organisations which were almost non-existent and the development of a farming newspaper. We have had the educational work done by Macra na Feirme. All those are positive achievements and at the same time, there was this great increase in productivity per person, brought about unfortunately, by a continual decrease in the numbers on the land. These facts are that today two men are producing what three men were required to produce in 1948.

If Irish industry can match that success picture over the next 12 years, we need have no worry about any extended time for the transition into the Common Market. In addition to all that, better farming practices have come into operation. The unfortunate feature has been that the increase in productivity per person has been brought about largely by decreasing numbers. That was largely due to two things, first, the uncertainty of the market for exports and secondly, the scarcity of skilled labour coming on the land. In the development ahead, the market will be there, provided they can bring their efficiency up to compete in that market. As well, industry has been the subject of a great deal of training and educational programmes and it will get far more of those in the future, so it should not suffer from the point of view of scarcity of skilled labour.

If Irish industry had those two factors in the past 12 years, and if it had access to an unlimited market for increased agricultural production, at reasonable prices, and at the same time, if it had a proper scheme of farm apprenticeship that would attract the cream of our young men on to the land, I have no doubt we would have got the same productivity per person by retaining the numbers on the land almost to the strength of 1948. In other words, agricultural production would probably be double what it is today. If you are in doubt about the position of Irish industry, just look at what the agricultural industry has done. Irish industry can do the same. We should not press too hard for this extended period. If we are to make the grade, we might as well make it in the minimum time possible, that is, assuming that an extension in the period would have to be compensated for by disadvantages in some other direction. I do not think we should accept any permanent disadvantages as compensation, to be set off against temporary advantages.

The wages policy was mentioned here. One item of wages policy that seems to be overlooked is that all of us here enjoy being very close to our work. No matter what sphere we work in, compared with corresponding workers in England and America, we have little or no travelling to do. The average worker in New York travels for about one and a half hours to two hours a day, or eight to 10 hours a week. He has to travel in crowded trains clinging to hangers, which is far more exhausting than spending the same length of time working in the factory, in the fields, or in the office. Consequently, I think that in a real upsurge to meet the challenge of the European Economic Community, we should not lose sight of this, and while it may not reflect itself in decreased wages compared with corresponding workers or professional people elsewhere, it should show itself in greatly increased voluntary contributions.

I do think that many of our building tasks and public developments, whether they are parks or swimming pools, could have a very large voluntary element in their make-up and could be done far more cheaply than at the moment when they are done directly from the public purse. We see an example of this in some of the public halls which have been put up by Muintir na Tíre, halls which were put up for a fraction of what they would cost if put out to public tender. One way to keep the nation together is to get groups to co-operate in voluntary endeavour.

I would say when we do come to a wages policy, further increases in wages must be directly related to productivity. We in this House could very well take that message to heart because since the increase was given to members of the Seanad, I see nothing but an effort to get by with less work. That shows itself very much in the way motions are treated and are allowed to lie on the Order Paper for nine months or more.

The Senator has terrific stamina.

We should set an example here and do our own job. We should be prepared to facilitate those members of the Seanad who show that they are conscious of their task by devoting long hours of study to preparing motions of urgent national importance.

It is a pity the Senator did not devote long hours here at late sittings but he was not around to show his stamina.

I depend on my record here and it will stand against the record of Senator Ó Maoláin or anyone else. If anyone reads the record, he will see that. Furthermore, I have never left this House during a late sitting.

You have. You have never been here for one.

I have always been here.

I do not wish to indulge in this type of unseemly banter with the Leader of the House. The Leader of the House could very well let the Seanad do what he, the Government and all of us expect from the workers of the country: a little more productivity for more wages.

The Senator will get plenty now.

Early today I was wondering if I would speak at all on the Finance Bill, but so much that is erroneous has emanated from Senators like Senator Lenihan, and surprisingly from Senator Ó Ciosáin, that I find I could not possibly leave it to be disseminated and broadcast throughout the country without comment. Every little columnist and scribbler is following the band wagon of the "wonderful prosperity." I learned as a schoolboy that Oliver Goldsmith said: "Ill fares the land to hastening ills a prey, where wealth accumulates and men decay." That was never more true of Ireland than it is today. There is all this talk about prosperity, and it is almost as bad as when the landlords were here.

In 1957, the years when this Government came into office, the agricultural income was £129.8 million or 30 per cent. of the national income. In 1960, they had reduced it to £126 million, or to the sorry figure of 25 per cent. of the national income. That is the indictment of the Government.

I want to say—remembering that the Minister for Finance is here—that I said 12 months ago in this House that agriculture was not being looked at in the way it should be. I said to Senator Brady that in his own county the people are leaving and the homesteads are being pulled down, because the people are not getting a sufficient income while other peoples' incomes are being bolstered up. Money brought in by national and local taxation is being used by people who have not the confidence or the wisdom to see that they do not destroy the country and its traditions. People are leaving Sligo, Leitrim, Limerick, Tipperary, and everywhere else, because they cannot get a decent way of life.

The Clare people will pronounce on that in a short time.

You are telling me.

I hope they will pronounce on the facts.

We can depend on them.


In the agricultural income there was a reduction of from 30 per cent. of the national income in 1957 to 25 per cent. of the national income in 1960, and the values of money are less today than they were in 1957, due to the inflationary policy pursued by the Government in reducing the food subsidies and causing the increased wage demands which followed in the wake of their uninspired policies.

I have the facts and figures from the latest journal to be published which is Economic Statistics issued prior to the Budget of 1961. It is very funny that although these figures were available when the Budget was being prepared——

Senator O'Donovan says all the figures are a cod.

These are the figures in Table 10——

Does the Senator accept these statistics?


I must be very effective because there are about four people interrupting me.

We would like to know before the Senator goes any further.

On page 24 at Table 10, under the heading "National Income, 1960-61" we are given some figures. Senator Ó Maoláin might also read the report of the Central Bank. At the end of page 11, it states:

As stated recently by the Taoiseach, "prosperity, no matter what we may do in other sections, depends on our ability to make agriculture prosperous". On a subsequent occasion, the Minister for Agriculture stated:

"Even though there has been a very considerable and very welcome industrial expansion, agriculture remains our biggest industry, accounting for 38 per cent. of the working population and 70 per cent. of our exports...."

Such statements are made but the fact remains that our agricultural income has gone down from 30 per cent. to 25 per cent. of the national income but we get economists, real or pseudo, to tell us of the wonderful increases. We are living in a fool's paradise. It reminds me of a business man who has to wait until he gets his accountant's figures. We have to get surveys to see where we are going. I challenged Deputy Brady to say that in Clare the people are not leaving their homesteads——

Who told the Senator that?

Everyone talks about Dublin, about more jet airplanes and that sort of thing, but we should keep our feet on the ground.

These are the latest statistics that have been published and if anyone wants to refute the figures I shall now give, they will have to refute these statistics. Senator O'Brien mentioned Mr. Lynch who spoke in Galway about our wonderful State-sponsored companies. I remember in 1949 when this Government were asked to spend £25,000 on a mineral survey in Ballingarry. They spent it because Ballingarry had an old coal mine and could be described as Ireland's Jarrow. There are many people ekeing out a tired existence by scraping coal in what are known as bassets, or out-crop coal. That part of Slieveardagh had the highest home assistance rate of any part of the country. The then inter-Party Government, or if you like Coalition Government—it is generally used as a term of abuse—spent £25,000 on a mineral survey.

In 1949, when the Government changed a few years ago, the then Minister for Industry and Commerce, Deputy Lemass, decided to sell out the coal mine. It had been a greater success under private enterprise than it ever could possibly be under the State until such time as we made the mineral survey and later the mine was sold.

That is a matter that would be more relevant on the Appropriation Bill.

I will not proceed any further but there is a case in point in Tipperary where a private company was handed over and was a dismal failure as a State company. There has been considerable reference to State companies.

I think more than for anything else this Government can be indicted for letting the cost of government increase. Anything we manufacture or produce will naturally, with our small two million population, be produced in smaller quantities and have to be moved further than in a better situated European economy, and it behoves us both locally and nationally, to keep taxation down to the point where production costs will be lower than anywhere else so that we may become a vigorous, progressive competitive economy. I was delighted listening to Senator O'Brien, using the language of the economist but putting it lucidly and clearly for people who had not the opportunity of studying economics, saying that it is common sense, the sort of sense required to run our own house or business, that will make us run the country well and prosperously. There is to be no easy way by astute financial measures, by the clever handling of finance, of attaining prosperity. It must be the old method of good housekeeping. We have not practised good housekeeping. Between 1957 and 1960, we have allowed taxation to increase by 15 per cent, and the so-called reduction which has taken place is illusory because money has deflated and the allowances and so on are not keeping pace with deflation.

Senator O'Brien referred to death duties and said they were a disincentive to saving. The schedule is much the same as it has been for many years but it is interesting to note that any worthwhile reliefs are being given to the person who owns a house or is very well off. The large bulk of farmers, small business people and private companies which represent 95 per cent. of the companies in the country will get little or no benefit as they must pay the high rate of estate duties. Therefore, that schedule has a certain lack of reality as applied to the situation here where so many businesses fall under the hammer of estate duties.

Two things were done by the previous Government which the present Government should consider adopting. The first was the Land Project under which more than a million acres of land were brought into increased production. During the inter-Party Government's time in office, for the first time in a hundred years, the population increased.

When did that happen?

I think, in 1953.

That is right, before the Coalition came in.

They had a term of coalition before that.

Bad statistics.

It was the result of the inter-Party Government's policy. In 1947, total exports from this country were only a meagre £37 million. I do not see that this Finance Bill will promote a healthy economy. The reduction in taxation will assist the large firm, the industrialist, while the Irish people we know who live down in Senator Brady's constituency and in rural constituencies generally will not benefit. It will benefit the setting up of a new plastic factory in Dublin but I would prefer to have no plastics factory in Dublin and to see the population increasing and more prosperity on the land of Ireland and we are not devoting our resources to these ends.

Senator Ó Ciosáin said that this Government were assisting the farmers far more than the previous Government. He said that where the previous Government gave £7 million, this Government were giving £16 million. I should comment that £7 million of the present £16 million is for T.B. eradication. I would much prefer to see a sharing of the increase in the national income with the agricultural community. Other sections are enjoying the income. They are getting £16 million more than in 1957, while the farmers are getting almost £3 million less. It is not much use to say to the farmers: "We are giving everybody £16 million and you will get only £10 million." That £10 million is being used only to redress the balance and the farmers are worse off than before. If we are to make a success of the economy and promote confidence, the Government must devote attention to these matters. The latest journal on statistics handed to us as members of the Oireachtas shows that the Government have to do a lot of work between now and the elections if they are to remain a Government and I say the sooner it comes, the better.

If the Government do not know it, the farmer does.

Fianna Fáil were supposed to be interested in the people of the country and I am very sorry to hear Senator Lenihan say that the buoyancy of our revenue always reflected prosperity. He seemed more concerned about that than about anything else. Dr. Lucey has spoken out very strongly, saying that what we should be interested in is the number of people in the country, in more men, women and children, more families living in happiness and prosperity, getting work at home in our own country, earning their living in our own land. He said we should be more interested in that than in the amount of money in our banks. I would agree with that because people do not seem to share the optimism spoken of by Fianna Fáil Senators. If they did, they would not be running away out of the country at the rate they are running at the present time.

If anybody goes down to the West of Ireland at present and travels the roads around Sligo or Leitrim or even down through Clare, he will be surprised at the number of houses locked up, the furniture inside and the ivy and nettles growing up around the door. Due to high taxation and high rates, the people are unable to earn a living in their own land. The idea at the present time seems to be to welcome everyone but Mary, Pat and Kate. They must leave to earn their living in England and elsewhere. Other people seem to be quite welcome. What is happening at present is that fewer and fewer people have to pay more and more taxes. Because the population has dropped, the people have to pay more taxes per head.

I think it will be agreed that the people of Ireland are ground down today by taxation, both national and local. Unfortunately, many of our people are between the frying pan and the fire and they are undoubtedly suffering. I think the people have grown so used to mounting taxes and mounting rates at the present time that they have become like punch-drunk boxers. They can absorb punishment without seeming to be affected by it. There is no doubt that that they are affected, and seriously and dangerously affected, by the high incidence of taxation both national and local, at present. If it continues, they will become like the punch-drun drunk boxer, losing all initiative and ambition. Many of the people, especially the people of rural Ireland, who I claim count in this country, are losing both initiative and ambition at present.

In 1930 and 1931, the general taxation rate was 18 per cent. of the national income. I think that, in 1959, it was round 28 per cent. of the national income, representing about £45 per head of the population or a figure of something between £200 and £210 per family.

It was very amusing to listen this evening to the Fianna Fáil speakers, more especially Senator Lenihan. There is no doubt that they have been converted to and adopted the Fine Gael policy, the policy preached by Fine Gael, by Cumann na nGaedheal, and which was for so many years condemned by the people on the far side of the House. Perhaps it is a good thing that even at this late hour they have been converted but it is an awful pity that they were not converted 30 or 40 years ago. If they were, this country might be able to support a much bigger population than we have today. People might be much better off and we would not have had 200,000 emigrating in the past four or five years.

They speak about industrial expansion. We on this side of the House are in favour of industrial expansion. Those who led our Party way back in 1923 were in favour of industrial expansion. They started the Shannon Scheme and the first of our beet factories. Fianna Fáil told us at that time that they were white elephants. When we speak about the prosperity we have in the industrial sector of our economy today, credit should be given where credit is due. Credit should be given to the action taken both by Deputy Sweetman, when Minister for Finance in 1956, and Deputy Norton when Minister for Industry and Commerce. They gave incentives at that time to encourage industrialists to come into this country. Money was brought in to start the coppermines at Avoca.

The Fianna Fáil Party condemned that outright at the time. They now see the wisdom of the action of these people. The inter-Party Government brought in the money to start the oil companies, £12 million. The Control of Manufactures Act for many years precluded any foreign money coming into this country. It was the inter-Party Government who took that action and to them alone is due the credit. Fianna Fáil are now carrying on the good work and good luck to them. If more industries are established within the next few years, we will be delighted.

You will never have a prosperous people on the basis of a poverty-stricken agricultural community. That is what the Government are doing. Unless the two are brought hand in hand, the work of any Government will be a failure. The Government have no more regard today for the farmers than they had during the Economic War.

Senator Lenihan talks about the Common Market and about hanging on to the coat tails of Britain. I am surprised that a national Party, which claims to have such a great record and heritage, should say they are going to hang on to the coat tails of Britain and follow Britain into the Common Market. Four years ago, the Fianna Fáil Government should have appointed committees or they should themselves have examined the feasibility and the possibilities at that time of joining the Common Market, either holus bolus or as an associate member, I think we should join along with Britain. As a nation, we should have set up our own committee at the time and come to our own conclusions.

I am old enough to remember when we were told that the British market "was gone for ever and thanks be to God it was gone." We were told to build a wall round this little isle of ours and that if every British ship were sent to the bottom of the sea, we would do without England and the rest of the world. Now we have a change. Not alone can we not do without England and the rest of the world but we must attach ourselves to Britain's coat tails. If she enters the Common Market, we are to follow after her. I am surprised at the members of the Fianna Fáil Party adopting that attitude. If we adopted that attitude and said we would do it, I know what we would be called. We would be called Tories and Conservatives: we would be pro-British as we were always supposed to be.

Now Fianna Fáil are telling us that although we have been an independent nation for 40 years, we have not the ability and brains to make up our own minds as to what we will do as a nation in the future. Whatever Britain does, we will do and go along with her. That is a wrong attitude for the Government to take up and I am surprised the Government adopted that attitude.

Senator Lenihan said that the people of Ireland would not trust any Government such as the inter-Party Government to negotiate in relation to the Common Market or anything else. It might be no harm to tell him that the people would trust men like Deputy Dillon and those who negotiated the Cattle Agreement of 1948. They got a good agreement for the people of this country when they went over there. At that time, if the little suck calf had not his throat cut, he was selling at 10/-.

What about eggs?

Immediately after that trade agreement, the price of cattle went up to as high as £60, £70 and £80. But in 1958, the Minister for Agriculture went over and what did he bring back? He brought back a damned bad agreement, unfortunately, for the people of this country. The Danes went over and they brought home the bacon. The Minister brought home nothing but the salt to rub in the farmers' wounds because that was all he got in Britain.

Senator Lenihan tells us it would take Ministers like the Fianna Fáil Ministers to negotiate a first-class agreement. Is it not true that, between 1939 and 1945, we were in the midst of a World War. British ships were being sent to the bottom of the sea. The British people were rationed to two ounces of meat per week. If the arch-patriots in the Fianna Fáil Party thought anything at that time about the farmers or about the people of this country and if they wanted to get a good price for their produce, why did they not go over to England then, and demand it from John Bull? They always preached to us in the past that England's difficulty is Ireland's opportunity. There was England's difficulty and there was Ireland's opportunity.

Instead of that, our Ministers refused to go over. They sent over civil servants. We know that at that time Irish meat was sold in Britain at from £2.10.0 to £3.0.0 per cwt. The Irish people have more faith in the men who negotiated the 1948 Trade Agreement than they would have in a Government or in a Party who let down the farmers of Ireland during those vital years.

Senator Lenihan also spoke about exports. He mentioned certain years. It might be no harm when we do speak about exports to remind certain people that we on this side of the House have always claimed we were taunted with being pro-British in the past—that the British market was of vital importance to us; that it was on our doorstep; that there were 52,000,000 people there crying out for food and that we should avail of it.

Despite the fact that we had 16 long years of strong government, in 1947, our total exports were £39.4 million. Senator Lenihan speaks about adverse balances. We had an adverse trade balance that year of £91.8 million. Those are facts and those are figures and neither Senator Lenihan nor the Minister for Finance can contradict them.

Is that a net figure? Is the Senator quoting a net figure?

Our total exports in 1943 were £39.5 million and our total imports were £131.3 million. Our excess trade balance was £91.8 million.

That is not a net figure.

Say £35 million to £40 million are coming into this country in other ways. The net figure that year, I think—I will not be certain— was something between £65 million and £70 million.

Net or gross, it is vital to his argument.

An Leas-Chathaoirleach


It is vital that he bolster up a case.

You should sit ashamed of yourselves when you hear him talk in that respect, the whole lot of you.

An Leas-Chathaoirleach


It is nonsense.

For 1957, he gave his figure of £131 million. If he wants to talk about records and if anybody in this House wants to talk about records, it is the record increase in exports that took place from 1947 to 1957—a period of ten years during which the inter-Party Government were in office for seven years. Our exports increased from £39 million to £131 million, an increase of £91 million in ten years. That is something for any Government or any Party to be proud of.

We on this side of the House have always claimed Ireland is an agricultural country. We have always claimed that if the people on the land are prosperous, the whole nation will be prosperous. I think Deputy Dillon has often stated that the standard of living of every man, woman and child in this country depends upon what our farmers are able to get from the land of Ireland and export profitably abroad.

One shilling a gallon for milk.

Nobody can deny that the standard of living of the Irish farmer to-day is at the lowest level since the Economic War. Never since the days of the Economic War were things so bad with the farmers of Ireland as they are to-day and there is nobody who can deny that fact. As Senator Burke has stated, the income of the farmers dropped from 29.9 per cent. of the national income to, I think, the 24 per cent. of the national income they received last year.

The farmers are being crushed with soaring taxation. They face increasing taxation every day and reduced prices for their produce. If anybody looks up the official statistics, he will find that under all headings the farmer is getting less today than he received in 1953. For wheat in 1953 he was getting 32/- per 112 lbs.; in 1960, he got 29/4. For oats in 1953 he got 24/6; last year he got 18/8d. For fat cattle per 112 lbs. in 1953 he received £10 10s. and last year the price was down to £10 8s. per cwt. deadweight. In 1953 for hoggets, sheep, per 112 lbs., deadweight, he received £14 16s. 3d. and last year he received £12 13s.

The position is worse today because lamb prices have dropped. It is impossible to sell lambs today. Yet the people getting those reduced prices are paying more and more in taxation. It is no wonder that the small farmer who is being crushed between reduced prices and increasing taxation is locking the door and leaving the land. That is a bad day's work for this country. The day the small farmer is driven out completely—and he is being driven out fast at the present time—will be a very bad day for this country.

The Fianna Fáil Party have always claimed in the past that they represented the small farmer. The world knows they are doing very little for the small farmer of Ireland today. We talk about getting markets abroad. The inter-Party Government negotiated and secured markets in Germany and France for lambs and sheep. I think that in 1957 we exported £7 million worth of lamb to France. What has happened to those markets, despite the fact that we are buying at least five times as much from France and from Germany as they are buying from us? Why can our Minister not go over and say: "We are not prepared to buy £15 million worth from you unless you are prepared to buy the same amount from us"? They have not done that and the time has come to do it. Four years ago, a sum of £250,000 was set aside for marketing and helping to find new markets. I remember Senator Lenihan speaking at length here about that. What has happened to that project? Last year, we were the only country in the world not represented at the British Trade Fair in London where we have one of our best markets. We have mentioned this on numerous occasions but so far we have failed to get any reasonable excuse.

I thought the Senator did not want us to have anything to do with Britain?

No; it was you on that side of the House who said "the British market is gone and gone forever, thanks be to God." We always believed, not for the love of them or because of the colour of their eyes, or because we were more pro-British than you on that side of the House, that it was good business to deal with our nearest neighbour. You said the market was gone and gone forever and the people were urged to keep bees instead of cattle.

An Leas-Chathaoirleach

That was a most unfortunate interruption.

That day is gone and you seem to be converted now to the idea of a British market.

I just want to speak briefly as my own county has been mentioned by Senator Burke and Senator L'Estrange. I want to refute what they stated. Senator L'Estrange was probably in Kilkee recently. He says the houses are being locked up there, and that the people have gone away.

I am sorry I had not got a camera with me.

That is a gross untruth. In Clare, we are very fortunate. We have very little unemployment and we have to thank the Government and the Minister for Finance for that. We have one of the best sources of employment in the country, that is, Shannon Airport, where at the moment there is employment for about 1,500 people. Most of them are from Clare but a good many of them are from Limerick. We can remember the predictions made about this airport by the false prophets. It was to be a place where rabbits would be jumping around. The rabbits would probably have died from myxomatosis but I take it that the hares would have taken their place. The Fianna Fáil Government purchased the Constellations years ago but the very minute the inter-Party Government got into office, they sold them and they got more for them than the Fianna Fáil Government gave for them. I suppose they wanted the money. They closed down the Lockheed workshop where Clare men were to be trained as skilled technicians. The result is that it has started again only in the past couple of years and we are about 10 or 12 years behind.

Taking the picture all round, in Clare, we have good farmers, men who use their land effectively and men who know how to use their vote. They knew how to use their vote in 1928, right down to Parnell's time and again when a greater man than any of them came along in 1917 and it was our greatest privilege to have him represent us for almost 40 years.

The people of Clare were described as incompetent and it was said that they were locking their doors and running to England. The people of Clare are able to produce the finest horses and the horse which got first place in Cork recently was produced in Kilkee and bred in Doonbeg. The picture painted here tonight by Senator L'Estrange and Senator Burke was the greatest possible misrepresentation of the facts. I know of course that they have not any great love for the Clare people.

We love all the Irish people.

We do not export them, like the Government.

Any time they came there, the people pronounced judgment on them. I did not interrupt Senator Burke and Senator L'Estrange and I expect the same courtesy as I gave them.

We are only helping the Senator.

They will be appealing to them again soon and I have no doubt what the result will be, and in their hearts neither have they. Why did Senator L'Estrange not come down to the bye-election a year and a half ago when the present President——

I was helping to win the bye-election for Deputy Ryan.

I was hoping to meet the Senator down there. I want to congratulate the Minister on our present position. We have had a balanced Budget for the past four years. We know what the position was in 1957 and 1958. Those of us who were in local authorities knew there was no money for any schemes. The then Government had not got it and they were not able to raise it. Fianna Fáil did not put them out, either. They had some time to go and they went out themselves. They went to the people to put the position right and the people did put it right and they will do so again in a few months' time.

Furmhór na Seanadóirí a labhair go dtí seo, labhradar, im thuairimse, mar gheall ar neithe nach bhfuil morán baint acu leis an mBille seo. Ba mhaith liomsa an méid atá le rá agam a dhiriú ar neithe a bhaineann leis an mBille atá ós ár gcomhair.

Is Bille é seo a bhfuil baint aige le cúrsaí cáin. Tá fuath againn go léir do chánacha agus do chánacha a dhíol. Caithfear iad a dhíol; caithfear gnótha na tíre a choinneáil ar siúl. Rud ná luaitear in aon chor is ea gur in Éirinn a chaithtear an t-airgead sin ar fad beagnach. Is aindeis an crot a bheadh ar ghnó poiblí na hÉireann mura ndeintí é sin. Tá na feirmeoirí ag coinne le teagasc agus le deontaisí, le feabhsú ar a gcuid eallach, ar a gcuid síl agus ar a gcuid oibre. Bíonn lucht oibre agus daoine bochta ag coinne le seirbhísí leighis, seirbhísí fóirthne, le tithe agus le neithe eile. Ar na neithe sin a caithtear an t-airgead. Ar mhuintir na hÉireann a caithtear an t-airgead agus má baintear de chuid againn é, caithtear ar an bpobal i gcoitinne é agus ar dhaoine a íochann fíor-bheagán den chnósach a bhíonn déanta ag an Aire.

Is ar an mBille ba mhaith liomsa go ndéanfaimid caint agus ní ar an rud a dúirt ár sean-mháthair 60 nó 80 bliain ó shoin. Ná bímis ag caint faoin mbéal bocht. Ní dúthaigh bhocht í seo; ní dúthaigh aindeis í seo. Tá neithe inti gur ceart a fheabhsú. Tá an Rialtas ag gabháil don fheabhsú sin agus tá ag éirigh leo. Bíodh deire againn le cáineadh agus leis an mbéal bocht. Ní dúthaigh aindeis í seo; ní dúthaigh bhriste í seo.

Ag caint ar thalamhaíocht, ar thalamh agus ar thithe dúnta, tá a fhios againn go bhfuil a leithéidí ann. Tá a fhios againn go bhfuil cuid den phobal ag tréigint cuid den talamh ach tá a fhios againn, leis, go bhfuil cuid eile den phobal sásta dhá luach a thúirt ar aon phíosa talúin a bhíonn le fáil. Is cómhartha é sin den mhuinín atá ann maidir le cúrsaí talmhaíochta. Ní fíor a rá go bhfuil na feirmeoirí dhá dtréigint ag an Rialtas. Ní fíor ach oiread go bhfuil na hoibritheoirí agus lucht tionscail dhá thréigint ag an Rialtas. Tá an Rialtas ag déanamh oiread agus is féidir leo agus tá siad dhá dhéanamh slachtmhar go leor, éifeachtúil go leor agus torthúil go leor.

Senator O'Donovan put as an alternative whether it was better to have a deficit in the Budget or to balance it by the creation of money. I do not think that is an alternative because I do not think there was inflation during the past three or four years and, therefore, the alternative does not apply. He also spoke of various parts of the country being much worse off because of the increase in tax revenue. I am prepared to admit that there may be certain parts of the country which are not as well off as we would like to see them, and which we would like to see better off, but I do not think it can be claimed that, generally speaking, anyway, this Government put up taxation. It is true that we got more money but we took a big slice off income tax and the allowances applicable to income tax, such as family allowances and earned income allowances.

We put a tax on many commodities such as fruit, and so on and we increased the tax on tobacco. As I mentioned here before, we increased the tax on tobacco four times since we became the Government. We increased it by 2d. in 1957, by 1d. since then and by 1d. this year, making 4d. altogether. That was not as bad as what my predecessor did. When Deputy Sweetman was Minister for Finance, he put 5d. on the price of tobacco in one go. It took me four years to put it up by 4d. and in only one hour he put it up by 5d. I suppose tobacco is a good mark for taxation and we both thought it a good way of getting money.

Senator O'Donovan said that if Dean Swift were alive, he would have suitable comments to make on some of our policies. I should be surprised if an intelligent man like Dean Swift were Fine Gael, if he were here.

With regard to the case raised by Senator O'Donovan about Table 20 of the Central Bank report on capital transactions, I am afraid I cannot give a proper explanation. Even if I knew it, I probably could not give it. As Senators are aware, I could not give individual figures in relation to how it is made up, even if I knew them. This is a net figure which relates to capital coming in and going out. One figure was mentioned by the Senator, and since everyone knows it, it is no harm for me to mention it. The Whitegate Refinery brought in £12 million and that would go part of the way towards explaining the whole position. A sum of £32 million was spent in 1958 and 1959 on capital transactions coming in. I cannot say any more.

An Leas-Chathaoirleach

You are not alone in that.

I might be able to get the figures but they would be confidential.

An Leas-Chathaoirleach

We have not got any explanation.

I do not agree with Senator O'Donovan that there is any cooking of these figures. He wound up with the usual forecast that our financial system is sure to go wrong and that a crash is coming. We have been told that for the past four years and perhaps it will be postponed for another year.

That doom is around the corner!

Senator O'Brien made one very weighty remark. He said that with a growing economy in Europe, it would be very difficult to prevent the economy here from growing. All I can say is that when there was a growing economy on the Continent, the Coalition Government prevented it from growing here in 1956.

That was the time of the Suez crisis.


The Coalition Government were able to put back the hands of the clock.

Senator O'Brien also asked me if we had any intention of introducing a measure of inter-budgetary fiscal controls, somewhat on the lines of controls introduced by the Chancellor of the Exchequer in Britain. We have, of course, one control here which he left out, the Control of Imports Act, but the powers given under that Act have always been used by the Government to protect our industries, never in a revenue sense, or in a fiscal sense. Apart from that, I may assure the Senator that we have no intention of looking for these powers because we do not see any necessity for them in the circumstances here.

I agree with Senator O'Brien that the balance of payments position does not look so good this year as it did last year. In fact, in the first five months, we were £6 million worse off than last year. With regard to this balance of payments, if you can see the explanation and see that there is a good reason for it, there is no need to worry. I have not examined the figures recently but I did after the first two or three months and there were a few items at least that one would expect to be against us this year more than last year. One important item was wheat. On account of the very bad harvest last year, 30 per cent. of our wheat was taken for milling, and we had therefore to import a much bigger quantity of wheat than usual. That is probably shown in the increased imports. There may also be other items of capital imports but I do not know if these are there.

Senator O'Brien gave a very reasoned estimate of the prospects of our economy for the present year, 1961. I think he gave a very honest forecast of what the economy would be like this year. It was not an exaggerated account of what we can expect and I would say that on the whole it was satisfactory. The Seanad, I am sure, will be quite satisfied if things turn out as outlined by Senator O'Brien.

On the Common Market, Senator O'Brien pointed out that we would have to cut our profits, as otherwise we could not compete. We all agree that costs must come down and that that is the only way we can compete against other countries in the Common Market. He was right enough in saying that, apart from labour, which is a big item in costs, there are also other items. There is the payment of executives, dividends and other factors which must be very closely watched by the companies concerned. They must also look to their efficiency and their productivity to bring things into line so that they can compete with all comers. These things are being looked after by the industries themselves to a great extent. However, as outlined in the Dáil by the Taoiseach, there are committees examining that particular aspect of industry, committees composed of representatives of industry and of the Government, economists, technicians and others useful in such an examination.

Senator O'Brien went on to say that the Government could not do very much to help the economy compete in the Common Market but that we could avoid putting on extra taxation which might have the effect of raising the cost of living and that we should resist as far as possible any increase in wages to Government servants. He rightly pointed out these facts, but I do not think we are ever the first to give increases. We are usually approached by Civil Service organisations when increases are given by other organisations outside and, as we have a conciliation and arbitration system, it of course is influenced by increases given outside and so civil servants get an increase. In other words, we do not lead the movement to increase wages; we follow others.

Senator O'Brien agreed that we were going in the right direction by changing our taxation from earnings to spending. Senator Murphy who spoke afterwards did not agree with that point of view. There are naturally views on both sides, but I think we might be creating hardship if we were to move rapidly from one to another. If, for instance, we adopted the report of the Commission and put it into operation just as it was, we would certainly be creating great hardship for some people.

As I am on that point, I want to deal with these reports because Senator Murphy drew attention to them. First of all, he was afraid that Government policy on that particular recommendation to change over to some extent from income tax to purchase tax was not satisfactory because it was not definitely a turn down, as one might say. We could not exactly turn it down because we had been pursuing a policy of changing from direct to indirect taxation. Even in this recent Budget, we took off a certain amount of income tax and put an increased tax on tobacco so it would be rather illogical if we turned the idea down completely and that is the reason it was stated in that way.

Finally, he said we issued the report regarding income tax for farmers and gave our decision the next day. That is correct. We were preparing that White Paper on income tax under every aspect, death duties and so on and wanted to deal with the various reports from the Commission so far as they had arrived. The report on income tax for farmers had not arrived very long. We had sent it for printing. We had taken our decision in the meantime, as is often done, and so we issued the printed report and the White Paper practically on the following day. That was because we had no time at our disposal to do anything else. It has often occurred before that the Government have issued reports of commissions and given the decision on them. We did depart from that recently. We issued reports from various commissions and did not announce our decision until afterwards.

To go back to Senator Stanford, he said he was sorry we had made no provision for a reduction in the tax on petrol. He made the allegation that we were paying a higher tax on an inferior commodity than was sold to the people of Britain or the North of Ireland. It is true that our tax is slightly higher. There is not much in it. I think it is a penny or three halfpence. But this is the first time I heard the allegation that it is an inferior commodity. I do not believe that, but, however, a responsible Senator has made the allegation and I will certainly make an inquiry about it. I am sure Senator L'Estrange would not like it to be true and I would not, either.

Another point which he raised was in regard to the 25 per cent. stamp duty on estates purchased by aliens. He gave the example of a person who might have bought an estate but who had not concluded the deal. He bought the estate knowing what it was going to cost and calculating what the three per cent. stamp duty would be and suggested that he might not be in a position to pay another 22 per cent. stamp duty. That point was argued very strongly in the Dáil by Deputy Sweetman. We ended by not accepting it because there were many reasons against accepting it. There are reasons for accepting it, I admit, but there were many reasons for not accepting it, principally because it would be almost impossible to prevent fraud. I take it that it will come up again on Committee Stage and I do not intend to deal with it further now.

Senator Ó Ciosáin said that, according to Senator Donegan, agriculture is relegated to the background and Senator Burke said that unfortunately that is so. Now, Fine Gael are adepts at generalisations.

Wait for the Appropriation Bill.

Why did the Senator not stay out?

Another generalisation by Fine Gael is that they kept the cost of living down, which is not true. Another generalisation is that they kept emigration down, which is not true, either. These are all generalisations. Now I will ask Senator Donegan to answer two simple questions. What did we not do that we should have done in the past four years? That is an easy one. Any member of an Opposition should be able to give an answer to that. I would be able to do so if I were in an Opposition. What did Fine Gael do now that we did not do? They never give any answer to these questions. They always make generalisations. They try to make the farmers believe them, without giving any particulars or any reasons.

You will get detailed answers on the Appropriation Bill for about threequarters of an hour.

I hope the Senator will live up to his promise.

Do not mention milk.

Do not mention cattle; do not mention grass or the British Market.

Do not mention milk because Deputy Dillon's price for milk was 1/- a gallon.

Never. That is wrong.

They deny that now.

I will not go any further with you tonight.

The Minister may be on a John Duffy effort. We will deal with him on the Appropriation Bill.

Do not mention milk.

We will mention milk.

It is on record——

What about the promises you made about milk which you did not fulfil?

We fulfilled all our promises. Do not mention pigs. Senator Burke is paying more for pigs now than in 1956.

Because Deputy Dillon guaranteed the price.

Pig numbers were never so low in this country as when Deputy Dillon left office.

They went down to 460,000 in 1947.

I ask the Chair to keep order.

Ask the Minister to keep order. Let him not invite answers.

Take your medicine.

The Minister is not mentioning wheat.

I will mention wheat next. I can see that the Senators are not going to answer questions. They are going to deny these things.

They will be answered.

They would not be found dead in a field of wheat.

Senator Donegan asked about wheat and the recent prices for wheat. I claim credit for having had a big influence in persuading the Government to agree to these prices. I come from a wheat-growing county. I told every farmer I met in County Wexford what I am telling the House now and every farmer in County Wexford said I was right.

Does the Minister think that for the past 12 months wheat was handled as it should be handled?

I never met a farmer in County Wexford when I was going round saying that I got this thing done who did not say I was right. The reason is that they were all good farmers because they were on the side of Fianna Fáil. A good farmer wants to see this price because——

A drop of 10/- a barrel since 1953.


From 1957 up, there is no change.

Wheat was 84/- in 1953.

And Deputy Dillon brought it down by 12/-.

And the Minister brought it down another 12/-.

The good farmer likes to see this new price. The good farmer says it will be so much greater this year or next year. He will have to pay a levy to pay for the wheat exported. He does not want to pay a milling price for wheat that is not fit for milling under 57/-. Every good farmer in the country is delighted with the change. The farmers who talk to Senator Donegan and who do not like the change are not farmers at all.

What did you say in your radio speech in 1957? You reduced it a further 12/-.

An Leas-Chathaoirleach

Let us have no more interruptions.

It was a cruel blow——

"A cruel blow" is right.

That is the year you put beet and wheat up the spout.

"The British market is gone forever" and you cut the calves' throat.

These boys are sleeping in top hats and swallow-tail coats.

Is the Senator dealing with the top hats now? He must be feeling very sore. The 1/- a gallon is a very hard one on him.

A top hat would hold a gallon.

You would want a top hat to top that all right — 1/- a gallon for milk.

It was a terrible policy — 1/- a gallon.

Do you remember when you had it down to 4d. and when turkeys were selling at 2d. a lb?

We had to fight the Blueshirts as well as the British.

The Blueshirts fought for Parliamentary democracy.

They fought for the British.

An Leas-Chathaoirleach

There must be no more interruptions. I notice that this discussion always ends up with the Economic War and the Blueshirts. They are extremely remote from the Finance Bill of any year in the 1960's.

They were not remote in the 1930's.

I would not take long if the Senators would allow me to talk. I think it was Senator Murphy who raised the point about P.A.Y.E. He said that the people paying income tax under P.A.Y.E. have an objection to paying income tax but they think it is all right as, in the circumstances, they must pay and that is the best way. But he said they have a suspicion that other people are getting away with it. That may be but I do not know what we are to do about it. We have tightened up the Income Tax Acts to a great extent during the past two or three years. I had to fight very hard to get some of those sections through, both in the Dáil and in the Seanad. If I were to bring measures here that would give the Revenue Commissioners power to make sure that all these sections were paying their proper income tax, I am afraid the liberal element in the Dáil and Seanad would be very much against me. I would not mind doing it at all if I thought I could get some sort of agreement on it.

We shall have another five years and maybe we shall have a try at it.

To go where?

The Senator is in the wilderness.

Do not worry. Fianna Fáil are on the way out. They made three or four good attempts to stay in during the past three years.

I am not a betting man but I know people who would put hundreds of pounds——

We might have a little bet.

The Senator would drop down to sixpences when it came to placing the bet.

£1 a seat up or down. There—you have that bet. Would you take it? I do not think you would.

I see. So you think we should get a majority again? I think we shall, myself.

No. I will have that bet with the Minister.

The Senator is not prepared to bet on the majority?

I will have a bet of £1 a seat up or down with you now, if you like, but you are not prepared to take the bet.

An Leas-Chathaoirleach

This should be arranged afterwards. This is not the place for it.

This is not a betting place.

You could collect tax, too.

Senator Quinlan said he thought there was danger in the negotiations that the Government might sell agriculture, as it were, in order to get better provision for the industrialists. There is no intention whatever of doing that. I can assure the Senator that that is entirely a false impression, if he has got it.

Senator Burke talked about inter-Party Government measures which had the effect of keeping the population figure stationary for one year. When we go back, we find the year was April, 1953, to April, 1954—not that the population remained stationary but it was the only year, up to last year, when employment increased since the State was set up. It is a most extraordinary thing that any Senator on the other side should claim that as a credit for the Coalition because it occurred in the three years when Fianna Fáil were in office. In the first year, there might be some reason for saying it was due to Coalition policy but it was in the third year that Fianna Fáil were in office that that position was achieved. They were then in office for three years again but they did not hold that position. Employment went down each year and only in 1960, that is, between April, 1956, and April, 1960, were we able again to get the position where employment was not decreasing. As a matter of fact, it just held its own in that year. We have not yet had the figures for the year from April, 1960, to April, 1961. These figures are not usually available until the end of the year. I am just pointing out that it was in that particular year that that occurred.

Coming on to emigration, I want Senators to realise that we came into office early in March, 1957. It is hard to influence a policy that has been very wrong. It is very hard to get it right for a few months, anyway. However, I am not claiming that now but I would ask Senators to make this up for themselves. They can do it, I think, if they take the three years from 1st March, 1954, to 1st March, 1957—the three years they were there—and take the emigration during those three years and take the four years 1st March, 1957, to 1st March, 1961, and take the average for these four years and then, as the schoolteacher says, let me know what the result is.

There is an answer to that. So many have emigrated that very few are now left to emigrate.

They would do better than that in first class.

Perhaps the Senator will say he is right when I tell him this, too. In the past six months, the emigration figures went down very much.

Eighty thousand people applied for work in Great Britain, according to the British Government.

You are talking about another figure now. I am talking about the net movement in and out of this country by sea and air. These are the figures that are taken as an estimate. It can only be an estimate of emigration between census periods. For one thing, we have no figures of people going across the Border and back. The estimate assumes the fact, if you like, that the net movement across the Border cancels out and therefore they take the other figure as being the nearest.

We have not Donegal-Glasgow or Louth-Glasgow at all.

Senator L'Estrange told us that for the ten years Fine Gael were there, they started the E.S.B. and the beet factory.

One beet factory.

You called them white elephants at that time.

I know, and I have been hearing for the past 30 years that claim of Cumann na nGaedheal that their Party started those two projects. Strange, they never claimed more than that over ten years.

We could sit for an hour on it. Do not forget the Land Project and——

They could not claim more because it was not there. They were in between 1948 and 1951. They claimed nothing for that period. For the period between 1954 and 1957, they claimed Whitegate and the St. Patrick's Copper Mines. In a period of 16 years, they claimed four projects in this country and they cannot claim another.

The Minister is not talking to school children now.

We had exploration in Wicklow in 1948, which Deputy McGilligan stopped for three years. When we came back, we started exploration again. By the time we went out, it was patently clear that something was there. These people came along and started the copper mines and now they have the cheek to call that Fine Gael policy, after trying to stop the project as far as they could.

Take Whitegate. An election was fought in, I think, 1937. The present Taoiseach was endeavouring at that time to get a refinery in this country. He had not succeeded but Fine Gael and Labour made a combined attack on him for thinking of such a thing as starting an oil refinery in this country. In fact, a paper was got out specially for the election—Labour News. It carried advertisements, quite sufficient to pay for the paper, anyway, and these advertisements were about the oil refinery. We had to stand all that onslaught from Fine Gael and Labour and when the Coalition were there, they got Whitegate going. Senator L'Estrange takes 1947 as a basic year. That is not only unfair but it is absolutely ridiculous.

The Minister can take 1946, if he wants to.

Every Senator knows that around that time, from 1945 to 1947, because we had no fertilisers, it took some 1,000,000 acres of wheat to supply the country. We had to grow twice the acreage of potatoes to get the yield we needed and the same applied to everything else because no fertilisers could be got during the war as we had no shipping available for that purpose. That meant that the yields were extremely low in 1947. As Senators know, we renew our seeds practically every year to some extent and these seeds are sold as pedigree seeds, or imported seeds, and under all sorts of labels. We got no seeds in during the war. I am not arguing too strongly, but I often thought we could produce our seeds just as well as the foreign ones. We had no imports of feeding stuffs. We do import a good deal of feeding stuffs and as a result of importing them, we had a certain output of pigs and poultry and so on. In addition, by importing our feeding stuffs, we get the proteins necessary not only for pigs and poultry but also for cattle, milk and other things. It is a most important item and we were not getting it during those years. That being the position, have Fine Gael not got a poor footing when they take that as a basic year? Deputy Dillon mentioned it a few times in the Dáil but he does not use it now because we shamed him out of it. The Senator has not got the same shame as Deputy Dillon.

Senator Burke complained, and I do not know exactly what his point is, that of the total output agriculture formed a bigger percentage ten years ago than now. It does not matter what year he took. He was talking about the percentage. I do not know whether there is very much in that point. One of the big troubles we all recognise in agriculture is to find a market for our produce that is remunerative. If industrialists over the past four or five years have been finding markets for their products, is that not all right? Let them go ahead. I think Senator Burke would expect the Government to say: "Just hold back because your percentage of the national product is going too high." That would be a ridiculous point. His case in regard to agriculture forming a lower proportion now than it did at that time is not valid at all. His case that the total income of farmers is not any better than it was four or five years ago is a point that has to be kept in mind.

It is certainly worse.

It is about the same. Take the last three years. It is lower than last year but last year was higher than the previous year.

Nobody knows better than the Minister.

I know all right. That is why I am trying to talk about it now. It is about the same, but, as I said, we have done our best. We have put money into it. We have tried to bring down the cost to the farmer by giving him cheaper fertilisers. We have continued the Land Project and drainage in both a big way and a small way——

I strongly object to that. As a matter of fact, in the area I come from, it is quite apparent that the amount for land reclamation has been reduced considerably.

No, not considerably.

We are spending much more money on arterial drainage which must be done before other drainage. We are also taking in intermediate rivers which will get further down to the farmer. As far as land reclamation is concerned, the amount is certainly not 20 per cent. less than it was five or six years ago.

It is certainly more than 50 per cent.

No; look at the Estimate and you will see.

I want to draw the Minister's attention to a question asked in Dáil Éireann last week as to why the amount of money spent on land reclamation in West Cork was reduced. If the Minister can answer me and tell me that the amount of money available in West Cork at the moment is the amount that was available last year, I shall be very glad to hear it.

I could not tell the Senator about any particular place. I know that the amount of money I am paying to the Minister for Agriculture is about 15 per cent. less than the highest peak ever reached.

An Leas-Chathaoirleach

This discussion would be more appropriate on the Appropriation Bill.


An Leas-Chathaoirleach

We will have it on the Appropriation Bill.

May I ask a question?

An Leas-Chathaoirleach

When the Minister has finished.

I hope we will have the opportunity then.

I agree, Sir, I am afraid I am not in order. As I say, we are doing what we can for agriculture. We are cheapening the farmer's costs of production. We are giving him incentives and one example of that is that if we had not brought in the subsidy on fat cattle, he would be getting between £10 and £20 per beast——

I wonder what will happen next month when you reduce it by £1?

It will still be the same position. The Senator is always wondering but he will find it is not going to vary very much.

We shall have to wait and see.

I am just mentioning that as an instance. All these price incentives, the fixed price for certain things, are designed to help the farmer and I invite the Senator to say what more could we do.

On the Appropriation Bill.

What will the Minister do next month?

The point is that industry may move more quickly than agriculture because industry is finding markets for its goods and all credit to it. They have gone into the British market. It must be admitted that they are getting in under a tariff but they are competing against British industries and successfully selling their goods there. That is a very good start and if we come to the Common Market, we should be able to make sufficient improvement to compete against all comers, as in the British market.

The Minister should tell us what he is going to do about agriculture. He has spoken about industry and I want to hear what he is going to do about agriculture.

An Leas-Chathaoirleach

The Minister, on the Finance Bill.

The Fine Gael Party are in full voice.

I have only one or two notes left. Senator Donegan talked about a "Fanny Adams" Budget. I think he meant there was nothing in it.

A "Sweet Fanny Adams" Budget.

We gave the biggest income tax reduction ever given in 40 years.

It was not much.

The Senator talks about a "Fanny Adams" Budget——

"Sweet Fanny Adams."

It shows they will say anything.

If you gave anything with one hand, you took it away with the other.

Where did we take it away?

An Leas-Chathaoirleach

On the Finance Bill.

That was a queer stunt in Drogheda last week.

No. I picked the man I thought was better for the job.

It was a somersault.

We picked the man who was better for the mayoralty. He happened to be Fianna Fáil. Was that not fair enough?

Everyone is aware that the Leader of the House does not give a twopenny Fanny Adams what happens to agriculture.

An Leas-Chathaoirleach

Order! The Leader of the House is not a farmer.

You would admire me for what I did in Drogheda, if you had the spunk.

It did not work.

It worked perfectly.


I do not know anything about that.

An Leas-Chathaoirleach

It has nothing to do with the Finance Bill.

Some Senators quoted from the report of the Central Bank. I should like them to look at Table 18 which gives the resources of the various countries and the utilisation of those resources. There is one figure, in particular, I should like Senators to note because it was said by several Senators that taxation was growing very rapidly here. As a matter of fact, if Senators look at the sixth column headed "Public Consumption"—that is where the money is used for public purposes —it shows that the increase in public consumption is lower in Ireland than in any other country in Europe, so we are not so bad after all.

The Minister is now apologising——

An Leas-Chathaoirleach


It is quite clear that the Minister is now apologising for the money that was spent on agriculture.

An Leas-Chathaoirleach


I am not apologising for it.

The Minister is trying to apologise.

I am glad we are spending money on agriculture and I am glad we are able to spend money on agriculture. Before I sit down, let me say this about agriculture. Senator L'Estrange said that the farmers were never so badly off. Senators should try to see the full picture. The position in 1956 was that I got letters and letters and letters—I was a T.D. at the time—from farmers asking me to do something to keep the banks off them. The banks were calling in money and saying: "If you do not pay, out you go." They were calling in money all around. Last year, the banks were putting advertisements in the papers saying to the farmers: "We will lend you money." That is a big difference.

Does the Minister claim credit for that?

I am not claiming credit for it but it is a fact.

The Minister is claiming credit for something for which he is not responsible.

There is no doubt that he is responsible for agriculture and the bad position of the farmers.

An Leas-Chathaoirleach


No one knows what the Minister——

An Leas-Chathaoirleach

The Senator must resume his seat.

There is no doubt that the Minister——

I must protest. This is making a farce of the House.

The Minister was responsible for the position of the farmers during the Economic War and he can never outlive that.

I would rather outlive that than try to outlive having been a Blueshirt.

An Leas-Chathaoirleach

I cannot hear the Senator any more.

The Minister and I were together in 1920.

We were.

We were in the same place. As a Blueshirt, I can tell the Minister that I was just as perturbed——

About the colour of the shirts.

——about our nation as he was.

An Leas-Chathaoirleach

The Senator must sit down.

My friend was with me, too.

An Leas-Chathaoirleach

The Senator must sit down. The Minister has allowed him to intervene.

I shall finish now if the Senator will allow me. Senators will agree that the position is that the banks were advertising credit a few months ago, whereas they were calling in money in 1956. Senators will also agree that land was never so dear and the farmers are paying more for it.

It was never so dear and the Germans are the purchasers.

I am concluding now if the Senator will allow me. I have more faith in the judgment of the banks and the farmers than I have in the judgment of Fine Gael.

Question put and agreed to.
Committee Stage ordered for Wednesday, 19th July, 1961.
The Seanad adjourned at 10.10 p.m. until 3 p.m. on Thursday, 13th July, 1961.