The Book of Estimates on which this Central Fund Bill is based contains the first indication of the Government's financial policy for the coming year. The coming year is a particularly important one because it will be the last year of the five yearProgramme for Economic Expansion and so, in looking at the Book of Estimates and discussing this Central Fund Bill, it is necessary for us to look at it in that particular context. The amount that is voted is important, but still more important is whether the money will be well spent and most important of all, whether it is spent in such a way that vigorous economic growth can be promoted.
Now, it is difficult for anybody not in full possession of the facts to discuss these matters thoroughly and, of course, actually only the Government are in full possession of the facts. So it is impossible for those of us who have to speak on this Bill to discuss the general facts of this Book of Estimates, to produce our alternative version of the Book of Estimates, to say that we might have done this differently or that differently, voting a little more here or a little more there. Nevertheless, it is possible to make some general comments and in particular, some general comments on the indications from the carrying out of the Government's financial and economic programme during the first four years of their five-year plan, to say whether money in those years has been well spent and whether in probability the money will be well spent during the coming year. These comments can be made and should be made.
Now, the Government's policy on financial and economic matters can be found in the Book of Estimates we have before us, summarised in the Minister's speech introducing the Bill. It can be found in the generalProgramme for Economic Expansion and the results to date of that programme. It can be found in the recent White Paper on Incomes and Output. It can be found, too, in Ministers' speeches on financial and economic matters from time to time.
If we look at theProgramme for Economic Expansion of which the Minister's financial proposals today are a part, the first thing we should be quite clear on is that the overall principle of that five-year programme is a matter for agreement. There might be disagreement on points of detail but in general there is agreement with the overall principles of the five-year Programme for Economic Expansion.
Why should there not be? If we take the programme published by the Government, look at it and read it, we will find in the table of contents under the general heading "agriculture" a series of subheadings. The first subheading is: "improvement of grass lands"; the second: "beef and mutton" and the third: "dairying." I think, taking this White Paper published by the Fianna Fáil Government, that critics of Fianna Fáil policy down through the years have no reason to take exception to these as primary headings in economic policy for agriculture. Look under "industry" and examine the headings. The first one is "foreign participation" and the last one is "reappraisal of policy". Here too there is general agreement and there is no need for any further discussion on this particular point.
When we come to the question of fundamental principles laid down in that five-year programme we find once again that we are substantially in agreement. I would quote paragraph 8 of the White Paper. We can all agree when I quote:
As capital is scarce, it is desirable both to conserve existing capital assets and to obtain the utmost value for new outlay.
There is no disagreement whatsoever. I quote from Paragraph 9:
Our problems will not be solved merely by additional productive outlay, whether public or private. While capital is a condition precedent to, it is not a condition sufficient for economic progress. More is required—the adoption of improved methods and techniques, the loosening of restrictive practices, the raising of the general level of technical education, the stimulation of new ideas, etc.
On these points again there will be substantial agreement. What is open to discussion is not whether these are good principles of policy but whether in fact the Government responsible for producing this five-year programme has itself lived up to the principles in the programme as I have quoted them here.
If we look at the results of the five-year programme in its first four years what do we find? The best indicator, I think, that can be used is to take the increase in gross national product at constant prices. I take the national product instead of the national income because allowances are made for changes in stocks. Also, if we want to deal with real economic progress we must take it at constant prices.
Taking these figures what do we find? We find that in 1959 the increase in real national product was just under 4.7 per cent.; in 1960 it was just under 4.8 per cent.; in 1961 it was about half-way between 4.6 and 4.7 per cent. These are figures that can be found from theEconomic Statistics introduced in connection with the 1962 Budget. What of 1962? Until the Minister produces his statistics for the 1963 Budget we will have no official estimate, but the quarterly bulletin of the Central Bank published in January has made an estimate of the national product which, I think, we can take as giving a reasonable indication of what the figure for national product is likely to be. What do we find in this estimate of the Central Bank? We find that in contrast to the rates for the first three years of between 4½ and 5 per cent. the rise in the national product at constant prices for 1962 was less than 3½ per cent.
Here, I think, we have the essential picture of how the economic programme has gone. In the first three years growth was at a rate in excess of 4½ per cent. which was indeed much higher than was anticipated when the programme was drawn up—the figure 2 per cent. was mentioned in the programme. In the fourth year, 1962, we have a falling off to 3½ per cent. Let us look then at both of these phenomena.
Firstly, regarding the fact that the rate of growth was better in the first three years of the programme than was anticipated, what were the factors which produced this? Can we get some idea of the factors that gave us this growth in real national product which was higher than anticipated? There were factors indeed which were part of the plan but which had an effect greater than was thought when the plan was drawn up. First of these factors of course were the benefits of planning itself, even planning of a most tentative kind. Secondly, there was the effect of the tax relief on exports decided upon by the previous Government before the plan and before studies which were the basis of the five-year plan. Another factor was the acceptance in the five-year plan of the recommendations of the Capital Advisory Committee. The fourth factor was the removal of some of the distortions in the economic structure of this country which had been inhibiting our growth and notable among these was the amendment of the Control of Manufactures Act.
What of the tapering off in the rate of growth which is something to which we must look, something we must think about? Of course it is far too early for anybody even to guess at the causes for this particular tapering off. There do not appear to have been any external factors to which it could be directly attributed. We find ourselves in the position apparently that we have this slacking off. It is hopeful that the tentative estimates which have been made so far do seem to indicate that the falling off was not so serious during the fourth quarter. When the final figures for the fourth quarter are analysed the position may not be so bad since there appear to be signs of recovery in the fourth quarter.
We find ourselves in this position and as always when faced with a position like this we should not panic but neither should we be complacent. We should not panic because if we do we may take measures either wrong in themselves or which may be unnecessary, which may not be called for due to the fact that what is occurring is a transient and temporary phenomenon. On the other hand we should not be complacent. Above all we should not be complacent and say that we started to plan for a two per cent growth rate and are now beating this. The fact that we have got to three and a half per cent is after all still beating our initial target of two per cent. However, something very important happened since then. When the five-year plan was drawn up a growth rate of two per cent was anticipated and hoped for, but since then this country and every country in OECD has pledged itself to increase real national product by 1970 to 50 per cent above what it was in 1960. To do this requires a steady rate of growth of something just above four per cent. In other words this country has pledged to its fellow members of OECD to have achieved by 1970 a state which corresponds to a growth rate of four per cent.
There is something else, however, that this tapering off in the fourth year means. It was stated in theProgramme for Economic Expansion and in the study of economic development on which it was based that an aim of the programme was the release of a dynamic in the Irish economy. Indeed Paragraph 139 of the programme states:
The programme outlined in this White Paper is calculated to release a dynamic of progress in the Irish economy.
This is the whole purpose of our economic planning and this dynamic, this state of accelerated change, is something which has not appeared and is not apparent from our viewpoint at the moment. From this point of view we might have been better to have started at a two per cent. rise and then came on to three per cent and four per cent rather than to have started in excess of four per cent and then to fall from that initial effort. What happened in these years might be due to the initial impetus which may now die away.
This fall off may not persist, it may be transient, but on the other hand, we must realise that no dynamic, no self-feeding mechanism, no accelerating growth factors have been released. Therefore, we find that the present time is time for thought. It is time for some action but not necessarily for the action proposed by the Government. It is time, indeed, for clear thinking and a time during which slogans should be left aside. During the year 1962 there appeared to be some slackening in our growth. We should learn from what has happened in this country in the past and from what happened in Britain, our close neighbour, in the recent past. In this connection I think it well that we should recall what Deputy J.A. Costello said in Dáil Éireann in recent weeks. He said he believed that in 1956 the measures taken went too far, too fast. It would be a pity, if at the first sign of a slackening of growth at the moment, the Fianna Fáil Government today would go too far and would go too fast in applying deflationary measures to the economy.
We can learn, too, from what happened in Britain in 1961. During the first half of that year, there was a slackening in the British economy; in July, 1961, there was introduced the British pay pause and other restrictions; and in the second half, from July to december, the national income actually fell. It can be argued that the national income would have fallen still further if these restrictions and this pay pause had not occurred, but it is equally arguable that the way in which this pay pause was introduced in the British economy in 1961 tended to accelerate still further those factors which were tending to slow down the growth of the economy. We can learn not only from what happened here and in Britain but from the Continental countries who have always placed their main emphasis on growth and have managed to avoid the difficulties in which we found ourselves in 1956 and the difficulties in which Britain found herself in 1961.
In facing the situation as it is at the moment it is important for us to distinguish between objectives and policies. There are objectives, there are outlines of policy and there are detailed policies. Again, there is no dispute between the Parties in this State about the general objectives. If you ask members of any Party to list the general objectives of that Party the same list will turn up—full and stable employment, fair distribution of income, steady economic growth, control of the balance of payments, control of prices, maintenance of the value of money, the reduction of emigration and so on. We all have the same list and economists can advise us on the questions that are involved in all these single problems. What the economists cannot do is to analyse the full, total, complex and complete situation of the Irish economy in its European context today. Because they cannot analyse it in full they cannot predict all of the inter-actions which would be involved. Hence it is necessary for any person who has to make a decision about the policy to recognise that there are areas of uncertainty and that in time either of crisis or uncertainty a priority of objectives must be determined.
It is here that differences will arise. This determination of priorities is a question not of economic expertise but a question of a value judgement which confronts those responsible for key policy decisions. The economists can tell us that inflation at any time in this country is equivalent to a deterioration of our balance of payments position; they can tell us also that deflationary measures can check growth and can inhibit its recovery for an unknown period. But the position is how do we choose between these two in any given situation? What faces us today is the choice as to whether we repeat what in my opinion were mistakes of over-action in this country in 1956, and in Britain in 1961, in order to keep our balance of payments tidy and neat in every single year at the cost of losing our growth momentum, of whether we are prepared to accept a temporary out of balance situation in order to concentrate on growth.
This is a choice that lies before us and I would submit that in our present situation, both from the point of view of the development of the economy and from the point of view that our word is pledged to growth— that we have pledged ourselves in the OECD to look to a policy of growth— growth should be the first priority in the policy of any Irish Government at present. If we fail on the 1970 target we will have let down our partners of free Europe and North America and even more we will have let down our own people and we will have demonstated to Europe quite definitely that we are unfit both economically and temperamentally for entry into EEC.
We do face a dilemma at present but I submit that we should not have to face this dilemma and that we should not have to make this critical and ominous choice between concentration on growth or concentration on the balance of payments position and that there should have been no setback such as appears to exist at the moment. There need not have been a set-back if the Government had followed out and converted into a detailed policy the principles of the programme which they published for economic expansion. In particular, I think we have not had from the Government an effective investment policy, that we have not had an effective productivity policy and that we have not had any income policy at all that is worthy of the name. I feel that on those three counts the Government are open to criticism.
If we go back to theProgramme for Economic Expansion we find in paragraph 8—which I already quoted:
As capital is scarce, it is desirable both to conserve existing capital assets and to obtain the utmost value for new outlay.
I submit that if we look at what has been happening in recent years in this country, we must come to the conclusion that public investment, and public support of private investment, have not been adequately examined from the point of view of economic and technical efficiency. If we look through the Book of Estimates we find that on the staffs of the Department of Finance and the Department of Industry and Commerce, only one professional economist is employed, as such. I am not denying that there are people with economic qualifications in those Departments apart from that, and neither do I want to take away in any way from the merit of the step of appointing a professional economist, as such, but I think that is a tendency, a direction, and a move, which should have gone much further, and which should have been started much earlier.
We have to face the situation that in this country we can only afford to invest in the best and most suitable plant. When we are investing, for example, in plant in our manufacturing industries, if we merely import plant, know-how and processes directly from other countries, we are, in effect, putting ourselves in a permanently disadvantageous position in regard to competition. Unless all our new processes and plant are the best available and are suitably adapted to our conditions, or where possible are actual innovations, we shall not be able to get ourselves into a really competitive position. Above all, we shall never be able to get into a position in which our capital investment will be as good for our conditions, as capital investment is in other countries for their conditions.
We must do far more than we have been doing, not only in investment itself, but in the actual creation of investment opportunities, that is, in research and development. It is not a sufficient answer to say that the money to be expended on the Bureau of Industrial Research and Standards is being increased. The fact that we are now spending £137,000 for industrial research and standards, in this Book of Estimates, is better than if we were spending a lesser amount, but it is far short of what we still have to do to get anywhere near the competitive conditions of other countries. That fact has been presented to the Government again and again. Indeed, I was a member of a committee of the Engineers' Association which presented a report to the Government in February, 1959, on many matters including, in particular, some views and figures in regard to the question of the research and development effort which was needed in order to make the Irish manufacturing industry competitive.
Professor Leahy, Professor of Mechanical Engineering in University College, Dublin, later in that year made a detailed estimate of the money which would be required to make Irish industry competitive allowing for the present structure of the Irish manufacturing industry. He estimated that £1 million would require to be spent on research and development. At the moment something less than one-quarter of that amount is being spent. We will never get real value for capital, and we will never get real value for investment, unless those conditions are changed.
Let us look at the overall position of investment in research not only in industry, but in agriculture. In the Book of Estimates presented to us the total expenditure from Government sources on research is something between £1,000,000 and £1,200,000, and the word "research" covers such activities as seed-testing in the Department of Agriculture which is carried out by technicians and which cannot properly be described as research at all. That sum of £1,000,000 or so is our total investment in research. The amount is in sharp contrast with the figure given by Professor Carter in a Finlay lecture in University College, Dublin, last year. Professor Carter was an advisor to the Irish Government as a member of the Capital Advisory Committee, and to the British Government on various aspects of economic and scientific policy. His estimate of the requirement of Government expenditure on research in this country is at least £5 million, and that to be comparable with the civilian research expenditure in Britain the amount spent should be of the order of £10,000,000.
I think that we are far from having worked out in detail an investment policy which will ensure that we will get value for money invested in accordance with the principles laid down in theProgramme for Economic Expansion. It is not enough to invest capital unless we get real value for the capital invested. Labelling it as productive capital is not enough. We have to ensure that not only is it really productive, but that it is productive at as high a level as it can possibly be.
If we leave the question of capital and go to the question of productivity policy, here again I think too little has been done during the first four years of theProgramme for Economic Expansion. The first comment I want to make is that I think the word “productivity” which is bandied about so much nowadays is a highly misleading term. The term “labour productivity”, which is used to indicate the ratio of output to labour input, is highly misleading since it carries with it the innuendo that it is something which depends on the effort of the worker whereas, in fact, this so-called “labour productivity” is something which is the responsibility of the manager, and indeed “management efficiency” would be a far better term to describe it.
For that high productivity as it is called—and I suppose one must follow the fashion and use the word—what is involved is the wise purchase of plant and equipment, proper organisation and control of operation, and a personnel policy. Here I think we see the weakness of productivity policies as they have been carried out in this country. Too many of our productivity policies have concentrated on plant and equipment, organisation and control, without bothering about a proper personnel policy which should be the start of any effort in productivity. Productivity is not only the responsibility of management; it is also the responsibility of the Government, because one of the greatest factors in productivity—and what is a necessary part of any productivity policy—is the education and training of certain people who cannot properly be trained within the firm: top management, scientists, engineers and technicians. The improvement in the existing practice will give limited returns, but it is not sufficient. Unless our manufacturing industries are receptive of new ideas, and continue to be receptive of new ideas, we will never have anything in the nature of a real productivity policy.
The position is that here again is something in respect of which I think the Government have failed to translate a principle into a detailed policy for action. Again, this is a point which was contained in the report presented to the Government in February, 1959, by Cumann na nInnealtóirí, the Engineers' Association. In this connection, Cumann na nInnealtóirí, pointed out that in the countries of Europe, with which we hope one day to be competitive, there were at least 15 technologists per 1,000 workers. What was the condition in this country? The Report states:
The group of Cumann na nInnealtóirí responsible for this present report has estimated the number of technologists per 1,000 workers in the transportable goods industry in this country to be about 2.5. Even in large well-established industries, ranked as moderately efficient by Irish standards, this number is as low as 3.0 to 3.5. It is, however, most significant that when a number of industries were examined which are known to be producing at competitive world prices, the number of technologists per 1,000 workers was between ten and 20.
The point is that Irish industry will have to make itself receptive in this way. Of course Irish industry has got to be told this, and I think the Government again bear a responsibility in this regard. Senators will remember that when this House was dealing with the setting up of a highly complex industry, when it was dealing with the nitrogenous fertiliser factory at Arklow, the Minister for Industry and Commerce did not feel that there was any necessity for a technically qualified person to be on the board of that company. In investigations made in Britain, published by Professors Carter and Williams in their book,Industry and Technical Progress, they have shown a high linkage between the number of scientists and technologists on boards and the progressiveness of industry. I hasten to add that Professor Carter and Williams are not technologists but are both economists. They examined 110 case studies in detail and found that in 70 of 110 cases there was a positive connection between progressiveness of the firm and the presence of scientists on the board. In 19 cases, the effect was negative and in 21 cases, it was doubtful. This is the position in British industry, the position that was found as a result of a special survey. The question is: is it fair to blame Irish industry for not following suit when in the case of a highly complex industry, the Minister for Industry and Commerce himself does not seem to be convinced on this point and does not seem to be aware of the conditions in these industries in other countries?
Above all there is the problem of technicians. For years past, engineers in this country have been urging the Government that the greatest lack in this country and the greatest hampering of productive efficiency in this country is the complete lack of technicians. Again there has been no real move towards a policy on this point. The point is that something can be done now. Something could have been done four years ago on this point, and something can be done long before we receive the result of two years' survey under the auspices of the OECD. We require a policy on technicians, a policy on technical training, an educational policy on the use by management of technicians and a proper recognition of the status of technicians in our industrial world.
It is easy to say that we have a National Productivity Committee and that we have been doing a great deal for productivity. I agree a great deal has been talked about productivity in this country, but I do not think half as much has been done, and I think we have had far too much talk and far too little action on the subject of productivity in the real sense of the word. The word is being used as a sort of magic ju-ju—that in some mysterious way we will, by continually chanting the word, reach higher production in our manufacturing industries. Again the Government hold the responsibility for this.
In that connection, I should like to quote from the Minister for Transport and Power, speaking on the Vote on Account—Volume 200, No. 6, column 844, of the Dáil Reports:
Obviously there has been an immense growth of activity in increasing productivity. There are seminars dealing with productivity of every kind. For the first time we have real action by the National Productivity Committees. We have speeches by trade union leaders on these committees. We have a growth in the country of associations of every kind interested in the improvement of rural life.
This is not what West Germany means by productivity, not what France means by productivity and not what Italy means by productivity. I think the sooner we overhaul this productivity drive the better.
Let me quote from the Minister for Transport and Power in column 845 of the same debate:
I think it is true to say that in no other country in Europe has there been a more consistent campaign for the growth of productivity and the stimulation of exports than there has been in this country.
The person who believes that is true knows nothing whatsoever about what is happening in regard to productivity in Holland, in France, in Germany, in Italy and in Ireland. It is simply not true that we are leading Europe in a productivity campaign. We are not even playing the game well. We have not even started and the sooner we get down to it, the better. The more we do so we will find our productivity will rise, and the sooner we will avoid need for White Papers lamenting that productivity has dropped down and we must start getting terribly worried about incomes and about wages. If we had a proper investment policy and a proper productivity policy, there would have been no falling off in 1962. There would have been no gap between productivity and wages and there would be no dilemma facing the Government today.
I agree that we need a wages policy and an income policy in this country. I agree there must be some relation between income and overall resources. What we want is a wages policy that will not interfere with economic growth. A wages policy that will not interfere with economic growth is not easy to devise and is something that must be planned with care. It may be that our present dilemma has been highlighted by wages outstripping productivity, but it must not be forgotten that during the past few years, we have been having CIO reports which have been showing an inflation of another kind which faces us, beyond yea or nay a cost inflation, in the Irish economy due to relative inefficiency in Irish industries. If we had had a proper investment policy and a proper productivity policy, many of these inflations which were revealed by the CIO reports would be well on the way to elimination. There is no reason why we should have a wages policy under which the worker should be asked to pay for the incompetence either of the Government or of management.
Even if we do have a wages and income policy of the type the Government consider it should be, what is going to happen? The one thing about wage restraints is that they do not work.
I wish to quote from an article in theIrish Banking Review of March, 1962,—“Wages and Economic Planning” by Richard Bailey, Director of Political and Economic Planning. That organisation is an independent research organisation in Britain and in case anyone thinks it has dangerous left-wing tendencies I might mention that one founder member was Harold Macmillan M.P. Here is what is said:
Although different attempts at keeping incomes and production in balance have been made, the experience has always been that either incomes have risen faster than production so pushing up prices, or restrictions have been imposed on incomes that, while checking rising prices, have at the same time caused a setback in employment and production alike. This has happened in cases where attempts have been made to adjust pay by voluntary agreement, and where compulsory arbitration has been tried.
The position is that where these restraints have been tried they simply have not worked and where there has been a failure to keep wages in restraint it has not necessarily been an economic disaster. If we look at the General Bank Report for 1962 we can find there on Page 42 tables of output per man and earnings per hour for several European countries. What do we find here in reference to Western Germany and France? If we take output per man and earnings per hour in Western Germany in 1950 as 100 in each case what do we find in 1961? Output has gone up to 167 and earnings have gone up to 229. Earnings have outstripped productivity in Western Germany. But Western Germany did not close her gap and has not reached economic disaster. While it might be said that Western Germany has a condition of a considerable surplus on external balance yet it can also be said that we have a sufficient surplus on external balance to enable us to ride a temporary imbalance of payments for a short period.
The question is that there may be no necessity for correction. There is no certainty of economic disaster. There has not been economic disaster in the European countries where we have had the conditions which were outlined in the Government's White Paper. We have at the present day in countries such as Germany and USA examples of the classic economy of high wages which is in itself the most effective challenge possible to management. When labour costs are high labour must be used efficiently and it is this efficient use of labour that makes the German economy successful. It is the inefficient use of labour that makes our economy a relatively stagnant one. We often hear of the principle of equal pay for equal work. I think a great deal could be said for equal pay for equal capacity. I think we have in much of our manufacturing industry people employed but not used to their proper capacity. This is the fault of management and if we had some plan such as equal pay for equal capacity management would pay for its own inefficiency and pay for its unused capacity.
We must realise that we are not isolated in this matter. The problem which we face at the present moment and which seems to have put the Government into a deflationary state of mind, or at least put their thoughts running in that direction, is something which is happening in other countries. Let us look at the position in other countries and ask what is its significance. I would like again to quote from an independent economist on this source. I would like to quote from a publicationWages in Ireland 1946 to 1962 by Edward Nevin, a British economist, and published by the Economic Research Institute in February 1963. What does he say of the increase of wages in Ireland from 1946 to 1962. He says:
To lament this inflation of the money-wage in Ireland without reference to similar developments elsewhere, however, would clearly be absurd. To maintain a low level of wages in a world of rising prices would merely involve gratuitous gifts to other countries in the form of (to them) improved terms of trade which would be advantageous from Ireland's point of view only if increased exports (assuming a positive real elasticity of demand for them) were regarded as an unmitigated good; alternatively, it would involve a redistribution of income in the form of rising profit margins. Looked at in the European context, it would be difficult to argue that the Irish wage level has risen dangerously rapidly in absolute terms. Irish wages are still distinctly low by European standards; by British standards they were even lower in 1961 than in 1953, despite a roughly equal rise inper capita product in the two countries during recent years.
The question is, I submit, that we should not treat increased exports as an unmitigated good. It is a good certainly but it is not an unmitigated good. Concentrating on our export policy is not going to be worth while if it destroys the overall growth— overall growth that we may not recover for several years. The Minister will probably tell us before this debate is over that this country is in a good condition in relation to emigration because emigration was lower last year than it ever was before. I want to say this to the Minister. Last year was a year of pay pause in Britain and it was a year in which wages were rising here. If there was not a slackening of emigration under those conditions of stagnant wages in Britain and rising wages in Ireland then we would never get it. But if, at a time when Britain is moving towards getting her economy going again and abandoning her policy of restraint, we take steps to restrain wages, we could becomes stagnant here and emigration would rise. Emigration would certainly be on the way up again.
As I said before, we should have an income policy and I think it is something which we should have if we are to plan our growth. In this connection I think it is only fair that I should say what I think should be the conditions of such an income policy. Perhaps before saying what an income policy is we might just say what it is not. I want to quote again from the article in theIrish Banking Review, March, 1962, by Richard Bailey, “Wages and Economic Planning.” Here is what he said:
The following expedients and devices are not regarded as constituting a wages policy:—
1. Exhortations to labour to exercise restraint.
2. Informal arrangements with labour to hold off all wage demands for a given period.
3. The use of arbitration machinery where those concerned are not made aware of the possible "average wage increase" before starting negotiations.
4. Intervention by the Government in a labour dispute to secure a compromise.
5. Centralised national wage bargaining without reference to "guiding light" signals from the Government.
These are given as things which do not constitute a wage policy and I think if we take the word of an independent economist in this case that these are not wage policies in the real sense of the word, then we can say quite clearly the Irish Government have no wage policy in the real sense of the word. If there is to be a real wage policy then there must be a parallel policy in regard to prices, profits, and management efficiency. Unless there are parallel policies here—and I do not mean by policies mere statements of sentiment around which the Government hopes are centred; I mean detailed policies which have been worked out—unless we have these we are not going to have a wage policy in any real sense of the word.
In this connection it is interesting to look at the views of two leading members of the Liberal Party in Britain, the Party who believe in a planned economy, the Party who do not believe either in the tinkering of the Conservative Party or in the nationalisation and socialisation planning of the Labour Party, a Party who believe in free enterprise under planning. What do they say? They say:
The first essential of any national incomes policy is that it must be by consent.
Secondly, they say:
Co-operation must be obtained from unions and boards of directors as organised sectors of the community.
Then they go on to say:
In particular, union co-operation would have to be sought as part of a package deal including for instance, the taxation of capital gains, worker-participation in coownership schemes, revision of company law to increase industrial democracy and a decent redundancy policy.
Set out these things in detail and you are nearer to having an income policy worthy of the name. I submit that this Government by their failure to work out in detail an investment policy that would be an effective policy, a productivity policy that would be an effective policy, have produced a dilemma and now they have fumblingly sought a wages policy. They have given an indication of their lines in thinking in this and having created a dilemma, have done, I think, absolutely nothing to remedy it. What is the White Paper on Incomes and Output? It is not a real wages policy and it was not intended to be so. Nevertheless it reveals a danger, I submit, of moving towards deflationary expedients.
What will be its effect? Of course we must look at certain possibilities. First there is the possibility that the White Paper would be acted upon by employers in all sectors and if this happens I submit what is most likely to occur is a slowing down of growth still further and a real danger of slipping towards the mistakes of 1956 in Ireland and towards the mistakes of 1961 in Britain. What happens if it is not acted upon at all in any sector? What then will happen? I submit that even if this happens the publication of this White Paper has already done damage. It has shaken the confidence of workers and union leaders and by its very publication it may result in the generation of resistance to worthwhile productivity proposals which workers quite understandably might look upon as merely an alternative way of imposing wages restraint. Of course their attitude in this is much reinforced by all the talk that has gone on about the imposition of some form of purchase tax characterised by the Commission which discussed it as a "wages cut in disguise".
What happens if it is acted upon only in relation to public servants? If this happens it will undoubtedly affect the morale of public servants. It will lead to the loss of well trained staff from these jobs and will affect recruitment of first-class people to the Civil Service. I believe that the Civil Service is in difficulty in these respects already. I do not expect the Minister to agree with me but I do believe that it is in difficulty in these respects already and what the Government have done in publishing this White Paper will tend to aggravate it. Over all the White Paper has done and will do harm and probably without real economic benefit.
Before I conclude I should like to ask the Minister some specific questions regarding his intentions and the intentions of the Government on income policy. In particular I should like to ask him the meaning of the last sentence of paragraph 21 of the White Paper on incomes and output:
It is not envisaged that conciliation and arbitration procedures should be put in suspense but rather that the findings should be considered in relation to their possible reaction in other sectors and, if necessary, not applied until this can be done without damage to the national economic interest.
What I should like to ask the Minister here is whether it is the intention that conciliation and arbitration should proceed as if the White Paper never existed and that only when the results of conciliation and arbitration come to the Ministers concerned the intentions of the White Paper will be carried out. This means in effect asking the Minister does he intend to instruct the official side in conciliation to ignore the White Paper and ask the arbitrators to do likewise because it is clear from reading this paragraph and from what was said in the Dáil by Ministers that the findings are to be in abeyance but that conciliation and arbitration are not to be in abeyance, and I should like to ask the Minister to clarify this particular point. In other words, is there going to be suspension only of the findings and are we going to ask the official side and the arbitrators to wipe from their minds every Ministerial speech and statement? That is what the Government say they can do—a greater task, I think, than to produce a four per cent. Or six per cent. growth rate in our economy. They say in effect that that is what it is intended to do and I would ask the Minister to clarify it. Is it his intention to do this and the intention of appropriate Ministers to do the same thing for statutory bodies?
If this is not done there will be a double effect, an effect on the minds of the official side and of arbitrators and then when the findings come forward those findings are going to be in abeyance. When things improve, are public servants to be given only this deflated increase? If things are to be done in this way the Government are imposing not one restraint but a double restraint on all arbitration and conciliation.
At the end of the Central Fund Bill debate last year I asked the Minister about certain parts of the Civil Service which had not received an eighth round increase. The position was, he assured me at that time, that these were going to arbitration and that the question of an award and the date of an award was a matter for arbitration. Since then we know that the group with which I was concerned, the clerk typists, got as far only as the High Court. I would ask the Minister specifically when this case eventually goes to arbitration will he ask the arbitrator to turn back his thinking 12 months and ignore everything that has happened in 12 months or are special arrangements to be made in this regard? We need much more clarity on this point.
With regard to local authorities one case which I know only too well is that of local authority engineers. Their case has been dragging on since 1960. A claim was made in April, 1960, and in October, 1961, an adjustment was made. At that time it was indicated that the adjustment which had been made was not an answer to their claim of 1960 but merely an adjustment to balance up differentials due to increases in other grades. Now we find the position in November, 1962, that these people were told that their claim of April, 1960, is no longer worthy of attention; that they have in fact received a complete eighth round. Here, again, I would point out to the Minister that this case is one which we hope will go to arbitration at some stage. In this case also what are to be the instructions? What will be the Minister's advice to the Minister for Local Government when he is asked to sanction these particular increases?
In speaking about the present economic position and the present economic and financial policy of the Government I speak, as it were, in three capacities. I speak first, as a technologist. As a technologist, I have a knowledge of the part played by technology in the economic growth of other countries. As such, I cannot but grieve at the extent to which we have fallen behind. I speak also as one who returned to this country from abroad and as one who returned because he believed there was a future in the country. From this point of view, if we are to have a future, to have any future in Europe, I believe that it can only be achieved by keeping our eyes fixed firmly on the idea of economic growth. I speak in the Seanad as a representative of salaried workers who have been particularly threatened by the Government's clumsy reaction to a situation which was largely brought about by their own failure to think out principles of policy into detailed policy and action. By re-thinking their policy the Government could avoid further damage to our growth; they could prevent further harm to individuals and they could enable us to keep our word to the other OECD countries by remembering that we were pledged to growth and that this should be the principal objective of our economic policy.