I should like to begin with a reference to the remarks with which Senator Cranitch concluded. I think every Member of the Seanad would agree we are coming to the close of what might be described without exaggeration, as a somewhat turbulent year during which we have had many changes of one kind or another, including Ministerial ones. When we were talking on the Appropriation Bill 12 months ago we had a different Minister for Finance sitting in the Chair. Now 12 months later we are addressing our remarks to Deputy Colley in that office.
The year came in like a lamb, notwithstanding the economic position, but it is certainly going out like a lion with the threatened introduction of section 2 of the Offences Against the State Act. I do not propose to dwell at any length on this particular measure which is the basis for an amendment put down by Senator O'Higgins and Senator Kelly. The subject-matter of that amendment was dealt with very comprehensively and adequately by Senator O'Higgins. I think that the Senators here who would not agree with what he said would give him credit for giving a very able exposition of his point of view and, in fairness, I think the same remark would be applied to Professor Kelly's contribution.
It is usual for Senators to refer to the ordinary people they meet as a cross-section of the public. It is amazing at times the different opinions one gets from such cross-sections. I listened to Senators on one side of the House talking about the views expressed by cross-sections of the people they had met on the threatened introduction of Part II of the Offences Against the State Act. I also discussed this measure or threatened measure with what I would regard as a fair cross-section of the public, people who would not be politically partisan but at the same time would take an intelligent interest in the country's affairs. I can say that, generally speaking, there was, and, I believe, still is very strong opposition amongst the ordinary people of this country to the introduction of a measure such as this.
People have described it as smacking of the jackboot mentality and the police State. These may be exaggerated terms but at least they do suggest that the ordinary man and woman are not happy to say the least of it about the possible introduction of this measure. They asked a number of questions which I personally found it very difficult to answer and which, as far as I can see and from what I have read of the Dáil debates, the remarks of the Taoiseach and some Ministers have not been answered.
Perhaps if I reiterate some of those questions now it may be helpful to a rational and moderate dialogue on this matter. The most common question one hears is the obvious one: Is the measure really necessary; is it a panic decision or a diversionary tactic or has the Taoiseach been guilty of making an error of judgment by rushing into the threat of introducing this measure? The next question is—and the previous speaker, Senator Cranitch, seemed to support the point of view that it was necessary—why has the Taoiseach not spelt out the reasons clearly and frankly? I am aware of course, as we all are, that he stated in the Dáil that he had received evidence from the Garda authorities that certain actions threatening life and property had been contemplated by certain individuals unnamed or organisations unnamed. If this is so I think the Taoiseach might have gone further and given the Dáil and the people more concrete evidence of these reasons for introducing, at such short notice, this unpleasant measure.
Further questions are: have all the existing resources of the State for the maintenance of law and order been exhausted and found ineffective to contain this unexplained threat to persons and property? Have the Garda always enjoyed the full support of the Government in matters like this? Is the threat so great that if the Garda force was expanded and better equipped, they could not deal with it? Is it not a fact that members of an illegal organisation have openly paraded with arms in defiance of the Government and got away with it? Is it true that action against members of an illegal organisation has been called off by direct or indirect intervention of members of the Government? These questions must be answered before the Government take action to prevent any citizen from enjoying his rights to a fair trial before internment.
During the past 12 months and since 1964, what might be called the year of the green light, the year in which the then Taoiseach, Mr. Seán Lemass, took a decision which appeared to many to be largely dictated by political rather than economic considerations, we have been suffering from inflation. Today we have roaring inflation, rising costs, prices up by approximately 20 per cent in the last three years, rising unemployment, falling production, growing balance of payments deficits, all the signs of a sick economy. These words are not my words; they are the words that the Minister for Finance and other Ministers and the Taoiseach have been using very emphatically, particularly during recent months.
The Government's efforts to grapple with the situation have lacked firm handling and have failed to carry conviction, due to the stop-go nature of their policies. Towards the end of 1969, the Taoiseach announced a norm of 7 per cent for wage and salary increases. He warned manufacturers and businesses generally that any increase in excess of this figure given to the employees would not be allowed when applications were made for price increases. This norm failed mainly because it was hopelessly untenable in the circumstances of the day and because it was made without any prior consultation with employers or workers.
Next came Budget No. 1 in 1970 in which the then Minister solved his deficit problem by doubling turnover tax thereby giving another push to inflation. Then came the present Minister's short-lived strong measure which put a ceiling on outstanding 12th Round increases and on future wage and salary increases. The reason for this action by the Minister was stated to be the failure of the employers and workers to arrive at an acceptable formula for wage increases. The Minister, as we know, was forced to modify his action, quite rightly, by allowing 12th Round increases to stand and virtually abandoning the 6 per cent ceiling. The ball was then fired back to the Employer-Labourer Conference, with the Prices and Incomes Bill hanging over their deliberations.
The recent agreement is the first sign of stability and is to be heartily welcomed even though it does appear to be above the Government's limit for increased wages and salaries. Everybody should support the Employer-Labour Conference in bringing about the first measure of stability, in providing the basis for regularising our economic affairs and getting the economy off the ground again.
The Finance (No. 2) Bill which we are considering in conjunction with the Appropriation Bill has one provision on which I would like to make a comment. I refer to the shattering increase in corporation profits tax, a bombshell which will have very serious repercussions on industrial expansion and consequently on employment. I realise that the Minister for Finance had a serious problem on his hands arising from the mismanagement of the economy which left him with the difficult task of having to find £21 million to cover the deficit in the current accounts. He has decided to find this money under several headings: first of all, by reducing Government expenditure by £7 million. The Minister has not told us, as far as I am aware, under what heading he proposes to reduce Government expenditure by £7 million. It is a move that is well worthy of commendation. It is the first really anti-inflationary measure that will have some results if the Minister can put it through. The Minister has decided to raise a further £5.3 million by extra taxation, just under £1 million on luxuries and almost £4½ million from extra company taxation. He proposes to borrow £8½ million but has not told us so far from where that £8½ million is to come. Is it to be borrowed from internal sources or from external sources? If it is to be borrowed from internal sources it is bound to add to the inflationary cycle; if it is to be borrowed from external sources it will bring more money into the economy and have an even worse effect on the inflationary situation. The Minister is faced with a very difficult problem in containing inflation.
His taxation on companies is the worst possible anti-inflationary measure. It must have an effect on capital growth, it must affect future production and consequently employment opportunities. In this day and age it is extremely difficult to borrow money. The Minister and the Government indicated before the bank strike that there should be a restriction on the amount of credit which the banks would make available. In conjunction with this restriction the Minister is cutting down on the opportunities for manufacturers and companies generally to save money out of profits and to plough them back into their enterprises.
Although the situations are not strictly comparable, it is worth noting that the British Chancellor of the Exchequer quite recently reduced the rate of corporation tax on companies by a very small amount, 2½ per cent, while our Minister for Finance has increased total taxation, corporation profits tax and income tax combined from 50 to an effective 58 per cent or approximately 16 per cent. In the current year, taking into consideration the retrospective nature of this new measure, companies will be called on to pay something like 74 per cent in taxation. This measure seems to me to be completely against the views which the Minister himself expressed in this House only as far back as 29th July last at the conclusion of the debate on the Finance Bill. The Minister made what most of us will recall was a very fine speech and I, for this side of the House, proposed that we should let our tea break run on a little longer than usual in order to give the Minister an opportunity of concluding. The Minister impressed not only those on his side of the House but also those on this side of the House.
On that occasion the Minister said, and I mention this in relation to his recent policy of increasing the already high level of taxation on companies, at column 1318 of the Official Report of that date:
I know from personal experience as Minister for Industry and Commerce that in quite a number of cases the margin of profit of some Irish manufacturers is dangerously low. When I say dangerously low I mean those industries are in danger because of inroads on their markets or for some other reason of having to close down and of putting their workers out of employment. As Minister for Industry and Commerce I was frequently faced with the dilemma of either allowing a price increase or of refusing it altogether or of reducing it at the risk of causing that firm to close down and to put its employees out of work.
The Minister went on to say:
I am making this point because it is frequently thought, or appears to be thought, that most industrialists are making enormous profits. I can say that none of the Irish industrialists serving the home market is making enormous profits. Some of them are making satisfactory or even handsome profits but many are making dangerously low profits.
I think the Minister hit the nail directly on the head there. With due respect to the Minister, I do not think the situation has changed in any event to warrant the heavy increases in taxation on company profits that he has brought in under the Finance (No. 2) Bill. It might be said quite rightly that the Minister by his action has helped, or is helping, to kill the golden industrial goose and is doing so on the eve of our probable entry into the Common Market.
There is another aspect of this situation which I feel I should mention. The Minister's decision to increase heavily taxation on manufacturers and companies generally coincides with the period of continued reduction in tariff protection. This occurs at a time when tariffs are beginning to bite severely. Continuing inflation combined with rising costs, the Minister's increased taxation on companies and the lowering of tariffs are bound to affect manufacturers and companies in the year ahead.
In connection with the question of tariff cuts, I have two examples very close to home of which the Minister himself will have some knowledge. They are the clothing industry and the footwear industry. Two factories in Limerick city—one is a clothing company which employs 650 workers and the other is a footwear factory which employs 250 workers—are in difficulties. The footwear factory has recently been served with notice of a probable closure next May and the clothing factory is now experiencing very severe competition not only in the export market, where they have been trying to build up satisfactory and profitable connections, but more important still in the home market. That is a fact that is sometimes lost sight of when we talk about lowering tariffs and the protection which industry has enjoyed over the last 20 or 25 years. Not only are we being offered the opportunity, with which I agree fully, of exporting and competing in the foreign markets but we are also opening up our small home market to factories outside this country. Most of those factories are larger than our own and, of course, are able to operate with lower costs.
Imports, as we know, have been increasing. Our exports have increased over the last ten years but they are not increasing at a sufficient rate to cover the increased rate of imports. In saying this I do appreciate that over the last 12 months there has been a slight improvement in our balance of payments situation. This improvement is so small that it will not make any significant difference within this financial year unless there is a tremendous increase in exports over the next four or five months or a substantial reduction in imports. None of the present indications seems to suggest that either of these things will happen.
I should like to refer now to a matter which has been brought very much to our notice recently and which concerns certain factories which are in danger of closing down in the face of heavy competition from outside. I refer particularly to the position of branch factories in this country which are owned by outside interests. Where a policy of rationalisation of production is decided upon by a British company—I am not specifically selecting British companies but they are the nearest to us and they are the cases of which we have most examples—because its markets are falling, because it has to lower its costs or for some other reason the chances are that it will close down one of its Irish factories, or its Irish factory if it has only one, and supply the Irish market from its home base. This is a perfectly logical development. It might be regarded as ruthless and lacking in humanity, but I am afraid we are living in an age of ruthless economic policies. We are living in an age when decisions are made by faceless men in backrooms in big companies who decide by looking at a set of figures that they will close down a factory in Kerry, Limerick or some other county, so as to reduce their costs or increase their profits. These decisions are taken without any reference to local interests and, so far as I can see, there is very little that our Government can do about it. It is called rationalisation, but it can be a very cruel exercise indeed.
I should like to turn for a few moments to another development in this country in which I see great opportunities and great potential. I have been critical up to now and in one respect at least I would like to show some optimism. I refer to the policy of regionalisation, a subject about which public representatives and others. The we read and hear a great deal from the individual does not count any longer. We are living in an age when policy of regionalisation offers this country, in our particular circumstances, a tremendous opportunity of harnessing all the various interests and combining all the relevant facts for a national effort which must be made if we wish to overcome the material and geographical difficulties under which we suffer.
Regional development organisations with no statutory powers have already been established, and there are regional tourism bodies. Regional health boards have just been established. The trouble so far in regard to the regional bodies dealing with economic and financial affairs and industrial development, apart from the fact that they have no statutory function, is that a great deal of overlapping occurs. Semi-State bodies such as the Industrial Development Authority overlap with the county development teams. The tourism bodies are intruding on other organisations and it seems to me that the development of industry, which I regard as a primary necessity, is divided among too many conflicting interests.
I should like to see certain provisions of the Devlin Report put into effect so that the Industrial Development Authority would not only promote new industries but would also finance them. No Department of State should be allowed to interfere with their work. This body should be given adequate funds and skilled personnel and allowed to get on with the job. The fact that it is proposed that the Industrial Development Authority should be regionalised is a very encouraging measure, provided we have genuine regionalisation and not centralisation under a new facade. One of our great tragedies is the amount of centralisation we have had in recent years.
In spite of all the committees and regional organisations set up they are all really only talking shops. They propose resolutions and demand that Ministers act in this way and that when, in fact, the faceless men in the Departments in Dublin decide the issues eventually. These local committees and councils have little or no power. We depend on the human element. Unless we can generate enthusiasm and come together in a binding force to work for the common good, I take a dim view of our future in the free trade area. In each regional area there should be a regional board with proper statutory powers to develop the area. There has been criticism about the growth areas and suggestions that if there is a growth area the countryside is denuded. I do not agree with this because if a city like Limerick is chosen as a growth area, the smaller towns and villages nearby will prosper along with the city. They have a much better chance of prospering if they are represented on a board who are responsible not for the development of a limited area but for the entire area.
There is one way to ensure that lopsided development does not take place, as I fear may happen under the existing scheme. There must be some balancing factor. If laisser-faire policy is adopted the east coast will be developed to the maximum and the south and west coasts will be virtually deserted apart from tourism. These regional areas all have the necessary facilities to supply skilled technicians. After battling for many years, we in Limerick have at last succeeded in getting what has been described as a third level Institute of Higher Education. I am very much in favour of providing this technological training in a wide area and of the giving of pass degrees. This Institute of Higher Education appears to have become bogged down despite the enthusiasm of a very competent and enthusiastic Director, Dr. Walsh. Although it does not come directly within the ambit of the Minister's Department, this is the only opportunity we shall have before the New Year of referring to it and I should like the Minister to use whatever influence he has in helping this project to operate as soon as possible.
I may have over-emphasised the question of the regional boards, but they are very important. If their regional objectives could include equality of opportunity and living standards in the context of the national development and if they are given the necessary powers and financial help the imbalance of development which I regard as a very real threat would not occur. Some devolution of the State machinery will be necessary if regionalisation is to be a success. I do not agree with this idea of transferring one or two State Departments to the west of Ireland or any one area. It may be a political gimmick but it is an ill-judged suggestion. I would prefer to see in each of the development areas a Government house or State house with sections of each Department represented. Then there would not be this great delay in the payment of social welfare benefits because every claim, no matter how minor, must go to Dublin for judgment by some anonymous person in the Department of Social Welfare. I am not criticising the people in that Department; they are the victims of a machine. I remember that, years ago, when social welfare payments were dealt with by the local social welfare officers—I instanced this example when talking on a similar Bill last year—if payment to the people in his area was delayed, he cycled two or three miles to make sure that the person concerned received their social welfare benefit, knowing that they could not wait until the following day.
These are the sort of little human touches that are completely missing from the type of State-governed machine which we appear to be erecting in this country. The individual is beginning to count for less and less while the organisation, the committees, the consultants and the commissions count for more and more. These are perhaps all good things in their own way but to my mind almost completely divorced from the human element and certainly from the individual. We Irish are a nation of individualists and if for any reason we get carried away with this modern concept of the big organisation, the big machine, the big company, the big government, we shall have lost something which this country has maintained in good terms over centuries.
I should like to return to this question of competition, because it is something of which the message has not been spelt out or has not been appreciated by those concerned—either the manufacturers or the workers. Whether we enter the EEC or not, we are going to be faced with continuing and growing competition under the terms of the Anglo-Irish Trade Agreement. Therefore if we are to survive in this country and if we are to continue to expand employment, which we must do if we are to absorb people coming off the land, we must prepare for greatly increased competition. In many ways we are more vulnerable than any other country in Europe. Our geographical position as a small island off western Europe, underpopulated, leaves us in the position that if we cannot manage our own affairs to provide for our own people, somebody else is going to do it for us. If we cannot compete on equal or better terms not only will we lose our export trade which has shown, especially in manufactured goods, such a wonderful expansion over the last decade—I pay tribute to all concerned —but our home market will also be in danger from outside competition. We can withstand this challenge if, and only if, all sections of our people combine in a sustained effort to produce goods of acceptable quality at competitive prices backed by efficient marketing and distributing organisation. In this regard I should like to pay tribute to the very effective work that Córas Tráchtála have done since their establishment. I think that any Senator here who has had experience in dealing with Córas Tráchtála would join with me in paying them tribute. Their officers are excellent, they do a very good job sometimes under very difficult circumstances and their enthusiasm to do a good job is a tremendous encouragement for anybody who has to deal with them.
I should also like to pay tribute to the Industrial Development Authority and particularly to their small industries division, since being set up under the directorship of Mr. Tom O'Connor, the former County Limerick Manager they have done wonderful work and have really got down to a basis of supplying and assisting small industries in isolated country towns and areas that normally would not hope to qualify for industrial development.
I recall some years ago the then Taoiseach, Mr. Seán Lemass, proposing that Government Departments should become developing corporations. I remember that made quite an impression on me at the time. I could see what he had in mind: instead of just being a State Department in an anonymous Civil Service, they should be brought more or less into the daylight, so to speak, and given an opportunity to show their worth. I do not know what happened to that theory or policy—it seems to have fizzled out, and it is a great pity because I think Mr. Lemass had something in that idea.
It is very disconcerting to all of us who read newspaper extracts from the recent report of the Committee of Public Accounts. One sentence in that report is illuminating; where they describe
the incredible deterioration in recruitment for the Public Services.
That is an appalling state of affairs and taking that statement in conjunction with the hope expressed by Mr. Lemass some years ago, it is obvious that something has gone seriously wrong. The Devlin Report also says:
There has been no attempt to link qualifications to requirements in recruiting to the Civil Service or State Departments.
If the State Departments are to become effective agents for the promotion of industry or services, they must be run as efficiently and economically as possible and I agree with the Devlin view that reorganisation is required urgently to suit the requirements of modern Ireland. State Departments should have an incentive comparable to the profit motive in private enterprise to use the best talents of their staffs. In addition to attractive salary terms and conditions, they should include the satisfaction that comes from doing a good job and knowing that it is appreciated.
So far I have been fairly critical of some Government policies. It is easy, and I suppose it is part of our job here, to define difficulties but to do so without offering some policies and alternatives is a negative attitude. There are certain priorities the Government must undertake. The first and most obvious is to come to grips with inflation by moderating the growth in Government expenditure as far as possible. The second is to maintain the maximum incentives to industry and business generally to enable them to expand. This means the reversal of the policy of placing additional taxation on companies, many already short of cash and finding it increasingly hard to get credit, even for the most deserving projects. Finally and possibly the most important of all, there should be the ability and the courage to take decisions which may be unpopular politically in the short term but which, in the long term, will have been to the benefit of the nation. In any age the Irish people never failed to face up to a critical situation and I am confident they will not fail to do so now if—and I emphasise "if"—they are given the true facts and given sound and fair leadership.
I wish to conclude by referring again to the Minister's speech on the Finance Bill in July. In that speech he said many things with which I agree and I could almost use the same words myself verbatim. However, I would rather quote from column 1327 of the Official Report of 29th July, 1970:
I will conclude by saying something that may sound a bit trite. Maybe it is something that many of us have said at election meetings on occasion but I believe it and I think most of us believe it when we think about it. Many of our people can be foolish. They can be perhaps rapacious on occasion but taking them in general, as a people and as a group, if this country and its economy is in danger and if the danger is explained to them and if it is explained to them that action by them will cure it, our people on the whole will respond and respond magnificently. The Government have a primary duty, but all of us have a duty to make clear to our people the danger that exists and the fact that we have the remedy in our own hands and that by exercising that restraint which is required—not to stop increases in wages but to ensure that there are regular increases in wages every year but worked in such a way that they will be a real increase—our people can avert this grave danger. If we can make this clear to our people I am certain they will respond as they have responded in the past. We can demonstrate once again, and we must demonstrate fairly fast, that this ability of our people which they have demonstrated so often in the past still exists in our people in 1970.
I suggest to the Seanad that now on the brink of 1971 those words of the Minister are even more applicable. But if our people are to respond they must have, as I have said, firm and fair leadership. We cannot cod all the people all the time.
I am convinced that if the Taoiseach and his Ministers are fair with the people and tell them what the dangers are, if they are prepared to eschew short-term political advantages I am convinced, as I think all of us in this House would agree, that our people will respond magnificently, as they always have.