Appropriation Bill. 1974 (Certified Money Bill): Second Stage.

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

Minister for Finance (Mr. R. Ryan)

The purpose of the Appropriation Bill is to appropriate formally the amounts voted by Dáil Éireann for the supply services and this year's Bill follows the general pattern of previous Appropriation Acts.

The explanation of the individual sections of the Bill is, as follows:

Section 1 authorises the issue of £7,664 out of the Central Fund to make good an excess on the Vote for Land Registry and Registry of Deeds 1971-72.

Section 2 (1) appropriates to the specific services and purposes set out in the Schedule to the Bill the sum of £738,706,804 which is the aggregate of —(i) the excess vote for Land Registry and Registry of Deeds, 1971-72 (£7,664); (ii) the 1973-74 supplementary and additional Estimates not appropriated in last year's Appropriation Act (£27,423,590); (iii) the estimates for the period from 1st April, 1974, to 31st December, 1974, as published in the Estimates volume (£664,905,000); (iv) supplementary and additional Estimates for the period from 1st April, 1974, to 31st December, 1974, amounting to £46,370,550.

Section 2 (2) authorises the utilisation of certain departmental receipts (£78,974,205) as Appropriations-in-Aid of the specific services mentioned in the Schedule to the Bill.

Section 3 is self-explanatory.

The Bill also gives the Seanad an opportunity to discuss not alone the details of expenditure contained in the Bill itself but also Government expenditure and financial policies in general.

A year ago I availed of the opportunity presented by the Appropriation Bill to outline the general economic situation. I described the thriving condition of the economy at that time, but referred also to the dangers lurking ahead. I predicted that, in common with the rest of the world, we would suffer severe disruption to our economy in the wake of the oil crisis and that our rate of economic growth would decrease considerably. Unfortunately these predictions have proved all too true. A year ago, the OECD forecast an average growth rate for its members of 3¾ per cent in 1974; the present expectation is just 1 per cent. Instead of the surplus of some £2,000 million which was expected in the combined balance of payments of OECD countries before the oil crisis, these countries are now likely to experience a deficit of about £15,000 million this year.

The effects on our small and open economy have been severe. Our balance of payments deficit and rate of inflation are at unprecedented levels, and our rate of growth has been well below capacity.

While the prospects for 1975 are not good, the Government are satisfied that, given the co-operation of the whole community, we will be well able to weather the storm. The economy is soundly-based, the inflow of investment funds from abroad is strong and our external reserves have actually increased during the last year. Our industrial exports have also risen and should continue to do so, while agricultural exports will be boosted by the higher prices agreed by the EEC. In view of the underlying strength of the economy we can face the present obstacles confident that, once these are surmounted, we can again achieve steady economic growth. Confidence is, indeed, the key to overcoming our difficulties.

To provide the conditions for achieving our objectives, we must accept that our living standards are not going to rise in the immediate future and that we must moderate our income demands to avoid lasting damage to the economy. If we exercise restraint, we will be in a good position to benefit as the international economic situation improves. Already some small signs of such an improvement are emerging. The German decision to expand their economy is particularly welcome, and we hope that other countries will follow suit where they can. We should also begin to benefit during the coming year from the easing of prices on the world commodity markets. Although progress towards curing the world's economic ills will be slow, I am hopeful that by this time next year I will have a better economic background picture to paint.

It is not usual for the Minister for Finance to make a lengthy opening speech on this debate and I do not propose to do so on this occasion. However, in my reply to the debate I will endeavour to deal as fully as possible with any specific points which will be raised by Senators in the course of the debate.

I now commend the Bill to the House for a Second Reading.

Mr. Lenihan

Nothing is achieved by walking out of any Parliamentary Chamber. We are here as an Opposition to fight the Government and we intend to bring, through the parliamentary forum, the facts of life of our economic situation home to the people through the media. This is the place in which to do it.

I would like to re-echo some of the feelings expressed by Senator Robinson and Senator Yeats in this House last Wednesday. It is expressive of the actions of the Government when we have the Minister for Finance coming in here with this serious Bill with a page and a half of typescript, a two minute flat speech, introducing the Appropriation Bill.

Mr. R. Ryan

With respect, the Senator is being unfair. He knows that this is a tradition of the House and the Minister does it as a courtesy to allow Senators to make their comments.

Mr. Lenihan

I suggest that this is an occasion in which we could have a comprehensive discussion on the whole economic and financial position.

There is one basic line in the script in which the Minister seeks to imply that a year ago the economy was in a thriving condition. We, in the debate this time last year—I am not going to go through the quotations—forecast exactly what has happened over the past 12 months. The Minister was here in a mood of bounce and described the thriving condition of the economy while, at the same time, ignoring the warnings being given by two of the agencies responsible for economic and monetary comment here, the Economic and Social Research Institute and the Central Bank. Both of these institutions this time last year and right through last year, were warning the Minister of the danger signals ahead.

When I, as late as last July, forecast that there would be a figure of £300 million in our balance of payments deficit for 1975, the Minister refused to believe me. I am on record as stating then that we would have a balance of payments deficit of £300 million in 1975. The Minister at that time with all the apparatus of the Department of Finance behind him was forecasting a deficit of £150 million for 1975. The Central Bank report sounded a very cautionary note about the Government's objective of limiting the deficit for 1975 to £150 million. They said that the statement on monetary policy was issued by the Central Bank on 21st June, 1974. In other words, as of that date, it was £150 million. At the same time the Economic and Social Research Institute were forecasting a deficit of £300 million in 1975.

As late as six months ago, the Minister was forecasting a deficit half the amount which has arisen. We on this side with no such apparatus behind us, forecast exactly the amount forecast by the Economic and Social Research Institute, a deficit of £300 million.

Paragraph 57 of the Minister's document, The National Partnership, issued some weeks ago, reads as follows:

Our payments deficit this year will reach the alarming total of £300 million or more.

It has taken the Minister six months to put in writing what we were able to tell him verbally this time last year. I quote again from the document:

This (£300 million) is equivalent to just 10 per cent of our national output, by far the highest of any EEC country.

It goes on to say that because of our external reserve position we are protected to some degree from the serious consequences of such a deficit.

Again, even in this political document and in regard to the external reserve position, the Minister has to admit a basic inflationary fact in this situation. I quote again from page 25 of the document:

More than half the inflow (of foreign capital) is accounted for by borrowing by the Government to finance the public capital programme and by semi-State bodies for development programmes.

We have a total inflationary situation. We are running a deficit of £300 million in regard to our trading position and to our payments position and more than half of that is being made up each year by imported borrowed money to add further to the inflation.

As the Central Bank very rightly said in the opening paragraph of their most recent report: "It is a fallacy even for the open Irish economy that inflation is due more to external than to internal causes and that it is beyond our power to curb or control it." If this were true and the only armour the country had against a mainly-imported inflation was price control the situation would be a sorry one. The whole tenor of the Central Bank Report is to show that it is a fallacy for anybody in charge of the Irish economy to suggest that inflation is caused by external rather than internal causes.

This is fundamental to the whole mess in which the Government have found themselves and it is completely wrong, and the Minister is being untrue to the people in suggesting that the oil and energy crisis, as it is called, is the cause of the present difficulties in which the Government find themselves. It is a contributory cause. The Economic and Social Research Institute and the Central Bank emphasise right through each of these documents that Government policy has been a main contributory factor to the present situation in which there have been international difficulties in regard to oil, energy and commodity prices.

Fundamentally the trouble began with the budget of 1973. The Minister is well aware of the situation. When he went into Government in 1973 the economy was in a thriving state. I quote from the March, 1974, Report of the Economic and Social Research Institute which says:

The upsurge in the pace of economic activity occurred in the second half of 1972 and the first half of 1973. Indicators of economic activity suggest that little or no growth occurred in the second half of the year compared with the first half. The high growth for the year as a whole, then, is due to a combination of the continued upsurge in the first half of 1973 and a carry-over effect which arose from the fact that the level of economic activity at the end of 1972 was well above the average for that year.

That means there was economic development of a substantial nature in 1972 and in the first half of 1973. We saw the signs, and in preparing for the budget in early 1973, we realised that the brake would have to be applied to some degree in regard to inflation. Our intention as a Government if returned in 1973—and the Minister is aware of this from the files in his own Department—was not to bring in the sort of popular catch-them-all type of budget that the present Government introduced after getting into power in 1973. I thought at the time that it was mad politics as well as being mad economics.

Here was a Government elected by the people, given the reins of Government—hopefully at that time, for a full period—and they proceeded to bring in a madly popular budget, obsessed with their own public relations, obsessed with their own image making. I know well, as a person sitting around the Government table in December, January and February of 1973, the type of budget we would have brought in, if returned at that time, would have been a restrained budget, because the economic and financial danger signals were there in February and March of 1973. They were there if the Government paid attention to them. We had done very well in 1972 and were still doing well but if we were planning ahead we would have to apply certain restraints particularly in regard to Government expenditure.

All the signs were there for the incoming Government in memoranda prepared by the officials of the Department of Finance and the Minister is well aware that when he went in as Minister for Finance in March, 1973, that the recommendations were there. The advice given to the Minister was that there were danger signals and that the thing to do was to exercise restraint and control the economy. As I said, it would have been good politics as well as good economics for the Minister and the Government in their first budget within a few weeks of the election to have exercised restraint. They could have made a good deal of political capital if they had approached the situation in another way but instead they set about making themselves popular at the expense of the people, deliberately encouraging inflation.

I charged the Government here at that time with proceeding on that slippery slope to such an extent that they introduced, for the first time, substantial deficit budgeting. Presumably they will resort to it in the next budget.

I can understand the reason now for deficit budgeting because the money is just not there. It is obvious that the Minister will have to resort to deficit budgeting in the coming budget: one does not need to be a prophet to see that. But I charge the Government with overdoing deficit budgeting in their two previous budgets, despite the warnings which we gave them at the time in the Dáil and in the Seanad and which are on record. I shall not bore the House by repeating them but I am on record personally here in the two previous Finance Bill debates that we had and the Appropriation Bills debates as saying that the Government policy of trying to buy votes and buy popularity and build up their image immediately after the election was wrong. Politically, it was the wrong time to do it, because it is the oldest adage in politics that a Government is always strong and tough in its early years and builds up to a climax of achievement in its later years.

These new people who came in decided that they had to maintain the image they had created and the whole exercise proceeded to be one of image-making rather than one of coming clean with the people and telling the truth. The truth was that in March of 1973 we were going well but the situation had to be watched; it was a time for budget restraint, for discipline, and a time for warning the people that inflation could develop, that prices could get out of hand and that restraints would have to be imposed, and that there would have to be discipline in regard to Government spending and private spending generally.

The very reverse happened, with the result that when the oil and international commodity difficulties hit the economy, the economy was totally unprepared for the shock. If there had been a good, sound, budgetary and financial policy emanating from a steady, controlled budget with a limited deficit in March, 1973, and if a similar approach had been adopted in March of this year we would not be in the mess in which we find ourselves now.

The Government are in a cash-flow problem situation. It is as simple as that and the Government by reason of their own squandering, their own excessive public expenditure, their own excessive encouragement of expectations in regard to the private sector right across the whole area of incomes, salaries and profits displayed a classic encouragement of inflation, the type of thing that was done by German Ministers for Finance in the twenties. It was totally irresponsible. It was pandering to the public and it was economically, financially and politically wrong.

It was also morally wrong because it induced an expectation in our people which was totally out of touch with the reality of the economic and financial situation as it existed in March, 1973. As a Government Minister, early in 1973 I saw all the memoranda coming from the Department of Finance and I know what their recommendations were. I also know what we would have done. We would have brought in a controlling budget, a moderate budget, with a limited deficit and with a moderate increase in public expenditure. That was what we had intended doing. I was flabbergasted when I saw the budget of goodies which emerged from the Government within six weeks of their taking office in March, 1973. Knowing the real background to the economic and financial situation, I could not understand how any sane Government could bring in such a budget. Politically speaking, it was crazy as well. The logical course of action would have been for the Government to face up to the existing situation and work towards a constructive improvement in a few years' time.

However we know, the course of action the Government decided upon. The net result of that action is that we are now in a situation where we cannot face up to an international crisis, one which is common to the whole of western Europe. Every other country is facing up to the situation. No other country has our— to quote the Minister's word—"alarming" payments deficit of £300 million. As the Minister stated, it is by far the highest of any other EEC country. I quote these figures as a percentage of national output. The balance of payments deficit amounts to .1 per cent of Belgium's national output; 3.9 per cent of Denmark's national output; 2.7 per cent of France's national output; —2 per cent of Germany's national output and it is +10 per cent of Ireland's national output. We are ahead even of inflationary-mad Italy where there is only a ratio of 7.5 per cent between the balance of payments and national output. The Netherlands, of course, is down, —1.4 and the United Kingdom is half of our percentage, namely, 5.6 per cent. Our balance of payments is twice as high as the United Kingdom and 2.5 per cent higher than Italy, which is practically ruined with inflation.

The Minister in his speech admitted that the only way the situation was being saved was the fact that the Government and semi-State bodies are borrowing externally. The situation is doubly compounded. We are running a balance of payments deficit which is inflationary in itself and, on top of that, we are adding to the inflation by borrowing heavily in money markets in an era of the highest interest rates experienced so far.

We are learning real lessons in relation to inflation. The Government should have the moral courage to face up to the problem. It took a desperate situation to arise before the Government were flushed out and told the people the truth. Up to the last few months the Minister for Finance has been disarming the people in general with optimistic talk and glib comment about the present and future state of the economy. Instead the Minister should have come clean with the people since the time he took his portfolio and saw the facts of economic life contained in the files and memoranda of the Department of Finance.

Another matter I should like to refer to is the report of the Central Bank. One must read the small print of documents published by the Government to see the truth. If one reads the small print of the Central Bank Report or the reports of the Economic and Social Research Institute, since the Government took office, one sees the truth. One does not see the truth in the releases from the Government Information Services. One does not see the truth in Ministers' speeches. Of course the Irish Civil Service is and always has been an honourable one. When one reads their documentation in detail one can see the truth. It is from the politically-inspired hand-outs from the Government Information Services and the handy headlines that one gets the glib untruths. We have had an outrageous situation since March, 1973, but when the documentation published by the Central Bank and the Economic and Social Research Institute and that coming from the Department of Finance are read in detail, they reveal the truth.

One of the fallacies—I am glad it is not contained in the document "A National Partnership"—generally believed by the public and sedulously cultivated by Deputies in the Coalition, particularly in the Labour Party, is the notion that membership of the European Economic Community is also part of our trouble. The two main causes, sedulously propagated by Government spokesmen, of our present economic difficulties are supposed to be (a) the problems of the international energy and commodity crises and (b) membership of the European Economic Community.

It is quite clear, that bad and all as our situation is, if we were not members of the European Economic Community and were not cushioned by that membership we would be in a catastrophic situation at the present time. Our situation is desperate and alarming, but it is not yet catastrophic. That is due to the fact that our membership of the European Economic Community has resulted in a substantial switch of exports to thriving economies on the continent of Europe and away from what is rapidly becoming the sick economy of the United Kingdom on which we were relying. I quote from paragraph 62, page 26 of the Minister's document "A National Partnership":

In 1972 61 per cent of our total exports went to the U.K. and 17 per cent to the rest of the EEC. In 1973 the percentage of total exports going to the EEC, excluding the U.K., increased to 21 per cent. Our exports to the British market only represented 55 per cent of total exports. In value terms, industrial exports to the EEC other than the U.K. increased by more than 50 per cent during 1973, from £64 million to £98 million.

That was the sector which was supposed to be, according to Labour Party spokesmen, the one that would be badly hit by membership of the European Economic Community. It is quite clear that, with an increase of 50 per cent in value terms of industrial exports to the EEC, other than the UK, substantial benefits have arisen to Irish industry by reason of our membership of the enlarged market. If we were dependent on the sick British economy for industrial exports at the present time, things would be very bad. This was what the Labour Party at the time of our entry to EEC advocated us to do: to rely on the British market and have some sort of arrangement with the EEC. We opted for complete membership. The result is a 50 per cent increase in our industrial exports to the EEC. As far as the farming economy is concerned, were it not for the milk prices guaranteed out of EEC funds the situation would be far worse than it is today.

I want to knock the two fallacies on the head once and for all, that the international situation is the cause of our problems and the other cause is membership of the EEC. Membership of the EEC has helped our prospects, improved our industrial exports, cushioned our farming situation. We would be in a much worse position if we were not a member.

As regards the international situation, it is quite clear that it is a contributory factor to our situation. But the Central Bank and the Economic and Social Research Institute have said quite clearly that it is a fallacy to say that, because we are an open trading country depending on international circumstances, we can do nothing about curbing inflation at home. It is quite clear we can, from the figures I mentioned some time ago. Every other country in the EEC is doing something about it. We are in an even worse position than Italy, where inflation is rampant, in regard to our ratio between balance of payments deficit and national output.

Every other country in western Europe is faced with the same international problems. We should look at the comparative position in a situation like this. How better or worse are we handling our economic situation compared with the other countries of western Europe who are facing the very same problem? We are all hit by the oil problems. The other countries are dealing with their problems; we are not. The Government laid down a budgetary policy that has led us into the present situation over the past 20 months. Only when the position becomes desperate do we find the Minister dealing with it. This is why we have had the rush of revenue charges in the past few months—postal charges, the petrol increase and the health charges, which we debated in the House last Wednesday. We have had a rush of these hastily prepared revenue charges imposed in order to improve the cash flow. The budget deficits have gone in inflation. The balance of payments deficits and the external borrowing are purely inflation.

I accuse the Government deliberately of pumping money into the economy way above the real productivity of the country. Money input into the Irish economy has run far ahead of productivity. This situation has arisen by (a) budget deficits, (b) balance of payments deficits, (c) foreign borrowing at high interest rates and (d) total inability on the part of the Government to control expenditure, either current or capital.

The policy since March, 1973, has been "let it rip". Everything has been let rip. Everybody has had a good time in Government, going around telling people everything is lovely. The headline makers and image makers have been at work. The Government Information Services have been increased tenfold in personnel and financial allocation.

It is a classical example of the worst kind of "consmanship." It is wrong not just from the financial, economic or political point of view but also morally wrong, because it has induced a very dangerous state of cynicism in regard to politics and Government. The worst thing for any Government to do is to raise public expectation out of the realm of reality and into the realm of fantasy. When public expectations are raised to a level where they cannot be exceeded, we are in a very dangerous situation. I accuse this Government, consistently since March, 1973, of raising public expectations in that manner. They told the people, in their highly immoral budget of March, 1973, that everything was great—we are in the EEC, there is plenty of money to spread around, not alone butter but jam, honey and so on.

That attitude was totally unrelated to the financial documentation before the Government prior to the election of February of that year. The financial documentation, which we were considering when the general election arose, was financial documentation which would not indicate under any circumstances the nature of the budget that emerged within weeks of the Coalition Government achieving office. Our intention was to bring in a restrained, controlled budget.

The red lights were there, bright and clear. Instead, the Coalition Government went through the lights and let it rip. They should have put the brake on and observed the red light. When it turned green they could have gone ahead. It was clear that we had a marvellous year in 1972 building up to a tremendous first half of 1973. It was clear that the danger signals were there. The red light said stop but the Coalition Government said: "We will break the red lights and take them as green."

The crash has occurred now. They probably broke many more red lights before the crash finally came. I hope at this desperate stage the Government face up to it. I assume there is a residue of morality left in the Government, which will impel them to face up to the reality of the situation and bring in a budget next month that will be consistent with the kind of development that we may see in a year's time if they do the right thing. For Ireland's sake I hope they work on these lines.

I have concentrated mainly on the financial aspect and the psychological attitude of the Government towards their duties in regard to public finance. I should now like to refer to the lack of decision making in practical areas that could give real growth to the economy. I refer here to the approach of the Minister for Industry and Commerce to one industry that at the present time could give an injection to the economy, the mining industry. Senator Fitzgerald is well aware of this industry. I acknowledge his expertise in this area. I am being complimentary to the Senator.

In this particular area the lack of decision making has been very evident. Right across the board the Government have been unwilling to face up to and make decisions. In this area, if decisions were taken 18 months ago, there could be substantial numbers in gainful employment, where productivity would be backed by investment. It would not be inflationary economic activity. Inflationary economic activity is when you import money and spend it on handing out goodies, which the Government have been doing in the past two budgets. You can import finance for productive investment here in order to provide employment. This is the correct kind of foreign investment and foreign borrowing.

For nearly two years the Government have dithered over the whole mining development, both on land and offshore. Instead of encouraging foreign investment in these two areas every step that has been taken and announcement that has been made has led to more and more indecision and more puzzlement as to what the Minister and Government are doing. The net result is that people who would invest in mining development are saying: "Good night, bye-bye". This is the area into which the Government have led the economy by a total lack of decision.

The Minister for Industry and Commerce has been playing politics with a very serious section of the economy. Instead of meeting all the people concerned with investment in mining and coming to quick decisions on the matter, instead of doing that he has dithered and we are still without a decision. We are facing up to a period when we will have 100,000 people unemployed in February and March of next year. In a period of rising unemployment and rampant inflation, here is one area of investment where substantial and well-paid employment can be given immediately, backed by external funds geared to sound economic activity. The increased exports which would result would more than match the inflow of capital for the purpose. This is a sound type of investment from every point of view, from the financial, the national, the economic and the social point of view. All that has happened is that Nero Keating is twiddling his thumbs and fiddling away while the economy burns.

This total lack of indecision applies in regard to the handling of the construction industry. This is an industry which is the barometer of any country's economic state. It is only now that we have reached a desperate stage that we are finally getting some admissions that there is a crisis in the building industry. There has been one for the past nine months. The Minister for Local Government has been telling us that there was no problem in the housing industry when a situation exists where no private houses are being built. There has been a total collapse in the financing of private houses.

We suggested in an amendment put down by Senator Hanafin last July a practical way in which we could get an inflow of funds into the building societies. That was by granting tax relief up to a certain level on investments by people in building societies so as to attract funds from abroad into the societies, thereby setting up a pool of finance to enable private house building to be carried on. The Minister advanced no good reason for not doing that. He said it would divert funds from other sources. I feel very strongly that the house building industry is all important from the social point of view. If there is high employment in house building, then the ancillary industries will benefit as a result. All that is required is a mere subsection in a section of the Finance Bill. I hope it will be included in the next Finance Bill.

Senator Hanafin suggested that complete relief be given to people in respect of an amount of money up to £5,000 or £10,000. Coupled with financial ineptitude and total immoral handling of the public finances of this country, we have a lack of decision-making. I mentioned two areas where this has occurred and where immediate stimulation of the economy could take place—the mining industry and the construction industry. The Government stand completely indicted in regard to those two areas. I hope for the country's sake that the Minister will finally face up to his responsibilities in a few weeks' time and tell the people in straight terms where we stand and adopt the measures needed to stimulate the economy.

Mr. Halligan

On the last day the Seanad met I had occasion to upbraid the Leader of the Opposition in his absence. I hope that my few remarks this morning will not be given in like circumstances because I have a great deal of respect for the Leader of the Opposition. I do not like criticising him in his absence.

Mr. Killilea

He was well defended.

Mr. Halligan

I do not think he was as well defended as he might have done himself. I made the point on the Health Contributions Bill that the very profession of politics is degraded by the type of behaviour exemplified by Senator Lenihan in his contribution this morning. What one knows to be facts, to which one admits privately, are represented in a totally contrary and opposite way in public for party advantage. There are issues in politics which transcend party interests. The state of the economy in an international crisis I would respectfully suggest is one such issue. The Northern Ireland question is another issue which, fortunately, the three parties have, because of their sense of collective responsibility, admittedly with some regrettable individual absences, placed above party politics. We were in Opposition when the crisis broke and we supported the Government, and the then Government, when they became the Opposition have done likewise.

I suggest that the economic crisis which afflicts the entire world but which afflicts us particularly as a small open economy in the course of development is another such issue. While I can understand the temptation to play politics with the crisis, I do not understand how people can underestimate the dangers of pretending, as Senator Lenihan has done, that somehow by Government policy we can avoid the impact of the crisis and that by some——

Mr. Lenihan

Dr. Whitaker has said it.

Mr. Halligan

I have paid Senator Lenihan the courtesy of listening to his entire contribution without one interruption, and I hope he will afford me a similar courtesy.

Mr. Lenihan

Refer to Dr. Whitaker, the Governor of the Central Bank, not me.

Mr. Halligan

I will refer not only to Dr. Whitaker but many other eminent authorities in the course of my contribution if I am permitted to continue.

It is irresponsible and immoral to pretend that in this situation any Government could avoid the impact of the world economic situation on its own economy, whether that Government be in the United States, the largest continental economy in the western system, in West Germany, or in France. The Senator is a cosmopolitan politician. He sits in the European Parliament with the Gaullist Party. Because of his close association with that party, in a Coalition Government in France administering an economy far richer than ours, he is more aware than others of the internal crisis that has been induced within that party by the economic situation afflicting France in common with everybody else. He is aware of the extraordinary measures the French Prime Minister has had to take within the last week in respect of the control of his own party. He is aware of the by-election results and the impact they have had on his sister-party. He is aware that in France they are again talking of the possibility of a recurrence of the events of 1968 because of the economic situation. He is aware of these facts because he sits with representatives of eight other economies, and he knows that every one of those is confronted with similar and even worse problems than ours.

If he has talks with representatives from Denmark he will understand economic problems because it is a country with the highest GNP of all the EEC countries, higher even than West Germany which has serious internal difficulties because of the economic situation. Its government have resigned and a general election will be held next year. He knows that better than I do because, like Senator Yeats, he is in touch with them daily. Yet, he says that if his party were in power things would be different. He devoted a large part of his speech to shooting down two fallacies: he said the international economic situation had much to do with our own internal crisis; he admitted it was a contributory factor and then he went on to classify it as a major fallacy which he wanted to repudiate.

Mr. Lenihan

That was the total cost.

Mr. Halligan

He said that the first budget of the National Coalition Government was a budget of "goodies". It sounds strange for any politician, even when engaging in the cynical area of party politics, to describe the sort of improvements contained in that budget as "goodies". Are we to assume, for example, that £1.50 increase a week for old age pensioners is a "goodie", a lollipop? Is the £1.50 a week for those in receipt of unemployment benefit a "goodie"? Is the £1.50 per month increase in children's allowances a "goodie"?

Mr. Hanafin

We will stay here until 12 o'clock. Would the Senator like to sit tomorrow? We can do that, if necessary.

(Interruptions.)

Mr. Halligan

I am sorry at the reaction of Senators opposite to a little injection of truth. I suggest they refrain from interrupting because I shall not curtail my contribution and, if they wish to waste the time of the House with senseless interruptions, that is their own affair.

An Leas-Chathaoirleach

Senator Halligan will continue on the Bill, please.

Mr. Halligan

I regret that Senator Lenihan has left the House because I did not realise until this morning how little he understands about economics. I wanted to draw his attention to some important issues—for example, the theory of inflation, which he believes (a) is caused by excessive Government expenditure and (b) by foreign borrowing. He said these were fundamental causes of inflation.

Mr. Hanafin

Senator Lenihan is back now.

Mr. Halligan

Good, in that case, I should like to refer Senator Lenihan to the current issue of the Economic Journal, which is one of the foremost theoretical journals in the field of economics and, possibly, the most prestigious and to the presidential address to the Royal Economic Society of Professor McDougal entitled In Praise of Economics. In the course of that address, he dealt with the problem of inflation and with the theoretical difficulties which confront economists today.

What is really happening in the world contradicts all the theories propounded over the years and economists are now faced with problems for which they have no theoretical solutions.

Professor McDougal also makes the point that the best analogy is with the state of economics as it was in the early 1930s when the theoretical economic system made more provision for large-scale unemployment. In the market place there were millions of people unemployed and economists had no answer. Professor McDougal referred to an apochryphal anecdote of an eminent economist beginning a seminar on economic policy in the early 1930s: "Let us assume full employment." Economists today could well begin many seminars with the statement: "Let us assume constant crisis." It would be equally inappropriate.

The professor said that, in respect of inflation, there is not at the moment any consistent, coherent or universally acceptable theory of inflation. The field of economic theory today is in the same position as it was in the early 1930s with regard to unemployment and public authorities, governments and economists await the advent of a contribution such as that made by Keynes in 1936.

It is 50/50. That is what I said all through.

Mr. Halligan

I do not believe we are making any converts opposite in respect of a policy of resort to foreign borrowing at a time when the terms of trade have shifted dramatically against it. It is totally irresponsible to contend that resort to foreign borrowing at this point in time is wrong, not only from a national point of view but also from an international point of view. I hope that the Minister for Finance, in common with other Governments of the EEC and with the United States and Japan, will be able to arrive at a new international financial mechanism to replace the obviously now destroyed one of Bretton Woods, so that we can avoid economic catastrophy on an international plane.

I make the point to the Leader of the Opposition whom I know to be a man genuinely concerned with the problems that face the national economy, so that there can be certain parameters within which the debate on the economic situation is conducted. The parameters I suggest are these: that we accept the impact which the change in oil prices has had on the entire world economy, and the inevitable and inescapable impact it has had on our national economy. We do not argue about that fact.

It must be fundamental to our whole economic thinking that we must limit our dependence and our interdependence on the United Kingdom economy in every respect. For a variety of reasons which are not germane to this debate, the United Kingdom economy is in deep crisis and will continue to be so for some time. It is also a social, psychological and political crisis. If we continue with the policy of interdependence, which we have had with the United Kingdom, they will drag us down irrespective of the Government of the day. They will drag us down the plug hole down which they are disappearing rapidly themselves. I do not believe, with respect, that the Minister is correct in stating that the balance of advantage lies at the moment in the continuation of the parity link with sterling with regard to our currency. The balance of advantage now lies with breaking the parity link with the £ sterling and having a truly independent currency.

I do not think there has been sufficient discussion of this particular issue either in public or academic circles. We have not got the necessary analysis in detail, but it seems to me that the original conditions outlined in the Banking Commission reports of 1926 and of 1938 with regard to the arguments in favour of parity of sterling obtain no longer. The world situation has been changed totally. Our own international situation has been transformed and the time has now come, as part of the conditions for our own economic survival, for us to have our currency floating independently of the £ sterling. It should be linked more closely with the major currencies of the EEC and, in particular, the Dutch guilder and the Deutschmark.

If one looks at the rates of exchange for currencies of various countries since 1967, prior to the devaluation of sterling, one finds that it is only the Irish currency which has maintained parity with sterling.

Currencies of many countries of similar size or relationship with the United Kingdom have appreciated in terms of sterling while sterling has depreciated in respect of them. It must be a unique argument to put forward to say that the balance of advantage lies only with Ireland out of all those other countries to maintain parity with sterling. For example, on an index of 100 in respect of the exchange for £ sterling for 17th November, 1967, Australia on the 22nd March this year was 62; Denmark, which is analogous for us, was 75; Finland, another small economy, 77; Portugal, an economy which is weaker than ours, 73 and New Zealand, a country which has had strong trading links with the UK, 81.

On another occasion I will develop this point in greater detail but I believe that a change in the parity link would stimulate growth because it would lower interest rates. Our interest rates are kept artificially high because of the link with sterling. Such a move would, I believe, cut inflation. There is also the question of safeguarding our reserves because the question of sterling convertability is going to loom very large over the course of the next year. The move I suggested would also enable us to adopt a more independent economic policy because to a great extent the continuation of the parity link means that, in a macro sense, we are simply a region of the United Kingdom.

I appeal to the Minister with regard to one other possible weapon that might be employed in facing the inflation problem at the moment. I refer to the question of food subsidies. I accept there is some validity in the argument that food subsidy is a scattered way of dealing with public finance; that it does not have the precision of, for example, an increase in the old age pension. On the other hand, we do have within our social welfare system benefits which are equally scattered, for example, the children's allowance system.

In common with any Senator who has a family. I receive children's allowances. The argument against food subsidies is that if they were introduced I also would receive them. The amounts involved in children's allowances would far exceed many times the amount that could be diverted now to certain basic foodstuffs, literally the bread and butter commodities of the market place which would go a long way towards alleviating, on the one hand, quite obvious and discernible hardship and, on the other hand, would have a beneficial impact on the inflation psychology which becomes, after a certain point in time, self reinforcing. I offer the Minister (a) the idea of further consideration of the parity link with sterling and (b) the question of food subsidies. These are two considerations he might take into account with regard to inflation.

The world international economic crisis is so vast in its dimension that its significance has not been grasped even by those of us who are engaged in politics and, in particular, has not been grasped by those who are charged with the responsibility of administering the world international financial situation. In ten or 20 years from now there will be literally hundreds of books, these and dissertations dealing with this problem. It is the single most important transfer of wealth that has ever occurred in history. It is a shock to the economic system and its effect will be felt for at least a quarter of a century.

Therefore, in dealing with economic policy we cannot make predictions that this is simply something that is transitory, that it is a passing phenomenon, that it can be dealt with by any national Government or that it is susceptible to the influence of one budget or any one financial measure. The various countries have not yet grasped the significance of what has happened vis-á-vis their relationship with the oil producing nations who could now literally buy us out chock-a-block within about ten years. The decision of the Irish Congress of Trade Unions yesterday is an indication that within the Irish trade union movement there is a realisation of the seriousness of the international situation and of the possible impact which it can have on employment and on growth.

I hope that the realisation which is burgeoning within the Irish labour movement, and the trade union movement in particular, will be seen and be responded to by other sections of the community. If they are in the field of imports, for example, that they would forego quick and fast profits in order to ensure that Irish products remain on the market and that businessmen and investors generally will see that investment prospects will continue to give a positive return in the next few years in spite of the great difficulties that face us. It is to their own advantage that investment should continue at the rate in which it has in the last few years. I hope that the consumers will see that it is to their own advantage that Irish goods are bought in shops rather than foreign products. As the Government White Paper said, such is the degree of inter-dependance that any one sector can irrevocably and irreparably damage all other sectors by interest which is taken in a short-sighted fashion and purely sectional. Therefore, I commend to everybody the analysis and the action which was taken by the Irish labour movement yesterday in seeking to bring into the field of incomes an element of rationality and responsibility. I commend them for it.

Mr. Killilea

I do not propose to go into high finance, but to deal with the problems that have bedevilled this nation. My approach to this situation is that half of the problem was caused by the Arabs and their oil and I propose to speak on the cause of the other 50 per cent of the trouble. I propose to give the reasons for our present plight which has been created by the Government. I should like, first, to refer to our biggest industry, agriculture. The Minister for Agriculture and Fisheries and his Department have given a despicable performance in the running of that Department in the past year. First, I want to talk about beef, the largest single part of agriculture. Denmark joined the EEC on the same day as we did and they went in under the same terms as we did. Yet today we find that beef going into intervention in Denmark is reaching the price of £22.80 while beef going into intervention here is reaching the miserable price of £13.00. Does this not mean that the Government have failed, in particular the Minister for Agriculture and Fisheries in negotiating the application for fair incentives for agriculture?

Is it not true to say that the highway robbers of this nation today were the beggarmen of four years ago? I make particular reference to the meat factories, especially the so called co-operative meat factories. Is it not true that they have put millions of pounds into their pockets in the last six to 12 months and are allowed to continue daily to do so by the Minister for Agriculture and Fisheries? It is common knowledge that in recent months, out of some sympathy that lay in the bottom of their pockets or in the bottom of their hearts, they decided to give back a little to agriculture—to give back something to the Minister for Agriculture and Fisheries, who is under desperate pressure by the small farmers of this country for help to try to carry the feed stocks of this country, to make things a little better and a little easier for the small farmers who can least afford to pay.

Is it not true that only a fortnight ago the Minister for Agriculture and Fisheries in the other House said that he would pay to the farmers feed voucher forms? One voucher, he said, per head of cattle would be equal to £7.10, and one can go up the scale to two vouchers for ten cattle, three vouchers for 15 cattle and four vouchers for 20 cattle. Four vouchers would amount to £30, a very small and insignificant amount of money, one would think, to give back to an industry from which millions of pounds have been taken.

This week we learned that the Department were unable to pay, that they were unable to honour the commitment made through the Minister for Agriculture and Fisheries in the other House. Now we have the situation that they have cut back to the situation where we have one voucher per ten cattle and two vouchers per 20 cattle. That is to cut back by half. Is it not a despicable performance by the Minister and the Department of Agriculture and Fisheries who gave money from the national kitty to those meat factories, particularly to the co-operative meat factories, only three years ago when they were in dire stress? Here was an opportunity for those factories to give back to the nation a small portion of what was given to them. Should those factories not be ashamed of themselves? Should the Minister and the Department of Agriculture and Fisheries not be ashamed of themselves?

Then we had the EEC slaughter premiums, the biggest scandal in the operation of a scheme that was meant to give money back to small farmers who were in hardship, the slaughter premium that was to be given to those who had beef to go into intervention. The factories collected that money and put it into their pockets without increasing the price to the farmers. When they were threatened by the Minister for Agriculture and Fisheries that something must be done about it, they answered: "Right you take the slaughter premium from us and we will bring down the price of beef." Has the Minister for Agriculture and Fisheries completely lost control of agriculture? I am afraid we must say so.

I can give an instance where "scandal" is the mildest way I could describe what happened, where a man who lives in an area of the county I live in had one bullock and tried to sell it at the market for £70 and could not get it. He went to a meat factory. He did not go to the co-operative meat factory. He was sent to a privately owned meat factory. He got back double the price, just because he asked a favour from a friend of his. The co-operative boyos who were in that market could not give any more than £70 and the privately owned factory could give £150 the following day? Is it not a bare-faced scandal?

There was an imposition of taxes in the last week amounting to £11 million per week—a nice Santa Claus present to the people of this nation from the Minister for Finance and the Government, and yet the Minister for Agriculture and Fisheries reports nothing.

When I spoke on a motion in this House on the farm modernisation scheme under EEC directive 159, it was fought bitterly by the then Opposition. We spent a long time then discussing it and we said it was nonviable, non-operative, and time has proved us right. It is common knowledge that the farm modernisation scheme has failed miserably in County Galway. I will give an instance to go on the records of the House. Sixteen hundred applications were made in my county for farmers to get in as development farmers. I thought in May last that the successful figure might be somewhere in the region of 60 per cent, but out of 1,600 applications, to date six farmers have made the development stage—six farmers out of 1,600. I want to quote in this House a warning I gave last May. I quote from the Seanad Official Report of 9th May, 1974:

I will deal first with the dry stock farmer. To continue the argument that I have just made, a reason for this situation is, when arriving at a labour unit, which is the income for one man per year, interest in investment must be deducted from the farm income at the rate of 2 per cent on fixed capital, that is, land and buildings, and at the rate of 5 per cent on working capital. Working capital is livestock. Those two figures are very substantial. As the farm size and the stock numbers increase, naturally the interest on investments also increase thus resulting in the ridiculous situation that even a 200 acre dry stock farmer will be hard set to reach the development target.

That was last May when this scheme was first introduced to this country. This scheme, as I said then, was wrong and the application of it in time must be wrong. Then I said a 200 acre farmer would be hard set. In fact a 200 acre farmer today on dry stock will not go in as a development farmer. Six applications from 1,600 is nothing less than scandal and I submit to the Minister for Finance today that the renegotiation of the farm modernisation scheme must get priority in the EEC. Nothing less than renegotiation will be acceptable, which is a mild way of saying that what they have given us is wrong and is against the farmer who has tried to be a reasonably good farmer.

We have a terrible situation in agriculture particularly in the county I come from, which one must say is a good farming county. We will now reach a stage where 98 per cent of the farmers must be categorised as transitional. When I said last May that 60 per cent of the farmers would be in the transitional stage I thought I was exaggerating and well outside the limit. But now I can say that 98 per cent of the farmers of County Galway must be so categorised. What will happen to them in 1980? What will happen when all the EEC and State assistance is taken from them? It is imperative that the Government renegotiate directive 159 and should give it top priority in order to revitalise agriculture. Directive 160 also needs to be reconsidered and I quote from Volume 78, column 6, of the Official Report:

Let us consider for a few moments the implementation of this scheme in conjunction with the modernisation scheme. I refer to the scheme to encourage farmers to leave the land, which comes under directive 160. On paper, it appeared to have some good features. In practice, it is very different because—and I think this is important—the farmer who sells or leases his land can avail himself of the life pension only if the land is being used by a development farmer.

How can directive 160 be applied to Galway or any other county when only 2 per cent of the farmers are development farmers? Surely directive 160 must fail when directive 159 is a failure. How can a farmer surrender land or receive a pension under directive 160 when there is no development farmer in his locality? This directive must be renegotiated. The Minister for Foreign Affairs or the Minister for Agriculture and Fisheries must put the facts clearly to the EEC Commission and Council of Ministers. That is vital for the survival of 98 per cent of the farmers of County Galway. It is important that that should be said now before it is too late.

Over the years we had the different agricultural policies of the IFA. We must look carefully this year, particularly in my own county, to the IFA policies in regard to the sugar industry. Last week there was some doubt that negotiations with the sugar company on a potato price of £26.50 per ton would not be accepted by the beet and vegetable section of the IFA. I clearly welcome a price of £26.50 all in for a ton of potatoes in the west by Erin Foods, a branch of the sugar company.

An increase from £19 to £26.50 per ton is reasonable. I must compliment the sugar company and Erin Foods on this achievement but why was doubt expressed in regard to the acceptance of that price? I suppose I should sympathise with the Government because they have their troubles with the IFA at present. We on this side of the House are used to having troubles with the IFA. Not long ago the Government were the upholders of the IFA. Now the Government are feeling the pinch. Only the other day the IFA had to be removed from outside the gates of Leinster House. There was great Press comment on that. Yet when the farmers protested in Merrion Street for a couple of hours some years ago the Opposition were loud in their acclaim of the objectives of the IFA. Now they are getting a dose of their own medicine.

I want to compliment the sugar company on their new approach in their negotiations on beet. Their new approach of letting the country know by public announcement of their proposed new beet formula is a good one. Since this formula was announced a fortnight ago, the price of the beet crop has risen. Cannot the beet section of the IFA calculate the price of this item? Do they not realise that this is a new and welcome idea from the sugar company and that it is open to all Irish farmers to ensure that there is accommodation for them and room for increase throughout the year? If the IFA are not satisfied with it, is it not agreed within that formula that there is a framework for arbitration offered by the sugar company to any respectable body requiring such arbitration facilities? The IFA should be very careful if they intend to reject this formula which is welcome, particularly to the farmers of the west. It is a pity that more consideration is not given to that formula. If the formula is not exact in its terms, then let the IFA make amendments so that we can work in a new era of industry.

I would refer the House to the Appropriation Bill some years ago when I forecast that by 1974 there would be a sugar scarcity and when farmers in the west were seeking a productivity bonus for beet production. Now we are experiencing that sugar scarcity. Let me quote from Volume 72, column 332, of the Official Report where I said a certain organisation——

...recently sent a deputation to the Minister for Agriculture and Fisheries. They suggested what was needed in the West of Ireland and made a positive demand—it was a good idea, and showed positive thinking—that a productivity bonus scheme should be applied to the smallholders in Connacht in order to encourage them to grow and indeed to give them the basic fundamental of equal opportunity. They suggested that they get £1.50 a ton...

That was three years ago. The farmers would have saved the importation of sugar into an agricultural country such as Ireland. We should be ashamed of ourselves. The Government of the time made a big mistake and the Government that followed made a further more serious blunder. The blunder would never have been rectified were it not for the fact that this year the Mallow beet factory reduced its acreage by 5,000 acres. To keep the shame away from the Government that had invested in that factory this formula was proposed. It is very welcome. I see it as a new light and ray of hope for the sugar factory in Tuam. For God's sake, let those negotiating for beet base it on this new formula now and forever until such a day as it fails.

In the Tuam area the sugar company have major investments in other areas. I refer to the investment in turf cutting. We talked a lot about fuel in this House all morning. I should like the Minister to encourage the sugar company to multiply, at least by two, their turf-cutting operation. This is the only use left for this type of fuel in Connacht. There is room for this little industry to be multiplied. There is room in the animal food processing industry for the sugar company to move in. They are people deeply implicated in agriculture. They know all about it. The Government should impress on the sugar company the value of an industry that could be working all year round in my town making animal food, cutting turf and doing what they should for the farmers of Connacht and the rest of the country.

I said four years ago that the sugar company should have a share in the massive production of farm machinery. Nothing has been done since. This is a shame. Four years ago imports of farm machinery reached the massive figure of almost £10 million. I wonder what the figure is today. I have not made an inquiry on it, but on the basis of inflation alone it must be £20 million. This £20 million is being paid out by this nation when these products could be made at home in a factory in Tuam. I ask the Government even at this late stage to move in that direction.

I want to refer to another failure by this Government. The Parliamentary Secretary to the Minister for Finance paid a short visit to my constituency last week to open a small industry. This is the only industry in our county that has been opened by this Government since they came into office. Our county was used to getting some industry prior to this Government's takeover. In Galway city we can see the new industrial estate in operation. This was established by Fianna Fáil. Not one addition to that industrial estate has been made by the present Government. I say shame on them that only one small industry—that in Mount Bellew—is to the credit of this Government. With the exception of the Parliamentary Secretary present, no other person from Connacht was appointed to the Cabinet. No man was appointed to try and do something for the west; yet everybody knows the west needs help. There is no need for us to be beggarmen. All we want is an equal opportunity and an equal slice of the cake. Shame on the Government and on the Taoiseach. The Taoiseach recently went to Paris for the summit conference. We saw what he brought back from that —a pittance that would not pay the interest on the money borrowed by this Government in the last six months.

Fine Gael, with us, wanted to get into the EEC. I know that the Parliamentary Secretary spoke outside many churches in Mayo as I did in Galway. We relied upon one thing when we spoke to the people—the regional fund. But it has collapsed into a mere pittance. We thought then and were assured that the least we would get from Europe would be approximately £50 million per year. We were living on the periphery of Europe, and that remains the position, but it seems we are floating further away from it as regards money coming to help us.

The fault rests with the Taoiseach and with the Minister for Foreign Affairs, who did not use their rightful position to try to achieve something positive for this nation, something that this nation, particularly the west, looked forward to. They had the audacity to say to the nation that they got £8 million for this year. This is nothing less than hypocrisy. The west can get nothing from the £8 million because this money is gone before it arrives.

The only thing we can look forward to in County Galway for the next two years is one more factory. We have the hardship of rates. Only two months ago we had to pay the rates of a major industry. This is what we are asked to do in order to maintain the industries we have. We get no help from the Government. I hope the other Senators from the west will support me in this.

Has the Minister any positive programme to offer to the people of Galway? If he has, let us hear it. Let him declare to the people of Galway that he will in future look after our county and give us our rightful slice of the national cake. Prior to going out of office we had arrived at the stage for the first time in the history of the State where, nobody was leaving Galway. In that census for the first time in our history we arrived at the stage that if some people left, the same number returned. I would not like to have a census now to see how many have left. It is desperately sad.

I ask the Minister to assure the people of Galway that he has some plans for further employment. Fair play must be the application at this late stage. In the field of social welfare we have heard accusations that the people of Connacht are abusing it. There is a moral obligation on this nation to help farmers survive on their small farms. When equal opportunities are not available, the State has an obligation to them. Four or 5 per cent of social welfare recipients abuse the social welfare code and have given a bad impression to the rest of the nation. The State must have responsibility for the other 95 per cent. There are people in the west today who desperately need help. The cost of living is rising every day. There are supermarkets all over the country. The small farmer must buy his groceries in a supermarket and pay for them at the cash desk. This Government have not played their part in giving full employment to the people in the west. They must realise that the social welfare code for these people is not sufficient. Many people today cannot even afford margarine, much less butter. They must use dripping and suet and go back to the hard times of 60 years ago. There are many men in towns with wives and large families whose incomes are no more than £30 a week. I ask any Minister if it is possible to pay rent and rates and buy butter for a family on that small wage? The price of a loaf of bread in old money today is four shillings. Something terrible has happened to this nation within the last two years.

The Minister for Industry and Commerce, Deputy Keating, must have bought more ink than any other Minister of State because his fountain pen never seems to be idle. He appears to sanction price increases ad lib. The Parliamentary Secretary present knows that what I am saying is the truth. He had the same experiences in Castlebar as I had in Tuam.

In the 1975 budget I hope the Minister will consider small farmers benefits and unemployment payments. The Government have a moral obligation towards them. We had a pitiful performance this morning from Senator Halligan who almost said "Amen" after every statement he made to give to those people the right to live in this country. One would think the Government had given these people every penny they could afford. This Government have a commitment to those receiving social welfare payments and those who have not equal opportunities. This Government is a failure. I appeal to the Parliamentary Secretary to impress upon his Minister the reasons why this country is in such a terrible state. When one takes the 50 per cent blame away from the Arabs, the other 50 per cent should be looked into as well. Agriculture must be classed as our major industry. When the agricultural community have no money the rest of the country suffers.

I appeal to the Taoiseach to switch his Cabinet and to withdraw Deputy Clinton from the Department of Agriculture and Fisheries and give him another post. He is the biggest failure in agriculture the State has ever known.

Mr. Markey

Having listened to two Opposition speeches this morning, I am beginning to wonder if the Opposition are aware of the economic circumstances in the world at large. Do they expect the people to believe that Ireland can move in isolation and within a cocoon of its own? Are the Opposition aware that it is not alone an inflationary situation which afflicts the world, but there is also a low economic growth in every country? Unfortunately both are combining simultaneously to confront each Government in every country with pressures. Would the Opposition deny that those two pressures are not intertwined and have not the effects on each other of compounding the results and consequences of either inflation or low economic growth at any particular time?

Mr. Keegan

We always have inflation.

Mr. Markey

One cannot divide the situation in two and put 50 per cent of the blame on the Arabs and 50 per cent elsewhere when both are intertwining and inter-playing with each other in their effects on any economy. It is nonsense to carry on an argument on those lines. I appeal to the Opposition for the remainder of this debate, to act in a mature fashion so that people will know we are confronted with an inflationary situation and a low economic growth situation, not alone in Ireland but throughout the world.

Comments were made that before the last general election restraints in the budget which would follow that election were being lined up in the Department of Finance by the then outgoing Government. This is an interesting relevation at this time. It is somewhat contradictory that the rosy picture presented by the outgoing Government in that general election campaign——

Mr. Keegan

What about the 14-point programme?

Mr. Markey

Of course, this is a typical argument of which we had experience with Fianna Fáil. It goes something like this, in public and in the open you preach the good news; in secret and behind closed doors you plot the bad news. You go out and seek a mandate, you come back with that mandate and then you crucify the people.

It has been done before and no doubt it will be done again. This Government have called for restraint in wage claims. Will the Opposition join in that request? On this side of the House we await an unambiguous, unequivocal "Yes" to that. There should be restraint on the growth of all sorts of incomes. Will you add your voice to that?

Senator Lenihan commented on the actions of the Minister for Finance. The words he used were, "his immoral handling of public finances". A Minister for Finance, irrespective of from which party he comes, handles the finances entrusted to his care under the authority given to him by Parliament. He cannot be accused of acting immorally. It ill behoves Senator Lenihan to use such words, as his colleague, a former Minister for Finance, Deputy Charles Haughey, up to this day, never fully accounted for the £100,000 spent in a way never authorised by the Government of that time.

An Cathaoirleach

We are concerned here with the administration in the current year. Any reference to funds voted in previous years is not in order.

Mr. Markey

I accept that. If this debate is to continue and to serve any purpose, let us conduct it in a mature fashion. I ask the Opposition in the remaining speeches to do so. We are living in a situation where we are not masters of our own destiny—far from it. We cannot say that the international situation has no effect on happenings within our own country.

Senator Killilea spoke of the money from the regional fund which will augment Exchequer funds. It took tremendous effort to establish this fund. We are getting our share in the proportion of 13 to one. In other words, we are getting thirteen times what our contribution is to the EEC. Let us be grateful for that and grateful that the Minister for Foreign Affairs and the Taoiseach succeeded in their negotiations. The precedent has been established. We will obtain 6½ per cent when we hoped we would get a maximum of 6 per cent.

I should like the Opposition to make their contributions on the basis that we are not an isolated community. We move within a circle which embraces all the EEC countries which are suffering at the moment from both inflation and low economic growth. Answers to these two problems must be found simultaneously. There are textbook answers by the thousand on how to deal with inflation and low economic growth but when both these occur at the same time new answers must be found.

I extend to the Minister for Finance our best wishes for success in the difficult tasks that lie ahead of him. When the economic gloom lifts from us and from other countries, we will have the experience of having surmounted our difficulties and we will know who our real friends have been.

Mr. McGlinchey

As a result of the charity of Senator Lenihan this morning, we have not at our disposal the time we would like to discuss Government mismanagement over the last 12 months.

Senator Killilea concluded by calling for the removal of the Minister for Agriculture and Fisheries. If I were asked which Cabinet Minister was best and which was worst I would find it very difficult to answer. I feel that half the members of the present Cabinet are nonentities and the other half bunglers. Senator Killilea dealt with the failure of the Minister for Foreign Affairs to obtain sufficient moneys from the regional development fund. To me this was the Minister's first real test, the acid test, since he was appointed to this post. In getting for the year 1975 the paltry sum of £8 million he demonstrates clearly to me that he failed that test. It is particularly disappointing for those in the Border counties who looked forward to the regional fund for cross-Border development, for arterial drainage and so on. The Minister for Foreign Affairs and the Taoiseach who went to Paris have no reason to feel proud of the paltry sum they got. While they were running across Europe, their colleague, the Minister for Finance, with the stroke of a pen, produced £27½ million in one year by taxing the motorists to the tune of 15p per gallon.

The Government by placing 4p extra on the lb of butter got a further £2.4 million and, only two days ago, the Minister for Health, by taxing the harassed workers, produced a further £3.5 million. In comparison with these sums, the achievement of the Minister for Foreign Affairs is very poor indeed.

Our economic climate is such that the people who control the money markets here have lost faith in the Government. Workers, business people and industrialists hear of nothing but tax, tax, tax. They are disenchanted; they are frustrated. If our economy is to be stimulated a radical new tax structure is needed. I have always looked forward to the day when a Fianna Fáil Government will abolish both income tax and rates and replace them with a tax on spending, either value-added tax at a much higher rate or some other form of tax.

If such a major and radical step were taken the workers would be encouraged to work for the nation, knowing that they would not be taxed to the hilt, that the business people and industrialists would be in a position to declare other profits and either save them or re-invest them in industry. By so doing they would stimulate our economy. It would be much better to save this money in Ireland than to place it in a numbered account in a Swiss bank. I hope the day will come when such an approach to our taxation system will be made.

The outlook for the farming population is bad and it looks as if it will get worse. I feel that if the Minister for Agriculture and Fisheries cannot find ways and means within the EEC regulations to subsidise fertilisers, then the 1975-76 winter season will be even worse. With compounds quoted at £97 a ton, and nitrogen at over £50 a ton it is going to be very difficult for small farmers in particular, and, indeed, for any farmer, to fertilise their lands in the coming spring. Coupled with the projected scarcity of fertilisers it looks as if the yield of hay and particularly silage in the coming spring will be very low indeed. I cannot see what this Government are doing about it. To alleviate the feed crisis, the feed voucher scheme should be extended from the 31st of this month and the value of the feed vouchers should be increased to £60.

Spokesmen for the Government would like the people to believe that the Arabs and the EEC are to blame for all our economic problems. There are now some farmers in Ireland who feel that we would have been much better had we not gone into the EEC. I feel that if the Minister for Agriculture and Fisheries properly administered the schemes provided for by the EEC much more money would go into the pockets of farmers. The slaughter premium was introduced by the EEC Commission to help producers of small cattle; for heifers over 6½ cwt and bullocks over 7½ cwt, the premium at the moment is running at £26 but it will increase to £36.40 in February. It is the producers who should benefit by this scheme, the small and medium-sized farmers in particular, but they are not. The butchers and the meat factories are receiving the vast majority of the money spent. There is only one person to blame for this—the Minister for Agriculture and Fisheries. He has failed to implement an EEC ruling that individual countries can make regulations regarding the minimum period a person can own an animal before the premium is paid. This premium is financed fully from Brussels and it will go on during 1975.

The Minister for Agriculture and Fisheries, by his failure to introduce the regulations that he is within his rights to do, is responsible for the farmers failing to get this very useful and important slaughter premium. The deficiency payment on export cattle to the United Kingdom is being paid for in bulk by the United Kingdom Government to the Irish Department of Agriculture and Fisheries. Here, again, the producers could benefit if the Minister for Agriculture and Fisheries was in any way realistic or interested. This money should have been channelled through the marts to the producers who, again, are small and medium-sized farmers. The Minister insists that this premium be paid to the big fellow, to the exporters.

The Minister for Agriculture and Fisheries has so far failed to consider the floor price for small cattle, where producers of beef cattle have offered to put half of their slaughter premium into a fund to put a floor price of £15 a cwt on small cattle provided the Government matches this fund pound for pound. This would have been a tremendous help to the producers of small cattle. The Minister for Agriculture and Fisheries has failed to recognise that he has even heard of this generous offer. With regard to the farm modernisation scheme, the Minister for Agriculture and Fisheries promised to look into the proposal that the target of £1,800 income for the western region be lowered. I feel that the Parliamentary Secretary listening to me, who represents part of the western region, must find it in his heart to agree with what I am going to say.

If this change were made thousands of small farmers would qualify as development farmers. In County Donegal alone it is estimated that 25 per cent of the farmers would qualify as development farmers if the Minister for Agriculture and Fisheries would carry out his investigation quickly and have this £1,800 income target lowered. This scheme has been in operation for ten months and the Minister for Agriculture and Fisheries is still dilly-dallying on it and, as a result, thousands of farmers are losing money.

I do not have to remind the House of the interminable charges of arrogance made by Coalition spokesmen against Fianna Fáil Ministers during the years before the change of Government. The recurring theme was that 16 years was too long. It took what one political correspondent described as "the present shower" much less than 16 months to acquire a degree of arrogance and disdain for the electorate hitherto undreamed of.

The Coalition came to power with promises of open government and consultation. The reality is painfully different. We have heard during the last 12 months a series of lectures and arbitrary decisions from Ministers. They tricked both Parliament and the people as they would a kindergarten class.

I will dwell for a few moments on one recent example of ministerial pretence which poses a further threat to the long suffering agricultural industry. I refer to the current dispute between the Minister for Agriculture and Fisheries and the veterinary profession over the Minister's decision to employ lay technicians in the brucellosis eradication scheme. I am not opposed in principle to blood samples being taken by laymen because I realise it is in operation in other countries. But when applied in the context of Irish veterinary practice the question is not so simple.

It has always been the policy of the Department to employ veterinary practitioners in the various disease eradication schemes because sufficient permanent staff were not available to the Department. This arrangement had the side effect of subsidising veterinary practice in areas where it would otherwise have been completely uneconomic. In these areas farmers had the benefit of veterinary surgeons who, without State schemes, would have had to charge much higher fees which the farmers could not afford. Many veterinary surgeons in recent times have taken on permanent assistants or have gone into good practices. This development, the economics of which depend in the main on State schemes, has resulted in a much more efficient and prompt service to the farming community as well as something approaching humane working conditions for the veterinary surgeons. When the Minister first mentioned the possibility of appointing lay technicians he gave a clear undertaking that he would consult with the veterinary surgeons before making a firm decision. He has failed completely to honour this undertaking and apparently at this stage even refuses to acknowledge correspondence from the Irish Veterinary Union. So much for the consultations that we were promised by this Government.

This attitude is in sharp contrast to the patient and highly successful discussions and negotiations that went on between the medical profession and the late and distinguished Minister for Health, Mr. Childers, on the choice of doctor scheme. The trouble between the veterinary surgeons and the Minister for Agriculture and Fisheries has led to the understandable threat from the veterinary profession of withdrawing from State involvement at all levels. The consequences of such a development would virtually paralyse the meat and dairy export industry. It would have a very serious effect on the eradication schemes. As I understand it, we are committed under EEC regulations to have brucellosis eradicated in this country by 1977. In order to have even the remotest hope of reaching this target we need the industry and goodwill of the entire veterinary profession, both within and without the State services. Instead of destroying this goodwill by petulant arrogance, surely it is not outside the bounds of possibility to initiate a crash programme which would allow laymen and the professionals to work together in harmony in the interests of Irish agriculture.

I do not believe that the veterinary profession would be less than generous if, even at this late stage, the Minister came off his high horse and proceeded with the consultations he promised. If he does not, I would place on the records of this House this warning. If this country fails to meet its commitment under EEC regulations to have brucellosis eradicated by 1977, then the responsibility rests clearly, categorically and unequivocally on the shoulders of the present Minister for Agriculture and Fisheries, Deputy Clinton. If this country fails to eradicate brucellosis by 1977, we can say it was a result of the pigheadedness of the present Minister. It is not yet too late for him to do something about it. I will take this opportunity of making a plea to him, in the interests of Irish agriculture, in the interests of the farmers and the veterinary surgeons of Ireland, to open negotiations, to have the open Government and consultations we heard so much about 21 months ago. And if he does, then possibly the time is not yet too late but if he does not, then on his head and his head alone be it.

About a fortnight ago I spoke on the Local Loans Fund and suggested that the figures given by the Minister for Local Government on the housing record of this Government were misleading, inaccurate and, indeed, dishonest. I stated that it was my firm belief that this Government did not build 25,000 houses in the year 1973-74. I listened to the Minister last week on the radio emphatically denying it. On the 1st July, 1973, the Minister introduced a new tenant purchase scheme whereby the prospective buyers were given recognition of the State and Local Government grants when they were purchasing their homes. These grants, of course, were not paid for by the Department of Local Government. It merely meant that when the price was determined the value of these grants was deducted from that price. In fact, it was the local authority or the rate-payers who were providing it; not one brown copper coin of that reduction was provided by the Minister for Local Government or his Department.

But I claim that in arriving at the figure of 25,000 the Minister included all the houses purchased under this tenant purchase scheme. As I say, a few hours later I listened to the Minister for Local Government on the radio and he said that I was talking from the top of my head and if any tenant purchase scheme houses were included in this figure they were ones built in 1973-74. This, of course, is absolute nonsense because some of these houses being sold under the tenant purchase scheme are as old as Methuselah. Some of them could have been built by Napper Tandy. The Government would like the people to believe that they were built by Deputy Tully, the Minister for Local Government, in 1973, and the Minister flatly denies that the statement that tenant purchase houses were included in the figure of 25,000 houses provided in 1973 is correct. I have here in my possession statistics circulated by the Department of Local Government giving the grants county by county from 1964 to 1970, and the figure for new house grants finally paid by the Department of Local Government for 1973-74 is 19,112. But there is a footnote to this document which makes interesting reading, it states:

Grants paid by the Department for tenant purchase dwellings provided by housing authorities are included in this figure.

Therefore, from the very documentation issued by the Department of Local Government we read that tenant purchase dwellings—and the scheme only began on 1st July, 1973 —are included in the number of houses built in the year 1973-74. Yet two weeks ago Senator Markey, who followed me, flatly denied it and said that he felt sure that the Minister would reply to me in due course. As I say, only last Wednesday week the Minister for Local Government went on the radio to deny the statement. I have here for all to examine a document from the Department of Local Government clearly stating that tenant purchase dwellings are included in this figure and this document gives a lie to the claim of the Minister for Local Government and, indeed, of the entire Government that 25,000 houses were built in that year. From April to December of this year the target of the Department of Local Government for new house grants is £12,750, 1,500 per month from April to November, and 750 for December. Now 1,500 houses per month in a 12-month year would mean that their target this year for new house grants is £18,000. Yet in 1973-74 they admit that they paid out £19,112.

I have here a document which states that from the figures available on 28th August the targets for the period April to December will not be met. The target for new houses from 1st April to 31st August was 7,500. I am not now discussing local authority houses. Only 7,000 houses were completed. In that five-month period the target dropped by 500 and a special plea went out from the Department of Local Government in August to officials asking them to forget about reconstruction grants, water and sewerage grants, even about the half grant, try to concentrate on houses which were almost completed and pay the maximum grant possible before 31st December so that the statistics would be enhanced.

At present county councils are selling cottages. This scheme is due to end on 31st December. Many of these houses were built by Fianna Fáil but, next Spring, these houses will be included in the figures for new houses built and the Minister for Local Government will claim he built that number of houses this year. Last year my own urban council sold a number of houses built six years ago under a Fianna Fáil Government. Those houses are part of the 25,000 which the Minister for Local Government will try and convince people he built.

The record of the Government on housing is not what the Minister for Local Government would like it to be. In 1969-70 there were 7,697 reconstruction grants paid for the improvement of houses. The following year 7,800 grants were paid. The year after that 7,591 grants were given. In 1972-73, 8,915 grants were paid, representing an increase of almost 1,400 on the previous year. In the first year of the present Government's term of office 8,962 grants were paid, representing an increase of 37 over the previous year.

The statistics for water and sewerage grants paid by the Department of Local Government make very interesting reading. In 1966-67 6,072 people were paid water and sewerage grants. In 1967-68 the figure rose to 8,342. In 1968-69 it rose to 8,743. In 1969-70 it rose to 9,088. In 1970-71 it rose to 10,971. In 1971-72 it rose to 12,594 and in 1972-73, the last year of Fianna Fáil's term of office, it rose to the enormous figure of 14,082. What happened in 1973-74, the first year of Government of the National Coalition? It dropped to 6,780, 1,562 fewer grants than were paid under Fianna Fáil in 1967.

Water and sewerage are no longer considered luxuries. They are looked upon as absolute and vital necessities. The figures I have quoted are not coming from the top of my head. They come from data compiled in the Department of Local Government. The statistics demonstrate clearly the misleading statements which emanate from Government Departments. Apparently the present Cabinet believe that, if they cannot reach the target they had hoped for, at least they would claim they had. They would claim they had surpassed it. The Government made this claim often enough to ensure a sufficient number of people would believe them.

I realise it would be out of order to call the Minister for Local Government a liar but, in claiming that he surpassed Fianna Fáil's target in the housing area, he is deliberately misleading the people. The statistics are there to prove him incorrect. It is a typical example of the way all the Departments, under this Government, are handling the country's affairs. One should judge the record of a Government not by their ability to get into a crisis but by their ability to get out of a crisis. Having watched and studied the record of the present Government for the past 12 months, I have come to the only conclusion to which it is possible to come, namely, that the Taoiseach and his Cabinet's best contribution to the nation would be to resign and make way for the party who, through dark days, steered the country's economic course so ably and so well. We have demonstrated, particularly in the last two years, that we have the experience and ability to steer this country out of the economic crisis we are in.

Mr. Moynihan

It is natural that emphasis should be placed on matters of great national importance: inflation, price increases, unemployment and social welfare. It is extremely regrettable that the Leader of the Opposition should have not only condemned the benefits that emanated from the 1973 and 1974 budgets, but also indicated beyond year or nay that had he been the responsible Minister for those budgets, these benefits would not have emanated and that there would have been a rigid policy of restraint.

It was equally regrettable that the expression "goody goodies" should emanate from a responsible politician in this House in 1974 in describing social welfare benefits. Let there be no misunderstanding on the issue of social welfare benefits. The budgets of 1973 and 1974 reorientated the social welfare structures. They were not handed out to the Irish community as goody goodies. They were legislated for because of the just conviction of the Minister for Finance and his Government that they were the entitlement of the people, because of society's responsibility to them. They had a national entitlement to them. It is regrettable that these benefits should be described as goody goodies.

This statement will have widespread ramifications among distressed sections of our community. They can see quite clearly that, had Fianna Fáil been in power, there would have been no adjustments in social welfare in either budget. The Leader of the Opposition clearly indicated that in both budgets there would have been a policy of rigid restraint. There would have been no reduction from 70 to 68 in the old age pension entitlement age. There would have been no extension of social welfare benefits to cover the deserted wife, the unmarried mother and the parents of handicapped children. No decision would have been made to extricate 60,000 of the lower paid workers from the income tax net. These decisions were made, not by way of handing out goody goodies, but because of the Government's responsibility to the less well off sections of the community. I am confident that that type of policy will continue.

One of the main arguments has been directed towards the Department of Industry and Commerce and the responsibility of the Minister to live up to the promise of a reduction in price levels. Let us be sincere and honest. Between March, 1973, and the onset of the oil crisis, the prices graph had shown a real downward trend. Immediately the oil crisis hit this country, as it hit the rest of the western world, the position changed. No economy escaped its impact. This Government and every Government in Western Europe entered a new ball game following the oil crisis. There was a different ball game at the time the 14-point programme was put forward.

Let us look at the main problems confronting this Government or any Government in Western Europe today. The primary concerns are to save jobs, to prevent unemployment and to ensure that social welfare beneficiaries are protected. Of course the Minister for Industry and Commerce could have taken steps to keep prices down. He could have refused to purchase oil and let our industries grind to a halt. He could have drastically reduced profit margins in industry to the point of creating colossal unemployment. He could have brought in control on wages and salaries which would have reflected itself in prices because of the impact of wage and salary adjustments.

He could have reduced agricultural prices because of the impact of these adjustments on prices of foodstuffs. Any of these moves by the Minister would have been seriously resented and violently opposed. In the first instance, industry must be allowed, at all costs, to carry on over this difficult period in the provision and maintenance of jobs. This is vital. Secondly, we do not live in an environment where a Government could bring in a rigid control of wages. This is a free economy with a free trade union movement and a free federated union of employers with responsibility to sit down and negotiate what is or is not possible within this economy.

I was particularly glad that at yesterday's very important meeting of the Irish Congress of Trade Unions they saw fit to continue a united and integrated discussion on the policies to be pursued over the next 12 months. One of the factors that should be borne in mind is that percentage adjustments tend to escalate into figures that create too much demand on the economy and tend to give adjustments to sections of the community that could well afford to carry on, on a lesser figure. A flat rate adjustment of wages and salaries related to what it is possible to give to the ordinary industrial worker should be applied right across the board. Differentials in the application of percentages would be avoided. The well-protected sections of the workers and salary earners could await another adjustment when the economy could afford it.

Much has been said in relation to the industries which have had difficulties relating to specifically footwear and textiles. If Fianna Fáil spokesmen are honest they will realise that when the Treaty of Accession was signed these industries were in trouble. Blaming the present Minister for Industry and Commerce, and unreasonably expecting him to extricate such industries from that problem, merely reflects back on the agreements made by the Fianna Fáil Government. The present Minister is legally and rigidly debarred, other than through a major breach of EEC agreements, without the approval of the EEC Commission, of imposing protective tariffs. The Minister is endeavouring through the EEC to do something that would give a further breathing space to these industries. The unions are happy with these moves and are hopeful of the outcome. To say, as was said in the Dáil recently, that the Minister should impose tariffs is nonsense.

Comments have been made on the mining industry and the problems associated with it. I am sure the people are thankful that a man of the calibre and ability of the Minister for Industry and Commerce, backed up by the Government, is responsible for mining. His anxiety, determination and outlook is that mineral deposits are the rights of the people to benefit from to the maximum. His determination, regardless of temporary setbacks, will be to ensure that negotiations with any bodies undertaking the development, exploration and utilisation of the resources of our mineral assets will pay back to the Irish people a proper, just and due share.

We hope the discussions now under way with a view to resolving the disagreements with consultants and medical staff over the implementation of a free hospital service will have a satisfactory outcome. I congratulate the Minister on giving the green light to the proposed new hospital in Tralee This has been on the cards since 1968 but no positive decision was made. This hospital will be of great benefit to the people of Kerry and it will help local girls who wish to seek entry to training hospitals.

There are within the health services certain shortcomings; I pinpoint dental and ophthalmic services for schoolchildren in rural areas which require a tremendous speeding up. The cost to one family whose six-year-old child had a tooth extracted was £14 including loss of part of a day's wages, transport and dentist's fees. No working class family can afford that. It is a State obligation to see that the dental and ophthalmic services are extended so that all children have an equal share of these benefits.

The extensions and improvements in social welfare are welcome. The pay-related industrial superannuation scheme introduced by the Government is very welcome. This is the third stage in the extension of the two introduced since 1973, the pay-related disability benefit scheme and the pay-related unemployment scheme. The trio will be completed when the pay-related pension scheme is introduced. This scheme will give the industrial worker a basis of superannuation similar to that of the service worker. This has been long overdue. Despite all the extensions in the field of social welfare problems still remain.

In the case of parents receiving social welfare who have a child still at school, on that child's 18th birthday the children's allowance and dependent social service disability allowance are cut off. This cut off could represent 25 per cent of the total income to the House. Admittedly, it was only in the 1973 budget that this was extended from 16 to 18 years but in the case of disability benefit a child ceases to be a dependent at 18. The benefit should be extended up to the point where the child's education terminates. This is a very serious defect. A child at 18 should not be cut off from this income if he or she comes from a home which depends entirely on social welfare contributions.

It should be remembered that 31 per cent of our population are self-employed; many of them are very anxious to involve themselves in a State social insurance scheme but have not been given the opportunity. I ask the Minister and the Government to do their best to include this substantial percentage in our social welfare service.

A new and radical change should be made in children's allowances. This is the only non-contributory payment that has no means test. Because of the number of people in the very low income group and in the social welfare group there should be a feed back to them of children's allowances paid to the higher income groups. This would do a great deal of good. There were substantial income tax reliefs in the last budget. These were not applicable to those in the lower income group.

The Minister for Local Government is quite capable of answering the allegations that he had falsified figures by Senator McGlinchey. I am anxious that the present local authority housing programme should continue to expand. We should build in advance of requirements rather than fall behind, as we have been doing. Housing authorities have not been forceful enough in buying or acquiring land. I strongly suggest to the Minister for Finance and the Government that housing authorities should be ordered to keep substantial land banks available because it is very desirable to have sufficient and suitable housing available for the people.

I am disappointed at the sum proposed to be provided by the Minister for Agriculture and Fisheries for the farm feed subsidy scheme. Part-time farmers should have been included as well as those engaged in full-time farming who have up to a £50 valuation. Part-time farming is now a rapidly developing feature of the agricultural economy. There are many intensive farmers who have part-time employment. They carry fairly large stocks. The aim of this scheme should have been to ensure that all stock have a reasonable amount of feeding to get them through the winter. The scheme should be reviewed further to see if part-time farmers carrying fairly large stocks could be included.

This has been a year with trem- endous difficulties. The campaign in the North has added considerably to the cost of paying the Garda, the Army and other security forces. In other times, these millions of pounds could have been used for housing, road making and industrial development. We owe a debt of gratitude to all the security forces. These men have had to leave their families to perform duties long distances away and have had to work long hours under very difficult conditions. They deserve our most sincere thanks.

I should like to re-echo what was said by our newly-elected President. In the approach to a period of peace and goodwill, we appeal to the men of violence to call a truce so that a true and lasting settlement can be brought about in that very troubled part of our country, the Six Counties.

Professor Quinlan

At the outset, I regret the decision to limit this debate because this has always been a type of general debate and served a very useful purpose. I know that Christmas week is not the best time for debate, but it would have been far better to follow the precedent followed in the past two years of accepting the Appropriation Bill without debate and having a three-day debate sometime in January. I and many others here intend to press very strongly in January for an opportunity for a three-day debate on the economy, the outlook for 1975, the problems that beset us.

There is a contribution to be made by the Seanad. Contributions from the Seanad are usually of a non-political nature and are generally valuable and constructive. At this critical time, these contributions are necessary and I ask the Minister to accommodate us in this before the end of January and I ask the Leader of the House to make these arrangements for us, because a debate lasting six hours is not adequate to cover the large number of matters which arise from the general budget, such as the state of the economy. We have few opportunities here for debate. It pains me, as one who welcomes a change of Government—having had one party so long in power— that the faults and criticisms that parties make when in Opposition, seem to be forgotten. They seem to have forgotten the demands they made for more involvement, for more opportunity to debate what was happening.

Therefore, I ask Government Members, as a new year resolution, to read the speeches they made four or five years ago condemning the then Government for their failure to provide adequate opportunities for real debate in this Chamber. Let us, in 1975, get back to trying to make Parliament, and Seanad Éireann, meaningful. As a nation, we are facing very difficult problems. These problems are not unique to us—they affect all developed countries and they will have to be faced in common at international level. Surely the problems at home will have to be faced by us all in a similar way.

I had hoped that in this debate I could examine the constructive and very down-to-earth report by the National Economic and Social Council which we received two weeks ago. In the time available, I cannot do this, but the message contained in that report is, as we know, the tremendous crisis in our balance of payments because of our having to meet a bill of about £140 million for our oil supplies. That makes nonsense of any attempt at a balance of payments position like that which prevailed a few years ago.

Much as I dislike the remedy proposed here, which is a remedy of borrowing on a slightly sliding scale to try to bridge this gap over a seven-year period, I do not think there is any other alternative. Even if we con strict our national consumption at home so as to free the equivalent of £140 million of goods that we could export, unfortunately the oil producing countries, the Arab countries and others, are still not facing up to the position of taking our products in return. We cannot—and this goes for all western Europe—achieve a balance between exports and imports to those countries. Therefore all we can do is take a very big gamble on borrowing our way through the balance of payments difficulties. It is something that the other countries are doing also. There is no real alternative to this with the balance of payments estimated this year at a deficit of over £300 million and with inflation running at 20 per cent.

We are really in trouble. We are in an economic war situation, which is as critical or more critical than any situation we ever faced since the foundation of the State. The only cold comfort to us is that the other countries are in an equally perilous situation. It is a time when there is a call for leadership. There is a call to spell out the blunt facts of the situation to our people. It is no longer a time for scoring party political points. It is akin to the time when Winston Churchill faced the people of Britain in 1943 and offered them "blood, sweat and toil". That is the type of realism that brought forth the fighting spirit of the British at that period.

A similar realistic approach here in 1975 would bring out the best that is in our people. That calls for leadership not only on the political level but also on every other level from the trade unions, professional groups, the vocational groups and all our voluntary organisations. At the moment each and every group is too inward looking, too concerned with maintaining its own relative position, with its own standard of living. The blunt fact is that you cannot just pay out or incur a deficit of an additional £140 million in the balance of payments without that affecting the standard of living of each and every one in our community. That message has got to be brought home to each and every one.

I should like to see the Taoiseach, the Leader of the Opposition and the others united in this. Having called on the North for two years to apply the solution there of power sharing, we must realise that that solution is equally applicable here. I called for its implementation here on many occasions but, so far, there is not even a sign of any such approach. We go along in the same old situation as before. Unfortunately, I have to conclude that, on that level, there is very little difference between the approach of the previous Administration to that and the present Administration. Ministers are, of course, more harrassed than they have been in the past, due to all the extra commitments involved in EEC membership. They have to face the tremendous crises which have faced no other Government at this level. I pity the Ministers for the harrassed existence they have to lead. That applies equally to the senior civil servants, who are coping with a new dimension of bureaucracy and who are coping with the EEC demands. Both these groups have not available to them the help that could be provided by a modernised parliamentary system. We should have a parliamentary system with a committee system combining some of the best committee systems obtaining in Europe, like the Dutch system. There is no power sharing, no load sharing here. We just carry on as a nineteenth century institution. That is not good enough in the crises in which we find ourselves today.

If there is one thing we in the Independent Benches can do in the next year it is to press on at every opportunity for the establishment of a meaningful committee system, one that will give the opportunity to the varied talents in this House and in the other House to make their contributions in committees on education, social welfare, finance and so on. These committees that could help the Ministers, on the one hand, and also help to moderate between what appears to be an inward growing and an over-defensive bureaucracy, which, unfortunately, has had all of its worst features accentuated with the impact of European bureaucracy. The present time calls for power-sharing and leadership. Our present economic problems call for conservation in a real sense, conservation where we do more than just simply utter pious platitudes about the need for it.

I have yet to see a practical system bringing the message home to individual people. I was in the United States recently and I saw there in the various institutions, factories and so on, this challenge of reducing their energy consumption. It is 10 per cent over the corresponding consumption for the previous year. It is a challenge to them and therefore it involves the turning off of lights, making sure that fires are not burning unnecessarily and doing everything possible to meet the target. It becomes a challenge to meet those targets. We will have to have something like that. It is painful to see the waste that goes to the refuge dumps. We still have not made any progress on the recycling of waste, the segregation of the various components, the tins and so on that can be recycled, the paper that can be reprocessed. All that at a time when we have an unemployment problem. It is into those efforts that we need to divert our available manpower at present. We can do more than that, we can divert our voluntary manpower into it also.

I heard a few days ago of a voluntary effort, in the town of Naas, where a group of citizens concerned with the welfare of the aged had, during the past few years, a scheme for collecting waste paper. This was done on a voluntary basis by people who were otherwise fully occupied. This practice has gone on for two or three years and at a time when we were led to believe that waste paper was not worth collecting. Yet, out of that waste paper they now have a home which cost £12,000 to £15,000 available for the aged. What one small town can do can be multiplied all over the country.

Likewise, conservation should mean a scaling down on some of our ideas on buildings, roads and so on. Frankly, we have allowed our prosperity of the last few years to go to our heads in that regard. I know that the best is the enemy of the good but as it stands at the moment many of our schemes are much too extravagant. Above all, we can look at this city, we can look at towns elsewhere and see the many servicable buildings that were allowed to be pulled down and to be replaced by office blocks and other buildings. Commercial interests bought these new buildings hoping to make a profit out of the rents. Again, that is a very extravagant and dangerous misuse of our national resources. Conservation, properly understood, looks at existing buildings and equipment and faces the question as to whether these can be used for a longer period or whether there is a need to scrap them. We are not an empire. We are a small country in the west of Europe and we have got to come down to earth in those regards.

This is a period of time in which a call for hard work should apply to everyone, whether he is in the teaching profession, the factory group, the public service and so on. This can show benefit in many ways such as more prompt answers to correspondence in dealings with State or semi-State Departments or in more productive work. Admittedly there is a conflict here with regard to factories vis-à-vis the disposing of output because more work by those already employed would seem to suggest that there would be fewer employed. That is what is happening in many of the factories that are trying to cope with their difficulties.

More productive work in the factories at this time might be regarded by some of the workers as rather dangerous in that if the market for goods was not available, the increased stockpiling might lead to reduced employment. All these factors can be reconciled by the proper use of retraining. It has been said that we should avail of this recession as an opportunity to retrain those who are unemployed in order to be equipped for the better times ahead. We all subscribe to that thinking but I would take it a step further and say that in factories where manpower is too great for the production that can be disposed of there should be planned retraining schemes engaged in, probably on a part-time basis. This might even involve cutting the work hours temporarily. The taxpayers would have to accept the cost of any such programmes. Individual factories may not be able to cope with that cost but if the people concerned are rendered unemployed they must be paid the usual unemployment benefit. I think it would be far better to spend this money on the work force in the factories as payment for part-time training undertaken. This part-time training might mean full-time training for some few weeks or months, or part-time just one day per week or on an hourly basis. There is nothing more demoralising in a factory than to see workers who have been there for many years simply put on the unemployment sheet. We need to make them feel part of the enterprise and give them the opportunity of retraining for the future. I would hate to see a rise in the numbers of unemployed. I would welcome an increase in the amount we are spending under that heading if it is to be channelled into this type of part-time retraining schemes.

We must realise that we have an unrivalled potential for agricultural development. No country in Europe has the same natural advantages. We should be concerned with what gives employment, that is, our dairying industry. Fortunately at the moment that industry is doing well. We have no guarantee there will not be another turn in the cycle within 12 months. We should keep our nerve and plan for the future. At the same time we must be realistic and realise that the farming community cannot carry the burden of borrowing to expand. Agriculture and dairying have become very high cost industries, costing from £30,000 to £40,000 in capital expenditure for every additional man employed. Obviously one cannot borrow that type of money. The only way it can be done is on a long-term scale from the ploughed back earnings of the farmer. By every means possible, he must be encouraged, cajoled, and forced to invest and expand. Unfortunately, a recognition of that very basic, simple and elemental fact does not seem to be grasped yet by the Minister for Finance in his approach to the question of farmer taxation.

Farmer taxation is an excellent means of achieving our goal of securing reinvestment in agriculture, thereby securing expansion and securing additional jobs in agriculture. Over the past decades agriculture has been losing 7,000 to 8,000 people per annum. We must try to find jobs for those in industry. We cannot afford to let this situation continue. Up to recently emigration masked the fact. Today with England in such dire economic straits, emigration is reduced almost to a trickle and we are face to face with the fact that we have to provide for our own increased population. Again I ask the Minister to have another look at agriculture. This industry should be encouraged, forced and cajoled by every means possible to keep the people on the land by making it profitable for them to do so.

I share the concern of Senator Moynihan for a speedy end to the soaring costs of the health services. The amount paid to consultants is only 6 per cent of the total. The real cost is in drugs and medicines. There we must look for economies. I have not heard any exhortations from any Minister or any group to the hospitals to cut down on those bills. In fact, it should be part of our economy drive to see a reduction under those headings. Most people would say that we are far too liberal in our prescriptions of drugs.

The real cost lies there and should be tackled. The educational services are a very demanding section on our financial resources. We are vitally concerned about this and are committed to providing all the educational opportunities possible for our people. This is one area where we should have joint effort because it is too big for any one Minister. Personally I am disappointed we did not get a White Paper on this subject with limited time for discussion.

I welcome the fact that we have reached the stage where education has surfaced again. I hope this time we will be able to hammer out a scheme that will serve fully our national needs and ensure the full co-operation of all groups concerned. I welcome the continuation of a dental faculty in Cork. That is not any gift to Cork. It is merely a recognition that the previous level of planning figures accepted by all bodies up to five years ago, that an output of 60 trained dentists per annum was adequate for our service, was not adequate. A more realistic figure today is between 80 to 100 graduates. When one accepts that change, one accepts the necessity for two training centres. We are happy and pleased that that has been accepted. I and my colleagues will give every help to continue the good name of UCC in that field.

A great mistake was made by this apparent failure to recognise the aspirations of the Cork and Galway colleges to independence. That can and should be put right. The new Limerick college now fits into this scheme. That can equally well be fitted into the pattern proposed for Ballymun, having the right to be recognised by either of the two independent universities in this region, the same can apply in the Limerick region.

An Cathaoirleach

I hope the Senator appreciates that the debate is confined to the particular sums voted in this Bill.

Professor Quinlan

I am worried about the way the money is spent. There is not enough concern for the educational realities. There is not enough consultation with the educational groups concerned. Far too much power is concentrated in one or two men in the Department of Education. I make a plea to the Minister for Education to set up a joint committee of both Houses of the Oireachtas to study the proposals made and to adopt a more flexible attitude to their modification. My colleagues and I will be very willing to co-operate with such a committee. However, people who might be considered as even having a semblance of vested interest should not be on this committee. I would appreciate the opportunity of giving full testimony before such a committee and answering any questions. It is only in this way that we can draw benefit from the many reports we have had, ranging from the Commission on Higher Education, 1960, up to the O'Malley/Lenihan Report, the NUI/ TCD Report, the HEA Report and the more recent one, so as to ensure that what emerges will have as broad a basis as possible; that we can go forward. We do not want to wait for another set of proposals. We want to finish the job now. It can only be completed through such a parliamentary committee.

I shall conclude by appealing for a more meaningful role for Seanad Éireann in 1975. Let the Seanad either be reformed or abolished. The Seanad must be meaningful in the Ireland of 1975. Let our parliamentary system show that the virtue of hard work applies in the Seanad as we would hope it applies in all sections of our community.

Mr. A. O'Brien

The Bill under discussion today affords the Opposition an opportunity of criticising the Government. It is an essential function of the Opposition, as part of the parliamentary system, to do so. The credibility of the Opposition argument depends on the sort of criticism made. Criticism for the sake of criticism does not command attention and to blame the Government for the effects of inflation is irresponsible. Criticism of this kind lays the blame on those who are innocent and misleads the people. It hinders an understanding of the difficulties which confront, not just the Government but the people as a whole. Other nations are affected by inflation. The true facts of the situation should be given to the people accurately. People have their own way of dealing with a crisis. A person will understand that growth in employment can be marked if he insists on buying Irish-manufactured goods thereby bringing about an early cessation of difficulties.

Our present difficulties are not due entirely to the vast increase in the price of oil. The price of vital materials has been greatly increased. Nations which produce important raw materials realised that they were not getting a realistic price for their goods and that many of their people were living under subsistence level when all the wealth was being exported to other countries. It is silly to pretend that a change of Government in this country would alter the effect of that realisation. Present difficulties are also due to the fact that the multi-national companies decided to develop in whatever part of the world suited their needs best. The great oil companies of the world concentrated on an area around the Red Sea and neglected the vast potential of the North Sea, northwest Canada, Alaska and various other places where oil could have been produced. Undoubtedly, the factor has contributed to growing inflation.

The people in the oil producing countries who heretofore lived on the poverty line now find themselves controlling the world's finance. It would be unreasonable if we blamed them for getting their own back. The day is gone when countries can develop and become rich at the expense of other countries. The world has changed. We must gear our thinking and development in accordance with that change. If we do not realise that the world has changed significantly and that we are passing through a transitional period we will not develop in the way in which we will overcome our difficulties. Both the Government and the people must realise that these problems are here to stay. It is misleading to attempt to convince people that by changing a Government these difficulties will disappear: it will postpone the day when we shall overcome our difficulties.

In addition to the problem of inflation which confronts the Government and the people there is also the unrest and violence in Northern Ireland. This problem has added to our troubles. The tourist industry has been affected. It has added significantly to the cost of providing security. Taking the figures in the Estimate, the increase provided for the Garda alone for nine months is over £6 million.

The increase provided for the Army is over £3 million. That is a net increase of £10 million. It is admitted that part of that increase of £10 million is due to the increase in the cost of salaries. A very, high percentage of that £10 million is an expenditure that was brought about by the need to have more people employed in security. Another fact that should be borne in mind is the cost of malicious damage and injury claims. If these things are repeated often enough and people become aware of the harmful effect this violence can have on the development of the country there is more likely to be clear thinking on the matter and less double-thinking.

Some unfortunate references were made earlier today—I do not intend to go into them in depth—regarding the handing out of "the goodies". They were unfortunate remarks and, in fairness, it is not entirely typical of the man who made them. It is wrong for the people to believe that this is goody-goody money or a Santa Claus type of money. It is a calculated effort by the State to supplement the incomes of people who are not able to do a full week's work and people whose farms are so small that they are not able to eke out a living on them. That is the policy of this social welfare scheme. I think there is widespread appreciation of the work done by the Government in the last two budgets in improving the social welfare benefits across the board and including for the first time under these benefits people who had been forgotten heretofore—people who had contributed in their own way to building up the wealth in this country.

The references were unfortunate. It is not right for people to think that there is one school of thought in this country that believes in a just society approach to these things and another school of thought that says the strong and healthy should flourish and the weak and senile should be forgotten. It would be wrong if the contribution to this debate here lead anybody to think that. It is recognised that the better off section of the community should help the weaker section. That is part of the policy of the Government. It was to a degree part of the policy of the last Government. If this Government have developed it to a further degree and have included people that were forgotten by the previous Government, it is to the credit of the Minister for Finance, and the Minister for Social Welfare and the present Government.

I think I am right in saying that a most undeserved reference was made to what was called the miserable amount of money that the Taoiseach and the Minister for Foreign Affairs obtained from the regional fund. The people should clearly understand that because of inflation and the difficult economic situation that prevailed in other member states it so happened that there was less money for distribution than was anticipated some years ago. It is wrong to give the impression here that if we had a different Government in office the Germans, Dutch, French, Danes and other peoples in Europe would be able to put more into the regional fund pool. That is asinine thinking. The facts are that because of the world economic situation and the economic situation that prevails in the EEC, only a relatively small amount of money could be spared for this pool.

In fairness to the Taoiseach and the Minister for Foreign Affairs, the facts are that as a result of their skill in negotiation and as a result of the respect in which they are held out there, they did succeed in getting a greater percentage of that fund for us than we would otherwise have got. I am glad to avail of this opportunity of complimenting the Taoiseach and the Minister for Foreign Affairs on securing a greater percentage of that fund than we had expected.

Similarly a tribute of the same kind is deserved by the Taoiseach and the Minister for Agriculture and Fisheries because of the success they attained in their efforts to get a more favourable green £ for us than was anticipated. I am sorry to have to say that some of the criticism that was directed against these men for that success arose from the sour grapes type of mentality. Some people who made that criticism were in fact disappointed that these men attained so much success.

The tenant purchase scheme came in for some criticism today. It is not fair to say that it was criticised as such. It was criticised because Senator McGlinchey believed that the number of houses acquired under the tenant purchase scheme were included in the number of houses built. That is Senator McGlinchey's interpretation of documents that came to his hand from the Department. I want to say that this tenant purchase scheme is a great tribute to the Minister for Local Government and the Government. It has put tenants in a position to acquire reasonably good houses for sums of money as low as £400 or £500 and even less. Any Minister and Government who enables a working-class man to become owner of his own house for that sum of money are taking a considerable step forward. It is not right that there should be misunderstanding about it. I think it is a good scheme. I am chairman of an urban council and in that area a large number of tenants have availed themselves of the scheme. They are delighted with it. It will be more and more appreciated as time goes on.

Reference was made to the growing unemployment especially in the textile and footwear industries. It is not much consolation to us but it does help to give us a greater understanding when we realise that the textile industry in north-west England, Italy and in part of France—countries that have had a long tradition in the textile industry and have developed and acquired skills as a result—have run into greater trouble proportionately than we have. I am not for one minute saying that it is satisfactory that we should have people being laid off in these industries, but it is wrong to give the impression that it is due to neglect on the part of the Government. I know, and many Senators also know, that aid will be given by the Government at present to help these industries that have a viable future over the difficulty and enable them to continue people in employment. An industry in Cavan town that was about to close down—not through any fault of the workers or management but due to world conditions—has now been preserved and employment will continue because of prompt action on the part of the Minister for Industry and Commerce.

A few days ago we had discussions about the health contributions and people spoke about the lack of hospital accommodation. It is freely admitted this is not what it should be. We have a long way to go in providing proper hospitals but steps have been taken gradually to remedy the situation. I was on a deputation to the Minister for Health last week to ask him to provide a regional hospital in Cavan. The present hospital was condemned in 1934, and it is surely unjust to blame the present Government for that situation.

I appeal to the Government to pursue vigorously arterial drainage schemes. A very high percentage of our land is under-productive as a result of recurrent flooding. Small farmers in the area I come from— the basin of the River Erne—suffer a tremendous amount from recurrent flooding, thus making their farms nonviable and uneconomic. We were told that that drainage scheme would be undertaken when the Northern Ireland Government lowered the level of Lough Erne. This was done ten or 12 years ago and nothing has been done yet.

I ask the Government to take into consideration the special conditions that prevail in an area of small holdings and the improved wealth of these people if they were able to stay on the land. They would not have to do AnCO courses. If their farms become uneconomic they will have to be trained for something for which they have no aptitude or interest in. If the Minister could improve this situation I am convinced it would improve the wealth of the country.

I appeal to the Minister for Agriculture and Fisheries to increase subsidies for feed for store cattle. Due to no fault of their own farmers in the west and in counties Cavan, Longford and Monaghan find, due to a bad summer, they were not able to save enough fodder to keep their stock on the land. Cattle that should have been sold in November and December cannot now be sold. There will be no market for them until late spring. It is absolutely necessary that these cattle be kept alive.

It has been said that we are prevented by rules of the EEC from intervention by the Minister. That is wrong. I do not believe any number of rational men could come together and impose regulations which would have the result of allowing thousands of cattle to die of starvation. Any money spent in coming to the aid of these farmers will be well spent. In a year or two these cattle will, in improved conditions, bring more wealth into the country.

The scheme for disadvantaged areas is a scheme designed to help the people in those areas. I attended a joint executive IFA meeting of Cavan and Monaghan earlier this week. They have produced facts and figures that would convince anyone who examined them objectively that they have a good case for inclusion under the disadvantaged scheme to the fullest extent. Perhaps the Government could bring pressure to bear in Brussels so that they will realise the great need that exists for extending that scheme to the fullest to counties Cavan, Monaghan and Longford and other areas that may be on the borderline. I believe the north midland section should be included with the counties along the western seaboard.

Senator Moynihan made a case for extending the provisions of the Health Act to children at school. There is a gap between the years 14 and 16. Until quite recently the age for finishing primary education was 14. Since the transport scheme was introduced that has shown a tendency to drop. It is now normal to finish primary school at 12 years. These pupils are attending secondary and vocational schools. A section of students are not catered for under the schools medical scheme.

In general there is an appreciation in the country of the difficulties confronting the Government. There is widespread appreciation of the fact that in difficult circumstances the Taoiseach and members of the Government are doing a good job.

Mr. Hanafin

I would like to register my protest over the time made available for this debate. It was traditional that three days were set aside in January to deal with this Bill. I was told the Minister would like to be present and as he would not be available in January he would like the Bill to be dealt with today so that he could hear what speakers had to say. I hope he returns to the House.

Mr. Yeats

He has only been here for an hour so far.

Mr. Hanafin

This is causing me some concern. That is the reason I was given. We would have been quite happy to have the Parliamentary Secretary here instead but the Minister said he wanted to be present to listen to what the Senators had to say. I hope some of the points I mention will be brought to his attention.

From the Government side today we heard much praise and assurances from speakers about how safe we should feel with the present Ministers, particularly the Minister for Industry and Commerce and the Minister for Finance. I should like to raise some points concerning these two Ministers, and when the Minister replies we can assess how much praise they deserve and how safe we can feel with these two Ministers to look after our interests in the coming year.

I should like to refer to a statement made by the Minister for Industry and Commerce on 4th November dealing with oil exploration. He said: "With the Government's attitude regarding applications from groups containing Irish participation..." It appeared from this statement that no favourable treatment would be given to Irish groups. Clarification was urgently sought on this point and the Minister subsequently confirmed, in reply to a parliamentary question and in several Press interviews, that where other things were equal, preference would be given to groups with a worthwhile Irish content, either public or private.

Following the Minister's statement, at least six major oil company groupings have terminated discussions in which they had been prepared to accommodate an Irish partner in their group on very favourable financial terms and at no cost whatsoever to the State. Notwithstanding clarification of the Minister's original statement, the oil companies have maintained this position. The net result, therefore, is a loss of several millions of pounds to Irish industry. Perhaps what might be even more important is the loss of opportunity for Irish companies to break into the international business of oil exploration.

Is the Minister aware of the effect which his statement on 4th November has had on negotiations between Irish industrialists and several major oil companies? If he is so aware, is he prepared to correct the position in the only manner acceptable to the oil companies, namely, making provision in the likely terms for more favourable treatment for groups having worthwhile Irish participation?

Coming now to the Minister for Finance, I should like to mention something which caused concern to some people regarding the loan from Kuwait. Bearing in mind the undesirability of a national loan issue in present circumstances, it is obvious that the Government will have to rely on foreign borrowing. All major oil-importing countries have had to borrow money to finance deficits. The image of creditworthiness is paramount in the criteria applied by lending sources. Surely the exceptional small size of this issue would not contribute to that image. I am not objecting to borrowing, but I have some concern about the manner in which the negotiations were carried out.

Based on the performance of the Kuwait dinar—£ rate over the past two-and-a-half years, June, 1972, .81715; December, 9th, 1974, .6720, showing an increased value of the dinar contra the £ of 27.55 per cent, it is probable that this trend in the present comparable economic circumstances will be maintained and more likely exceeded, thus increasing the amount repayable on maturity of the loan by at least 40 per cent. If there has not been an agreed exchange risk clause, this will be committing the Exchequer to a borrowing costing of approximately 50 per cent, something close to £4 million. I should like the Minister to tell this House whether there has been an agreed exchange risk clause and if not, why not?

The figure of £4 million caused concern to many people. I recall some time ago when a motion was introduced in my name, asking for tax relief on investments in building societies. The Minister at that time said that this would cost £4 million. From this side of the House we pointed out to him that the construction industry was in a dangerous position and that we were offering a solution to the problem. We have been accused in many places of never offering a solution to the present economic problems. We offered the solution that there should be tax relief on deposits not exceeding £5,000. We made a careful study of the matter before presenting it to the House, and our research showed there was £119 million already lodged with building societies consisting of deposits not exceeding £5,000. We believe if the tax relief had been given at that time it would have attracted much more money to the building societies. If 8 per cent could have attracted so much, surely tax relief on the deposit would have increased investment.

We believed, in presenting that solution, that responsible people on the Government side of the House would have accepted our motion. We offered the solution in good faith because we could see the unemployment that was facing the country, particularly in the construction industry, which is always the first to be hit. The figure for unemployed persons at the moment stands at 90,000, and a figure of 100,000 is expected in a few months. We believe that had our motion been accepted this unemployment figure would not be so terrifying, so huge at present. I do not know what percentage of it was employed in the construction industry but it may well be almost half the total figure. The figure must be enormous if one takes into account all the people directly employed in the construction industry and in the ancillary services.

We believe that the Government were either irresponsible or not intelligent enough to see the merit of our proposal at the time and accept that they could save a considerable amount of hardship over Christmas and in the coming year. In deference to other speakers I must limit myself in what I have to say. I have many important things to say but, in view of what I feel is the high-handed action on the part of the Minister limiting this debate, I must deal very quickly with these other points. I wanted to deal with mining and broken promises and how that has affected our credibility——

Mr. M.J. O'Higgins

I hope the Senator will not mind me interrupting him but, in fairness to the Minister, it should be stated quite clearly that the Minister had nothing whatever to do with limiting this debate. It was done by agreement between the parties in this House.

Mr. Hanafin

But the Minister did have something to do with preventing us from having a three day debate in January. Our credibility has been affected by broken promises over mining. In Wall Street and everywhere else they are all aware of the position.

What I have to say on petrol taxation is important. It has been stated by Sheik Yemani, the Saudi Minister for Oil, and restated as recently as two weeks ago, and stated also by the Kuwait Minister for Oil and Finance, Mr. Teiki, that a very important factor in their oil pricing has been the subsidising of consumer countries' economies by the rate of local taxation on oil products.

A more valid gesture in assisting the importing countries' economies to absorb oil cost increases would have been more sincerely exhibited by a form of practical control, such as rationing, rather than increased taxation which only benefits the Exchequer. What was said in other places and in the other House was a complete sham; the reason given for increased taxation on petrol was that it was a form of rationing. The balance of payments was mentioned. I firmly believe that the only reason for the increased taxation was that more revenue was needed.

The recent figures on oil given by Minister Teiki show that for each £ worth of crude oil the breakdown is as follows: average consumer country taxation, 55p: oil company refining and so on, 18p. The exporting countries, the Arab countries, are blamed for all the increases. This is a common problem all over the world. Has anybody ever looked at the average consumer country figure which is 55p out of every £ and the Arabs get 18p? Other countries with similar problems are, I believe, doing a better job. Does the recent increase in taxation assist our credibility for a sincere effort to reduce consumption? It does no such thing. It will not affect consumption.

Does it not have the counter-effect of further supporting the justifiable views of the Arab producers and add a twist of minimum benefit to the Exchequer to the inflationary spiral?

Mr. Alexis FitzGerald

I must say that on the whole, if I do not sound patronising in saying it, the contribution of the last speaker was what I would call a reasonable one in the context of this debate. He made a great many points. I have not got information on some of the points so I cannot make any judgment as to the effect of the statement of the Minister for Industry and Commerce in November, but the point made seemed to me a valid Opposition point. With regard to his reference back to the proposal concerning the allowance by way of taxation in relation to deposits in the building societies, I thought that was an interesting idea and one well worth examining, but I do not think it was fair of him to say that the Minister was irresponsible in not adopting the suggestion. This has many aspects. What is the effect, for example, of that tax free allowance on deposits in building societies on the distribution of savings, in as far as they go into other channels, which is a matter with which a Minister has to have an overall concern? Again, I cannot express any judgment on that; it is not necessarily irresponsible of the Minister to decide that he cannot approve of the particular proposal in that particular form, without necessarily rejecting the idea of some differential in taxation to encourage the building of houses, which is an idea I like very much. There is then the question of the structure of the building industry, whether the kind of package which is required to solve the construction industry's problems does not, perhaps, involve some consideration of how all the capital can be properly deployed in the interests of everybody in the industry.

There is also the existing structure of the building societies and the necessity to bring in up-to-date legislation dealing with them. All these matters must affect a Minister; for example, say he knows of a situation where a building society—he cannot overtly refer to it—is not as strong as it ought to be, he may hesitate to take a step which will encourage the transfer of deposits into such a society until other steps have been taken which will impose a proper discipline on that society.

I make that preliminary comment on Senator Hanafin's contribution to contrast it with the opening contribution of Senator Lenihan. It seems to me he is worthy of better. When he uses the kind of extreme language he did use, talking about the immoral handling of the finances of the country, of the Government standing indicted, of hopes that there is some residue of morality left in it—this kind of language coming from a former Minister, as well-informed as he must be about the realities of the national situation, seems to me to make rather a charade of the democracy that all parties ought to be concerned to defend. We should be concerned with the prestige of our own Parliament and the kind of language we should use in the parliamentary exchanges it is proper to have.

Take the allegation which gave great offence: in Senator Halligan's defence of the Government, he took up Senator Lenihan's unfortunate phrase about the "goodies" of the 1973 budget. Remember, incidentally, the rather interesting slip Senator Lenihan made when he told us what the Fianna Fáil budget would have been in that year; it would have been a different kind of budget. To be realistic in this regard he should honestly say that the decision would have been not to give these welfare increases or, as Senator Yeats implied in an interjection he made at a later stage: "Yes, give them but increase taxes." Let us hear now what these taxes would be. We may not complain about budget deficits and we may not complain about "goodies" being given unless we are going to state what the alternatives are. Here is a former Minister, speaking with all the knowledge of the economic and financial situation which existed at that time. It is not a question of "Tell me the facts and I will tell you the solution." He knew what the facts were and he should have told us what were the wrong decisions the Government made which contributed to the critical situation we all recognise exists. It would be more honest of us all if we recognised that this is due to causes which are for a very large part outside our control.

I am not saying that the Government should go scot free of all responsibility because the Government make decisions in all sorts of ways. Incidentally, you do not see the impact of some decisions of Governments on the economy or on society until a long time has passed. If we are talking about the small proportion of our gross national product made available for social welfare contributions, for example, we are making a statement with regard to the effect of decisions made for many years before that calculation was made. We are passing a judgment on the whole national policy in so far as the success of its application is applied in the matter of productivity, assuming for a moment that this is a word we are all fore-sworn to. I have my own reservations on this whole question of growth and productivity. We are here now assuming that increased productivity and increased welfare contributions are desirable. We must realise that when we are talking about statistics we are recording decisions made many years before by all sorts of people. I am not psychologically attuned really to this kind of party debating on issues; I am not awfully good at remembering who said what on 4th March, 1972, or whatever date it was; that does not happen to be the way I go about these things. As Ministers know, I would not agree that all their decisions have been right, and I do not conceal it from them when I think they are wrong.

Taking a broad view of the national interest as I see it over the past 18 months, in my own judgment, the Government have done their job well. On the whole they have sensed the national need with regard to social distribution and their judgment on that is correct. I fear some developments which are very often pressed on a Government by a not fully informed public opinion as to the effect of these developments. For example, attempts to equalise distribution between people who are beyond a rational minimum of possessions, may well endanger the fundamental duty of bringing people up to the minimum, the submerged 20 or 25 per cent, or whatever the statistic is. In so far as I see a movement towards that kind of taxation policy—and assuming for a moment that equality is in itself in all circumstances right, or right for this people at this time, and assuming that it could be achieved —I am not sure that it is right, and, I sense that the effort to do this may well endanger the fundamental duty of people in this House and in the other House to see that people who are in real need are looked after.

Senator Halligan made a particularly good speech. I was very impressed by it. He took up the Minister on a statement made recently that the balance of advantage still lay in maintaining the link with sterling. For a couple of reasons I am not at all sure that I share the judgment the Minister has expressed. If I had to make a judgment on it now, I would be inclined to support the judgment of Senator Halligan. There is a long argument on this. I will not bore people with it. I am aware of all the radical consequences of this kind of step, and the disharmony and inconvenience in trading with Britain, and so on. The justification for the link with sterling was due to the nature of the trading relations between the two countries. For example, in 1921—just to take the beginning of this State—98 per cent of our exports went to Britain. I am talking now about trade exports and not about invisible receipts. I have not an informed view about the effect that the invisible receipts would have on the whole balance of payments position. You can get a view of the dramatic change which has taken place in the whole relationship between the two countries, if you look at the fact that in 1921, 98 per cent of our exports went to Britain and 78 per cent of our imports came from Britain, while in 1973, we exported only 58 per cent to the UK and we imported 51 per cent.

These figures represent an exaggeration of the present trading link because of the determination by the common agricultural policy and units of account of the 40 per cent of the agricultural exports which go to Britain, so that figure of 58 per cent of exports gets reduced to 37 per cent. We have got a completely different basic trading relationship. We can now consider whether, for the second reason, the time has not come when we might wisely take the step of changing that whole relationship. I believe it would give an enormous psychological fillip to the people here if we really had our £ totally independent of the British £, with a financial trading situation now developing and, progressively developing, which would enable us to support it.

All I am really saying is that this has reached the point where it is worthy of very serious debate by people who know a great deal more about it all than I do. I say that in a completely non-chauvinistic spirit. I am one of the people who has said here on a few occasions that we owe a great deal to British traditions: the British tradition of Parliament, the tradition of the Civil Service, our liberty of expression, all that wonderful achievement of the common law which is something I very greatly respect and which we got, whether we like it or not, from Britain. It is therefore not anti-British; it is not chauvinistic and I recognise, of course, that there is the problem of our account being at one rate and that of the North of Ireland at another.

I want to refer now to prices. Everybody agrees that there is an international move on prices. I do not want to invite the Government to hide behind that, or the previous Government to hide behind it. Obviously, there is an informed view that we could do more than we have done. These steps we are talking about taking are painful enough steps. We have the figures from the Central Bank report on public spending, increased proportions of gross national product, and so on. That is all very well until you get down to the painful business of stopping the spending of money. Built into our national expenditure now is this sort of self-accelerating item of the cost of the public service. If I were in Government I certainly would feel it my duty to see what could be done to prevent a redistribution of wealth is favour of those in the public sector at a time when the real wealth of the people is coming down.

There is also the question of incomes policy. It is all easier said than done. It is a difficult matter of judgment. It is not as simple as saying that if no monetary increases took place that was the right thing. It certainly is not the right thing even from the point of view of inflation and even from the point of view of prices. It is a question of a judgment of how to moderate the increases so that the effect on productivity is most beneficial. The domestic decisions which may help us are mostly painful to make. There is one point which is worth making. I am indebted to Senator Halligan for the point.

Having regard to the openness of our economy, the rise in import prices translates itself much more quickly into our price index than in an economy which is not so open. The position, for example, of Britain where the proportion which imports bear to the gross product is less, is that the effect on the price level is less than the effect on our price level of a similar rise in import prices. If everything is equal one would expect to see the Irish cost of living going up at a faster rate than the British. This is a fact, an economic fact, which I do not think should be made a current of the debate in general and should not be regarded as some sort of national failure It is an economic consequence of the nature of the openness of our economy.

It has costs and consequences for us and we must act accordingly. But again take, for example, British prices rising through the devaluation of sterling. They control their own prices as a result of this but they do not control their export prices so that the effect of devaluation of sterling affects their exports to us and is reflected more rapidly in our price levels. There are so many people trying to denigrate politicians, trying to denigrate the processes of Parliament and to attribute to them blame for facts of life. One might as well blame people for the rain as to blame politicians for some of the things that happen. Politicians on all sides know perfectly well what the true position is.

I do not think politicians do themselves a service without being more disciplined in not making mean points, not making bad arguments against opponents wherever they come from; they can come from the Government side against an Opposition as easy as they can come from the Opposition benches against a Government.

In the beginning was the word; in the beginning was intelligence and intelligence was with God and intelligence was God and this ought to be respected by all of those that use the word and express that intelligence. We debase our society, debase ourselves when we use spurious arguments and present bad cases about our opponents. One of the costs of Government at this moment, a heavy cost in Government, a heavy cost in this economy, is the cost of this fierce lawless conspiracy to overthrow this State, to reduce democracy to a rubble, to establish a Fascist alternative of the most mean and brutal character. Does anyone know what that means in terms of the welfare of the poorest people in this country? What has happened to our tourist industry?

There is much going for this economy, another reason for breaking the link with sterling; we have not lost an empire; we have ceased to be a clan to the patron that has lost an empire. Our morale is not upset by the fact that Chums' Annual does not come out anymore and that Boys' Own is not given to my children. This does not upset us, we are not in the imperial tradition. They are suffering from it. This business of having lost an empire and found no new role is a sad business. But it is part of the trouble and we are at least not suffering from it. The flow of capital is coming and despite the mistakes the Government have made, and all Governments, these have not affected the fundamental confidence that the world has in this economy and in the stability of this policy. I have great faith in it and the inflow of capital is one of the signs of a healthy economy.

The IRA, whichever branch or bunch of people they are, are definitely a factor making for instability, definitely an economic cost. In so far as we reduce the coin of our political exchanges we simply strengthen these people in their resolve to destroy us. I am inviting everyone in this House to take a stand on that issue.

Mr. Keegan

On a point of order, is it the intention to accommodate all the speakers who wish to speak?

An Leas-Chathaoirleach

As far as possible.

Dr. Martin

I realise that there is considerable urgency about this so I have reduced what I have to say to absolute rock bottom minimum. I guarantee to be finished in less than ten minutes. I, therefore, want to zoom in on one aspect of the whole Appropriation Bill, the area of education, and the manner in which money is being appropriated for educational purposes. I have made one or two of these points before and, indeed, I made some of them in the presence of the Minister and he replied with skill and adroitness to them but nothing has been done about them. I will give him an opportunity to again exercise his skill and adroitness and I will continue doing so until something is done about them.

The main thrust of my argument in the matter is that in the spending of money on education perhaps the most vital element in education is frequently overlooked, the teacher or the man in the field and the whole area of teachers' salaries. I propose to pass over that due to lack of time but the other area of great importance is that of teacher morale and the whole concern that the Government should have about the increasing and the enhancing of that morale. Therefore, it is a matter of extraordinary disappointment to us all to realise that the Government have done nothing at all about the recognition of teaching service abroad. The best, the most adventurous and the most sophisticated of our teachers very often go abroad and expand their horizons and increase their expertise. They come with a great deal more to offer than those who stay at home but there is no recognition of this. In fact, they are disadvantaged for the rest of their lives because of this situation. It would not take a great deal of money to remedy the situation but no steps have been taken in that direction.

Secondly, I should like to argue for a far greater concern about in-service training. This is a principle that is recognised in every area of industry and commerce but it is needed far more in the teaching arena than anywhere else. There is no easier arena in which to become routine and bored in one's work than in teaching. There is a great deal of monotony in the job. Side by side with that monotony there is the challenge of new courses which teachers are scrambling desperately in many areas to make up. The extraordinary burden, for instance, falling on vocational teachers and to which vocational teachers are rising magnificently, should be lightened by in-service courses to a far higher degree. There should be more summer schools and more week-end seminars.

Furthermore, those that are there at the moment are not being attended because, in fact, it is impossible to attend any of the Department's courses without losing money. One does not get paid for about six months afterwards and very often it is 12 months afterwards. In the first place they are not given enough money; they are miserably funded. As a result, they are not being utilised even the poor few that are there. I urge strongly on the Minister, and his colleagues, to think of this vital area of Irish education. It is no use putting a fleet of buses on the road and it is no use building magnificent schools, comprehensive, secondary, vocational or technological or otherwise if the people who are working in these schools have not the resources increasingly to make themselves better teachers and to go about their work with dignity and a sense that they are constantly improving their ability to teach.

The suggestion I made in that direction is one which sounds a bit utopian —that of a sabbathical year. This privilege does not exist in our universities, but as a university teacher I would be willing to forego it if it could be made available to teachers in the vocational and secondary areas. After 12 years a chance should be given to a teacher to return to a university or some institute of education where he could recharge his batteries and think about his vocation for a year without having to suffer any economic losses as a result.

Finally, and related to that point— my time is short and I want to keep faith with my colleagues, although there is a great deal more I should like to say in support of this matter—is the question of textbooks. This is becoming one of the most acute areas in our educational field at the moment. Parents are finding the provision of textbooks an extraordinary problem. The Minister will be aware of the increase in the price of printing and paper and how the cost of publishing books has escalated. There is no substantial subsidy given for parents towards the cost of buying textbooks.

There is another way of solving this problem although it is not quite within the ambit of this particular debate and that would be to zero-rate them as far as value-added tax is concerned. The arguments against this action are impressive. The Minister raised some of these arguments the last time when he said that it was impossible to discriminate between what is worthless in a magazine like Playboy, although it is not allowed into the country, and an educational book. One small step in that direction might be to consider zero-rating any books ordered by a school bookshop. It would be a modest step towards an ideal which should be achieved in the long run. Education should not be taxed out of existence.

If you cannot find a means of zero-rating it taxwise, then the opposite process—that is, subsidisation—must operate.

Mr. Cowen

I should like to join with previous speakers who complained about being limited to five hours' discussion on such an enormous piece of legislation, economically speaking. Senators are confined to a few minutes in which to give their views on the performance of Ministers during the past 12 months.

If we had a proper three-day debate on this Bill, it would have given ample range for proper democratic debate and would give the Members of this House a realistic opportunity to examine, discuss, praise, or maybe condemn, and make positive constructive contributions and suggest changes in direction and aim. Such a long debate would give the people their right to know where their money is being spent, what they are contributing to the national coffers and finally, they would see the fruit of the handling of the country's moneys by the Minister for Finance. The debate would give the people an opportunity of seeing the performance of the various Ministers in their handling or mishandling of the moneys allotted to various Departments.

The method now being used by the Government in relation to this Bill denies these opportunities to the Seanad and also of letting the people know how moneys were spent during the past year and the proposed allocation of money in the coming year. Millions of pounds are being appropriated today in this Bill, but we do not have ample time or opportunity to discuss or suggest what way this money should be spent. We are left in the position of believing that the Government are frightened of something, that they are holding back and not allowing the true facts to be known, not just to the Seanad but to the people as a whole.

If moneys are spent intelligently on good causes, a Government could then be described as being an honest and virtuous one. If moneys are spent in useless ways, then it can be said the Government are putting a guilty hand into the till. If this is the position, there must be no investigation, no accounting: this is what the Government seem to be saying. If moneys were being put to effective use from the social, agricultural and cultural points of view, naturally, this Bill would have been given its proper debate. The Minister for Finance would sit through a three-day debate when all the factors involved in the various Departments would be scrutinised to the fullest extent. The Senators are very limited in the time for expressing their views on how the moneys have been spent.

The Government have failed miserably to raise the farmer from the chaotic position in which he finds himself at present. I am speaking in general of the farming community. In parts of County Offaly, we have very small valuations. There are small farmers in the county who are actively involved in smallholdings and have part-time employment with Bord na Móna or CIE. Those farmers now find themselves coming into the tax net by reason of their farming income. Those farmers were putting back the money they earned from employment in those industries into the land in order to develop and extend their smallholdings.

Let us take the case of fertilisers at present. Prices have almost doubled. Fertilisers are necessary to ensure that any farmer, big or small, can develop his land to the fullest extent. In the case of particular counties—for example, Leitrim— farmers have come to protest outside Leinster House against the Minister for Agriculture and Fisheries and the Government. They feel that the Government have completely let them down. Farmers farming on such poor land in those areas find themselves coming to the stage of being on the breadline. Their income, however small it may have been in the past, has dwindled with the price of young cattle, to the extent that they have no income whatsoever. That is the reason those farmers have come to protest. The Minister for Agriculture and Fisheries and the Government should have taken some action to alleviate the hardship experienced by that type of farmer in the past 12 months.

Various Government Ministers claim continuously that the inflation in this country at present is due to world inflation; they emphasise particularly European inflation. Previous speakers here have pointed out that while inflation may be the reason for 50 per cent of the increase in the cost of living it stops there. While various Ministers continue to say that the present increase in the cost of living is due to worldwide inflation, they forget that we are now the second highest in the European league in regard to inflation. Italy—a country that was pressed economically for a number of years—is the only one that surpasses us in that league. Various Ministers produce a diarrhoea of words to the effect that it is not their fault; they say simply that that could not happen while they are in power. The fact is that it has happened and is happening.

We on this side of the House say openly and clearly that present inflation is due in the main to the mishandling and mismanagement of this Government. If you ask any housewife in Ireland today what is wrong her answer will be certain and fast. She will say everything is wrong because the prices she is being asked to pay today for food essentials are so high she is unable to cope with them. Inflation is the pinch which forces this verdict from every housekeeper. The Government relentlessly blame inflation here on the whole world, never on themselves. The blame lies on their own doorstep.

The Minister for Industry and Commerce is more persistent than other Ministers in listing all the external factors which he claims are causing the 20 per cent rise in the cost of living. He wishes to paint the picture that the drastic economic situation in which we find ourselves is due to European and worldwide inflation. I should like to ask the Minister and his colleagues who they think they are fooling because facts speak for themselves. The housewives filling their baskets on shopping days recognise the real purchasing power of money whenever they shop. Ministers trying to put across to people the argument that world inflation is the cause of our present situation is not good enough. The failure lies with the Government principally in not coping as they should with the situation.

We are confined to a limited time for speeches today. It would be necessary to have at least an hour allocated to each speaker in order to go through the various phases of policy through which the Government have brought this country into its present economic shambles. Indeed, bearing in mind the mini-budgets we had in the past month, I shudder to think what the Minister will produce in the budget for the financial year next month. If we are to take as guide lines the mini-budgets of the past month, petrol increases and so on— there is no knowing where the spiralling inflation will end. I only hope that, when the Minister presents his budget to the Dáil, he will come out in the open and let the people really know where they stand in the economic sense.

Mr. Keegan

I, too, will try to restrict my remarks as much as possible in an effort to speed up the debate. I must say that we meet to debate this Bill under one of the darkest clouds that has ever hung over the Irish economy, people or nation. Naturally, the responsibility for the welfare of all the people must rest fairly and squarely with the Government charged with the management of the economy.

It has been said that external problems are responsible for the state of the economy at present. Some people say it is responsible for 50 per cent of our economic difficulties; others say it is responsible for 60 per cent. We must all admit that the oil crisis has created many new problems for our economy. We must remember that we are not alone in this crisis. Other countries are in a similar situation. Therefore, there is no use blaming the Arabs, or the oil-producing countries for our present economic difficulties. There is no use in blaming the Arabs for the crisis in agriculture at present.

When we talk of agriculture we speak of our greatest natural resource. Some people look to our mineral wealth as our only natural resource. It should be remembered that our greatest single natural resource is the land. Therefore, it is important that those working on the land and producing food from that land should be given every opportunity of remaining in that capacity and of producing more and more of the food that the world needs at present. It is extraordinary that half the world is starving and yet we have food surpluses of which we cannot dispose. Is it not extraordinary that in a few short years of membership of the EEC we find that that market is already packed to capacity with food surpluses? Therefore, some of the emergency measures introduced this year in order to alleviate the distress of Irish agriculture have not been adequate to maintain the living standards of our farming community or of our people in general. We must bear in mind that if there is a decline in agricultural incomes in the long run every other section of the community must suffer.

There is need for our Ministers to adopt the iron-fist attitude when they go to Europe and demand more acceptable directives from the EEC Council of Ministers. I refer to the farm modernisation scheme which, in my opinion, is not adequate nor adapted to the problems of Irish agriculture. The targets set out in that directive cannot be achieved in this present crisis situation. Therefore, there is an obligation on the Minister for Agriculture and Fisheries, the Minister for Foreign Affairs and the entire Government to see that a more realistic farm modernisation scheme is implemented and adopted. I can see a serious crisis building up in agriculture. It has been building up for the past seven or eight months. I am afraid that small farmers will again have to take the emigrant ship.

In recent years emigration has been non-existent but we have it back again now. The fathers of young families will have to emigrate to seek employment in other countries in order to provide for their families and carry out their duties as parents. This is a problem that the Government will have to tackle earnestly.

I am glad Senator FitzGerald admitted that the Government could have done more. They probably had not the will to do it. We have now massive unemployment and that trend will continue. We are being conditioned to the belief that there will be 100,000 unemployed in January. What will the position be next March, April, May or June? Will it be 120,000 or 150,000? This is serious for everyone concerned with the future economy of the country. There must be down-to-earth consultation by every Minister of the Government in order to avert that serious crisis which we are led to believe is just around the corner.

We should look first to our greatest natural asset—agriculture. There was a time when the agricultural community could survive a crisis situation but they cannot do so today because of lack of markets. Farm costs have completely superseded farm incomes. Last year thousands of farmers could not dispose of their wool because the price was unrealistic. Many farmers have stored last year's crop of wool hoping that better prices will prevail next year. I do not understand why it is impossible to dispose of Irish wool, particularly when clothing prices have increased enormously down through the years. That particular section of the agricultural industry should receive priority treatment from the Government because thousands of small farmers have been depending on the sheep industry for their livelihood.

We hear a great deal about the crisis in the shoe industry. Why is it that animal hides which were making £13 and £15 last April are only making from £2 to £5 today, particularly when leather prices have increased 100 per cent? Surely that is a field that could be explored by our Minister for Finance and the Government. Have we not adequate tannery facilities to process enough leather to manufacture sufficient shoes for the Irish people to buy at economic prices? The Government should establish adequate tanning facilities to enable the footwear industry to survive and maintain employment and provide the needs of the whole market. I am appalled when I see every shelf in every shop filled with foreign footwear. Why is a situation like that allowed to continue? Why have the Irish people become so lax in their choice of purchases? At times they have no choice at all. The foreign article is placed before them. The trader probably gets a higher margin of discount by selling the foreign article. The frustrated shopper has no alternative but to buy the foreign goods. A Buy Irish campaign will only be successful if a Sell Irish campaign is introduced first.

If we discover that some of our stores, supermarkets or retailers are not stocking Irish goods at comparable value, we can penalise them by increasing their rates of income tax, by imposing greater import duties wherever possible. There may be problems in regard to import duties but there would be no problem if a further measure of taxation was added to those people who refuse to stock Irish goods. We should bear in mind that the success or failure of a Buy Irish campaign depends not on the housewife but on the stores who supply the goods. We should intensify our Sell Irish campaign. By so doing, we would be adding a great deal to the economy of the country.

It is a tragedy that we are debating the Appropriation Bill in such a hurried fashion. We are not being afforded adequate opportunity to discuss the Bill in full. The Minister would gain something from a full scale debate on the Bill.

More needs to be done in the field of housing. To a large extent our housing drive depends entirely on the efforts of private enterprise. Housing grants need to be increased by at least 200 per cent if they are to bear any relation to the cost of building at present. Loans are available only to limited groups through the local authorities. In many cases local authorities have inadequate loan facilities to meet the demand for housing loans. We should help more those who are trying to buy their own homes. New house building grants have remained static for many years. Reconstruction grants were increased in 1970 or 1971 but were not altered since then despite the 100 per cent increase in building costs. If we are to continue with the housing drive, if we want to induce more people to provide their own homes, the grants should be increased so as to make this as easy as possible. The more people become dependent on local authorities for their housing needs the greater the drain on the Exchequer. I would ask the Minister to help the people who are endeavouring to help themselves.

One would get the impression that the present social welfare rates were decreed by the Almighty. The social welfare schemes do not compare with the rapid increase in the cost of living bearing in mind that the cost of living has increased by more than 20 per cent. No one knows what it will increase by during the coming year. No doubt it will be another 20 per cent. Social welfare benefits are, therefore, inadequate if we are to help the weaker sections of the community, those who have no means at their disposal of supplementing their income.

We have tax problems in many areas. Many people feel they are being over-taxed at present. I should like to refer to the unexpected steep increase in petrol prices. It was alleged that it was in keeping with Britain but we must bear in mind that our taxation on motor vehicles is much higher than it is in Northern Ireland or in Britain. Therefore, the Irish motorist has been taxed to a greater extent than has his counterparts in Britain or Northern Ireland or in any part of Europe. We have import duties, excise duties on car parts and import duties on fully-assembled cars. It is the motorist who foots the bill all the way. These steep increases will affect workers' weekly pay packets because many of them travel long distances to work. It is mainly rural workers who are most affected.

People engaged in the building industry, the ESB, Bord na Móna, forestry, land projects and arterial drainage, travel long distances to work. They may be changed around to several different schemes and this leads to serious increases in their transport costs. They get no tax remission on money expended on essential travelling. The Minister for Finance would be well advised to do something for the workers in rural Ireland who must travel from place to place to work. Give them a greater tax free allowance, a car allowance, or a mileage allowance. I know forestry and Land Commission workers who have to travel 40 or 50 miles to work. People in the midlands often travel as far as Dublin to their employment. They must be given some kind of allowance. If this is not done, their weekly wage packets will decrease seriously and they may do something to have themselves declared redundant so that they can claim pay-related benefits for a while.

In some cases, there is a greater advantage to be gained by drawing unemployment benefit than by working. Crisis or no crisis, that situation will have to be corrected sooner or later. If time were available to me, I should like to speak further on many points.

A great deal remains to be done in regard to health. It is extraordinary that in 1974, many years after we commenced various health reforms, we have greater need for hospitalisation than ever. We seem to have diseases unheard of before. From every regional health board we have demands for more hospital accommodation, additional staff and so on. What is wrong with us that we need so much hospitalisation? Are we becoming a weaker race? What is the cause? The health services are becoming an increasingly heavy burden on the taxpayers. Therefore there is need for a great deal of new thinking about our health services.

If the Government is not prepared to face up to its responsibilities there is only one alternative, that is, dissolve it and let the people make the decision on how this country should be governed.

Mr. Whyte

I will be very brief. If I had to listen to Opposition speeches here all day, I would be very depressed because it looks as if we are in a disastrous situation. The hospitals are full. We are short of beds. The farming community is on its knees and so on. It is not that bad, as we all well know. We have a depression here, as has most of the world, but it is not a major depression yet.

Senator Dolan said our social services are so good that it would be as well to be on social service as to be working. If that is so, things are not so bad. I should like to point out that the £140 million we have to pay, together with all the other expenditure, amounts to roughly £200 to £300 per family a year. This is not a big sum for some families but it is a very considerable sum for other families. It is the duty of the Government to ensure that the burden is distributed as evenly as possible. The Government have been doing this and will continue to do that in the future. The social services have been considerably increased in the short time since this Government came into power.

Ministers have been attacked here. That is fair game. They are well able to defend themselves. I do not propose to defend them but I do propose to defend the IFA. There was an unwarranted attack made on the IFA this morning by Senator Killilea.

If it is true that farmers are on their knees and the Government are blackguarding them in one way or another, there was never a greater need for farmers to organise. The IFA fought with past Governments for the farmers and they did a good job. They were entitled to do that. If on occasions they broke the law, they were prepared to pay the penalties. It is absolutely unwarranted that a Member of this House should come in here and attack a body which is not here to defend itself. The IFA are negotiating with the Government at present. They are welcome to meet any Minister on any occasion they wish. The organised members of the farming community are quite prepared to accept the Minister for Agriculture and Fisheries and any other Ministers, more than they were prepared to accept Ministers in previous Governments. By and large, under very difficult circumstances the Government have been doing a very good job. There is much still to be done.

I should like to refer to our oil industry. The negotiations going on at present between the Minister for Industry and Commerce and the oil interests are very difficult. It would be very simple to let things go ahead and start working but what must be considered is that those interests ought to be developed for the people of this country. Any benefits accruing should go to the people. It does not really matter whether it is an Irish individual, in co-operation with outsiders or a completely foreign source that is involved. The point is we must ensure that our people get the maximum return. This is what the Minister is trying to do. He should have the backing of the people in his endeavours to get the best terms possible for all. This will also have a big influence on our oil rights. Once again, I should like to compliment the Government on the very good job they are doing.

Mr. Dolan

I have been here since 10.30 this morning in the hope of getting in, so, with three-and-a-half minutes left I do not think I can make much of a contribution. I feel it is wrong that this debate has been going so quickly and, apart from what anybody may say about agreements, to a rural person such as myself, who travelled to Dublin to attend, it is very wrong. I think the Government should be saddled with the blame for this. They are the people responsible for the Seanad meeting or not meeting. It is wrong for Parliamentary Secretaries or other supporters of the Government to go on radio and make statements that the Seanad met for only one or two days, without giving reasons. When interviews like that are being conducted in future they should not be so one-sided. The other point of view should be taken into consideration. The Parliamentary Secretary who did that was very unfair and very disrespectful to the Members of this House. Irrespective of what anybody may say, the majority of the Members of this House were elected; they had to go around all Ireland to be elected. They are public representatives and I do not think they should be slighted in that fashion over the media by a Member of either House.

Because I am limited in time I cannot make a proper contribution. I could go right over the whole field taking one Department with another. To my mind, and to the minds of the majority of the people in rural Ireland, this is the most hopeless Government that was ever put in charge of a nation. I think they are totally responsible for the gloom and doom that is written over the face of Ireland at present. It is an example of how history repeats itself. Not alone is it happening now but this is the very same pattern that led to the collapse of the first Coalition and the second Coalition. The same denials were made at that time regarding the housing situation. If the people who are making the denials now want proof, let them come up to the northwest and see where we have people on a three-day working week in the building industry because they cannot sell building materials. That is proof to the farmers and workers in this country.

People coming in here with prepared notes, making flashy, economic speeches will not convince the ordinary people. We are not such fools down the country as not to know that in the last month or so we had three or four budgets. Taxation amounting to almost £50 million was recently imposed upon the people. That has been done to cushion the impact of the new taxation that we know will come on 15th January. All this because these wonderful people, with all the brains, who knew it all, were far more concerned about political popularity than about doing their job for the country. These people have used the media in every way to boost their own images and they now find that the images are toppling, that the people of Ireland have found them out and that the game is up. In all decency, and for the sake of the country they should bundle up and get out. It is no pleasure for me to say it here and to see the country in the state it is in at present. On the last two occasions Fianna Fáil had to go in and build up the finances of the country and the confidence.

Mr. W. O'Brien

You are not serious.

Mr. Dolan

I am quite serious and you should know it because there are almost 100,000 people unemployed at present.

(Interruptions.)

Mr. Dolan

Senator O'Brien need not worry. He is well shod. I am thinking of the poor fellows who have no jobs. These are the people that matter most because they have families. When they go into the shop at present to try to buy their necessaries they know what Government is in office. They have not to read newspapers or watch television. They know in their pockets; that is where it hits them hardest. There was reference here this morning to "goodies" and so on. It is a fact that last year when they were giving these increases in social services they used the funds that were coming back from the EEC. They were the generous Santa Claus. I think that by Christmas next year this Government will not be in office and the nation will be very thankful.

Minister for Finance (Mr. R. Ryan)

I congratulate Senator Dolan on playing a very worn-out record with a zest that was reminiscent of a chapel gate about 20 years ago but has very little relevance to the difficulties facing this country and every other western European country at present. This is no time for despondency, pessimism, gloom or dejection. We must, nevertheless, be wary to avoid overlooking the difficulties which face us and, above all, we must ensure that dismal talk does not bring about the situation which we all genuinely fear. There is the danger that we could talk ourselves into a recession. It is happening throughout the whole oil-importing world. Instead of taking the right decisions many countries more powerful than ours, many international bodies with greater influence than any nation or State are generating the very recession that they want to avoid through inactivity on the one hand coupled with too much pessimistic talk on the other. Like any oil-importing country we have serious and unique problems. There is no point in minimising them and we would be doing a serious national disservice, as Senator Halligan said, by trying to delude our people into believing that we were not menaced in a way which we never experienced before by factors outside our control.

We must not magnify or exaggerate any of these difficulties out of proportion. In Government we have deliberately avoided an over-statement of the position. It would be equally disastrous for us if we tried to remedy these unique difficulties by applying out-of-date economic theories which would only aggravate our current difficulties. The orthodox remedy for a balance of payments deficit was to contract to reduce demand. Nothing could aggravate our difficulties more at the present time than to bring about a State-stimulated contraction or to reduce demand. A great deal of our difficulties at the moment are attributable to a fall-off in demand in both the domestic and the export market. Because we have unique problems we have to apply to them unique remedies.

We will borrow at home and abroad because it is the right thing to do in these circumstances to meet part of the deficit. Borrowing involves an obligation to repay. We cannot escape that obligation. The principal reason why we have recession in the world today is that the vast amount of money which is now surplus to the ability of the oil-producing nations to use has not been recycled to those areas of the world which could use that money. Those areas are the developed areas such as the one in which we live, or the developing countries which need the money so badly in order to maintain their existing, totally inadequate living standards and need the money still more in order to give them any promise of a better life in the foreseeable future.

We have in this country a number of assets which many other countries do not have. It is important that at present we should remember what these are. We have a very rich natural resource in the climate and soil of Ireland which are so eminently suited for the production of foodstuffs which as many Senators have pointed out, are very scarce in the world at present and are likely to be even more scarce in the foreseeable future.

We have a very sound agricultural industry. Some sections of this industry are passing through difficulties at present. Basically, our agricultural industry is sound and is now poised for a very significant take-off for an improvement in 1975 which will not merely compensate for the disappointments of 1974 but will leave the agricultural community at the end of 1975 in a much better position than we were at the end of 1973.

We have an expanding and a very soundly based industrial arm which has been the principal provider of the additional job opportunities in Ireland over the last two decades. It is an industrial arm which is related to foreign markets and if foreign markets are suffering from recession there is very little we can do to cure the disease of recession and depression in other economies. We will still have to sell in those markets and our opportunities to provide jobs will be directly related to the ability of our people to sell the fruits of their labour abroad.

We have an industrial and agricultural labour force which is second to none. We have a first-class international credit rating and that is a very significant thing at present. Many very wealthy countries now find that they are being put into second- and third-class credit ratings and are finding it difficult to borrow. Ireland is still in the top class in the international money market. This is reflected in the tremendous growth of our external reserves in a year in which any comparable country has suffered severe loss. This is at a time when, primarily due to the oil deficit and to shocking inflation in the cost of basic commodities all of which we have to import, we find ourselves with a balance of payments deficit at the end of the year of £300 million.

I should like to refute what Senator Lenihan suggested at the outset when he said that it was only when other people identified the size of the deficit at £300 million that the Government admitted to this. As far back as last July I warned the House that on the basis of the trade figures then known the deficit in our balance of payments for 1974 would be not less than £200 million and that there would be a significant disimprovement in that figure because of all the indicators which were then operating. By September of this year, the Government went formally on record as saying that the deficit for 1974 would be not less than £300 million.

Mr. Lenihan

Excuse me, we said it first in this House.

Mr. R. Ryan

You have always been the forecasters of doom and occasionally, I suppose, you must be right and particularly if the world situation gets worse. You also forecast that this Government would not last two months. You also forecast that we could not fulfil——

Mr. Yeats

Who forecast that?

An Cathaoirleach

Whatever about the forecasting, it is not relevant to this Bill.

Mr. R. Ryan

We talk about the same construction industry crisis.

Mr. R. Ryan

Senator Lenihan and some of his colleagues again faulted the Government's budgetary strategy in 1974 and 1973. I want to remind people exactly what our strategy was and to assert, without fear of contradiction, that difficult and all as the present situation is, it would be immeasurably worse if we had not consciously embarked upon an expansionary policy in 1973 to overcome the drop of some 10,000 in the number of employed that occurred in 1972, at a time when there were no international constraints, no oil crisis, no international inflation, such as we have experienced over the last year and when the rate of imported inflation was only one-sixth of what it now is.

We are now in the situation, that Senator Lenihan cannot accept, although the statistics disprove him, in which 60 per cent of our total inflation is imported. It is something over which we have no control other than to go without the goods, the energy, the other items, which we regard as essential to the maintenance of our standard of living and in many cases that, apart from the question of comfort and convenience, are essential to production and to the provision of employment. We either import those essential ingredients to our economy or else we go without. If we import them then we have to pay now a price which is six times greater than what our predecessors had to endure in 1972.

It was suggested today that food should be subsidised. This was from people who 11 years ago taxed food for the first time in this country. Were they still in power food would be taxed at the rate of at least 6 per cent. They have promised that if returned to power they would restore value-added tax on food and yet they have the audacity to say to us that we were wrong to remove tax from food. Apparently they would tax food and subsidise it at the same time so crazy is their idea of proper management of the economy. We were also chastised because we had not imposed taxes to pay for what Senator Lenihan called "the goodies", although in the first budget we imposed taxes on nonessential commodities of £20 million in order to ensure that there was at long last some progress made in providing reasonable assistance for the less privileged in our community.

We have increased social welfare benefits. Notwithstanding all the difficulties which we have at present this will remain a priority with us. We know from statements made by the Members opposite, and from their colleagues in the other House, that if they had their way there would now be a standstill on all welfare. The result of our budget was that we wiped out the drop in employment that developed in 1972 and we brought production up to a European record level in 1973, of 7 per cent.

Mr. Lenihan

It is on paper.

Mr. R. Ryan

This is not on paper. I am now talking about the gross national product. In 1974 a neutral budget, if we had not the oil crisis, would have been the appropriate remedy. Some members of the Fianna Fáil Party only realised there was an oil crisis when the price of petrol was increased recently and then only because they could take a political advantage out of the situation. Perhaps it was worthwhile increasing it to bring them to the use of economic reason in 1974.

In 1974 we again went for an expansionary policy, which was criticised by our opponents on the grounds that it was not suited to the requirements of the necessities of 1974. Here, at the end of 1974, they chastise us because we were not expansionary enough. In 1973-74 our capital programme increased by 29 per cent. Of that 29 per cent over half of it was injected by us into the capital budget in the nine weeks between the time we went into power and the time we produced the budget. They proposed a reduction on the capital budget of 1973-74.

Again, this year, having that very substantial growth last year, we gave a further injection of 20 per cent in the capital budget because of our determination to get the economy moving accordingly to its capacity. Now we are told that the trouble is that we kept people in employment, put more people into employment and we used up the under-used productive capacity of this country. It is a jolly good thing that we did. Whatever problems we have now facing us would be infinitely worse if we had not got the courage to do that at the time we did it.

A great deal of mischief has, of course, been generated again today by people who had arranged to give away the profits of mining to people who would not be under any obligation to return a fair proportion of it for the benefit of the Irish people. As I said in the other House during this week, the Government are not responsible for the suspension of activities in Navan. They are not responsible for the initiation of litigation to challenge the efforts of an Irish Government to ensure a fair return to the people from the resources which they own.

Mr. Lenihan

That is not John Costello's view.

Mr. R. Ryan

We have very clearly set out to the world what the mining taxation regime will be in Ireland. It is very interesting that it is broadly accepted by an industry, which is global in its nature, and is in accordance with what operates in virtually every other country in the world. Even those who at one time had extravagant and generous baits to attract the mining industry have long since abandoned them. They were abandoning them at the time when in 1967 the 20-year prodigal tax holiday was introduced. That is gone and it will not come back again as long as this Government remains in office.

Senator Halligan very correctly said that this nation at present was under siege economically. It might not be easy for the Opposition—I am as good a political animal as the rest and I spent longer in Opposition than most of them did—to put aside the temptation to take party advantage but they do this country no service when they pretend that the difficulties now facing us are domestically generated. I am not for one moment saying that there is not a domestic element in all economic problems. Of course there is, but the principal difficulties facing this country at present are from outside. If we fail to recognise that and to trim our sails accordingly to the way in which the wind is blowing and the force of the wind then we will simply be blown over. That will not operate to the advantage of anybody in this country.

Senators Halligan and FitzGerald referred to the desirability of having what Senator Halligan called "a truly independent currency" which would be independent of Britain. I think no Minister for Finance has spoken as openly and as freely as I have on the question of the link between the Irish £ and the £ sterling. I have no doctrinal or historical approach to this association. The Irish £ is in the longest currency tunnel in the world. We are advised by many people that this is the proper way in which countries should allow their currency to operate at present. That tunnel with which we are associated is the £ sterling——

Mr. Yeats

It is going downhill rapidly.

Mr. R. Ryan

Breaking the link with the £ sterling might satisfy one's chauvinistic pride but as far as this Government are concerned our decisions in relation to the link with sterling will be related simply and solely to what is in the best economic interests of the people of Ireland. When people talk about breaking the link I put to them this question: "Do you visualise that if we broke the link that the Irish £ would be revalued upwards as against the £ sterling?" Invariably, the answer is yes, because it would be considered a matter of national disappointment if it went the other way, apart from any economic assessment of the matter. If we were to revalue the Irish £ upwards as against the £ sterling, our exports would become dearer. In relation to some products which are essential to other markets, that would mean a gain. We would get a higher price for what other markets regarded as necessary. If we think of some of our principal exports at present, we find that they are in very severe competition with producers elsewhere. There would be no guarantee that our exports would be able to maintain their position. Indeed, many of our exporters would be in real difficulty and would be put out of markets where they are now competitive because of the loss of advantage which we would have if our exports became dearer.

That is one side of the coin of revaluation upwards. The other side is that imports would be cheaper. Whereas, that would be very pleasant in relation to necessary imports which cannot be produced here, it would also mean that many items could be imported to create even greater competition for Irish producers. Some of the difficulties we have at present are attributable to the free markets, the Anglo-Irish free trade agreement, and to the lowering of tariffs in the EEC, in which we now have to operate. These difficulties would be accentuated very seriously if we were to revalue the Irish £ upwards. It would mean that our imports would be cheaper and hence Irish industry and producers would face keener competition on the home market.

If, on the other hand, we were to devalue the Irish £ as against the £ sterling, then imports would become dearer, including imports of essential commodities, which would mean of course, that the cost of living would rise. Our exports would become cheaper, true, but that would mean in relation to certain of our exports the producers would receive less than what they already consider to be inadequate. There is no very easy or quick answer to the problem. I want to assure the House that we will continue to keep a watch on the position and if and when there seems to be an advantage in the medium and long term for Ireland to sever the link with sterling, we will be the first to promote it.

Again, let us recall this: we no longer operate in a totally free world. If the Irish £ was to sever the link with sterling, then it would most probably have to link itself with some other currency or currencies. That might well mean that you would divorce yourself to remarry, and the second spouse might be even more difficult and volatile than the first. That is the problem in a nutshell.

An Cathaoirleach

I should like to point out to Senators and to the Minister that, when more than one at a time speaks, the effort is wasted because recording is impossible.

Mr. Hanafin

I have visited Kuwait and I am fully aware of the goodwill that exists in Kuwait towards this country. I asked a specific question and the Minister said there was not an agreed exchange risk clause. He said this is normal; I do not accept that it is normal. On a loan of £7½ million the Minister has committed us to paying £4 million interest.

An Cathaoirleach

I should like to indicate to Senator Hanafin that these are points that could be raised more appropriately on Committee Stage. It would be more orderly to allow the Minister to make his concluding speech on this stage and then raise specific points on Committee Stage if the Senator is not satisfied.

Mr. Hanafin

I believe I was misquoted in what I said. There were words attributed to me that I would never use in regard to Kuwait. I cast no aspersions. The Minister said somebody cast aspersions on the integrity of Kuwait. I did not hear anybody on this side of the House or the other side casting aspersions on the integrity of Kuwait. The Minister was not here and he was not advised properly as to what was said in his absence. He should have been here.

Mr. R. Ryan

On the question of the length of the debate and the Minister's attendance or absence, I should like to say I had no control whatsoever over either the date or duration of the debate. I will be very happy, indeed, to be available to Seanad Éireann for as long as it requires me. Anybody who suggested that I was responsible for curtailing the debate was most unfair.

Agreed to take remaining Stages schoolchildren.

Seanad Éireann díospóireacht - Friday, 20 Dec 1974