Financial Resolutions, 1952-53. Committee on Finance. - Resolution No. 11—General (Resumed).

Thursday, 24 April 1952

Dáil Éireann Debate
Vol. 131 No. 3

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Mr. MacBride: Information on Seán MacBride  Zoom on Seán MacBride  I think I have practically completed what I wished to say. As the Taoiseach is here I would like to take this opportunity of suggesting that he should examine, in the light of present developments, the various viewpoints which were put before him in 1948 at the time of the Banking Commission Reports. I feel that anybody examining these reports in the light of circumstances will have very little doubt in deciding that the wrong [393] turn was taken at that particular juncture and that the wise course lies in seeking now to remedy the mistakes which we have made in the framing of our economic policies since 1921.

I feel certain that if the Taoiseach appealed to the Parties on this side of the House for co-operation on that basis he would receive that co-operation. Some members of the House, particularly one or two of the Independents who are in difficulty in connection with this Budget and their support of the present Government, have asked what the attitude of the different Parties is to the question of subsidies. I have no hesitation in saying that, in my view, subsidies provided one of the best methods of bringing relief to that part of our economic structure where relief is most needed.

As I think I indicated in the debate on the Social Welfare Bill I regard all forms of social security measures either by way of monetary payment or assistance as really a method of hiding the defects in our economy. It is merely a patchwork quilt to hide the holes in the blanket, but so long as the holes in the blanket are there we need a patchwork quilt to hide them. Probably subsidies provided one of the best methods of bringing relief to the lower income groups of the community and in particular to the woman of the house and to the mother who has to provide food for a large family. As far as I am concerned and as far as my Party is concerned we would certainly do everything we could to restore the subsidies if they were removed.

On the question of additional taxation my view is that the Budget contains provisions for over-taxation of anything from £8,000,000 to £10,000,000. Details of this over-taxation have already been given and have not yet been fully answered. That would leave a sufficient margin for the restoration of the subsidies. I do not know whether the Minister for Finance intends leaving the House or not, but I would like to remind him of one of the declarations he made just before the last election. He made it, no doubt, in order to secure political support and, possibly, [394] financial support from a certain section of the community. Speaking at the Rathmines Town Hall on the 15th May last, he said:

“A number of persons in the licensed trade were spreading the rumour that Fianna Fáil if returned to power would reimpose the tax on drink which was imposed by the Supplementary Budget of 1947. There is no truth in such a rumour.”

I notice that the Minister for Finance just left the House before the quotation was finished. I feel it is unfortunate that any responsible public man should be put into the position where he could commit a flagrant breach of a promise and an undertaking given to the electorate on the eve of an election. The present Government have put themselves in that position. The only honourable course they can pursue in that situation is to face the electorate if they believe that they have a good case. If they have the courage of their convictions, then they should not hesitate to face the electorate on that issue. As far as we are concerned, we will gladly face the electorate with them on that issue.

Mr. Childers: Information on Erskine Hamilton Childers  Zoom on Erskine Hamilton Childers  I would like to open my remarks by referring to a chance happening in the course of the debate recently when a Deputy started quoting a speech made by the former Minister for Finance, Deputy McGilligan, on the occasion of the 1951 Budget. One of the Deputies belonging to the Labour Party interrupted and said that that was Manchester school stuff. He was then reminded of the fact that the observations were being made by Deputy McGilligan. In my view, that gives an indication of the atmosphere which we have to face in connection with the whole study of the Budget. We are implementing a Budget, the nature of which was, on two separate occasions, foretold by the former Minister for Finance. He gave in the clearest possible way a warning to the nation that, unless economic circumstances were drastically changed, some steps would have to be taken to correct the position which was becoming more and more serious. I feel that no speech in connection with the Budget [395] could be made at any length without quoting Deputy McGilligan.

He spoke in rather soft tones. He did not emphasise very greatly what he had to say, although he has always been known as a person with advanced views on financial matters. Unlike most members of the Fine Gael Party who wanted retrenchment, he had a way of talking during the last four or five years of our previous administration as though he would prefer more unorthodox methods of financial administration. Nevertheless, he was very careful to warn the people of this country on a number of occasions that there was a drift that must be arrested. In 1949, in the course of his Budget speech, he said:—

“Agricultural output and exports, as a whole, are still at dangerously low levels. Capital expenditure, some of doubtful productivity, is outstripping current savings. Rates and taxes are excessive. Deadweight debt is rapidly expanding. Production costs are unduly high, and the primary needs of the moment are increased output at lower unit costs from farm and factory and more saving by the community generally.”

Later on, in the 1951 Budget speech, Deputy McGilligan said:—

“Making all allowance for the exceptional conditions now obtaining, it is to be feared that we are not producing and earning enough to pay our way. The implication is obvious; we cannot have both consumption and capital development on the present scale unless we save more and produce more.”

None of the Deputies in the inter-Party Government protested against those observations. We heard no outcries, and there was no suggestion that Deputy McGilligan was being overconservative or going back to theories of economics of the nineteenth century when he gave those warnings at that time. Nobody then questioned the information made available to the then Minister for Finance by the Department of Finance which bade him warn the country in a very definite way as to the financial trends for the future.

[396] The general attitude of the Opposition has now apparently changed, and Deputy McGilligan himself, when he speaks, makes no reference to his previous observations.

The position apparently is that that sort of talk has become an unpopular doctrine now that we are the Government, that it must become unpopular to tell the people the truths accepted previously by Deputy McGilligan. Perhaps this attitude is due to the granted bitterness of spirit among Deputies now that they are no longer the Government, but whatever the cause is it is most familiar to us. The fact remains that we, very unwillingly, and without wishing to impose burdens on the people, have been forced to take the action which was foreseen absolutely clearly by the Minister for Finance. I must admit that at the time he uttered them he was a voice crying in the wilderness, since nobody else in the Coalition Party and no other Minister referred to the warnings in any way which would make the average man in the street appreciate them. It was simply a statement made for the record purposes, so to speak, and no emphasis was given to it.

I do not think there is any necessity for me to repeat ad nauseam the challenge to the Opposition that they should make some proposals for a reduction in expenditure so that this debate should continue on an intelligent basis. It is curious that, for the first time since 1921, we have had no group of people in the Opposition who take the attitude that they must attempt to check expenditure by questioning every item, and by questioning whether we can afford such public services as we have. It is usual, in practically all Governments of the world, for some group in the opposition to suggest unbridled extravagance and to question what they deem to be extravagance in regard to various aspects of Government expenditure. However, there has been on that matter an extraordinary silence. We can only presume that the proposals for reducing expenditure are negligible in kind and that, therefore, the debate largely centres on how to make the Budget balance and how to find the money.

[397] In so far as the allegation that we have copied the British Government is concerned, it is incorrect. We have shown an independent attitude towards economic affairs in this country for many years. We have had to face now those who are the Opposition questioning every single step we took to reach a reasonable degree of independence from Great Britain. We have taken successfully the same action which has been taken by half the Governments of Western Europe.

The action we have taken is being taken in many another country. If we are pro-Butler we are also pro-Danish, pro-Norwegian and pro-Swedish. Every country has had to face these difficulties and has had to read, shall we say, ultra conservative reports presented by whatever central banks are in operation in those countries. They have had to take some kind of action exactly the same as would be taken by a man in his own household if he saw that there was undue expenditure and that the receipts were not coming in at the same rate as the expenditure was taking place. As the Taoiseach has said, we have had to take that kind of action. There is no reason why we should not shelter under the same tree as other Governments — and that, in fact, is what we have done.

Allegations have been made that in some way or another we are making the suggestion that the American Government is attempting to dominate this country.

Mr. Morrissey: Information on Daniel Morrissey  Zoom on Daniel Morrissey  Hear, hear! You are doing it.

Mr. Childers: Information on Erskine Hamilton Childers  Zoom on Erskine Hamilton Childers  The only statement which we have made and which we shall continue to make is that our independence depends on sound finance, on our being free from the necessity of having to go to our neighbours either to the east or the west of us for financing or for undue financial assistance of any kind. We shall continue to make the statement that because we are an island of the coast of Western Europe and because 86 per cent. of our trade is with Great Britain we must, of necessity, retain such financial independence in so far as our trading is [398] concerned as can be secured only if we maintain a reasonable balance of assets in Great Britain and if we avoid extravagance of a kind that can only lower the general financial reputation of the State. That is all that the Fianna Fáil Government has said at any time.

We believe we have a mandate from the electorate to provide a sound Budget.

Mr. O. Flanagan: Information on Oliver J. Flanagan  Zoom on Oliver J. Flanagan  That is not so. You have no such thing.

Mr. Childers: Information on Erskine Hamilton Childers  Zoom on Erskine Hamilton Childers  We do not believe that we have any cause to go to the country to seek the views of the electors on this subject.

Deputies:  Why?

Mr. Childers: Information on Erskine Hamilton Childers  Zoom on Erskine Hamilton Childers  We made it clear at the time of the last general election that we questioned the whole financial administration of the inter-Party Government.

Mr. Morrissey: Information on Daniel Morrissey  Zoom on Daniel Morrissey  No.

Mr. Childers: Information on Erskine Hamilton Childers  Zoom on Erskine Hamilton Childers  We made it very clear that we questioned the manner of raising loans and the whole position in regard to agricultural production. We made it clear that we noted that stagnancy in agricultural production still remained. We made it clear that if we were returned to office there would be an examination of the financial position and that we would make quite sure that receipts would meet expenditure on every occasion.

Mr. Morrissey: Information on Daniel Morrissey  Zoom on Daniel Morrissey  And that you would not remove the subsidies.

Mr. Childers: Information on Erskine Hamilton Childers  Zoom on Erskine Hamilton Childers  None of us was then aware of the seriousness of the financial position. None of us could have been aware of it at that time. As a very junior Minister I have discovered that one learns a great deal more when one has an opportunity of making a continual study of the position from the inside than one can possibly learn when one is a Deputy in opposition. I warned the electors of Westmeath and Longford that I thought that the position was serious and that if we were returned to office we should have to take whatever action we deemed advisable to make ends meet and to [399] make quite sure that our capital development projects could continue on a sound basis.

Mr. O'Leary: Information on John O'Leary  Zoom on John O'Leary  And that there would be no Coalition.

Mr. Childers: Information on Erskine Hamilton Childers  Zoom on Erskine Hamilton Childers  For these reasons we do not believe that there is any obligation on us to go to the electors at present.

Mr. Morrissey: Information on Daniel Morrissey  Zoom on Daniel Morrissey  You are afraid to go.

Mr. Childers: Information on Erskine Hamilton Childers  Zoom on Erskine Hamilton Childers  We have no intention of going to the electors. If the members of the Opposition will stop making political gags of various kinds, which deceive the people of this country who have not an opportunity of making a detailed study of finance, they will serve a better purpose than imagining that they will stampede us into a general election.

Mr. O'Leary: Information on John O'Leary  Zoom on John O'Leary  Did the Taoiseach not say that he would break stones? You have four Independents supporting you in Government.

Mr. Morrissey: Information on Daniel Morrissey  Zoom on Daniel Morrissey  Nothing any of us says will make them go to the country.

An Ceann Comhairle: Information on Patrick Hogan  Zoom on Patrick Hogan  Order! There must be an end to these interruptions. The Minister should be allowed to make his speech without interruptions.

Mr. O. Flanagan: Information on Oliver J. Flanagan  Zoom on Oliver J. Flanagan  The Minister does not want to lose his seat.

An Ceann Comhairle: Information on Patrick Hogan  Zoom on Patrick Hogan  I warn the Deputies that the Chair will have to take serious note of interrupters.

Mr. Childers: Information on Erskine Hamilton Childers  Zoom on Erskine Hamilton Childers  There has been a campaign of nauseating propaganda in connection with this Budget. I think that political controversy in this country has reached one of the lowest levels since 1921. I think that the arguments put forward suggesting that the people of this country live by drinking and smoking are ludicrous in the extreme. As I said in the 1948 General Election, I have no objection if those who are unwilling to pay the extra cost for tobacco and beer occasioned by this Budget, and who are unwilling to reduce their consumption by about one-quarter if they do not wish to pay the [400] taxes, do not vote for me. I said that to my constituents in Westmeath-Longford during the 1948 General Election.

Captain Giles: Information on Captain Patrick Giles  Zoom on Captain Patrick Giles  They nearly put you out.

Notice taken that 20 Deputies were not present; House counted and 20 Deputies being present,

Mr. Childers: Information on Erskine Hamilton Childers  Zoom on Erskine Hamilton Childers  I was saying that we believe that we have a mandate to put the finances of this country in order. I said also that some of the arguments which were used appealed to the lowest elements in human nature and I think they are quite unworthy of this House. I hope that the Party to which I belong will never have to have an election budget to secure the support of the people. Opposition members say that a general election will be declared next year, immediately after the announcement of an election budget. I do not believe the atmosphere, under such circumstances, would be helpful to the electors in making their decision. I think it would be far better if Governments could remain in office sufficiently long to enable people to judge them by the effect of their policy on production and on the general life of the people over a considerable period. I think it would be ludicrous for any Government in this country to have a general election simply on a budget issue, particularly from the point of view of agricultural policy. Agricultural production can improve but slowly and agricultural conditions change slowly, and a change of Government policy in relation to agriculture can become apparent only after a period of years. Realising that democracy is by no means perfectly operated as a system in this world and realising the weakness of human nature, I do not like the idea of election budgets or of budget elections, and I hope that we shall avoid them.

Mr. O. Flanagan: Information on Oliver J. Flanagan  Zoom on Oliver J. Flanagan  The Minister does not like the idea of elections at all.

Mr. Childers: Information on Erskine Hamilton Childers  Zoom on Erskine Hamilton Childers  If any Deputy imagines that we framed this Budget with the object of having an enormous surplus [401] at the end of the coming year and then going to the people and saying: “See what we have done for you,” and seeking re-election on that issue he is mistaken, because that conception, in my view, is ludicrous. It is ridiculous to suppose that a Government can impose heavy burdens on the people by way of taxation just for the sake of being able to go to the people at the end of 12 months, having then relieved the burdens sufficiently to ask for the people's support solely on those grounds. In my view that is entirely wrong and is not the way for a democratic Government to act. The people of this country cannot be expected, having regard to the amount of time they have to study political and economic conditions, to vote in an atmosphere of calmness or in an atmosphere in which they could make some decision on a reasonable basis.

One Deputy suggested that in the course of the Budget debate there have been so far no observations on the unemployment situation. We regret the increase in unemployment that has taken place. We have some hope that it will not increase much further because in fact it has remained stable for some time past. For a considerable number of weeks the number of unemployed has not increased.

Mr. Morrissey: Information on Daniel Morrissey  Zoom on Daniel Morrissey  Does the Minister believe that or is this one of his irresponsible statements?

Mr. Childers: Information on Erskine Hamilton Childers  Zoom on Erskine Hamilton Childers  I have said that, based on the last few weeks' figures, there has been no notable increase in the number of unemployed over and above what it was in the previous period. It has remained at the same figure the existence of which I regret and which the Deputy knows is very largely due to the serious position created all over the world in the textile and clothing trades.

Mr. Morrissey: Information on Daniel Morrissey  Zoom on Daniel Morrissey  I was referring to the Minister's hopes for the future.

Mr. Childers: Information on Erskine Hamilton Childers  Zoom on Erskine Hamilton Childers  The bulk of the unemployment that exists consists of unemployment in those trades and industries. I am very glad to say also that there is no sign of depression whatever [402] or of unemployment in a very large group of industries in this country.

Mr. Morrissey: Information on Daniel Morrissey  Zoom on Daniel Morrissey  That is not true.

Mr. Childers: Information on Erskine Hamilton Childers  Zoom on Erskine Hamilton Childers  In a great many industries there has been no noticeable change in the number of unemployed. Provided we have a high level of agricultural trade, with large exports during the year and provided we have a good tourist season, as we all hope we shall, we shall escape some of the depression affecting other countries. In England, for example, textile and clothing sales are down by about 20 per cent. The Dutch Government recently authorised a special unemployment grant of £6,000,000 because unemployment in certain areas in Holland is very serious and Holland is a country in which a large amount of defence work, such as we are not doing, is being carried out. All over the world in certain regions there has been an increase in unemployment. The House can be assured that we in Fianna Fáil know how to provide employment when it can be provided by State auspices. We were the first Government here to establish employment scheme grants. We were the first Government to make available protection for new industries. We know all about that. We started the whole system in this country——

Mr. O. Flanagan: Information on Oliver J. Flanagan  Zoom on Oliver J. Flanagan  You started the free beef.

Mr. Childers: Information on Erskine Hamilton Childers  Zoom on Erskine Hamilton Childers  Nobody needs to lecture us on how to deal with unemployment because it was we who first made use of the resources of the State to increase employment for the people of the country. Observations have been made by a considerable number of Deputies suggesting that we have manipulated and twisted for political purposes the various figures of revenue and expenditure upon which this Budget is based. I do not know whether it is the desire of some members of the Opposition to undermine the confidence of the public in the permanent administration of this country.

Mr. Morrissey: Information on Daniel Morrissey  Zoom on Daniel Morrissey  You have been doing that all your lives, and at last you succeeded in creating a crisis.

[403]Mr. Childers: Information on Erskine Hamilton Childers  Zoom on Erskine Hamilton Childers  I think the observations of the Deputy who spoke a short time ago are revolting in the extreme, since he suggested that he was not prepared to accept honest estimates made on behalf of the Department of Finance for the Minister on the basis of the then information available which had been presented by his officers.

Mr. Morrissey: Information on Daniel Morrissey  Zoom on Daniel Morrissey  You have created a situation in the country in which there is a real crisis — a crisis of which you are yourself now afraid.

Mr. Childers: Information on Erskine Hamilton Childers  Zoom on Erskine Hamilton Childers  The Deputy will have to take his medicine. Deputy Morrissey will sit down and wait until I have concluded.

An Ceann Comhairle: Information on Patrick Hogan  Zoom on Patrick Hogan  The Minister for Posts and Telegraphs.

Mr. Morrissey: Information on Daniel Morrissey  Zoom on Daniel Morrissey  I shall leave Deputy Blowick to deal with the Minister. I could not sit here and listen to statements of that character. I am not going to allow him to get away with statements of that kind while I am here.

Mr. Killilea: Information on Mark Killilea Snr.  Zoom on Mark Killilea Snr.  You do not like to hear the background of all this.

Mr. O. Flanagan: Information on Oliver J. Flanagan  Zoom on Oliver J. Flanagan  The big toe.

An Ceann Comhairle: Information on Patrick Hogan  Zoom on Patrick Hogan  Perhaps Deputy Flanagan would like to follow Deputy Morrissey from the Chamber? I have warned him that he will not be allowed to indulge in continuous interruptions of that kind, and I want to repeat that warning.

Mr. Morrissey: Information on Daniel Morrissey  Zoom on Daniel Morrissey  May I make it perfectly clear——

An Ceann Comhairle: Information on Patrick Hogan  Zoom on Patrick Hogan  If the Minister gives way.

Mr. Morrissey: Information on Daniel Morrissey  Zoom on Daniel Morrissey  I want to point out to the Chair, in case there might be any misunderstanding about your statement, that Deputy Flanagan might wish to follow me, that I am leaving the Chamber quite voluntarily.

An Ceann Comhairle: Information on Patrick Hogan  Zoom on Patrick Hogan  That is perfectly right.

Mr. Morrissey: Information on Daniel Morrissey  Zoom on Daniel Morrissey  Yes, but the Chair made use of the statement to Deputy [404] Flanagan: “If you wish to follow Deputy Morrissey.”

Mr. Killilea: Information on Mark Killilea Snr.  Zoom on Mark Killilea Snr.  I should like to point out that if lying insinuations are made against me, and against which the Chair cannot protect me, I shall take my own steps and my own ways and means of dealing with them.

An Ceann Comhairle: Information on Patrick Hogan  Zoom on Patrick Hogan  No threats of that kind can be allowed. The protection of Deputies is in the hands of the Chair.

Mr. Killilea: Information on Mark Killilea Snr.  Zoom on Mark Killilea Snr.  I should like to know what protection is being given against lying statements hurled across the floor of the House.

An Ceann Comhairle: Information on Patrick Hogan  Zoom on Patrick Hogan  The Chair can only use its discretion. The Chair does not know whether certain statements are lies. The matter does not now arise.

Mr. Killilea: Information on Mark Killilea Snr.  Zoom on Mark Killilea Snr.  Deputies must have some protection against lying insinuations. Deputy Flanagan got it before and he will get a taste of it again.

Mr. Blowick: Information on Joseph Blowick  Zoom on Joseph Blowick  On a point of order. Deputy Killilea has used the words that Deputy Flanagan “got it before and he will get it again.” I presume that the Deputy was referring to an assault previously made on Deputy Flanagan. Is the Chair going to allow that observation to pass?

An Ceann Comhairle: Information on Patrick Hogan  Zoom on Patrick Hogan  I do not know what the reference was.

Mr. Blowick: Information on Joseph Blowick  Zoom on Joseph Blowick  The words he used were a definite threat.

An Ceann Comhairle: Information on Patrick Hogan  Zoom on Patrick Hogan  I have warned Deputy Killilea that he must not use threats against any other Deputy. The protection of Deputies is in the hands of the Chair.

Mr. Killilea: Information on Mark Killilea Snr.  Zoom on Mark Killilea Snr.  If the Chair cannot protect some of them they will see to it themselves.

Mr. Blowick: Information on Joseph Blowick  Zoom on Joseph Blowick  Did the Chair hear the threat that Deputy Killilea used?

An Ceann Comhairle: Information on Patrick Hogan  Zoom on Patrick Hogan  I have heard him use a certain expression but the Chair cannot say what he meant by it.

[405]Mr. Blowick: Information on Joseph Blowick  Zoom on Joseph Blowick  Might I respectfully suggest that the Chair should ask Deputy Killilea what he means by it?

An Ceann Comhairle: Information on Patrick Hogan  Zoom on Patrick Hogan  The Chair does not presume to understand the meaning of every word used by Deputies. I do not know what Deputy Killilea was referring to. I cannot assume——

Mr. Blowick: Information on Joseph Blowick  Zoom on Joseph Blowick  Might I suggest that the Chair would ask Deputy Killilea for an explanation of what he meant?

An Ceann Comhairle: Information on Patrick Hogan  Zoom on Patrick Hogan  The Minister for Posts and Telegraphs.

Mr. Gilbride: Information on Eugene Gilbride  Zoom on Eugene Gilbride  Let Deputy Blowick into the Chair.

Mr. Killilea: Information on Mark Killilea Snr.  Zoom on Mark Killilea Snr.  He would fill it very well.

Mr. Blowick: Information on Joseph Blowick  Zoom on Joseph Blowick  There would be no part of me missing anyhow.

Mr. Childers: Information on Erskine Hamilton Childers  Zoom on Erskine Hamilton Childers  I was saying when the interruptions took place that the Budget had not been manipulated in order to give a false impression in regard to the revenue and expenditure of the country. Deputy Sweetman suggested that the revenue inflow before the end of the financial year and after the end of the financial year had been subjected to some kind of political manipulation in order to reduce to the maximum possible the revenue of the last financial year and then to rake it in afterwards. That is a complete misstatement of fact. No step has been taken by the Minister for Finance, nor has he given directions to the officers of his Department, to manipulate the flow of revenue in any way. The actual facts are that we have done everything we possibly could to secure the maximum amount of revenue for the last financial year. It was to our interest to secure such revenue, and in so far as the period since the beginning of the financial year is concerned the position is that there has been no great change on previous years in regard to the flow of revenue in the country.

Some suggestion was made that there was some sinister reason for an alteration in the net deficit in the [406] balance of payments that, while the figure in the White Paper published some time last year was £70,000,000, the figure now is officially given as some £62,000,000 odd. So far as the arguments are concerned, they are not in the slightest degree affected by whether the deficit in the balance of payments is £70,000,000 or £62,000,000. Secondly, the first intimation of the deficit was given by us on the information then at our disposal and based on facts as they could be gleaned. It is an extraordinarily difficult thing for the officials of the Department of Finance or of the Bureau of Statistics to predict what an adverse trade balance will be at the end of the year. If they get within a reasonable percentage of the right figure they are doing the most they can under the circumstances. In fact, none of us would now alter any statement we made in relation to the balance of payments as a result of any change in the figures.

Mr. Morrissey: Information on Daniel Morrissey  Zoom on Daniel Morrissey  No, and if it showed £9,000,000 instead of £61,000,000 the same rule would apply.

Mr. Childers: Information on Erskine Hamilton Childers  Zoom on Erskine Hamilton Childers  I shall come to that later. An adverse trade balance of £61.6 million is, materially speaking, as serious from the point of view of the country as an adverse trade balance of £70,000,000. If the figure had been £20,000,000, £30,000,000 or £35,000,000 it could have been said that we were issuing warnings of an unnecessary kind. There is no point in arguing this matter any longer, because the public are fully aware of the facts.

Deputy Sweetman also suggested that if Deputy McGilligan had made allowances in the Budget of 1951 for increases in the salaries and pay of civil servants he would have been in some way influencing the action of the Arbitration Board. The Arbitration Board signed its report on 19th April, 1951, and in my view——

Mr. Sweetman: Information on Gerard Sweetman  Zoom on Gerard Sweetman  That is not true.

Mr. Morrissey: Information on Daniel Morrissey  Zoom on Daniel Morrissey  Would the Minister give us the foundation for that statement of his?

Mr. Childers: Information on Erskine Hamilton Childers  Zoom on Erskine Hamilton Childers  What statement?

[407]Mr. Sweetman: Information on Gerard Sweetman  Zoom on Gerard Sweetman  The date that the report was published.

Mr. Childers: Information on Erskine Hamilton Childers  Zoom on Erskine Hamilton Childers  The date of the statement was 19th April, 1951. I have not said the date of the report. I have given the date of the statement.

Mr. Morrissey: Information on Daniel Morrissey  Zoom on Daniel Morrissey  What statement?

Mr. Childers: Information on Erskine Hamilton Childers  Zoom on Erskine Hamilton Childers  In my view, Deputy McGilligan could have foretold to a greater extent the amount required for increases in the salaries and remuneration of civil servants. That is all I have said. It is a perfectly clear statement.

Mr. Morrissey: Information on Daniel Morrissey  Zoom on Daniel Morrissey  That is not what you said.

Mr. Childers: Information on Erskine Hamilton Childers  Zoom on Erskine Hamilton Childers  In my view he could have predicted to a greater extent the amount that would be required.

Mr. Sweetman: Information on Gerard Sweetman  Zoom on Gerard Sweetman  That is not what you said the first time.

Mr. Childers: Information on Erskine Hamilton Childers  Zoom on Erskine Hamilton Childers  Looking at the background of the discussion we are having on this matter, I think it is regrettable that the time has ended in which we could make economic progress without this type of long-drawn-out debate and without the bitterness which seems to be associated with arguments as to how fast we should go in our capital development work.

We in Fianna Fáil were never pessimists. We have always had faith in Irish enterprise. Yet, we have been attacked and villified from every quarter of the Opposition for many years. But the fact remains that all the new ideas for developing this country were our ideas and solely ours. Everything from land reclamation, farm building grants, employment schemes, industrial development, to shipping and air development, the development of additional credit for industrial enterprises, the development of our bogs, and the development of our tourist traffic were all the result of Fianna Fáil enterprise and Fianna Fáil encouragement.

We managed to survive two different financial crises in the past and we believe that the people will trust us to survive the present crisis. We survived [408] the economic war when prices were low and we survived a world war when prices were high. We had to fight the present Opposition to a standstill on all sorts of principles. We had to fight them to a standstill on the question of having our own independent Constitution, on the question of industrial development, on the question of the ultimate benefit of tillage. We did far more during our 16 years of office to make this country as reasonably independent as it could be of England than anything they have done by this eternal argument about our external assets.

Mr. O'Leary: Information on John O'Leary  Zoom on John O'Leary  You forgot the civil war.

Mr. Hickey: Information on James Hickey  Zoom on James Hickey  What is the good in your talking about our now being on the verge of desperation if you did all those things?

Mr. Childers: Information on Erskine Hamilton Childers  Zoom on Erskine Hamilton Childers  I am stating what I believe to be the truth. We in this Party have demonstrated our initiative and our know-how in relation to the future of this nation. We have demonstrated our capacity to provide a diversity of employment and new employment. We have always managed to go neither too fast nor too slow and to avoid the necessity of financial wrangles which the ordinary public find it difficult to apprehend and which only result in a loss of confidence on the part of those to whom we would appeal to invest money in this nation.

Never, until 1948, did we divide this nation on the question of what was possible or impossible in relation to national development. It is indeed a remarkable thing that there was continual progress in relation to almost every aspect of national development save one; because of the economic war and later because of a world war we were unable to maintain any temporary increase we had effected in agricultural production. We have that task yet to accomplish. It is a task that has been delayed because of the difficulties under which the agricultural community operated as a result of political or world conditions.

We have never confused the public by wild crackpot talk on finance. We have always given the public a perfectly [409] clear indication of the direction in which we are going, and how we are going. If some of the wild talk ends and the people can get down once more to earth and understand the nature of economic conditions here, we will be able to continue the work. I have not mentioned all the work we did in connection with social welfare. I shall leave that to a later portion of my speech.

I object to the idea of capturing the public fancy by offering inducements of a specious kind. I object to the idea that one can gain votes by saying: “Boys, the tobacco tax will not go up this year”. That is a revolting conception of democratic government, and this country will not survive if that kind of clap-trap continues.

Mr. Morrissey: Information on Daniel Morrissey  Zoom on Daniel Morrissey  That is what the Minister for Finance said last year on 15th May.

Mr. Childers: Information on Erskine Hamilton Childers  Zoom on Erskine Hamilton Childers  One will never have any national development if that is the atmosphere in which elections are conducted. We must think of development on a long-term basis.

Mr. Morrissey: Information on Daniel Morrissey  Zoom on Daniel Morrissey  There will be no development while you are over there.

Mr. Childers: Information on Erskine Hamilton Childers  Zoom on Erskine Hamilton Childers  It is rather tragic that the work of 16 years was interrupted for three years. Deputies may laugh, but it is true that the work of 16 years was interrupted for a period of three years.

Mr. Morrissey: Information on Daniel Morrissey  Zoom on Daniel Morrissey  It will be interrupted again very soon.

Mr. Childers: Information on Erskine Hamilton Childers  Zoom on Erskine Hamilton Childers  The result of that interruption has been to confuse the minds of a minority of the people here. That has been the sole result. Now we have to end the spending spree and we are doing our best to deal with the matter.

I would like now to give one or two popular illustrations of the difficulties we face in connection with the Budget. I think many people are unaware of the nature of the increases in expenditure and of the amount of money that has to be found to meet them.

May I put the matter in a very simple way? The debt service between [410] the last financial year and the present financial year, which is about £2.3 million, is just about equivalent to the amount which will be raised by the extra 3d. on the pint. I hope that Coalition supporters, when they go to a public house and occasionally indulge, will remind those whom they find therein that the increased tax on the pint will only just about pay for the increase in the debt service, and ask themselves whether they think that the debt service is not mounting rather rapidly, having regard to the general economic position of the country. The increase in the tobacco tax and what we expect in the way of additional revenue — assuming that the tax remains the same — will just about meet the extra increases in the wages and salaries of civil servants, the Gardaí the Army and so forth, and a number of ordinary routine increases in Estimates, such as the increases in the Estimates for old age pensioners before the Social Welfare Bill——

Mr. O. Flanagan: Information on Oliver J. Flanagan  Zoom on Oliver J. Flanagan  And Dan O'Donovan.

An Ceann Comhairle: Information on Patrick Hogan  Zoom on Patrick Hogan  Deputy Flanagan will withdraw that remark at once.

Mr. O. Flanagan: Information on Oliver J. Flanagan  Zoom on Oliver J. Flanagan  I withdraw it.

An Ceann Comhairle: Information on Patrick Hogan  Zoom on Patrick Hogan  The name of any civil servant should not be mentioned in this House.

Mr. O. Flanagan: Information on Oliver J. Flanagan  Zoom on Oliver J. Flanagan  The political adviser to the Minister for Social Welfare.

An Ceann Comhairle: Information on Patrick Hogan  Zoom on Patrick Hogan  The Deputy is sailing close to the wind, and I warn him on that.

Mr. O. Flanagan: Information on Oliver J. Flanagan  Zoom on Oliver J. Flanagan  The Minister is sailing close to the wind.

An Ceann Comhairle: Information on Patrick Hogan  Zoom on Patrick Hogan  If the Deputy persists in his interruptions I will name him direct to the House, and ask for a decision of the House on his conduct.

Mr. Childers: Information on Erskine Hamilton Childers  Zoom on Erskine Hamilton Childers  I mention these things in order to give members of the House and the public in general some idea of the difficulties we are faced with, and of how one particular tax can be swallowed [411] up in a number of group expenditures, still leaving others to be covered. I might mention also my own Department.

There has been a large increase, a merited increase, in the wages and salaries in the Department of Posts and Telegraphs. When the Estimate is announced it will be found to be a very large, almost a record, figure, due almost entirely to the increases in the wage award applied to the Department where there are 15,000 public servants. It is a classic example of the kind of inflation we are facing in this country, and should demand the serious attention of every thinking man. An increase in the deficit, in spite of an increase in the volume of traffic, has taken place, and what it amounts to is this, that production has not increased enough in this country. The public have not sent a sufficiently greater number of letters, parcels, telegrams and telephone messages to offset the increase in wages and salaries or to offset it to even a 50 per cent. degree. The increased traffic is nothing like enough to meet those increased wage charges. As a result, the deficit has increased, and so, while production remains the same, the public have got to pay out of their savings or taxes in one form or another for that. That is a perfectly clear example of the difficulty we are facing in other directions.

A great deal has been said on the question of food subsidies. I should like to reiterate again the figures upon which the subsidy payments are based, figures which we believe to be accurate. They can only prove to be wrong should there be a change in consumption habits, which we and the officers of the Department, under the direction of the Minister for Finance, are not able to envisage. They are honestly supplied figures. I think it is unfortunate that Deputies should question them when, as I have said, we have made the best effort possible to produce correct figures, to make correct estimates, and to assess the value of the subsidies.

I do not know whether I should deal in detail with the statement made by Deputy Corish in regard to what he [412] regarded as the extra cost to a family of five persons resulting from the changes in the subsidies. I think he claimed that the amount required was something like 2/10½ or 3/-. I can read for the House, if the House wishes, the methods by which these increases in the cost of living, resulting from a reduction of the subsidies, have been worked out. The exact figure given to me works out at 1/5.9 per week. It is a genuine figure, based on the quantity of foodstuffs as provided by the ration. It is no use for Deputies to suggest that the amount is very much larger. All we can say is that it is a useful average figure, based on what we know to be the position at the present time.

Mr. M.P. Murphy: Information on Michael Pat Murphy  Zoom on Michael Pat Murphy  Could we have the particulars?

Mr. Childers: Information on Erskine Hamilton Childers  Zoom on Erskine Hamilton Childers  Perhaps I had better read them. In the case of tea, the weekly ration is 2 oz. The present retail price is 2/8. Assuming that the new price is 5/- per lb. the extra cost per lb. will be 2/4. The cost to a family of five is 1/5½ for tea. In the case of butter, the weekly ration is 8 oz. The present retail price is 3/-per lb. Assuming the increase is 10d. per lb. the cost of the increase to a family of five is 2/1. I wish that Deputy Corish were here because I would like to reassure him on this matter. In the case of sugar, the weekly ration is 12 oz. The present retail price is 4d. per lb., and assuming that the price is increased to 6½d. per lb. the cost of the increase to a family of five is 9½d.

In the case of bread, the weekly ration is 6 lb. The present retail price is 6½d. for the 2 lb. loaf. Assuming the new price to be 9d. for the 2 lb. loaf, the cost of the increase to a family of five is 3/1½d. The total cost to a family of five for all these items is 7/5½ and the cost per head 1/5.9. As Deputies know, the increases in children's allowances are to offset, in part, that increase. The second child will receive 2/6 and there are two children who will receive 1/6 each.

Dr. ffrench-O'Carroll: Information on Michael ffrench-O'Carroll  Zoom on Michael ffrench-O'Carroll  How does the 1/5.9 apply in the case of the two children?

[413]Mr. Childers: Information on Erskine Hamilton Childers  Zoom on Erskine Hamilton Childers  This is the over-all cost per head. I think it is well that I should give these figures. There are many families consisting of a man, his wife and three children. It is just as well that I should reassure Deputies that I believe these are accurate figures as far as we can get them. They do constitute a burden on families. I recognise that. The only alternative, if we were to balance the Budget and reduce to some degree the subsidies, would be to tax still further some of the usual commodities. We could say that, in order to balance the Budget without in some way or other reducing the subsidies, we would have to add at least one-third, and double in some instances, some of the present taxes. For example, we could add another 2d. on beer, another 3d. on cigarettes, another 1/- on income-tax, another 2d. on whiskey and another 2d. or 3d. on petrol and achieve the same result, I suppose, but it is far better to be honest and to tell the facts in regard to this whole subsidy position.

We have left subsidies which will cost us £8,500,000 per year. We compromised on the general question of whether to abolish subsidies completely or not. We recognised that there were large families and persons with very low incomes who needed assistance. I think Deputies should pursue these figures in regard to their consumption habits in this country. They are average figures and must be taken with all the reservations applied to average figures.

In 1949, which is the latest date for which we have information — and figures have not been compiled for the two succeeding years — out of every £1 of wages approximately 2/6 was spent on drink and tobacco. If we regard it another way and divide up an expenditure of about £44,000,000 on drink, tobacco and amusements, which we know was spent exclusive of tourists, among 3,000,000 people the consumption comes to 5/6 per head. That is a most dangerous average because there are a great many people who do not smoke. There are others who do not drink and there are others who neither drink nor smoke, and there [414] are others who do not indulge in amusements. Deputies can work out for themselves what they think would be an average expenditure. I am only giving 5/6 per head per week covering the whole 3,000,000. Having regard to the heavy expenditure we are now incurring, some £15,000,000, we know that a great many people must spend at least 5/6 per week on drink, tobacco and amusements. We believe there are some people who should be able to face a reduction in the subsidy, while there are others whom we should try to help by reductions in income-tax or by extra children's allowances or other extra forms of assistance.

We are in very good company in regard to that decision. Norway, the Netherlands, Denmark and Britain, countries with very advanced forms of Government, intend, this year, to reduce subsidies by stages. There is not likely to be any reduction in the cost of foods, and what was meant to be a safeguard to families during a war or a temporary inflation has now become a matter of taxing the whole community for subsidies and giving the money back in the form of lower food prices. I think myself that it is only reasonable for us to have taken that action having regard to the difficulties in facing the Budget.

I want to deal in some detail with the question of the dance tax. As far as I can gather, there has been a very large amount of serious criticism in regard to the fact that we have permitted the dance tax. The dance tax remission will bring in a saving of about £100,000 this year and £140,000 in a full year. Opposition Deputies have been going around the country addressing unfortunate people who have neither the time nor the opportunity to study statistics. They have told these people that we have abolished the dance tax and increased the price of butter. The majority of the people are not really so stupid as to accept that kind of propaganda. The people who have not the time to study statistics might well accept that statement, but the statement is ludicrous.

The butter subsidy costs £3,000,000 and the remission of the dance tax has saved £100,000. If we had left the dance tax as it was and added to it [415] the existing subsidy it would have reduced the cost of food by about one farthing per head per week. It is really nonsensical stage Irish stuff to have Opposition Deputies trying to make unfortunate people believe that the dance tax remission is equivalent to the reduction of the subsidy in any of the items of food.

Another way of putting this matter might be to make the comparison with what the same money would bring if imposed on stout. The dance hall tax is roughly equivalent to 1d. on eight pints of stout. In view of the fact that many dances are run for reasonably laudable purposes, if we are going to have any intelligent discussion in the country in regard to the Budget the Opposition could at least avoid making ludicrous suggestions to the effect that the dance hall tax could seriously affect, by its remission, the cost of food in the country.

Deputy Dr. Browne made some interesting proposals. Not only did he deal with the dance hall tax but he also dealt with all the taxes on amusements. He suggested that we might, in the interests of the country, have increased the taxes on other forms of amusements. I think that is a fair criticism. It is something that has to be answered. I think it is even arguable. I have not got the figures for expenditure on amusements by the people of this country for the last two years. I have only the figures as published under the auspices of the last Government. I might add that the figures for expenditure on drink, tobacco and amusements, 5/6 per head per week in 1949, and a figure I am now going to give for entertainment, were both prepared under the auspices of the last Government.

In 1949, the public spent some £4,000,000 on all forms of amusement. It is quite obvious that on a total expenditure of £4,000,000 it is impossible to increase the existing taxes upon those amusements in any way which could materially affect the main facts of the Budget. In the last financial year I understand that the total receipts from betting, cinemas and dances were £2,000,000. It might be imagined that we could by a stretch of [416] the imagination conceive an increase of taxation revenue of £600,000. I think that would be too much.

The most you could increase the £2,000,000 by—and I stand open to correction since the figures have not been checked — would be somewhere between £200,000, £400,000 and £600,000. You certainly could not go beyond £600,000 on the existing figure of £2,000,000. That again would have no ultimate material effect on the character of this Budget. If Deputies work the matter out for themselves they will find that £600,000 could only reduce the cost of food by less than 2d. per week if we add that £600,000 to the present taxation of £2,000,000 on betting, cinemas and dancing, although Dr. Browne may be right in saying that we might have taken some action in regard to all those three forms of amusement, the amount would have been very small and could not alter the general argument in regard to the rightness of this Budget.

Again, to give the public some idea of what they have had to face in regard to increases in costs, the loss on Córas Iompair Éireann is very nearly equivalent to something just under 2d. in the pint of stout — a very serious thing. It is very easy for Deputies to go round the country promising social services, promising the sun, moon and stars if they do not tell people what it is going to cost. The increases to civil servants, the Army and the Guards are equivalent approximately to 4½d. on a package of 20 cigarettes.

It is well for the public to appreciate that Government expenditure has become very high indeed, that the cost of these services is enormous. I wonder how many people realise that one in 20 of the people in this country are old age pensioners. It has become an extremely costly service. Fianna Fáil can say that with a clear conscience, because we effected every increase but one in the old age pensions from the figure at which they were when we took office. But the fact is that it is a costly service.

This year, before the Social Welfare Bill is passed and before the new allowances are given, people can reckon on this—it is definitely a rough figure— that every time they purchase a packet [417] of 20 cigarettes 9d. of the price alone goes to the existing old age pensions. It is an enormous figure. We would have more co-operation from the public perhaps in regard to this Budget if the ordinary man in the street, instead of being told all this nonsense about the dance tax being equivalent to the butter subsidy, was told that the existing old age pensions cost them 9d. in every packet of 20 cigarettes.

Another fact of interest to the public would be that before the social welfare allowances are increased under the present Social Welfare Bill and before the new social welfare allowances come into being to offset the decreased subsidies, the social welfare services taken as a group, totalling about £18,000,000 last year, were roughly discharged by the total amount received from income-tax. It is useful to direct attention to this fact, because the social services are in a large measure a redistribution of income from the rich to the poor and it amounts to this: that practically all our income-tax is required to pay for these social welfare services before the increases which will take place under the present Budget.

A figure which should be drawn particularly to the attention of the House is the sum we shall have to pay for many years to discharge the loan we received from the American Government. Commencing in the financial years 1953-54, we shall have to pay, I think it is, £1.2 million every year for many years. It is equivalent to approximately 1½d. on the pint of stout and I think it would be an excellent form of intellectual entertainment if people who criticised the Budget were to discuss with their friends when they indulge in an occasional pint what they see around them to account for paying for years and years 1½d. on the pint in order to repay Marshall Aid. They might ask themselves whether perhaps there was a better way of spending the money. In any event they should bear in mind that there is that heavy impost. It is a very large impost. Nobody wants to pay 1½d. on every pint of stout to pay back a loan the whole of which has to be discharged in 2½ years from the time it was incurred without which the Budget could have been balanced. If we were to [418] add on 1½d. on the pint of stout for the interest that will accrue at the end of every two years for new Marshall Aid loans, or any other loans, the price would be very prohibitive at the end of ten years. That is a very good illustration of the difficulty we have to find increasing debt charges, increasing expenditure, without the increase in production and the increase of exports to raise the yield of taxation so that no one would notice the impost upon them.

Mr. M.P. Murphy: Information on Michael Pat Murphy  Zoom on Michael Pat Murphy  Why did you issue that statement last May about the cost of living being brought down?

An Leas-Cheann Comhairle: Information on Cormac Breslin  Zoom on Cormac Breslin  Deputy Murphy will get an opportunity of making his own statement.

Mr. Childers: Information on Erskine Hamilton Childers  Zoom on Erskine Hamilton Childers  I am talking about something which is extremely serious and I do not want to be interrupted at this point. The public would not feel any increase in taxation, which in any event would have been more moderate if the whole of the national production had been increased to meet it. If agricultural production and exports had bounded in the way in which we were promised by Deputy Dillon when he came into office, the yield of the existing taxes would have gone up so much, whether there was a Korean war, whether there was defence going on in the world or not, that the taxes on these commodities such as tobacco and drink which are so largely increased would have helped to fill the gap in the Budget and I would not have to mention the heavy impost of Marshall Aid, because Marshall Aid might have resulted in a very great increase in production, which it did not. The reason why we hear these complaints, the reason why the public feel the burden of these taxes is because agricultural production and exports in general have not bounded up in the way that was promised by the last Government or in the way they should have if we were to continue under the existing financial system in regard to taxation.

I now want to deal in some detail with the statement issued by the Trade Union Congress. I must say that I cannot conceal my admiration for the statement to this point — that it was the [419] first consistent document I have seen in regard to the Budget. Although I do not agree with its conclusions, it is a document prepared by persons who were determined to work for the workers' interests, and to present every fact they could in the most favourable light so far as they were concerned; to present all the worst features of the Budget. But the remarkable thing about it should be mentioned immediately — the fact that the Trade Union Congress did not deny that the Budget is genuine; that there is not one single word in the memorandum which suggests that we have used faked figures, that we have falsified the Budget, that there are vast huge surpluses everywhere. I congratulate the framers of that document in regard to this. When the workers whose unions are affiliated with the Trade Union Congress study the document, at least their minds are not hopelessly confused from the beginning by having the suggestion made to them that the Budget is faked in any way. At least that much can be said for this statement. I suppose that one of the reasons why the statement is more measured, more thought out on what I might describe as the workers' maximum demand basis, is because a very large proportion of the workers always have and always will vote Fianna Fáil, including vast numbers of those whose unions are associated with the congress.

Mr. O. Flanagan: Information on Oliver J. Flanagan  Zoom on Oliver J. Flanagan  That is one of the reasons for the 70,000 unemployed.

Mr. Childers: Information on Erskine Hamilton Childers  Zoom on Erskine Hamilton Childers  It is for the unions to show some sense of discretion in presenting the facts. The fact that the Trade Union Congress did not suggest that the Budget was faked showed a perfectly clear divergence from members of the Fine Gael Party. I am glad the Trade Union Congress took a view independent of the members of other Parties in the House, and made public a statement of their own, making every possible representation they could for the workers in reference to increased taxation. The statement, as far as it went, was of that type.

To deal with the statement in detail, [420] first of all they suggested we could have a deficit Budget. In view of what we have been through during the last three years, I can say that although I do not believe in elections based on the kind of talk we have had about taxes as being good for the country during the last two weeks, if one could have an election on just the isolated question of whether there should be a deficit or not on the current Budget. I would be agreeable to face the public on that issue. If we could have an election without the question of changes in taxation but on the easier question of whether we are going to balance current expenditure, I would be prepared to go to the country on that, and I could feel sure that we would get an overwhelming majority. To me that is a very escapist suggestion made, no doubt, in good faith by the framers of the document. However, I have seen too many countries in Europe go under because of continual deficits in the Budget. I have seen too many countries in Europe which had large Communist Parties because the Government never dared to balance the Budget. I feel that that was an unfortunate suggestion. I would be prepared to go to the country on that issue alone at any time.

We next want to deal with the suggestions made in this document with regard to the cost of living. They took the fullest possible advantage of the situation to point out how much the cost of living had increased. I just want to mention a few factors that alter the position slightly. The information we have received is that the average earnings of the community, as distinct from wages, have increased 115 per cent. from October, 1939, to September, 1951, and that the cost of living in approximately the same period—August, 1939, to August, 1951— went up by 105 per cent., so that, in fact, earnings did go up more than the cost of living.

That may be an excellent thing for the workers concerned. I feel that should be taken into account to some degree when discussing the effects of the present Budget on the cost of living. I should also mention the fact that the wages of agricultural workers [421] have gone up 150 per cent. since July, 1939, if the July, 1951, figure is taken into account. Agricultural workers have always been underpaid and have not enjoyed the standard we would desire, but one can see that there has been a very considerable rise in their wages. I merely mentioned that because I think it better to do so, because of the claims the Trade Union Congress have made with regard to the cost of living, which might be described as being on a maximum basis. I thought it would be well to come down to earth a little in regard to the increase in the cost of living effected as a result of the changes in the subsidies. Again, I must take averages and take account of the fact that the cost of living increase is only approximate. It is based on commonly used foodstuffs. It does not include tobacco and drink. Making allowance for all these limitations, the position is this. Although it is true that the cost of living will go up by seven points on 114, when these subsidies are reduced, and taking the index at mid-February, 1952, if you take the position for a family — a man, a wife and three children—you have to take the average effect of the index in making allowances for increased children's allowances. If you take the family as a whole, very approximately the increase in the cost of living for all items, including food, rent and clothing, between February and July, assuming these subsidies are reduced, is 3.7 per cent. Some of the figures given by the Trade Union Congress statement suggest something much larger than that. Taking the family as a whole, it simply means that the second child is more than compensated for by the allowance of 2/6, while the third child is compensated for just sufficiently by the increase in the children's allowance of 1/6.

If the Deputies opposite wish to examine properly whether or not there has been an increase in the cost of living, they will find that it has gone up 3.7 per cent. Taking the whole family as an average, the cost of living in regard to food only goes up 5.5 per cent., because rent, clothing and other expenses were eliminated from that argument. This is only an approximation [422] but it is something quite different from the figures given by the Deputies all over the country and which suggest that the cost of living, as a result of the removal of the food subsidies alone, has gone up by 25 per cent. The actual position is that the cost-of-living figure which was 114 points in mid-February, 1952, will go to 121 at the point where subsidies are reduced. If that is applied to the family of a man, his wife and three children it will be found that, making allowance for those for which the cost of living does not go up in so far as we can work it out by averages, the increase in the cost of living is 3.7 per cent. I mention that because I feel it would be interesting for the House and the public to hear something more like facts in regard to this matter.

We hear a great deal about what goes on in Great Britain and comparisons are made constantly between that country and this country. I feel it is just as well to mention at this point that the cost of living has gone up in every country in Europe fairly steadily since 1948. We in this country have controlled it fairly well. There is evidence that there have been changes in the cost of living in Denmark, Norway, Belgium and France. When we compare the cost of living in those countries with the cost of living here, we find that we have managed to restrain, since we took office, the figure fairly successfully. There is no great variation except in the case of one or two countries and, as I say, we are amongst the lowest.

There have been certain suggestions that we are maintaining the interests of the profiteer and allowing the rich man to grow richer at the expense of the public. I feel it is just as well to record some figure for the House in regard to this matter. If we take the cost of living basis as 100 in 1948, taking each country separately and, of course, realising that there must be some variations from country to country, we can see that we fared fairly well. In Denmark, by June, 1951, the figure had reached 120. It went up from June, 1951, to January, [423] 1952, to 124. The figure in Norway was 124 in June, 1951, and it had reached 129 by January, 1952. The corresponding figures in Belgium were 106 and 108, and for France 129 and 146. In the case of the United Kingdom there was a greater increase—from 116 to 122. In the case of Ireland it was 110, the figure being taken for May, not July, to 115 in February, 1951. That illustrates in a rough and ready manner that there has been an increase in the cost of living in almost every country and that we have managed to hold it down as well as other intelligent Western European countries, and that the suggestion that we are allowing profiteers to make still greater profits has no foundation, at least so far as that comparison is concerned.

Next I think it is very essential to point out to the public that we have been extraordinarily lucky in this country in regard to the price of the main foods compared with those in other countries in Europe. The cost of the main foods in this country is low by European standards. It is an interesting fact that Western European countries, for the most part, increased their agricultural production more than we did. It is one of the sad things about the present situation that the last Government was unable to make agricultural production abound in the same way as it did abound in a number of European countries. Whether that was the case or not, the consumers apparently received less protection than they received here and as I have said already, subsidies are being withdrawn in three Western European countries. These prices are interesting because they give the ordinary public an idea of what conditions obtain in other countries. People are so used to comparing the cost of foodstuffs here with those in England, where there have been very heavy subsidies and which is a country having a huge proportion of its national income based on an export industry, that I think it is just as well that people should go further abroad for information.

I have obtained through the Department of External Affairs these comparative prices, and they are of interest [424] to the House and to the public at large. In July a pound of butter in Ireland will be 3/10; in Belgium it is 6/-; in France it is 6/3 to 8/-; in Holland it is 3/6; in Sweden 4/3; and in Switzerland 7/5. The 1-lb. loaf of bread will be 4½d. here when the subsidies are removed; in Belgium it is 6d.; in France 6d.; in Holland 5d.; in Sweden 1/5; in Switzerland 5d. The lb. of sugar which in July will be 6½d. here is 8d. in Belgium; 1/1½ in France; 10d. in Holland; 10d. in Sweden and 10d. in Switzerland. These facts are interesting because we tend, as I have said, to make too many comparisons with Great Britain.

I want to deal with another aspect which was a matter of criticism by the Trade Union Congress — and it is very important to record any criticism with great seriousness which suggests that too much of the tax is being put on those least able to afford it. As Deputies know, there has been an increase of 1/- in income-tax, an increase in connection with whiskey and an increase in the petrol tax. The suggestion is made by the Trade Union Congress that we might indulge in a profits tax. The position in regard to that matter is this. If we were to adopt an excess profits tax we would have all the difficulties of deciding what a standard year is for the various types of companies involved and so on. During the war the position was rather easier for us, in that industry perforce was slowed down through lack of supplies and although adjustments were made for certain companies which had only started production and on whom the effect of the tax would fall very unfortunately there was not the same importance then as there is now of stimulating production or encouraging enterprise.

I do not think one can defend very easily an excess profits tax in a country where most industries are so new, in a country where industrial development is of a very recent character. We could possibly increase the corporation profits tax, but if we had increased it from 10 per cent. to 15 per cent. it would have taken three years for us to reach a revenue of £1,000,000 and in the first year only £160,000 would have been received, a little bit more than the actual [425] tax that is being abolished on dances, which shows how trivial the sum would have been.

Mr. Hickey: Information on James Hickey  Zoom on James Hickey  What would be the amount of the excess profits tax?

Mr. Childers: Information on Erskine Hamilton Childers  Zoom on Erskine Hamilton Childers  I have not the figures. I am only dealing with corporation profits tax. I have said that to establish an excess profits tax when there has been no violent change from a condition of a complete peace to a condition of war and scarcity of supply and slowing down of the industrial machine would be a most difficult process and we in the Government believe it would inhibit enterprise.

Deputy Briscoe has already dealt with the question of surtax. I would just like to repeat very briefly that for incomes over £1,500 in the aggregate the State takes in income-tax and surtax 53 per cent. of the excess over £1,500; and for all incomes over £3,000 the State takes in the aggregate in income-tax and surtax 64 per cent. of the excess over £3,000. It is a matter for argument whether any purpose would be served by increasing that rate of tax. There are less than 200 people in this country with incomes over £10,000 a year. It is not a rich country. There are approximately only 20,000 well-off people in this country out of 3,000,000 people. If we want to encourage enterprise, to encourage industry we think we have, by imposing the 1/- income-tax, which affects the wealthy section of the population, done the best we can under the circumstances.

To give the figures in another way, under the envisaged increase in tax, about 7,000 people will pay in surtax and income-tax £650,000, and about 170,000 will get relief of £900,000; about 1,100 or 1,500 will pay £1,000,000 more. There is another group of 6,000 who will pay £900,000. The whole thing balances out in this way—the reliefs against the increases to the figure given by the Minister in his Budget. As I have said, we have tried to help the people of modest income and at the same time to ask that very small group of people who are extremely wealthy to pay a higher rate of duty.

Another criticism in the Trades [426] Union Congress statement was that the estate duties might be raised I was very much surprised when I asked for information in regard to the present position. Whereas there is an exemption of estate duty up to £2,000, from £2,000 to £20,000 we have roughly the same rate of estate duty as in Great Britain, and it can hardly be suggested that we can increase it very much more. From estates of £20,000 to £50,000 there is a growing divergence; the divergence only reaches 5 per cent. near the £50,000 level; and when you take the estates of the value of £100,000 up to £500,000 — there are very few of them — the divergence varies from some 9 per cent. up to 17 per cent. That is the position as regards estate duties. It does not seem to me that we can do very much that would be of assistance in balancing the Budget by increasing this tax measurably, and I think that is a fair answer to the proposals which were in a sense quite reasonably made by the Trades Union Congress for a readjustment of the Budget. We are very anxious to encourage private initiative. Far too much of the capital available in this country is being taken up by the Government. We must give encouragement to private individuals to start new industries and enterprises of every kind.

The next criticism by the Trade Union Congress was that we did not impose a purchase, or luxury, tax. Here, again, we are involved in administration difficulties as well as difficulties of other kinds. If we imposed such a tax, most of the revenue would be derived from imports. At the same time, we should have to compel wholesalers and retailers to register and to declare all their goods which were liable to tax. The keeping of accounts and the whole administration of the tax would be most difficult.

As I understand it, the British purchase tax is designed to force exports to the greatest possible extent and to ensure that a high proportion of the goods manufactured will be sent abroad. We have some luxury exports but they are not of a character that would benefit by the imposition of a purchase tax in this country. Already there are import duties on a very large [427] number of luxury articles. If we increased the duties, so to speak, by a purchase tax on Irish-manufactured articles I think we would create unemployment, and in the case of both Irish-manufactured and imported articles I think we would reduce consumption.

The Deputies interested in the trade union statement might like to hear details of some of the duties on imported luxuries which obtain at the moment. The duty on certain classes of domestic glassware is from 10 per cent. to 90 per cent. On imported cutlery the duty is from 75 per cent. to 100 per cent. On lighting fittings the duty is from 33 per cent. to 50 per cent. On wireless sets the duty is from 50 per cent. to 75 per cent — that is, a minimum of £5 per set in the case of preferential duty and £7 10s. per set in the case of the full duty. I do not know how we can tax wireless sets very much more than that. None of us would wish to tax the wireless sets made in this country, under considerable technical difficulties, simply in order to balance the Budget. How you could tax an imported wireless set higher than £7 10s. per cent. I do not know. Clocks are taxed from 33 per cent. to 75 per cent., depending on the category. Gold rings and gold and silver plate are taxed from 25 per cent. to 37 per cent., with an addition of 10 or 15 per cent. if engraved. I will give the House an example of that particular form of import. The annual consumption is estimated as being £181,000. Those who are interested in the trade union statement will realise that no matter what tax you put on precious metals of that kind it would not affect the Budget very much. I should mention one more item, since it was specified by Deputy Corish. He made frequent references to mink coats. The customs duty on fur coats— I think of all kinds—is 75 per cent. full and 50 per cent. preferential. It will be seen, therefore, that already there is a fairly heavy impost on that luxury article.

It is very much easier to speak to this Budget when making use of the Trade Union Congress statement than to reply to the specious arguments of [428] many Opposition Deputies. The Trade Union Congress made a perfectly clear, reasoned and logical case and, like a good advocate, they pleaded on behalf of the workers, the great majority of whom vote for the Fianna Fáil Party. It is very much easier to reply in a reasonable way to the suggestions which they made than to try to answer some of the innuendoes and slanders made by Deputies of other Parties.

A suggestion was made both by the Trade Union Congress and by Deputies in this House that credit is being unduly restrained. It is as well to repeat the figures which have been given so often but to which nobody seems to pay any attention. I do not know whether some Deputies believe that the banks are faking these figures. It has been suggested to the public that the officers of the Department of Finance are not above providing the Minister for Finance with figures that are not reliable. The last figures which I have been able to get to show the changes in the loans, advances and bills provided by the banks within the State are up to the 18th March, 1952. The following figures are the average for December quarter, 1950, and for the December quarter, 1951. Loans and advances and bills within the State in the December quarter of 1950 totalled £105,272,354: in December 1951 they totalled £124,054,841, which is an increase of approximately 20 per cent. In the face of these figures, nobody can assert that there has been a strangling of credit by the banks of this country because, under the circumstances, it would be ludicrous to make that statement. Deputies can make investigations for themselves and if they take the figure from June 1950 to June 1951 they will find that the increase was in somewhat the same measure. We know that prices have gone up in that period from December 1950 to December 1951. We know that they have not gone up so much that they could entirely nullify, so to speak, the effect of an increase in bank advances and loans amounting to 20 per cent. It was a ridiculous exaggeration for a member of this House to state in public that we were being crucified on a cross of gold and it was an unseemly statement to make in connection with a matter so [429] important as this, and it bears no relation to the facts.

The Government has become a very heavy borrower from the banks and the more the Government becomes a borrower from the banks, the more careful the banks have got to be if they are to lend to private investors so as to make sure that if they lend money they will not be called upon to pay forfelt. As I have said these credits have gone up by 20 per cent. from December, 1950. The suggestion has been made that the screw began to turn since December, that we had entered into some conspiracy with the banks whereby they would allow credit to go up so that we could quote a certain figure and this year credit would be restricted, so that for a number of years we could show that there was no increase in credit. I therefore got the figures available to the 18th March, 1952, and they show that credit has gone up by £127,000,000 showing that credit continues to expand.

I want to make it quite clear that while it is easy to talk about the necessity for increased credit, the fact remains that that credit has been increased to cover increased costs and increased Government borrowing, and that there has been no corresponding increase in production. Production has not been increased in quantity by 20 per cent. Neither agricultural exports nor production have increased to account for that increase in credit. The increase in credit has gone on because of the necessities of the case but if expansion on that level is to continue there must be an increase in production. Whether this is a Socialist, a Communist, or Conservative State, no matter what form of economy exists that process will stop some day unless agricultural production or some other form of production here markedly expands. That simply cannot go on indefinitely with a stagnant economy.

Mr. Hickey: Information on James Hickey  Zoom on James Hickey  If there is an increased rate of interest on loans to farmers, you cannot expect increased agricultural production.

Mr. Childers: Information on Erskine Hamilton Childers  Zoom on Erskine Hamilton Childers  The Deputy knows there is difficulty there because if there is an increased interest rate on deposits [430] the rates of interest on loans must go up as well. If the late distinguished Sir Stafford Cripps were to look at these figures he would say: “This may be necessary because prices have gone up but now show me the exports from Ireland”. If the late Sir Stafford Cripps were to see these figures he would, just as much as any Conservative or Tory Chancellor, say: “That cannot go on indefinitely unless agricultural production markedly increases”. As I have said, I expect that my statement will be twisted so as to represent it as being that of a friend of the bankers or of the employers but it is a simple plain statement based on modern economic thought. I have dealt in fair detail with the statement of the Trade Union Congress. I know that many workers who are supporters of ours and who are affiliated to that congress would wish to have the accusation contained in that statement dealt with, so that the Trade Union Congress could operate in the fairest possible manner in dealing with disputes or with any discussions in regard to wages. We only want to get fair play from the bodies representing the workers. Many efforts have been made to draw workers away from Fianna Fáil. We have had all this for years and years. For years and years certain elements in the community have tried to take away the support that we always had from the workers. They have been warned that Fianna Fáil was a capitalist Party whose only interest was in assisting the rich and in forwarding the interests of the rich. They were told during the economic war that we were creating a depression which would lead to their ruin. They were told during the last war that we were not looking after the interests of the workers because we imposed the Standstill Order but at the end of the war nobody could deny that we were one of the happiest countries in the world.

In 1948 the workers were given a particularly big inducement to desert us in large numbers. They were told the whole country was ruined by profiteering, that we had failed to prosecute thousands of rich men, and that if some other Government were elected the cost of living would go down with a bang, that the cost of living in Deputy [431] Larkin's words would be broken, that the profiteers would be prosecuted, that the sternest action would be taken against them and that the corporation profits tax and the excess profits tax would be reimposed. Some of the workers temporarily deserted us and supported the Labour Party. Then when there was a change of Government they found to their amazement that the cost of living did not go down, that there was no noticeable decrease. Then when it started to go up again a further inducement was held out to the workers when the fatuous price freeze was introduced at a time, when above all others, it could not have succeeded. It might have succeeded at almost any other point but it was instituted at the very worst possible moment.

Further, the workers have also been told that some other Government but Fianna Fáil would institute social legislation to their benefit, that if only some other Government were elected social legislation could be implemented more rapidly with additional benefits and higher rates of allowances. The fact is that when the Social Welfare Bill comes into operation, as I believe it will, it will be seen that we are the [432] only Government that continued to pass social welfare legislation benefiting the workers. Virtually all the social legislation was passed by us. We initiated it and expanded it in this country. We instituted conditions of labour which at one time were in advance of any obtaining in any other country in Europe, as members of the Labour Party well know. When the new Bill goes through, as I hope it shall, we can claim credit for passing virtually all the social welfare legislation in this country.

Some observations have been made in regard to emigration. I should like to speak quite honestly about emigration. Looking back at the history of emigration in this country since 1922, I think I can say that we have now reached a point when all Parties should cease talking about it in terms of a political gag designed to secure votes from the people.

I move to report progress.

Progress reported; Committee to sit again.

The Dáil adjourned at 5 p.m., until 3 p.m. on Tuesday, 29th April, 1952.


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