Wednesday, 3 July 1957
Dáil Éireann Debate
That a sum not exceeding £111,640 be granted to complete the sum necessary to defray the Charge which will come in course of payment during the year ending on the 31st day of March, 1958, for the Salaries and Expenses of the Office of the Minister for Finance, including the Paymaster-General's Office.
There are just two matters to which I wish to refer. The first concerns the recent issue of Exchequer Bills. I am glad to say that we have had a great success and that the issue was oversubscribed. It gives us great encouragement to proceed with this type of borrowing in the future and, I hope, on a more extended scale. I cannot say now when we shall be in a position to issue bills of this kind again but, as Deputies are aware, the present bills will be due for redemption at the end of September. Therefore, around that time, if not sooner, I presume we shall be on the market again for more of these Exchequer Bills.
On the 12th June I indicated, in answer to a question asked by Deputy O'Higgins, that full particulars of the manner of the first draw for prizes under the prize bond scheme, due to be held in September next, would be published early in July. I would like to take this opportunity of giving Deputies the promised information on the subject. As the House is aware, the amount subscribed to the first issue  of these bonds last spring was approximately £5.4 million. Assuming that withdrawals in the meantime will not be appreciable, there will be over £100,000 in prize money for the September draw. On the basis of a £100,000 prize fund, there will be ten prizes of £5,000 ten of £1,000, 200 of £100 and 400 of £50, making 620 prizes in all.
The first draw will be held during the first fortnight in September in the Bank of Ireland, College Green, Dublin, where the registers of bondholders are kept, and will be under the supervision of the bank and my Department. As the space available in the bank is limited, it will not be possible to open the draw to the general public but representatives of the Press and radio will be present while a small number of representative persons will also be invited.
Consideration was given to the systems in use in various countries for selecting prizes in State lotteries, etc., including the electronic device in use in Britain in connection with their Premium Savings Bonds Scheme. It was decided that the system most suitable for our prize bonds drawing would be one based on those in use in such countries as Sweden, Norway, Belgium and France. Briefly stated, it consists in selecting, by lot, each digit composing the winning number.
For the coming draw a special apparatus is being made for the Bank of Ireland by a Dublin firm. It will consist of six small drums capable of being rotated together by means of a handle at one end. Reading from left to right facing the apparatus the first drum will represent the hundreds of thousands digit of the winning number, the second the tens of thousands digit, the third the thousands digit, and so on. Each drum will contain counters bearing respectively the numbers 0 to 9 while the drum representing the hundreds of thousands digit will, in addition, contain a counter numbered AO as bonds numbered in excess of 999,999 will bear the prefix letter “A.” These counters will be so constructed that when closed the number on them is concealed from view. Each drum  will have a hinged door and three sides of glass so situated that when the door is uppermost the glass sides will face the audience so that they will have a clear view of the counters and can see the operator removing them.
When the drums have been rotated and come to rest one counter will be picked at random from each drum simultaneously by a team of operators who will then open and display the counters to the audience. The prize bond represented by the number consisting of the digits and prefix letter, if any, drawn from the drums will be the winning bond. This procedure will be repeated until all the prizes have been drawn. If the number drawn represents the number of a bond cashed before 1st September or is the duplicate of a number previously drawn during the course of the draw or is a number in excess of the highest bond number issued, it will be rejected and another number drawn instead.
As it is a condition of the prospectus under which the prize bonds were issued that a bond will not be eligible for inclusion in the draw if the holder has died before 1st September or if it is held by a person not entitled to hold prize bonds, for instance, a person under 16 years of age, it will be necessary before the draw proceedings are brought to a close to draw a small number of additional numbers which will be held in reserve in case one of the numbers on the winning list is later rendered ineligible to receive a prize under the terms of the prospectus.
Lists of bond numbers which win prizes will be published in Iris Oifigiúil and notification will also be sent by post by the Bank of Ireland to the holder of the winning bonds. Statutory regulations governing the method of the first draw are at present being prepared and will be made by me shortly. The actual date of the draw in September will be announced later.
I should like to add that it was found impossible to get any place large enough to enable the public to be admitted generally. I hope it will be possible to consider that in future. Deputies are perhaps aware that in order to engage a large hall in Dublin  you must put in your application nine or 12 months ahead, which makes it very difficult.
Mr. Sweetman: On the subject of premium bonds, there is only one request which I want to make to the Minister in respect of the draw to which he has referred and that is that he will ensure that my number comes out of the drum. I dare say he will have a fair number of requests of that sort.
With regard to the draw, I presume there will be adequate facilities not merely for reporters as such but for Press photographers. A movietone news item, or something like that, would be desirable. So long as there is sufficient publicity of that sort, I do not think anybody would mind that the general public would not be able to be present though I suppose a good many people would turn up for the thrill or in the hope that their number might come out of the drum. Has the Minister yet made arrangements as to whose will be the golden voice on this occasion announcing the success of the various units? If it is somebody connected with the Department of Finance, it will be a new rôle for him to be giving something like this rather than in his normal and proper rôle of restriction. Perhaps the Minister will keep that pleasure to himself? However, time will tell.
So far as the issue of Exchequer Bills is concerned we are glad on all sides of the House that the issue was a success. There has been some considerable discussion from time to time about the provision of an Irish money market. From the editorial in the Irish Press the other day it would appear they thought this was an Irish money market. It is not, of course, but it is undoubtedly a system of short term Government financing which is very desirable indeed and which, as I indicated the other day, is one which could not be successfully introduced until, first, our balance of payments had been put on a proper basis and  secondly, until British Treasury Bill rates had dropped.
The Minister was lucky in that the previous Government created the first situation for him. So far as the second is concerned, nothing that we do in this country can in any way alter the international interest rate nor the British Treasury Bill rate. The augurs were favourable for the Minister and he took advantage of them and on all sides of the House we are extremely glad that the issue has been so successful.
I noted in the statement that was made, the Minister indicated that the average price of issue was somewhat below the maximum. That also is satisfactory. I think the information that was published in that respect is the same information published in respect of British Treasury Bills. I can easily see that to ask for any additional information might very well impact on the confidential nature of the individual transactions and, therefore, so far as I am personally concerned I do not propose to ask for any information other than that divulged by the Press statement through the Department of Finance.
While many countries issue bills of the sort which have just been issued, very few countries indeed have the money market and the complex system of discount houses which exists in London. It is not necessary to have that complex system of discount houses for the successful issue from time to time of direct Government Bills. I think Canada, Australia, New Zealand and South Africa—to mention some countries of the British Commonwealth—all operate the type of Governmental Exchequer issue such as that we have released but I do not think any of them operate the type of money market and discount house which exist in London. In fact, to the best of my recollection, Australia did once start an effort to have such a money market and it was a complete failure, while the issue of Treasury Bills in Australia remained most successful.
When I was speaking on this the other day, I did not want to say too much before the issue closed but there  is no doubt in my mind that it was the re-discount facility which made the issue a success. I think without that facility the Minister would not have got many of the applications he did receive. I hope that in whatever new issue of bills he may contemplate in future he will pay particular attention to the re-discount facilities that are offered because, in my opinion, they are even more important than the fractional rate of interest over or below the average which it may be possible to achieve. At the average tender price of £98 17s. 9d. I think the interest is somewhere about £4 11s. 3d. per cent. which is an extremely high rate for a bill which has the guarantee of 48 hours' discount that these bills have.
It is a rate which I think we would be able to reduce in the future, but at the same time let me be quite clear in saying that I think the Minister was right in making his initial rate the maximum figure he quoted and which would be the guide to tenderers. He was right in making that rate fairly high on this occasion so that he would be sure in that way that the initial issue would be successful.
I hope that further issues will be made along the same lines and, even if the Minister does not make any issue before the 30th September, I hope that when these bills come for redemption he will make a new issue at that time. By then also people will have become more acclimatised to the situation and it might be possible to get more small tenders for the bills than perhaps was the case on this occasion.
I would like to know from the Minister whether he proposes to retain the services of the Capital Investment Advisory Committee? I hope he will retain their services. It is an organisation appointed for the purpose of giving advice, and only for that purpose. The decision must remain with the Minister if it is within his ambit, or with the Government if within their ambit, but at the same time I think it is desirable that a body such as the Capital Investment Advisory Committee should investigate our problems and tender disinterested advice on  them. It remains then for the people concerned to judge the value of that advice and to take decisions on it.
Obviously the committee will give that advice only from the purely economic standpoint and other things have to be taken into account in arriving at decisions. It does not necessarily mean that rejection of economic advice is any indication that the economic advice as such is considered unsatisfactory. It may be entirely satisfactory as economic advice but at the same time it might set off certain trends in other fields that would render the economics of it open to serious criticism.
For that reason therefore, the opinion of any such committee can only be purely advisory and must not be regarded in the nature of a decision. We heard some remarks from time to time during the Budget debate on this matter which I do not propose to go into now but I remember Deputy Loughman saying the Government had taken the committee's advice. The Government, of course, did nothing of the sort. The advice of the Capital Investment Committee was in relation to capital purposes not in relation to current purposes as was the Minister's decision. However, that is all water that has flowed under the bridge.
I should like to reinforce what I said on the Central Statistics Office in relation to the Department of Finance. The Minister is aware that I made a certain effort to try to strengthen the economic section of the Department of Finance but I was not able to get exactly what I had in mind. I hope that, if that opportunity arises in the future, the Minister will be able to strengthen the Department in that way.
I have very strong views that it is through the Minister for Finance the Government should be advised on economic matters. It is impossible for the Minister adequately to advise the Government on economic matters, unless he has an adequate economics staff in the Department. The officials that were there to advise me on these matters gave me advice that could not have been bettered. I was extremely lucky in their co-operation, but, at the same time, they were so limited in  number that there was a certain disadvantage. The number available requires expansion and if something is not done, should the opportunity arise wherein to carry out that very necessary expansion—it is only a trifling expansion—I am afraid some officials will be very seriously overworked, with bad effects not merely on their own health but on the eventual quality of their work.
I should like the Minister also to tell us whether the system of the Government stock for dealing with national loans and other Government securities which was instituted in 1954 has been successful in recent months. It was initiated in 1954 in relation to Irish Government securities, and was subsequently expanded to other issues, and I should like to know whether that expansion for Dublin Corporation issues, for example, has proved satisfactory.
I have two other matters to raise, and one I shall raise in a general way only. I was very surprised indeed to see that it was the Minister for Industry and Commerce, and not the Minister for Finance, who made a statement yesterday on the future of the levies. The levies were imposed for balance of payments purposes and it was the Minister for Finance and the Department of Finance who were primarily concerned in these levies. I was quite amazed therefore when I saw that it was the Minister for Industry and Commerce and not the Minister for Finance who made the statement last night prognosticating what their future was likely to be. I hope that, by that, the Minister for Finance is not relinquishing the primary responsibility that remains to him, and should remain to him, of dealing with levies, should our payments and our balance, visible and invisible, vary from time to time. It would be most unsatisfactory if that were so.
The other matter is one which does not require legislation, in my view, and I think it would be very bad, if it did require legislation. The reason I say it should not require legislation is that I feel we have got to arrive at a situation in which the Central Bank and  the commercial banks will co-operate more closely with the Government of the day than they have done up to the present. In saying that, I do not want to suggest at all that there has not been a liaison. There is, and it has been a satisfactory liaison in many respects; but I think that liaison must become even closer in the light of our present economic conditions; and one of the things that must be done is that the Minister for Finance must impress upon the commercial banks that they will have so to alter their system that they can have selective interest rates to a degree not existing at present.
If the Minister goes back on the records of his Department, he will see that I made certain suggestions along those lines some little time ago. Other circumstances arose in relation to our balance of payments which necessitated that my concern would be taken away from that and directed towards other much more pressing matters. I think we will have to have here a system of more selective overdraft interest rates so that we will be able in any potentially inflationary situation to damp down the type of spending that we do not desire and at the same time, stimulate the type of productive investment that we must have in far greater degree if we are to improve. The present situation, by virtue of which an overdraft for luxury consumption pays exactly the same interest rate as one for productive development, does not provide a satisfactory solution. I know, of course, that the trade loan guarantee system does provide for a lower rate of interest, but that is a very limited aspect of the problem and the problem requires to be dealt with on a much wider basis.
In no circumstances should it be dealt with by legislation, in my view. It would be highly undesirable that there should have to be legislation for that purpose. It is a matter that should be dealt with administratively between the spokesman of the Government, the Minister for Finance, on the one hand, and the commercial banks, on the other, with, perhaps, the Central Bank in between acting as the cement, as somebody so graphically  described it the other day in relation to a somewhat similar problem.
Now that we have got ourselves on to an even balance of payments keel, I hope that in the time ahead that will be one of the reforms which will be possible of achievement. It was one which it was not possible for me to tackle while our balance of payments was in disequilibrium in the years 1955 and 1956. The Minister will find that Australia, subsequent to my making certain suggestions here, adopted this system and now has in operation this system of selective overdraft rates. The report of the New Zealand Banking Commission, which was published round about last Christmas, recommended the same thing. They are countries, like ours, which are underdeveloped. They are countries, like ours, which may have inflationary tendencies from time to time and may desire to curb these tendencies, without, at the same time, affecting the productive enterprise so necessary to build them up just as it is so necessary to build us up here.
Mr. Russell: I should like to refer to the methods at present available to and availed of by the Revenue Commissioners in relation to the collection of income-tax arrears from employees. I do not know why the present system was instituted, whereby, if an employee fails to pay his income-tax, certain pressure is brought on his employer to deduct the amount from his wages and, failing that, the employer can be made liable for the arrears and methods bearing on the Gestapo-like can be employed if the employer fails to pay.
The Minister may have seen a letter which appeared recently in the Limerick papers from a very reputable firm of contractors, Messrs. Lanigan Brothers, setting out the steps which the Revenue Commissioners had taken to collect arrears due by certain of their employees who had left their employment without paying those arrears. The Revenue Commissioners even went to the extent of seizing some of the firm's property.
I would suggest very seriously to the Minister that the time has come when the laws governing that particular  section of income-tax payers should be revised. A very sensible step in that direction would be the introduction of the P.A.Y.E. system which is in force in England and other industrial countries. Undoubtedly, it is a hardship nowadays for any working man, particularly if he has a family, to be presented twice a year with a substantial bill for income-tax. Whether we like to admit it or not, a very great proportion of the workers to-day and, indeed, of every class of the community, live on a week to week basis and it would make the position very much easier for the categories concerned if the P.A.Y.E. system were introduced in Ireland.
I am aware that there are certain difficulties and possibly some expense involved in the introduction of that system but it would be well worth while. Certainly, if we ambition expanding as an industrial nation we will have to adopt systems which have proved themselves outside in regard to employees' income-tax. The case that I have referred to of Messrs. Lanigan Brothers of Limerick has left a very ugly taste in the mouths of people in my constituency and Southern Ireland generally and I would urge the Minister to make a general study of the whole question.
I should like to support the suggestion made by Deputy Sweetman that professional and economic advice should be available to various Ministers. I had hoped to have an opportunity of raising this matter on the Estimate for the Department of Industry and Commerce, but the debate concluded rather earlier than I anticipated.
I would suggest that, not only should we adopt the policy of setting up commissions or committees to advise Ministers on various matters connected with the national economy, but that one or more professional economists might be included on the staffs, certainly on the staff of the Department of Finance. If we had availed of the very efficient, highly expert, professional and economic advice available in this country, the procedure adopted in regard to the investment of public funds over the past 30 years might have taken a different trend and the present demand  for priority for productive investment might have been put into practice at an earlier date, to the great benefit of the country generally, if we had had competent professional and economic advice available to the Departments concerned.
I would seriously suggest to the Minister for Finance that consideration should be given to the question of employing on a permanent basis professional and economic advice of the most expert kind, particularly now that we have reached the stage in our economic development when we must look ahead and plan for an expanding economy or suffer very serious consequences, consequences even more serious than those we are dealing with at the present time.
I should also like to suggest to the Minister that at the earliest possible date he should indicate to the Dáil his plans for inducing investment of outside capital in this country. In his speech yesterday to the Dáil, the Minister for Industry and Commerce stressed the fact that, as far as his Department is concerned, he proposes to introduce facilities to encourage the investment of outside capital and the activities of outside capitalists in this country, a development with which I am very much in agreement.
Taking the short view, the best way at this stage to get industrial know-how and the requisite capital is to go outside the country. One way of doing that is to offer attractive inducements. I do not believe that export of capital should be restricted to a major degree. If we accept the philosophy of a free enterprise economy, it is far better to attract capital into the country by offering inducements rather than to restrict the export of capital by any artificial form of restriction. If capital gets a fair return in this country, Irish capitalists will retain their capital in this country and there will be a flow of outside capital coming into the country, to the benefit of the economy in general.
In that regard, a review of the income-tax code is long overdue. I understand that a commission is to report to the Minister in due course on that matter but time is moving on and I suggest that, in the present precarious  state of our economy, the question of inducements to capital requires the Minister's urgent attention.
The Minister indicated in his Budget statement that certain inducements will be given to shipping companies. I think I am correct in saying that that would bring us into line with what is being done in England and elsewhere. In such matters we should be prepared to go even further than other countries in order to induce shipping companies and others at least to register their ships here, if it is not practicable to build the ships here. We must get out of our heads the idea that it is sufficient for us to follow what is done outside. We must be prepared, if necessary, to take the risks involved in going further.
I should also like to support the suggestions made by Deputy Sweetman in regard to credit facilities. It must be admitted that the world is living on credit and that any serious restriction or attempt to curtail credit drastically, in the nature of a deflationary policy, is likely to have even worse results than the pursuit of an inflationary policy. I do not intend or wish to advocate in any sense an inflationary policy, which would lead to disaster in the long run, but I think that credit should be available for worthwhile projects, particularly productive enterprises that would give employment and expand the economy. A general direction from the Minister to the Banks Standing Committee in regard to this whole question of availability of credit would have a very salutary effect on the banks.
I am not suggesting that the banks should throw money around indiscriminately. I would be strongly opposed to any such suggestion. The trouble is that when there is a question of a credit squeeze, a blanket is thrown over the whole industrial and commercial life of the country and credit is restricted, willy nilly, whether the enterprise happens to be productive or one that is either socially or economically undesirable. In other words, a dance hall proprietor probably has as much chance—I have nothing against dance hall proprietors—of getting funds when there is a credit  squeeze on as a person who wants to start a new industry. As Deputy Sweetman suggested, there should be some question of priorities in that regard.
We have in this country in abundance two of the essential things that go to create wealth. They are human material and land. We are short of capital. I suggest that anything that can help to utilise the two ingredients of which we have a surplus supply should be done and our available capital resources should be utilised to the best possible extent. If I developed that to any extent, I would be going outside the Vote altogether.
Again, I want to suggest very strongly to the Minister that, in his financial policy and in the policy of the Government in general, every possible inducement should be given, and given as soon as possible, to outside capitalists to invest in this country. It would be a very desirable development, not only from the point of view of getting in capital, but also because with the capital would come the technical know-how and experience which otherwise might take a very long time to provide from our own resources, no matter how desirable that might be.
Mr. MacCarthy: Deputy Russell raised a number of important points but in order not to delay the House I shall just deal with one—the question of the income-tax code and the collection of arrears. We all know that people of very modest incomes, particularly unmarried men, are now charged income-tax. It has come to my knowledge that when arrears mount up and when the income-tax bill is presented and perhaps taken home to the mother of the house, there are no means by which the comparatively large sum looked for can be paid in a short time. In consequence, the revenue commissioners perhaps spread it over portion of the coming year. Then, when the man concerned takes into account that deduction from his wages, plus the deduction for the current year's income-tax, he feels he is working for a very low wage indeed. I have known young men who, rather than meet these deductions, have emigrated from this country and gone  abroad. I think there is a very strong case for the introduction of the pay-as-you-earn system of income-tax.
General MacEoin: We were all glad to learn from the Minister for Finance of the success of the issue of the Exchequer Bills and that it is his intention to proceed with such issues in the future for public financing of State capital development and so on. However, I felt that the Minister, in moving his Vote to-day, would avail of the opportunity to refer to a statement issued by a member of the Government, and I suppose on behalf of the Government, in which it was declared that £200,000,000 of our capital assets had been wasted since the war.
That statement was made at a time when the Exchequer Bills were being issued. I think the Minister should have addressed himself to the validity or otherwise of that statement. I know it was made and issued to the Press in a script so that it was not any careless slip of the tongue by the Minister for Lands. Therefore, we have to take it that it is the considered view of the Government that it is correct. I suggest the Minister should either repudiate the statement or inquire into it and deal with it in a very positive way.
If that is true, action must be taken by somebody. It is a charge that cannot be allowed to go unattended. If the Government feel that that charge is true, they should take the necessary steps to deal with the people responsible for it. I now invite and challenge the Government to hold a judicial inquiry into that. But at the same time they should inquire as to whether a time when Exchequer Bills are being issued is the time to make a statement of that sort. I will not admit for one second that £200,000,000 of our external assets were wasted since the war either by the Coalition or Fianna Fáil——
General MacEoin: £200,000,000. It is published in every paper. It brings up another question. According to this Minister's statement, apparently £200,000,000 was accumulated. Where was it kept and what use was it put to? What interest rates were we getting for them? If there was £200,000,000 to be spent by us or by Fianna Fáil and wasted on unproductive expenditure, it must have been some place. It is a serious matter which cannot be passed by. If that statement were taken seriously—and it will be taken seriously by a number of people—I think it could do untold damage to the credit of the State and to the credit of everybody concerned with the Government and the Oireachtas——
General MacEoin: The administration of the Department is governed by the policy of the Minister and his predecessors. However, I shall leave it at that. I presume that it could be more appropriately raised on the Taoiseach's Vote in which general policy could be surveyed, but I feel that on this question of finance this matter should be raised now. I agree with the proposal that capital for productive expenditure is our great need and I trust that every effort made by this Government, or any Government that may hold office, to find capital will be successful. It is important in the interests of the country that it should. There is no reason why overdrafts and credit facilities, if required for worthwhile productive activities, should not be made available at a reasonable interest rate, much less perhaps than that for expenditure which is not so productive. I shall go no further than that.
I am glad that the Prize Bonds have also been successful. I trust that when the names of the lucky winners come out of the drum next September, under the supervision of the Minister for Finance and the Bank of Ireland, the fortunate winners will regard this  country as the best place in which to invest their money once more. I wish them the best of luck.
Mr. D. Costello: I regret the decision which the Minister announced a couple of weeks ago in reply to a question of mine. He stated that he would not set up a commission, or small group of experts, to investigate and advise on the relationship between the Government and the commercial banks. It is in the interest of the country to bring our banking system into line with the banking systems of other countries. At present the Government can exhort the commercial banks to expand or restrict credit but they can do nothing else. The question of policy with regard to credit expansion or restriction is entirely at the discretion of the commercial banks. I do not wish to suggest that the commercial banks, in deciding their policy, may deliberately decide to act against national interests but the national interests in regard to expansion or restriction of credit should be determined by the Government of the day.
The relationship between the Government, the Central Bank and the commercial banks is archaic. It is not in tone with recent developments in other countries. It is now over 20 years since we had an independent body of experts to investigate our currency and banking situation. It seems to me that the time has now come—and other countries faced with a similar problem have thought so too—to investigate the present set-up. I believe that legislation may be necessary in order to bring the Government policy into line through the medium of the Central Bank and the commercial banks——
Mr. D. Costello: With respect, Sir, I am endeavouring to relate my remarks to the administration of the Minister in the light of recent statements made by him in the Dáil. I am suggesting that his administration is at fault through his refusal to set up a group of experts such as I have suggested. I should like to make it clear that in my view the proper  course to adopt would be to set up a very small commission of a few selected experts, strengthened by outside experts, to investigate conditions here. New Zealand has recently had a report from a banking and currency commission. Great Britain has recently set up a banking commission, although changes were made there as recently as 1946 and 1947.
It does appear to me that the system which we operate is not one which in our circumstances works in the national interest. I feel that there would be no opposition from the Government to steps necessary to give more power to our Central Bank in the direction and control of credit policy. What I have to say in this respect is not, I wish to make it clear, directed against the commercial banks who are doing the job as they feel it should be done but I feel that the duty of the Government has been to a certain extent abrogated. It is a duty which in the national interest the Government must undertake.
Over the last few years the overall demand for goods and services was to some extent influenced firstly by the amount of wages in the community, secondly by the amount of savings and thirdly by the amount of credit given by the commercial banks. It appears to me that by far the greatest influence on the expanding or contracting of our economy was the last mentioned item. It is the policy of the banks that really determines what will happen regarding employment and production. I suggest that the Minister should reconsider the decision announced a couple of weeks ago.
There is, for example, very important advice ready to be given by experts from O.E.E.C. As a result of our joining the Bank of International Reconstruction and Development it is possible to obtain expert advice on this aspect of our economy from the bank and if the Minister does not see fit to set up a commission I suggest he should obtain the services available to him from that organisation so that we can have a report from an outside independent body on the matters I have referred to.
 There was one aspect of the banking system last year to which I think particular notice should be paid. Since January, 1956, up to March of this year the non-sterling assets of the legal tender note fund increased by over nearly £5,000,000. That is a very good development and I sincerely hope that the Minister will continue the practice, which was advocated by his predecessor, of seeing that the assets of the legal tender note fund are invested to a greater extent in non-sterling securities.
In this respect, too, it seems to me desirable that the assets of the Central Bank should be kept in Irish Government securities. To my mind there is no economic or financial reason why that should not be done and there are many good reasons why it should be done. There is power to extend legislation to do it. Our financial system could be strengthened and the position of the Government with regard to its capital programme would be strengthened if a certain proportion—not all— of the investment portfolios were held in Irish Government securities.
As I said earlier, the situation is such that I do not think opposition would come from any section of the House if the Minister were to suggest to the Central Bank, or otherwise bring pressure on the Central Bank, to invest some of its assets in Irish Government securities. If our banking system were to be streamlined in accordance with modern requirements, I think it would get the support of everybody in the Dáil.
Mr. Corry: I want to point out that  Deputies opposite have succeeded in increasing the interest and principal of dead weight debt from £4,000,000 a year at the time they took office to £15,000,000 at the time they left office.
Mr. Corry: I am pointing out to Deputy Costello what the last experts left after them. Fifteen or 16 commissions brought about this position. There is only one way in which this burden can, at least, be reduced. I was glad when I heard the Minister for Finance announce previously that he intended to reduce the burden on this country in regard to payment of the Civil Service. We have at present something between 4,000 and 5,000 civil servants more than are required. The burden of paying them is a heavy one, some £17,000,000 a year. We have an enormous amount of brass hats, some 900 of them, drawing over £1,500 a year. I do not wish to see men sacked because in the Civil Service, if you sack them, you have to give them a pension. By stopping recruitment and allowing the natural wastage to take place, it would not be so many years until the Civil Service was reduced to the number that is required.
I was amazed to see an advertisement for further examinations for civil servants during the past two months. It is time that was stopped. We cannot afford to pay £17,000,000 a year to civil servants. We cannot afford those two dead weight debts together, that of £15,500,000 principal and interest on public debt and £17,000,000 a year for the Civil Service. That is over £32,000,000 a year which  must be found by the taxpayers before anything else is done. There is something here for the Minister to do. A responsibility rests on him to have each Department examined in turn to see what the staff position is and to take steps accordingly. I do not want any more commissions. I think the Minister could easily have one of his Parliamentary Secretaries take on the job of doing that. I do not want it done by civil servants because I know what that would mean.
With regard to letters from local authorities to Government Departments, it takes six months from the day a letter arrives in a Department before anything like a definite reply, or a definite decision, can be expected by any local authority. It has sometimes taken up to five years. One case with which I dealt last week in relation to the health services took 20 years before a decision was made. It has cost the ratepayers and taxpayers —I do not know which will have to pay it—over £40,000. It is time these things ended. It is unfair to the public.
In regard to credit facilities for farmers, I suggest that the Minister in that respect examine the terms and conditions attached to loans issued by the Agricultural Credit Corporation, and let us have some explanation, if he can, as to why such loans are not forthcoming from that corporation even to men in good standing, men who have their rates paid up, who owe nothing to anybody and who, if they apply to the Agricultural Credit Corporation for a loan of £100, must have at least £1,000 in the bank before they get it.
These are the conditions under which we are endeavouring to carry on. I see no occasion for any loan to any farmer if the farmer is paid for his produce. He is not, and Government legislation has been brought in to force him to accept an uneconomic price. The farmers are the chief producers and the people we have to depend on for the balance of payments.
As long as that condition of affairs prevails, we cannot hope for increased production. There are two ways of  getting it. One is by offering inducement, by giving a fair economic price to the farmers; the other is by starving the farmers out in such a way that he will have to till to save his life. The question is, which way is this Government going to adopt? The previous Government adopted one road and we know where that led us. As regards any further commissions of experts, we have too many experts bringing us into bankruptcy quicker day by day.
Dr. Ryan: I was asked, first of all, about maintaining the services of the Capital Investment Committee. I have met the committee already and they have very kindly consented to continue their investigations and continue to render any advice they can. I must thank the committee indeed for their past services and I am looking forward to receiving information and advice from them in the future.
I agree with the point made by various Deputies that the Minister for Finance should have access to the best possible economic advice. I agree also he should have independent advice, advice which does not come from other Departments. Naturally if his advice comes from other Departments he is not in a position to consider the schemes from those Departments as they should be considered.
Deputy Sweetman asked about the Government stockbroker and the scheme inaugurated some time ago under which the Government stockbroker was prepared to buy or sell Government stock at any time to a limited extent. The scheme has worked very satisfactorily on the whole. It means that anyone who wants to get rid of Government stock finds a market. In fact, I am told there is more difficulty in finding stock for sale than there is in finding a buyer, as a general rule. That gives an indication that the scheme has been successful. The scheme was extended to some local authority investments, but the stockbroker has not been so successful in these cases.
I have no intention of relinquishing my responsibility for the import levies and Deputy Sweetman need not have  any fear on that score at all. A question raised by Deputy Sweetman, which has been rather a question of contention between Ministers for Finance and the banks for some time, is the question of rates of interest—selective rates of interest, as Deputy Sweetman put it, according to the national productive content of the scheme for which the credit is sought. The banks have more or less resisted any pressure put upon them to provide selective rates of interest. They say it is very difficult, and so on. In any case, I am afraid our trouble at present with the banks is to try to get them to look favourably on the application for a productive project, whatever it might be; and we have not come down to the question of rates of interest yet, until we find that their attitude towards applications of that kind is favourable, in particular where the productive content is good.
Deputy Russell spoke of the method of paying income-tax. It is true that the Revenue Commissioners will ask an employer to collect the amount due and will deduct it from the employee's wage or salary. That is a power I would not like to relinquish on behalf of the Revenue Commissioners, to collect it in that way. It is quite possible that, as Deputy Russell said, if we had the P.A.Y.E. here there would be less recourse to that particular power. Of course, it is open to any employer here to bring in P.A.Y.E. himself, if he and his employees agree; and there are various systems worked out by different employers. Some employees pay in so much a week, making a fair guess at what their income-tax will be, and that sum is standing to their credit when the demand comes along. There are various systems worked voluntarily by groups of employees in agreement with their employers.
I have no objection to P.A.Y.E. and I am not prejudiced against it. The commission at present sitting on income-tax will consider that system— that is, if they do not advise the abolition of income-tax altogether.
I was asked also as to what inducements we were offering outside capital to come into industry here. In the recent Budget we gave inducements in regard to taxation; we gave extra  benefits in the wear and tear on machinery and—I would say, more important probably for outside people, as Deputy Russell pointed out, who have the know-how as well as the money— we gave a concession on export profits. A firm starting for the first time will, as a result of the Budget, have the profits they make on export completely exempted from income-tax. That is a very big inducement indeed to anyone coming in from outside—as it is also to people inside who have money to invest, since, of course, it applies to them also. In fact, it applies more to them, I suppose.
I do not know under what circumstances a Minister of the Government made the statement that a lot of money was wasted in the past and therefore I cannot deal with it. I will have to leave it to Deputy MacEoin to deal with at another time when it can be dealt with better than I could deal with it now.
I do not intend to set up any commission to deal with the relationship between the Government and the commercial banks. We know what the relationship is, there is no difficulty about that. It is well known what the relationship is and the banks are very sure of the relationship and so is the Government. There is no necessity for any commission of inquiry into the relationship. A part from that, I am not convinced and I do not think anyone is that any particular change would be sure to be beneficial to this country.
We all make suggestions as to things which might improve matters but there is no certainty, no volume of opinion in this country as far as I know, in favour of any particular change in any particular direction. We will have to wait, I am afraid, until we know at least what we want and what we think might be a good change before setting up a commission to investigate it. We could not ask them to try to think out some better way of dealing with finance than we have at the moment. The terms of reference would be too wide.
I do not accept that the commercial banks have the great powers some people say they have. I do not think that the commercial banks do, in fact, direct policy here. What directs policy  to a great extent is the general financial position with regard to the balance of payments and many other things which enter into the matter. The banks have to take things more or less as they find them and try to carry on the business within the framework as it is. There are changes gradually taking place in connection with the relationship between the Government and the Central Bank and the Government and the commercial banks, and also in the relationship between the Central Bank and the commercial banks. Some of the changes made recently are very significant and should have a good effect on the financial position here and on the smooth working of our financial position in the future.
Dr. Ryan: Take the re-discounting of bills by the commercial banks which became a fairly regular feature of the Central Bank in the past year or so, and which has had a very good effect and has made it much easier for the commercial banks to lend substantial amounts not only to the Government but to Government agencies, such as Tea Importers and people of that kind. That evolution is very good.
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