Wednesday, 10 November 1965
Dáil Eireann Debate
“but considers that such emergency economic measures were rendered necessary mainly by the Government's previous inadequacies and failures in economic policy, particularly in the field of price control.”
Mr. Corry: Last night I was dealing with the allegations made and the demands made for a discussion on the free trade agreement with Britain. I was giving instances of what happened in a previous British Agreement and I was quoting the then Minister for Agriculture, Deputy Dillon, on it. On 12th July, 1960, Deputy Dillon said in the House that he had no knowledge of an Agreement made with Britain in 1956 and had no knowledge of a levy of £16 per ton put on Irish sugar exported to Britain under that Agreement. I do not know how much faith can be put in Britain's word in view of the fact that Deputy Dillon, who has always been a believer in the good faith of both parties to these Agreements, stated publicly in the House that portion of the Agreement with Britain in 1956 was a direct violation of an Article of an Agreement made with Britain in 1948.
In 1948, we negotiated a Trade Agreement, Article V of which read as follows: The Government of the  United Kingdom undertake that where goods, the growth, produce or manufacture of Ireland, are dutiable at preferential rates of duty they will not vary the existing preferential treatment of these goods in such a way as to put any class of goods, the growth, produce or manufacture of Ireland, at a disadvantage in relation to goods of that class from other sources enjoying preferential treatment.
That is a pretty comprehensive Article and yet with that Article in existence, I understand that goods containing Irish sugar are being subjected to a very formidable levy, the proceeds of which are devoted to the subsidisation of goods of similar quality containing sugar derived from the Crown Colonies of the British Crown. I am told, I think, by some of the Minister's colleagues, that when Deputy Norton was Minister for Industry and Commerce this matter arose, and that he did not consider it desirable to press the implementation of Article V which would give us the right to claim exemption from that levy.
Mr. Corry: I have read it in order to prove that sections of that Agreement of 1956 were made without even the knowledge of a member of their own Cabinet, Deputy Dillon. He denied it here. I do not want to read anything unnecessary here. He said:
Under that section of that Agreement made in 1956, this country had to pay over £2 million in two years on sugar and chocolate crumb exports to Britain. Nobody knew of that Agreement in this House until we started exporting sugar and I put down questions to find out the reason for this levy.
Mr. Corry: I do not think they are up to anyone here, Sir. What I have read is a complete answer to those who are now demanding that the Free Trade Agreement should be discussed here. I have shown the manner in which that Agreement was made and in which the knowledge of it was not conveyed even to Cabinet Ministers of their own Government.
If we had a little more patriotism in this country, there would be no need for talk of a credit squeeze or anything else. I have looked at the shops in Cork city and in my own rural towns and in every case Irish goods are prominently displayed in the windows of the drapery shops there. But you come to Dublin and walk the principal streets, as I did yesterday and the evening before, and you will see no Irish goods displayed in their shop windows.
Mr. Corry: That was the same gentleman who closed down Lyons and Company in Cork and put 300 men out of employment last week—the fellow who was kicked out of the Seanad. There are 200 or 300 workers walking the streets of Cork because he decided to leave Dublin and come down to Cork to carry on his iniquities there. Let us have a little more patriotism in that line and let us at least help out our own workers by buying goods of Irish workmanship. I suggested to the Minister for Industry and Commerce previously that, if the  shopkeepers of this city will not stock Irish goods in their windows, they should be made display in their windows a sign saying “No Irish goods stocked here.” Then let the public deal with them. There is too much of this going on.
My fault with the steps taken by the Government are that they are not severe enough. Some nine months ago when speaking in this House, I dealt with the question of certain goods that had been imported here. We are an agricultural community. The bulk of our exports is agricultural produce— good beef, good mutton, eggs, butter and everything else. To a large extent this is what you might call a deal in kind, where we send something over to Britain and get something back in return. I said then, and I repeat now, that the farmers who produce the goods for export so that imports can be brought in are feeling sore, and very sore, and if any Deputy over there goes to the trouble of reading——
Mr. Corry: I have here the imports into this country during the last 12 months and, amongst them, is an item of £1 million worth of musical instruments. I have a very definite objection to a good hundredweight of butter, a good bullock, or a good sheep going  over to Britain to pay for the tambourines and the pop singers' flutes.
Mr. Sweetman: May I raise a point of order? This is intended to be a serious debate on a serious subject. I do not think it does the House or the country any good to have this sort of pseudo-comical speech.
Mr. Corry: I have here an official document with particulars of the imports of certain items into this country. On behalf of the taxpayers and of the workers, I ask that these be prohibited, not tariffed. There is a limit to everything. Can anybody justify the present barter system under which we send over good food to Britain and get back tambourines?
Mr. Corry: This document gives the imports from January to December, 1964. There is an item here of £3½ million for imported periodicals, novels and printed tickets. I have always believed we had enough printers in this country to produce what we require. I cannot understand our having Britain print tickets for us—perhaps they are soup tickets. These are the things to which I object and that is why I say I am not satisfied with the action taken by the Government. The time has come when we must have prohibition of certain luxury goods and articles coming into this country. The figures I have read out here I read out here some six months ago.
Mr. Corry: I suggest the Department of Finance should go through this book and pick out the articles that do the country harm instead of good, and prohibit their import. I could go on reading this book until it is time for the Taoiseach to conclude tonight, but I do not want to delay the House. I suggest Deputies take the trouble to examine this book for themselves. It is disgraceful that at a time when the agricultural community are trying to increase production in order to have more for export, we should have these articles being imported. I object to exporting good food in order to import tambourines. It is time this sort of thing stopped.
The agricultural community have done their part. Only yesterday I concluded an agreement with the General Manager of Comhlucht Siúicre Éireann under which our little processing factory in Midleton will increase its acreage of produce three times, from 600 acres to 1,850 in the coming year. The acreage producing vegetables for processed foods will be increased by 100 per cent. That is the proper way to meet a situation such as the situation we find ourselves in now. But I strenuously object to exporting good food so that trash and tripe costing millions of pounds can be imported.
Mr. Sweetman: The Minister for Industry and Commerce and I agree on one thing, and that is that this is a serious debate and the type of pseudocomic tambourine to which we have unfortunately had to listen does not do the Dáil, or the country, or the Party to which the Deputy belongs, any good.
Mr. Sweetman: It would be very easy for me to take this motion, and  the documents behind it, introduced by the Taoiseach yesterday and use the opportunity solely for the purpose of ramming down the neck of the Taoiseach and the Fianna Fáil Party the untrue attacks that were made some nine years ago, attacks in which I was the target. I do not propose to regale myself with that pleasure. I am perfectly satisfied that in due process of time, history will write the correct tale and the judgement then, in history, on the actions of the Government of which I had the honour to be a member, will be that we took the right steps at the right time, and that the mistake that was made then was perhaps that at Christmas of that year we did not lighten up just before the general election and the mistake that was made by the Fianna Fáil Government who succeeded us was that they, deliberately, for their own ends, accentuated the trough of depression and deliberately, for their own ends, made certain that we would get into the depression from which the country suffered until 1958.
Any observer impartial in any respect who goes back and looks at what happened then will see without question that, apart from the catastrophic breach in confidence caused by the Fianna Fáil Party tactics in the general election of 1957, the salient point is that the Government of that day retained the levies and in certain cases built them permanently into our whole customs structure. It would be easy for me to go back to that time to contrast the speeches that were made by the Taoiseach with the speech he made in July last and with the speech of the present Minister for Industry and Commerce made in July last, which I did not have the opportunity of reading then but which I have since read.
In 1956, the whole cry of Fianna Fáil was: “Too little and too late”, that the Government of that day had not imposed a serious enough deterrent. When speaking here at the close of the debate last July, the Taoiseach, at column 1549, expressed the view that the Coalition Government of the day did too much too soon.
 I am not interested in endeavouring to see what was said then and what is said now for the purpose of justifying the action that was taken at that time. I am interested solely in examining what transpired for the purpose of seeing how it can be applied to the present situation. As I have said already, I am quite satisfied that the verdict of history will be that the action taken then by the Government of which I had the honour to be a member was the right action at the right time and in the right degree and that the verdict will be favourable. I am equally certain that the verdict on the Fianna Fáil Party of that day will be as unfavourable in history as the verdict that will be placed by history on their leader of that time who is interested only in his own personal aggrandisement and the aggrandisement of the Party, instead of considering the national interest, even right down to the time when he denied his own shadow Minister, Deputy MacEntee, who came to see me in reference to the arrangements for the debate of that date.
We face a position today in which the Government have taken certain steps. The Government announced that they would take certain steps in July. With the remarks of the Taoiseach on that occasion I shall deal later but we are discussing today primarily the levies, the 125 new taxes, the Government introduced, not in a Budget speech—because they were afraid to come in here and introduce these levies in a Budget speech, as we introduced them to the House. They had to do it by mere Government Information Bureau statement outside in respect of which they could not be criticised or challenged. They have brought in these 125 levies and they have done it because they say the situation requires them to do something.
I want to brand 1965, not as the Taoiseach said last July when he was referring to another observation, as the Zulu War or the night of the big wind, but as the year that will go down in history as the year of the great deceit, the year in which Fianna Fáil fraudulently deceived the people in the  spring, before the general election, and the year in which, since the general election, they have been so incredibly incompetent as a Government that anyone in business would be ashamed of his life if he had carried on in the way in which they have carried on, never knowing from day to day what they wanted to do, shilly-shallying, wobbling, announcing one thing and changing it the next minute, as I shall show in a few minutes, and, above all, hiding from the people the true state of the economy as they knew it, or should have known it if they were competent to know their job.
Yesterday, the Taoiseach said in the House that the Government had no knowledge of any circumstance other than knowledge that was available to the ordinary people. I want to brand that as an untruth, saying so with all the knowledge that was available to me as Minister for Finance when I was over there, and to say categorically that any Minister has available to him, and the Taoiseach more than any has available to him, advance information in relation to statistical trends the ordinary public has not got. I want to go further and say that the members of the Government have also available to them skilled economists to portray, to decipher, to gauge and to determine the strength of the economic statistics available to the Government and not available to the ordinary person.
I shall give certain specific factors and I challenge the Minister for Industry and Commerce who, I presume will speak in this debate, and I challenge the Taoiseach when he is concluding the debate, to deny that these specific factors were known to the members of the Government and were not known to the public and that they were either fraudulently concealed from the public so that the Fianna Fáil Party might get a verdict in the general election or else that the Government did not know and are too incompetent to care what was happening in relation to the national economy.
I think I am right in saying that the general election took place on 7th April. Last March, a foreign body, the  Organisation for Economic Co-operation and Development, printed from Paris an economic survey on Ireland. The Minister for Industry and Commerce may not know but his colleague, the Minister for Finance, will tell him that before that survey is printed a draft of the survey is discussed with the officials of the Department of Finance and that the officials of the Department of Finance were aware of the facts that would be commented on in the publication of March. I am certain that those officials brought their knowledge to the notice of the Minister at that time.
On page 23 of that report, it is made clear that the inflow of capital in 1965 was bound not to be as great as it was in 1964 and yet the Fianna Fáil Government and the Fianna Fáil Party went out to the country saying that they would spend more and more capital in 1965, though they had that special knowledge that the ordinary people of the country had not got.
We were saying at that time, without the knowledge that was in that report, then secret and not available to the ordinary people, that it was certain that there had been some short-term transfer of funds from Britain and elsewhere to here that was masking the position in relation to our current deficit in the balance of payments. We said it again and again but the proof of it had not come to our notice and, had not become available to the public but it was available, not perhaps to Deputy Hillery because he was considering Education at the time, not Industry and Commerce, but to the Government as a whole and, above all, it was available to the Taoiseach and the Minister for Finance.
The second item of which the Taoiseach knew and of which he would not tell the country was the drop in the external assets of the banking  system. Before I give the exact figures in respect of that drop, let me draw the attention of the House to a revealing question I asked here in June last. It was always considered in earlier years that the important ratio of our external assets was the ratio of net external assets to imports, so as to ensure that we would, come what may, have sufficient external assets to be able to carry our imports for a substantial time. In the year ending 30th April, 1956, our net external assets were 91 per cent of our annual import bill. In the year ending 30th April, 1957 they were 106 per cent and year after year since that they have dropped, so that, in the year to 30th April last, the percentage of 91 per cent has dropped to 58.2 per cent. The figures in relation to that were not completely known to everyone until I asked for them in a question in the House, when they were made known and if the members of the Government had wanted to take the trouble to inquire and did not want to deceive the public, they could have done so.
Let us look at the figures for the net external assets which, with the exception of June and December, are made up to mid-month in every month and are on the table of the Minister for Finance, as well as I can remember, on the last day of that month or the first day of the succeeding month. I am certain the practice in existence when I was Minister for Finance of those figures being made available to the Minister for Finance has not been discontinued or, if it has been discontinued, why? Was the Minister for Finance not interested? But as far as I know, those figures would be there on the last day of every month.
What was the position in January 1965 or, mid-January? In 15 days approximately, 15 or 16 days, according as how the week ended, there had been a drop of £5 million in our external assets, double the situation of the preceding year. In mid-February there had been a drop of £5,700,000 in these external assets, in March a further drop of £3,100,000, compared in the previous year with a rise of £7 million in March. These  figures were available to the Taoiseach, these figures were available to the Minister for Finance, showing a serious trend, a trend that had to be considered. Yet the Minister and the Taoiseach decided they would not disclose them to the public but they would go ahead lest it might interfere with their chances in the general election.
Then we come to the next point mentioned by the Taoiseach in July, which is hire purchase. The increase —and the Minister for Industry and Commerce will be able to verify this from his own Department—in the March to December figure was virtually double what it had been in the March to December period of the previous year. Again, there was no mur-mur about that, or about the import excess trade figures for any month which are available by the middle of the following month. I agree, of course, everybody knows the trade figures when they are published but only the Government know, only the Government have an assessment, until the full quarterly returns come in, as to how that trade figure has been made up. It is only the Government who can tell whether it is a consumption increase, whether it is an increase of producers capital goods or whether it is an increase of materials for further production. They know because they are given an assessment. At least, I was given an assessment and I am certain the Minister for Finance of the day is given an assessment in the same way. It is not the flat knowledge of an import excess that matters but the knowledge of how that import excess can be segregated, is distributed and can, therefore, be construed.
In February of this year the import excess was £15 million against £8,700,000 in February of 1964. In March it was £18 million against £12 million the March before. In April it was £20 million against £14 million the April before and, in May, it was £17,850,000 against £9,730,000 the May before. It was double—as near as makes no difference—but was there any effort by anybody, knowing this trend was coming along, to say a word to the public before the 7th April?  The public were deceived and the Government kept concealed from the public the information it was the public's right to know.
Worse than that, once the election had come and gone, the Government, by their handling of the matter, showed themselves utterly incompetent to deal with the situation. It was bound to come. We have been saying this for some time, that it was bound to come, and the boys over there have been jeering at us. How could it be otherwise?
We had a deficit in our balance of payments in 1962 of £13,500,000 and in 1963 of £22 million. The deficit in 1964 was £31 million. How did we meet them? We met them by borrowing from other people who are bringing their money in—capital inflow. Was it not bound to happen that that would one day stop? Was it not bound to happen, as OECD agreed, that the amount of capital which would come in in anticipation of the formation of a Labour Government in Britain would go back once the British Labour Party had given its indication of the pattern of Labour taxation in England? We built up by depending on other people's capital to finance Fianna Fáil's current deficits and anyone could see that was not likely to be an unending situation. It is a glorious thing to go on drawing from the bank as long as the bank manager allows you to go on drawing, never asks you to pay back and never asks you not to go further. That was what Fianna Fáil were doing in relation to our general account and now nemesis has overtaken them and they are a bit surprised.
If we look at page 4 of the June trade statistics we will see there that one of the things happening was that we were getting in a substantially increased amount of consumption goods in the first six months of this year, a preview of which must have been available, by way of assessment, to the Government, which should have acted as a warning light: £3,500,000 in those six months alone purely on consumption goods. There were also increased many of those items such as that we heard today in relation to  Ballymun that could have been mentioned here but nobody was bothering to do so. Had not “Buy Irish” meant “Buy Irish” for everyone other than the members of the Government, as was proved by the Minister for Local Government today?
The fact remains and cannot be gainsaid that in relation to every economic index of which the Government had knowledge and on which the Government should have acted, it was certain that this was going to come at the time of the general election. I charge the Taoiseach with deliberately concealing from the Irish people the true facts in relation to our economic position. I charge him with having sent out his boys, his Ministers, for the purpose of painting a picture which he must have known in his heart and soul was not a true picture, the picture that we were to have more and more and to pay less and less for it.
Let us look, for example, at that expert in extravaganza, the Minister for Agriculture. He said. “We intend to continue our policy of economic planning for the future, to expand the incomes already achieved until we reach a level of prosperity equal to that of the most advanced country in Europe.” How? With levies, with a credit squeeze, with restricted hire purchase? I have plenty of quotations from the Golden Boy, as somebody calls him. In the final rally in Dublin, he said: “Our simple purpose is to do everything better in the next five years.” How? Better with levies, better with hire purchase restrictions, better with a credit squeeze?
He has done better in one respect. He has done better in respect of the manner in which imports of cereals are coming into the country. I concede that perhaps because of the harvest weather, wheat imports will have to be higher. They are going to be 5,100,000 cwts. this year. But barley was a good crop and yet, apparently, we are to import 1,625,000 cwts. this year, although we have never imported that amount since 1950. And then we are told: “Buy Irish, grow Irish.” This is the Golden  Boy. In regard to maize, we find it is not possible to give particulars of maize alone because there is maize, milo maize or seed wheat. Even now we are in a situation that we are to import 1,700,000 tons in the remainder of this year, although we have already imported 1,500,000 tons. Again, with one exception, this is the greatest amount imported in any single year of the past ten years. And we are told to grow more Irish. In that respect, at any rate, he is planning better than he did last year.
It is not, perhaps, fair to pick on him. He was just carrying out the instructions of the Taoiseach, the instructions of the Government who told him that there was nothing to worry about, and perhaps they gave him an order that this disturbing economic phenomenon was not to be circulated to Fianna Fáil speakers in case some whisper of it might get to the people. Yesterday the Taoiseach referred to these things and to speeches he made in January and February last warning the people that there were dangers. He made speeches in January and February but the moment he decided to declare the general election, he stopped those speeches. It is now quite certain that the reason the Taoiseach decided, when Deputy Mrs. Desmond won mid-Cork, to declare a general election was that he knew the pattern of these economic trends, knew what was going to happen and decided that he had better get his election over before the cat was out of the bag.
There was no other reason for it, and it must now be obvious, even to the Deputy from mid-Cork who was then the Fianna Fáil candidate in the by-election. I know his name. I was one of the people he came to when he wanted to join Fine Gael. But it was not as a member of Fine Gael he wanted to join. It was like the recruit going to join the Guards who, when asked why he wanted to join, said it was not the Guards he wanted to join, that it was the superintendents he wanted to join. And the portfolio of Finance was the one in which he was interested.
 Now let us come from the general election to the present time. The general election was on 7th April, Again I do not know the reason—it may have been that knowing that they had deceived the people in the general election, the Government in office were afraid to let the cat out of the bag any sooner—the Budget came in on 11th May and what did we discover yesterday? We discovered something about which there was not a word in the Budget. This was kept secret until yesterday when the Minister for Finance acknowledged that the day before the Budget was introduced, the banks were told to clamp down on credit and reserve it for certain purposes.
Is there a word in the Budget about that? If the Minister for Industry and Commerce has not a copy of the Budget speech before him when he rises to speak on this motion, I will lend him mine. There is not a word of that in the Budget speech. Either the right hand did not know what the left hand was doing or else it was not disclosed for the reason that if it was disclosed, then it would look as if they had failed to tell the people the true situation during the general election. Nothwithstanding the fact that they had before them the OECD Report, they put out a plethora of documents, including a statement on the capital programme. I do not object to a plethora of documents but when they push out all these figures in the course of one week, it is impossible for anyone to assimilate them in the days immediately before the Budget.
One of the things mentioned in the statement on the capital Budget was that there was £7,700,000 which was classified as capital services and which should properly be met out of current revenue or out of borrowing. With all the trends there—trends the Government now have to acknowledge—what did they do? They deliberately poured petrol on the flames by injecting that £4 million additionally into the economy to make for further inflation.
They also went on to say they had made certain changes in relation to some items. Did they give any indication  that they were making those changes because of any dangerous trend in the economy? Oh, no. They said they were doing it because time had made closer examination possible. I wonder was that true? Looking back, I wonder was it not the beginning of the cut in the capital programme they were trying to hide, by pretending it was merely a later examination, a later estimate? Or was it that they were so incompetent that they did not know what they were talking about, just as in relation to capital expenditure by the Government the Taoiseach has shown himself utterly incompetent within the course of a few months?
When replying to the debate at the end of the last session, the Taoiseach made it very clear—I shall turn up the quotation in a second—that the Government were going to ensure that the capital programme was not in excess of the programme as outlined in the Second Programme for Economic Expansion. As Deputies will see if they look at page 270 of the larger blue volume, the Second Programme for Economic Expansion provided £95,570,000 for public capital programme. The Budget estimate published on 11th May was £103,720,000, an increase of £8,150,000. On 11th May, the Minister for Finance told us that the appropriate figure for this year was not £95,570,000 but £103,720,000 and on 13th July, as reported at column 1094 of the Official Report, the Taoiseach said:
To summarise therefore the immediate measures the Government consider applicable to this economic situation, they are: first, the reorganisation of the Government's capital programme for this year to keep the total outlay on capital account within the forecast in the Second Economic Development Programme.
“To keep the total outlay on capital account within the forecast” in the Blue Book. We now come to the White Paper published in October—August, September, October, three months afterwards—and what do we find? A White Paper published with an entirely different figure again. I thought perhaps it was “laid by the Minister for  Finance” and that the Minister was ignoring what the Taoiseach said, but it was “laid by the Government”. Instead of being within the amount laid down to make for expansion within the Second Programme, it was to be £5 million in excess.
When will the Government make up their minds as to what they are going to do, or is it that they do not know, that they are incompetent, that they are afraid of taking the appropriate steps? Why did the Taoiseach come in here in July before the House broke up for the recess, and make the solemn assertion that he, as head of the Government, was going to see that the capital programme was kept within that figure? Then, before the House resumed we had another White Paper denying the Taoiseach's words. Had they changed their minds again, or was the Taoiseach chancing his arm when he spoke here in July, or had they not got down to the question at all?
During the course of the general election, we heard statements by the Minister for Local Government in particular, that if only Fianna Fáil were returned to office, there would be a rising bounding building programme of a kind never seen before. I invite the attention of Deputies to paragraph 23, page 9, of the White Paper on Government Capital Expenditure which makes a liar of the Minister for Local Government, because it says that even if balance of payments difficulties had not arisen, the recent rate of expansion could not have been maintained. It seems very hard to see where they are going when they do not know from one day to another themselves.
We now have 125 new taxes imposed by—is it the Minister for Industry and Commerce or the Government?—Government order, I think. Included in that is a licensing provision. I think the effect of that licensing provision will be that people will tend to look for raw materials outside the country, even though those raw materials may be available within the country. I have in front of me one comment by a business man who knows what he is talking about. He  said business had been anticipating that the levies would be introduced and accordingly would be pre-stocking to beat those levies and that, in addition, designers and buyers tend to order from their traditional sources of supply. That is natural, and the very fact that there is this licensing provision will mean that they will more and more go to that traditional source rather than see for themselves whether it is not possible to improvise in relation to what we need.
I want to know from the Minister for Industry and Commerce what he proposes to do to ensure that we get out of this economic difficulty, crisis, phase, depression, whatever word one likes to use. What does he propose to do in relation to industry? We know that so far as the Minister for Finance is concerned on the day he brought in his Budget, there was not one single incentive of any sort, kind or description introduced for the purpose of industry, for the purpose of agriculture, for the purpose of saving. Then suddenly about a month afterwards, when we came to the Committee Stage of the Finance Bill, he got a brainwave and decided that it was terrible that there was not a single incentive and that he had better put one in on that Stage. He decided to increase the incentive I gave for small savings in relation to deposit interest. After nine years, he just increased one figure. That is all the Government were able to think of. They are barren of ideas. They show that they do not really know where they are going by changing from day to day or else are deliberately deceiving the people. I will leave it to them to explain which it is.
We have to ensure that there is greater agricultural production at home; we have to ensure that those imports to which I have referred are not going to be continued. We have to ensure that we get for our exports proper markets and proper terms. In relation to the free trade area, let me say that I want to be satisfied in any discussions or in any agreement that is made on the free trade area that we get worthwhile concessions for agriculture. Paper concessions are not  worth a curse. A reduction, for example, in the period for which our cattle have to be in England before they qualify for the British subsidy is not worth anything. Unless we can get clear, full and unrestricted access for cattle, sheep, lambs, butter, pigs, pork and bacon it is not going to be worthwhile giving up what we have to give up on the other front.
It is because rumour has it that the Government have failed in that respect that we take the critical attitude we do take in relation to that failure. It has got to be done if we are to succeed and the Minister for Industry and Commerce has to do some new thinking in relation to industry. He must take other steps, other leaves out of our book, as the Government have done in relation to certain aspects of our incomes policy. Speaking as far back as February 1964 in this House, I made it clear that I felt that one of the things necessary was an incomes policy to ensure that we would be able to get that orderly marketing, that orderly prices regulation, that orderly paying out of the increases in national production that all of us would desire. Even as late as the general election six months ago, the Taoiseach said he was against it. I welcome the conversion, welcome it wholeheartedly. The only thing about that is that in other respects where Fianna Fáil have taken over Fine Gael policy they were usually too incompetent to carry it out properly.
I want to make sure, too, that in these difficulties the truth is told to the people. What is the use in the Minister for Industry and Commerce or the Minister for Finance saying outside that these levies will be on for a period of six months, to the end of March, 1966, when the Minister for Finance comes in here, as he did yesterday, and says solemnly that he does not think we are going to get out of the difficulties before March, 1967? How can we reconcile the two things? Is this another indication of the deceit of the Government in their desire to fool the people?
I do not think that even Fianna Fáil  could have the local elections before March, 1966 and get away with it. Certainly from what I have heard people are beginning to see through their deceit. This was bound to come because, for one reason, three consecutive years of Budget deficits by Fianna Fáil, over £4 million in 1963, £2,219,000 in 1964 and £4,069,000, in 1965, or £11 million of accumulated Budget deficits in three years, have added fuel to the flames and more fuel was added in the seven months of this financial year.
In the first seven months of this year, up to 31st October, expenditure rose by £15 million over last year and receipts rose by £12 million. We have gone £3 million further in the red in the first seven months as a result of Government action, of Government incompetence at a time when they are pretending they are trying to rectify the situation. Anyone who wants to see these figures can see them in Iris Oifigiúil for 2nd October —receipts up by £12 million and expenditure by £15 million. At the same time, the Government have injected £9½ million extra into the economy in below-the-line issues in that period.
There is a striking indication in another place of the manner in which the Government are causing difficulties for the commercial community, because as we can see on page 13 of the July Central Bank Bulletin, in mid-July, total bills, loans and advances at £329.9 million were 14.5 per cent above the level of 12 months earlier. Borrowing by the Government and local authorities showed an increase of 36.1 per cent over mid-July of 1964. Borrowing by the Government was up by one-third on the previous year. How could there be enough money for the private sector when the Government were taking it all? How could the ordinary farmer looking for credit, the ordinary businessman, the person trying to buy his house, hope to get money when the Government were, in plain, if rather vulgar language, hogging it all? That is what it amounts to.
We have heard from the Taoiseach  some comment on the free trade proposals. I want to be perfectly clear, as the Minister for Industry and Commerce has come back again, and to say that we want to be sure that these proposals will give to us unlimited duty-free access and unlimited access as to quantity without quota into the British market for all our agricultural products. Without that, we will consider the Government have failed in their task in negotiating a proper trade agreement. As regards the interim, let the Government act as a Government. Let them make up their minds about what should be done and keep to it and not have the shilly-shallying or the wobbling or the deceit or the change of direction there was between July and October in relation to the Government capital programme.
Let the Government stand up to their responsibilities even—and I can say this—if in doing so it makes one temporarily unpopular. The permanent record of history is worth far more. This country is sound and can be saved in spite of Fianna Fáil. Our economic problems can be solved and we can do it provided there is a proper lead. A Government can be certain that they will not get from this side of the House, the suggestions, the under-currents, the sabotage with which they were so glib when they were over here. I want to make it quite clear, as did Deputy Cosgrave, Leader of my Party, that we believe without question that these problems can be solved and we refuse to see any question of devaluation arising. There will be no suggestion by us as there was in 1956 by members of Fianna Fáil that devaluation was on the way. Devaluation is not on the way and must be rejected and if the Government are not capable of rejecting it, they should get out and make way for a Government who are.
Minister for Industry and Commerce (Dr. Hillery): In case Deputy Sweetman's strong assertion about devaluation should again raise the hare, I should say that the Taoiseach has made it clear that there is no question  whatever of devaluation of the Irish currency.
Dr. Hillery: We have listened to vague, swollen generalities and then to pious assumption of responsibility by people who would not like to rock the boat and then to the outright pillorying of members of the Government by Deputy Sweetman. In an earlier debate we heard Deputy Dillon say that we kept the knowledge from the people but we hoped to be beaten in the election. Now we hear Deputy Sweetman say that we kept the knowledge from the people because we hoped to win the election——
Dr. Hillery: If I were to accept Deputy Sweetman's challenge and the others that were flung out, I should need to be like Cuchulainn catching all the darts in one shield. I do not feel I am up to Cuchulainn's standards and in any case I have some points to make, not alone for the House, but for the public also. We have heard the Opposition here speaking with hind-sight and many blind spots and I was tempted last night when Deputy M.J. O'Higgins was taunting us with the call “Let Lemass lead” to say: “Surely politics is a matter of alternatives, particularly at election time, and if you want to argue on that basis what was your alternative and what did you do with the alternatives afterwards”? I do not want to follow that line. I want to take up, as we intended in July, a line of seeking public co-operation and of minimum interference by the Government in the normal  domestic processes while at the same time taking enough action to protect the developing and expanding economy. I do not see any sign of the disasters Deputy Sweetman seems to see.
Dr. Hillery: The amendments to the Taoiseach's motion seem not to be at issue with the measures we have taken but rather tend to say that we have taken these measures too late. There is some element in the speeches of “too little” also.
Dr. Hillery: My answer to that would be the same answer as that I gave in July which Deputy Sweetman missed but read afterwards. I believe that in their period of office the Opposition, in dealing with perhaps a similar situation, reacted too quickly, almost abruptly, and too much and, in justifying the naturally unwelcome aspects of their policy, created an atmosphere the consequences of which were worse, I think, than the effects of the economic situation they set out to cure.
Earlier this year when we saw the development of unwelcome trends and at the beginning of the year, before the election, the Taoiseach gave it as his view of the economic situation to the people in public that this was going to be a difficult year. There is some implication in what Deputy Sweetman says that if the people thought they were facing trouble they would not have elected this Government but would have opted for another. I cannot see any sense in that: I do not think the Deputy really believes it himself, but when we saw the trends developing we set out to let the public know that if these unwelcome trends went unchanged—increasing imports, slowing of exports, spiralling of incomes and prices, and industrial  unrest, a serious situation could develop.
That serious situation could still develop but as a first step we decided that what was to be done was to alert the nation to the possibility of this occurring and to take certain measures, some very moderate which could be described as mild, on the part of the Government. These measures were in relation to hire purchase, taking powers more actively to control prices, cutting down Government expenditure and a real attempt to put whatever capital was available into productive use and reduce the spending of useful capital on unnecessary consumer material. These measures were, in a way, restrictive and much of the debate has centred on this type of measure or curb. My thinking at that time was, and still is, how positively to bring our productivity up to the level at which it could support the developments which are and have been going on in our economy. For this we need strong voluntary co-operation from the general public and from organised sectors as well as certain Government incentives.
I would like to repeat I am still convinced that the Opposition, who are now saying we are acting too late, in their time abruptly over-acted and created a chain reaction of damaging consequences. I am confident—and I think we are all agreed— that, with a fundamentally sound economy, what we need is a gradual adjustment back to the trends we can support. I am sure most people are aware that other nations with developing and developed economies are subject from time to time to the various ills of such economies and have to take such action as they think fit to protect themselves. There is no running away from responsibility, nor would I at any time claim from the Irish people that the only right we have to be in Government is that everything would go well. We are fully aware of our responsibilities. We stand to be judged not alone on how we manage our affairs in good times but how we manage them when, for various  reasons, things become a bit more difficult.
The co-operation of the general public of which I spoke was mainly aimed at restraint in spending, and perhaps a diversion of spending as much as possible away from imported consumer goods. The Buy Irish campaign, which has recently become active again, is calculated to divert much of the consumer spending from imported goods to goods the manufacture of which gives employment here at home. If, by putting on the levies or taking other actions, we seem to be disappointed at the result of our call for voluntary co-operation, that is not to say we are turning away from seeking the public co-operation, as we did in July, and depending entirely on our own measures. Now, more than ever, we hope that the interest of the general public in our economic health will bring the co-operation that is so necessary.
I would not wish, by having this debate or by the imposition of recent measures, to set the stage for a situation where the individual and the State seem to be in opposition and where various individuals would try to escape with whatever they could get away with. We are a community, all dependent one upon the other. In recent years, as economic life has become more complex, the different sectors of the community have become more dependent on each other. The State is the instrument of the nation in seeking to combine all forces for the common good.
Having said that, I should like to return to the Buy Irish campaign. I am happy to see that the formers of public opinion see, as I see, the imposition of the levies not as an alternative to the Buy Irish campaign but as a new springboard for greater public response to it. In a question in the House today I was asked about the statement of a prominent man who said that the Buy Irish campaign was contrary to our movements towards competitiveness. I would like to make it clear that this is not a campaign to try to sell the goods of Irish manufacturers who are not endeavouring to be competitive. It is a campaign to promote the sale of Irish goods of equal  value, competitive in price and of as good quality as the foreign article.
Dr. Hillery: There is a consumer complaint service which is widely availed of Several hundred complaints have been handled since its inception. Apart from constituting an outlet for dissatisfaction by the consumer, it is having a salutary effect on keeping the Irish manufacturers alert to the need for maintaining quality and presenting their products in a way which can compete with international standards. It is important in relation to this campaign, and in relation to everything we do, that no short-term measure would militate against us in the long run by reducing the competitiveness of our manufacturers. They must be prepared to go out to seek markets. We depend on them. We must expect them to win markets, and that includes the home market. Many countries more powerful than we are have constant campaigns for the home product, because an exporter needs the sound basis of a home market from which to work. If other stronger countries do this to support their manufacturers, we should do the same in Ireland.
The positive side of our policy in dealing with the economic situation does not change. Much of what is good in good times is a protection in bad times. If I talk a great deal now about exports, it is because there is a more urgent need for us to export and to earn our own money. Nobody owes us a living. It is not a good idea to over-simplify economic matters. However, I see the position myself as a matter of how we earn, how we pay for what we earn and how we spend. I believe the way out of our difficulty is hard work, and perhaps more important than hard work is work to better effect. A call for hard work is never welcome, especially to people who think they are working hard enough already; but work to better effect, through better management, better equipment and better organisation, is within our reach and can raise our productivity. I think  it was Swift, an Irishman, who said that the man who could raise two ears of corn and two blades of grass on the spot where only one grew before——
Dr. Hillery: ——would deserve more from humanity and be doing more for his country than all the generations of politicians. I should like to add to Swift's definition the products of our factories, to bring him up to date, and, having done that, I would say that he has a very good definition of productivity. It is one of the troubles of our time that you find a word which explains something so adequately that it fails to sink in, but we have to get down to realising that, if we are to get more money, we will have to produce more wealth ourselves. For too long too many people have felt that the way to get more money is by charging more for what they are doing. If a commodity or a service costs, say, £1, then the way to make more money, or to earn more money, it to produce more commodities and not to charge £2 for what should cost £1. The way to production is to produce two commodities where one was produced before. Then we shall be on our way. The way of productivity is the way towards economic success and out of economic difficulties. But it is not the way that has attracted most people because it is not the way of least resistance. Up to recently people have found the way of least resistance to be the passing on of the price to the consumer. If we continue to do that, we shall price ourselves very easily out of export markets and, indeed, out of the home market, too. There is very little hope of further industrial expansion based on our small home protected market. We will have to go out and find new markets and stimulate the industrialisation process which has been going on by offering it the prospect of wider markets.
In relation to exports, I should like to say that recent years have seen a  good start made by Irish manufacturers in exporting. If I, from time to time, express dissatisfaction, it is because most of our exports are done by a small number of manufacturers and a big number of manufacturers are still content with what they can do in a sheltered, protected market. These manufacturers must be made to get out of their offices and out of their businesses and go out and find markets abroad. As I say, we saw a good start in recent years. In 1964 the export of industrial manufactured goods had a value of £54 million, that is, about five times the value ten years earlier. In the first seven months of this year, exports of manufactured goods had a value of £32 million, representing an increase of £1.5 million over the corresponding period in 1964. Our industrial exports have continued to rise. What has happened now is that the pace at which they were rising has slowed down. There is a slackening in the momentum of the increase attained in recent years. The main cause of this was, I think, that £50 million worth of our exports were hit by the British temporary surcharge of 15 per cent, imposed in October last year and reduced to ten per cent in April of this year.
Government action, when this levy was imposed, and when this threat to our exports appeared, was a prompt decision to give market development grants to help to meet a proportion of the lossess incurred by our exporters. Government action at that time also involved various measures to assist diversion of exports to other markets. I think it might fairly be said now that prompt Government action at that time helped our manufacturers by enabling them to turn a difficult corner in relation to their exports. Of interest, and a welcome feature that has been referred to already, is the fact that in the first seven months of this year, while exports of manufactured goods to Britain and the Six Counties fell by £1.3 million, a six per cent drop as compared with the same period in 1964, exports of the same type of goods to other countries rose by £2.8 million, an increase of 33? per cent as compared with the first seven months in 1964.
 The Dáil will remember that, to give an added incentive to the export drive in July last, which is regarded as an essential action in relation to curing our economic trends, the Government announced that firms whose total exports for the second half of this year are greater than they were in the corresponding six months of 1964 will qualify for increased market development grants in respect of their exports to Britain. It is hoped that a substantial increase in exports will result from this. I have no estimate as yet as to the probable effect of it, but I should like to announce that we have taken a decision that the increased grants will apply also where exports for the first half of 1966 exceed exports for the first half of 1965. These are the new incentives to our exporters. Once more, I should like to refer to the need for a sound base in the home market for our manufacturers so that they can face export markets with confidence.
I know it is not easy for manufacturers to win new markets, but I also know that it is not impossible. What some manufacturers can do, others can do. Since our economic survival depends on them, I am sure our manufacturers will rise to the task. There are many State encouragements which compare favourably with the aids their competitors from other countries have. I do not know if it is necessary to remind the House that the profits from increased exports are relieved from both income tax and corporation profits tax and that there is a wide variety of services provided by my Department and by Córas Tráchtála to help manufacturers find export markets. They can be helped in financing visits to new markets, in financing design programmes, consultations, participation in trade affairs, and in a big number of other ways.
The funds with which Córas Tráchtála are provided in the form of grants-in-aid from my Department have been increased from £145,000 in 1959-60 to £450,000 in the current financial year. These funds are for the purpose of helping our manufacturers to export. The growing output from our industries, both the newly-established  industries and the old, the various incentives, tax and otherwise, which I have mentioned, the increased investment in advertising and sales promotion abroad, the continued improvement in products and package design are all reasons why we can be optimistic about the future of our exports of manufactured goods.
Earlier I mentioned productivity. While many of the new industries which are being set up are being set up for the export market and are geared to compete on that market, I should like to say that we must not lose sight of the fact that the main contribution to an increase in our exports must come from the old-established firms and that, to be able to compete, these firms will have to increase their efficiency and productivity. The easiest way to judge the increase in productivity is by measurement of the steps taken by firms to replace and improve their equipment. The provision of new and extended premises, new and better machinery and facilities is essential to competition in the export market. As measured by applications for grants and loans—because there are Government grants and loans towards adaptation for the purpose of this stronger competition—more than 500 industrial undertakings have embarked on adaptation programmes, involving capital expenditure of about £50 million. The State contribution towards this in respect of grants and loans approved up to 30th September of this year is about £7½ million.
The overall picture is one of widespread capital investment which I am certain will leave industry in a strong position as far as the economics of production are concerned. It is clear from the information available to me that many firms are regarding adaptation, not as a protective measure but as a way to increase their output and as a springboard for expansion in foreign markets. They take the view, and they are right, that a firm that does not go forward will ultimately decline. Many of these firms are  foreign-controlled and it is encouraging to see that they are demonstrating their confidence in the future of Ireland's economy by investing considerable amounts of money in expansion and modernisation. These firms which are foreign-controlled have set a headline to our own Irish industrialists which they could emulate with advantage.
The degree of participation by firms with external associations varies from industry to industry. In some, such as the chocolate and sugar confectionery, footwear, fertiliser and electrical goods industries, firms with external associations have a dominant position while in others, such as the cotton, linen, wearing apparel, glassware, iron and steel industries, the degree of foreign participation is not significant.
In the course of their normal activity, members of the Industrial Reorganisation Branch of my Department have discussed with firms their future plans and in the case of industries where externally controlled firms hold a dominant position, most of the major companies have indicated their intention of maintaining their production here, no matter what the outcome of free trade negotiations will be and many of them have plans for expansion in circumstances of free trade.
There are indications also that several single-firm industries with external association will continue production here in the event of free trade. It is inevitable that some foreign-dominated or controlled firms would find it in such circumstances more economic to cease production here but it is reasonably certain that the most of the large firms will continue their manufacturing activities here in the event of free trade, in view of the size of the capital investment already made, the availability of labour, tax incentives and the difficulty often experienced of expanding in their own countries. I gather that the subsidiary industries or firms least likely to continue here are of the medium to small size type and do not constitute a significant proportion of the employment or output potential of our industry.
 Adaptation is not, of course, a matter for individual firms taking individual action. The Committee on Industrial Organisation urged that organisations be set up called adaptation councils to sponsor the measures needed on a collective basis by different sectors of industry. These councils are State-aided by a 50 per cent grant of their administrative costs for a limited period. Similar scale grants are available to trade union advisory bodies established to facilitate consultation within the councils and the trade unions. In all, 22 adaptation councils have been established. Some of the 26 sectors of Irish industry examined were satisfied and satisfied my Department that a council would in their case serve no useful purpose.
The position about adaptation councils generally is reasonably satisfactory but their effectiveness has varied somewhat. Some have given striking evidence of what can be achieved by co-operation and others have not up to now made the progress which might have been expected. Those which have not up to now made progress will have to get down to it. Nobody can say from now on that they did not have sufficient warning or that there had been a lack of financial encouragement by the State. I should like to tell these people now that time is running out and that further delay could be fatal to their individual industries.
The imposition of the levies announced by the Minister for Finance may in the minds of some firms constitute a breathing spell or may be used as an excuse for more delay in facing up to their responsibilities to prepare for freer trade and keener competition. This is a foolish attitude and a firm that adopts it will almost certainly find itself in real trouble when these protective duties are removed. The trouble is that these firms are not alone endangering themselves but they are threatening the livelihood of their employees by their dilatory procedures and I would say to them again now to adapt before it is too late. The firms which have been taking effective measures to adapt themselves to free trade are firms which will  survive and will thrive in the context of keener competition, but to them, too, I should say that they cannot afford to slacken in any way. Some firms will not survive in free trade.
We had some discussion here yesterday during Question Time about what would happen. The CIO Report on the probability—as far as it could be calculated—of the outcome of trade in relation to membership of EEC suggested that certain of our industries would not survive and that those would represent, perhaps, an employment figure of 10,000. The estimate of the same group for the new employment possibilities in the same period was 86,000, so this is the position which workers and management should prepare for. This is the position we are preparing for by developing a manpower policy. The first part of our manpower policy, or the first essential of a manpower policy, is to create new employments.
Our industrialisation is going ahead as it was in the past number of years. In the first six months of 1965, 16 new firms and extensions to existing undertakings went into production. The capital investment was not less than £10,000 in each case and the aggregate investment amounted to £6,900,000, with an employment potential rising from an initial 1,300 to 2,900 at full production. At the end of June, 1965, 47 new factories and extensions to existing ones were in course of construction. The capital investment in these new enterprises is expected to amount to £30,700,000 and the employment potential to rise from an initial 3,000 to 5,350. Many of the undertakings and extensions which went into production in the first six months of this year will make a valuable contribution soon to our economy.
A number of proposals for new projects are at present under consideration. I should like to say that the number under consideration is up to the level of any other year. A number of these relate to production for export markets. It is in the context of a continuation of this industrial development and the creation of new industrial employment that we think on our manpower policy. I think it was  Deputy Cosgrave who criticised our decision not to have a Department of Labour. The imminence of freeing of trade and the immediate effects on certain industries—such as the one we discussed yesterday—make it necessary to have our manpower policy in operation as quickly as possible. The quickest way to implement it was to have an agency set up in my Department and there the Parliamentary Secretary is responsible for the development of the various types of legislation and administrative arrangements for implementing a manpower policy.
Dr. Hillery: There are so many activities which really belong to different departments. For instance, Education in the retraining of people, Social Welfare in the placing of them and Industry and Commerce in another way. There are several departments and to attempt to build all your administration in the first instance would only create delays which would be unforgivable in view of the urgency of arrangements to meet the many rapid changes which must come within the next ten or 15 years.
I would say that the development has increased with that which needed to be done and, as further staff is needed, that section of the Department of Industry and Commerce will widen. As further responsibility is taken on by that section, there could be a gradual evolution towards a separate Department of Labour. But the way we are doing it now is the quickest way to meet the needs which we foresee.
Speaking from memory, I had a question in relation to the car assembly industry yesterday and somebody across  the way shouted that 20,000 people will be put out of employment. I do not know how you handle this type of shout. There are 3,600 wage earners in the car assembly industry and about 700 on the administration side—say 4,300 people in all. Some of the firms assembling are quite certain they will survive any changes which might arise out of a free trade agreement. For my part, those who will not survive I would urge to turn their factories to other uses now and I will give them any help and any facilities in respect of their present mode of living which would encourage this. I do not think there is any need for the workers to feel insecure in this industry because the projection is that new employment positions will be available. We will have a training body, training courses, retraining courses and redundancy schemes in operation so that workers will easily transfer from one employment to another in the event of their present employment being unable to survive in competition.
Dr. Hillery: I was going to talk about prices. It was our policy that in  normal circumstances prices are best controlled by the free movement of commodities and we always regarded as undesirable any intervention except in very exceptional circumstances. Indeed we did not provide for such intervention until last July when we thought an economic situation might develop which would warrant intervention in this field of prices.
I would like to do a small analysis of prices, if not for the benefit of the House, at least to clear our heads as to the way the price of an article goes. I have not got any figures for our own country but I have a document from which I can make an estimate of the component parts of the prices of commodities and services. This document is an English one and in that country prices fall into three parts: money incomes, 74 per cent; imports, 16 per cent; and taxation on expenditure, ten per cent. We probably have to import more of our raw materials but if you allow ten per cent off money incomes and on to imports, you could say that 60 to 65 per cent of the cost of commodities would relate to money incomes, wages, salaries, profits, and fringe benefits, 25 to 30 per cent would be imports and ten per cent would be taxation.
If the money income percentage of prices goes up, it being the biggest component part, it will put up the price proportionately more than a percentage increase of import costs or taxation. The line of least resistance is one of the laws of human nature and up to now there has been a tendency to follow the line of least resistance when costs go up. The line of least resistance was to pass on the costs of new money incomes, fringe benefits, wages and salaries to the consumer. The consumer, finding prices dearer, in his own turn sought increased income and so whatever services and commodities were involved on his part were also increased in price. A spiral resulted. It is possible that if an article contained a sum of £10 in the income part of its components and the people making it want to get more out of it, they can do so by producing two articles. Up to now they have been doing it by charging  twice the price for the one article. It is possible to improve our methods of work and our equipment so that we can have better output. Passing the increase on to the consumer is not the way to do it. That is the basis of our decision to attempt to control prices.
As well as that, there is also the competitiveness that arises if the money income is increased. Other sections of the community immediately have an expectation of an increase in their own incomes. When the Government made the order on 7th October considering that the economic situation required it, giving me certain powers for the control of prices, I set about making a Ministerial order and publishing a notice on 27th October requiring three months' advance notice by manufacturers wishing to increase their prices as well as importers and wholesalers who wish to increase their margins. These goods covered a wide range and the intention was that as far as these goods are concerned, only justifiable increases will be allowed to be passed on to the consumer.
When the levies were announced, an interpretation of them was made by the people in the trade that their margins could not be increased and, to make the matter clear, I announced that the cost of the levy would be passed on but the people passing it on such as wholesalers and retailers should not take any margin increase for themselves. I could see no justification for not passing them on because the purpose of the levy is to make the foreign-finished article more expensive here. I could see no justification for holding down the prices of foreign-finished articles. Nor could I see anybody basing a claim for an increase in salary or wages on the increased costs of non-essential foreign-finished goods.
I told Deputy O'Higgins yesterday that I had about 30 applications since the publication of that notice from various manufacturers and importers, covering a range of goods which would affect many of us in our ordinary lives. Every one of these has been held up until it is investigated. I had a great deal of departmental investigation carried out before that and applications  for price increases have been refused in almost all cases. Price advisory bodies have been set up to inquire into the cost of meat and potatoes respectively and they are to report on 30th November and at the moment I am about to set up a price advisory body to hold a public inquiry into fertiliser prices.
Mr. Cosgrave: While it is understood that the trader can pass on the levy, is it the case that he cannot take an extra margin? Does it follow that if he is liable for increased turnover tax on the increased price, he is entitled to offset that increase by increasing the price?
Dr. Hillery: I will have that point cleared up. I should like to say in relation to prices that I will not hesitate to use what powers I have, and make full use of those powers, to attain price stability. Too much is at stake for us not to go at this task with every weapon we have. It is vital to our situation at present that we have price stability. I should also like to say that I would hope—and I think we could expect—to have the full co-operation of every responsible citizen in this matter.
I am sure the House would like to have information about the effect of the hire purchase curbs, the restrictions which we put on in July, but there is no real evidence yet of their effect. Other factors, particularly the request to have capital used for productive purposes, are having an effect in this market, and it is not as yet, at any rate, possible to say what effect the hire purchase restrictions we put on are having.
I set out to deal with what actions the Government have taken to deal with our economic situation, and I hope I have succeeded in taking people's minds away somewhat from solely restrictive actions, because I am very convinced that if we are to see our way through these difficulties and build on them in sounder times, it will be through work, through productivity,  and through the promotion of exports. While the curbs may be necessary to reduce unnecessary spending on imports and divert capital to productive activities, they are only half the picture.
Again, when the Opposition say we acted too late, my answer is that when faced with a similar or a corresponding situation they overacted and acted too suddenly, and in justifying themselves they created an atmosphere, the consequences of which outlasted the difficulties they set out to cure.
Dr. Hillery: The atmosphere was well created before the election in which you blamed us for creating it. I should like to refer back to the variety of voices with which Fine Gael speak, the vague generalities, the pious responsibility, the pillorying of Ministers. They spoke with many voices, but I think the public have a right to expect at election times, and other times, that they should produce an alternative. It is not enough to say we did not do something in time. They should produce some alternative which would appear more attractive and more effective than what we are doing.
Mr. Cluskey: Yesterday in his speech to the House the Taoiseach said that the amendments put down by the Fine Gael Party and the Labour Party were purely politics, plain politics, and the Minister for Industry and Commerce has said more or less the same thing here this evening. We in the Labour Party make no apology for putting down the following amendment:
“but considers that such emergency economic measures were rendered necessary mainly by the Government's previous inadequacies and failures in economic policy, particularly in the field of price control.”
We think the criticism included in that amendment is very much justified.  We say so, and we can substantiate it by looking back not as far as 1956—a year which has been bandied about for the past two days—but over the past two years. Let us look back at the National Wage Agreement which was negotiated—and I emphasise the word “negotiated”—and not given out by Fianna Fáil as they tried to insinuate.
Mr. Cluskey: Twelve per cent was negotiated for a period of 2½ years, and since that time—and the agreement has not yet expired—the Government have allowed prices to rise by 11 per cent. Then, some 18 months after the National Wage Agreement was concluded, they introduced price control which they stated and reiterated in the past was a heresy. They introduced it when it was too late. They introduced it when the damage was done.
In the period we are now reviewing, industrial production went up last year by some ten per cent and in the first half of this year it went up by 4½ per cent, but where did it go? Where have the fruits gone? We do not know. The workers in the factories, the shops, and elsewhere, do not know, but they want to know, and are entitled to know, and are entitled to be told by the Government who brought about the situation which now confronts us, and which we are now discussing. The Irish Congress of Trade Unions want to know. They are at the moment carrying on discussions which were found necessary in view of the situation which was allowed by the Government to develop by their refusal to introduce price control at a time when it could have been effective, could have done some good, and could have saved us from the situation in which we now find ourselves.
One wonders what is the motivation for the Government's action? One wonders are they trying to sabotage the talks going on at the moment  between employer and labour representatives? I do not think the political acrobatics in which Government spokesmen have been indulging recently will deter the ordinary workers from seeking their just rights. I do not think, if it is the intention of the Government to sabotage these talks, that they will be successful and that the workers are just going to sit back and do nothing after waiting for approximately two and a half years with their 12 per cent.
During this debate several speakers have referred to an incomes policy. We in the Labour Party have always accepted the need for and the desirability of an incomes policy. This is not something to which we have been lately converted and it is not—and I think this should be said—something that was thought up by Fine Gael, although they are claiming it now as if it were their brainchild. This is something that has been advocated by Labour representatives for a long time. When we hear new converts talking about an incomes policy, we wonder just how sincere they are and just what do they mean. Do they mean all incomes? We are inclined to doubt it. If an incomes policy were devised and put before this House, we would be very interested to see just where the support would come from for such a policy if it were to affect, as it would have to affect if it were an incomes policy, not only wages and salaries but profits, dividends, professional earnings and so on. We are inclined to think Fine Gael are perhaps talking with their tongue in their cheek to some extent when they talk about an incomes policy. If we are wrong, we are glad that we have managed to convert other Parties to the desirability of an incomes policy.
Before the last general election, everything was beautiful, according to Fianna Fáil spokesmen. There was no need for the country to worry; there was no sign of the country being in the situation in which we now find ourselves, just six months later. It has been stated by the Minister for Industry and Commerce that Deputy Dillon made one statement about what motivated the Government's silence  and that Deputy Sweetman made another statement, but I do not think it is hard to see at this stage what motivated them. They were not quite sure whether they would get back into power, and if they did not get back into power, was this not a lovely situation to hand over to someone?
Mr. Cluskey: If you won, this had only happened and if you lost, then somebody else could clean up the mess. That is my interpretation of the situation. The facts were, and must have been, known to the Taoiseach, the Minister for Finance and the Government as a whole.
To go back for a moment to the question of an incomes policy, I have said that the labour movement, both the political labour movement and the industrial labour movement, would support and accept a true incomes policy but it is only fair to say that they will not accept an incomes policy imposed on them by this or any other Government, or accept any policy that will interfere with the free, collective bargaining system we have.
We all know the record of Fianna Fáil in regard to standstill orders. We can look back to the war years and at  the other attempt made in 1947. There was another “go” when we had Closing the Gap and then more recently we have had this suggestion about setting up the tribunal in relation to civil servants and semi-State workers. We all know Fianna Fáil's attitude in regard to free, collective bargaining and we know that if they think they can get away with it, they will impose another standstill. However, even at this stage I think they realise that it would not be too easy to get away with it, although very obviously they are chopping around the edges. I doubt if they would be foolish enough to make a real attempt because I can tell them it would not be accepted by the ordinary workers.
When the Minister for Industry and Commerce was speaking, he referred to the Buy Irish campaign and said we should all encourage people to buy home-produced products. We agree, and every Party in this House has lent support in every way possible to that campaign, but one wonders what the Government are at when one discovers that over the past two weeks members of the Government replying to Parliamentary Questions have had to state that post boxes, mail bags, baths and pipes, to mention but a few items which were bought by Government Departments, were bought outside the country, despite the fact that they were obtainable here and that Irish firms tendered for their supply to the Departments. One wonders how serious are the Government.
The Minister mentioned manpower policy and said that one of the first things that must be done is to find new jobs. He went on to say that workers who might be affected by the advent of free trade need not feel at all insecure, that they had nothing to worry about as the Government had this position under review and were instituting all sorts of schemes to provide alternative new employment, with particular reference to the people in the car industry. It is not too reassuring for Irish workers, faced with redundancy through the direct action of this Government, to look over the record and see how far short the Government have  fallen of their Second Programme for Economic Expansion in the provision of new employment. It is not too reassuring to go back and find that each year over the past four or five years only 1,000 new jobs have been provided and it is necessary, in order to reach the Government's target, to provide 15,000 jobs per year from now until 1970. Does the Taoiseach at this stage really believe this can be achieved? Yet, Irish workers are supposed to be assured and not feel the least insecurity because the Government have taken action.
On the question of grants being paid to people coming in here to establish new industries, I understand that the amounts of these grants are related to some extent to the amount of employment these firms will provide. I do not think it is news to anybody that the experience in regard to employment by new industries has been anything but satisfactory. They expected to do this and that, but the fact remains that in the vast majority of cases, if not in all, the employment they proposed to give when seeking the grant and getting it, never materialised. This has been going on wholesale for many years and that is another reason, I suppose, why Irish workers facing redundancy should not feel insecure: the Government will look after them.
We now have a situation in which negotiations for free trade between Great Britain and ourselves are taking place and nobody in the House, except a chosen few members of the Government, knows what is going on in the negotiations or what will be the result of what we are seeking in regard to free trade between ourselves and Britain. The Government do not see fit to take the House into its confidence and inform them, as they are entitled to be informed, about negotiations that could, and will have very far-reaching effects on every man, woman and child in the country. There is speculation by the ordinary people, by Deputies, by organisations of farmers and workers and by all sorts of organisations in regard to what the outcome will be and what the Government are at, but we are not told. One  speculation is that while it would appear reasonably sure that the agricultural community will be looked after, the industrial section will pay the price. I do not think an agreement having that effect, if it has that effect, would be acceptable. I can assure the House it would not be acceptable to members of the Labour Party. If the Government think they can sacrifice one section of the community for the betterment of others, they have another think coming. They will be bitterly opposed by the Labour Deputies.
At this stage everyone is being urged to pull his weight. The country is in a bad way and everyone must now rally round the flag. We agree. It is our intention as it always has been —and our record shows that—to do what is necessary or to support the Government in any action they consider necessary to try to rectify this situation. We are prepared to do that but we say: Fianna Fáil brought about this mess. They alone are responsible as the Government, and must accept responsibility for our present situation. They know they can appeal to the patriotism and sense of responsibility of Deputies in Opposition and they will undoubtedly get support for whatever measures are necessary to rectify the position but they are still answerable to the people of the country for the situation they have brought about, and that is something they cannot escape.
Mr. Dillon: It would be wholly wrong for anyone to minimise the economic crisis in which the country now finds itself. I emphatically endorse the words of the Taoiseach which he has used on two separate occasions here warning the people that we are involved in an economic crisis of the first magnitude. On both occasions, he has taken the precaution of sending in the Minister for Industry and Commerce on the following day to apply soothing syrup and that Minister, by his own claim, is a past master of that art. But the Taoiseach is the person who counts in this Government and his estimate of the situation is correct. We are faced with the gravest economic crisis the country has faced since the Economic War, but there is  this difference: we entered on the trial of the Economic War sustained by the reserves so prudently marshalled by the Cosgrave administration: we enter this crisis on bare boards and let the House recall that for the first time in our history we have mobilised the last reserves of the Central Bank. That has never happened before.
The less experienced Members of this House and of the public may not realise that the forced loan on the joint stock banks negotiated by the Government some months ago of the order of £20 million was in fact the mobilisation of the free reserves of the Central Bank, because we had nowhere else to turn for the money required to insulate the economy from imminent collapse. Since then, we have had recourse to borrowing abroad £7 million sterling to meet a deficit in our balance of payments of £50 million sterling. Let us not underestimate the quality or magnitude of the economic crisis which confronts our people at present.
The people are going to ask these questions: first, how did this economic crisis come upon us? Secondly, why did this economic crisis come upon us? Thirdly, what will it involve for us all? Fourthly, what should be done now? I speak only for myself but I am going to try to answer those questions as honestly as I can.
I can charge myself with no responsibility for leaving the people unprepared as to the inevitable results of what this Government were doing for the past 18 months. I think I can claim, as Leader of the Opposition over the past few years, that beginning in Naas Town Hall on 9th January, 1964, in the course of the Kildare by-election; in my own constituency; at the Árd Fheis; in the Roscommon by-election, and in the general election culminating on 25th March last, on 15 occasions I warned the people that Fianna Fáil were marching them into the ground and that, if their policies continued, we would be faced with an acute economic crisis which would strike at the livelihood of every employed man and woman in this country.
 Now, I propose to recapitulate the answer to the question: how did it happen? What brought this about? The people are entitled to know. I say this was brought about by the thrice-accursed decision of the Fianna Fáil Government to enact the turnover tax. I told them in the Dublin by-election that, if that tax were enacted, there would flow from it consequences disastrous for this country. The people of North-East Dublin accepted that estimate, emphatically rejected the tax and returned Deputy Belton to this House in a constituency represented by the present Minister for Agriculture and the Minister for Education, which boasted of having the best Fianna Fáil organisation in the country.
Then we had the Kildare by-election. It is a grave charge to make —I make it deliberately—I say in the Kildare and Cork by-elections the present Taoiseach made up his mind it was requisite to save his political fortunes to practise a confidence trick on the electorate of this country. I concede that, in spite of my warnings throughout these by-elections, his confidence trick succeeded admirably and he won them both by fraud. Let us say what we like, Deputy Cluskey rightly says that the 12 per cent increase in wages was the result of negotiations between the trade union and employer organisations, but the Fianna Fáil Party made the case in the country that it was a benefaction from their hands. I heard the case made in the Kildare by-election: who would vote for Norton? Is it not Lemass is splashing the money around? You may regard that as clever and cute. I suppose it is. But it degrades the standards of public life of this country.
Mr. Dillon: I am saying Fianna Fáil made a fraudulent claim that they were the dispensers of this benefaction. Listen, I will make my speech here, whether the Minister for Agriculture interrupts me or not. I will say what I intend to say.
 That fraud came off, but the truth remains that, so long as you were faced with the combination of rising prices, a rise in the adverse trade balance and a rise in the adverse balance of payments, we had before us evidence as clear as crystal that we were in an inflationary spiral and that there was imminent danger not only to the economic but to the political survival of this country as an independent entity. Do not forget, and some of the less sophisticated members of the Fianna Fáil Party ought not to forget, that General de Gaulle perceives what the natural consequences of the EEC are. Certain degrees of economic integration carry with them political over-tones. It is one thing to become a member of a united Europe with a large quasi-federal body of equal partners. Think what it means establishing a Common Market between partners who have no pretensions to equality at all.
I want to answer the question, if my diagnosis of how this came about is right, why did it come about? Why did Fianna Fáil plunge down the precipice of inflation and land us where we are today? It is a reasonable question for any ordinary man or woman up and down the country to ask and to expect an answer from those they trust. To those who trust me—and they are not an inconsiderable number—I want to provide an answer and, to my mind, it is a shocking answer. It is an answer I am ashamed of.
It was with deliberation that I described this Government as a gambler's Government led by a gambler. Any of us with experience of life know that there is some element of romance about a gambler, always provided he gambles with his own money. But when a trustee begins to use the funds of which he is the trustee to gamble at the expense of those who trust him and loses, he is ordinarily described as an embezzler. I charge this Government with gambling with the fundamental interests of the Irish people and, having lost, they are deserving of the same fate as any other trustee who betrays  his trust, that of the embezzler. It is a beastly thing to see a Government in whom the people have placed their confidence betray them, for any reason. I charge this Government, deliberately and publicly, with betraying them for the basest reason of all.
Deputy Sweetman may have his views and Deputy Cluskey may have his. I will give mine. I believe that the present leader of this Government came to the conclusion, after the Roscommon and Galway by-elections, that his confidence trick on Kildare and Cork could not be repeated. He judged that he was going to be beaten in the general election which could not long be postponed. He spent everything he could lay his hands on; he borrowed wherever he could borrow; he entered into commitments of a gargantuan kind, manifestly beyond his capacity to meet, and he entered the general election, believing he would be beaten and his place taken by an inter-Party Government. In that belief he was right until Deputy Corish spoke at Tullamore. That ended that and threw the victory back into the Taoiseach's hands. His purpose was to go out of office and leave us to deal with the mess he now faces so inevitably, which was there and concealed by him from our people. The purpose was to return to office and, in the credit that he had falsely claimed, to pass on the office he now occupies to his son-in-law, the Minister for Agriculture. That is true: crudely put, but true.
Mr. Dillon: ——and they do not like to hear it. And I do not like to say it because, whatever the truth is, the Taoiseach is the head of an Irish Government. It is our Government. It is the Government our people chose. They are ruling this country by the authority of God. It is something we  ought to be proud of; and what revolts me is that I have to make such an indictment in public of our own Government. It is something of which I am ashamed. It is something of which I think everybody in this country has every right to be ashamed. When I see the situation into which we have now drifted, and when I hear the Taoiseach of this State tell us that our economic plight is such that we must cut back, I am ashamed. Cut back on what? We must cut back on education. We must cut back on health. We know by our own experience that we are cutting back on housing because the man who wants to borrow the money to buy or build his house today cannot get it.
Mr. Dillon: Wait a minute. I want to ask the House, and the Taoiseach, and the Minister for Agriculture if this be true: does this not represent a nation eating its own seed corn without regard to the harvest of the future? If we are to deny our people education, if we are to deny our people the essential health services we are all agreed they ought to have, if we deprive them of the housing that we believe distinguishes a decent society from a deprived society, are we not creating a future for our people which can only be described as that of a nation gone mad enough to eat its seed corn? Remember, this is certain. In the world into which we are passing, nolens volens, there is no room anywhere for an unskilled labouring man. Whether or not Fianna Fáil intend to drive another quarter of a million of our people abroad, can anyone believe them to be so cynical and so ruthless as to resolve that those people are going to be driven out, uneducated, as unskilled labourers into a labour market where they cannot even command the lowest living wage?
I am ashamed to have to say these things in an Irish Parliament. I am ashamed that the world should see us reduced to such a level. But these facts are true, and they are shocking facts. Deputy Cluskey is shocked that we  should compare today with 1956. Only a fool does not learn by experience. We did run into difficulties in 1956. Why? Because we had a good Minister for Local Government in the late Deputy Michael Keyes. I glory that he ran us into difficulties. He built too many houses, and he went on building, and there were many of us in the Government, Deputy Sweetman included, who said that was the cause, but we would not withhold money from it. We spent too much and we built too many houses. We did get into difficulties and, to the eternal credit of those splendid colleagues, when they saw the danger that now confronts at this hour threatening the working man of this country, they said: “Whatever the unpopularity, we will never face the danger of mass unemployment. We will stand up to whatever steps are necessary to restore equilibrium in the balance of payments because we know we have colleagues who will stand by us until the ship is back on an even keel”.
Just as the Labour Government in Great Britain at the present time, inheriting from the Tories a storm-tossed ship, shaken to its foundations, turned to their supporters and asked for their confidence to get the ship back on an even keel so that they can sail on to the objectives they have before them, so we asked our colleagues in the inter-Party Government to judge us by our performance as their colleagues. They trusted us, and they were right, because within one 12 months we produced out of our difficulties in 1956 the first favourable balance of payments of £12 million, the first recorded since the State was founded. I know what we had to do was harsh. I know it was stiff. I know it was resolute, but it meant that we had then the resources to resume the expansion we had engaged on. Remember, too, that in our first Government we were putting men into employment at the rate of 1,000 men a month.
Mr. Dillon: When I hear people allege that the late Deputy Norton, or the late Deputy Keyes, or the late  Deputy Tim Murphy failed in their trust, I look back with pride on men who were faithful to their trust and compare them with—I used the word; was it too strong?—the rabble who bear a similar burden today and who so shamelessly betrayed the people who trusted them. I am proud of the things we did and, having swung back resolutely, as we did, we handed over to the present Taoiseach, who was then Minister for Industry and Commerce——
Mr. Dillon: We handed over a State where we had kept the people at home, where the people trusted us that we would find employment for them again as we had done before at the rate of 1,000 per month. Fianna Fáil came in and solved the problem. They shipped 300,000 abroad. If we had done that, we would have had no 97,000 unemployed. We would have had a shortage of 200,000. They stayed at home. In 1957, 1958 and 1959, they went away.
Let us not forget the lessons we learned. I agree that it is the future that matters but only a fool faces the future indifferent to the past. We should learn from the past, not only by the wisdom that is there available but by the mistakes that were then made. We made a mistake but I say quite openly it is a mistake that I am proud of. We built too many houses and, as the Taoiseach told us, when he came into office and sent for Dublin Corporation and asked them what was their housing programme, they said they had too many houses, 1,500 houses with no one to go into them.
Mr. Dillon: Listen to them. We had 1,500 houses with no one to go into them. If that was the cause of our difficulties, I glory in it because, added to that, we had the complications of Suez and the complications of other international events. I do not deny that the Taoiseach has had to face the problems of the post-Tory period in England, with England trying to redress her balance of payments. He  has the problem of the post-election situation in the United States of America where they are trying to redress their balance of payments. That is impinging on us. But do Deputies not remember that in this House, speaking from that Front Bench, I said to him: “Remember, at the present moment in England there is inflation going on with the Tories trying to win the election and to persuade the people to reject the Labour Party,” that I said to him: “Do you not realise there is inflation going on in the United States of America with the Democratic Party seeking to secure the suffrage of the American people? Do you not realise that there is going to be a situation immediately after these two countries have passed the elections in which there will be retrenchment to the left of us and retrenchment to the right of us? What plans have we to meet that situation?” and the answer was that he did not believe me? I do not deny that he has that difficulty to handle. I do not deny that that has exacerbated the difficulties with which he is at present struggling but I do charge him that he concealed it from the people for the base ulterior motive I have described and, worst of all, that when he finds himself confronted with the situation, we have the degrading spectacle of his not knowing from hour to hour or from day to day what he ought to do.
Mr. Dillon: I want to point out to the Taoiseach the deplorable effect it creates upon the morale of the people when his Government declare on a Monday that the 15 per cent levies are not to be passed on and on Wednesday issue a statement that, of course, they are to be passed on. I can imagine that kind of lack of co-ordination existing between Departments but I want to warn him that that kind of lack of co-ordination and atmosphere of confusion  in the central Government is calculated to persuade the people of what I am desperately afraid may be true, that you do not know what you are doing, that you are staggering about from one frantic effort to another.
I want to warn the House again that the 15 per cent levy with the ten per cent preferential rate is not going to correct the balance of payments problem with which we are at present confronted. It is a nice choice whether when you deal with a situation of this kind, you grasp the nettle firmly, do what has to be done and have done with it, or whether you keep piling Pelion upon Ossa until the people abandon all hope of finality of disruption of their daily lives. I think we will find by experience that the business of loading one fatuous remedy on top of another does infinitely more damage than a resolute approach and a frank admission of the gravity of the situation with which we have to deal. I am certain of this: you may deceive some of the more unsophisticated members of the Taoiseach's Party but you do not deceive those who look at this country from abroad.
Mr. Dillon: You do not deceive those on whose judgment this country now for the first time has so heavily to depend. I am 30 years a Member of this House, in Government and out of Government. I have never known any period during that 30 years or, indeed, watching politics during the ten years that went before that, when this country was not in a position to say that they did not give a damn what the bankers in Zurich thought of Ireland, we could do as we pleased here and we had the means to say to anybody: “If you want to speculate against our currency, go and speculate.” We could beat the wealthiest consortium of bankers in the world and, signs on it, down through these 40 years the British currency was speculated against, the French currency was speculated against, the currency of practically every great  nation in the world was speculated against, but at no time did any Government of this country have to feel the apprehension that our esteem would decline in the eyes of international bankers anywhere. Can we say that now? When we go borrowing, whether it is in New York or in Zurich, what sort of questions do we have to answer?
I was present at a meeting of FAO to which Mr. Eugene Black, President of the World Bank, expounded the doctrine on which the World Bank was founded. His explanation of it involved this peroration: he said “Our purpose is to help; we want to help everyone but of course I want to make this clear—we are a responsible body and we are not going into any country to offer them help unless they give us an adequate undertaking to use that help as we think it can best be used.” I remember a great many agricultural Ministers there applauding Mr. Black and thanking Mr. Black and saying what a benediction Mr. Black and his bank were, and then I struck a discordant note. I said: “Mr. Black, are you seriously proposing to me that the Irish Government should express its indebtedness to you for offering to buy from us with your loans what seven centuries of fire and sword would never make us concede to the British Government? Because, if these are the terms on which your loans are to be made, I want to tell you that decisions on our social policy and our economic policy are made in Oireachtas Éireann and we do not give two god-damns what Mr. Black thinks.” I was thought to be a very unruly citizen. Was I right?
Mr. Dillon: I represented a sovereign Government and I recognised the right of no external power, whether it was based in London, Paris, New York or Zurich, to come in and tell us how we should run our own country. Remember that when I spoke, I spoke in the full knowledge that I had behind me the resources  so to say to Mr. Black. Can we say the same today?
Mr. Dillon: To give every man his due, we survived five years of Economic War on the resources of Mr. Cosgrave, the present Party Leader's father. We then accumulated great reserves during the war and I do not deny that we came into office in 1948 at a time when expansion and development were relatively easy. All I am saying is this: I was in a position to take up that attitude ten short years ago. Can we say the same today? If we cannot, is it not time we pulled up our socks and began to consider our situation?
I remember a great deal more of that period, in which we were able to improve social services, reduce taxes and develop industry, but I agree with Deputy Cluskey that to go into the past in too great detail is a fruitless exercise. At the same time, I think there were lessons to be learned and, so long as I am here, they are lessons I glory in recapitulating and none more glorious than that we ran ourselves into difficultes building too many houses.
I want to ask the House have they considered this question because the people will ask it. When we have answered the question of how, when we have answered the question of why, the people will then ask us: “What do you mean when you talk of the country being faced with an economic catastrophe?” We have all heard this question: “What do you mean when you say the country is going bust? The country is always going bust and yet nothing seems to be happening.” I want to tell them, and I want to tell them on the authority  of the Taoiseach, the Head of the present Government, that this is what “going bust” means. I think the Taoiseach speaks truly, and I endorse his remarks when he says that any rumours current elsewhere that the currency of this country was to be devalued were groundless and false. I know this Party and, I believe, the Labour Party—unless they have taken leave of their senses—will throw themselves a hundred per cent behind any Irish Government in resolving the position, albeit, the steps they have already taken seem to me to be inadequate, but, as the situation evolves, they will take further steps and then the currency will come through unscathed and intact.
But I say you are moving this country into a situation which I call “going bust”, which means either devaluation or the physical control of imports. Now the Taoiseach goes on to say—rightly, in my judgment —“I rule out devaluation; now we must turn to the control of imports”. Right—in that he is perfectly right— but he goes further. He says: “That is not enough; that is only a curing symptom, holding the line until the real remedial measures have time to operate”. That means cutting down on capital outlay and postponing—now that is a nice long word—“postponing”—certain things we hoped to do in the spheres of education and health. That is what “going bust” means. Do not let us laugh at it because, remember, when you go slow and postpone education, remember what that means. It means to say to one generation of children, one group of youngsters who are now 15 and, in three years' time, will be 18: “You are going to go for the rest of your lives of three score and ten without the education you ought to have had”. They will never get it. Do not let us forget that. Each one of them will go through life without the education he ought to have had. Do not forget, in the world in which we live at the present time, what that means to each of them. Take any one of us who is sending his children to secondary schools because we have the means to send them. Imagine if you took your own child from school at 14  and gave him no secondary education at all, closed the door to university and told him that he would have to make a way as best he could. That is what we are saying to thousands of our neighbours up and down the country and it is a horrible thing. There are thousands of people in this country who will now have to take the decision that their children will never get the secondary education or the vocational education which will equip them to develop to the full the gifts God gave them. That is one of the consequences of “going bust”.
We will postpone the health services. There is none of us here in this House who, if he is ill, cannot go and get the remedy and pay for it—not one of us. But there are people in the next three years who will become crippled for the rest of their lives because we have decided it is necessary to postpone certain medical facilities we had hoped to make available. That is what “going bust” means.
Mr. Dillon: It does not mean the country stops; it does not mean that Ireland sinks into the sea. It means that thousands of our neighbours will suffer irreparable harm and, at the end of their lives, they will feel the consequences of this Government having brought us where we are. They should be ashamed to admit that to the nation, if they know what shame means.
The Minister for Agriculture is here. I do not quite know the reason for the collapse in cattle prices at the present time but this debate has so far proceeded almost on the assumption that our society consists exclusively of industrialists and industrial workers. The industry which employs most people in this country is agriculture. In the past three months the small farmers of Monaghan, Cavan, Donegal and the west of Ireland have lost in the price of cattle more than they collected in the heifer subsidy. That is a shocking thing to realise. Farming on the small farms of Ireland is hard work and very few Dublin Deputies  believe or understand that farming on the small farms in rural Ireland means not a four-day week, or a five-day week or even a six-day week but a seven-day week, day in, day out, year after year. If you keep pigs or cows that have to be milked seven days a week twice a day, there is no escape from it for yourself or any member of your family who is grown up enough to do the work. I want to remind the Minister for Agriculture, and I live among the farmers and I represent them, that the wave of disillusionment that has swept over the congested areas of Ireland in the past six months appals me. And the burden has fallen most heavily on the small farmers who produce cattle and sell them young.
I know dozens of farmers who bought cattle last April and May, who took land and paid too much for it, and who with the failure of the grass before the autumn have had to sell those cattle and take £5 a head less for them than they paid. And then they have to pay the rent.
Mr. Dillon: Deputy Collins knows as much about the congested areas as my foot. This is a result of the ill-conceived scheme of the Minister's predecessor in office, Deputy Smith. I know he was doing his best but everything went against him and the weather went against him. The fact that we have had no growth of grass from the end of August to this day has greatly complicated the problem. The small farmers of the west of Ireland have had to face cruel disillusionment and they now have an immensely heavy burden to bear. For some reason that I do not understand, there has been a very heavy fall in the price of bonhams. The increase in the price of meal consequent on the increase in the price of barley given last year has driven a lot of people out of pig rearing. That surprises me.
With the spead of the creamery industry throughout the west, I expected that the availability of milk, plus the availability of meal, would make the feeding of pigs more popular but I saw  bonhams sold for £7 a pair a fortnight ago. I have not seen them as cheap as that for a long time. They have been from £10 to £12 a pair. I am speaking now about the ten weeks' old pig and I am repeating these facts so that the House may remember that it is not only the industrial workers and the industrialists who are living in a state of acute anxiety and difficulties. The small farmers are also suffering acutely today.
The question which any man is now entitled to address to Deputy Cosgrave or myself is: “Now that you have told us the story, what do you think we ought to do?” The duty is on me to answer that question to the best of my ability and I want to say, quite honestly and without making a smart answer to anybody, that the only solution is to get rid of the Fianna Fáil Government.
Mr. Dillon: I want to give my reasons for that. No one can prescribe the true remedy for the present economic crisis unless he is in full possession of the facts. As Deputy Sweetman said today, nobody who is not in the Government has access to the true facts. Every public statement made by members of this Government on the economic situation or the economic prospects have been proven in the event to be false. I would not believe the Gospel from their lips today. I believe that on every occasion they will tell us what is not true. I know they did not tell the truth in the past and I have no reason for believing that they will tell it in the future.
I will conclude by telling the people what the remedy is but before I do so, I want to say that I am grateful to Deputy Collins for giving me the opportunity of placing on record this fact: I am speaking from this seat by my own will and desire, by my own irrevocable decision. Some people may think that is right; some may think it is wrong. I am here because, in my judgment, this is the right place for me to be and my colleagues in my Party accepted my judgment on that matter  as on many others, and I think they were perfectly right. I think they were fortunate in having at their disposal so able and suitable a successor as Deputy Liam Cosgrave. This is the last time I will advert to that matter in this House.
Mr. Dillon: My answer to the people's problem is to get rid of Fianna Fáil and we can put our hands to the task without delay. There is available a weapon to wipe them out and it is for us to show whether we are fit to use it. We have the local elections in June and if we can inflict upon them the kind of defeat we ought to be able to inflict upon them, we will have them out before the end of that year and will have Deputy Liam Cosgrave as Taoiseach of a new Government. There is only one remedy for the present situation, that is, to put that gang out and put in a Government of honest men.
Mr. Dillon: Never mind about our Ard-Fheis. Your Ard-Fheis is due next week and if two or three of you do not suffocate from swallowing your own words, it will be the eighth wonder of the world. I do not want to hit that Deputy over there too hard. He is new here and I do not want to hurt his feelings but every time I see him, I am inclined to answer him as if he were an old, hard nail. The only chance this country has is to get a Government of honest men. That Government will be faced with very formidable difficulties that they will inherit from this Government, but by telling the people the truth, and by resolutely undertaking what requires to be done, they can salvage this country from the crisis and the disastrous mess into which it has been led by Fianna Fáil. I wish I could say and believe that I think Fianna Fáil have been honestly doing their best. I am sorry to say I cannot. I believe we are in the mess we are in  because of the strange, almost daft, obsession on the part of the Taoiseach to pass on to his son-in-law the post he at present occupies.
Mr. Dillon: His interjection made me express solicitude for his future. The difference is that I proclaim it in public and his colleagues do it behind closed doors. Here is the solution, and I know of no other. I have sought faithfully to put myself questions in public which I believe the people want answered, and to give them in public and in the presence of my critics, not at a dinner or a dog fight, my answers to those questions. I challenge a pretty adroit performer, who sometimes I suspect is more adroit than honest, to deploy the best resources he has to answer me if he dares.
Minister for Agriculture (Mr. Haughey): I think we can all agree that that was a magnificent performance, but what connection it had with reality escapes me, at any rate. There is a central riddle, it seems to me, which is emerging.
Mr. Haughey: The riddle is: was the ninth round wage agreement, the famous 12 per cent agreement, a bargain freely negotiated between the trade union movement and the employers as Deputy Cluskey said, or was it a confidence trick produced by the  Fianna Fáil Government as Deputy Dillon suggested?
I submit to the House that it cannot be both. If it was a freely negotiated agreement between those two independent parties, it cannot be a confidence trick by the Government. If the Fianna Fáil Government at that time were so full of chicanery, and so activated by base motives of self-interest, that they were prepared to seek popularity by foisting a wages agreement on the Irish people which they should not have done, could they be the same Government who deliberately went out and sought unpopularity by imposing the turnover tax? This seems to be an extraordinary situation. Here, on the one hand, we have this Government who apparently sought popularity at all costs by, as Deputy Dillon suggested, buying votes through squandering the national resources, and who at the same time went out and brought on themselves a wave of unpopularity such as this country has rarely seen by imposing an iniquitous tax on the people. I wish some speaker who comes after me would solve that riddle for me.
Mr. Haughey: The Taoiseach, the Minister for Finance and the Minister for Industry and Commerce have dealt at some length with the economic and fiscal situation and the plans which this Government have to deal with it. I think, therefore, that my contribution to this debate should be concerned mainly with the two great industries for which I have special responsibility, their present position and prospects, and the part which we hope they will play in our plans for the future. I refer, of course, to the industries of agriculture and fisheries.
 While it is true that fairly steady progress has been made in recent years in the development of our sea and inland fisheries, I believe that the full potential of the industry, either from the point of view of production or consumption, has not yet by any means been realised. I think that is particularly true on the sea fisheries side. At present there are some 1,700 men employed in sea fishing in a full time capacity. In addition, there are about 4,000 persons engaged on a part-time basis, most of whom are farmers or members of farm families. The annual value of sea fish landings is somewhere in the region of £1½ million. Exports of all fish, including salmon, are valued at approximately £2 million per annum, a not insubstantial sum.
An Bord Iascaigh Mhara, in collaboration with my Department, have recently been carrying out a detailed study of our sea fishing industry and I have every hope that a more intensive development of the industry along modern lines will be shown in the years ahead and will bring about a marked improvement in terms of increased employment, greater landings, and particularly in a higher level of exports. All of this, we hope, will make a significant contribution to the economic growth especially in localities where other types of economic development present serious problems. It is my intention to press ahead as vigorously as possible with this development programme which will parallel in the fisheries sphere the agricultural expansion programme.
Events, I think, have shown quite clearly the importance of agriculture in general and of our cattle population and cattle products in particular in relation to our balance of payments. Deputies know that what is often referred to as the import content of agricultural exports is low, a factor which increases their impact on our balance of payments. We have a record number of cattle and sheep now on our farms and a record number of breeding stock. The census for June, 1965, showed that cattle numbers had reached a record level of 5.3 million, or 7½ per cent higher than in 1964. Cow numbers increased by 137,000;  cattle under one year, by 134,000; cattle over one year, by 106,000. Sheep numbers topped the 5 million mark for the first time.
Mr. Haughey: Nonsense. In 1964 the number of cattle exported—and as Deputies know this figure fluctuates from year to year—rose very substantially and prices were much higher than in previous years. In the present year, however, cattle on the average, for a variety of reasons, are of a younger age and including increased retentions for breeding, many more cattle apparently are staying on the farms. The revival in cattle exports which we expected in the second half of this year has not happened, at least it has not happened to the extent we hoped for. However, the cattle are there on the farms and in vastly increased numbers and they will certainly be exported in 1966, if not in this year.
Deputy Dillon mentioned that some of our farmers have been hit by the fall in cattle prices. I agree that that is so and that unfortunately that has happened but we have acted to the best of our ability to help in that situation. As Deputies know, the beef guarantee scheme which we introduced earlier this year to underpin the cattle trade has been extended to June of next year and that should have the effect—we hope it will—of enabling farmers to go ahead this winter and feed cattle secure in the knowledge that they will have a remunerative price for them when they come to dispose of them.
Milk production and income from milk have continued the steady upward trend of recent years and exports continue to expand. Last year deliveries of milk to the creameries was 7.4 per cent higher than the previous year. This year supplies to the creameries are running at nine per cent higher  than last year. The value to farmers of milk delivered to the creameries rose from £31½ million in 1963 to £37 million in 1964 and we estimate that it will be at least £40 million this year. It seems clear, therefore, that agriculture is now geared for an expansion of output, exports and income, for the next few years——
Mr. Haughey: ——though prices obtainable for our products and access to markets are still a constant source of anxiety to us. We would like, and all Deputies I think will agree with this, to solve our balance of payments problem by increasing exports and by balancing at a higher level of trade. This is clearly the right solution in the long run. Recently, with this end in view, at the request of the Government, I inaugurated a series of meetings with agricultural and fishery organisations and exporters and discussed with them possible ways in which agriculture and fisheries might make some extra contribution towards solving our present difficulties. It was clear from these discussions which I had—and they were on a very broad basis—that there are very real prospects for an expansion but special attention will have to be paid to marketing arrangements at every level. In the tightly controlled world around us, where a variety of protective devices of all sorts exists on every side, we cannot afford to leave anything to chance or be haphazard in our approach. We must make every effort at Government level to protect our legitimate interests and at trade level to exploit in a consistent, determined and scientific fashion every opening available to us.
The decline in tillage has, very serious effects on our balance of payments position. We had a substantial bill to pay for imports of cereals and sugar in 1964. At the beginning of 1965 I increased the price for wheat and barley and the price for sugar beet was also substantially increased. Despite these increases, however, there has been a further drop in the tillage acreage——
Mr. Haughey: ——and also a poor wheat crop. I am afraid we are likely to be faced with an even bigger bill for imports in 1965-66 when we can ill-afford it. This is a very real problem and a very serious one and one to which I have given a great deal of study. It is one which I have discussed time and again with farmers' organisations and representatives and I want to admit frankly that I do not know what the answer is. I will be very happy to accept any constructive suggestion which any Deputy in the House puts forward.
I was told that a very important factor bearing on the decision of farmers whether or not to grow wheat was the question of marketing arrangements. After some considerable trouble we succeeded in devising and putting into operation this year a system of marketing which I think has been generally acceptable. But again this does not seem to have solved the problem and I admit that this question of the decline in tillage is a serious and a worrying one.
Mr. Haughey: In the expansion of agricultural production, on which we must rely very greatly to achieve an improvement in our balance of payments, the question of agricultural credit is very important. I want to tell the House, in case there is any misapprehension about this matter, that credit for farmers has been expanded very rapidly in recent years. The banks are the main source of short and medium term credit for farmers and the amount outstanding in respect of bank advances to farmers has increased from £33 millions in mid-1960 to over £50 millions in mid-1965. Side by side with that increase in bank lending there has been an enormous expansion of activity by the Agricultural Credit Corporation. During the years 1961 to 1965 the Agricultural Credit Corporation lent a total of £10.3 millions, which was equivalent to the  entire amount it had lent in the previous 33 years of its existence.
A good deal of lending recently by the Agricultural Credit Corporation had been for purposes which were not directly productive. There have been some suggestions that the Government put a squeeze on the Corporation's lending. In fact, all the Government have done has been to recognise that some of the purposes for which the Agricultural Credit Corporation was making money available were not directly productive and they have asked the Corporation at this time to confine its resources to immediately productive purposes. I think at any time, but particularly at the present time, that would have been a sensible and reasonable request to make to the Corporation. The Corporation is, in fact, really inhibited only from lending money for two main purposes, the purchase of land and the funding of debts. The truth of the matter is that the Government have made £1 million extra this year to ensure that the Corporation will be in a position to make money available for all the directly productive proposals put to it.
Mr. M.P. Murphy: Does the Minister agree that the Corporation should not lend money for the purchase of land which is a very important function in the western counties where a small farmer wishes to increase his holding?
Mr. Haughey: I would make a distinction there between different types of purchases of land. I could certainly agree that, where you have a farmer with a limited holding, farming it well and with a good sensible development programme, to lend him money to increase his acreage to an economic size would certainly be a productive purpose and, as I understand the situation, the Corporation are still prepared to consider applications of that sort.
Mr. M.P. Murphy: It must be within the past fortnight that they are prepared to consider such cases because farmers of that type have got notification from the Corporation that they will not advance money for the  purchase of land, irrespective of the merits of the case. I think that is bad.
Mr. Haughey: As the Deputy knows, the Corporation must consider every case on its merits, but my understanding of the position is that the type of case he has mentioned— and I think the Deputy will agree— is the type of case that should be catered for.
Mr. Haughey: The increasing willingness of farmers to use credit is I think one of the encouraging features of the situation and in particular it shows they got away from the old fear of debt and borrowing. They are now prepared to show their confidence in the future by borrowing money and investing it in their farms. It will be agreed, I think, that the Government have played a significant part in stimulating development by providing very substantial amounts of capital, many millions annually, by way of grants for farm buildings, land development, livestock and so on, Demand for these schemes has been running at a level even higher than anticipated in the Second Programme. This indicates a very substantial amount of reinvestment by farmers out of income. The farmer is operating in a fluctuating environment both in relation to weather and markets and he cannot be expected to reinvest in his farm unless he has, first of all, reasonable prices and secondly, a reasonable guarantee of stability in the markets. These we have endeavoured to provide by providing price assurances where possible and so far as was in our power to do so, such as the one I have mentioned, the introduction of the beef guarantee scheme.
I want to emphasise that it is our policy to seek to close the gap which exists between farm income and that of other sections of the community. I do not think we can have a balanced,  healthy community here if any one large section of it is to be condemned permanently to a state where its income is substantially behind that of most other sections. I want to emphasise that this is not something which can be easily achieved but we intend to do our best and indeed to take this problem into account in all our economic planning. Some progress was undoubtedly made in 1964. It was a good year for farmers. I admit that economists will disagree as to the precise extent of the effect on this relativity but at least there was some improvement.
The agricultural price level is, of course, of primary importance in this problem but there is a great variety of other factors that greatly influence the income of farmers such as land and the amount of capital available and the efficiency with which they are able to use these. We now have in operation a comprehensive structure of schemes and services to help farmers to increase the contributions to the national product and incidentally in so doing, improve their own income position. As Deputies know, these measures include grants for the improvement of lands and buildings, the Calved Heifer Scheme, measures to improve livestock and seeds, expanded educational and advisory facilities, marketing arrangements and the extension of the operations of the Land Commission. As I have said, it is an indication of the healthy state of agriculture and of the confidence which farmers now feel about the future that they are availing of these various improvement schemes to the extent that they are. I would hope, therefore, that in these two great industries, agriculture and fisheries, we have the potential to make a very real contribution towards the solution of the financial and balance of payments difficulties which we are undergoing at present.
Everyone has an interest in preserving stability in the economy and ensuring that increases in income do not outstrip the growth of productivity and are equitably distributed among the various sections of the community, including farmers. Farmers,  especially, have a vital interest in the maintaining of a steady and balanced growth in the economy and in seeing to it that increase in gross national product is shared out evenly all round, and they can be relied upon to support any measures necessary to ensure these objectives. I have, therefore, every reason to believe that farmers are fully behind the Government in measures which they have taken to ensure that steady economic progress will not be jeopardised by allowing unhealthy trends which have been appearing in the economy to continue unchecked.
On the broader front, it seems to me that we are now confronted with a new situation in this country, a situation in which we have problems arising out of expansion. Hitherto for decades we have been faced with the difficulty of getting a comparatively inert economy to move forward at all. That problem has now been overcome, the break through has been achieved. Everywhere one goes in the country to-day one sees evidence of progress, development, expansion, improvement. The statistics reflect it clearly also.
The new situation in which we find ourselves has been brought about by this very progress itself. I much prefer to deal with the problem of controlling expansion than the problem of overcrowding stagnation. Our task at this stage is to find enough fuel to keep the fires burning, now that they are well and truly lighted. I want to emphasise that this is a very difficult job that calls for very careful handling. Economic management is a very fine art despite what any Deputy may say. There is always the danger of going too far, of accentuating the very trends one wishes to correct, or of precipitating violent fluctuations and disruptions. These are the sort of considerations that have guided us, and will continue to guide us, in our approach. We have no doubt that we can succeed in our endeavours to steady the economy and set it moving forward to even greater levels of achievement.
I suggest that the Government have not been dilatory and have not been secretive with the country or the Dáil but that we have, honestly and  openly at every step of the way, outlined what the situation is, what the difficulties are and what the trends are. As it became necessary to do and in pursuance of our policy of not going too far in any one direction or another, we have brought into operation remedial measures which we believe are adequate to deal with the situation at this moment of time.
Mrs. Hogan O'Higgins: That the Government find themselves in this mess is no shock to me. In fact, it has been apparent for some time but we were facing a number of byelections and subsequently a general election, and I think the Government did not have the moral courage to tell the people the position they were in. Since the introduction of the turnover tax, prices have been steadily rising. About 18 months ago, I think, I addressed to the Minister for Industry and Commerce a number of questions about the price of various foodstuffs. To each he replied that, though the prices were high, he did not think they were unduly high, so prices went on their merry way. Now they have reached the stage where the average housewife finds it almost impossible to balance her budget.
In July, the Government brought in a prices control order and last week they imposed the levies. By the very imposition of these levies, prices have increased further. There is no good saying that, if you buy things made in this country, you will not be charged the dearer prices. I looked carefully down the list of articles subject to the levy. There is one item which affects me and many other young mothers in the country, that is, baby-clothes. Although a baby is a very small little thing, his clothes are extremely expensive—and baby grows very rapidly! You cannot get in Dublin city—or indeed in my constituency of Galway —good, well-made Irish baby-clothes. You get a very limited range of baby-clothes made in this country and, I regret to say—perhaps it is not popular to do so—they are not of the best quality. A housewife with so many calls on her budget will only be prepared to pay for something that is going to last. She will not buy an  article that will be gone in a day or two. I would appeal to the Minister to have another look at the question of baby-clothes and see if there is any way by which they could be exempted from the levy, or else appeal to clothing manufacturers to make a better line of baby-clothes. My remarks do not refer to clothes for children in the four to ten age group. They are well catered for. But infants and toddlers are not well catered for.
Mrs. Hogan O'Higgins: The situation in regard to the health services in my constituency has sadly deteriorated. About one and a half years ago, a number of dispensary areas were amalgamated and we lost one dispensary doctor. I understand we are going to lose two more, who are coming here to Dublin. I further understand that these dispensaries are not to be filled because, as the Government always seem to be doing, there is to be issued a White Paper or Blue Book on Health. The White Paper or Blue Book will not remedy the appalling dispensary service in my constituency.
Another matter which worries me exceedingly is the County Home, St. Brendan's, in Loughrea. It was to receive a considerable amount of money for extensions. It is said that one can judge one's country by the way it treats its old people. If we judge this country by the way it treats its old people, it must rank as one of the lowest in Europe. St. Brendan's is a very old building. It is absolutely bursting at the seams. They have an excellent staff who take good care of the patients, but it is impossible for them to work and cater for the number they have. This is a matter of absolute urgency. No matter what money is spared by the Minister for  Health, I would appeal to him to release whatever money is necessary for this urgent matter.
With regard to education, I had intended saying a lot, but I think another opportunity will arise. I notice the Minister for Education, not so much in the House—he is not given to telling us things in the House—but by letters to certain Bishops in the papers and other remarks, plans to make changes in the school system, whereby some schools will be amalgamated, doing away with the smaller national schools. Anything that would tempt the Minister to do away with the small national schools in my constituency—and we need a number of new ones—would be an absolute disaster. If I lived permanently in the country—I spend half my time there and half in Dublin—I would send my children to a national school. The small national schools with one or two teachers give children an education they never get in the “tonier” schools. I know; I have been to both.
In my constituency—indeed throughout the west of Ireland—education is the only opportunity we have to offer our children. If we cannot give them a sound basic education, we can give them nothing. Unfortunately, half of the boys and girls leaving the national schools, secondary schools and vocational schools in my constituency emigrate. It is vital that every penny be spared for education. It is also vital that the boys who stay at home on the farms get a good education. There is only one way to save the West, that is, to get the men of the West to marry, and the girls will not marry them unless they have a reasonable standard of education. For that reason I implore of the Taoiseach not to curtail in any way the money spent on health services and education.
Mr. Kyne: We should treat this debate as a trial before a jury. The Government stand charged of incompetency and of not being able to see into the future as their position should have enabled them to do. Because of that, the Labour Party amendment has been tabled. We believe the beginning of this crisis was not when a 12 per  cent wage increase was granted but when the Government subsequently failed to control prices. The jury in the case are the people of Ireland. It is they who will decide whether or not the Government are guilty of neglect in this case.
Let me say that the Labour Party had no quarrel with the wage increase. At the time many people, whether he claimed it or not, gave credit to the Taoiseach for bringing about that increase. But we knew that, should that increase be followed by a continuous increase in the cost of living, we would lose all that was gained. That proved to be true. There was a continuous spiral of increases in all the necessaries of life, uncontrolled, without any attempt in any way to limit the profits being made by (1) the importers, (2) the manufacturers and (3) the retailers, until the position was reached in which, before the National Wage Agreement period had been exhausted, trade union officials, their committees and their officers, were being pressed by their members to demand a further increase. That that was resisted in so far as it was humanly possible is evidenced by the facts. Only in isolated cases has there been any compensation for the increases in prices which resulted since that agreement was entered into. There were exceptional cases. I think the Dublin Corporation, the ESB and CIE are the outstanding ones.
Prior to the general election, that is, prior to 7th April of this year, we read and saw slogans somewhat on the lines of the Tory Party slogans in Britain: “You never had it so good.”“Let Lemass Lead On.”“Return Us and Everything Will Be All Right.”
Mr. Kyne: Prior to April, and that is not so long ago, the Taoiseach and his advisers must have been aware of the danger, if not the actual fact, of  this crisis. Why were the people not told? I will not allege that the Taoiseach kept the information back so that he would be elected. I just do not know why he did it, but I believe he must have known, and I should like him to say why he did not tell the people and let the people judge on the facts, as they were then; apparently we were running into an economic blizzard. None of us, neither those of us in the Labour Party nor those in any other Party, wants Ireland to sink under an economic blizzard, not even for political reasons. I do not want to see a Fianna Fáil Government wrecked and go down with that wreck myself. I do not want to see the people go down with it. I am quite sure that any co-operation the Labour Party can give to this Government, or could give to any Government in power in the same circumstances, will be given willingly but that does not mean that we can be stopped from saying what we think needs to be said. Why were the people not told? I just do not know why they were not told and I suggest to the Taoiseach that, when he comes to reply, he should clear up that point with the public.
On the Fianna Fáil side of the House, we have had one suggestion. We have had two contrary suggestions on the Fine Gael side of the House. On my side of the House, we are anxious to know why the Taoiseach did not, prior to 7th April, during his “Lead on” campaign, indicate to the people that there was a danger of an economic blizzard hitting us within six to eight months.
I come now to the solution devised by the Taoiseach, the 15 per cent on imports. We do not oppose this imposition. Our amendment and the Fine Gael amendment show clearly that we are in agreement that this must be done. We regret the need for it and we allege that the need for having these amendments is the fault of the Government. When the people examine the facts, I think they will be fairly satisfied that that is true.
How will this 15 per cent operate? We heard at the outset that it would not be passed on to the consumer. It has been explained pretty clearly now by Government spokesmen that  that is not so. In relation to commodities subject to the 15 per cent levy, the levy will be passed on to the consumer. What will be the result? “Buy Irish” is a fine slogan and all good trade unionists would like to accept that principle, but there are things, manufactured in Ireland, which are not perhaps just what people need. It may be a matter of style; it may be a matter of quality; it may be a matter of price. If a man is working on a tight budget and can find a foreign substitute for an Irish commodity, something he needs urgently, and the price is within the range of his budget, then naturally, very naturally, he will buy what suits his pocket rather than what suits the country. “Buy Irish”, by all means, provided Irish is as good and as cheap as the commodity produced by the foreign competitor. We will certainly do that, if it suits us, and any Irish manufacturer who is putting on the market a commodity as good in quality as and in price comparable with that of the foreign competitor, need have no anxiety. Irish people have enough sense and wisdom in them to make the right choice.
If this 15 per cent levy causes a price increase, the effect of that increase will be reflected in organised workers demanding and securing, by organised resistance, a compensatory increase in wages. Where will we go from there? We will have prices rising and wages endeavouring to follow. When we get an increase in wages, there will be a further increase in prices. It is true that we have a price control arrangement. I suggest that that price control arrangement is the very type of machinery which will lead to a further wage demand. I hope not; I sincerely hope not.
Having listened to all sorts of talk about 15 per cent levies, “Buy Irish”, and all sorts of recommendations to increase exports and reduce imports, I was rather puzzled to come across a curious position in my constituency only six weeks ago. It was the subject of a Parliamentary Question on 21st October. I asked the Minister for Industry and Commerce if he was aware that the National Board and  Paper Mills of Waterford were permitted to import pure Kraft paper without any duty, even though, in ordinary circumstances, it is subject to 60 per cent duty. The National Board and Paper Mills were permitted to import over three years more than half a million pounds worth of paper, duty free, with the result that workers who had previously to be compelled to work excess overtime to meet the market now find they are in danger of going on short time. I got the glib answer that the factories say it cannot be done. It was done; it was done for one and a half years. The reason that product did not turn out to be satisfactory was that the firm themselves insisted on adding to the mixture an inferior substitute that proved unreliable in the process. Is it any wonder that this American company should favour taking their surplus from Florida, importing it duty-free and distributing it throughout the paper industry in this country? This represented a loss of employment and of wages for workers in this country and adversely affected our import-export balance by £½ million.
When I endeavoured to secure redress for the workers of the area, I was met in this House with the statement that the Minister was not satisfied, that he had heard the employers' side and would have to secure a lot more proof before he would accede to my request for a meeting between his Department, the employers concerned and the trade unionists so that the trade unionists could explain that, whatever the employers said about inability to manufacture, the workers were prepared to prove that, given the proper machinery, they could do just as good a job as any American firm. In view of the fact that adaptation grants are made available, one would imagine that the Government and, in particular, the Minister for Industry and Commerce, would be anxious to give Irish workers a chance to prove their ability. One would think that he would do that for the sake of encouraging national self-sufficiency and achieving the objective we are now trying to achieve by the imposition of a 15 per cent levy on various commodities.  I notice that Kraft paper is not included in the items on which the 15 per cent will be levied. Either through error or by deliberate intent, it has been excluded.
To substantiate what I have said, I shall give figures given in reply to a Parliamentary Question tabled by Deputy Pattison and myself for answer on 21st October. In 1963, the value of paper imported duty free as waste was £239,714; in 1964, it was £186,287 and in 1965, for the first nine months up to August, it was £164,965. That is a total of £590,966, just over £½ million. This is an extraordinary position in the context of our having to impose a levy of 15 per cent on commodities that people believe to be essential in order to redress the import excess.
Another thing I find difficult to understand is the imposition of levies of 15 per cent at a time when we are in the middle of negotiations for free trade. We are endeavouring to negotiate free entry of our goods into Britain and free entry of British goods into this country, subject to certain reservations and certain dates, while, at the same time, we are imposing emergency tariffs of 15 per cent, reducing to ten per cent. Was there ever anything so crazy and so impossible to understand?
I am aware that under the agreement of the House, I must conclude at 8.15. I should like to have had an opportunity of further discussing whether the Fianna Fáil Party and Government were guilty or not guilty. When the people examine the charge that the Labour Party make against Fianna Fáil, that they did not foresee in time the difficulties they are now faced with and did not take adequate steps to protect the interests of the people, the verdict will be “Guilty as charged.”
Mr. Treacy: The people have had a rude awakening. Little did they think six months ago when they fell for the sunny and glowing promises of the Fianna Fáil Party that they would find themselves in such a sad predicament today. The veneer of smug complacency has been wiped off  and the Government Party have been revealed for what they are and for what they always were, a Party bereft of a policy, bankrupt of ideas and of ideals, and now, it would seem, bankrupt of financial resources.
We were told six months ago that we never had it so good in this country. Having listened to the Taoiseach's speech of gloom and foreboding yesterday. I think it is true to say that we certainly have had it good and proper with a bang on this occasion. The “Lead on” slogan which so many fell for in the last general election and in so many previous elections has led us to the brink of virtual economic disaster. The plans, programmes and policies of this Government, so glibly presented, and which duped and fooled so many in the past, have come to nought and even the most ardent supporters of the Government Party are now stupefied and dumb-struck by the frustration, misery and fear of the future which surround them on every side today.
At a time of unrivalled opportunity in this age of unparalleled progress in human knowledge and scientific development, when all around us in the world today we witness a scientific revolution that is making it physically possible for the first time in human history for Governments to win for their people high standards of life, full employment, the atainment of high cultural values and leisure which formerly were enjoyed only by the privileged minority in society, when countries are moving forward to the prosperity I have referred to, it is difficult in the extreme to reconcile ourselves to the situation that we have to contend with in Ireland.
Our country has not merely not made progress; it has remained constantly underdeveloped and stagnant. Now it seems, despite the high incidence of unemployment and emigration, which is the highest in the western hemisphere, not to mention the social code here in health, education, welfare and housing which is not benefiting any civilised or Christian society, we are now falling back into  an abysmal depression which will wreak terrible deprivation, suffering and misery on countless extra thousands of our citizens, as if they had not suffered enough.
Mr. Treacy: The Taoiseach is responsible for this sorry state of affairs. Any scanty glance at the system of government in any progressive country will reveal that it is not necessary in this atomic age that people should suffer so and it is clearly a question of gross mismanagement and dereliction of duty on the part of a Government who wreak utter misery of this kind on the people. This Government stand clearly indicted for the sorry state of affairs which we in this country have to contend with today. Let it be said they have had more than a fair innings to solve the social and economic ills of the country. They have been in power intermittently for almost 30 years and have had every opportunity of putting into operation their policy for solving the problems of our people. Thirty years is a fair opportunity in that respect and, in this modern day and age, in the affairs of nations, 30 years in government, except in a totalitarian state, could hardly be rivalled.
At the present time, apart from the fact that we have had a chronic problem of unemployment in this country averaging 50,000 and reaching 90,000 at peak periods and the fact that we have had emigration running at between 30,000 and 50,000 a year, certainly under the operation of the First Programme for Economic Expansion from 1958 to 1963, it is on record that 170,000 people have emigrated. Today unemployment is rising. Underemployment and redundancy are rearing their ugly heads now in almost all facets of industry. The building industry—this important industry charged with responsibility for rehousing the thousands who are living in rat-infested houses and insanitary tenement flats— has been the first to be hit by this credit squeeze. It is felt by the unions catering for these men that in the early  part of next year unemployment amongst the tradesmen, labourers and craftsmen in the building industry will be widespread. Some firms in the textile industry—an industry which, mind you, was expected to do well, even in face of bad circumstances — have already closed down. Again, in the flour milling industry, firms are closing down. In my own constituency, the town of Cahir has met with economic disaster by the closing of the mill there and I think it is true to say that another mill is about to close in my leader's constituency in Wexford. This has come about, again, as a result of the Government's tendency towards the creation of monopolies.
It is ironical to realise that when I stood for election in 1961, the Fianna Fáil Cumann in Cahir town on the eve of that general election rushed to the printers and issued pamphlets, to the effect that if I were elected to the Dáil as a Labour candidate, or if my Party came to power, the flour milling industry would be nationalised and the workers would all lose their jobs. How happy an event it would be for those unfortunate workers if that flour milling industry had been nationalised, as we have persistently demanded. These workers would be secure, have remunerative employment and their future would be stable. They can blame their own Party for the damage which has befallen them.
Likewise in the motor assembly industry. In today's Irish Times, we read of the fact that the trade union leaders estimated yesterday that about 400 workers have become unemployed as a result of redundancy; 200 workers were laid off at Messrs. Fords of Cork and others have been laid off in some other motor assemblers throughout the country. The workers in that industry are about to march through this city, I understand, on next Saturday, protesting—2,000 strong—against the Government's intention to wipe out that industry by agreeing to free trade with Britain. Is it too late to appeal to the Taoiseach to safeguard the livelihood of all these workers and, in that regard, there are not fewer than 6,500 workers involved? They  comprise some 1,000 people engaged in the coachbuilding industry, 4,000 in the assembly of cars and 1,500 in ancillary trades. It seems rather a tragedy that the Taoiseach is hell-bent on free trade, in the clear knowledge that this industry will be wiped out and that misery will be the lot of some thousands of workers in this important business. The wages paid to the operatives involved amounts to some £5½ million a year and it seems the height of economic folly that we should unnecessarily threaten the future of that important industry.
We are not compelled to enter into a free trade agreement with Britain. There is no obligation on us and why any responsible Government should create this sad state of affairs is beyond us. Again, money is drying up for local authorities. Housing, in particular, is badly hit. Money is not available for essential work schemes of water supplies, sewerage and house-building, et cetera. Many local authorities, according to our local papers, are already bankrupt. They cannot find the money from the Local Loans Fund or the Department of Local Government and the banks will not accommodate them. We have grave fears of the curtailment or cancellation of essential services for our people and we are gravely perturbed about the possibility of wholesale unemployment amongst county council workers as well. These people in the building trade, in particular, have been the first to be caught in this credit squeeze. It seems particularly sad that the many thousands of people waiting for homes —8,000 in the queue in the city of Dublin and some 160,000 in the country at large—will be committed to a further long purgatory of waiting, relegated to a limbo of forgotten people to be the first victims of this infamous credit squeeze.
It is to be greatly deplored that many progressive firms in this country and many progressive industries which, conscious of their obligations and the fact that free trade would come some day, had been making realistic efforts to re-adapt themselves, re-organise themselves and revitalise themselves, for that kind of rigorous competition should now be faced by free  trade with Britain at a time when clearly they are not fully prepared or equipped to meet that kind of challenge. These industries, the boot and shoe industry and other industries, need more time to perfect their adaptation methods and strengthen themselves for this competition with which they will have to contend in freer trading circumstances. The abandonment of the quota and the introduction of the levies will, in our opinion, have disastrous consequences. Clearly our industrial potential cannot compete with the all-powerful British industry.
However, I want to say a word in connection with another industry which is deeply involved in this matter, an industry for which I have a particular responsibility in this House and from which I derived my livelihood for a long number of years, the boot and shoe industry. This industry provides the requirements for 97 per cent of the home market, employs 6,000 persons and another 2,500 in ancillary industries, so that there are about 8,500 people, or 35,000 families, dependent on this industry. It distributes in wages some £3.5 million a year and exports 27 per cent of its output. That is an indication of the extent to which this industry has developed and we are concerned here, in respect of the recommendations made in the report by the Committee on Industrial Organisation and the reports of the National Industrial Economic Council, that many of the Government agencies, and especially the Industrial Development Authority, would seem to be working at variance with the reports of those bodies as to how best to assist these industries in their system of adaptation.
I want to emphasise that fact by saying that the policy of the concentration of industry is being ignored by Government agencies. This industry is widespread throughout the country and the report of the Committee on Industrial Organisation recommended the centralisation of industry. We have the sad predicament of new industries for the manufacture of boots and shoes being removed altogether from the boot and shoe centres, which is at  complete variance with the recommendations to which I have referred. The adaptation council of the industry clearly cannot fulfil its obligation, especially in regard to education in the technology of boot and shoe manufacture, if this continues. The Industrial Development Authority has an obligation to consult with these adaptation councils and to advise them of future developments. New industries should bet set up where industry is in existence at the present time; they should be tied up with the industries which are now operating. This industry is over-producing and this question of centralisation is a matter of dire necessity for them. It is ridiculous to set up new factories in places where a number of factories have closed in recent years.
This Party have been pleading with the Taoiseach to advise us of the terms of the Anglo-Irish agreement which is now nearing completion and the Taoiseach has persistently refused to give us this information. This is in stark contrast with the attitude of the British Government who are advising industry in Britain as to the ramifications of the Irish agreement and as to the repercussive effects it will have on industry in Britain. This is borne out by the fact that the British Board of Trade obviously consulted the British boot and shoe industry and revealed to it the fact that the Industrial Development Authority in Ireland had recommended the removal of the quota and that it should be replaced by an import levy of 30 per cent on imported British footwear. This was the first intimation the Irish industry or the trade unions involved had received of the removal of the quotas. The British Government obviously had advised the industry of this fact.
Mr. Treacy: The first they knew about it was when they read it in the British Shoe and Leather News. We know of no reason why the Taoiseach should not give to the House and the people concerned the information that is vital to them.
Mr. Treacy: If free trade is to be the outcome of these talks we in the trade unions and the labour movement know full well what will follow. There will be widespread dislocation of industry, a shocking problem of unemployment and redundancy and even the existence of the best established industries will be threatened, if dumping is permitted. It will be difficult to prevent the dumping and too late to stop it when it has taken place and factories have closed down. The Taoiseach seems to be in the mood to teach Irish industrialists a lesson, to be determined to unwrap the swaddling clothes and to expose them to the stark realities of free trade. He seems to be about to teach them a lesson for some inertia on their part but he would be a foolish man indeed if he did not realise that the great and highly efficient industries of Britain can supply for the 52 weeks of the year the total needs of this country from less than a week's production of their factories. There is no ambiguity in our minds about the fact that if the tariffs and quotas are removed, industrial graveyards will result. There will be widespread unemployment and emigration. That is the price Irish workers are being asked to pay.
The employer in most cases will be able to confer on himself a golden handshake, but the workers with whom we are concerned will be thrown ignominiously on to the unemployment market. They will be helpless and penniless. We know the size of the problem because it is spelled out for  us in the report of the CIO. Of the 26 industries on which the CIO reported, employing some 77,000 operatives, they have told us that in freer trading circumstances—and this surely applies to Britain—not fewer than 11,000 Irish workers would lose their jobs, and that if the adaptation measures which the CIO recommended were not adopted, a further 23,000 workers would lose their jobs. That is the kind of great human problem with which we have to contend. Even if agriculture does well out of this free trade agreement, which many of us doubt, it is unlikely to absorb any extra employment on the land, especially when one has regard to the fact that since 1957 over 60,000 workers have left the land for the towns and villages more particularly of Great Britain.
Let me say now that the White Paper on manpower policy which was issued recently by the Government has come to us in the trade union and the labour movement as a deep disappointment. It is a deep disappointment to those of us who worked and agitated for a positive manpower policy designed to achieve an intelligent, organised, planned economic development which would provide jobs quickly, ensure jobs security, raise living standards, give us price stability, and deal effectively with the problems of unemployment and redundancy with which we now know we will have to contend. The proposed manpower policy of this Government is only a pale shadow of what is required by the Irish trade union and labour movement.
I say that primarily because this economic policy programme is being handed over to two Departments of State, the Department of Industry and Commerce and the Department of Social Welfare. It cannot be successful. We resent deeply the fact that the Department of Social Welfare should have been brought into this matter at all. The Labour Party and the trade union movement have called for the establishment of a distinct Ministry of Labour whose responsibility would be to effect this intelligent and organised plan for our society to which I have adverted.
 We believe a Ministry of Labour is vitally essential. We think its primary purpose should be to enrich and ennoble labour. We resent the fact that this responsibility has been handed over to the Department of Social Welfare with their archaic, puny, niggardly-minded concepts, their doles, their means tests, and all the red tape that can possibly be conceived by the ultra-conservative bureaucrats in that Department. That Department could never solve the problem of redundancy or unemployment. I realise I have only had half an hour to deal with these important problems.
The Fianna Fáil Government have been in power in this country for nigh on 29 years. They were returned time and time again by a mandate of the Irish people, sometimes with a huge majority. They have had more than their fair innings to resolve the social problems of our country. Seldom in the history of nations have a Government been able to lead a country for so long. It seems to us in the Labour Party that this Government are bereft of any hope of curing our nation of the economic and deep-seated malaise which has clearly set in. They are now about to abandon us and to hand us over to an outside interest, be it Britain, EFTA or the EEC, whatever the humiliating terms or their shattering consequences.
Mr. Treacy: Certainly. The Government are clearly prepared to sell out the Irish people. It is obvious that a defeated Government driven by economic failure are prepared now to come to terms with the age old enemy, England, in the hope that the gold may rub off and that some kind of boost may be given to our wilting and decaying economy.
Mr. T.F. O'Higgins: In the past 12 or 18 months we have heard references to inflation. The references made in the past need no longer be a matter for controversy here because in this debate, at this time, at this moment, this country is facing the  problem of inflation. The basic cause of that is that the total of domestic expenditure, both current and capital, by public and private sources, has increased at a rate substantially faster than national production. As I say, this is no longer a matter of controversy. It is now one of the facts of life which even Government Ministers have had to concede and deal with in this debate. We in Fine Gael are concerned not so much with establishing a problem which is there, but with considering how it came about, what led to it, what situation brought this calamity upon our people, so that if that can be established steps can be taken to ensure that what has happened will not happen again.
Inflation, as we all know, has certain symptoms while it is taking place. The process may be pleasant initially but there are certain indicators which should be read and seen, particularly by those charged with the responsibility of looking after this economy. The Minister for Agriculture and Fisheries who said a few words a while ago made a very precious reference to the art of economic management. Let us see how well this art has been exercised by those who have had responsibility in the past 12 or 18 months. One of the first symptoms of an inflationary situation must be and is the creation or development of balance of payments difficulties.
Without going far into the past, it is reasonable to point out that in the first six months of 1965 our imports rose by £13.9 million while at the same time our exports dropped by £9.6 million. That led to an adverse trade balance showing an increase of £23.5 million. That fact was there to be seen, to be observed and to be considered. I wonder was it? Perhaps it was brushed aside by the facile reasoning that this drop was due to a decline in our cattle sales and this would be bound to rectify itself later in the year. It is true that the creation of that trade gap was contributed to by a decline in cattle exports but there were other more ominous factors which should have been observed and understood by a Government knowing their job, confidently doing it and concerned to discharge  in a proper way their obligation to the people.
For instance, in that first six months' period there was a decline, and a significant decline, in the quantity of manufactured exports. There was also —probably a more significant factor and more disturbing in view of what took place last year—an increase, and again a somewhat significant increase, in the rate of consumer imports. The total increase in imports in the first quarter of this year was some £5.7 million. In fact, consumer imports represented 37 per cent and in the total amount of imports in the period, the rate of consumer imports advanced significantly.
Now, these facts were there to be seen in the opening months and throughout the first part of this year. They were not the only factors that should have been observed. We have had a situation over a number of years in which there has been a deficit in our balance of payments but in fact that situation was covered and cloaked by a very large inflow of foreign capital into this country. In the last few years the figures have been significant, but significant as they were they contained in them a source of danger, the source of danger being that the size of the capital inflow would create, as I believe it did create, Ministerial complacency in relation to our trading position.
In 1960 the inflow of capital was £0.6 million; in 1961 it had risen to £13.4 million; in 1962 to £23 million; in 1963 to £25 million and last year, in 1964, there was a massive inflow of capital of some £36.6 million. Now, that massive increase of over £11 million should have put the Government, if they knew their job, on their toes to see whether we were not banking too much on an inflow of money upon which we could not rely. We had a deficit in 1964 of £31 million but even so with that inflow of capital our external assets rose by something around £8 million. I want to suggest that with that situation going on last year and the beginning of this year a change took place which should  have been apparent to a Government watching their responsibilities. It was a change of a significant kind because the rate of capital inflow into this country began to decline significantly. The Government knew that; the people did not. The Government knew what was taking place but did they understand what was involved? I suggest they did not.
There is ample evidence that in the first months of this year as a result of the fall in the inflow of foreign capital there was a clear economic indication of danger given and that was by the steady and continuous decline in the external assets held by the commercial banks. In fact, the accumulated drop in the first four months of this year was 17½ million and the drop in the external reserves of the commercial banks was from £100 million in January, to, in the month of April— and let Deputies mark well the month —£79 million. I charge this against the Government, that knowing of a situation in which we were increasing our imports, and in which our exports were dropping, knowing of a situation in which the inflow of foreign capital was decreasing and seeing a very perceptible drop in the reserves available to our banking system, any Government knowing their job would have appreciated that the reason for this was something that was happening in the economy itself.
Of course, they would not have far to go. They would only have had to look at the extraordinary amount of expenditure that took place in the year just concluded. There were also other indications available to them. If they cared to consider it there was available, as published subsequently in the Economic Statistics, the fact that industrial production was perceptibly dropping towards the end of 1964. Indeed, in the review which was in course of preparation, and which was subsequently published by the Department of Finance, on the working of the first year of the Second Programme for Economic Expansion, attention was drawn to the fact that in the latter half of 1964 the rate of expansion and the volume of production was slowing down.
 Shortly following that, the National Industrial Economic Council, in its comments on the Department of Finance review, drew attention in paragraph 4 of its publication to the fact that the development of production was slowing and that there appeared to be grounds for anxiety. It directed the Government's attention to this. All that must have been apparent to the Government in the early months of this year, in January, February and March. We want to know why something was not done about it. Is it because the Government did not recognise the signals or, recognising them, chose not to do anything about them? Was this another exercise in political expediency, in declaring an election before the facts had to be faced? We can remember only too well, as can the people, the last exercise in political expediency by the Taoiseach and leader of Fianna Fáil. Only 12 months before, having published on behalf of the Government a White Paper indicating that a gap between incomes and output would require to be closed, the same Government nine months later, at a time of political embarrassment for them, initiated—I say it deliberately — the ninth round of wage increases.
In the early part of this year, inflation was indicated. Not only had there been a vast increase in expenditure from private sources, a very definite and great increase, but public expenditure had also increased enormously. It appears from some figures recently published that in 1964 there had been a very definite increase in bank lending in the public sector. It was up by some 27 per cent and there had also been a very great increase in lending in the private sector. In any event, in the early part of this year, these figures should have caused concern to any Government concerned with discharging their responsibilities. We do not know whether the Government considered these signs or what was the mind of the Government. We know only what they said, and at the end of the first three months of this year, with our external assets falling in London, the volume of industrial output  dropping, the inflow of foreign capital decreasing, with all the economic indicators pointing to danger and these facts known to the Government, we find the Taoiseach saying on March 25th that the years immediately ahead would far surpass all that has yet been accomplished, provided we as a nation followed a consistent and coherent policy under a competent and united Government.
Mr. T.F. O'Higgins: I want to know how could the leader of a Government knowing his job, concerned with public honesty and with playing fair with the people, or how could any man who was aware of the facts to which I have referred and which are now available in Government statistics, say to the people that “rarely before in history were all the circumstances, external and internal, so favourable to Irish economic development.” Either the man did not know his job or he was indulging in an exercise in political chicanery.
It may have been a coincidence that on March 27th, a Saturday night, down in Nenagh, there was the last mustering of Fianna Fáil supporters in that constituency prior to a general election the following week. Possibly that had an effect on the Taoiseach's approach. We are concerned, however, with the fact that the election being over, the situation now having been faced, the people should know what mistakes were made and these mistakes having been discussed, that guarantees will be given that they will not be repeated. We believe that what happened—and I doubt if this will be seriously challenged by anyone—was that there was not on the part of the Government sufficient foresight and  planning in relation to the direction in which this country should expand.
They had the Second Programme, and up and down the country Ministers were in the habit, in 1964, of persuading themselves and those who listened to them that the mere fact of printing a Second Programme for Economic Expansion was as good as delivering the goods. In fact, the Second Programme was an exercise in sound economic foresight by a team of civil servants. I do not believe that either the Taoiseach or any member of his Government ever understood what that Programme was designed to achieve. How could they, because no programme for economic expansion can hope to get off the ground, unless it is guaranteed sufficient credit? How could anyone hope to expand an economy like ours without ensuring that there is available for the worker for the doing of the necessary operation sufficient organised and sustained credit?
The second feature to be emphasised in relation to the rapid acceleration of bank lending which developed in 1964 and which gained force in the earlier months of the present year is the steep growth in borrowing by the Government and other public authorities.
There was no effort by the Government in relation to the Second Programme to make sure that the machine —we will call it a motor car for the  moment—had enough fuel to get going. When we in the Fine Gael Party indicated in our Programme for a Just Society our views in relation to how the economy should be planned, we indicated in the section on economic planning certain things which required to be done. Amongst the primary things we put forward was effective co-ordination between economic and monetary policy. That was part of our banking policy. It was immediately impugned by the Taoiseach. He said we were in some way going to make a raid on the people's money. All we were concerned with was that in relation to any economic plan there should be a rationalisation and an organisation in regard to monetary policy to ensure that it would work. The Taoiseach sneered at it. Now, six months later, it is apparent to all that the dissipation of our credit resources which took place last year has prevented and has retarded the economic expansion hoped for in the Second Programme.
In relation to many other matters, a prices and incomes policy and matters of that kind, we also indicated in the early part of the year what should be done. If what we indicated at that time had been done, it would not be necessary in this debate in the autumn of the year, for the Taoiseach to say, as he had to say yesterday, it is too bad but the situation is so grim that we will have to postpone the promised expansion in health services and in education. In my view, the fact that these have been postponed is a tribute and a monument to the imcompetence of Fianna Fáil in the past 18 months.
Mr. T.F. O'Higgins: I want to say a word about free trade. The Minister for Finance in the debate yesterday said—I thought rather naively—that he could not understand the anxiety expressed about the free trade proposal with Britain, that, after all, we had been talking about free trade since the summer of 1961. That is quite true. Ever since 1961, when quite suddenly the Leader of Fianna Fáil and the Government made an application to the EEC for membership, we have been talking about free trade. But it is quite a different thing and it is in no way the same thing as the proposal to have a free trade area agreement with Britain. If the Minister for Finance or the Taoiseach thinks our people understood all the talk for the last four or five years to have been related to free trade with Britain only, then he is very much mistaken indeed.
What attracted the ordinary people in relation to free trade under the Rome Treaty over the past four years was the fact that, if free trade was to come, we would have the benefit of the institutions established under that Treaty. Those institutions were designed particularly to safeguard the interests of weaker economies and smaller countries. They were designed particularly to have regard to the kind of economy, the agricultural and rural economy, in parts of Europe very similar to our own. It was these things that were understood when people talked about free trade in the past four years.
I want to suggest in relation to a free trade agreement with Britain that at no stage ever since the present Taoiseach became the Leader of Fianna Fáil was there the slightest indication or suggestion given by him or any member of his Government that they were proposing or contemplating a free trade area agreement with Britain until he announced it  when he came back from London last July. Up to that, there was never any such suggestion, good, bad, or indifferent. It is worth recalling that this announcement was made at a time when, apart from one newspaper, the national press was not available and there was not any possibility of having a general discussion on a matter which was rather in the nature of a political bombshell.
The Minister for Finance said last night that free trade was coming and that there was GATT and all the rest of it. I do not believe GATT offers any justification for this proposal. I believe that, on examination, it will prove to be quite erroneous to say that because of any complications in relation to GATT a step of this kind is necessary. GATT has been there for a long time. There has been more talk about it than evidence of progress. The GATT situation is not a factor that requires to be considered at the moment. But I would like to remind the Taoiseach—I am sure it is not necessary to remind him, but it may be necessary to remind the country— that the proposal to enter into a free trade area agreement with Britain creates, or may create, the very dilemma which Arthur Griffith fought against and foresaw as far as this country was concerned.
Arthur Griffith's whole political and economic philosophy was concerned with trying to correct a situation in which the small Irish economy was face to face in unrestricted competition with a larger and more powerful one. I should imagine it is not necessary to suggest these matters; they should be known to everyone in the House and, most of all, to the Leader of the Government, but we are concerned with the fact that, having made the announcement in July, these has been no further public discussion on behalf of the Government in this country in relation to this matter. It could, however, be mentioned in the Queen's Speech in Westminster yesterday. It could be referred to by the British Prime Minister, who said that he is very pleased with the progress that is being made, and the Minister for Finance could go across to London and, in the  presence of Mr. George Browne, talk about the free trade area proposal. But no Irish Minister and no leader of an Irish Government will discuss it here in Ireland's Parliament, and this is where it should be discussed.
Mr. T.F. O'Higgins: What are we doing now? The Taoiseach is not doing it. The British Prime Minister said yesterday that prospects were bright. That is precisely why we fear this. When an Englishman smiles, many an Irishman has learned to shiver. Prospects were bright!
Mr. T.F. O'Higgins: What is the justification for this proposal? We either go into Europe or we stay out. We will certainly go into Europe if Britain goes in. If Britain stays out, we shall have to take a decision. If those circumstances arise, we shall either merge ourselves into the British economy or we can seek to continue the existing type of trading arrangement with Britain, while, at the same time, exploring the possibility of accommodation in Europe. Those are the alternatives open to us. The Government have obviously decided that, with Britain out, it is necessary to enter into an economic marriage with Britain.
I should like to know what efforts the Government have made in the past three years to explore the possibility of seeking accommodation under the Rome Treaty. I assert that they have made no effort whatsoever. There has certainly been no diplomatic move in Europe, good, bad, or indifferent, ever since the end of 1961. If this free trade area goes through, we shall have to examine the terms—I assume they will be debated here—if a commitment is entered into. I am assuming for the moment that the treaty will be such as will preserve the economic independence of this country. I am assuming for the moment that the  treaty will be such that the balance of advantage will be in our favour. I am assuming that the new arrangement will be along those lines, but I want to ask what then will happen if Britain enters Europe. We will go in, of course, but we will be no longer in charge of the negotiations. Those who will negotiate on our behalf will be the British.
We have problems quite particular to this country. We have the problem west of the Shannon. We have the situation in which there is emigration from the rural areas and the flight from the land. Are we going to allow a British Prime Minister to negotiate these things for us? I assert that this particular piece of folly is being indulged in now by the Leader of a Government bankrupt of ideas, frightened at the effect of their own mishandling and running away from the economic mess created through their own incompetence in the past 18 months.
Mr. T.F. O'Higgins: People can take some consolation in these times and in these circumstances in the fact that there is now in Dáil Éireann a strong, determined and vigilant Opposition, sure of their policy and knowing precisely what should be done. We gave the lead in relation to proper thinking and proper consideration in regard to economic planning, in regard to the things that might have been done in the past six months, in regard to the free trade area, and all the rest of it. We are concerned with the establishment of a more just society in this country. We have a policy which we believe can achieve these things. Certainly, in present circumstances, we are, I believe, acting properly in the interests of the people. We are not behaving as Oppositions have done in the past, as the Opposition behaved when Deputy Sweetman was Minister for Finance and was doing what required to be done, taking the steps that should be taken, steps which, according to the Minister for Finance yesterday, were too severe in the view of Fianna Fáil in 1956, steps which are now adopted by Fianna Fáil. Unlike the pattern  then, there is no destructive Opposition here on these benches now. We recognise that the strength of the Irish economy will withstand the past mismanagement of Fianna Fáil. The economy is sound. It can develop if proper methods and a proper policy are introduced. Sooner or later, I believe we shall be called upon to do just that.
The Taoiseach: I am not very clear why the Opposition Parties asked for this debate. During the course of it, there was no serious dissent expressed by any spokesman of either Opposition Party to the measures taken by the Government to deal with the present economic situation, which is what we were supposed to be discussing. In the main, the Opposition speakers confined themselves to making some carping and critical remarks about other matters irrelevant in this context. It seems to me the Opposition Parties were seeking to make some small political change; I doubt, however, if they made very much.
In this day and age, political parties and political leaders have to work for public respect rather than for partisan cheers. That, anyway, is my view. I do not want to press it on either of the Parties opposite if they do not like it. I doubt if the interest of the general public in this debate goes deeper than a desire to understand the nature of the difficulties now facing the nation and what is being done about them. I think there is far less concern about how they arose, why they arose, when they arose, and how they are to be cured. When we are considering how these economic difficulties can be overcome, how the country's rate of economic growth can be speeded up again, the public want precision, definite and understandable statements and proposals about measures capable of immediate or early application rather than vague generalities. This is what the Government have given them and the advantage of this debate to the Government is that it afforded us an opportunity of repeating those statements rather than listening to anything that the Opposition Parties have contributed.
I want to make some comment on  the opening speech on the other side of the House by the Leader of the Fine Gael Party, Deputy Cosgrave. In doing so, may I say I recognise at once Deputy Cosgrave's difficulty in speaking as a leader of a Party so divided and confused as Fine Gael seem to be? The leadership of such a Party is a very difficult business, I appreciate, and must necessitate considerable skill in tightrope walking. That probably explains why in his speech Deputy Cosgrave confined himself to the vaguest generalities, avoiding specific commitments of any kind, and suggesting policies rather than advocating them.
He began by repeating his suggestion that the economic difficulties of this day began with the turnover tax imposed in 1963 and, no doubt, this was just his formal acknowledgment of what used to be known as the old Dillon line. I doubt if he really believes it himself. It is, of course, as unfounded now as it ever was. It ignores several things. It ignores the purposes for which that tax was imposed, the purposes for which the revenue raised by that tax was expended, the alternative taxes which would have to be imposed if that revenue was not available, and it ignored particularly the fact that, although that tax came into operation in 1963, 1964 was the best year this country ever had, a year in which production went ahead more strongly in agriculture and industry, in which national income rose more rapidly than before and which was in every way a good year which has given us added strength and resources with which to meet the difficulties of this year.
Deputy Cosgrave spoke about a Fine Gael plan. For those of us who are  not very familiar with the internal affairs of the Fine Gael Party, perhaps he will at some time say which of the many plans they produce from time to time has now been elevated to this capital letter Fine Gael Plan. If what Deputy Cosgrave said about it is descriptive of it, then it is nothing more than a string of vague generalities which could mean anything or mean nothing.
He said that the purpose of this plan, although he emphasised the word “plan”, is not to impose controls of any kind, not to control business or to order individuals around but, he said, to marshal the forces of the nation. I do not know how you marshal forces of any kind without giving them directions or orders or without controlling them. Military metaphors of this kind can sometimes be confusing and perhaps some time or another Deputy Cosgrave will translate what he said about his plan into plain civilian language.
He urged that we should have meaningful targets for agriculture and industry. With all due respect to Deputy Cosgrave, that was not a very meaningful statement. But, apparently, this plan provides for a planning board, a board which is presumably to supersede the Government or to order the Government about, although later in the same speech he made the suggestion, which was repeated by other members of his Party, that the Government are being run by civil servants. It seems to me that if I understood him correctly this is precisely what his Fine Gael plan envisages.
Then he said the public and private sectors of the economy should be properly co-ordinated. Whatever that means as a practical measure, it was a fine phrase, a pretentious phrase, although what it means or does not mean is not very clear.
The Taoiseach: That is one definition. Perhaps some other Deputy of the Fine Gael Party will give us  another definition. Then he said we should have an ordered system of capital priorities but made no suggestion that the priorities set out in the White Paper on the Capital Programme should be changed in any way. He complained that there was a sudden and rapid cut back on Government capital spending and bank credit when all the facts disclose that there has been no cut back, sudden or otherwise, and only a restraint on their expansion, as I tried to explain when speaking yesterday.
The Taoiseach: Once again, Deputy Cosgrave spoke about a prices and incomes policy. This is a vague phrase which he uses frequently but carefully avoids defining. Later in his speech he spoke about wages being settled in free negotiation and, whatever may be said for that particular method, it seems to me the very opposite to the type of incomes policy that he had in mind and as he wanted us to interpret it.
All these matters, he said, were to be organised on a basis of goodwill and mutual understanding, which sounded to me far more like a prayer than a policy. Then he went on to call for what he called a constructive banking policy with a combined approach of Government, Central Bank and commercial banks—another fine but rather meaningless phrase unaccompanied by any indication of the extent to which present banking policy is defective or requires to be changed.
He spoke, again very pretentiously, of effective co-ordination between the monetary and the economic policies. That, to me, is as fatuous and as meaningless a statement as anything that ever appeared in an Irish Times leading article. The leader of a political Party, any political Party, but, I suppose, very especially, Fine Gael, should be trying all the time to bring all his colleagues up to some level of responsibility. Once he starts allowing himself to fall down to their lowest level of partisan irresponsibility, then he is abandoning the obligations of leadership. I regret that Deputy Cosgrave  here, yesterday, decided to revive some of the antiquated political jibes that were at one time Fine Gael's entire stock-in-trade but which we thought he was going to put on the scrapheap as an unwanted legacy from the Dillon days.
The Taoiseach: I recognise, of course, that he has got political needs vis-à-vis his own Party and that this is the kind of stuff that members of his Party understand and expect but, if I may say so without offence, I suggest that he should seek to establish his reputation as a Party leader on a sounder basis. He may be fairly sure that, no matter what he says, Deputy L'Estrange will still lead the applause.
The Taoiseach: To get back to the more serious aspects of Deputy Cosgrave's speech, he asked if the Government would give an indication of the likely trend of events in regard to the import levies, to facilitate traders who may wish to place orders for delivery of these goods after next March. Personally, I do not think that the Government should be expected to facilitate operations of that kind. We have announced that the levies are in force until March 31st, next year. I hope it will be possible then to let them lapse but, as I said, it would be irresponsible on our part to make a firm commitment to that effect until all the facts are known.
May I say a few words also about Deputy Corish's speech? First of all, he gave me the impression of making a speech here yesterday because he had to make a speech and not because he had anything new or different or important to say. As I am giving advice on Party management to Fine Gael, I may as well give it to the Labour Party. I think the Labour Party will have to train themselves to look squarely at realities, not just to deplore them or to moan about them but to decide how to deal with them.  None of our difficulties, whether they are large or small, will go away just because the Labour Party do not like them. It seems to me that the way to get rid of these difficulties is by plan and action and in these respects Labour Party Deputies have nothing to say or, at any rate, decided that they would not say it on this occasion. If the Labour Party aspire to exercise influence in Irish life, they will have to abandon the role of the Party of discontent and be prepared to commit themselves to some clear ideas and some definite proposals and, perhaps, formulate eventually what could be presented as a comprehensive policy. Jeremiah was never a very popular guy but he had not to go up for election and was not worried about his popularity.
The Taoiseach: A philosophy of defeat and gloom with Deputy Treacy as its high priest will set no bonfires alight. Most Deputies who think about these matters would prefer to have a more constructive role for their Party.
The Taoiseach: The Labour Party belief, expressed by Deputy Corish and supported by other members of the Party, that the price increases of the past couple of years could have been prevented by some earlier application of price controls does not stand up to any detailed examination of the price increases of that period as reflected in the consumer price index. I am going to take these price increases, the commodities which have gone up in the price, in the order of their importance in the index. The first was beef. The increase in the price of beef added 2.5 points to the index. That was due to  the high prices prevailing in the export markets. No system of price control that we could have applied here could have prevented these higher prices following on the increase in export markets. The only result of any attempt at price control would have been to make it impossible for Irish butchers to purchase Irish cattle and so would have made vegetarians of all of us. There is an inquiry being undertaken at the moment into the whole system of marketing of our meat.
The second group of commodities that added to the consumer price index were those which are affected by increases in taxation, cigarettes, whiskey and stout, and the increase in taxation on these commodities was imposed with the approval of the Labour Party and with the consent of most Deputies in the Dáil, in order to enable us to pay out higher old age pensions and to provide better social service benefits generally.
The next cause of the increase in the consumer price index was the increase in the price of potatoes and this was due to the bad harvest and the shortage of supplies. Whatever the disadvantages to consumers it is at least one consolation to know that the higher prices operated to compensate the producers for the bad yield. Fresh milk was responsible for another increase in the consumer price index and that was due to higher prices which were sanctioned for fresh milk and, to some extent, to higher wages in milk distribution.
The increase in the price of bread was due almost entirely to higher labour costs, although there was an increase in the price of wheat. These items account for about half of the total increase in the consumer price index. Is there any one of these in which Deputy Corish would say we should have controlled the prices?
The Taoiseach: The turnover tax raised prices by three per cent. It did what it was intended to do. Of the  remaining half of the increases that took place in the two year period, while some were related to increased import prices——
The Taoiseach: ——higher labour costs accounted for the greater part of the other half. If we had done as Deputy Corish asked, that following the National Wage Agreement we should at that time have imposed price control, it would have meant that most of the workers would not have got the increases and that the rest of them could not have got them until much later.
The Taoiseach: When you get down to thinking about these things, you will realise how true that is. If we had said to every employer whose employees were seeking an increase of 12 per cent in wages that they could not increase their prices, how many of the employees would have got the increase? That is what you are saying we should have done.
The Taoiseach: The effect of the British levies was that there was a falling off in industrial exports to Britain but there has been an increase in our industrial exports to other destinations, although the increase in these exports has not been as considerable as we would hope for. I am surprised at Deputy Corish's concern that we should not express criticism of the British Government for imposing this charge. He said that his Party was advocating price control for the past two years but I hope he and his Party will assist us in providing a defence when all the  consequences which may flow from this measure of price control begin to emerge. I am sure that not all of them will be welcome.
The Taoiseach: Several Deputies, including Deputy Cosgrave and Deputy O'Higgins, appeared to be of the opinion that the import levies now in force should have been imposed much earlier. If the Government had taken action before it was certain that that action would be required, before it could be demonstrated as necessary, it would have been another story. The Government took action when the situation required it and when most Irish business circles expected that action would be taken.
I mentioned yesterday that some countries had made formal protests about the levies. They were not many, they were not serious and they were not pursued when the circumstances were explained. They would have been much more seriously pursued if the need for the levies could not have been as clearly shown. There was adverse comment in some foreign newspapers. The usual argument advanced by those who made these protests and by these newspapers who did not fully appreciate our circumstances here was that with our reserves standing at over £200 million a deficit in external payments as anticipated by us in this year could have been carried by these reserves without imposing any restrictions on trade.
If this was a temporary situation, one which we could say was now over, or coming to an end, no action would have been required and none would have been taken. Our concern is not with what has happened but with what may happen. We propose to correct the adverse trends which threaten our economic stability before these trends become too strong. Earlier action would have been unjustifiable. It is generally accepted by the Irish business community and abroad that this action was necessary.
Deputy Dillon compared these measures which the Government are  now taking with the measures which his Government took in 1956. He says that our measures are inadequate but I will give this assurance to the House and the country, that this Government will not build up a surplus of £12 million in external assets as in 1957 at the cost of one hundred thousand unemployed.
The Taoiseach: The Labour and Fine Gael Parties have been talking on this subject of an incomes policy. I have often objected to the use of this phrase in a loose way by people who clearly have no conception of its meaning or regard it as a cure-all. When I use this term “incomes policy”, I mean complete and effective arrangements that will ensure that the benefits of rising production and productivity are reflected in higher incomes, including wages and salaries regularly and adequately while at the same time avoiding undue or untimely increases so as to ensure that the benefit of higher incomes in living standards will be as full as possible by minimising adverse effects on the general price level and, with particular regard, to the consequences in respect of the expansion of employment.
It seems to me that an incomes policy must also be capable of serving social purposes, involving some redistribution of the national income for the benefit of the worst off groups of our community and must, therefore, imply a willingness on the part of the better-off groups not to press for increases of equivalent percentage amounts and to accept whatever taxation is required so that those worse off may be assisted, without seeking compensation in their own remuneration.
We are slowly building up to such a conception but it is a very hesitant process. Pitfalls of suspicion and misunderstanding abound. I think it would help to have defined, in as precise a way as possible, what are the components of an incomes policy and what are the social purposes to which it should be directed. I hope that the NIEC may undertake this task.
The Taoiseach: Deputy Cosgrave said that I did not admit in the course of my opening statement that the Government had made any mistake in this situation. Looking back now, I can say that if we had started to pull down the level of Government capital expenditure earlier in the year, we would have found it easier to impose limitations, but, now when we are going to do it, Deputies do not seem to be very happy about it and I doubt if they would have been happy about it earlier in the year either.
Deputy Dillon said that I said we are planning to cut back expenditure on health services and education. I said nothing of the kind. I said in my opening statement that we see a necessity to defer expensive improvements in the health and education services until the economic situation improves. I want to make it clear that existing policies will proceed and what I have in mind are significant new developments involving substantial expenditures. So far as the health services are concerned, the Government have comprehensive plans for their development but, with the best will in the world, these developments could not in any event and for practical reasons, have proceeded far in the coming financial year. The present financial difficulties will not stop us developing long plans for the health services. In fact, the Government have recently decided to publish them in a White Paper which I hope will appear before the end of the year, so that there can be full public discussion on them before the final decisions are taken and legislation drafted for their implementation. It is the firm wish of the Government that these and other social services should be developed as the growth of national income makes it possible. The wish is to be in a position to push on steadily and early with our development and that indeed is an important factor influencing the Government in their present steps to strengthen the national economy.
With regard to educational facilities here, we are awaiting the receipt of  Commission reports on important aspects. The intention is that development plans will be fully prepared, publicised and implemented as rapidly as our resources permit. We must, however, be realistic in our recognition of the fact that in the circumstances of 1966 if substantial additions to taxation are to be avoided, as we hope, the rate of progress in relation to these or, indeed, any of the State services will be less rapid than we would wish but some progress will be achieved.
Deputies opposite appear very anxious to overlook what has happened in respect of these services and this applies also to misinformed newspaper commentators on these developments. The enormous development which has taken place in our educational services in recent years is, I am sure, well understood by those who are concerned about the educational facilities of the State but they are not likely to be mentioned by Deputies across the way when they are speaking at the crossroads. In the past ten years, these services have been so expanded that Government spending on them has increased from £13.2 million ten years ago in 1955 to £33.7 million in this year. For every four pounds spent on the education of our youth in 1955, there is £10 being spent today.
The Taoiseach: Even if the Vote for Education next year is no higher than it is this year, it will still be more than 150 per cent higher than it was during that golden era Deputy Dillon was talking about.
The Taoiseach: The same applies to our health services. The expenditure on our health services, where there has also been a very considerable expansion, has more than doubled over the same period. Total expenditure on health in 1955 was £7.8 million. In this year, including a Supplementary Estimate yet to be submitted, it will amount to £15.8 million. If it can continue to expand at this rate, it will be grand but, if we cannot do it, it will  still be a record of achievement which we will be able to present to the people with pride.
There were a few other matters mentioned in the course of this debate to which I should like to refer and which may be less contentious if Deputies will keep quiet. Like Deputies, the Government have been concerned by reason of the placing of orders by Government Departments abroad in the circumstances where the wisdom and sense of these courses appear dubious. In some instances, it is more by reason of the normal operation of standard procedures and after the normal preference has been extended to Irish firms tendering for the contracts. There always has been the need and always will be the need to prevent the taxpayer being mulcted in unreasonable quotations by Irish firms. This will only be done by making it clear that if it does happen the Government will resort to other sources of supply. The Government have now decided that substantial orders should not be placed abroad for goods or equipment capable of being supplied by Irish sources without the specific approval of the Minister concerned and where it is possible, there should be at this time a postponement of other purchases. We expect this practice to be followed by all the State-sponsored bodies.
Deputy Cosgrave referred to what he called the exclusion of agricultural representatives from the National Industrial Economic Council. I have spoken so often on this matter that it is hardly necessary for me to speak on it again but apparently what I did say has not registered. There is no exclusion. If farming organisations are willing to accept responsibility for membership, there is no objection to that course so far as the Government are concerned. There may be some practical difficulties of arranging adequate representation for farming interests within a reasonable number of members, but I feel sure an adjustment of the present balance of representation by the principal interests on the council can be negotiated, if this is regarded as necessary.
The Taoiseach: The allegation that is frequently expressed by Fine Gael Deputies that Government policy is settled by civil servants is an absurdity and can only be put forward by a Party who are mentally reconciled to being permanently in Opposition. We have many highly competent civil servants to whose advice we give full weight, but decisions on policy are made by the Government, and only by the Government. If there were any member of the Government, who in my judgment, was not fully in charge of the policy of his Department, I would regard it as my duty to request his resignation. That has never arisen and I do not expect it will ever arise in this Government. Every decision of the Government is subject to challenge in debate in the Dáil, and is defended here by the man or men who made it. It is my duty to see that policy decisions of Ministers within their own Departments are fully co-ordinated, and kept in line with the overriding policy of the Government as a whole, a policy that has been widely publicised and fully documented to the Dáil.
I will not occupy the hour, but I want to repeat what I said yesterday and, indeed, what the more responsible members of the two Opposition Parties confirmed in their remarks. Nothing has gone fundamentally wrong with the national economy, and it is the determination of the Government to act in good time to prevent anything from going wrong in a fundamental way.
I do not know in what kind of world Deputy Treacy lives. He does not seem to have any understanding at all of the situation prevailing in the country, or pay any attention to the official statistics that are published. Production is rising. We may not in this year achieve the rate of growth in national  output for which we hoped and for which we programmed but we will still have growth and it will be at least three times the average rate of growth in all the six Coalition years.
Unemployment is lower. Deputy Corish said unemployment was rising, or perhaps it was Deputy Treacy said that. We send him every week an analysis of the Live Register but this seems to be a waste of time, paper and postage. In the first nine months of this year the average number on the unemployment register expressed as a percentage of the total labour force was the lowest ever recorded since these statistics were prepared. In seven of those months and in the two other months, when the level of unemployment was affected by trade disputes, the percentage on the register was not higher than the lowest previously recorded.
The Taoiseach: Here we have a situation in which there is no loss of output. Output is rising. There is no slipping back in the national economy. It is not going ahead as fast as we would wish, but it is still going ahead. There are more people in employment than there were last year. Fewer people are registered as unemployed. When I say that in this year the number registered as unemployed in most of the first nine months of the year as a percentage of our labour force was less than that ever recorded, I hope I will  be able to say the same next year. That will depend on the effectiveness of the measures we are taking now and the degree of public co-operation we get in fulfilling them.
The Taoiseach: Because of the country's progress in recent years, and particularly because of the exceptional improvement in our position last year, the country is in a much stronger position now to meet the impact of a temporary period of difficulty. In recent years we moved to a higher plateau of activity, and there we intend to stay. We have no intention of allowing the country to slip down from that plateau. We intend to consolidate our gains, our gains in production, our gains in providing employment, our gains in higher living standards, and the object of our policy now is to ensure that these gains will be made permanently safe so that a revival of our nation's progress at a still more rapid pace will be made possible later.
The Taoiseach: We are confident we can do it and, as the Party responsible for the management of the nation's business, the fact that we have confidence in our capacity to do this is far more important than the despondency of those Deputies who spoke in this debate with the intention of undermining public confidence and adding to a nation's difficulties.
Burke, Joan T.
Clinton, Mark A.
Coogan, Fintan. Donegan, Patrick S.
Esmonde, Sir Anthony C.
Fitzpatrick, Thomas J. (Cavan).
Flanagan, Oliver J.
Harte, Patrick D.
Hogan, Patrick (South Tipperary).
Hogan O'Higgins, Brigid.
Jones, Denis F.
Kyne, Thomas A.
Lindsay, Patrick J.
Lyons, Michael D.
Costello, John A.
Crotty, Patrick J.
Dillon, James M.
Dockrell, Henry P.
Dockrell, Maurice E. McLaughlin, Joseph.
Murphy, Michael P.
O'Connell, John F.
O'Higgins, Michael J.
O'Higgins, Thomas F. K.
Reynolds, Patrick J.
Blaney, Neil T.
Burke, Patrick J.
Calleary, Phelim A.
Collins, James J.
Corry, Martin J.
Crowley, Honor M.
de Valera, Vivion.
Fitzpatrick, Thomas J. (Dublin South-Central).
Gibbons, James M.
Gogan, Richard P.
Healy, Augustine A.
Hillery, Patrick J.
Kennedy, James J.
Kitt, Michael F.
Lalor, Patrick J.
Lemass, Noel T.
Millar, Anthony G.
Ó Briain, Donnchadh.
Ó Ceallaigh, Seán.
Tellers:— Tá: Deputies L'Estrange and T. Dunne; Níl: Deputies Carty and Geoghegan.
Amendment declared lost.
Amendment No. 2 put.
The Dáil divided: Tá, 63; Níl, 69.
Burke, Joan T. Collins, Seán.
Costello, John A.
Crotty, Patrick J.
Dillon, James M.
Dockrell, Henry P.
Dockrell, Maurice E.
Donegan, Patrick S.
Esmonde, Sir Anthony C.
Fitzpatrick, Thomas J. (Cavan).
Flanagan, Oliver J.
Harte, Patrick D.
Hogan, Patrick (South Tipperary).
Hogan O'Higgins, Brigid.
Jones, Denis F.
Clinton, Mark A.
Cluskey, Frank. Kenny, Henry.
Kyne, Thomas A.
Lindsay, Patrick J.
Lyons, Michael D.
Murphy, Michael P.
O'Connell, John F.
O'Higgins, Michael J.
O'Higgins, Thomas F. K.
Reynolds, Patrick J.
Blaney, Neil T.
Burke, Patrick J.
Calleary, Phelim A.
Collins, James J.
Corry, Martin J.
Crowley, Honor M.
de Valera, Vivion.
Fitzpatrick, Thomas J. (Dublin South-Central).
Gibbons, James M.
Gogan, Richard P.
Healy, Augustine A.
Hillery, Patrick J.
Kennedy, James J.
Kitt, Michael F.
Lalor, Patrick J.
Lemass, Noel T.
Millar, Anthony G.
Ó Briain, Donnchadh.
Ó Ceallaigh, Seán.
Tellers:—Tá, Deputies O'Learv and Pattison; Níl, Deputies Carty and Geoghegan.
Amendment declared lost.
Main motion put and agreed to.
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