Wednesday, 7 May 1969
Dáil Eireann Debate
Minister for Finance (Mr. Haughey): In view of the detailed analysis of the economic situation given by the Taoiseach last November and the number of documents currently available reviewing the economy, I do not propose to give more than a broad outline of economic trends in 1968. Detailed information is contained in my Department's “Review of 1968 and Outlook for 1969”, the comments of the National Industrial Economic Council on that review and the annual survey of the Irish economy published by the Organisation for Economic Co-operation and Development.
1968 was the best year in our economic history. The main objective of economic policy during the year was to keep the economy on the path of steady and substantial growth without imposing an undue strain on the balance of payments. We achieved a growth rate of 5½ per cent. The balance of payments outturn was not unsatisfactory. The actual deficit, £20 million, was not much above the £15 million projected at this time last year, though it represented a swing of £35 million from the surplus of £15 million in 1967.
Industrial production increased at the remarkable rate of 11 per cent and reached a record level in 1968. While an expansion of domestic demand  contributed to the rise, exports were the main source of growth. The stability of unit wage costs resulting from a productivity rise which virtually offset a sharp increase in wages contributed to a 30 per cent expansion of industrial exports. This gain in productivity was based largely on the taking-up of slack capacity in industry and may not be experienced in the same measure in 1969.
In building and construction, there was a marked rise in the volume of output in 1968. Agriculture too had a good year. Thanks to substantial increases in crop output and to a rise in livestock numbers, a growth rate of up to 6 per cent seems likely on the basis of provisional figures.
Employment outside agriculture increased and is likely to have more than offset the continuing decline in numbers engaged in agriculture. In the last quarter of the year, employment in manufacturing industry was 6,400 higher than a year earlier. At the end of the year, unemployment was below the level at the end of 1967, while emigration was approximately the same.
Both industrial and agricultural exports showed satisfactory increases, although agricultural exports lagged behind the others mainly because supply difficulties limited the volume of cattle and beef exports. In the balance of payments, net earnings from invisible transactions were boosted by high receipts from an excellent tourist season.
As I envisaged last year, imports grew rapidly throughout 1968 from the abnormally low base in 1967. This was associated with a quickening rate of growth of consumer expenditure which rose by five per cent over the year as compared with 1½ per cent in 1967. The main factor in stimulating this rise was the substantial increase in incomes, accompanied in many cases by the promise of more in 1969.
Despite the generally favourable trend of production, employment and exports in 1968, the threat posed by the rapid rise in incomes, consumer expenditure and imports necessitated the corrective measures introduced in November.
During the past year, we pursued a policy of diversifying our currency reserves and acquired a creditor position in the International Monetary Fund. We agreed to release part of the Irish currency element of our subscription to the Fund for use in convertible form by countries in need of foreign currency. As a consequence, we have become creditors in the Fund to the extent of £13¾ million.
Under the Basle arrangement for the support of sterling, we in common with other members of the sterling area, received from Britain a guarantee of the maintenance of the dollar value of the greater part of our sterling reserves. On our side, we have agreed to maintain a minimum of 65 per cent of our official reserves in sterling.
Unfortunately, the international payments system has been showing increasing signs of inadequacy, and the past year witnessed further strains upon it and upon the principal international currencies. It is a tribute to the system's resilience and to the ingenuity of the many ad hoc arrangements made to support it that it continues to function reasonably well. However, one must note that surplus countries have been hesitant to aid international liquidity by substantially reducing their surpluses, while countries with balance of payments difficulties, such as the United States, Britain and France, have adopted increasingly defensive policies.
Although few are satisfied with the present system, a consensus is lacking on what should be done to improve it. There is fairly general acceptance of the new special drawing rights scheme of the International Monetary Fund. For our part we have accepted it and passed the necessary legislation to enable us to participate in it. I hope that our fellow-members of the Fund will agree to its early establishment and implementation.
Even if there were general agreement on further improvements, it would take time to bring them into effect. We must, therefore, base our short-term policy on the assumption that the external environment will be one of continuing uncertainty.
The most important element of our foreign trade is our trade with Britain. The Anglo-Irish Free Trade Area Agreement is working well and has substantially justified the hopes we held when entering into it. Between 1965 and 1968 the annual value of the total trade between the two countries has risen by 38 per cent. During the same period our exports to Britain increased by 46 per cent—from £160 million to £234 million. A striking feature of these trends is the remarkable growth in our exports of manufactured goods to Britain which rose by 78 per cent.
During the second half of 1968 there were some developments which affected the smooth working of the Free Trade Area Agreement. I refer, in particular, to the British import deposit scheme and to British proposals for restricting supplies of cheese to the United Kingdom market. These matters were of sufficient importance to warrant a series of ministerial discussions which took place from November to March
The Government, in co-operation with the Irish banks, devised a scheme which ensures that, so far as our exporters are concerned, there will be no difficulty about financing the deposits on Irish goods entering the UK. While this scheme has gone a long way towards enabling Irish exporters to maintain the rising trend of our exports to the UK, we cannot insulate our exports against British measures for the curtailment of internal demand which affect British as well as imported goods.
In making the arrangements for exports of cheese to the UK market for the two-year period ending March, 1970, we emphasised that we do not regard voluntary restriction arrangements as a normal feature of the Free Trade Area Agreement, and we reserved all our rights in regard to the future. This position was accepted by British Ministers.
It is clear that the Agreement can bring considerable benefits to both economies and that there should be continuing close contacts at ministerial level to ensure that any difficulties arising are resolved promptly and that the agreement realises its full potential.
 While Britain is and will for a long time remain the principal outlet for our products, it is important that progress should be made towards greater diversification of export markets. Our experience in the British market in recent months emphasises the need to hasten this process.
In the long term the best prospect for diversification of markets lies in membership of the EEC. Recent political events have led to speculation on the possibility of the opening of negotiations with the applicants for membership, including Ireland. The Government are following developments closely but, while it may be permissible to hope for a more fluid situation favouring progress towards the enlargement of the Community, it is, as yet, too early to form an opinion about the likely course of events. I would like to emphasise, however, that, despite present uncertainties, it will be in the long-term interests of our exporters to have secured a foothold in the EEC market when membership becomes a reality. This applies particularly to industrial products since, until membership is achieved, the prospects for industrial exports to that area are much better than for agricultural exports.
To find new markets is a top priority. Córas Tráchtála is charged with the task and has been provided with substantial additional resources to enable it to do so. Another field to which increasing attention will be given is the development of new products for export and finding ways of harnessing the talents of our young scientists and technologists to this end.
The autumn budget was designed to moderate the rate of increase of domestic demand in 1969 and make it possible to maintain economic growth at a satisfactory rate without allowing the balance of payments to get out of hand. This strategy was founded on a careful assessment, based on such information as was then available, of economic prospects in 1969 and, in particular, on the likely trend of demand pressures.
During the early months of this year  certain adverse trends persisted. Demand pressures remained high despite the appeal which the Government made in January for restraint in requests for pay increases. The settlement of the maintenance craftsmen's dispute at a level far beyond any likely increase in production would have had the gravest consequences for the economy if, as seemed possible at one stage, it set a headline for general pay revisions. The Government were, understandably, concerned since such a development would have made it impossible to sustain the rate of growth which the economic indicators showed to be within our capacity this year. Thanks to the responsible reaction of the trade unions and other groups, that danger seems to have receded and the economy's prospects for 1969 can now be viewed with less apprehension on that score.
The indications are that the growth rate will be about 4½ per cent. This means that 1969 will be our third successive year of satisfactory growth. There are, however, some warning signals. Export expansion is likely to be slower than last year because of less favourable conditions in our main export markets, and the recent interruption of industrial production has probably lost us a number of export opportunities. At the same time, the pressures carried over from last year are likely to cause a large rise in imports of consumer goods and raw materials for further processing. Capital imports will be swollen by exceptionally heavy purchases of aircraft. Allowing for a rise in net invisible earnings, the likelihood is that the balance of payments deficit will be about £55 million. Even if aircraft imports are excluded on the basis that they will be financed in the first instance by foreign borrowing, the deficit is likely to be £40 to £45 million. This is still large but must be viewed against our strong reserves position, the voluntary capital inflow and the prospects of substantial increases in output, savings and investment.
The background to this year's Budget is dominated by the incomes situation. Developments on this front in recent months have been responsible for the basic approach to the strategy of the Budget. With a view to working out an acceptable, realistic policy for incomes this year in which budgetary measures would play a vital role, the Government initiated a programme of wide-ranging discussions with all the parties involved.
The prospect of a growth rate of over four per cent in 1969 means that we can reasonably allow the general level of money incomes to rise by that amount in sharing the fruits of our advance. Coming on the heels of the exceptional rise of 1968, this would represent a substantial average improvement over the two years. However, the particular settlement I have already mentioned, representing more than four times the expected growth in national production, set a dangerous pattern early on. The Government have been active in alerting public opinion to the dangers involved in sharply rising prices which affect particularly the lower-paid and weaker sections of the community and threaten employment.
The rapid recognition of these dangers by employers and employees alike was encouraging and there is every reason to hope for a united effort to avoid them. This would remove the most dangerous threat to our chances of a further year of substantial improvement in 1969 and would be of enormous benefit, not only in its material aspects, but also in the confidence it would create in our combined will and ability to overcome similar dangers in the future.
There is widespread agreement that any general restraint should not extend to lower-paid workers and that a special effort should be made to improve their position and that of the poorer and weaker sections generally. Any attempt to do this would, of course, be impeded and, indeed, negatived if other groups were to insist on maintaining differentials and relativities.
The Irish Congress of Trade Unions,  which held a special consultative conference to discuss the situation, has pointed out that the majority of wage agreements do not terminate before the end of 1969. It has called for urgent action to improve the position of the low paid by substantial increases in family allowances and for effective action by the Government to restrain non-wage inflation by price control and other appropriate means.
It is reasonable to infer from this and other trade union statements of a similar nature that, if the Government take action along those lines, the trade union movement will not seek to alter existing agreements which run to the end of this year and will pursue a policy of moderation in negotiations where agreements have already expired or will expire during the year. The Government welcome this response which accords fully with our social and economic policy regarding the rights of the less well-off sections to a growing share of increasing national prosperity. The Government are prepared to play their part in facilitating the development of incomes along these lines in 1969. We have decided, therefore, to make substantial improvements in the main benefits payable under the Social Welfare code, which I will shortly announce. I propose also to apply to public sector pay the general policy already outlined and to take related action to which I shall come at a later part of my statement.
While the budgetary proposals I will announce are of more than usual importance this year in relation to incomes, the major part of budgetary policy is contained in the expenditure proposals published some weeks ago. Accordingly, before coming to to-day's budgetary measures, I intend to deal with the current expenditure set out in the book of estimates and to comment on the growth of that expenditure
A year ago, I drew attention to the huge rise in social expenditure generally and in aid to agriculture. I pointed out that current Government outlay on social welfare, education and health had more than doubled in the decade to 1968. Outlay on the economic  services and on the improvement of the growth infrastructure has also been buoyant. This rise in expenditure came in response to the need to strengthen the social and economic framework of the national economy.
The Government's continuing desire to increase social expenditure and to help agriculture is again evident in this year's volume of estimates. The total of non-capital outlay is £298½ million. This is £41½ million, or 16 per cent, up on the figures in last year's volume. Over £31 million, or more than 75 per cent, of this rise is devoted to the social services and to agriculture.
Total Government expenditure in relation to agriculture is estimated at about £81 million for 1969-70, compared with £78 million in 1968-69, and £38.5 million in 1963-64. Two items account for well over half of the £81 million. In 1969-70, support of creamery milk prices will account for £27 million, which is £6 million above the original estimate for 1968-69, and relief of rates on agricultural land will cost over £19 million—an increase of more that £2 million on the previous year.
The cost of supporting creamery milk has risen from the comparatively modest sum of £6 million in 1963-64, to an estimated £27 million in the present year. The dairy industry is, of course, a key one and is closely linked with the cattle industry, which gives us our largest single export. At the same time, the Government are, naturally, concerned at the steeply rising cost of supporting creamery milk, especially at a time when the return from marginal markets represents no more than about 2d per gallon at the creamery exclusive of the value of skim. The reasons for the high bill are the low prices on export markets, due to over-production all over the world, and the increase in production here. The more money is required for support of creamery milk, the more difficult it is to find the additional funds needed for other sectors of agriculture. For all these reasons, the Government decided that the last increase in creamery milk prices should be on a  selective basis and intended to benefit mainly the small and medium-sized producers.
In view of the depression in export markets for milk products, it is, obviously, a sensible course to give increased incentives for beef cattle production, and this has been done under the recently-introduced Beef Cattle Incentive Scheme. The response to this Scheme has been encouraging. It will cost about £1 million this year, but expenditure is likely to increase considerably in later years.
Because of increased State support for the relief of rates on agricultural land, net rates on such land are at approximately the same level as eight years ago. With the complete exemption of small farms with a land valuation not exceeding £20, only one farmer in three now pays rates on land.
The cost of supporting agriculture now represents a very significant proportion of the Budget and Government expenditure accounts for a large part of the increase in farm income in recent years. It is the Government's policy to preserve a reasonable relationship between farm and other incomes. The Government, therefore, will, throughout the year, watch carefully the development of farm incomes in relation to the movement of incomes in other sectors.
As stated in the Third Programme, studies are in progress to establish whether the best results are being secured from the heavy State expenditure related to agriculture. When these studies are completed, they will be published as a basis for public discussion. In reaching decisions on these studies, the Government's aim will be to ensure that the agricultural community gets maximum benefit and that national resources are allocated to the best national advantage.
Agriculture again made very good progress in 1968. The value and volume of output broke all previous records. As I stated earlier, provisional figures indicate a growth rate of 6 per cent. Agricultural exports totalled £155 million. It is provisionally estimated that farm income went up by about 16 per cent, as compared with 10 per cent in  1967, and that those engaged in agriculture not only held their position relative to the rest of the community in 1968, but improved it somewhat. This is, indeed, a welcome development.
As regards 1969, it is, of course, too early to attempt an income forecast, but there seems no reason not to expect another good year, assuming favourable weather for the rest of the year and no disruption of prices on export markets.
The non-capital estimates for education amount to £51¾ million. The corresponding figure for 1959-60 was £15¾ million. This vast increase is compelling evidence of the Government's commitment to improve the prospects of our young people.
Within the past three years, there has been an increase of almost 25 per cent in the enrolments in second level schools and of 2,500 in the number of university students. As a consequence, the school building programme has been stepped up and there has been a considerable expansion in the recruitment of teachers. In the present financial year five of the Regional Technical Colleges will be opened, additional comprehensive schools will be built and new services, such as a nation-wide scheme of career-guidance masters in post-primary schools, will be introduced.
The growth in numbers in whole-time education will continue. The number of students is expected to increase from 695,000 in 1968 to 760,000 in 1972. Most of this increase will be in the number of post-primary pupils. Thus, over the next few years, we will have to meet a continuing growth in expenditure on education.
In the past five years expenditure on social welfare has risen from £52½ million to £81 million. This year, it is estimated that £85 million will be spent on existing services before today's increases are taken into account.
A special feature of the growth in social welfare expenditure has been the shift in emphasis from non-contributory  to insurance, or contributory, arrangements. The increases of recent years have been far in excess of the rise in the consumer price index and have substantially raised the real value of the benefits.
Legislation has been introduced to provide for three eminently desirable innovations. These are: a limited scheme of retirement pensions for insured workers at age 65; invalidity pensions for insured workers whose illness or incapacity is either permanent or likely to be of long duration; and payment of a death grant in respect of a qualified insured worker, or of his close dependants. A scheme of pay-related unemployment and disability benefit is under consideration.
Current government expenditure on health services has been rising steeply. The total amounted to £9½ million in 1961-62; it had risen to £14¼ million in 1964-65 and this year it will cost about £30½ million.
The Government's general proposals are set out in the White Paper on the Health Services and their Further Development. Discussions on the implementation of new services are in progress with the relevant professional organisations, and legislation has been introduced in the Oireachtas.
The Bill includes a new structure of administration for the health services. It provides for the replacement of the dispensary system by a service offering choice of doctor in the general medical service for the lower income group in so far as this is practicable. It also proposes that drugs and medicines will, as far as practicable, be issued through retail pharmaceutical chemists to the eligible groups.
Local authority finances and rates relief are current and controversial topics. Undoubtedly, a problem exists but the debate of recent months has tended to ignore the fact that, over the years, more and more of the burden of local expenditure has been borne by the Exchequer and less and less by the rates. This is clearly evident if a comparison is made with the pre-war  position. Coming to more recent times, local authority current expenditure rose from £90½ million in 1965-66 to an estimated £123 million in 1968-69. £18 million, or more than one half of this increase, was financed by way of Government grant while the rates have had to bear an additional burden of only £8 million or about one-fourth of the total increase.
These figures effectively rebut allegations that the Government have been complacent in their approach to the rates problem. Indeed, they illustrate how much has been done by the Central Government in this sphere without any apparent recognition.
The Exchequer comes to the assistance of ratepayers in several ways. Apart from the rates relief for agriculture mentioned already, it meets the bulk of the cost of the health services. Last year, 56 per cent of the net expenditure of health authorities came from the Exchequer. In addition, the Exchequer makes good part of the deficits of voluntary hospitals relating to Health Act patients. The sum included for this item in 1969-70 is £2¾ million. It must also be emphasised that the Government have decided that no part of the cost of new health services or further extensions of existing health services should fall on local rates.
On the recommendation of an interdepartmental committee, the Government have introduced legislation providing for the payment of rates in instalments and a flexible form of rates relief for necessitous persons. Other recommendations are being considered in conjunction with a review of the structure of local government at present being undertaken.
The estimated cost of the service of debt shows an increase of £11½ million over last year because of the additional borrowing required for the capital programme and the very high level of interest rates now prevailing. There is continued advocacy for the provision of more money for housing and sanitary services, for rural electricity and for telephone development, to mention but a few items of the programme. Money  borrowed for capital investment must be paid for, and as long as we accept the duty of providing the capital we must also accept the responsibility for the servicing of the resulting debt. At present, interest rates all over the world are at phenomenally high levels, and we cannot isolate ourselves from these trends. We must be prepared, therefore, if we are to press on with capital development, to remunerate the borrowing involved at the going rates. In general, these are 1 per cent or more over those prevailing this time last year.
The budget plan for 1968-69 provided for a balance between revenue and expenditure after making an allowance of £4 million for errors of estimation. However, for a variety of reasons which are now well known, expenditure outpaced revenue and excessive demand pressures developed as the year progressed. The supplementary budget, which was introduced in November to cope primarily with the demand situation, projected a deficit for the year of little over £7 million.
In the event, the deficit was £8.4 million. Expenditure, at £353.9 million, was £2.4 million higher than the November estimate. Increased outlay on the health services accounted for the greater portion of the excess. Despite the depressing effects of industrial disputes on tax returns, revenue continued to be buoyant and at £345.5 million was £1.2 million above the November estimate. Receipts from Customs and Excise duties and from the turnover and wholesale taxes were greater than expected.
The 1968-69 capital Budget proposed an expenditure of £136.4 million on the public capital programme, but because of increases during the year in the allocations for industrial grants, electricity generation, transport, agriculture and agricultural credit and for housing and sanitary services, this rose to £141.6 million and was 28 per cent higher than in 1967-68. The deficit on  current account, a shortfall in the investment resources of Departmental Funds and reduced public holdings of Exchequer Bills had the effect of raising Exchequer residual borrowing requirements from the estimated figure of £33 million to £52 million.
The primary economic aim of budgetary policy, both capital and current, for 1969 must be to encourage the continuance of the satisfactory growth performance of 1968 and the main contingency we have to guard against is the possibility of excess demand arising from money incomes growing faster than national production.
In view of the attitude of the Irish Congress of Trade Unions in regard to pay for the rest of this year, and the Government's intention to foster a realistic development of incomes on the lines I have already mentioned, there is much common ground between the economic and social objectives of budgetary policy on this occasion.
The public capital programme is reasonably expansionist without running the risk of undue inflation. Although it shows a substantial rise over last year's expenditure, the original proposals for capital spending have been reduced by some £23 million in order to keep the State's credit requirements at a reasonable level.
The estimates of current expenditure have undergone similar treatment. While they are £41½ million above the corresponding figure for last year, they would have been almost £25 million higher still but for the Government's determination to reduce them to a figure which could be met from the estimates of revenue at present rates of taxation. This was a formidable task. The original total was an intimidating figure and Ministers have been continuously engaged since the beginning of the year in getting it down to manageable proportions. To succeed in doing so involved many difficult decisions including the postponement of many desirable new projects and extensions of existing ones. The aim was to favour expenditures contributing to economic growth, to eliminate anything  that seemed wasteful or unnecessary and to use existing resources to the best possible advantage. This work will be followed up vigorously throughout the year to ensure that appropriations are not exceeded.
In all, £48 million has been lopped off public expenditure, current and capital. In different circumstances much of this would have been approved. A reduction of this size is an earnest of the Government's determination to ensure that inflationary pressures are contained and that economic progress is not imperilled by excessive external deficits.
The major part of budgetary policy is normally contained in the pre-Budget expenditure proposals as set out in the capital programme and the book of estimates published some weeks before Budget day. The policy measures I am announcing today, however, are more important than usual. They represent the Government's contribution to a specific approach to incomes in 1969 which we hope will be adopted by all the parties involved for the common good.
I propose to balance the current account for 1969 at a level which is likely to facilitate achievement of our economic and social aims. The achievement of balance this year should have a marked disinflationary effect following on the deficit of £8½ million in 1968-69. The supplementary budget of last November had as its principal objective the checking of excess demand in 1969. It has not yet had time to work its way through the economy and I am counting on its delayed effects as a major factor working in favour of moderation this year.
The White Paper published a few days ago discloses that estimated revenue for 1969-70 totals £387.6 million and expenditure comes to £386.7 million. I have, therefore, an opening surplus of £0.9 million. This situation was achieved, as I have explained, by a thorough review of every item of expenditure and the elimination of anything not considered necessary for social and economic development. It was open to me to leave matters at that  by simply distributing some or all of this amount and going no further. Needless to say this course offered the attraction of avoiding an increase in taxation.
However, it will be clear from what I have said that we decided that the Budget this year must play an important part in establishing a sensible policy for incomes by coming to the aid in a very positive way of the lower-paid and weaker sections. I shall now outline how this is to be done.
The present allowance of 15/6 a month for the second qualified child will be increased to 30/- and the present allowance of 26/6 a month for all other qualified children will be increased to 40/-, with effect from 1st August, 1969. The present allowance of 10/- for the first child remains unchanged.
Deputies will recall that, in my budget statement a year ago, I indicated that the structure of the scheme of children's allowances would be reviewed with a view to ensuring that an element of selectivity would be introduced by reference to the means of the parents. I have decided against the introduction of a means test but I propose to make a start towards selectivity by providing that part of the proposed increase in the allowances will be recovered from persons paying income tax.
The allowance for children under the Income Tax Acts will be reduced by £15 for each child who qualifies for an increased benefit under the Social Welfare Acts. For children over 16 years of age who are attending an educational establishment, the income tax allowance will remain unchanged because they are outside the scope of the Social Welfare Acts.
As the new social welfare allowances are payable from 1st August, 1969, the reduction in the income tax child allowance for 1969-70 will not be £15, but £10 for each qualified child. In this  manner I propose to recover about £400,000 in a full year and about £300,000 in the current year from income tax payers thus reducing the net cost of the increases to £3.3 million this year and £5 million in a full year.
The combined effect of these changes is that, with the exceptions mentioned, everyone will receive a net increase which will be greater or less depending on the circumstances. An income tax payer with one child will neither lose nor gain and persons in the top ranges of sur-tax, who have qualified children, will be called upon to make a small contribution towards the scheme.
In addition to these increases, and as a contribution towards the heavy additional expenses incidental to multiple births, a sum of £100 will in future be paid on the birth of triplets and £150 on the birth of quadruplets.
Last year, increases of 7s 6d a week were given to the recipients of old age, blind, widows' and orphans' contributory and non-contributory pensions, as well as to those eligible for disability payments, for unemployment assistance and benefit, for maternity allowance and for adult dependant allowances.
This year, to compensate them for increases in the cost of living, and as part of our policy of positively improving the position of the less well-off, we are giving even greater help to persons in the categories I have mentioned. Increases of 10s a week will be paid from August, 1969, in the case of non-contributory pensions and allowances and from January, 1970, in the case of contributory pensions and benefits. The disabled persons maintenance allowance and the infectious diseases maintenance allowance, which are administered by the Department of Health, will be increased by 10/- a week also from August next.
Last year, a scheme was introduced for the payment of an allowance to incapacitated old age pensioners living  alone. The allowance was payable in respect of daughters who left insurable employment to undertake full-time home care of their parents. Experience has shown that this scheme is a worthwhile addition to our social welfare services, but that its effectiveness is impaired by the condition that, to qualify, a daughter must have left insurable employment and by its limitation to our own old age pensioners. It is proposed, therefore, to waive this condition in the forthcoming Social Welfare Bill thus enabling payment to be made in respect of daughters who have never worked outside the home, and also to extend the scheme to cover all incapacitated old age pensioners over 70 who, except for their daughter's company, live alone.
Widows in receipt of social welfare pensions, whether contributory or non-contrbutory, are faced with serious financial difficulties in educating their children. Their problems are not eased by the fact that the allowances in respect of the children cease at 16 years of age. To provide some assistance towards continuation of the children's education, I propose that payment of the allowance will continue for so long as the child is in full-time education up to the age of 21.
There is a distinction between the free travel scheme and the free electricity and television and radio licence schemes, inasmuch as the latter schemes do not extend to persons in receipt of Northern Ireland or British old age pensions. As many of these are Irish people who have returned here on retirement, I propose to remove this distinction and to extend those schemes to such pensioners who are over the age of 70.
The final social welfare improvement I propose is to extend the duration of the cheap fuel scheme for necessitous persons by a month at each end, so that from this year onwards it will cover the period October to April, inclusive. These miscellaneous improvements will cost £310,000 this year.
The Government are concerned at the hardship caused to mothers and  families who have been deserted by the father of the family. The Minister for Social Welfare is examining how to provide some financial assistance for those cases in this year's Social Welfare Bill.
I have been considering for some time the general structure of our income tax and sur-tax codes, particularly with a view to making improvements in the personal reliefs and allowances. The basic ones have remained unaltered for many years because, as Deputies will realise, the costs involved are enormous. Because of this, significant changes in our direct taxation structure could only be undertaken in the context of a comprehensive recasting of the general pattern of taxation—both direct and indirect. In addition, the machinery of our system of PAYE makes fundamental changes impossible during the course of the income tax year. A comprehensive scheme is being examined and it is my intention to introduce it, if possible, for 1970-71. This would mean making the necessary legislative and other arrangements before the end of the current financial year.
However, I think it is absolutely necessary to give some relief this year, and accordingly I propose to increase the allowance for married persons by £30 and to increase the allowance for single and widowed persons by £15. I estimate that this will cost the Exchequer £3.52 million in the current year and that it will remove about 30,000 taxpayers from the income tax net when account is taken of the adjustment for the increase in social welfare children's allowances. The magnitude of this cost clearly explains why greater reliefs cannot be given at present.
As I announced earlier, I propose to increase the amount of the non-contributory old age pension to £195 as from the 1st August next. Consequent on this increase I intend to raise the income limit for the allowance for income tax purposes of dependent relative relief. This will secure that a taxpayer, who maintains at his own  expense a dependent relative having no income other than a non-contributory old age pension, will not have the allowance reduced because of the increased pension.
A taxpayer whose spouse is totally incapacitated and who employs a housekeeper to look after the incapacitated person does not qualify, under existing law, for any special relief. In response to representations that this causes hardship I propose to provide that a new allowance of £100 will be granted where such a taxpayer requires the services of a housekeeper to care for the spouse.
Deputies will recall in the course of the Committee Stage of the Finance Bill last year I was asked to do something for the parent of a child who was, by reason of mental or physical infirmity, incapable of receiving full-time instruction. This year I propose to bring in a provision which will permit the parent to claim, in lieu of the dependent relative allowance, the child allowance which, of course, is substantially larger.
The Finance Act of 1967 introduced a valuable tax relief for people who were unfortunately obliged to incur heavy medical expenses. The relief is for expenses in excess of £50 incurred by a taxpayer on himself or on any one who is dependent on him; the relief is related to the expenses for each individual and not to the expenses for the family as a group.
This year I propose to extend the relief by providing that the taxpayer may elect to claim for expenses exceeding £100 incurred by him on his family as a whole if this would be more favourable to him than the existing arrangement.
The exports sales relief, which came into operation in 1957-58, has been a powerful incentive in stimulating investment in Irish industry. As it is due to expire in April, 1980, its incentive value will progressively diminish. If the pace of industrial development is to be maintained, our incentives to export-orientated manufacturing industry must be strengthened. I therefore propose to extend the terminal date of the relief to April, 1990—a period, which, I feel, will be sufficient to maintain the momentum of investment in Irish industry and, in particular, to attract new technological industries requiring a lengthy “running-in” period. The “Shannon” relief will be similarly extended.
In addition, the maximum period for which a company may claim exports relief will be extended from fifteen to twenty years. Full relief will be available for fifteen years, with tapering relief at the existing rates for the remaining years. These extensions will, of course, apply also to existing concerns.
I have decided to give a special measure of assistance to traders and manufacturers who purchase or convert machinery or plant for the purpose of the change-over to the decimal currency system. In the case of new machinery or plant purchased before the 6th April, 1971, I propose to allow “free depreciation” to be claimed so that the purchaser may, if he so wishes, write off 100 per cent of his expenditure in the first year. In addition where, because of the change to the decimal currency system, a trader or manufacturer incurs before the 6th April, 1971, capital expenditure on major adaptations or conversions of his existing machinery or plant, I propose to allow the amount to be deducted as a business expense.
The Shannon Free Airport Develop-  ment Company is fostering, in conjunction with Bord Fáilte and local interests, the building of holiday cottages of a type suitable for letting to tourists. I propose to encourage this development by extending to these cottages the initial and annual allowances which are at present available for hotels and holiday camps. Subject to the provisions of the legislation, the relief will apply to similar projects throughout the country.
It is desirable that workers in manufacturing industry should have a wide range of recreational facilities and amenities provided at the factory and elsewhere for use during breaks and after hours. To encourage management to provide these, the Finance Bill will contain provisions to extend the industrial building allowance to capital expenditure incurred by a manufacturer on the provision of facilities such as swimming pools, tennis courts and sports clubs for employees, where such allowances are not available under existing law. The relief will have no effect on the revenue until 1970-71.
I propose to introduce a number of changes affecting the incidence of stamp duties. To assist purchasers of “grant-type” houses, I intend to relieve entirely from duty conveyances or leases executed on the first purchase of such houses. In addition, the present maximum rate of £3 per cent will be reduced to £2 per cent in the case of purchases of other property, whether lands or houses, where the value does not exceed £6,000.
To compensate for the loss of revenue resulting from these reliefs, the rate of duty on sales involving upwards of £50,000 will be increased from £3 per cent to £5 per cent. I also propose to impose duty on a new subject of charge, namely, contracts for office block development. This will be chargeable at the rate of £10 per cent of the contract price and will apply only to contracts of over £50,000; it will not affect local authority contracts or contracts in connection with projects in the undeveloped areas.
The National Bonds, 1966-77, were issued with the condition that the premium payable on maturity would be exempt from tax (income tax, sur-tax and corporation profits tax) and the 6½ per cent Investment Bonds enjoy a like exemption in respect of the three per cent premium which is payable on the Bonds at the end of five years. This year, I am including a provision in the Finance Bill to grant such an exemption generally in respect of premiums which may be payable on future issues of Government securities. These exemptions do not of course apply where the premiums fall to be regarded as a part of trading profits.
Representations have been made to me that Irish life assurance companies who decide to engage in pension annuity business in Great Britain would suffer a competitive disadvantage by comparison with British life assurance companies which enjoy certain tax exemptions in that field. I propose to include in the Finance Bill provisions which will remove the disadvantage.
As provided in last year's Finance Act, tax under Schedules A and B of the Income Tax Acts will not be payable for the current year. Detailed provisions removing Schedules A and B from the statute book will be included in the forthcoming Finance Bill. The termination of Schedule A will be of particular benefit to owner-occupiers of private residences, while the abolition of Schedule B will give additional help to the farming community through the exemption of income from the occupation of land.
Recent Finance Acts contained provisions for abatement of the estate duty payable in respect of property  passing on death to a deceased's widow or dependent children. The abatement in respect of a widow's benefit is £1,000 and that for a dependent child £500. Experience has shown that in certain cases, on account of the way in which the property passed, the abatement to the widow was less than it might have been otherwise. I propose to remedy this in the Finance Bill.
Deputies will recall that a provision was included in the 1968 Finance Act exempting from road tax vehicles which are specially constructed or adapted for use by disabled drivers. It has been represented to me that the cost of petrol constitutes a particularly heavy burden on disabled motorists who must use such vehicles to get to work. Indeed many disabled people are totally dependent on this form of transport to enable them to obtain employment. I am satisfied that the circumstances of these motorists are exceptional enough to justify relief from the petrol duty.
I propose, therefore, to authorise the Revenue Commissioners to make repayments of duty at the rate of 4s a gallon in respect of petrol used by disabled motorists subject to an annual maximum of 350 gallons per person. The repayments will cover petrol used only in those specially adapted vehicles which are exempted from road tax. The concession will apply to petrol used on or after 1st June next and will cost approximately £25,000 this year.
Last year, Government expenditure in relation to agriculture rose by £9 million. A further increase of £3 million has been provided in the Estimates already published and further improvements continue to be made where considered necessary. In addition to the new Beef Incentive Scheme, the rate of export subsidy for beef has been increased  by 10s per cwt. from 1st April and the rate of subsidy on mutton and lamb by 1½d a lb. An Córas Beostoic agus Feola has been set up to promote exports of cattle, beef, mutton and lamb, and an increase of 3s per barrel for barley of the 1969 crop has been announced.
In the discussions which have taken place between the Minister for Agriculture and Fisheries and farming organisations, a number of suggestions were put forward and were promised consideration by the Minister. Arising out of the various suggestions the following improvements are being made.
The rate of payment under the Beef Incentive Scheme was recently increased from £8 to £12 per animal. As a further encouragement to sheep production, it is proposed to extend the sheep subsidy scheme. Farmers in mountain areas already receive a lamb subsidy of £1 per head: in future they will also receive a subsidy of £1 per head for each hogget ewe. This additional subsidy, for which £150,000 has been provided in the estimate, should lead to a considerable improvement in the quality of breeding stock in the mountain areas and promote an expansion in sheep production generally.
The small farm (incentive bonus) scheme, which is designed to effect a substantial improvement in the income of small farmers, has not proved as attractive as expected. As a further inducement to farmers, the Government now propose to offer a higher cash incentive. At present the scheme provides for a grant of £50 per head for four years. It is now proposed to increase the grant to £75 in the second and third years and to £100 in the fourth. The total grant available per farm will thus be increased from £200 to £300.
The Government also intend to improve the terms for certain grants under the farm buildings and water supply schemes. The limit for the highest rate of silo grants is being increased from 100 to 150 cubic yards. The maximum grant for housing dry stock is being raised from £75 to £200. The maximum grant for the provision of farm water supplies is being increased from £100 to £125. These reliefs will  cost £133,000 but, as this is capital expenditure, it does not affect the current budget.
In general, the value of any property for the purposes of Estate Duty is the price which it would fetch in the open market at the relevant date. There is, however, an exception to this in the case of agricultural land. This may be valued on an artificial basis favourable to the taxpayer if, broadly speaking, by adopting such basis the value of the estate does not exceed £1,000. In order to lighten further the incidence of Estate Duty on such land, I propose to raise this limit to £2,000.
In recent years the Government have increased public service pensions on six occasions. Pensions related to 1959 pay levels have been raised by 35 per cent and those related to 1961 pay levels have gone up by 28 per cent. This includes compensation for rises in the Consumer Price Index from those years, up to June, 1966, and, in addition, a further increase of 5 per cent was granted last year.
The pensioners longest retired are, of course, those whose needs are most immediate because of the lower pay rates to which their pensions are related. I have met the representatives of these pensioners many times and they have always pressed for parity with the pensions of those retiring now. This would be quite expensive. While I could not give full effect to it now, I have decided to adopt it in principle and to move towards it over a number of years. As a start, the pensions of those who retired before the general pay revision of 1st February, 1964, will be brought up to the level of the pensions of their colleagues who retired with the benefit of that pay revision.
The main groups affected are retired civil servants, Gardaí, teachers, members of the Defence Forces and Local Authority pensioners. There will be a corresponding adjustment of Military Service pensions and other Army pensions, including special allowances.
In making this provision the Government are continuing to discharge  their obligations towards their former employees and are making a substantial contribution to raise their living standards of one of the weaker sections of the community.
I have been asked to do something for those members of the Old IRA who may be in needy circumstances. I shall always be happy to do whatever I can for these men to whom we are all so deeply indebted. Special allowances are paid to veterans who are not well off. Some of them have small military service pensions also. I propose that any recipient of a special allowance who has a military service pension of less than £25 a year, will have his pension brought up to that amount. The revised pension will then qualify for the general pensions increase which I have just announced and which, in this case, is about ten per cent. The special allowance will also share in that increase.
I am also providing a funeral grant of £25 for those members of the Old IRA who are in receipt of special allowances. The representatives of the veterans have asked specially for this and I am glad to be able to meet their wishes.
I have considerable sympathy with the widows of pensionable public servants who, because their husbands retired or died before 23rd July, 1968, are not eligible for benefits under the new Widows and Children pensions scheme. The introduction of this scheme was in line with the practice of good employers and has been welcomed on all sides. As it had to commence at some current date, a number of widows whose husbands never had an opportunity of participating in the scheme are excluded. The question of the State accepting some responsibility  for these widows has been brought frequently to my attention.
I have examined this question fully and have decided that the most equitable solution is to give these widows half the appropriate benefit under the scheme on an ex-gratia basis. Serving staff are paying half the cost of the scheme, the other half being met by the Exchequer. Thus under my proposal the widows of pensionable staff who retired or died before the introduction of the scheme will be paid the portion of benefit attributable to the State's contribution. This is, I think, a reasonable and generous solution which, I hope, will be welcomed.
It will take some time to set up the administrative machinery to implement this scheme but I propose to introduce it as soon as possible. I am providing £200,000 for this purpose in the current year. The concession will cost almost £500,000 in a full year.
By reference to the size of this year's budget — almost £400 million — an allowance of £4 million, or 1 per cent, for errors of estimation would not be unreasonable. However I must have regard to two factors. The first is that the estimates have already been subjected to a very severe pruning, and the second is the necessity to provide for contingencies—notably that which is likely to arise in applying to public sector pay the incomes policy which I have already outlined.
I have had fruitful discussions on this subject with the public services committee of the Irish Congress of Trade Unions and these are continuing at official level. In accordance with the general policy which I have already mentioned, I propose to earmark the  bulk of such limited resources as can be made available for public sector pay, to increasing the pay of the lower-paid employees.
I propose therefore to provide for this and any other uncovered contingencies that may arise by making a deduction of only £2 million under the traditional heading of errors of estimation. To raise the sum of £9.33 million required to balance my budget I propose to make the following increases in taxation:
I propose to find the bulk of the additional revenue required by increasing the duties on tobacco, petrol, beer, spirits and wine. The specific proposals and the expected additional yields in 1969-70 are:
|Tobacco—equivalent of 2d per packet of 20 standard size plain cigarettes and a corresponding levy on manufacturers' stocks||1.5|
|Petrol and diesel oil (other than diesel oil for buses) 3d a gallon||2.0|
|Beer—equivalent of 2d a pint||2.6|
|Spirits—equivalent of 4d a glass on home-made spirits and imported spirits of United King- dom origin and 6d a glass on other imported spirits||1.33|
|Wine—equivalent of 1 shil- ling a bottle||0.2|
As the principal social aim of this Budget is to assist the lower-paid and weaker sections, it seems appropriate that some of the additional revenue required should be derived from spending on less essential items. I propose, therefore, to increase the rate of wholesale tax on certain articles from 10 to 15 per cent, with effect from 1st June, 1969. The articles concerned are motor cars, motor cycles, scooters and  mopeds; television and radio sets, radiograms, record players, gramophones and records; caravans; yachts and other pleasure craft.
In the field of sales taxation, the Finance Bill will also contain some minor provisions designed to remove anomalies which have come to notice. It is desirable that one of these provisions, dealing with the settlement of accounts by way of set-off, should have immediate statutory effect. It is, therefore, the subject of a Financial Resolution which I shall be moving this evening.
There will now be a three-tiered system of turnover taxation—the retail turnover tax of 2½ per cent on general consumer goods; the 10 per cent wholesale tax on less essential goods, which makes a total charge of 12½ per cent on these goods; and the additional 5 per cent charge on a very narrow range of items. The total charge in that limited area will thus be 17½ per cent on tax-inclusive prices.
A decision has not yet been taken on the question of introducing an added-value tax but, if at a later date it were decided to have such a tax, it would be quite feasible to retain the new three-tiered system.
In deciding on the tax increases I have just described, I have sought to combine a number of objectives. I wished to avoid raising the money required by increasing indirect taxation on essentials. This would have run counter to the general objectives of the incomes policy which we are seeking to have accepted. Such taxes affect prices and living costs and might, therefore, give an impetus to claims for compensatory pay increases which would be particularly unwelcome in this year's conditions.
Direct taxes, on the other hand, tend to discourage effort and to have widespread disincentive effects. Moreover the Government were conscious of the need to lighten the load of direct taxation on the lower-paid taxpayer. There  are now upwards of 700,000 income taxpayers, many of whom can be classified as lower paid and will benefit from the increase in personal allowances. It would have been inconsistent with this objective to raise the rate of the income tax.
I believe that the course I have taken represents the right mix of measures to achieve these varied purposes. It spreads the burden as fairly as possible on the commodities affected by the tax increases and is in line with the general feeling that ostentatious luxury-type spending should be discouraged and the cost of essentials kept down to the minimum.
I am very conscious of the fact that I am turning once more to those well-established sources, drink, tobacco and petrol. The simple fact is, however, that they continue to be as buoyant as ever—the consumption of beer for instance has for the first time ever touched the 40 million gallon mark last year. As long as they continue to come up smiling they cannot expect to escape the attention of any Minister for Finance.
At this stage, I wish to make it clear that the Government will subject applications for price increases to the most rigorous scrutiny. Apart from the economic necessity for minimising price increases, we are determined to ensure that the large sums now being set aside to improve the position of the less prosperous amongst us are not eaten up by unjustifiable price rises. The Department of Industry and Commerce will exercise a continuous surveillance on prices and I would urge an increasing vigilance on the part of the public itself in this field.
This budget is the first to be prepared since the Third Programme was published. It seeks, therefore, to outline a fiscal policy for 1969 with regard not alone to immediate problems and possibilities but also to the potential and the requirements of the economy over the next four years. It is not always practicable in a particular budget to reconcile completely the conflicts between short-term and medium-term needs. I would hope, however, that improved  procedures which are now being developed will make this more feasible.
Periodic reviews of the programme will take place from next year onwards. Their purpose will be to assess the progress being made towards the programme's economic and social objectives, and to identify the factors responsible for any significant departures from the expected path of development. The Government's contributions to progress must come in for particular examination. With this in mind, we are attempting to relate Government current and capital expenditure more closely and more specifically to the needs of development. The annual budget will be used to correct any deviations from the programme's targets that may occur in the course of a year and to re-align the public sector if the targets should be altered.
Considerable progress has been made with the appraisal of the public capital programme. There is a large number of items involved and many are complex in scope and effect. It is hoped to complete the task early next year. The possibility of developing a programme budgeting system for Government expenditure, both current and capital, is being examined. This would place emphasis on defining the aims and objectives of expenditure, on analysing the costs and the benefits associated with them, and on aligning expenditure with resources. This work will be assisted by the systematic study of Departmental objectives which will be made by the development units mentioned in the Third Programme. Because of the theoretical and administrative questions to be resolved, it is unlikely that results will be apparent for a number of years.
The most desirable allocation of expenditure is, of course, only one side of the budgetary problem. The financing of these expenditures and its relationship to the general management of demand is another. Here also, the medium-term objectives of the programme have been taken into account in framing the provisions of this Budget.
The extra cost of today's benefits will  accelerate the pace of the progression contemplated in the Third Programme in social development and total Government current expenditure but I consider this justifiable in the circumstances I have explained.
Last year I announced the Government's decision to introduce on 15th February, 1971 the £, new penny decimal system of currency. In June, 1968 I set up the Irish Decimal Currency Board to facilitate the changeover by familiarising the public with the new currency and by finding solutions for the problems that will arise.
The board are placing most emphasis at this stage on publicity to persuade business to take preparatory action in good time to ensure that accounting and other machines are capable of decimal working.
Many traders have already taken steps to prepare for the changeover. A recent survey made by the board among the main machine supply companies showed that, in relation to about 30 per cent of cash registers in use in this country, action has already been taken. This is a good start but the pace must be accelerated. Those who have not yet made definite arrangements for conversion or replacement of their machines should do so now. I hope that the free depreciation provision which I have already announced will encourage them to take early action.
I have already announced the designs for the decimal coins. The 10p and 5p coins, which correspond to the existing florin and shilling, will be in circulation in the autumn. The new 50p coin, which corresponds to the existing 10s note, will be out early in 1970.
Preparations in the public sector are proceeding. The Department of Education has been planning to phase out the teaching of “shilling-and-pence” arithmetic and to have decimal currency calculations taught. Preparations by the Post Office and the other Government Departments are also going forward.
In my Budget Statement last year, I mentioned the trend towards merger and consolidation in Irish banking. These developments have continued and both major banking groups have now declared their intention to bring about complete mergers of their separate clearing banks into single entities. The Associated Banks are our major banking institutions, the main recipients of the community's savings and the source of a great part of the funds for investment and development. It is important that our banks and financial institutions, in common with other businesses, should make every effort to keep down the cost of their services. Any steps they take to rationalise their business, increase efficiency and widen the range of their services, are to be welcomed.
While it cannot be said that the reorganisation in Irish banking has not been in the public interest, the Government are conscious of the fact that over-concentration of business can entail risks. I am happy to say that the banks have always kept the Central Bank and my Department informed of their intentions in these matters, and have thereby enabled the impact on the community at large to be taken into account.
The money market committee have completed their work and presented a report to the Central Bank. The report was published last week and is being studied by the Bank, by my Department and by the Associated Banks. The results of this examination and the decision in regard to the development of a money market here will be announced in due course.
The necessity for increased savings to finance the expanding development requirements of the economy has been frequently stressed. Saving is largely  a matter of individual decision. The Government can hope to influence that decision mainly by providing incentives to save and by endeavouring to contain increases in prices.
Details of the savings media in the public sector have been conveniently summarised in a brochure by the Savings Committee. I am having a copy of this sent to Deputies and I hope that they will do all they can to encourage savings whenever they get the chance.
Since January last, interest on deposits in the Post Office Savings Bank and the Trustee Savings Banks has been increased to 4 per cent and Investment Bonds have been put on sale offering an interest rate of 6½ per cent and a tax-free capital gain of 3 per cent after 5 years. The Trustee Savings Banks have also introduced a new type of investment account carrying a rate of interest of 6½ per cent. The response to these measures has been most satisfactory. In the first quarter of this year savings through the Government media have shown an increase of almost £5 million over the corresponding period of the previous year. I hope that this commendable performance on the part of the public will be continued.
The Operations Research survey of the Post Office Savings Bank and other media is continuing. Much useful analytical work has already been completed, and market research methods will now be applied to ascertain the views of typical savers. The results of this work may enable further improvements to be made in existing savings media and may indeed suggest some new form of investment for savings.
I have said that saving is a matter of individual decision. It is also a matter of habit. The development of this habit would be greatly facilitated in places of employment if employees were to join in group savings schemes such as those organised under the National Savings Committee. While many employers have agreed to the operation of these schemes there are still some who, for one reason or another, find themselves unable to participate. I would appeal once again to all employers to facilitate the introduction of savings schemes based on deductions from pay.
In 1967 I set up the Special Regional Development Fund to provide a flexible source of finance for economic projects in the West which, though worthwhile, do not fall within the scope of existing schemes of assistance. The Fund has proved itself an effective instrument of development. The projects assisted have given rise to a significant amount of employment and income. The establishment of the Fund has given a new dimension to the work of the County Development Teams and I think it is fair to say that it has an effect far out of proportion to its size.
In each of the first two years, a sum of £250,000 was provided. Experience of the operation of the Fund and the pace at which commitments mature for payment, indicate that a sum of £100,000 added to the balance in the Fund in March last will enable it to meet all the demands which will have to be met during this financial year. I should like to emphasise that this does not place any limit on the activities to be financed but is simply an estimate of what will be required. No worthwhile economic project in the West will be allowed to fail because of lack of funds and whatever amount is needed for the Fund during the year will be provided.
The Public Services Organisation Review Group has almost completed its investigation of the organisation of the public services at the higher levels and I expect its report during the course of the summer.
Every effort is being made to keep to a minimum the growth of the Civil Service as Government activities expand and to increase its productivity and efficiency. Recruitment procedures are being adapted to changing circumstances, the use of computers is being extended, appropriate modern management  techniques are applied and the assistance of outside consultants enlisted where necessary.
The Civil Service has been in the forefront in the application of organisation and methods and continues to extend the use of these techniques. New methods of clerical work evaluation are being introduced. A recent development has been the setting-up of a special unit in my Department to undertake a continuing survey of work in Government Departments to control numbers and to establish correct gradings. Civil Service training and staff development activities continue to expand.
As already announced, the Government have decided to set up a Review Body on remuneration in the upper ranges of the public sector. This will be a standing body which will advise the Government from time to time on the general level of remuneration of civil servants and local authority officers outside the scope of conciliation and arbitration schemes, and of chief executives of State-sponsored companies. The Government consider that it is both in the public interest and the interest of the staff concerned to have remuneration in this area reviewed from time to time by an independent outside body.
The body will consist of five members, of whom two will be drawn from the Labour Court, in line with the Government's efforts to secure co-ordination in regard to remuneration generally in the public sector. The names of the members were announced on Monday last.
Material progress is vital to the nation's well-being, but by itself it is not enough. Indeed it brings many problems in its wake which must be identified and solved if the quality of living is also to improve. For more and more people, rising standards are providing time and resources which  can either be fruitfully employed or simply frittered away.
Thus, the problem of the use of leisure is already with us. There is an urgent need to provide a wide range of cultural, educational and social facilities not just for the few, but for all our people. We must seek a situation where the arts are an integral part of the daily life of each individual. Only in this way can the individual achieve personal satisfaction and the quality of our society be improved.
The fruitful use of leisure affects adults and young people on different levels. A survey of adult education needs is being undertaken to enable the Government to initiate any necessary expansion on restructuring in this important field.
I have already announced the reorganisation and strengthening of the resources of An Chomhairle Ealaíon. I can assure those who may be growing impatient about this that action will not now be long delayed.
As further encouragement to the creative artists in our midst and to help create a sympathetic environment here in which the arts can flourish I will provide in the Finance Bill that painters, sculptors, writers and composers living and working in Ireland will be free of tax on all earnings derived from work of cultural merit. This is covered in the cost of the miscellaneous tax reliefs.
In the dramatically changing times in which we live there is an urgent need to do more for our young people in their use of leisure also. The provision of suitable sporting and recreational facilities requires a new comprehensive approach. In many areas, individuals and groups, through youth clubs and otherwise, are struggling to meet the need but their efforts need encouragement, expansion and guidance.
Young people in Ireland have always shown a strong inclination for outdoor activities and sports. Several movements and associations help to organise and guide these healthy instincts. How they can be helped and strengthened will be examined. The recent commissioning of the Asgard for  the training of young people in seamanship is an example of what can be done.
The Government intend, therefore, that a new and forceful impetus should be given to the provision of sporting and recreational facilities for our young people. By and large, the organisations catering for spectator field games are able to fend for themselves and it is in other directions that help is needed.
I know that very little positive progress can be made in this field without funds and, as already announced, I am providing a sum of £100,000 in this year's Budget to enable a start to be made. We are considering whether a new organisation should be established to undertake the task of administering to the best advantage this allocation, and whatever other moneys may be made available, and to promote progress in this area generally.
As Minister for Finance, I have exercised a general co-ordinating and supervisory function regarding the specific decisions contained in the White Paper on the Restoration of the Irish Language. A progress report giving particulars of measures taken during the two years ended 31st March, 1968, was issued early this year. Arising from this and the last report of Comhairle Comhairleach na Gaeilge, the Government have decided to increase and intensify their efforts. A new broadly-based Council—Comhairle na Gaeilge—are being set up to advise and assist the Government.
The Linguistic Institute of Ireland is being re-organised and strengthened. It will undertake specialised, scientific research and evaluation programmes to identify the methods and policies most likely to succeed in developing the use of Irish. Measures for the economic, social and cultural advancement of the Gaeltacht are being intensified and extended. The Government intend to transform the widespread public goodwill in favour of the language into a sustained national effort to maintain and extend its use. We regard this as the most important cultural activity of all.
I have already stated that the expected deficit on external payments, though exceptionally large, must be viewed against the background of such factors as our strong reserves, the likelihood of a continuing capital inflow, and the upsurge in investment. Strong, however, though our reserves are, we would not be justified in deferring action to correct an excessive deficit unless there were reasonable grounds for believing that the forces generating inflation would be contained otherwise. Apart from the measures taken to secure that the Budget deficit of last year will be replaced by a balance on current account, I have proceeded on the basis that the proposals I have outlined in favour of the less well-off will avert excessive pay claims and income increases generally. If this expectation is realised, the necessity for corrective measures disruptive of output and employment can be avoided.
This Budget, therefore, has been carefully planned to meet the needs of the present situation. Its main purpose is to make sure that economic growth is maintained for the benefit of all the people. At the present time the overriding need is to act in a clear and positive way to encourage the adoption of a sensible attitude to incomes. This has been done by a series of specific,  detailed measures to improve the position of the poorer, weaker and lower paid sections. I believe that what has been done should be accepted as reasonable and that claims for an increase in money incomes should be moderated accordingly. There is a great victory to be won here. If the Government, acting in co-operation with all concerned, can steer the community through this anxious period of threatening inflation, the lesson of that achievement will last for many years to come.
As successive Budgets should do, step by step, this Budget takes what measures it can to eliminate poverty and injustice, and to bring everybody in the community a little further along the road to prosperity and the good life.
Because of this, and because of the many provisions it makes for improving our national life, I am hopeful that those who will have to pay more will do so willingly in the knowledge that they are contributing to that improvement and making life better for young and old alike.
I dare to hope that this Budget will be regarded as enlightened and that it will take its place in the financial calendar as one which made a real contribution to improving the present, and safeguarding the future, for the ordinary people of Ireland. TABLE EXPLANATORY OF CURRENT BUDGET, 1969.
|1. Tax Revenue (excluding Motor Vehicle Duties)||315.59||1. Central Fund Services (excluding Payments to Road Fund)||76.45|
|2. Motor Vehicle Duties||13.10||2. Payments to Road Fund||11.50|
|3. Non-tax Revenue||58.90||3. Supply Services (non-capital)||298.73|
|4. Add:—||£m.||4. Add:—||£m.|
|Wholesale tax||1.60||Increase in children's allowances||3.30|
|Tobacco||1.50||Other Social Welfare improvements||4.11|
|Hydrocarbon oils||2.00||Public service pensions||0.50|
|Beer||2.60||Public service widows||0.20|
|Spirits||1.33||Youth clubs and other items||0.13|
|5. Deduct:—||5. Deduct:—|
|Income Tax—personal allowances||3.52||Allowance for errors of estimation||2.00|
|Other tax concessions||0.48|
|1. Tax Revenue (excluding 2 below)||281.03(a)||282.30||1. Central Fund Services (excluding 2 below)||65.20||65.11|
|2. Motor Vehicle Duties||12.16||12.70||2. Payments to Road Fund||10.70||11.16|
|3. Non-Tax Revenue—||3. Supply Services (non-capital)||275.54(a)||277.58|
|1963-64||1964-65||1965-66||1966-67||1967-68||1968-69 Provisional||1969-70 Estimate|
|Service of Public Debt||38,156||42,849||49,035||56,462||64,286||76,580||88,938|
|Forestry and Fisheries||1,414||2,038||2,166||2,169||2,251||2,807||2,966|
|Justice, including Gardaí||7,317||8,189||8,431||9,274||9,383||10,327||10,653|
|Public Service Pensions||7,535||8,246||9,073||9,618||10,322||11,128||11,503|
|Remuneration included in above figures(b)||55,276||71,032||75,502||80,935||85,900||95,631||103,053|
|Gross National Product||835||946||1,013||1,063||1,142||1,260|
|Current Government Expenditure as % of GNP||22.3%||23.5%||24.5%||25.5%||26.9%||28.1%|
(a) Excludes temporary assistance to industry of £2.10m., £2.21m., £0.28m. respectively.
(b) Comprises the pay of civil servants (including industrial employees), national and secondary teachers, the Defence Forces, Gardaí, and the Exchequer contribution to the pay of health authority staffs and vocational teachers.
 TABLE III
RECEIPTS AND ISSUES
|1968-69||1969-70 (Estimated)||1968-69||1969-70 (Estimated)|
|1. Opening balance||—||—||1. Road grants (a)||9,981||10,030|
|2. Motor taxation, etc.||11,164||11,500||2. Administration, etc.||1,183||1,470|
(a) Including payments on foot of previous years' allocations.
 TABLE IV
CERTAIN RECEIPTS AND EXPENDITURE OF THE EXCHEQUER AND OF LOCAL AUTHORITIES
|Revenue||Non-capital issues||Expenditure from revenue (a)||State grants received||Rates collected|
NOTE:—(a) The revenue of local authorities comprises broadly rates, State grants and other receipts, e.g., rents, fees, etc.
 TABLE V
STATE EXPENDITURE IN RELATION TO AGRICULTURE
|1965-66 £000||1966-67 £000||1967-68 £000||1968-69 Provisional £000||1969-70 Estimate £000|
|Butter and other milk products||10,704||13,781||19,295||25,440||27,000|
|Carcase beef and lamb||89||923||5,284||1,062||1,300|
|Fat cattle (temporary scheme)||—||656||—||—||—|
|Subsidies to reduce production costs:|
|Livestock headage grants:|
|Beef cattle incentive scheme||—||—||—||—||1,000|
|Calved heifer scheme||2,852||1,999||1,233||1,069||200|
|Sow headage scheme||—||284||275||194||125|
|Mountain sheep scheme||—||46||175||370||550|
|Incentive scheme for small farms||—||—||—||—||150|
|Drainage, land reclamation and general improvement schemes:|
|Improvement of Land Commission estates||937||756||851||891||1,077|
|Other improvement schemes||492||211||320||305||469|
|Schemes for Gaeltacht and other western areas||276||317||260||300||323|
|Elimination of disease, livestock improvement, etc.:|
|Administration of improvement and regulatory Acts||587||600||760||899||898|
|Grants towards buildings and equip- ment:|
|Farm buildings, water supplies and milk coolers||2,283||2,441||2,417||2,600||2,770|
|Poultry houses and equipment||111||89||84||104||87|
|Forage harvesting equipment||73||79||71||91||70|
|Education, research, advisory and technical services:|
|Departmental land and buildings||267||140||220||139||262|
|Halving of land annuities||906||955||989||1,021||1,072|
|Bonus to vendors and other costs||120||123||124||126||128|
|Relief of rates:|
|Capital for Agricultural Credit Corporation Limited||3,148||1,200||900||1,500||1,500|
NOTE:—Figures are net of appropriations in aid.
Mr. Boland: No smiles over there now.
Mr. Clinton: Nothing for the farmers.
Mr. T.F. O'Higgins: This Budget can be described as a cynical exercise in vote catching——
Mr. L'Estrange: Give it with one hand and take it back with two.
Mr. T.F. O'Higgins: ——and recognise it as such the people will, because they will remember that in March of 1965 Dáil Éireann was suddenly dissolved and the Fianna Fáil Party's appeal for votes at that time was based on the continuance of a supposed prosperity which the country was experiencing. Indeed, one can recollect their posters which carried the messages “Back Prosperity”, “Stay With Success”, “Let Lemass Lead On”.
Deputies: Hear, hear.
Mr. P.J. Lenihan: It still holds.
Mr. T.F. O'Higgins: The Fianna Fáil Government knew at that time, what the people did not, that a grave economic crisis was in the offing. They also knew, what the people did not, that the apparent prosperity was spurious, that the country was living beyond its means, that a huge balance of payments deficit had been incurred and that the country was in the grip of inflation. They knew also, what the people did not, that bills had been run up, that debts had been incurred that would have to be paid, not by the rich but by the ordinary people through their wages, through the taxes they would have to pay and through the jobs they would lose.
The last election took place. It was fought and it was won by Fianna Fáil. Then what happened? I see the Taoiseach sitting there beside the Minister for Finance. He had the unenviable task of coming to Dáil Éireann when the election was over asking the people to pay the bills. The party was over, the cheque had to be taken up, not by the rich of this land but by the ordinary wage earners and workers  who were asked to pay the bills for the inflation which Fianna Fáil ran up in 1964.
Mr. P.J. Lenihan: Looking for the Labour vote.
Mr. T.F. O'Higgins: There was a drastic reduction in employment, there was a severe restriction in credit, there was a staggering load of taxation imposed on the people of this country and all the Minister for Finance, the present Taoiseach, could say to Dáil Éireann was: “What went wrong with last year's Budget?”
Mr. P. O'Donnell: Deputy Paddy Burke told him and so did Deputy MacEntee.
Mr. T.F. O'Higgins: Let us bear that in mind, because now, once again, we are on the brink of a general election and now, once again, we have the Fianna Fáil Party putting the interests of the Fianna Fáil Party before the welfare of the country.
Deputies: Hear, hear.
Mr. T.F. O'Higgins: This time, however, it will not be so easy to fool the people. They have had far too much bitter experience of Fianna Fáil double dealing. The credibility gap between Fianna Fáil and the ordinary people today is far too wide to be bridged by doses of instant sunshine.
Deputies: Hear, hear.
Mr. T.F. O'Higgins: The people have seen all this before. In 1966 we had a Presidential Election and in 1966 we had an April Budget and April sunshine—a mild Budget, an election Budget, a Budget designed to please. The people voted and a week later in the month of June, 1966, we had a second Budget. In that second Budget quite suddenly the sunshine of the spring had disappeared and gloom and disaster were descending on the people. Taxation was imposed. The election was over. The people will remember that.
The Taoiseach: Why does not the Deputy complete the picture for 1966 and talk about the by-elections?
Mr. Reynolds: Wait until you hear about the referendum.
Mr. T.F. O'Higgins: Fan go bhfeicfir.
Mr. L'Estrange: The Presidential Election was won by a short head only.
Mr. T.F. O'Higgins: It is necessary to remind Deputies of such a recent event as that which took place in 1968? That was another election year. We had the referendum election. We had a Budget introduced on 23rd April by the Minister for Finance. It was designed to please as many people as possible. Social welfare benefits were increased. Income tax reliefs were given. There was a little bit of comfort for most sections of the voters. We now know, and it is so recent that it is worth recalling, that in his Budget, introduced on 23rd April of last year, the Minister paid no regard to certain significant commitments of the State. He paid no regard to the public salary increases which were already ordained and in train. He paid no attention to certain agricultural payments which were required. In April of last year he introduced a false Budget which, if it remained unaltered, would have meant that we would have come to the end of the financial year with a huge deficit of over £13 million.
Mr. L'Estrange: Hear, hear.
Mr. T.F. O'Higgins: Why was it introduced. It was introduced because of the referendum proposals. It was designed to cod the people into voting for the Fianna Fáil proposals. They did not do so. Of course, the referendum was over then, and we had a second Budget introduced by the Taoiseach, in the absence of the Minister for Finance, on 5th November, 1968. That was the crunch, because in that Budget £19 million of new taxation was imposed upon the people of this country, making last year a record year for the imposition of taxation— £19 million of which only £4 million was required in that financial year, but that £19 million was intended to provide slush money to enable this Budget to be introduced today to indulge in vote catching.
Deputies: Hear, hear.
Mr. T.F. O'Higgins: How are the people to take this Budget or this Minister or this Government seriously? We can all remember—it is only a matter of a few weeks ago—the unprecedented appearance by the Minister for Finance on television.
Mr. M.P. Murphy: Unfortunately Fine Gael fell for that gimmick.
Mr. T.F. O'Higgins: Wait. Do not put me off. What had he to say? He appeared in an atmosphere of drama. There was a crisis upon our land and an emergency was rife throughout the country. Look at the headlines he got: “We face crisis, says Haughey” in the Irish Press. He ranked a leader in the Irish Press of 19th March. I will refer to that leader in a moment. Other headlines were: “Gloomy Budget forecast by Finance Minister”, “There is a deficit to be made up of well over £15 million”. Here is what the Minister said to the people of this country just four or five weeks ago:
We came into this year with very real financial problems. During last year money incomes went up by 10 per cent, while national production rose by only 5 per cent.
We carried this inflation into 1969. When incomes and the price of things bought by those incomes each start to rise, the pressure of events chase both upward at an increasing rate.
On top of this a very difficult budget position was developing. As a community, we have been going quite fast in providing new and better services for our people.
An enormous amount of money has to be provided this year to build all the houses, hospitals, schools, factories and other things we want.
The bills we are facing in paying for the improved education, health and social welfare services and supporting farm prices exceed our capacity to pay.
To frame a budget to meet this situation was clearly going to be a formidable task anyway. There  would have to be increases in taxation with small, if any, increases in benefits for those who would normally be expecting them.
That was the Minister for Finance on 19th March last. I do not know how the grass roots of Fianna Fáil took that, but the Irish Press came out with an editorial headed, “Paying our Way” and they had this to say:
It was no secret that Mr. Haughey, as Minister for Finance, was faced with a very difficult task in preparing his 1969 Budget. He and his advisers have been working on these calculations, which are based on known figures and estimates of how the economy will perform in the coming 12 months.
The editorial went on to underline the crisis that faced the people and the difficulties which were causing headaches to the Minister for Finance because of the formidable Budgetary situation he was facing. As Deputy Murphy reminded me with his interjection, this crisis appearance by the Minister on television was followed the next day by an announcement from the Head of the Government that, as an example in belt-tightening, Ministerial salaries would be reduced by 15 per cent.
Mr. Cosgrave: That solved the crisis.
Mr. T.F. O'Higgins: That was an end to the crisis. I want to suggest that today we have a Budget in which the Minister tries to please as many people as possible and, knowing what has been done so frequently in the past in election years, how can anyone be expected to take seriously what is proposed today? We know there are disturbing features in our economy, and the Minister knows it. We know—and the people throughout the country know this full well—that prices are soaring and the cost of living is reaching a record peak. Last year prices rose by five per cent. The latest figures show an increase of 6½ per cent. That is indicative of a very serious malaise in the economy. Does the Minister pay any attention to it? Not at all. The harassed people will have to be satisfied with a bromide doled out by the Minister.
 In his statement today the Minister said:
The Government have been active in alerting public opinion to the dangers involved in sharply rising prices...
There was no need to alert the public. The Minister does not know it, but the ordinary people of this country have been alive to it for a long, long time. Rising prices represent a problem and a challenge to the welfare of every average family throughout the country. That is one factor. This Budget ignores that. In addition, there is the fact that unemployment continues to be disturbingly high. There are over 60,000 people unemployed at the moment. What is in this Budget to deal with that? Nothing whatsoever. Unemployment is ignored. There was a time when Deputy Lemass put forward the view, with which I entirely agree, that the true test of any Government's policy in this country or any other country was the number of jobs they were able to provide for the people. There are 60,000 of our people unemployed today and the Minister for Finance acts as if he was the veritable goose that laid the golden egg.
It is realised by this complacent Government—if it is not it is well to remind them—that emigration is running at the rate of close on 24,000 a year, at a higher rate than in recent years. Although we are told there is a restriction on employment opportunities in England, nevertheless in the year which has ended 23,700 young Irish people left this country. These disturbing features exist and abound.
Another aspect is referred to in the National Industrial Economic Council's report. At page 7, paragraph 10, in a review of the year they say:
Throughout 1968, the inflationary pressures grew in strength, and the rate of growth in consumption and investment expenditures accelerated. The Budgetary measures of 5 November, 1968 probably had a net expansionary effect during the remainder of the calendar year because the growth in expenditure to forestall the higher rate of wholesale tax which became effective from 1 January  1969 was almost certainly of greater importance than the immediate restraining effects of the higher duties on beer, tobacco and spirits. However, at this stage the relevance of 1968 lies in the legacies it bequeaths to 1969...
“The legacies it bequeaths to 1969.” It goes on to deal with the prospects for 1969. Time does not permit me to go into this report in detail but it is fair to say that this National Industrial Economic Council is objective, and it points to very serious sources of danger affecting the very welfare of our people and the employment of ordinary people throughout the country. The warning contained in that report was also contained in the Economic Review issued by the Department of Finance in relation to the outlook for 1969.
Where in this Budget is there any evidence of a plan to deal with persistent, chronic unemployment, with continuing emigration, with the dangers inherent in a rising deficit in our balance of payments? There is nothing here. This is merely an effort to please as many people as possible.
Mr. MacEntee: Does that annoy the Deputy?
Mr. T.F. O'Higgins: The Minister said it was carefully planned to meet the needs of the present situation. That is his own phrase. Of course, it was. He also said it was a right mix of measures. Of course, it is. It is an effort to perpetrate a confidence trick on the people and it will not work. Let us look at what is done. I shall not go into detail on the various concessions that are made but I want to refer to some of them. An increase in children's allowances—this we welcome; this we have advocated again and again at Budget time.
The Taoiseach: That is Fine Gael policy, is it?
Mr. T.F. O'Higgins: And let it be remembered that in January of this year we published our social welfare policy.
The Taoiseach: Deputy Corish knows how much you believe in your policy.
Mr. Reynolds: You are afraid to move the writ for the by-elections.
Mr. T.F. O'Higgins: When we published our social welfare policy or charter, as I would prefer to call it, the Taoiseach called it “pie in the sky”. We pointed out in that document that in relation to the eight countries that paid children's allowances Ireland was the lowest of the lot, that although Italy's average living standards were not much higher than Ireland's, it was nevertheless able to pay a rate of children's allowances two-and-a-half to six-and-a-half times higher than we could.
Mr. B. Lenihan: Talk about the figures in the Budget.
Mr. T.F. O'Higgins: Dictator Lenihan is not dictating to me. We showed the way in which there could be a minimum increase of two-thirds in children's allowances. The Minister has proposed now after years and years of neglect——
Mr. MacEntee: We brought them in.
Mr. T.F. O'Higgins: They emanated from Deputy James Dillon, from the Fine Gael Party.
Mr. B. Lenihan: We brought them in.
Mr. T.F. O'Higgins: The Minister proposes something less than a 50 per cent increase; the Fine Gael proposal is a two-thirds increase, and we guarantee it will be in operation inside 12 months. The next social welfare proposal by the Minister is an increase of 10/- in the old age pension. He broke his heart. The Fine Gael policy proposal is an immediate increase in old age pensions to £5 a week and it will be done.
Mr. MacEntee: You gave them 2/6d in four years.
Mr. T.F. O'Higgins: Would the senile delinquent keep quiet?
The Taoiseach: Having regard to your previous performance you will never get the people to believe that.
Mr. T.F. O'Higgins: The Minister gives some relief in income tax. This, again, is very welcome. But how seriously are these reliefs to be taken? There is an increase of £15 in the allowance. That means—I am anxious that the Minister should check my figures—that the lower paid worker, who is supposed to be touched by the magic wand, will get £15 a year increase in his allowance. If he smokes 20 cigarettes a day, if he takes one pint a day, if he smokes no cigarettes on Sunday and if he does not take a pint on Sunday, all that that means is that he will pay more in increased taxation than he will get by way of allowance from the Minister.
Deputies: Hear, hear.
Mr. T.F. O'Higgins: Would the Minister care to check my figures? Twopence a day for six days, not counting Sundays, over the year amounts to £2 12s; twopence on the pint each day for six days, not counting Sundays, amounts to £2 12s. That totals £5 4s and the income tax allowance from the point of view of actual tax payments will be £5 5s. The Minister is giving a bob.
Mr. B. Lenihan: It is good chapel gate stuff.
Mr. T.F. O'Higgins: Chapel gate stuff! The Minister for Education sums up this Budget as good chapel gate stuff. May I conclude by saying—I say this quite seriously—that I do not believe this is an exercise in responsible administration?
Mr. Cosgrave: Neither does Deputy MacEntee.
Mr. T.F. O'Higgins: I believe this is a dangerous exercise in political expediency. I hope harm will not come of it, though I know well that the responsibility for dealing with the situation, if harm does come, will not be that of the Minister. I know well that sooner or later whatever has been done  or not done in this Budget will have to be tackled by somebody else and, in the interests of the country and in the interests of our situation vis-à-vis other countries, may I suggest to the Minister and to the Taoiseach that they should end this period of uncertainty? Let the Taoiseach dissolve Dáil Éireann tonight and let us get to the country and, as the Minister for Education said, go and talk at the chapel gates.
Mr. Corish: For the first time since 1965 the backbenchers of the Fianna Fáil Party had an opportunity of applauding a Budget. As far as I and my Party are concerned, we welcome the concessions given and we will be prepared to support the measures designed to finance these concessions. I do not know that the Minister for Finance has a good claim to be considered any sort of financial wizard because, as far as the Budget is concerned, we are still following the same old pattern, particularly where taxation is concerned. It does not need a great deal of imagination or a great deal of brainwork to do what the Minister has done today or what he and his predecessors did in Budgets over the last five or six years. There is the usual twopence on the packet of cigarettes, the usual twopence on the pint, threepence on the gallon of petrol, and so on. That brings in £10 million and then one gives concessions to certain sections of the community. Those who are being assisted are, I agree, deserving of assistance but nobody is going to tell me that, as a result of this Budget, the old age pensioner will run riot on £3 15/- a week or that the single person qualifying for the proposed income tax relief will be any better off as a result of that so-called relief.
As I said, we welcome any concessions and we will support the measures designed to finance them. In recent years Fianna Fáil have not acted in the best interests of the country when framing their Budgets. They put Party before country. There is all the evidence in the world to support the argument that Fianna Fáil think this is a good political Budget. One could see  the relief when the different concessions were mentioned. The Fianna Fáil Government, the Fianna Fáil Party and Fianna Fáil Ministers for Finance have used Budgets to protect or to safeguard their political fortunes and their only interest now is in the result of the next general election, whenever it may be.
In April, 1968, we had what is now generally described as the “Referendum Budget”. It was a mild Budget. It did not cause a ripple anywhere. The taxation proposals were lenient. There were reasonably generous concessions. All this was done because there was going to be a referendum. The Government deliberately ignored their responsibility. The Minister ignored his responsibility to provide for the pay increases in the public sector, increases amounting to some millions of pounds. It would have been an unpopular thing for him to have made, as he should have done, provisions for these pay increases at that time and the Minister was not prepared to risk unpopularity, for the sake of the Party and for the sake of the referendum that was held later in that year. It was a politically tailored Budget. One could describe this Budget also as politically tailored for the general election, whenever it will be.
The referendum was held and, in face of the colossal rebuff the Government suffered, the Government decided they would have to face up to their responsibilities. They did not postpone facing up to these responsibilities as a Government normally would until the next Budget was introduced in April or May of this year. They knew they would be in a difficulty because there would be a general election looming up and the Taoiseach, as acting Minister for Finance, introduced what was called a “mini-Budget” but what was, in effect, a “maxi-Budget” to raise the £12 million or £15 million needed for public service pay increases and to meet other liabilities amounting to some £3 million or £4 million. Within a short six months an extra £20 million was called for—£20 million that should have been given consideration when the Minister for Finance introduced  his Budget in April 1968. They postponed making provision for that £20 million until after the referendum and they brought in a Budget in November in an effort to repair the damage done before they entered an election year.
One wonders whether or not we can now depend on the figures, any of them, quoted to us here this afternoon by the Minister for Finance. Fianna Fáil Ministers have been wrong in the past, so wrong that they were compelled to bring in two Supplementary Budgets. We have reached the stage now where we cannot trust a Minister for Finance. It is a dreadful thing to have to say that, but the fact is that we cannot trust him. I do not know who will be the Government after the next general election—Fianna Fáil, Fine Gael, or Labour—but it is a possibility that, because of past practices of Fianna Fáil Ministers for Finance, as soon as the election is over, we will be faced with a colossal problem as far as revenue and taxation are concerned.
The taxpayers were scourged in 1968. There was more taxation imposed in that year than was ever imposed in any year since the State was founded. It amounted to something like £22 million. The taxpayers were scourged in order to ensure that there would be something for the Minister for Finance to distribute as largesse in view of the impending general election. In two Budgets cigarettes went up by 5d. As a result of this Budget they will go up by another 2d—an increase of 7d on the packet of cigarettes in a period of 12 months. There is an increase of 5d on the gallon of petrol in the same period. Those who drink will be asked to pay another 2d on the pint. Similarly with spirits. The wholesale tax went up by 51 per cent last year. Now it is proposed, in respect of certain commodities, to increase it further.
The Minister had not much regard in his speech for the way the consumer price index has behaved in the past 12 months. There was an increase of 7.1 points. It was the second largest increase in the consumer price index in this country in 15 years. Of course, the notable one was the year 1963-64 when the turnover tax was introduced.  Between 1953 and 1960, seven years, the consumer price index went up by 18 points. However, between 1961 and 1968, it went up by 40 points. We had twice as large an increase in the consumer price index between 1961 and 1968 as we had between 1953 and 1960.
We have a surplus of nearly £1 million but, again, at what cost to the taxpayers? We have that surplus at a cost of something like £22 million or £23 million to the taxpayers which was imposed to produce one result only, as all Budgets here in the past three or four years have been designed and as this Budget is designed, namely, to garner votes for Fianna Fáil in the 1969 general election. I suppose the people are now expected to be grateful for the concessions that have been given. They should be grateful, I suggest, that a Fianna Fáil Minister for Finance has ceased kicking them for the first time in five years. They may not now feel the pain so much.
One is bound to wonder if this Budget is the first instalment of the Budget for the financial year 1969-70. There was some reference to this last year also. In April, 1968, when the Minister said—casually—that he might have to come back to the Dáil in the autumn, his remark was not taken seriously. When the Minister for Finance introduced his Budget in 1968, nobody thought that the Taoiseach, on his behalf, would have to come back in the autumn for so much extra.
The past year has been a year of economic confusion: I am not talking about strikes in this context. The greater part of the confusion was caused by the Government themselves and, as Deputy O'Higgins has said, the Minister for Finance was the chief contributor to that confusion and panic, aided and abetted by the Taoiseach. Reference was made to the unprecedented television appearance of the Minister for Finance on 18th March, 1969. This had never been availed of by any Minister since Radio Telefís Éireann was established. Deputy Haughey told his television and radio audiences that we came into the financial year 1968-1969 with grave  financial problems and that to frame a budget for the financial year 1969-70 to meet that situation would be a formidable task. He told his audiences that there would have to be an increase in taxation in order to provide small, if any, increases in benefit for certain categories of persons. We are, indeed, glad that the Minister for Finance has introduced these benefits. On 18th March, 1969, he mentioned the serious economic situation in which we found ourselves. He talked about a cutback in spending, a credit squeeze and more restrictions. He ended his speech in that rather serious vein.
As Deputy M.P. Murphy has mentioned, if the Government thought the position at that time was so serious that they reduced their substantial salaries by £250 per annum, we may well ask for what purpose did they decide on that reduction. Was it meant to be an example to the community? If it was, it was a cynical gesture by people who, like ourselves, had voted themselves substantial increases last year but believed that, by reducing their salaries by a mere £250, low-paid workers would show restraint. It was a cynical gesture by the Minister and, equally, it was a cynical gesture by the Fine Gael Party. One month later, the Minister for Finance said there was no crisis. If there was no crisis, why did he go on television one month before that and call for restraint? Why did he talk about the adverse balance of payments? I suggest that the answer is that a general election was in the offing and that everything he did was done with an eye to that occasion. Why did he suggest, within one month of its introduction, that this Budget would be a very tough Budget? What was his purpose in doing all that?
Mr. Spring: Perhaps he wants to be Taoiseach.
Mr. Corish: I am not concerned about the internal struggles in the Fianna Fáil Party.
Mr. Spring: One more vote.
Mr. Corish: This is one of the best examples of the confusion and frustration  created in the mind of the Irish people as a result of the radio and television speech by the Minister for Finance on 18th March, 1969. I cannot call a general election. That is his prerogative and that of the Taoiseach, in consultation with his Cabinet members.
This Budget is further evidence that everything the Fianna Fáil Party have done, particularly in the past three or four months, is designed to ensure that the fortunes of the Fianna Fáil Party will be safeguarded rather than the fortunes of the nation. There are other crises the Government have ignored. The manufactured crisis of 18th March, 1969, dissolved within a month. There are other crises which neither the Government nor the respective Ministers have attempted to dissolve. Take those who cannot find employment.
I am amused by some of the contributions in this House by the Minister for Industry and Commerce and other Ministers on the subject of employment and new industries, the prospects for further employment, and so on. Deputy Haughey spoke a lot about employment and unemployment in his Budget speech. I would ask him to take note of the following figures. In 1968, the last year for which figures are available, there were 6,000 fewer persons at work in this State than in 1964. Is that not a crisis which the Government are refusing to tackle and is that not a crisis which has obtained since Fianna Fáil came back into office in 1957?
Let us talk about 1957 for a moment —1957, the year which has been described as the worst year in our economic history. In that year there were 19,000 more at work than there were in 1968. So much for Fianna Fáil's industrial miracle. Our people are not getting the jobs Fianna Fáil promised to provide for them or forecast under the various programmes for economic expansion. On the contrary, ever since Fianna Fáil came back into power in 1957, the number of jobs in this country has gradually been diminishing to the point that we now have 19,000 fewer people at work in this country than were at work here in 1957.
Is there not a crisis for the homeless?  It would have matched some Minister, principally the Minister for Local Government, to make a special television appearance on the subject of the housing crisis in this city, in every town and in the rural areas. That is the crisis that should be tackled rather than the gimmick of the Minister for Finance who made a speech on television and on radio on 18th March last—a speech which has not yet been explained.
Mr. M.P. Murphy: Fianna Fáil, in 1957, promised the electorate of this State 100,000 new jobs by 1970.
Mr. B. Lenihan: Early in 1957, there were 100,000 unemployed.
Mr. Cosgrave: The present unemployment position is camouflaged: even the Department of Finance admits that.
Mr. Corish: It was 153,000: the unemployment figure was about double the 1954-57 figure. It would match the Government and the Minister for Industry and Commerce to concern themselves about the crisis in prices. It was somewhat cynical of the Minister today to reiterate that there must be strict control of prices. Did the Minister for Labour, Dr. Hillery, not introduce a Bill into this House entitled the Prices Bill? During the debate he promised there would be strict control of prices in order to try to ensure that there would be stability in wages and salaries. It is a bit late now, three or four years afterwards, to tacitly admit that we have not had price control since that Bill. As I say, every housewife knows that there is a crisis in prices. The cost of living for her went up by 5 per cent last year which means that she is only getting 19/- worth now for the £ that she spent the year before. There is a crisis as far as the small wage earner is concerned. Wage earners particularly have been dragged into the taxation net by the hair. I should like the Minister to be under no illusions about what his £2 million is going to do for the lowly paid workers in the public service. It will give them a certain small amount but it will not satisfy them in the manner he expects.
I appreciate as much as anybody else how costly it is to make sweeping  changes in our income tax system. Again, let me say that the concession of £15 to the single person is not going to have a tremendous effect on his spending power. It will not increase it to any great extent. Again, as has been said, this Budget will do nothing for anybody who smokes or drinks or has a car. In any case, there is a grave disproportion in the amount paid by those who now have their tax collected under PAYE and other sections. Over the last five years, sur-tax went up by 20 per cent, tax on company profits went up by 50 per cent but taxes on wages and salaries in the same period went up by 100 per cent. The Minister can check those figures if he wishes, certainly I will check them anyway. Year after year those who are earning wages and salaries are paying proportionately more.
Mr. MacEntee: Their incomes are higher.
Mr. James Tully: The incomes are higher for the other sections too.
Mr. Corish: I am talking about percentages. I am saying that they are contributing a greater percentage. The wage and salary earners have borne the brunt of tax increases in recent times. The Government should also concern themselves with the crisis in agriculture. There have been concessions given but I am afraid these are not going to satisfy to any great extent those people from the farming organisations who made representations, perhaps, to the Minister for Finance, but certainly to the Minister for Agriculture and Fisheries. There is a crisis as far as the agricultural population is concerned in that, while year after year large numbers have left the land, in 1968 9,000 more left the land. We have not applied ourselves to the task of endeavouring to improve the incomes of those engaged in agriculture. At present their income is only three-quarters of the incomes in the cities and urban areas. These concessions whilst they are welcome will certainly not go anywhere near to equating the incomes of the agricultural community with those in the cities and towns.
Mr. Haughey: Is it not your new policy to tax them?
Mr. Corish: That is right, in accordance with their income. Any farmer who should not pay income tax will not pay it and that will mean the majority of farmers, due to the policy carried out by the Fianna Fáil Party over the last 12 years. The Minister has been hammering at the workers for being solely responsible for our economic difficulties. He can deny this if he likes but that was one of his purposes on television, to tell workers that they dare not look for any more money or the economy would be upset. How the unfortunate worker is to relate that to the balance of payments problem I do not know. Too often and for too long has the worker been made a scapegoat of Government attacks when they find themselves in balance of payments difficulties——
Mr. Haughey: I did not do that.
Mr. Corish: The Minister did it by interference. What was the Minister doing on television?
Mr. Haughey: I was alerting everybody to the dangers,
Mr. Corish: Did the Minister not say that there was a crisis?
Mr. Haughey: There was a danger of a crisis——
Mr. Corish: The Minister said “crisis”.
Mr. James Tully: If workers look for increased wages there would be a crisis.
Mr. Haughey: It is only fair to read fully what I said. If the Deputy is going to quote me he should quote me exactly. Do not be adopting the Fine Gael tactic of misquotation.
Mr. Corish: The Minister should concede this: some people believe that wage costs have gone up beyond all control. It is true that in 1968 wages went up by 8½ per cent but it is also true that the workers increased production by 8½ per cent so that anything they got in 1968 was their due. As a result of this, apropos of what has been  said about increasing wages and exports, unit wage costs did not go up last year but there is no mention of profits going up. I did not hear any emphasis being laid by the Minister on increases in profits. If I remember rightly, there was no mention in his television speech of profits going up by 12 per cent last year. We are not supposed to touch these people and we talk about incentives for these people to make profits in order that they will produce more. There are no such incentives for workers who last year justified every single penny they got as far as wages and salaries were concerned.
If the Minister is looking for an economic crisis he should look at the trading conditions of this country with Great Britain. If he likes he can read the speeches made by members of this Party on the Anglo-Irish Free Trade Agreement. Last year we had an adverse swing in our trading with Great Britain of £25 million which was solely attributable to Government policy. However, the real threat to security is jobs and we do not believe that as a result of Government policy, particularly as far as the Anglo-Irish Free Trade Agreement is concerned, that we can look forward to an increase in jobs or that we can look forward to security.
There is nothing in this Budget to solve our economic problems. It will be regarded as a popular Budget and it is tailor-made for a general election. That is the right of the Fianna Fáil Party, but in the last four or five years they have scourged the taxpayer and thrown out paltry amounts to social welfare recipients. They will boast about what they are doing for social welfare and talk about what I as Minister for Social Welfare did or did not do but as far as tax revenue is concerned, or as far as Budgetary expenditure was concerned, the late Deputy Bill Norton and myself did more than the Fianna Fáil Party are now doing. In 1962-63 there was 16.6 per cent of total Budgetary expenditure on social welfare; in 1968-68 it was only 13.6 per cent, or £45 million out of a total of £332 million. We have had various Ministers, including Deputy  MacEntee and the present Minister for Social Welfare, Deputy Brennan, and all the Fianna Fáil Ministers for Social Welfare, telling us that we cannot give the pensioners any more unless we get more in. That has not been the pattern; crusts have been thrown to them. The old age pensioner on £3 15s. a week is not going to go wild, nor are those who are going to get increases in unemployment benefit or sickness benefit going to go wild. We thought the Minister was going to make a determined effort to improve the lot of social welfare recipients and of the lowly paid workers, particularly in his own Department. He has not done that. Therefore, I do not think that the people are going to get too excited by this Budget. They will recognise it for what it is. There seems to be a childish attitude on the part of the Government in regard to the date of the election. If the Minister wants to know our point of view on that I can tell him: we are ready. It is not a question of catching any Party, or at least the Labour Party, on the wrong foot. It is a childish idea to be withholding what the Taoiseach may regard as a secret, keeping everybody in suspense. A general election is an important thing. It is not an instrument for the Fianna Fáil Party only. It is an exercise in which Deputies will be returned to Dáil Éireann and the country wants to know when it will take place. The Minister, as Minister for Finance, should recognise that because there is this uncertainty there may also be uncertainty in industry and business. Like the Deputy who spoke before me I would urge the Minister to ask the Taoiseach to dissolve this Dáil as soon as possible because no matter what one thinks about this Budget, and conceding the good things that are in it, we are prepared to fight every Party in the expectation of greatly increasing our present strength.
Mr. P.J. Lenihan: And vote for the Budget?
Mr. Corish: I certainly will.
An Ceann Comhairle: Will the Minister move Financial Resolution No. 1?
|Last Updated: 15/09/2010 09:18:16||Page of 63|