Thursday, 30 April 1970
Dáil Eireann Debate
Mr. Moore: I was making the point last night that the objection of the Fine Gael and Labour Parties was apparently not to the increased social welfare benefits but to the turnover tax which they said was a penal tax and they voted against it. Whether it is as simple as that is another matter, but unless there is increased taxation increased benefits cannot be given. This time the Minister for Finance decided he should increase the turnover tax which the Opposition speakers so far have decried. It is probably their job to do that, but they are not being very consistent about it. There are two instances where members of the Fine Gael Party proposed an increase in the turnover tax. Deputy FitzGerald of the Fine Gael Party, commenting on the inter-departmental committee on the rating system wrote two articles in the Irish Times on 17th and 18th July, 1968, and in a review of these articles  in the publication Administration of autumn, 1968, it is interesting to read these comments:
——FitzGerald turnover tax at an average of 5½ per cent over the whole country would have brought in a sum equivalent to the entire rates burden of 1960 and 1961. Thus rates are done away with easily and simply and everybody is happy except the committee.
Therefore it was suggested two years ago that an increase of 5½ per cent would have abolished the rates system. It may well have done, but the point is that, seeing that an increase in turnover tax, if not proposed, was at least suggested, the Fine Gael opposition to the Budget is altogether suspect.
In 1968 also the then Dublin Corporation set up a committee to probe the whole rating system and to suggest other ways of raising local taxation. This committee included Fine Gael and Labour members, though be it said in fairness to the Labour members that they dissented from the findings for a turnover tax. However, the committee proposed that local authorities should have the option of seeking an increase in the rate of turnover tax collected in their areas, the proceeds of the increase to be applied to relieving the rates.
There are two instances of Fine Gael actually advocating an increase in turnover tax two years ago. If the Minister has delayed listening to their recommendation for two years, perhaps the timing is wrong; but surely the principle, with which Fine Gael seems to agree, is not wrong. In connection with the corporation committee I want to be quite fair and to say that Alderman J. Mooney and Councillor G. English asked to be recorded as dissenting from that recommendation. I think I have shown clearly that Fine Gael are being a little hypocritical in this whole situation, but perhaps even now they could make amends and withdraw their opposition to the turnover tax.
It has been said, perhaps with some truth, that the tax will hit small shopkeepers.  I suppose all taxes hit somebody, but in this case discussions are to take place between the Government and the retailers and I do not want to say anything that would prejudice the issues on either side.
Mr. Moore: That is a good point about the last time. We can recall there was a great demonstration in the city here against the turnover tax and even for the next three or four years the argument went on in this House. As I said last night, when we asked one Fine Gael Member who was speaking at the time would the Fine Gael Party abolish the tax if they were ever returned to power he gave a very naive answer to the effect that it is impossible to unscramble a scrambled egg.
Mr. Moore: I am not arguing whether it is good or bad but about the Fine Gael attitude to the whole thing, saying they would not vote against the social welfare increases— and I do not believe they would—but voting against the source which makes these increases possible.
Mr. Moore: It amounts to the same thing. I was referring to the small shopkeeper who in each of our own local districts is a kind of institution  and one which we would be very sorry to see disappear. At the same time, we live in this supermarket age. The public, the housewives, do go to the supermarkets to shop. I do not say they are better shops but at least housewives can go on a comprehensive shopping spree in the one store. However, the small shopkeeper will continue to have a place in our society. There may well be indications that, as this society has rejected many things, it will also reject in time to come the idea of huge supermarkets. People will once again look for the personal service available in the small shop and the incidence of the tax will not be felt only by the small shopkeeper. It is impossible to count them, but there must be many thousands of small shops. I have not yet seen any great closure of shops at any time as a result of the turnover tax. Shops may close because of housing demolition in an area where old, bad housing has been cleared and their customers are transferred to other areas.
The income tax concessions in the Budget help the lower paid worker. I should like the Minister to take very firm action to catch tax evaders. I am not referring to the small man who, perhaps, earns so little that the fact that he does not make a return of income, although he is obliged to do so, does not influence the general trend of taxation. There are many aspects to be examined in regard to the big spenders and the devious means of evading tax. If tax evaders were brought to heel, the burden of taxation could be spread more evenly. Perhaps it is another day's work to launch a campaign against tax dodgers such as was launched against “TV spongers”. All in all, the Minister has done a good job. Once again he has indicated his concern for social welfare recipients and lower paid workers.
I look forward to next year when, I hope, the Minister will seek to have derating of urban dwellings on the same lines as he provided for derating of certain agricultural land. It may not be possible to equate an urban dwelling with an agricultural holding but the principle is there. Undoubtedly, smallholders need relief but urban dwellers also need relief of rates. This  year a start was made in the Act providing for rates remission. This Act was a pointer. More of this type of legislation is required.
Of course, any kind of relief involves increased taxation. Perhaps the Minister would examine the articles by Deputy FitzGerald and the report of the committee established by Dublin Corporation to inquire into the rating system and the system of taxation. He will notice the suggestion is made that a turnover tax of 2½ per cent was not as sacrosanct as the Fine Gael Party would have us believe. A member of that party and members of a local authority proposed that the turnover tax be increased. This suggestion should destroy any illusion that there may be in the public mind that if by any chance Fine Gael were in a position to deal with the turnover tax they would abolish it. They would not. They would simply increase the turnover tax. It may be said that a turnover tax of 10 per cent and complete remission of rates would possibly solve the rates problem but it would not have the effect of distributing taxation more evenly. In conclusion I want again to indicate my support for the Budget and to express the hope that the Minister for Finance will be back in the House very shortly.
Mr. Ryan: The most that can be said of Deputy Moore's speech is that he helped to add to the confusion in economic and political thought in the country at present which appears to be the preoccupation of very many people, many of whom are paid much more than Deputy Moore, many of whom congregate in nice-sounding bodies to publish annual compendiums of clichés and most of whom take little time off to think. It would be my desire to get people to think clearly while they try to assess the realities of our pending economic disaster. Last evening, of the 144 Deputies elected to Dáil Éireann there were only four present to discharge their duty to think about and debate the annual finances of the country.
Mr. Ryan: Deputy Desmond tells me that they were watching the World Cup match. That had not occurred to me. I thought they were supposed to be listening to another expert addressing them on the report of the public services organisation review group. This is probably what would be called a commissioned background study—another example of the increasing futility on the part of many people engaging in wonderful exercises of planning and reviewing and studying in depth and lecturing and writing in papers about them, only getting the country into greater and greater economic and financial difficulties.
What hope is there for this country when you have the Central Bank and the Department of Finance acting in diametrically opposed ways? How can the ordinary man-in-the-street get an understanding of the needs of the community when the governor of the Central Bank and the Minister for Finance are contradicting each other? How is the industrialist, the trade union leader, the manager, the worker, the farmer to know what is the right thing for the country when the experts are speaking with different voices and acting in different ways; when the governor of the Central Bank and every agency appointed by the Government to give advice say that credit must be restricted and the Minister for Finance keeps grabbing more and more of whatever domestic credit is available and, not being able to appease his insatiable hunger for money, then goes out into world markets to make multi-million borrowings at 15 per cent?
Either we can ignore all the warnings given as having no meaning or application to our requirements or else we heed them. It seems to me, Sir, that the stark reality is that the experts disagree and the nation is dying. The fact that the imminent death is not apparent to many people yet does not make it in any way more remote.  The certainty is that as we are at present drifting, since the Government refuse to govern in the things that matter, we will face disaster in the very near future. If anybody were to consider what should be a location for investment I would suggest wheelbarrows. Investment in wheelbarrows is certain to pay off in the not too distant future.
Mr. Ryan: ——because, as things are now developing, the housewife will soon need a wheelbarrow to wheel to the supermarket to hold all the pound notes necessary to make even the smallest purchases. This is no wild dramatic picture to paint. This happened in Europe in this century in a country which failed to stop rampant inflation, in a country which enjoyed, as many people here are now enjoying, the pleasures of inflation.
We are now, for the first time in our half century of independence, in a situation in which the Irish £ is becoming significantly of less value than the British £ and we are in imminent danger of having to devalue the Irish £ as against the British £. The £, both here and in Britain, was devalued not so long ago. We were assured at the time that benefits would flow to the economy as a result of that devaluation. It is certain that there was immense gain by the British economy as a result of devaluation. It was potentially of assistance to our economy but, within a couple of months of the devaluation of the £, any benefit which had accrued evaporated completely. All that devaluation has meant is a depreciation of our external reserves, an increase in costs at home and a totally useless exercise so far as our economy is concerned. I have not yet had time to digest the voluminous documents circulated to Deputies——
Mr. Ryan: ——some few days before the commencement of this  critical debate on the Budget. I am, indeed, very pleased to learn that an economic expert like Deputy Dr. O'Donovan—I assume he is including himself in his all-embracing statement that not everybody has been able to read and digest all this documentation —has not read and digested it. It is, at least, within his particular discipline and field of extra-mural activity to study and understand these things, but it was certainly not within the capacity of most Deputies to read and digest all that is written in these documents in the short time before the commencement of the debate on the Budget. I would plead that some of these documents at least should be circulated for a longer period before the Budget. We received the Report on Incomes and Prices Policy, containing 47 pages, eight days before the commencement of the Budget debate. The report was prepared as far back as 20th February last. I do not think that is fair.
We received the “Report on the Economy, 1969, and Prospects for 1970”, which contains 23 pages, just immediately prior to the Budget debate. That was published on 20th March last. The “Review of 1969 and the Outlook for 1970” incorporating the Third Programme Review, containing 161 pages, was also received in the week immediately before the Budget. We received seven pages of closely typed statistics in the “Estimates of Receipts and Expenditure” for the year ending 31st March and, of course, 34 pages on the capital budget, 138 pages of a treatise entitled “Membership of the European Community, Implications for Ireland”.
Mr. Ryan: This morning we received another document containing 150 pages dealing with the prospects for agriculture in the European Economic Community. We did not, unfortunately, receive “Old Moore's Almanac.” I would have a great deal more faith in “Old Moore's Almanac” than I have in the Government's predictions in all this multitudinous and voluminous documentation.  What does this documentation say? It says many of the things we have known for years. For instance, the NIEC disclose the revealing fact that agricultural production is subject to influences, such as weather, over which we have no control. Have we not reached the ultimate in nonsense when a wonderful organisation like the NIEC solemnly tell us that agricultural production is subject to some things, like weather, over which we have no control? Here it is at page 20:
Mr. Ryan: A 27-man team that comes out with a statement like that in 1970 is really doing something worthless. Is it not time that people were allowed to think for themselves instead of having to sit down, out of a sense of obligation, to read in the anxious days before the annual Budget such a statement as that “Farmers' incomes are strongly influenced by natural phenomena, such as weather” and also by:
We have been arguing for many years that there should be farmers' representatives on any council concerned with the development of the country economically and if the present members of this council cannot get any further on the agricultural problem than an understanding of the influence of natural phenomena, such as weather, it would be better to disband the council rather than let them continue in their present fashion. Perhaps  I should quote a little more. On the previous page, dealing with the importance of having an equitable tax structure, this 27-man team says:
We believe, however, that the question of the whole tax structure and its incidence on different income categories must be studied. A start should be made as soon as possible by commissioning background studies.
When I was at school we were told by our lecturers in English to write clearly and with economy of words. When you see a Government appointed team producing a document like this containing the sentence “A start should be made by commissioning background studies” you wonder if these people have forgotten all they ever learned at school or if they paid any attention to a document about writing clearly which was issued by the Department of Finance about two years ago. Instead of saying “A start should be made as soon as possible by commissioning background studies,” all that required to be said was “A start should be made as soon as possible.” This is typical of the wooden, meaningless language which we are getting in many of these documents which are being published at enormous expense. I would plead for a substantial reduction in the quantity, weight and volume of words we are getting from Government Departments because it is a pointless exercise at any time and becomes a frustrating one when whatever advice they contain is completely ignored by the Government of the day.
The Budget this year, like those for many years, has been an annual sermon or exhortation to people to do that which the Government are not prepared to do. Once again the Minister for Finance has told everybody to save, to reduce expenditure, but whatever increase there has been in consumption on the part of ordinary people in the last six years it has been very much less than the consumption on the part of the Government which is running ahead of private consumption by 5 per cent to 6 per cent. The Minister for Finance says that there was no room, as he saw it,  for further reduction in Government expenditure. If so, how does the Minister think private consumption can be reduced without causing severe hardship? I think the reality is that he knows hardship is being caused but is not concerned with it so long as the Government, that is the public side, are able to maintain their momentum. The primary obligation to reduce consumption and inflationary pressures lies on the Government and the Government have failed singularly in that regard.
When I heard this year's Budget I could not believe my ears. It must be the Budget most deserving of a leather medal prize for stupidity and recklessness; stupidity, in that it appears to fail to understand the main causes of our economic problems, causes we have been identifying for several years past. In the main, these are the increases in prices across all levels of the economy. It has been suggested that these increases have caused concern to the Government and the Minister for Industry and Commerce set up or strengthened a special section in his Department to deal with price control. Notwithstanding that, the Department and the Minister have ratified price increases in many hundreds of cases per annum, apparently because they felt they were justified. In addition to those increases there have been other increases that have not come under the observation of the Department so that clearly the machinery is not working or, if it is, it has been established to the satisfaction of the Minister that the price increases are necessary. If this is so it is clearly incumbent on the Government to take more stringent control of the economy in order to keep prices stable.
I have already mentioned that the advice of the Central Bank, of the NIEC, the Irish Congress of Trade Unions, the Economic and Social Research Institute, the Labour Court and any other group you can think of has been ignored by the Government. Another body that recently identified the main cause of our problems and difficulties was the OECD who, in their annual report, emphasised that nearly half of the price increases of the last  two years were attributable directly to tax increases. This is the main reason why the Department of Industry and Commerce have become little more than a rubber stamping machine for price increases. When applications are made to the Department they must without any further investigation approve half of the price increases sought because on their own information and because of deliberate Government action half of the price increases are attributable to tax increases. It is quite easy to see that the other half would be attributable to the many indirect and direct forces which send up production and distribution costs.
The Taoiseach some time ago said the machinery for price control would be strengthened as and when that appeared necessary. Will it require disaster, devaluation of the Irish £ or refusal to give further credit to this country, to convince the Taoiseach and the Government that more effective price control is required? It would appear that if they are not affected by all the warnings and pleas that have been made to them over the last two years it will require a major disaster and rampant unemployment with all the consequent misery to convince the Taoiseach and his Ministers that more effective price control machinery is required.
The Minister for Finance claimed in his Budget speech that taxes in this country were the lowest in Europe. I ask members of this House to take a look at any newsagency stall and see the prices of magazines and newspapers here and across the world. Many of these have on their front covers the price at which they can be bought in different countries and invariably you find that the prices in Ireland are as high as the highest and in many cases a great deal higher. Where the price is a 1s in Britain and elsewhere—or the equivalent—it is 1s 2d or 1s 3d in Ireland. There are many other articles in general distribution here which in price are anything from 20 to 30 per cent dearer than elsewhere.
I have had occasion in the discharge  of my public duties to travel considerably in the past six months. I have been in seven European countries and three countries of the Middle-East, including the more developed countries where the cost of living has been notoriously high for decades past, and with increasing conviction it has been borne in on me that the differential which did exist between Irish prices and prices abroad has gone. There was a time when we were perpetually surprised at the high cost of living elsewhere. The price of clothes, food and meals was much higher than it was at home. That day has gone. Go to the dearest countries in Europe, to Belgium, France, Italy. Again and again you will find that the price of a suit of clothes, a shirt, a dress, a pair of shoes or a meal, which at one time was one and a half times or twice as dear as the price of these articles at home, is no dearer than it is at home and in many cases is cheaper.
Mr. Ryan: The situation now is that even in the United States of America, which is noted for its high cost of living, many articles are cheaper than they are in Ireland. To me these things speak far more effectively than any statistics that may be quoted. They convince me to a greater extent than anything which the Minister for Finance, or any other Minister for Finance, or his experts and advisers, or any NIEC report or anybody else might say.
One's own eyes can observe and one's own pocket can tell that the cost of living in Ireland is now one of the  highest in the world. Although that is so, apparently the Government are not yet convinced of the necessity to take steps to control prices. We are surely sliding down the road to economic and financial disaster. What this Budget has done is to put a banana skin under the nation which was already slithering down the slope to ruin. The Budget has now toppled the nation. It is hard to see how this situation can be rectified.
It may be that later this year the Government will impose severe restrictions on imports. It would seem that this course will be forced upon them. The appalling thing is that such a step will have a dreadful reaction on the employment situation. It will probably also topple many small firms into bankruptcy. There is nothing whatsoever in this Budget to put a limit, or even a gently applied brake, on the level of imports which have been upsetting our economy for some time past.
We are living in an atmosphere of total cynicism. The old patriotism, the old readiness to make sacrifices on behalf of one's neighbour, the old preparedness to accept a lesser standard of living in order that other people might do a little better, have gone. Why is it that our people have now adopted a policy of looking after one's self first, last and all the time? I think it is because of the terrible example which they have received from the Government.
It is common knowledge that the Fianna Fáil Government are not concerned with running the country well and have no interest in social problems except in so far as they can get political benefit from them. Their overriding concern in all matters is to maintain their own reputation, irrespective of the cost which has to be borne by other people. It is distressing that, when we have examples of misbehaviour on the part of Government Ministers, such as the Minister for Justice exhorting people to break the law in the certainty that he will cover up for them, our people are no longer shocked. They are not appalled by it. They are even inclined to titter at the Opposition for making protests because they see that success appears to  follow those who disregard principle for their own ends.
Many things are now being done in Government and private circles, and are accepted as being the norm, which would not be accepted in many other European countries because our people have sunk to a new low. It seems to me that there is a great need to awaken our people to the consequences of ignoring principle and to the consequences of accepting that cynicism and materialism ought to be the guiding factors in all our activities. This Budget does nothing whatsoever to awaken our people to their need, which is to rid themselves of this cynicism and selfishness. If anything this Budget has a reverse effect.
I mentioned earlier that this was a stupid Budget because it failed to understand—or if it did understand it failed to apply—the lessons to be learned from the economic situation in which we are at the present time. Instead of accepting the advice of anyone in a position to give it regarding the need to control prices, the Minister has directly ensured that prices will increase over the next 12 months by from four to five per cent as a consequence of Government action. Once again we can anticipate what will be said in next year's OECD report: the Government were directly responsible by their own action for at least 50 per cent of the price increases in the previous year—and that is putting the Government's responsibility on a very low scale.
I believe that the Government's inflationary injection will result in Government responsibility in excess of 50 per cent for price increases over the next 12 months. This is a year when, apart from the price pressures under which we are suffering at present, there are other reasons why no steps should be taken by the Government to inflate prices or to put any pressure of any kind upon prices.
In February next we will have decimalisation. No matter what care, or control, or supervision is applied, decimalisation will increase the cost of living. In every country where it has  been introduced, it has triggered off some degree of inflation and has depreciated to some degree the value of currency. Therefore, the Government should have been more anxious than ever this year to take pressure off prices so that the net result when decimalisation is introduced would be at least no increase in prices.
We now have the turnover tax, which, on past experience, will produce an increase of four to five per cent in the cost of living, and decimalisation in the one year. We must look further. There is a new growing optimism that our entry into the European Economic Community may be nearer than was once thought. There is now expectation in some circles that the negotiations may be completed this summer and that entry into the EEC could take place next year. I do not share this optimism —I would not call it that because to my mind our entry is not an occasion for optimism—that the negotiations will be completed and that Ireland will be a member of the EEC next year. Those who are thinking and talking that way are some members of the Government.
Mr. Ryan: ——within the next one to four years there is an additional reason to take the pressure off prices because entry to the EEC will mean a direct and unavoidable increase in the cost of foodstuffs—bread, butter, meat, sugar, flour, and everything that goes on the Irish table. The price of all these commodities will be drastically increased when Ireland becomes a member of the EEC. We will have the inevitable inflation which will come as a result of this Budget and of other actions over the next couple of years, a 5 per cent increase from turnover tax this year, and another 1 to 1½ per cent from decimalisation next February and another 7 or 8 per cent following as  soon as we become members of the EEC. In the face of that, how can anybody seriously think this economy can be corrected by making pleas for voluntary restraint? How can anyone be expected to impose self-discipline and to stand back in the rat-race of total cynicism in which we are going forward under the Government's leadership? Inflation is going to continue and to multiply in the years immediately ahead.
The economic and financial crisis facing the country has arisen directly from the fact that Ireland has had the most rapid increase in the cost of living of any European country over the last nine years. The principal cause for the steepest ever rise in living costs in our history has been the outlandish and often unnecessary increase in the rate of taxation. The pressure of taxation has been greater than any other factor contributing to the increased costs. It has been greater than the pressure of wages. It has been greater than the pressure of import prices. The income from PAYE has risen in the same period from £3 million to £36 million annually. The tax imposition is ten times greater than when it started. This tax weighs most heavily on wage-earners and on the very people who are blamed by the Government as being primarily responsible for the inflation under which we are suffering. The wage-earners are 61 per cent or 62 per cent of income earners. Look at what has happened. Their contribution to tax has been multiplied ten times over in a period of nine years to satisfy the immense hunger for money. We have in the Fianna Fáil Minister for Finance a financial enzyme that eats and gobbles up all money or anything that even savours of money like the enzymes in the much-advertised detergents. There is little left as a result of these activities and there are not a few people who suffer from financial dermatitis and other infections as a result of the Government's tax policy.
I spoke earlier about the disappointing way in which our people accept that low standards in many things are unavoidable and that there is no point in protesting against them. It is regrettable that our people are seemingly reaching  a situation in which they feel there is little point in protesting against increases in prices. People have now accepted these increases as normal. One cannot accept these things as normal or desirable if the consequences are going to be economic and financial ruin. There is no sound economic reason for increasing the rate of taxation in the Budget this year. The State is going to get a massive increase in income through PAYE, income tax, wholesale and turnover tax at present rates resulting from the twelfth round. The Minister has acknowledged this and allowed for some of it in his Budget assessments. The small amount of saving which could have balanced the Budget and which could have prevented any increase in income tax might certainly have imposed some hardship. There is very little saving which would not have some unpleasant consequences, but they would have been a great deal less unpleasant than the inevitable and total disaster which is ahead unless corrective action is immediately taken. What has happened instead is that we have a Budget which not only imposes additional tax, and therefore increases living costs, but does it in the worst possible way.
In his Budget statement the Minister justified what he was doing on the following grounds. He said in the supplement to the Financial Statement— column 1765 of the Official Report of 22nd April, 1970:
Like the pay-as-you-earn system of income tax, the sales taxes have smoothed out the rather severe seasonal fluctuations in the flow of tax revenue thus easing the day-to-day financing problems of the Exchequer.
This appears to be the preoccupation of Fianna Fáil Ministers for Finance. This appears to be one of the things which determine which mode of taxation they will use—the convenience of administration is above all sacrosanct. Although the day-to-day burden of the poor administrators is being eased by having PAYE, in which the dirty work is done by the employer, and by sales taxes in which the dirty work is done by the poor shopkeeper, we have more people employed by the Revenue Commissioners  than we ever had before, notwithstanding a computer and all kinds of modern aids. We have more and more people operating a system which is, to a great extent, being trimmed to administrative convenience so that the day-to-day burden of the tax-collectors may be eased. It seems to me that we have our priorities wrong when the convenience of administration is paramount and the hardship imposed on the community is regarded as being of little consequence.
Another example of the priority given to administrative convenience irrespective of the damage caused to the community is to be found in the decision of the Government in regard to applications to the Department of Lands in respect of land in some urban areas. Two months ago the Minister for Lands announced that he would change the system whereby it was necessary for foreigners to apply to the Department of Lands for permission to buy land within the majority of our provincial towns. What was the reason given for this? It was administrative convenience: it would relieve the Minister and his Department of the burden of scrutinising every application by a foreigner to buy land here.
For years up to 1965 the Government paid little or no attention to the need to limit purchases of land and other property by foreigners in Ireland. The Government were forced by the weight of public opinion to mend their hand in 1965. As a result of the Land Act of that year, which imposed an obligation on all foreigners, the rate of purchase of property by foreigners in Ireland was reduced by about one-third of the purchases during the previous ten years. Now, that has been put aside as being awkward to administer, as imposing an obligation on the administrators to scrutinise every application. Now foreigners can come in and buy up land and other property in the towns of Ireland with the same right as any Irish person but with the advantage that most of them have more money to spend than most Irish people. The result is that in towns where sites for housing have reached  prohibitive levels we are now to have a new inflationary force applied.
Not only is there to be the competition of one Irishman against another in which the wealthier always win out, but there is to be the competition of foreign investors who do not want to invest any more in their own countries, perhaps because of domestic taxation inhibitions. Where will such a foreigner invest his money here? It is not on the top of an unyielding, unproductive mountain which nobody will want. He will have the right to invest his money in those locations which are already the most difficult to get, building sites on the serviced land of our towns. And all this is so that administrative convenience will be achieved.
So we have PAYE, turnover tax, wholesale tax, the wholesale buying of Irish housing sites by foreigners to serve the sacred cow of administrative convenience. I have the figure for land purchases. Between 1961 and 1965, 53,938 acres were sold to foreigners and the rate of land purchases by foreigners since then has been less than one-third of the sales in the previous four years. However, about one-twelfth of the arable land of this country is owned by foreigners, non-nationals or people who are Irish, citizens in name, living and investing their profits abroad.
One of the greatest scandals, one of the greatest social evils has been the exorbitant profits made by people holding land suitable for housing close to our cities and towns. These prices have contributed to the situation in which Ireland has the lowest housing output in Europe. In relation to Irish incomes, Irish housing sites have reached prohibitive levels, and money which should be going into bricks and mortar is going into the buying of land before building even starts. Now we have added to this inflationary pressure by opening the door to foreigners to come in here to compete against Irish people.
Why are Fine Gael against the turnover tax? It is because indirect taxation bears most heavily on the poor. Deputy Moore tried to make something out of observations made by people acting in an expert capacity. The function of the economist is to identify certain  economic forces and to state what the consequences of these forces or what interference with them may bring. It is the duty of the politician, the parliamentarian, to make the choice as to which forces will be permitted to operate and how. That is what we in Fine Gael are doing here and will continue to do. Deputy Moore and others suggested that the Opposition should suggest alternative means of collecting revenue if they do not find the Government's means acceptable. That is not the function of the Opposition. In fact we are forbidden by law to take steps to obtain revenue from other sources——
Mr. Ryan: If we table an amendment to the Finance Bill to incorporate suggestions, we will be ruled out of order. I do not think most Deputies understand that. If Deputies sitting behind the Minister tried to do it they would be ruled out of order. This is an argument in favour of amending the Standing Orders of the House, and I am very much in favour of doing that but, while the present law exists, we are curtailed. It is this kind of restriction which causes estrangement between the people and Parliament and it is something which to my mind needs radical reform.
For the time being, we cannot do anything about the system under which we operate, but the day on which we get the right to table amendments to the Finance Bill we will use that right and vote accordingly. In the meantime we are estopped, and nobody knows that better than Deputy Moore and the Minister for Industry and Commerce and his colleagues. Throughout the year most Members ask questions of the Minister for Finance. They ask him for some relief or another or to take some course of action or another, and as we put down the question we could also write the reply, saying, in effect: “You will understand that the Minister is unable to disclose his proposals in advance of the Budget but the matter will be considered when the Budget is being prepared.” We are to have one rule of conduct for the members of the Government and we are to be taunted because,  under the Rules of this House, Parliament, the law of the land, we are prohibited from making suggestions.
Mr. Ryan: We can get ourselves put on NIEC, QRST, XYZ, or ABCD & E and we can publish, at enormous expense, document after document after document and deliver them to the Minister for Finance in February or March every year. Where will we get? Nowhere. We will end up, as we are doing now, talking to empty Fianna Fáil benches. However, we have a duty and we shall discharge it, to show the Minister for Finance the consequences of his action.
In the absence of the Minister, the Taoiseach delivered a wonderful Sermon on the Mount saying he was doing wonderful things for the people lying on our social conscience—the people who require help. He wept copious tears for the families of Ireland. He intended to be particularly helpful to them—by giving them increases of 5/-a week for their children in certain cases.
Let us look at this Budget. Let us see what it means. There is no relief for any families who do not pay tax. Half of our industrial workers do not pay tax. None of our agricultural workers pays tax. Therefore, there is nothing in this Budget for them by way of assistance, other than the children's allowances, if they happen to have children. Let us take a family of three or more children with the father earning £21 a week or less. For that man, there is no income tax liability. However, in turnover tax, over the next year, he will pay at least £20 and, later this year, his insurance contributions will compulsorily be increased and he will pay an additional £5 a year. Therefore, he will pay an additional £25 a year—and get no relief because he is paying no income tax— in turnover tax and insurance contributions. Against that, for the support of  his children, he will receive the generous sum of £3 a year. For the third child he is to receive the extra sum of £3 a year. Therefore, under this Budget, he is £22 a year worse off. This will represent increased hardship to this man who is typical of the majority of families with three children on £21 a week or less.
Take a family of four children where the husband is earning less than £25 a week. Again, he will pay over £20 a year extra in turnover tax and a further £5 a year extra in insurance contributions—anything from £25 to £28 extra a year. He will get, by way of increased children's allowances, £6. That is all he will get.
Mr. Ryan: We are told this Budget is designed to help the family man. That claim is not true. This Budget means that nearly 250,000 families will pay more tax and will not get benefit commensurate with the additional tax they have to pay. This is not a progressive Budget and it is dishonest to pretend that it is. In Dublin city, over 2,000,000 free dinners are given annually to people who cannot afford to pay for a meal for themselves—in this so-called affluent city. Over 200,000 are getting bags of free turf. Over 350,000 people in this city are living on the starvation line. All of these people will be asked to pay an increase of 4 to 5 per cent on whatever small things they can buy for themselves.
This is an anti-social Budget and an anti-social proposal. The Taoiseach said, on behalf of the Minister for Finance, that the Government's social proposals in this Budget are in pursuance of the policy negotiated in the programmes for economic expansion. I agree entirely with that statement. The First and Second Programmes said nothing whatever about social matters except that many of our social requirements were already met and that the emphasis would now have to be on economic profit-making—the making of filthy lucre, not the distribution of the nation's wealth among those who need it. The making of money was the  aim of the First and Second Programmes. A passing reference is made in the Third Programme—the kind of reference made in this Budget—with the consequence, as in this Budget, of no effective or worthwhile distribution of the nation's wealth.
There is sufficient wealth in this country to bring about a fair standard of living for even the least privileged or least benefited person in the community but we are not doing that. We shall never achieve that much to be desired objective through a system of intricate taxation such as the turnover tax.
The Minister for Finance endeavoured to make something out of the increase of £150,000 to voluntary organisations caring for old people, bringing the State's contribution to £250,000. I think him for nothing. Every £ spent on looking after the aged reduces the State's liability by £7 to £8 annually. Mark you, I do not decry the additional help given. It is humanitarian and it is also economically profitable. The return to the State is greater because the more old people can be kept out of institutions the greater the saving to the State.
However, the dreadful thing is that the State is doing so little in this regard. Apart from this sum of £250,000 given to the voluntary organisations, the total cost for care of the aged outside of institutions is borne entirely by the local rates. In the Dublin region the vote on home assistance has increased fourfold in a period of five years. This is because the Dublin Health Authority are spending more money in granting assistance to voluntary organisations to provide day centres for old people, in providing home nursing, laundry, chiropody and other services to help maintain old people in their own homes.
All of this was done primarily for humanitarian reasons. It has also resulted in a happy situation in which for several months in the year there are no elderly people waiting to get into St. Kevin's, St. Mary's and other institutions for old people. What was started out of kindness has turned out to be an  immense economic advantage. The terrible tragedy is that the State has not yet accepted the validity of this exercise and, apart from this £250,000, the total cost of looking after old people outside of institutions must fall on the local rates. If those old people go into institutions the State pays half the cost in respect of their maintenance.
There is an increase in some of the social welfare payments this year but it is interesting to note that the increases are less than last year and this has occurred in a year when the turnover tax has been doubled. The payments given this year are totally insufficient to meet the increased tax burden which will have to be paid. Everybody has to bear that burden. We are all tax collectors; even the child who gets money from his parents to buy chocolates pays tax on this item. Nobody is saved from this obligation; everybody from the cradle to the grave is a tax collector now. This is the appalling situation we are in today. May be I am wrong, but I think perhaps undertakers are exempt?
I would have hoped that this Budget speech, which referred to many things not relevant to the state of the nation's finances, would have made reference to the ridiculous maintenance of the limit for compulsory insurance of £1,200 per year. That limit was fixed in September, 1965, when it was raised from £800 to that figure, although it was then years out of date. Industrial earnings by next October will have increased by 60 per cent over what they were in September, 1965. Using the 1965 figure as a base, the ceiling in relation to compulsory insurance would be in the region of £1,900 a year.
Surely the Minister for Finance should have announced that everybody earning £2,000 per year or less would be brought within the ambit of compulsory insurance. It would have provided necessary insurance for these  people against unemployment and disability and this insurance is perhaps more necessary now in view of threatened increases in unemployment. Had the Minister done this—and it is still not too late—it would bring an additional £1,300,000 into the insurance pool. I know there has been talk about removing any ceiling for compulsory insurance but talk from Fianna Fáil Ministers comes easily, but results seldom emerge. They have talked for the last 12 years about a modern health service, about the acceptability of an insurance scheme which they were studying and which they said carried merit. Nothing has come of all this talk.
It is unlikely that we shall see in the foreseeable future the ceiling lifted or removed in respect of compulsory insurance. If it is not going to be removed, let us at least accept that the obligation in 1970 is not less than it was in September, 1965, and increase the ceiling to £2,000 per year. That will bring it up to the statistical level which is related to the September, 1965, base and it will also provide a small margin for manoeuvre in the ensuing six months.
I welcome the incentives in the Budget to increase savings. I think however they do not go far enough. The Minister has promised to provide a scheme to pay nine per cent compound interest, free of tax, on regular monthly savings. That interest will just about compensate for the anticipated devaluation in money in a two-year period. Nobody is going to get enormously rich or get any great compensation for making sacrifices by postponing spending now in favour of saving. This “free of tax” gimmick sounds wonderful to those who are paying tax but it does not provide benefit for people not paying tax who, nevertheless, may wish to save some amount each month. I am not saving it will be easy for those people to save but there are those who are prepared to make sacrifices for future benefit and there is no great incentive here.
If the Government were so concerned about the rate of income increases this year being nearly three times what they  consider prudent, why did they not take steps to oblige people to save, or is this too dangerous a proposal to make? It has been done elsewhere and it seems to me that, in the state of economic and financial emergency this country is now in, it might have been prudent to adopt this course, making due allowance, of course, for those who are not in a position to save. There are many young people today, without family obligations, who have at their disposal fairly substantial amounts of money to spend on luxuries. There are people, who because of inadequacy in our social and educational system, are not aware of the advantages and prudence of saving. It would be desirable to encourage them to save. These young people spend freely and lavishly in the days before they undertake matrimonial obligations; on accepting those obligations they frequently look to society and the State to assist them in the establishment of a home. It would be a good and sensible thing, and of benefit to the people themselves, to drain off some of the spending on idle and passing pleasures in favour of investments, the money to be returned to them with a substantial bonus in the event of marriage. This would have been an imaginative, a useful and a constructive thing to do. But the Minister has not done it, and because he has not done it he has lost a great opportunity for the future of the country and he has also failed to render a service to our young people which could have been of use to them.
I am strongly in favour, where people are disinclined to make savings of this kind, of introducing a system whereby the State would arrange to have such savings made. This has been done with immense benefit, for instance, in the Scandinavian countries where there are vast funds now available for national, productive investment at reasonable rates because the State has drained off surplus income to bring about future benefit. Within short periods interest has been paid to the people, so that in the long run they have done better both income-wise and capital-wise. This is the kind of progressive action we ought to be taking.
 I am also anxious to see that there should be a greater respect for savings, for the right of people to make money out of what they save and the right of people to pass on to their children what they save. There has been a certain amount of unwise, irrelevant ideological attacks upon people who earn money from their savings. The right to save and the right to accumulate property needs to be stated as a respectable right, a right which people should be free to exercise as long as it does not interfere with their obligations to society. Above all, the right to bequeath property to one's children must be respected. This is a fundamental right but there has been a certain amount of loose talk in some circles about it. It is one which ought to be recognised in any civilised society and it is therefore one which not only must be respected but which must be capable of being exercised as well.
Surely it is much better to promote home savings by as many people as possible than to be borrowing money abroad. Thirty-one million pounds was borrowed abroad at 15 per cent by the State. Would it not be wiser for the State to promote a £31 million saving on the part of our people at, say, two-thirds that interest rate? That would keep the benefit of the profit earned from that money within the country and would also stimulate people to become savings-orientated.
The tragedy is that many reasonable reforms, practical improvements, changes in Government policy, changes in economic and social policy in our time have not been realised because of the anxiety of some people who are opposed to the Government to channel their opposition into stands which are different merely for the sake of being different. Fianna Fáil will never be toppled by people taking ideological stands against them. There are no vast ideological cleavages in Ireland and God forbid there ever should be. The wisdom of mankind achieves compromise, so that some benefit can follow, rather than follow foolish paths of non-compromise. I would hope that the pretended ideological conflicts which some people are trying to set up in our midst to use as Aunt Sallies  will become a thing of the past and that the real practical improvements which can be brought about in our time will be achieved by bringing about a change of Government based upon practical policies and practical alternatives.
The easiest thing to do is to dress differently from your neighbour but you do not command a greater influence over your neighbour or anybody else by dressing in that way. So it is that the future economic and political fortunes of this country will be determined by and will be in the hands of people who provide practical alternatives to show what is achievable, who convince the people of what is achievable without knocking down everything that is there. I believe this new wisdom is prevailing and that benefits will flow from it.
Compared with ten years ago taxation is now taking 10 per cent more of the nation's income. However, nobody can say that the expenditure of the Government has conferred another 10 per cent on the community. For every 2s in the £ tax which was paid then nearly 4s in the £ tax is now being paid, that is, by those who are paying tax. This is a frightening prospect, but it is something which must be borne in mind if we are to get a true understanding of the value of the various expenditures of the Government.
We are surprised that the Minister for Finance dealt in such a scanty and unsatisfactory manner with our trading position. The worsening of our trade balance with Britain is nothing short of alarming. We are extremely disappointed at the failure of the Government effectively to protest to the British about the manner in which they have departed from both the spirit and the letter of the Anglo-Irish Free Trade Area Agreement. The truth is that the Irish taxpayer is now subsidising John Bull to the extent of £2½ million a year. Harold Wilson now has this subsidy from the Irish taxpayer and the Government have accepted it quietly like lambs.
Mr. Ryan: We were told they had gone to London. I know many people who would like an odd trip to London at the taxpayers' expense to be wined and dined at St. James's Palace or elsewhere. That is not making effective protest and let us not cod ourselves it is. The British are laughing at us and will continue to laugh at us as long as we allow a situation in which the Irish taxpayer has to subsidise John Bull. We are doing it for our own good in the export of butter to assist our farmers, but we are doing it for John Bull's good in paying the deposits which should be paid by British importers. We are paying them——
Mr. Ryan: Is it not high time we said to Britain: “All right, we can both play at this game. No British goods will be allowed into Ireland unless the British exporter deposits the money in Irish banks in London”? That is the way to do it and there is no other way—if you like, a mini-economic war. The British are walking on us and will continue to walk on us as long as we reserve our activities to mild diplomatic talks in London and elsewhere. Even the continent of Europe, the member nations of the EEC with which Britain is now negotiating, are not yet aware of the way in which the British have welshed on the Irish in an agreement that is only four years old. I told many of them in Strasbourg last week and they said they were very delighted to know this, to know the kind of people with whom they are now entering into negotiations.
The British today may be nice people to meet socially, casually, friendly-like, but make no mistake about it, their bond in international agreements is no more respectable today than it was when they signed the Treaty of Limerick. We pretend that these are people with whom we can carry on polite, diplomatic tea-parties. No such thing. The whole balance of advantage has gone completely away from us and in the face of that I regard it as nothing short of treason for our Government to give any further reduction in customs duties. The further reduction  of 10 per cent in tariffs next July should not be granted until the British learn to respect their bond and stop using a little country like Ireland in order to maintain the financial health of the British Empire.
It is time we got the British off our backs. We are not going to do it by this soft approach which we have been using in relation to the British. I believe the Government have a clear obligation to notify all the members of the European Economic Community of the way in which Britain has ratted on Ireland under the Anglo-Irish Free Trade Area Agreement. Members of the European Free Trade Area know something of the duplicity of British politicians because they also got very little consideration from the British when the British ran to protect their corner. Our situation is now no less serious than was the position facing the British Labour Government some years ago. What is sauce for the goose is sauce for the gander. If they say that their circumstances necessitated the unfair action which they took against Ireland, we are entirely justified in taking similar action at this time. Unless we give the British the same medicine as they are giving to us, we will get nowhere. They are simply laughing at us at the moment and they will continue to do so as long as we take them nice and easy.
The British, of course, are not the only people to whom we have to talk tough. There is no nation in Europe, either east or west of the Iron Curtain, which gives us any balance of advantage in international trade. All that can be said is that one country is worse than the other. This is a situation which is keeping us in the difficulties we are in. It seems to me that there is something singularly lacking in our trade negotiations when this situation persists, particularly when we have, in some commodities, surpluses that other countries could do with or could absorb but, for their own financial reasons, they do not do so. We are always, apparently, only too willing to play second fidde. Not only will we not stop the economic and financial rot in the  country at the present time but we will never make any worthwhile progress unless we really talk tough to Britain and others. If we made an example of a few countries, others might then see that Ireland was talking seriously. At the moment nobody accepts us as being serious in trade negotiations or trade relations and that is a deplorable situation and one for which the Government primarily must be condemned.
I welcome the further step towards parity for all State pensioners in the Budget. The Minister has now brought all pensioners to the 1968 level but there has been a substantial increase in all State incomes since 1968, so there is still a not inconsiderable gap between pensioners who retired prior to 1968 and those who are still working or have subsequently retired. I would hope that the Minister would see his way in next year's Budget to closing this gap once and for all. Indeed, I was hoping that as he had come as far as 1968 in this Budget he would have made a definite commitment to give parity next year and to maintain that parity in future. This is something which I think our society must accept as a sine qua non in establishing justice for our senior citizens. The State and all sectors of our community should accept that our elder citizens should not have to pay the price of the inflation caused by their children. This can only be done by accepting and committing ourselves for ever more to complete parity for all pensioners.
The Budget is singularly disappointing in its failure to provide any adequate assistance to increase employment. Indeed, the Minister's own statement is dismal in its reference to employment. We now have 72,000 persons officially regarded as unemployed. That is nearly 11,000 more persons unemployed compared with last year and this figure gives no attention to the substantial increase in emigration which has taken place over the last few months. If that emigration —it may perhaps be only temporary or it may be permanent—had not taken place, the official figure of unemployed would be 80,000. We have the  largest number of unemployed people in all Europe and the Government are indifferent to that situation. The Government are quite complacent and make no effort in this Budget to redress that sorry situation.
When we talk about unemployment we must not overlook the fact that it is now three years since the Government by a stroke of the pen knocked between 12,000 and 14,000 persons from the official register of unemployed. Therefore, if we are to compare like with like, the actual number of persons now unemployed compared with, say, four years ago, is 86,000. That is a crisis figure. People are inclined not to accept it as such because 14,000 persons were officially taken out of that figure and concealed in another statistical column. Comparing like with like, comparing the figures with the figures to which we were accustomed down through the years, there are now 86,000 persons unemployed.
I do not want to detain the House much longer but I do want to return for a few moments to the turnover tax. The turnover tax at present applies to all shopkeepers save a limited number who are in a very small way but, because of the exemption given—with which I do not quarrel—to producers of agricultural goods, that is, to farmers, an unjust situation arises in relation to greengrocers. In urban areas the sale of greengroceries from vans is a widespread practice. It is a legitimate practice. The van salesmen deserve to be facilitated and nobody has any wish to put any curb on their activities because they are working hard in all weathers.
The greengrocery business is not the easiest of trades because of the rapidity with which the goods perish. Greengrocers who purchase in the same market as the van salesmen and who sell their goods in shops are subject to turnover tax. The result is the van salesmen have been able, until now at any rate, to work with a 2½ per cent  advantage over those with shops and, in the future, the van salesmen will work with an advantage of 5 per cent over those who operate shops. This is not fair. There should be similar terms of trade and the tax burden should be equally carried.
That is one side of the coin. On the other side you have the rates situation. The van salesmen pay no municipal rates but the shopkeeper must. The shopkeeper, therefore, has to meet a turnover tax bill of 5 per cent and a rates bill while his competitor who calls to the door with his wares pays no rates and no turnover tax. It seems to me the Minister for Finance has an obligation, particularly as this is in the field of necessities—vegetables and fruit are necessaries—to relieve greengrocers from the obligation to pay turnover tax. That will not remedy the longstanding grievance they have about the payment of rates whilst their competitors pay no rates, but it would be of significant assistance to them and now, when the turnover tax is being increased, the injustice will be multiplied. If the Minister does not do something shortly he will push a large number of greengrocers out of business.
It is deplorable that the turnover tax should continue to be charged on medicines and drugs for human beings. This is surely an opportunity to exempt medicines from turnover tax. Medicines used for animals are exempt. Clearly there is no administrative obstacle to granting exemption. The only case the Minister could make would be that pharmacists sell more than medicines; they also sell cosmetics, cameras, toilet accessories and so on. Pharmacists sell medicines for animals and, if they are able to exempt from turnover tax one category, surely the other category could also be exempted without creating administrative difficulties. I have no doubt whatever that, if this concession were granted, pharmacists would have no difficulty from the point of view of administration. Indeed, they would welcome the exemption and so would people generally.
A great deal of complaint is made, when we are dealing with the Estimate  for the Department of Health, about the multiplication of the cost of drugs in recent times. It is now almost ten times what it was six years ago. That is an enormous increase. There are many reasons for it. Drugs are becoming more expensive because of the amount of research that goes into them and because of their increased potency. They are also becoming more expensive because of inflation. But turnover tax is a significant factor and, if these medicines and drugs were exempted, that would result in a reduction in rates and in the Estimate for the Department of Health. I find it impossible to defend the application of turnover tax to medicines required for the relief of human pain and suffering and the preservation of human life. We would hope that this reasonable amendment would be made in the Finance Bill.
This Budget is one of the most disappointing imaginable having regard to the economic needs of the country. We have a great future potential and the tragedy is that so much can now be thrown away because the little required of the Government—some responsibility, some courage, some readiness to accept passing unpopularity—is just not there. To my mind the Government are not fit to govern because they refuse to do it in the way the nation requires it should be done.
Minister for Industry and Commerce (Mr. Colley): Quite some time ago in the course of his speech Deputy Ryan referred to the sheer volume of documentation supplied to Deputies. I recall not so long ago that the complaint was that Deputies were not getting sufficient information. By implication, the Deputy suggested that the information being supplied could be presented in a much more concise form. He might have practised a little of what he preached in his own speech. He also suggested that the sheer volume of documentation was preventing people from thinking. Without intending to be in any way discourteous to Deputy Ryan, I would suggest that a great deal of his own speech was, perhaps, a justification of the criticism  he made because it seemed to me, judging by some of his remarks, that Deputy Ryan is of the opinion that inflation is the equivalent of price increases. That appeared to be the case especially when he referred to our likely entry into the EEC and talked about the increased prices of foodstuffs and so on.
He referred to this as an inevitable further round of inflation. Inflation is not, of course, just price increases and the sooner all of us are clear as to what is involved in inflation the better it will be. Inflation means an increase in prices and incomes which is not related to increased production; in other words, it is an unreal increase. It is the real increase in incomes that is of proper relevance. I shall return to this later.
The occasion of the Budget debate is the occasion on which we review the economic activities of the country in previous years and look forward to the coming year. There are some aspects of economic activity with which I, as Minister for Industry and Commerce, am particularly concerned. I want to refer to them and I want to give the House some information which may not be available to it. First of all, I should like to refer to the performance of the economy in the export field last year. Deputies are well aware, as are most people, of the vital importance of exports for this country and of the fact that failure to expand exports will lead directly to a serious drop in our standard of living, to failure to provide new jobs and to the creation, therefore, of a good deal of unemployment.
Therefore, the performance of the economy in exports is a matter which concerns all of us. In 1969 both our total exports and our industrial exports broke all previous records. In that year our total exports amounted to £409 million as compared with £367.5 million in 1968, which was an increase of 11 per cent. Our industrial exports increased by 17 per cent and in 1969 for the first time represented just over 50 per cent of our total exports. This is a milestone in our economic history and one that should be noted for its economic and, possibly, social implications.  There cannot be much doubt that the future trend will be that industrial exports will increasingly exceed nonindustrial exports. The passing of this milestone is a tangible indication of the progress we have been making over the years in industrialising this country and changing from a predominantly agricultural economy to a mixed industrial and agricultural economy. The implications economically and socially are very important and must be borne in mind in relation to future planning of the economy.
In 1969 some of the principal increases in our industrial exports were as follows: metal ores increased from £9 million to £17 million; pharmaceutical products from £9 million to £11 million; clothing and footwear from £16 million to £19 million; textiles from £16 million to £18 million; surgical and medical instruments from £5 million to £7 million. All these figures exclude Shannon. Perhaps of more interest is the destination of our exports: 34 per cent of them went to countries other than the UK in 1969 as compared with 29 per cent in 1968 and 27 per cent in 1967. The principal increases in these non-UK markets were, in the case of EEC, 39 per cent, and in the case of the USA, 21 per cent.
Large percentage increases were also recorded in exports to Eastern Europe, 47 per cent; Australia, 38 per cent and Spain, 84 per cent. In these cases, of course, we are operating on a much smaller base. The significance of these figures is that, as the House will remember, following the imposition of the British import deposit scheme I called a meeting of the employers and trade unions at which the serious position which could arise for this country was discussed and I made an effort to demonstrate to those present that it is vitally important for our future that we make special efforts to diversify our markets. Following this, a special programme of aids and services was introduced by Córas Tráchtála early in 1969. This included improved grants for travel, for trade fair participation, brand advertising and for technical demonstrations of capital equipment and engineering goods as well as extended  consultancy and market investigation services. The increases in our exports and the increase in the total percentage of our exports going to markets other than the UK are a satisfactory outcome of those efforts, not by any means satisfactory in the sense that we can now afford to be complacent but a satisfactory indication that we have achieved substantial progress and that much more progress in this regard can be achieved.
As the Minister for Finance said in his Budget, a scheme to provide credit on favourable terms for exports of capital goods is being prepared. I hope that an announcement in that regard will not be long delayed. In addition, arrangements to provide improved export credit insurance facilities are also in train. A special effort is being made to make arrangements to enable exports to Eastern Europe to grow. A trade agreement has now been concluded with Bulgaria and talks with Russia, Poland and Czechoslovakia have been opened. All the items I have mentioned involve considerable effort on the part of many people and involve considerable expenditure but I have no doubt that they are well worthwhile from the point of view of the economy as a whole because failure to increase our exports would have most dire consequences for the whole economy.
In regard to industrial development last year there is one matter I want to mention. It is a statement made recently on television by Deputy Tully in a party political broadcast on behalf of the Labour Party. In the course of that broadcast he said, or suggested, that various advances in our industrial development programme which I had announced over the past year had not materialised. While one must, and I do, allow for a certain amount of oratorical licence in the uncomfortable situation in which Deputy Tully found himself in relation to this Budget, nevertheless the programme for industrial expansion is too important in terms of jobs and our whole economic wellbeing to allow these misleading and inaccurate assertions to go uncorrected.
Our success in the field of industrial expansion is a major reality. In the  12 months ending in September of last year a record total of 16,000 new jobs in the non-agricultural sector was created. Allowing for a fall of 12,000 in agricultural employment, this represents a net gain of 4,000 new jobs. One may say, perhaps, that this figure is not very impressive but, in relation to the problem we have in this country about the fall in the numbers engaged in agriculture, the still very high proportion of our work force engaged in agriculture, and the record of our efforts over the years this, I claim, is a very impressive performance, a performance for which I do not attempt to claim credit for myself or for the Government, a performance which was achieved by the Irish people and one that all of us should know occurred, because there is too much pessimism, too much lack of confidence in our own ability to overcome our problems.
All of us should know of and take pride in the achievements of our people, achievements, I may add, which were made possible by the economic climate created by the Government. That is the only credit I claim for the Government in this context—the economic climate and the various incentives put forward. The real achievement was by the Irish people and that achievement, as I have said, was the creation of 16,000 new jobs in the non-agricultural sector in that one year.
Deputy Tully in that statement went on to imply that my announcement of 44 new industrial projects on the 11th January, 1966, was an election gimmick. In fact, as far as I can recall his words, what he said was that the Minister for Industry and Commerce returned from Canada waving four new factories about. By the time of the election these had magically become 44 and now there are none. As far as I recall they are the words he used. The facts are as follows: in 1969, some 90 new industrial projects actually went into production. A further 98 projects were under construction and, at the end of that year, 76 further projects were approved but construction had not actually commenced. In addition to  that, in that same year, some 228 projects were approved under the small industries programme.
The national effort to provide a continuing improvement in social and living standards depends on our ability to maintain and step up the pace of industrial growth. Statements like those of Deputy Tully, throwing cold water on the nation's achievements, can only undermine the urgency of the effort here at home and possibly create confusion overseas amongst those whom we are trying to attract to this country to invest capital and technical and marketing skills. I would hope that we will not have many more of such glib and inaccurate statements.
Reference was made by the Minister for Finance in his Financial Statement to certain changes which it is proposed to make in the small industries programme. The House will recall that that programme, which was initiated in April, 1967, operated in the beginning mainly in the designated areas or, as we used to call them, the undeveloped areas, and was subsequently, early in 1969, extended to the country as a whole. Up to the present the programme has covered firms employing up to 30 workers and having fixed assets up to £60,000. This programme has provided small firms with a comprehensive range of services in the areas of management, finance, production and marketing.
The results to date have been highly encouraging. The figures for the period from the inception of the programme to the 31st March this year show that 395 firms or projects were approved for grants and that the grants approved amounted to £2.8 million. The net increase in employment is estimated to be 2.749. It has long been appreciated by the Government that industry in the designated areas faces particular problems. The results achieved under the small industries programme clearly demonstrate that there is no lack of entrepreneurial skill in the designated areas. Indeed, those results justify further encouragement of these qualities of initiative and enterprise amongst our own people.
 The experience gained under the programme indicates that the breakthrough from small to medium sized operations is accompanied by increasingly complex problems in marketing and in management. In an effort to ensure that these transitional problems will not inhibit the growth of successful small scale industry in the designated areas, it has been decided to extend the services of the small industries programme to firms with up to 50 workers and with fixed assets up to £100,000.
In the operation of the small industries programme to date, the county development teams and their development officers have worked closely with the small industries division of the IDA. As already announced, the IDA will shortly be establishing regional offices designed to provide at regional level the full range of the authority's services. The close co-operation between the IDA and the development teams to which I have referred will be maintained in this new situation and, indeed, it is hoped that the benefits of the county development team concept will be enhanced and improved as a result of the new arrangement, and the co-operation between the county development teams and the IDA especially through their regional offices.
Mr. Colley: I know that has been suggested but I do not think there is any basis at all for it. Indeed, certain administrative arrangements are being made to ensure that this will not happen. I do not believe there is any basis at all for any clash in this area but rather, as I have said, a basis for even greater co-operation and greater value to be obtained out of the county development team concept being applied more actively within the region.
Experience has shown that the availability of temporary premises can often be a decisive factor in the location of new industrial projects. Consequently, it has been decided that a small number of prefabricated factory buildings will be made available in the west. They will be suitable for first stage production and for staff training. Where they are used they will be. I hope, of considerable value in advancing the commencement date of full scale profitable production. In addition to that, I think they should be very useful in ensuring that an industrialist who wants to start up straight away, or start on a training scheme straight away because he has a tight schedule, will not be diverted either away from the particular area in which he is interested or away from the country altogether because of a lack of suitable premises immediately.
The value of these temporary factory premises will lie mainly in that area. It is envisaged that these temporary buildings, which will be sited in consultation with the county development teams, will be designed so that they will be easily transferred to new sites when the permanent factories are built. I do not wish to give the impression that all of the western areas will be covered by temporary buildings. This is not what we envisage. We envisage that in conjunction with the county development teams, which will know most accurately where these are most urgently required, temporary demountable factory buildings will be provided. When they have served their purpose of enabling training schemes or initial production to be got under way and when the permanent factory has been  provided they will be moved to another area.
I wish to deal with another aspect of the economic activity coming within the range of the Department of Industry and Commerce and that is the question of price control. The present system of price control has been in operation for over four years. Price increases in manufacturing industry and in wholesalers' and importers' margins have, in effect, been debarred during that period without my prior agreement. There is clearly a general awareness of the existence of price control. It has been criticised very freely. Some people say it is far too restrictive. Others say it does not operate at all. It is reasonable for me to claim, in the middle of this crossfire, that it must be reasonably effective since we have this virulent criticism from both sides. Those who say that the control is too restrictive are those who have to make their cases to me for my agreement to a price increase. The opposing group refer to the evidence of rising prices all around them and to the lists of price increases which are published at monthly intervals, and to which I have agreed. I want the House to know, if there are any doubts on this score, that I do not agree readily to price increases. Since October, 1965, when the present scheme of control was introduced, price increases have only been conceded to compensate for unavoidable increases in costs. They have, in general, compensated only for part of such unavoidable cost increases. In other words, the applicants in the vast majority of cases were obliged to absorb a substantial proportion of the increased costs themselves.
Manufacturers cannot always be expected to meet, from their profits, additional costs for which price compensation is not given. An obvious way of dealing with this is by increased productivity. As is well known, when assessing increased costs for the purpose of a price application no allowance is being made for wage increases occurring during 1970 in excess of 30s per week or 7 per cent. Where wage increases exceeding that amount are granted it is evident that manufacturers  are entitled to expect, and indeed should receive, the co-operation of all their employees in offsetting the remainder of the wage increase which they are not allowed to recover from the consumers. It should be known also that applications for price increases have to be backed by copies of certified financial accounts for the latest three years. Examination of these accounts has revealed, with very few exceptions, that profits in industry are not unreasonable. In some cases they are quite low and in a small number of cases I would say they are dangerously low. I say this not only because manufacturers are entitled to a reasonable rate of profit but because some of the accounts reveal a situation in which the firm concerned are not in a position to set aside money for reserves to enable them to adapt and to re-equip in the event of free trade. Any undue preponderance of a situation like this can only mean that the firm are not in a position to adapt and to re-equip and that they will fail in free trade conditions with consequent loss of employment to those employed by them.
This is a matter of considerable concern to me in dealing with price applications. I confess there have been cases when I have refused price increases, or price increases as applied for, and about which I have had some qualms of conscience as to the ultimate consequences of my refusal. People should know that this is the situation in a number of cases. However, the most important thing about this whole question of price control is that people should realise that no form of price control will stop all price increases. For instance, the increased costs of imported materials are beyond our control. We are all only too well aware of the increased costs occurring at home. It should be realised that in many cases if price increases of some sort—though maybe not the total amount demanded by the applicant— were not sanctioned by me a number of firms would have closed down by now and many thousands of people would be out of work. This is a reality which all of us must understand. It is misleading to suggest that it would be  possible for this Government or for any Government simply to prevent price increases of any kind without the most dire consequences for many thousands of workers and for the economy as a whole. This is the reality. The true situation here seems to me to be one that goes to the root of our whole economic difficulties at the moment. It is necessary for this country to have an effective incomes and prices policy.
The House will be aware that the NIEC recently produced a report on this problem, that the Government accepted the recommendations in that report and that there has been a meeting between the Taoiseach and three Ministers on the one hand, and employers and trade union representatives on the other, with a view to discussing the early implementation of this report. I am hopeful that the machinery recommended in that report will be got under way without delay and that it will operate effectively.
No one suggests that the panacea for all our ills lies in that report. The entire question of an incomes and prices policy is extremely complex. It has not been solved, to my knowledge, in any country. But we have the opportunity to go a long way towards solving this and the machinery recommended in that report and accepted by the Government provides a framework on which a reasonably effective incomes and prices policy can be worked out.
There is, however, one essential feature in all this—with it we can go a very long way, without it we can be much worse off than we are at present—and that essential feature is a commitment by all parties to try to get an effective incomes and prices policy working. If you have some sections of the community which are not prepared to make and to honour that commitment we can forget about any efforts to get an incomes and prices policy working.
There may be—I think there are— some small sections who are not prepared to make that commitment at present for theoretical reasons. I want  to make it as clear as I possibly can that the alternative to that kind of effective incomes and prices policy can only be a free-for-all, much worse than anything we have seen before, and that it is not in the interests of anybody in this country that that should happen.
I would hope that the vast majority of those concerned with this, who are reasonably intelligent rational people, would bring their influence to bear on seeing that this policy is made to work, that they will not allow themselves to be manoeuvred or intimidated by a small section who, for their own reasons, are not prepared to try to make this policy work.
It should be obvious to everybody concerned that the alternative can only mean the most serious and dire consequences for our economy. That being so it is the duty and the privilege, of the vast majority of those concerned to see to it that no small section will be allowed for selfish reasons to upset the operation of this policy.
Mr. Colley: That is a matter I was about to speak on and Deputy O'Donovan has led me into it. Even assuming we get this commitment, it does not mean we go on from that with an incomes and prices policy automatically working itself out. Of course, we will not. There will be the gravest difficulties in the application of any such policy; there will be anomalies. What I suggest is that if we have machinery which can be used, given commitment by the parties concerned to overcome  these anomalies, to iron out these difficulties, then we can make it work reasonably effectively.
If we do not have such commitment, then the onus lies on those who are opposed to the proposed machinery or to the effort that is involved in making it work to show a viable alternative to that proposal. If somebody says it will not work because A, B or C— somebody like Deputy O'Donovan— or that human nature is not made that way, I accept there is a tendency in human nature to look after oneself, to look after one's own section. I do not, however, accept that our people on the whole are so irrational and so unintelligent that they are unable to control that tendency to some extent. One important aspect of an incomes and prices policy is that many people seem to think of it as an effort to restrict, to hold back, wages. In fact what is involved in it is a planned and orderly increase in real wages. This is what I referred to at the beginning when dealing with some of Deputy Ryan's points. The cost of commodities, the level of wages, really means nothing. What matters to people is the real cost of an increase in prices.
One hears suggestions on the one side that because of rising costs any claims for increased incomes are justified. On the other hand one hears that because of rising incomes claims for increased prices are justified. These claims, in so far as they are stated in that way and do not go any further, are simply not just illogical but are fooling the public generally. They are made by people who are perhaps fooling themselves. So long as we have people making such claims we are only making the situation worse.
The sooner all of us realise that what is involved is the value of the real increase in wages the sooner we will reach the point from which we can make genuine progress in the matter of wages. For a few years we had a situation in which increases in wages were roughly in conformity with increases in productivity. During that time, we had very little in the way of price increases but we had real advances in incomes. Now, we did not  achieve that because of an incomes and prices policy; we achieved it because of a number of factors which came together at that time. Whatever the reason, people were getting steadily better off without the weaker sections being put to the wall—and this is the objective of an effective incomes and prices policy.
If one looks at this Budget, one can see that although we had fairly substantial inflation last year the Government have stepped in to remedy the plight of the people who suffered most by it—the weaker and unorganised sections of the community: social welfare recipients, the lower bracket of income tax payers, pensioners and so on. We are taking deflationary measures. Let us look at what happened last year. We had a reasonably substantial surplus on the Budget which, of itself, was a deflationary measure. It is true that we had a very substantial deficit in our balance of payments but we ended up the year with higher external assets than at the start of it.
Through the Budget, the Government have tried to remedy the worst effects of inflation last year for the weaker and unorganised sections of the community. It is alleged that we are doing nothing to deal with the inflationary problem. Broadly speaking, the alternatives for dealing with inflation are crude, deflationary measures or a reasonably effective prices and incomes policy. The primary cause of our inflation has been income increases which have not been related to increased productivity. Many people who have criticised the alleged failure to take action against inflationary pressures have not spelled out precisely what they mean. The only thing they can mean is that we should take action to deflate the economy, something on the lines of what was done in 1956.
Mr. Colley: If at all avoidable, we should not take steps which would have the effect not only of throwing people out of work but also of so deflating the economy to such an extent that it would take a very long time to catch up on again.
Mr. Colley: The measures available to a Government to achieve some measure of deflation are rather crude in the sense that it is not possible to direct them precisely at the areas at which they need to be directed. Inevitably, many other areas which should not be attacked in this regard are affected. I do not wish to see these methods adopted unless we have no alternative. The alternative lies in an effective, or reasonably effective, prices and incomes policy. The blueprints are available. We know how we can go about it. We can guarantee that it will be 100 per cent effective. A real commitment by the people involved to make it work will ensure that we shall not have to take very crude, deflationary measures.
If we, as a people, refuse to adopt this approach to our problem, or if we allow ourselves to be talked out of making these efforts—even though most of us know they are the right efforts to make—the Government may have no alternative but to introduce what I have described as rather crude deflationary measures. The Government will not take such steps unless there is no alternative. There is an alternative but its effectiveness depends on the vast majority of our people using their intelligence to ensure orderly progress with real increases in incomes year by year. We can do this. If we are not prepared to exercise our intelligence and self-discipline to achieve that objective, there will be no alternative left to the Government but the measures to which I have referred with distaste.
Mr. Colley: I have no doubt that, at any given time in any Department, there is some room for pruning. To suggest a substantial cut-back on the expenditure of all, or most, Departments, to a degree that would achieve an appreciable difference in this problem—and without doing away with services demanded all over the country and without creating undue unemployment—is glib or misleading. I do not think it can be done. If anybody thinks otherwise, let him be specific in this regard.
Basically, this Budget seeks to redress the balance for the weaker, unorganised sections of the community who suffered last year through inflation and to point the way to avoiding this problem in future. It can be done if we are willing to be disciplined and if we use our intelligence. Nevertheless, it would be dishonest of me not to say that if we fail to do so there may be no alternative left but to take steps, which I hope would not be as dire in their consequences as those taken in 1956, which would have the most serious effects on the economy. Even more important, they would have the most serious effects on thousands of men and women, measured in personal terms, in their homes, in the emigration that would be necessary and so on. However, we have alternatives and I want to say that, in so far as they can. Members of this House, irrespective of party, should put these alternatives to the people and use their influence to get the people to accept them. It can be done if we have the intelligence and self-discipline necessary.
If our people understand what is involved I have no doubt they will make the intelligent and right choice. Many people, however, do not understand the situation. All of us here are  guilty to some extent in that we have not made enough effort to explain what is involved and what are the alternatives. The time has come when we must all make an effort to discharge our duties in that regard. I know there is not an easy solution to the problem of inflation but I am saying if we cannot do better than we have up to now, if we cannot resist the pressures—reckless in some cases, dishonest in others—from small sections in the interests of the community as a whole then perhaps we do not deserve anything more than what is going to happen to us.
If our people understand the position they will resist these pressures and they will enforce discipline on the various sections of the community; not injustice, but discipline. Members of this House, from all parties, can contribute substantially to an understanding by the people of this problem and I am certainly convinced that if the people understand it we are all on the way to a solution.
Dr. O'Donovan: I am not to be regarded as one of these people who want to charge around doing this and that. In fact, I was accused in 1955 of holding up the measures then taken and thus making the problem worse. The Minister talks about “the small sections”. Let me identify the section who are really creating the shocking inflation in the country—the Government. The Minister used the word “glib” on a number of occasions. However, he did not answer Deputy Tully's charge that the Minister came back from Canada stating he had four Canadian firms coming here and that number became 44. The Minister spoke in an abstract way in relation to that charge—I am not saying he spoke glibly——
Dr. O'Donovan: However, I am standing over the fact that the Minister  did not answer the charge. He pretended to answer Deputy Tully but, in fact, did not. I have no doubt the Minister will be asked to answer that charge shortly——
Dr. O'Donovan: ——in the way that is provided in Parliament. I went right through this Volume of Estimates and I am not exaggerating when I say I was almost in tears when I had finished. This feeling was intensified when I saw who would get benefits this year: the Government will get £50 million and the rest of the economy will get £25 million.
We are accused of being Maoists and so on. Certainly I do not think we could be more extremely socialist than that. I would believe in a prices and incomes policy if I thought it was feasible. All the documents that have been presented are full of moral preaching. I am old enough to have my moral character formed at this stage and no amount of preaching will alter it very much, certainly not from people whose duty it is not to preach to me because they set such a bad example themselves.
The only document I propose to go through is headed: “Banc Ceannais na hÉireann—Advance copy of the chapter on credit policy which will appear in the spring quarterly bulletin.” This document is the ultimate in nice, even writing but it contains more moral preaching than any document I have ever seen. The Minister said a reasonably effective prices and incomes policy can be worked out. The answer is that it cannot because of the large number of people whose incomes cannot be controlled; I am referring to the farmers and small shopkeepers. As far as the latter are concerned, this new turnover tax will certainly ensure that their incomes are controlled and diminished as will the incomes of small farmers. If that is what the Minister means by an effective prices and incomes policy this Budget has certainly done this to the small farmers. It has put very little into their pockets and it tries to take out three or four times as much as it puts in.
 I do not know if the Minister really believes what he said. He certainly believes that restrictive measures may have to be taken and here I agree with him. I am not critical of the Government for taking their time about doing this; I would be inconsistent if I was. I am not critical of the Minister for Finance for learning from his disastrous mini-Budget of November, 1968. Both the Department of Finance and the NIEC have produced reports regarding the economy in 1969 and the prospects for 1970. For what it is worth, I express the opinion that only one Deputy in this House has read these documents. Anybody can identify that Deputy; I shall leave it to the few who are here present in the House. I might mention, a Cheann Comhairle, that when 2 o'clock comes I shall call for a quorum as I do not like to interrupt people at their lunch. Certainly the attendance on the Government side of the House this morning was, to put it mildly, not too good.
For the financial year 1969-70 fiscal policy was on balance expansionary. The increase in public capital expenditure was of the same order in 1969-70 as in 1968-69. The last year's budget tended to offset the disinflationary impact of the November, 1968, measures.
I do not know who the congenital idiot was who wrote that last phrase, because anyone who would talk about the November, 1968, measures being disinflationary should have his head examined, considering it put 1.1 per cent a month of an increase on the new cost of living index, which was then submerged. I was not against the establishment of this new cost of living index because the previous one was established in 1947 when prices had doubled compared with pre-war and had more than doubled again, and this was a time to bring in a new index.  However, it was dropped like a hot potato when this frightful story was told. Any serious person could have told the Minister the effect of the socalled disinflationary measures in the mini-budget of 1968. Of course, it was not a mini-budget. It was much more a maxi-budget than the Budget we have before us now. However, it caused an increase of 1.1 per cent per month which started the inflationary forces to work in the economy from which we are still suffering.
The Minister for Industry and Commerce said things went all right for a while and that a small section were opposed to a prices and incomes policy for theoretical reasons. I am not opposed to it for theoretical reasons. I am opposed to it for the most practical reason, that it simply will not work, and no amount of theorising or moralising in dozens of documents will alter that. The Government have set up a vast number of bodies whom they pay well. I have not engaged, like my colleague Deputy Garret FitzGerald, in a campaign of writing against these people. I would not have a hope of churning out an answer to everything they produce. They come not as single spies but in battalions.
The Minister talked about what happened from, say, 1960 to 1963. It was quite all right to have a free economy while the chancers and profiteers were lining their pockets and getting into position to squeeze the rest of the community, but the day will come when the ordinary workers, slow though he may be, will catch up and demand the right to be compensated properly. He is still not really compensated properly.
Take the figure of 23 per cent which the Labour Court awarded to a group of workers, not inappropriately two days after the Minister for Industry and Commerce had said at the Fianna Fáil Ard Fheis that the appropriate amount was 7 per cent. Of course, it was not an increase of 23 per cent because the Government collect 5s 3d in the £ from every worker, and this has not been seriously changed in the Budget. When they collect this 5s 3d, which is about 6 per cent, the workers are left with 17 per cent and on my calculations that barely compensates  for the increase in the cost of living as at 31st December, 1969.
I see no reason for accepting this ludicrous figure that was produced by the Central Statistics Office of an increase of 5 per cent in our cost of living in 1968. I have already told the House there was a 10 per cent increase in export prices, an 11 per cent increase in import prices and, I am told, there was a 9 per cent increase in wages—and all this increased the cost of living by only 5 per cent? You would want to be very green to believe it. The value of money had been devalued by 14 per cent, and the Central Bank told us the effects of this were over by the following spring. You would want to be still greener to believe that. I do not know why a serious body like the Central Bank write that kind of rubbish. I certainly would not put my name to it. Yet these are the people who moralise about these matters. It offends my sense of decency.
I have made these remarks because the Minister for Industry and Commerce did make what I felt was an honest effort to appeal to the people, but as I remarked to him while he was speaking he wants to change human nature. To succeed he would want to be a latter-day Peter the Hermit, raise his standard and go on a crusade around the country, and if he was sufficiently powerful in voice and argument he might get some results from it.
The Minister for Industry and Commerce also said the people were becoming steadily better off without the weaker sections being put to the wall, but of course the weaker sections were being put to the wall, because there was no increase in children's allowances for big families until the election was looming up last year. This Government do not believe in children's allowances. They have given only 5s a month for the third and subsequent children under the general scheme of children's allowances. It would not pay the 2½ per cent increase in turnover tax.
Dr. O'Donovan: Let me just say this: we were asked here earlier today to make suggestions. I remember time and again the former Deputy James Dillon during the wages standstill period of the war advocating that if we were going to stick to that the only thing was children's allowances. If any man had an influence on introducing them it was Deputy James Dillon, and I have no particular reason to love Deputy James Dillon but I believe in being honest. I heard him speaking time and again here when the low wages order was in operation. That is what it is normally called. It is a perfectly good description of it. “A standstill order on wages” are very long words but the words “low wages order” are nice and neat and very much to the point. I heard the former Deputy James Dillon in this House when I sat on the official benches time and again advocating children's allowances. It certainly showed that the man had a heart because I saw tramway workers at that time disappear before my eyes, become thin, gaunt and wan as the cost of living went up 70 per cent without any increase in wages except, eventually, the 16s a week and that lasted up to 1946. The present Government party prate about being interested in the lowly paid workers. They are interested in one group of people, I presume because—let me give them credit—they believe in it but they are not interested in the lowly paid workers, the people who work.
Dr. O'Donovan: If they were interested in the man who works in this  day and age for £11 or £12 a week and has a family of eight or nine, why did they not give him a decent increase in children's allowances? Why did they not bring it up even to the British rate, which would not have cost all that much? I see according to the figures that the pending 2½ per cent turnover tax was expected to bring in £23 million. According to the estimate of receipts and expenditure, they had the odd £3 million. If they doubled that and made it £46 million, and they only wanted £20 million, according to their own figures, they had the necessary money in their pocket, if they were interested, but of course they were not interested, not one blooming bit.
You must compare like with like. It is quite a simple calculation to take this year's Estimates Volume which has a figure of £418 million on it and compare it with last year's Estimates Volume which had a figure of £354 million on it. That is not an increase of 7 per cent, as the Taoiseach told us; it is an increase of nearly 18 per cent; it is 17 per cent, not 7 per cent. There is no use in bringing in the flotilla of supplementaries that we had at the end of the year and then comparing one with the other. There will be a flotilla of supplementaries this coming year also. I notice the Parliamentary Secretary is not too talkative now. We will have the same old thing again this coming spring.
Dr. O'Donovan: Balance the Budget—balancing at high level by getting the banks to make an entry of £50 million in their books—£25 million last October. Did not the Government get the banks to write up £25 million for them, a creation of credit which in the situation that existed was violently inflationary and that also added to the inflation? There is no use in bodies like the NIEC producing reports on a prices and incomes policy and all this sort of thing. The only purpose of a prices and incomes policy is to keep down wages because, of course, you cannot control other people in the way in which it has now been decided to control wages and  salaries. Of course, the effects are to be seen in the various disputes that are on in the economy, in a variety of directions.
I was perturbed that Radio Telefís Éireann, in their news item, when comparing the two volumes, should have compared merely the current services. In other words, either they were induced to do it by somebody or they did it on their own accord but in any case it was inaccurate. I see no reason why it should have been done, complete with table and all this sort of thing, when it was, in fact, inaccurate.
The last Minister who spoke asked what alternative they had. I will start with one alternative. I asked was he not on speaking terms with his colleague the Minister for Lands? He has shown how it should be done. Let me take an example from the Minister's own Department. For the Office of the Minister for Finance the net total for this year is £2,343,000 as against a gross total last year, that is to say, at the end of the year—not gross in the other sense—of £1,595,000, a net increase of £748,000. And what for? Let me read out what for. The number of staff in the Department of Finance—a Department which in recent years has been about as effective as a sheep dealing with a lot of lions—is to be increased this year from 317 to 388 and doubtless they will produce tomes and tomes and tomes all moralising about how the rest of us should behave but they will not be able to keep down Government expenditure, which is their duty. That is the duty assigned to them by the Constitution—to keep Government expenditure in some kind of reasonable proportion. That is going to cost an additional £165,000. I shall not bother about the oddments.
The Irish Decimal Currency Board is to cost £230,000 against £33,000. What the devil for? Let me read out the explanation that is given: “Fees, publicity costs and incidental expenses” and the further explanation: “This board was set up in June, 1968, by the Minister for Finance to facilitate the changeover to decimal currency by familiarising the people with the  new currency.” Think of the degree of familiarisation that was required to exchange a tenpenny piece for a two shilling piece when they are the same size and you do not have to look at the damn things. How do people going from one country to another familiarise themselves with the various currencies? That is a fake of the first order. The fivepenny piece is the same as the shilling. Now that the British have decided that they cannot abolish the sixpence, we will keep it too. The decision was, I believe, to keep it for a couple of years in any case.
The decision to abolish the sixpence was an absurd decision. It meant that there was no coin between the new 2.4p. and the new 5p., which was the same size as the shilling. That is one of the greatest fakes ever perpetrated anywhere. It is pure waste of money. I do not mean maybe. Then we follow the British with that absurd coin for which every shopkeeper has to have a separate bowl or place in his drawer because it is the same size as the new 10p. although it is septagonal. You would be surprised how quickly you could give the wrong one. I am told that shopkeepers have found that they have given out the wrong one, that they think they are giving two shillings whereas they have given out 50p.
Dr. O'Donovan: Not so few and not so far between. Why do we have to follow the British so totally? We could have accepted their new 50p. and let it circulate around as we always have allowed their money to circulate. We should have enough gumption. These fellows are now spending £200,000 this coming year—one would think it was 200,000 farthings—on familiarising the public with the new currency and finding solutions for the problems arising in consultation with interested parties. Fees, publicity costs and incidental expenses, £200,000. Could the Parliamentary Secretary to the Minister for Social Welfare, who is now occupying the front bench, make any suggestion as to the necessity for this expenditure? I am aware,  of course, that there is another side to this story but, mark you, it is a side that will be limited to a few manufacturers making cash registers. I suppose £10,000 would do the whole job and teach these people whatever it is they need to be taught. Actually they will do this themselves because it will be in their own interests to do it.
Dr. O'Donovan: I have been too long on the road now to chase that kind of red herring. There is another very big item in this—payment to special regional development funds, grant-in-aid. It is stated that the grant-in-aid will be paid into an account from which issues will be made by the Minister for Finance by way of grants or repayable advances to assist economic projects in the western counties. It is also stated that the amount will be subject to examination by the Comptroller and Auditor General. The amount is up from £100,000 last year to £300,000 this year. It will be subject to examination by the Comptroller and Auditor General. Examination is a new word in this context. The ordinary word is “audited”. This will not be subject to audit; it will be subject to examination. This is something new. Normally there is not much of a debate on the Vote for the Department of Finance, but it has now reached such a size, £2,300,000, that there ought to be a debate on it this year.
All I can say is that, if this is the kind of employment the Government are creating, it will not do the economy much good. I say that because I am truly appalled. I am sorry the Minister for Finance is not here. I regret very much that he had an accident. Here is a Department whose first duty, as they used to say about the old British Treasury, is to save candle ends. When I was a junior official in the Department  of Finance I used to think that that was carried to extremes. Even Fianna Fáil acted no differently when they took office.
Dr. O'Donovan: I understand that a newspaper circulating in mid-Cork said I wanted to apply income tax to co-operative societies. I never suggested anywhere that co-operative societies should be charged income tax. I do not mind people quoting me correctly, but I do not like people imputing to me something I did not say. If co-operative societies were required to pay income tax then, equally, trade unions would be required to pay income tax. Far be it from me to suggest that trade unions should pay income tax. They lose enough funds without paying income tax.
Dr. O'Donovan: What do the income tax remissions about which we hear so much amount to in the case of a married man with £1,000 a year? They reduce his liability from £114 to £102, by about £11. Every Deputy who pays income tax, and I take it most of them do, will also get that benefit and so will the man who has a salary of £5,000 a year. I am all in favour of it. The Minister said that he had got 50,000 people out of the income tax list; I think he would have been well advised if he had doubled that and eliminated 100,000 because the Augean stable in O'Connell Street—and everybody  knows that is what it is—could then be cleaned up. It cannot help being in its present condition; they really do not know what they are doing there from one period to another. They do not know whether people have paid their tax or not. The situation is appalling.
Dr. O'Donovan: Under the PAYE system they have our money. In the old days we had the money and they had to prise it from us. Now we must try to get it back when they have it. Before the war—and nobody will suggest that at the end of the economic dispute with Britain this country was well off; I am talking of 1939—the basic rate for exemption from income tax was £150. That is the equivalent in purchasing power of £675 a year today. To restore the position to what it was prewar everybody with under £13 a week should be exempt from income tax. Of course the Minister got the figure up from roughly £6 15s to £7 10s, to about £375 a year, when in fact it would need to be £675. It is no use pretending that the married man with a couple of children who has to pay 10 per cent of his income in income tax is any better off than the married man with an equivalent amount before the war and at that time he had to pay nothing.
I have spoken about the cost of running the Government and I should like to say a word about one item in that cost. That is the £88 million for servicing the national debt. I have not forgotten that the Fianna Fáil Party in 1950 when a national loan was being raised here plastered the hoardings of this city with the sign of the pawnbroker but, typical of Fianna Fáil, when somebody thinks up a good idea they take it and ride it to hell. As somebody correctly said this morning the money we now borrow abroad costs us as much as if we were paying our own citizens 15 per cent for money.
I said on the day of the Budget that the turnover tax was about the worst form of taxation possible because it takes out of the pockets of the people much more money than it brings into the Exchequer. I know it amuses some  people when I refer to the old gentleman but this is what Adam Smith 200 years ago had as one of his canons of taxation: economy. It was his definition of economy, that the tax should take as little as possible out of the pockets of the people over and above what it brought into the Exchequer. I do not see why I should not quote a 200-year-old thought when it was never more appropriate. I would quote a 2,000-year-old thought if it was correct in my opinion.
When the turnover tax was introduced people might dispute its effect on prices. Theoretically, it was 2½ per cent but anybody who gave it any thought would not suggest that it cost less than 5 per cent. Many thought it cost between 6 and 7 per cent. In my opinion it was somewhere between 5 and 6 per cent. I do not suggest it would cost that much again now but it will cost a minimum of 3½ per cent to 4 per cent. Instead of 6d in the £ it will cost 1s or very near it. It will reduce the value of the £ as it is at the moment, not to 19s 6d, but to about 19s. Watch it happen. This is not a question of making a projection five years ahead; this is a projection for the next three months. In fact, before this House adjourns for the Summer Recess we shall know the answer.
There are several things that are deplorable about this turnover tax. One, for example, is that if an unfortunate trader is not paid a bill by 1st May he will have to pay turnover tax when he gets the money. Another is that hire purchase contracts, although they are continuing contracts with specified amounts—some might be a year old—will also be subject to turnover tax on the payments.
What will be the effect of it on the price of the loaf? We were twitted by the present Tánaiste, Deputy Childers, that we were mewling and groaning over the price of the loaf and the bottle of beer. Although consumption may not be going down the price of the bottle of beer is now three times what it was then and the price of the loaf will very shortly be three times what it was ten or 12 years ago. Last week the price of meat went up by 6d a lb. and  of course it will go up another 6d a lb. very shortly when this increase comes in.
It is suggested by the Government that the taxation rate here is among the lowest in Western Europe but I reckon it is among the highest. My reason for saying so is simple. It is that in countries where they have the added value tax they have not income tax in the same way as we have it. If we compare ourselves with our neighbour across the water we find that there is no turnover tax in Britain. Income tax there is 8s 3d in the £ at the standard rate but, on the first £100, when you come into that system, it is charged at only two-thirds of the rate. The lowly paid people, those with £600, £700 or £800 a year, do not pay the full rate at all, whereas we pay it here.
Dr. O'Donovan: If the Minister were to select specifically the worst possible way of solving the problems, this would be it. To use the word the Minister for Industry and Commerce was so fond of using, it was a slick way of doing it. That is not a word I would use but, since I had to listen to it four or five times this morning, especially in relation to a very correct case made by my colleague, Deputy Tully, it is no harm for me to use it in return.
It has been widely suggested by the party opposite that we favour imposing income tax on the farmers. It is in our written policy that farmers with a valuation of £100 or more should be required to submit accounts the same as any trader. I do not believe that any reasonable person would object to that because, if a man with a valuation of £100 has not got an income of £2,000 a year out of his farm, he should give up farming and sell his land.
Dr. O'Donovan: The valuation is the same all over the country. It has never been changed since my namesake, O'Donovan and O'Curry, did it over 100 years ago. Deputy Tully tells me it was in 1857 so it was 113 years ago.
Dr. O'Donovan: I object particularly to the Government's taking credit for giving what they regard as substantial concessions to people on small incomes when in fact they are giving the same concessions to people on large incomes, surtax payers and everyone else. They are all getting the same amount. The tables supplied to us by the Revenue Commissioners show this. We are all benefiting to the tune of £10 or £12 a year. The man who gains these few pounds has to pay out a great deal more. I worked out that the man on £1,000 about whom I was talking a while ago, whose income tax will be reduced from £114 to £102, will pay in turnover tax in the ordinary way somewhere between £25 and £35 a year. It depends on what he uses his income for. He gains £12 from the Minister on the one hand and on the other hand the Minister takes away from him somewhere between double and treble that amount.
Deputy Ryan referred to unemployment. He is quite right. The method of calculating the figure was altered. I have nothing against this but, when Deputy P. J. Burke gets up in the House and talks about 100,000 unemployed in 1957, I must say that I remember what the exact figure was. It was the same as it was when Deputy MacEntee was Minister for Finance. It was 93,000. If we want to talk about history it was not much more than  half of what it was in the middle thirties. It was 153,000 in the middle thirties.
Dr. O'Donovan: Quite correctly the people who cannot work have been taken out of that figure but if we are to make comparisons let us make the correct comparisons. Deputy Ryan said that the figures at the moment, taken on a like basis, suggest that there are 87,000 unemployed. Comparing 87,000 with 93,000 is just like comparing Tweddledum with Tweedledee. When I see the Mercedes cars sweeping down Mespil Road, nearly knocking me down when I am trying to cross the road, I am well aware that the whole thing is masked by this massive inflation.
Dr. O'Donovan: I am employed at the moment. The Achilles heel of this Budget, as I said, from the political point of view is what has been done to the farmers. First of all a sum of £20 million was mentioned——
Dr. O'Donovan: What will the Budget cost the farmers as a whole? It will cost them at least £10 million in the coming year. I made this calculation and I think it is accurate enough. I am assuming that it will result only in a 3½ per cent increase in prices. I am trying to keep my mind on one subject at the moment. I am behaving like a mathematical economist. I am keeping my mind on one track at the moment. It will cost the farmers at least £10 million, taking them as a whole, and the benefit they get is £4 million. That is not too generous to put it mildly.
Dr. O'Donovan: The Government engage in talk about this serious problem. They employ men and more people to write about the problem but, instead of doing something effective, they do exactly the reverse. The figure £418 million is on the face of this volume. It is 17 per cent up on last year. Everyone knows that the inflationary problem has taken a turn for the worse. It is most unfortunate that the lead should be given by the Government. As I said earlier, why does the Parliamentary Secretary not talk to his colleague, the Minister for Lands? He showed how it should be done.
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