Tuesday, 16 May 1972
Dáil Eireann Debate
Mr. Briscoe: There were pious questions asked about the future of Shannon Airport, although it was the two parties over there who sold out  the transatlantic airlines. There are times when silence is more eloquent than words.
Mr. L'Estrange: They were shedding crocodile tears about the British market. You would want to put on magnifying glasses to see the advertisement which was issued by Fianna Fáil in the Sunday papers last week. They are ashamed of their past.
Mr. Briscoe: I have plenty of time, but I shall not disappoint Deputy FitzGerald who is waiting to hear something about the EEC and the result of the referendum which may be painful to some other people, mostly not present. The Fine Gael Party have been praising themselves for doing the correct thing in the national interest in supporting EEC entry. I would not disagree that it was in the national interest that Fine Gael were in favour of going into the EEC, but to clap themselves on the back for it is not the most modest thing.
Mr. Briscoe: No. Fine Gael played a part, we all agree, and I do not intend to go into the empty exercise of saying who was working and who was not working. My constituents know what they received in the way of literature and they know the way in which they were canvassed, and so forth, and,  therefore, it is not for me to judge that issue. There is no reason why people should clap themselves on the back for having done the right thing.
Mr. Briscoe: I understand the Labour Party have been taken over by Deputy John O'Connell. Apparently he has thrown in the sponge and has admitted that Labour will not form a government in his lifetime.
Mr. Briscoe: Deputy Keating wishes to be judged in five years time on the policy adopted by the Labour Party in opposing entry to the EEC. Not alone will Deputy Keating be judged, but so will the entire Labour Party.
The preparations made by successive Fianna Fáil Governments since 1961 for entry into Europe have placed us now in a very good position. We heard a great deal of criticism by the Opposition of the 1965 Anglo-Irish Free Trade Area Agreement but, if it were not for that agreement, Irish industry would not be in as strong a position as it is today and Fianna Fáil deserve full credit for the healthy state of the economy. I predict that full employment will come much earlier than is predicted by most authorities as a result of our entry into Europe. I could not understand the utter irresponsibility of those who tried to encourage the people to vote against their future prosperity.
Mr. Briscoe: The result was a massive vote of confidence by the people in themselves and their future. We, on the Government side, have always had tremendous faith in the wisdom of the people and they certainly showed that wisdom last Wednesday. I am probably the only Member of this House on record in The Irish Times of 10th May predicting that I would be most surprised if more than 200,000 people voted “No” out of every 1,000,000 who voted.
I should like to take this opportunity of commending the great courage shown by the small farmers who resisted all kinds of pressure to vote “No”. They have shown that courage on former occasions. If I were a small farmer I would have had many misgivings and I would have been fearful of the dire consequences with which I was being threatened if I went into Europe. But the small farmers were not afraid. They did the right thing. They voted “Yes”, placing their trust in what I call the voices of sanity which told them to vote “Yes”.
I should like, too, to praise a constituent of mine who lent her shop as a headquarters. An incendiary device was put through her letterbox by some dissident elements. Her shop was burned out. She lives on the premises with her children. I asked her if she would prefer that we did not use her premises after that; she told me she was very frightened but we could go ahead and use them. That took tremendous courage and Mrs. O'Brien certainly has my admiration.
 I predict that our country will benefit more than any other country in the EEC because 60 per cent of our economy is based on agricultural exports. However, time will tell. But I believe we will benefit more and so do the majority of the Fianna Fáil Party.
A leading article appeared in the Sunday Independent of 14th May. The writer, under the cloak on anonymity, made an attack on the Members of this House, particularly on the Minister for Foreign Affairs, Deputy Hillery, and Deputy Garret FitzGerald. He said the Members of this House were largely made up of “mindless chumps”. I do not know who this man is. Perhaps he will have the courage to disclose his identity in next Sunday's Sunday Independent. I do not know what authority he has to describe Members of this House as “mindless chumps”. On the same page there is an article by Deputy Garret FitzGerald, running into six columns; as I interpret this writer's comments, Deputy Garret FitzGerald is one of the “mindless chumps” in this House. I invite this individual to disclose his identity and tell us what contribution he has to make for the betterment of the country and what his contribution has been in the past.
A few weeks earlier in the same paper there was an article showing the number of lines spoken by Deputies in this House, the insinuation being that unless Deputies are contributing to debates they are wasting the taxpayers' money. As most of us know, the work that is being done here is not done by contributing to debates but rather with our constituents outside the Dáil Chamber.
Mr. Briscoe: I am not saying that. I am glad the Deputy interrupted me so that there can be no misinterpretation. The article was written by Xavier  Carty a couple of weeks ago. I invite him to come along here any day and I shall be glad to let him see what goes on. It appears to me that many of those who write these articles have never been in Leinster House. If they had been in the House they would not write in that way.
The provision included for local authority housing in the 1971-72 budget was £19.5 million. A supplementary allocation of £1 million was made in October, 1971, as part of the measures outlined in paragraph 11. This additional allocation together with savings on other housing services enabled expenditure on this programme to rise to an estimated £21.6 million in 1971-72. The allocation for 1972-73 is £23.9 million which includes £6 million for housing to be provided under the guaranteed order project. This project is being carried out largely by the National Building Agency Limited on behalf of local authorities.
Expenditure on grants for the erection and reconstruction of houses and loans by local authorities for house purchase is expected to amount to £17.2 million in 1972-73, as against £15.8 million in 1971-72.
The allocation for the building of schools is increased from £12.25 million to £15.09 million. The allocation for hospitals is increased from £4.30 million to £5.75 million. The provision for tourism is increased.
I am particularly pleased about the increased provision for telephones. The estimate is £13.73 million. The provision will be spent on the installation of new telephones and new plant. The telephone system is so over-worked that we all experience great inconvenience. I have constantly to report faults in order to have them corrected. I welcome the increased expenditure under this heading.
 I should like to express the hope that the Minister for Local Government will advertise the existence of citizens' advice bureaux in this city. I was listening to Deputy O'Connell on the “Late, Late Show” on Saturday night. He said that there was no citizens' advice bureau in Dublin and suggested that bureaux should be established. I was surprised to find that the Deputy was unaware of the existence of a citizens' advice bureau which operates through the library system in Dublin.
A number of industrial projects are at the moment with the IDA. The figures vary every time I hear them. I telephoned the IDA and was informed that there are about 88 projects before them, the majority of which were awaiting the result of the referendum. I have no doubt that we will witness over the next few months an enormous increase in applications to set up industries here. It is my sincere hope that the Government will recognise the importance of having a first class road system in order to encourage the establishment of industries in the west of Ireland.
Mr. Briscoe: As I have said before, we need a first class motorway from east to west. The provision of such a motorway would involve an enormous amount of money. When we take our place in the EEC one of the first things we should do is to seek aid or loans for the purpose of building such a motorway. It is difficult to divorce a debate on the budget from the recent referendum. I hope I will be forgiven.
One cannot allow this occasion to pass without complimenting the Minister for the increases given in social welfare pensions and allowances. The extension of free transport to all persons over 70 years of age is a tremendous boon. These provisions show the deep understanding on the part of the Government of the needs of the elderly in our society.
I would conclude by expressing the hope that the result of the referendum last Wednesday will place this country well on its way to prosperity for all:  that those who achieve this prosperity will use it to serve them rather than their serving it; that materialism will never become our god; that we will hold on to our spiritual values; that we shall keep a close eye on what is referred to as the quality of life. It has happened in other countries that with material wealth there came dissatisfaction, greed, jealously, envy. True contentment begins with having enough to eat and a place in which to sleep. There are many of our citizens who do not have a very comfortable place to sleep in. It is the earnest hope of everyone in this House that all our people will have a decent place to sleep, decent food to eat and that they will at the same time hold on to those things which mean so much and not let material things become their god.
I should also like to say to those who opposed entry to the Common Market: get your shoulders to the wheel and work for the betterment of this country. The vast majority of our people have shown their wish to do this. All elements in our society should work towards this and welcome the ideas expressed by Roy Bradford recently. I think he showed a common-sense approach in suggesting that we should make the most of our opportunities. I remember reading in The Irish Digest in 1961 the following sentence: “When the nine o'clock rush hour is at eight o'clock, you will know Ireland is in EEC.” I have noted that it seems to be at half past eight at the moment. Only another half hour and we shall be there, pushing and working.
I wish the Minister for Finance all that is good in the coming year. May our prosperity continue and may we have no setbacks. May the Irish Congress of Trade Unions continue to show, as they did in their dealings lately with certain types of strikes, a sense of responsibility and unity. This consolidates and knits the country together for the common purpose of bettering all our people.
Mr. O'Hara: I should like to thank Deputy Briscoe for his reference to the west, brief though it was, and his suggestion that the west and  its problems should be remembered. He mentioned a major link road as one thing that would be of benefit to that region. I agree with that but apart from this, there are many other things with some of which I propose to deal in my remarks this evening. It is so rare to hear any Dublin Deputy refer to the west or western problems that I felt it a duty to thank him for mentioning it and I assure him that I and those I represent appreciate it.
When the budget was framed the Minister probably was not quite sure where he stood in regard to the referendum, whether the Irish people would vote “Yes” or “No”. It seems to some that he took a certain gamble by budgeting for a deficit but I would not regard it as a gamble. Neither did Deputy O'Higgins who spoke after the Minister nor the Labour Party leader, Deputy Corish. One can afford to take certain risks at certain times and this was an occasion when the Minister was quite right in taking the steps he took and budgeting for a deficit. He was well aware that if he ran into problems he could come back to the House, perhaps in October or November, with new proposals to help him out of his difficulties.
In the circumstances when we look back on the referendum result it seems that the Minister has not taken anything like a serious risk. I share the optimism of Deputy Briscoe— perhaps not to the same extent—when he says there is a bright future for the country. I am convinced that is so provided we put our house in order. I also share his view that this was the greatest thing that ever happened to this country. I have lived through a period in which I personally experienced the difficulties and problems that confronted our people when they were totally dependent on the British market for the sale of their produce, particularly agricultural produce.
Down through the years our farmers have had the experience of being advised and encouraged not only by successive governments but by everybody with any influence such as committees of agriculture, to increase production  in various lines, poultry and pigs, lowland and mountain sheep and so on. They were advised to improve the quality of their cattle. When they did, time and again the farmers were faced with having to sell their produce, after all their labour and investment and the work of themselves and their families, below economic level.
This went on year in year out. They might enjoy a boom for two or three years but this had the effect of leading them up the garden, rushing into producing a surplus of something such as cattle or sheep or pigs or turkeys only to find the market depressed and the produce almost unsaleable or saleable only at give-a-way prices. The British market was a very doubtful one. Although quite near us and involving minimum shipping, we still found ourselves in the position that because the British believed in a cheap food policy, they were able to buy from Australia, New Zealand, Denmark and elsewhere, very heavy surpluses at certain times with the deliberate purpose of depressing the prices of our products. This has happened time and time again with very serious consequences to farming and to those dependent on it and also to the economy of the country.
A new deal will now be arranged. We know the terms of the Treaty of Rome. We are assured of a bright future provided we are prepared to work harder. Our people will be prepared to do so once they know that their efforts will be rewarded.
I was engaged in the referendum campaign in my own neighbourhood. I spoke to many people and explained the facts to them. Many of these people were former customers of mine who supplied me with different items of farm produce. They realise my position as a businessman and their own position as producers. They are aware that what I said was true. I spoke at chapel gates and other centres from where I could see closed homes and schools. The churches were half empty. All these things were the sad and positive proof that a blight had struck. It is no pleasure  to me to relate these facts, but they are true.
I was curious to know how the polling went in the different regions on polling day. There are considerable acreages of good farm land in County Mayo, which is a big county. There is some good quality land in the Claremorris area, and around Castlebar, Straide, Killala and Ballycastle. There are also mountainous regions. In the mountainous regions where people are in receipt of unemployment benefit or “dole”——
Mr. O'Hara: The name used is “dole”. That is how I refer to it when speaking to them. I live among those people and know the language they use. There had been much propaganda about unemployment benefit or “dole” being taken away or reduced and social welfare benefits disappearing, but our people were intelligent enough to vote “Yes” for the new deal.
Mr. O'Hara: The people in my part of the country were very surprised at Deputy Tully, who comes from County Meath, and at Deputy Corish, the Leader of the Labour Party. They were completely confused by Deputy M.P. Murphy. They could not understand how the Labour Party could talk out of one side of their mouths about providing more jobs and making suggestions about how they should be provided, and still advocate a system in which we would be tied to the coat-tails of the British. We would find ourselves as badly off as previously when we had a “stop-go” policy and depreciation in prices. The trade agreements we have with the British would be wiped out, and yet it was suggested by people who are regarded as responsible members of the Labour Party that we should go to England, cap in hand, and beg for concessions from the British.
My neighbours were not prepared to do that. Quite a big percentage of  the people whom I represent have had to go to England in their lifetime. Some have gone to America or Australia to try to supplement their incomes. Many of these people are prominent in the labour movement in England and because of their association with that labour movement and with political parties there they were surprised that the Labour Party in an Irish Parliament should adopt the attitude they did. They felt that this attitude was unpatriotic.
I was present at the count in Swinford and the people of Ballycastle, which is a high “dole” area in my constituency, voted 90 per cent “Yes”. There were only ten or 12 “No” votes altogether. At least half a dozen boxes contained 100 per cent “Yes” votes. There were some regions where the vote was not quite as high. I have documents in my files showing the overall figures in connection with the voting. I want them for future reference. Never let it be said again in this House or outside it, as has been said in the past, that the people in Connacht are a crowd of “dolers” or people who want to depend on social welfare benefits. I always knew that our people were a proud people. Many people in the rest of Ireland—and the Minister for Finance here will appreciate this—know that the people in Erris and Connemara have stood by the Irish language and culture down through the years, in face of obstacles.
I am proud that the Government have given this area a voice on the air to help them to get their language and culture across to the rest of the people. I hope that the new radio station will have beneficial effects. There may not be many votes to be got by saying that here. I have heard people expressing strong opposition to the new radio station. It is a step forward.
I am proud that my people have given the lie to those who said that they were ready to take hand-outs and were not concerned about work because they were too lazy. Our people have shown clearly what they want. Social welfare benefits are necessary for many people. I am in favour of them. Many of my neighbours have gone across to  England and through seasonal and long-term employment have sent millions of pounds home to keep the home fires burning. I often handled their money in business deals. I would say that in any region 75 per cent of the money handled by merchants was remittances from their families in England and in America. If for a few years, until employment is found for the younger generation, we have to give them unemployment benefit or some little assistance to help them to rear and educate their families this is well due to them.
The Minister promised some increases in old age pensions, widows' pensions, unemployment assistance and other benefits and these are very welcome. Some people, who have to depend on those benefits, told me they were delighted with the increases given. We all appreciate that people who are obliged to live on social welfare benefits find it more and more difficult to live. There is in my constituency a high percentage of people who carry the scars of having worked long hours in the coalmines and on building sites in England. Some of those people are in poor health today as a result of the privations they suffered during the last war. Those people were anxious to earn as much money as they could to send home to their families. It is only right and proper that any Minister for Finance in this country would keep those people in mind and would be generous in regard to social welfare benefits.
The younger generation are more concerned with regular, full-time employment than with signing on at the labour exchanges for the dole. There are very few young people in rural areas who are not availing of secondary and vocational education. Indeed, many of them are going to the universities and the regional technical colleges. The young people in the 18 to 25 age group are more concerned about getting good jobs, owning a car, getting married and making homes for themselves than having to do with any hand-out such as unemployment assistance. This money is very necessary for people who are out of work or for those on small farms whose incomes  are too low to enable them to rear their families.
There is a reference on page 23 of the budget statement to some benefits given for agriculture but if we read that carefully we will find that the benefits given are not very great. A lot of development can take place in many regions of the west if there is a progressive Minister for Finance who is prepared to take the initiative. The Minister should be prepared to provide money to help the people in the poor areas of the country.
The Mayo and Sligo region derived benefit from the Moy drainage scheme. Arterial drainage is a big undertaking. Surveys have to take place, engineers have to be engaged and the work can take many years to complete. Although the work on the main channel was highly successful and relieved thousands of acres of land from flooding there are still thousands of acres of land flooded in my constituency and other areas of the west because work was not undertaken on small rivers, some of which flow directly into the sea and where there is no serious problem in regard to levels. The chairman of the county committee of agriculture, Councillor O'Toole from Louisburgh, spoke about a river in his region which flows into Clew Bay where proper drainage was not undertaken. If this were properly drained it would be of great benefit to many small farmers in that region. I have no estimate of the cost of such a proposal. There are many proposals for this type of scheme. Some of those schemes were undertaken by the inter-Party government under what was known as the Local Authorities (Works) Act. Those proposals were shelved and were left in pigeon-holes. They were certainly not regarded as a top priority. They were put aside.
I now urge on the Minister that he should restore the Local Authorities (Works) Act because there are hundreds of acres of land which could be reclaimed in the Foxford, Ballina, Crossmolina, Claremorris, Balla and other regions if that type of work was undertaken and the main channel is  now fit to carry that extra water. I would urge, too, although it does not affect my constituency, that wherever there is arterial drainage work to be done there is nothing the Minister or the Government can do that will improve the economy more quickly than that work. Our people are only waiting to reclaim land. There is the land project scheme initiated by James Dillon. There is the lime scheme. These schemes have brought wonderful benefits to the country and I am prepared to give the present Minister and other Ministers before him credit for what was done. However, there are hundreds of farmers in this country who are held up because of the failure of successive Governments, and particularly of this Government, to provide money for this purpose.
I remember when the Local Authorities (Works) drainage scheme was in operation. We used to get sums of £60,000 and £80,000 in Mayo every year for that drainage work. I am aware that some of it was spent badly for the reason that the main channel was not, at that time, low enough to take the water which was being unloaded on to it. Great foresight was not shown at all times but not all the schemes were a failure. Now the main channel has been done and work can be undertaken. The Minister should, as quickly as he can, restore that scheme again. Mayo County Council— there is a Fianna Fáil majority there— would agree word for word with what I am saying. The members have expressed themselves time and time again along those lines and they would be glad to know that I availed of this opportunity to refer to this. We would gladly administer the scheme. We are now in a better position to have the work carried out successfully due to the Moy drainage scheme. It is a pity, when £6 million or £7 million of taxpayers' money was spent, that full benefit cannot be got from it.
The Minister for Lands, Deputy Seán Flanagan, is well aware of this problem. He and Ministers for Lands before him have undertaken the work of migrating people from the west to Deputy Tully's area, County Meath. I  know, and I can understand it, that there is some opposition in Meath to our people going there and taking over holdings to which Meath people feel they have a first claim. It is a costly business. The Minister for Lands gave me a figure of £14,000 to migrate one family. That was in 1969. Costs have since gone up. I would not be surprised if it was £18,000 or £20,000 per family now. When one examines the economics of that one could question the wisdom of it. When you migrate a family or a few families from an area you are breaking up the structure of a rural community. The school suffers, the Church suffers, the local town suffers. It would be far better for our Government to have land reclaimed and reclaimed quickly.
When I was speaking to my neighbours before the referendum I told them: “On Thursday next you will know whether we are going into Europe or not. If we are, do not be afraid to get heifers in calf as quickly as you can. Do not ever get into your heads that you will sell them at depressed prices again because that will not happen. Make sure you breed with good animals. Do not be afraid to expand because there is not the slightest danger that we will flood Europe with what we have to sell. You are on a safe winner.” I went around again last Sunday and Complimented them and I told them: “Expand, expand and expand. If somebody comes along to buy a good heifer from you tell him that if you can afford it you will keep her yourself and get her in calf. That calf should be worth £70 or £80.” The people who were subjected to the marketing conditions we experienced down the years should be the first to gain. I should like to see them gain. They deserve to gain. They had to be tough and hard-working to surmount the obstacles and problems they met for many generations. I am pleading with the Minister to have a chat with his colleague, Deputy Seán Flanagan. I am sure he would agree that people want water-logged land drained, they want to be able to lime it, to put on phosphates and potash, if required. They are prepared to plough back profits from that land provided the Government do their share.
 I suggest, therefore, the restoration of the Local Authorities (Works) Act. If it needs amendment the Government should bring a measure in here and I think it will get a ready passage. It is one thing to be critical of a budget, to attack a Minister and point out what he could and should have done. Now we have a chance. We have gone through a share of trials. The former Minister for Finance, Deputy Haughey, called me the banshee on one occasion because I pointed out so often the tragedy of rural people leaving the land. I believe there are many people who would be delighted to come back. Many people have told me they would be glad to come back. Their small holdings are still there. Some of them would be on pension now and others would be young enough to make a “go” of things in Ireland with improved conditions. Some of them are skilled people, people who have excelled in foreign countries. They would be glad to settle in Ireland. They are anxious that their children should be brought up in the environment in which they were brought up. That is their main concern—the education of their children. Many of these people, too, deplore the closure of rural schools. They are quite worried about it.
Mr. O'Hara: They have written to me about it. Sentiment is all right in its own way. We can all be a little sentimental, but it is well to remind ourselves that there is need for change. I appreciate that the Minister for Education has many problems, not just with the parents, but also with people who have given of their best down through the years. Some of them may be getting on in years and hate change like all people getting on in years. They do not want change.
The rural schools and the smaller communities served this country well in their time. Many educationalists worked for nothing. Nuns, brothers and priests often gave their services free in trying to educate our children, and it is only fair to say thank you to them. I should like to think that  the Minister would deal sympathetically with every case in trying to find a solution. Many families will return to benefit from the improved conditions which I foresee. We must make up our minds to play our part. There is a limit to what a Government can do. A Government can lead. The Minister for Finance is budgeting for a deficit. A Government can borrow money in the people's name. The Minister for Finance is quite safe in borrowing now. He will have increased earnings and increased incomes and he can pump more and more money into the economy. He can get things going in a big way, and in a hurry.
If I had a life assurance policy maturing for £20,000 next year or the year after, and if I had it in the safe, and if I decided I needed £1,000 or £2,000 for some project, and I took it to the local bank manager he would shake hands with me and tell me I was very welcome. He would look after me and hand me out £1,000 or £2,000. We can now put a new figure on the stock in this country. It is not in 10 Dowings Street that the price will be settled in the future. We know the figure. We know it is long-term. We know that we will not flood Europe with the total amount of produce we could send out.
The British did not like the idea at all of going into Europe. They went around Europe trying to wreck the Community. They tried to form an outer bloc because they “had it pretty good” as it was. That state of affairs does not exist any longer. Our people realise that. I would not stand up here and say we should give everything to the farmers. If the cake is to be bigger and sweeter and better, let us see that all our people share in the benefits in town and country. First things must come first. We must make the cake bigger first. We must pump in the money where it is required and we must not produce goods which are unsaleable.
With increased production in the agricultural sector we can provide more and more jobs in the meat processing industry. For a considerable  time factories have engaged in that type of operation in my own county and in the adjoining countries and they have given good, secure and long-term employment. Let us increase that employment by increasing output. We can do that. If the minister acts on the suggestions I made this evening I have no doubt about that. I have seen it going in the opposite direction. I remember when these places were booming but, because of the treatment we got from the British, people got out of production, became careless about their land and finally went away to foreign countries.
I sold produce in England and on the German and Spanish markets. Long before Kerrygold was thought of, I made sure to have a brand name and so did my late father. This is very important. If you are selling a proper article, if the customer finds that it is sound he will come back and ask for the brand name. The day is gone when we could throw something into a sack, tie a piece of twine around it, and throw it into a railway wagon or on to a boat and think everything was OK. That will not happen in future. We will meet keen competition in some countries. If we want to put our exports, manufactured or otherwise, on a sound footing we must make sure to produce the article which is required and we must package it properly and sell an honest article for good money. If you do business on those lines you are doing it on sound lines. We know that the other method has not succeeded in the past. It is less likely to succeed in the future.
There has been much criticism about delays in the rearrangement of holdings. The Minister for Lands would want to take a quick look at his Department. Thousands of acres of land are in the hands of the Land Commission, some for a considerable period. Something should be done about this. When people ask me to see if I can get an addition to their holdings, I always remind them that the Minister has not got a pack of cards which he can divide and throw around, play the game, and take them up again. When you parcel out land it is usually a long-term job and a costly job. It  sometimes annoys neighbours and causes friction and ill-feeling.
No Minister for Lands could justify a situation in which lands are held for very considerable periods in the hands of the Land Commission. In these circumstances land does not improve and generally, it is not very long until it is overgrown with weeds. Also, the fences are broken so that stray animals can enter the lands. Sometimes a bungalow in respect of which a grant was paid stands neglected for a number of years. It is sad that these things should happen. They are continuing to happen. This question has been the subject of much criticism by members of Mayo County Committee—a committee that consists of persons having different political views but all of whom fail to understand the policy.
Mr. O'Hara: I appreciate that, but one can take certain liberties here from time to time. At the Fianna Fáil Ard-Fheis of 1969 there was much praise for the Minister for Lands by reason of a statement he made here regarding the necessity for part-time employment in industry for small-holders particularly in the western region. Both Deputy L'Estrange and I have advocated a policy whereby an effort would be made to provide the families of small farmers with employment in their own localities in so far as possible. This would have the effect of supplementing the incomes of small-holders in the west. Before the Minister advocated that policy I had urged strongly that such measures should be adopted. However, the Minister got credit for the policy as if it had been his idea but I suppose it does not  matter very much who gets the credit. What I am concerned with is that the policy as advocated by me and as agreed on by the Minister should be implemented.
Shortly after making that statement the Minister for Lands appeared on television and when questioned by an interviewer he pointed out that Deputy O'Hara from his own constituency was in agreement with him. That was true but despite the courage shown by the Minister in saying something that was not altogether in line with Government thinking, nothing worthwhile has been achieved since in this regard. There is no reference to the matter in the budget statement apart from a reference to grants for certain regions in underdeveloped areas. I appreciate Deputy Briscoe's statement that down through the years, despite the efforts of Ministers, a solution to this problem has not been arrived at. I would not say that the efforts have failed but they have not succeeded in the way I would like them to have succeeded. Of course, some industries have been established in the west. Some of them are in my own county but it is a matter of concern to me that this whole problem is passed over so lightly in the budget statement and I am not satisfied that the problem is receiving the attention it deserves.
I remember a time when such towns as Swinford, Ballina, Foxford, Claremorris and others were hives of business and when the rural population was adequate to keep these businesses going. In those days one could see the people coming to town with their horses and carts. The farmers did their business in the shops where they could obtain credit for short periods and until such time as they sold some of their produce. Of course, that pattern has changed completely and I am sure that as the Minister for Finance has driven through these towns he has observed that many of them show a lack of investment and employment. One can hardly imagine what it would mean to any of these towns to have employment provided for 300 or 400 people. It would give  new life to the towns but, unfortunately, it seems from this budget statement that there is no serious effort being made in this regard and it looks as if we are being given the cold shoulder. Recently I read in, I think, The Irish Times, that there has been an increase in recent years in the amount of foreign investment in this country. The article pointed out that in the years 1969 to 1971 there was a certain amount of investment here that might be referred to as “hot” money. However, despite the fact that this country has received much adverse publicity in recent times, because of the unfortunate trouble in the North, instead of money being withdrawn from the country, the reverse is the case. I suspect that there are certain people, particularly in the USA, who are responsible for that kind of investment here and that they are inclined to use this backdoor way of getting a foothold in this country so that at a later date they might export from here.
Deputy Briscoe said optimistically — and in this regard he is more optimistic than I am—he could foresee a situation in which we would have full employment. That might be going a little bit too far, but I hope he is right. This trend was mentioned at the very time when normally people would be withdrawing their money and getting out, and the reverse is happening here. I strongly suspect, therefore, that these people are hopeful, and so am I, that peace will descend on our country and that, following peace, prosperity can be brought about.
However, I am particularly concerned about the towns I mentioned and other towns in Connacht where there is and has been a colossal investment in housing, water and sewerage schemes, electric power and so on. It would be a tragedy of the first magnitude if these towns were let go into decay. Journeying around the country one can see depression in towns which were prosperous at one time. I should be glad therefore, if the Minister would have another look at the whole question of regional development about which he has not been too clear. The  Taoiseach or one of his Ministers said during the referendum campaign that details of a regional policy would be made known later. I sincerely hope that when these details are made known Connacht and particularly Mayo will not be forgotten as they have been down through the years.
There is an urgent need for the provision of employment in these towns if they are to be saved from ultimate destruction. A certain journalist who attends this House quite often referred in a book which he wrote to the death of an Irish town. I am not here to sell his book or to praise or criticise his journalism, but it is quite true that the town to which he referred, Charles-town, has all but gone to the wall. I told them at the church gate quite recently that as a first step towards saving their town they should vote “Yes” and that unless they did something to help themselves, by encouraging industry into the town, I could see no future for it. I said I would be happy to go with any Fianna Fáil Deputy or councillor to any Minister or Department to further that effort.
It should be remembered too, that there is a colossal investment in education at this time. One has only to go out early in the morning to meet bus loads of students going to national, secondary and vocational schools, to regional colleges and universities. The regional college in Galway city is nearing completion and it will be in operation shortly. I was in the university on Sunday last having a quick look around and there is general expansion there. The regional college in Sligo is also doing very well. New schools have been built in Swinford, and there are extensions all over the place.
Are we going to let this greatest of all investments, the investment in education, be lost or, worse still, are we going to send these people with their improved or advanced education across to England or America so that those countries will benefit from our investment at home? It would be wrong policy to do that. I give due credit to Ministers for Education, past and present. The late Donogh O'Malley when he was Minister for Education did a great deal for School transport,  as I said during the referendum campaign and on many occasions. My own family, living in a rural areas, benefited from that scheme. It was a great scheme for the poor man's child. One man told me he would have to buy three bicycles and that each bicycle would cost £20 but that he had not £60 for the three bicycles. I told him he might not have to buy them, that the transport scheme was coming. That man's children are now availing of this transport scheme and doing well at school.
There is room for expansion in the industrial field in the west of Ireland. Land is much cheaper and in many cases water and sewerage are already laid on. We would welcome foreign investment, particularly from the USA. As I drove around the industrial estate in Galway I could not help noticing the beautiful roads and buildings. These industries have gone through many difficulties and probably will go through more in the future. There are those who are very glad to stand up and shout about the one industry that may fail. I would be sorry to hear that any of them failed. I am glad to note from the Minister's budget speech that if certain industries are confronted with difficulties he hopes to come to the rescue with money and advice to save these industries. I am concerned with one in my own town, the woollen mills, which started off in this country in the days of British rule and carried on an export business. They are quite worried. I was told by senior members of the staff that while things are all right so far, they do not know what the position will be in the future. We do not want to see these industries disappear. It is unlikely that they will, but let us keep the numbers employed in them up to the highest possible level. It is remarkable that in Foxford, in which that industry is situated and in which many of the people there are employed, there was one of the highest percentages of “Yes” votes. It shows there was a certain amount of fear. I deliberately checked on that box to find it was the only one with that high percentage.
Mr. O'Hara: It is wonderful all the suggestions that can be made when one is out on a referendum campaign. Some of them may have some merit; others may have none. I agree with the Minister for Lands about the necessity to provide some kind of employment for those living on uneconomic holdings. People do not like being uprooted. Their relations are buried in the local graveyard and they do not like going far away. I remember an old man who said to me that all belonging to him were buried in the area and he did not like leaving it because of that. They should not have to leave. These are the people who have the real Irish culture. Even in my own town of Foxford there is plenty of Irish culture. These people deserve special treatment and consideration.
When the Minister introduced his budget he was not 100 per cent sure that the people would vote “Yes” in the referendum to the extent to which they did. But he was optimistic. It may have been embarrassing for us to play the part we did but it was our duty to support the referendum because the issue was so important. We know how far we can trust the British. On one occasion the advice given by the late Winston Churchill with regard to Irish agriculture was: “Get as much as you can as cheap as you can from those boys.”
Mr. Nolan: I should like to be associated with those Deputies who congratulated the Minister on this excellent budget. Because of the referendum campaign the budget did not get the publicity it would normally get but, looking back on past budgets, this budget must go down as the best budget ever introduced because never before was so much given without taking anything.
Mr. Nolan: Very often the implications of the capital budget are forgotten because of emphasis on increases in social welfare and so on. The most important part of this year's budget is, in my opinion, the increase in the capital allocation of something in the region of £58 million. This will mean the erection of more houses, hospitals, schools and so on, as well as increased farm grants. This in turn will lead to employment.
Those of us who are members of local authorities are only too well aware of the problem of rates. Had the Minister not given what he did to the Minister for Health the rate demand would be even bigger than it is. Because of the courageous decision of the people to go into Europe the Minister next year will save £30 million or £40 million on agricultural subsidies.
Mr. Nolan: I ask the Minister to use a large part of this £30 million or so for the relief of rates. Certain concessions have been given to certain types of farmers, to the aged, the poor and the sick. The ordinary ratepayer is getting no relief and the burden is becoming intolerable. On a valuation of £20 a ratepayer will be asked to pay on average £15 more in rates this year. There is, too, the problem of differential rents. The rent may be £1.50 and the rates 90p. Those in the lower income group are more deeply affected than those in the higher income group because the percentage of rates in the lower income group, when one combines rents and rates, is far higher than it is in the higher income bracket. I gave an example of a person paying £1.50 rent and 90p rates. Differential rent is based on income. As the income  goes up, the rate part of the payment is not as severe.
There are some aspects of the current budget to which I should like to refer. Take the case of a widow whose late husband had been an old age pensioner. He would have qualified for free television licence, free travel and the other social welfare benefits given with the old age pension. On the death of the husband the widow loses all these benefits. I would ask the Minister to consider that matter.
It would be a very good thing if free travel were extended to widows with families. The young widow with a family would be very greatful if she could take her family on outings during the summer. Free travel would mean that the cost of the outings would not reduce her weekly income.
The points I have made are small having regard to the massive size of the budget. I would ask the Minister to consider them. Deputy O'Donovan suggested that I was speaking about the future. I am speaking about the future. The 1972 budget was a great budget but we in Fianna Fáil are always looking to the future and Fianna Fáil Deputies, when talking to Ministers, either in private or in public, refer to these matters.
Mr. Nolan: That is one of the reasons why the Deputy is sitting  where he is now and one of the reasons why Deputy O'Connell said on television last Saturday night that he would never see the day when Labour would be the Government. How right he was and how honest he was to say it.
Now I come to the question of the allowance for dependent relatives. Last year a person with a dependent relative received a tax free allowance of £60 and, in case of two dependent relatives, £120. A number of persons have told me that the allowance in the case of two dependent relatives has been reduced to £103 in certain cases and the £60 given in respect of one dependent relative has been reduced to £40. This is a matter that I am taking up with the local inspector of taxes. There is no change in the financial circumstances of the household except that there was an increase in the social welfare payment. I mentioned a similar matter to a former Minister for Finance and suggested that if the social welfare benefit was increased the dependent relative allowance should be correspondingly increased. It is most unjust and unfair that the breadwinner, instead of getting an increase in the dependent relative allowance, should suffer a decrease. I can bring evidence of this to the notice of the Minister.
I wish once again to congratulate the Minister and the Government on an excellent budget. I wish also to congratulate the people. We always knew that the people had courage and when they are asked to show that courage they do so, as they did last Wednesday. It was a great pity that some public representatives failed to understand the people. When the people are asked to take a courageous action they will always do it.
Mr. McLaughlin: I had no opportunity of preparing my speech because of the referendum. The Minister did well in his budget, having regard to the amount of money at his disposal. The Minister is tied by the amount of money available. He did a good job.
One aspect of the budget that has  been brought to my notice is the fact that old age pensioners must wait until October for their increase. The cost of living has gone so high that it is difficult to have enough money to meet all the demands. I was asked to refer to this aspect of the budget. Many old age pensioners will have passed on before the increase comes into operation. If a Minister for Finance were courageous enough to put social welfare increases into operation immediately following the announcement of the budget, the precedent would be followed on all future occasions. If that were done, it would give a new lease of life to some social welfare recipients.
In regard to widows, I have come across cases where women have had to move, for one reason or another, to places just across the Border. Some of these widows are told that they cannot get the widow's pension even though you could almost throw a stone across the Border, or at least drive across in a short time to where they are living. They cannot get the pension by writing for it or in any other way. I have in mind the case of a woman from the Kiltyclogher area, in the Donegal/Leitrim constituency, who went from that area to some town not far from Enniskillen. Her health is poor; she lives with her married daughter but she cannot get her widow's pension. Such cases should be examined with a view to making it easier for those women to get their pensions. This lady's doctor has said she is not fit to worry about these things and she is unable to travel to collect the pension. I shall bring this to the notice of the Minister for Social Welfare and I hope the Minister for Finance will be able to help.
I am also concerned about roads, housing and drainage. I come from a farm in County Leitrim and I know something about problems under those headings. We have some very big road schemes being carried out but in some cases we consider that there are schemes which could be left undone until the same amount of money has  been spent on county roads instead of main roads so that the minor roads would be at least rolled and tarred. A huge amount of money is being spent re-routing main roads but we believe that without changing the routes, traffic could be adequately catered for. I have never seen an accident on the roads to which I am referring. The amount spent in one year on these very expensive schemes would bring minor roads up to an acceptable standard. Nothing makes people more discontented at present than a gravelled road leading to their homes. Repairing it is only a waste of money under present conditions. Road-men are well paid today, with £20 a week or more, and many of them are employed on those roads but it is well recognised, by our engineers particularly, that with today's traffic of cars, tractors and machinery, that a week after repairs have been made, these roads are back to their original condition. The engineering staff have costed this—the cost of the material, the cost of producing and delivering it—and it amounts to big money. If the Department of Local Government could, under the regulations, forget about changing routes of main roads and spend the same amount of money on minor roads in many cases it would result in having more contented people. The cost of maintenance afterwards might fall heavily on the Department but it would still be money well invested because money spent on these inferior roads is almost wasted; it can make them passable but no more. Therefore, I ask the Minister to consider this problem seriously.
Another problem arises in my constituency in that Northern Ireland can export large quantities of road material and building material to the Republic but we cannot export to Northern Ireland. The Government should examine this matter very carefully. When the Common Market, and all that goes with it, comes into operation this problem may be sorted out. Will we be free to export road and building material to Northern Ireland? This seriously affects employment because in north and south Leitrim limestone quarries, in  many cases, are closed. Were it not for one contractor from Sligo practically all of them would be closed. I hope that the people's vote last Wednesday will enable the position in regard to road and building materials coming from Northern Ireland to be remedied. Many contractors feel very sore about this. They cannot possibly compete in the production of material against Northern Ireland contractors who are very highly subsidised by the millions of pounds pouring in there. According to the Department, our local authorities are bound to accept the lowest tenders, irrespective of the source.
Mr. McLaughlin: I had intended to mention this at some stage and I took the present opportunity. Housing grants should be increased. It is a long time since there has been any increase in grants for the erection of new houses. We are looking for increases in the grants towards the erection of houses. There has been no change in reconstruction grants. A sum of £100 is given towards the reconstruction of a three-roomed house and £120 for a four-roomed house. Grants of £140 for the reconstruction of five-roomed houses are just not given. A sum of £208, inclusive of supplementary grant, is still only given for any job. One may ask a contractor to do a reconstruction job and to install a water and sewerage system and the bill could be £2,000 but the grant remains at £275 each way. The grant is only a fraction of the total cost. I know that £70 million for housing has been mentioned.
A superintendent was transferred into my area from Dublin. He tried to find a house in three towns but he could find no suitable accommodation. There is a housing famine in my area. The Department of Local Government have to be satisfied with the report from the local authority on the housing needs of an area before sanction is given for the provision of housing. If the Department of Local Government and the local authority  provided houses they would be occupied. Wages have increased and people are prepared to pay rent. People have cars and are prepared to travel five or six miles to and from their work.
In centres where there is good employment young married couples are paying £5, £6 or £7 per week in rent for one or two-roomed flats. Something should be done to relieve that situation. Great progress has been made in Sligo. We have a fine factory there — SNIA — with a considerable labour force. People are getting married at a younger age than they did ten years ago. The Department of Local Government and the local authority cannot cope with the housing situation. When houses are being allocated in Sligo the county manager and the MOH are pestered by people. Only a limited number of people can be accommodated.
It is desperate to see young people struggling to pay over £5 per week from their weekly earnings. They cannot carry on easily. We are often told that the delays are connected with the housing inspector. The number of such inspectors should be increased. These inspectors should try to call on the people more quickly.
Mr. McLaughlin: There are too long delays. There is a delay until the inspector comes to make an estimate, and another delay until he comes to pass the work. I wish to say a few words about the Land Commission.
Mr. McLaughlin: I had a little to say about drainage. The Department of Local Government have been very generous with Leitrim and Sligo. We still have a waiting list of 800 people anxious to avail of local improvement scheme grants. Such money is well spent. We got about £100,000 in Leitrim.
There are many people who are discontended over a scheme which, while generally satisfactory, has one flaw. In the west the majority of the farmers are small farmers. According to the beef incentive scheme the first two cows do not qualify for a grant.
Minister for Finance (Mr. Colley): I am naturally very pleased that this year's budgetary strategy of planning for a deficit has met with general approval and that it has been generally accepted. It means that the budget tackles in a reasonably imaginative way the problems which confront our economy this year. For some time we have been faced with a combination of high unemployment, high, though moderating, cost and price inflation, a large external deficit, slow growth and the accumulation of excess capacity.
Earlier this year it looked as if the stimulatory measures which were taken in the autumn last year and the further measures announced in January this year would soon see us back on our potential growth path. However, subsequent events in Northern Ireland damaged the prospects for tourist receipts this year and the outlook altered to one in which it seemed to probable that slow growth would continue again this year unless a further and substantial stimulus were given to the economy.
 The Government decided that the most effective stimulus in present circumstances would be a planned deficit on the current budget. This, as the House knows, is the first time this was done. As I have said, I am particularly pleased that the basic strategy involved has been accepted and approved on all sides of the House. The extra money pumped into the economy in this way, that is by virtue of the planned budgetary deficit and, indeed, on foot of the earlier stimulatory measures I have referred to, is designed to give a sizeable boost to demands and a fillip to business confidence so as to get the economy moving again and, of course, in this way also to prepare for the opportunities which membership of the EEC will offer us. The budget measures are intended to achieve an increase in annual growth of about 1¾ per cent by mid-1973.
Mr. Colley: This increase of 1¾ per cent in the additional growth rate achieved by mid-1973 would restore us to our potential growth path of 4 per cent or more per annum. I would like to emphasise again that a calculated risk is being taken in adopting this approach, a risk, as I said in the budget speech, that I may well be fuelling the fire of inflation rather than the engine of growth. There is a considerable risk in one sense that failure to observe reasonable restraint on the incomes front could lead to this extra money simply being used up in increased wages, not in the creation of new jobs but in the rendering of existing jobs redundant because of lack of competitiveness.
This is a risk but I do not think, frankly, that it is as great a risk as it may seem to some people because I believe by now most of our people have learned the basic facts of economics. They know this risk is there and they recognise that it is in the interests of every one of us, whether we are in a job or whether we are unemployed at the moment, that we should get growth in the economy as soon as possible and that to do that reasonable restraint on  the incomes front has got to be observed.
I would now like to deal with some of the various points that were raised in the course of the debate. Firstly, on the question of buoyancy in revenue, the suggestion was made that the budget deficit for the year is likely to be considerably less than the £27.8 million because, it has been alleged, first, that inadequate allowance for buoyancy has been made in the estimate for tax revenue for this year and, secondly, because of the Estimates do not take account of the boost given to the economy by the budgetary measures.
The first point seems to me to be based on a misconception of the notion of buoyancy which does not, as many people seem to think, simply consist of the difference between the outturn figures for one year and the pre-budget estimates for the following year. To arrive at a true figure for buoyancy, the estimates must be adjusted to take account of tax changes, the full impact of which on the revenue may not be experienced in the year in which they are announced. This is a reasonably common occurrence. In other words, I might put it this way, that buoyancy calculations are based on a year to year comparison at unchanged tax rates.
On this basis I have made an allowance of over £64 million or more than 11¼ per cent for revenue buoyancy in the current year. In all the circumstances, I think this is a reasonable estimate and it can be compared with an average of about £54 million over the past four years. When account is taken of the uncertainty about the general economic climate this year and, in particular, the possibility of a reduction in tourist earnings and its direct and indirect impact on receipts from the main customs and excise duties and the sales taxes, it must be conceded that this is a reasonable provision for buoyancy.
As to the second point, the criticism that the estimates of revenue do not allow for the boost being given to the economy by the budgetary measures, I think Deputies will recall that I indicated in my financial statement that, to the extent that the action taken in  the budget to stimulate the economy achieves its objectives, there will be a consequential increase in revenue which, of course, in turn, will mean reducing borrowing below the sum that I indicated we would have to borrow. I referred to this specifically in the budget statement. However, I think it should be clear that I could not, at this stage, quantify this factor, certainly to any great degree of accuracy.
Mr. Colley: The Deputy will appreciate that when I referred to an increase of 1¾ per cent in growth I referred to it being achieved by mid-1973 which is beyond the end of the financial year we are dealing with. In other words, the impact in regard to revenue buoyancy is not likely to occur very much in the earlier part of this financial year. I agree that it should be taking effect in the second half of the year but its major impact is likely to be occurring towards the end of the financial year and thereafter.
Dr. FitzGerald: Would the Minister not agree that if we are going to have deficit budgets for some time it would be necessary now to build into them, despite the difficulties of calculation, some attempted estimate of the effect on buoyancy? It is done in Britain.
Mr. Colley: We have not done this before. Secondly, I would not like it to be thought that we were likely to develop a continuing practice of budgetting  for a deficit. This should depend on the economic circumstances at the time the budget is framed. I certainly would not like the idea to go abroad that, after this year, we are likely to go on budgeting for a deficit as a matter of course. I am sure Deputy FitzGerald would agree with me.
Dr. FitzGerald: The Minister will agree that it is not a question of a deficit or a surplus. It is a question of when the budget is intended to have an economic effect on growth either up or down, that the consequences of that on the revenue ought to appear on the face of the budget. They never have. It is now becoming more important because of the magnitude of the amounts.
Mr. Colley: I agree. They never have, but I would prefer, particularly in the light of the uncertainties to which I have referred, to just see how it works this year and we could have a look at it then in future.
Mr. Colley: The servicing of public debt was referred to. There were a number of references made to borrowing and the cost of servicing the public debt. The cost of servicing the public debt is estimated at £106 million this year which is a rise of £7 million on the outturn for 1971-72. This is due mainly to the increasing size of the national debt which has been incurred principally to finance the Government's investment programme. In addition, money which was borrowed in earlier years at comparatively low rates of interest has been falling due for repayment and must be replaced by funds which are raised at the much higher interest rates now prevailing.
It would, of course, be wrong to regard debt servicing solely as a burden of £106 million on the taxpayer. Looked at from the financial viewpoint, it must be remembered that about a quarter of it is in respect of sinking funds for redemption of debt. However, if the sinking funds are not required immediately for redemption purposes they can be used temporarily  to finance further capital expenditure and thus reduce our other borrowing requirements. It should also be borne in mind that the Exchequer expects to receive £30 million this year in respect of interest and dividends on advances made by the Exchequer out of borrowed moneys. I am mentioning these facts because I think it necessary to take these into account if one is to get this figure of £106 million into some kind of perspective.
Debt service charges represent in some measure the cost of the enormous development which has taken place in this country over the past few decades. The huge investment programmes which made possible the consequent rise in non-agricultural employment and the general improvement in living standards could not have been undertaken without Government capital spending and the consequent borrowing. All of these factors, I suggest, should be taken into account in assessing the impact of borrowing and, in particular, of this servicing of the public debt.
There was criticism from some of the benches opposite of the proposed level of borrowing this year. The funds required this year by the Government are needed mainly for investment and, again, without this money many very desirable projects just could not go ahead. The large public capital programme which is such a major factor in promoting growth would just not be possible if it had to be financed out of current revenue. while borrowing may be criticised, I have noticed that there have not been many suggestions—I am not aware of any suggestions—as to those investment projects which should be cutback in order to reduce our requirements. Furthermore, it should be recognised that the money borrowed represents the Government's investment in the Country on behalf of the people and it must be remembered that there is a substantial financial return on these investments. As regards the residual borrowing requirements this year from the banks and from abroad, I should point out that if we lean too  heavily on domestic sources we are in danger of depriving the private sector of necessary capital. The extent to which we will borrow this year is still under consideration by my Department in consultation with the Central Bank but I think it will be clear that we should not rely too much or to too great an extent on foreign borrowing.
Another question raised was the rather hoary one of the repatriation of external assets. It was suggested that we should have met this year's financing requirements by repatriating external assets rather than borrowing abroad. I should like to remind the House that the external assets held by the Central Bank represent this country's official external reserves. They stood at £407 million at the end of March. They are held to finance fluctuations in external transactions and to tide the nation over difficult periods in international trade and payments. The greater the dependence on foreign trade the greater the need for a substantial cushion of reserves.
There is no way in which our domestic financing needs could be met directly by using external reserves. There has been a good deal of talk, and not all of it has been well informed, about external reserves. We should understand that external reserves just cannot be brought home and handed over to the Government just like that. Strictly speaking, the only way in which they can be repatriated in any practical sense is by the import of goods and services and, to the extent that these imports lead to a deficit in the balance of payments, the external reserves will be drawn down.
Borrowing by semi-State bodies for the purchase of capital equipment is part of the reason for the high level of external reserves. For example, Aer Lingus borrowed abroad for the purchase of two Jumbo jets. As these purchases will be paid for over the next few years, our external reserves will correspondingly be reduced. On the other hand, private capital inflows are also responsible for a large part of the increase in our external reserves. Our policy on the use of these is clear. We allow for an excess of imports over  exports so that additional capital goods can be imported, in this way raising domestic investment and the rate of growth above the levels which domestic savings on their own could support.
I pointed out in the budget statement that the quickening of economic activity which the budget is designed to promote is likely to generate a substantially increased demand for imports and the balance of payments deficit will, therefore, have to be watched very carefully. We are fortunate to have sizeable reserves at this time. Prudently used, they can help us to achieve the faster growth we need. Indeed, if we did not have these very substantial external reserves that we have, the possibility of using the strategy which we have used in this budget might well not be open to us at all.
Another matter to which some Deputies referred was the item of the surplus income of the Central Bank to which I referred in the budget statement and, indeed, am using to bridge some of the gap emerging on the current budget. The £7 million surplus of the Central Bank is not related in any way to the bank's new powers under the 1971 Central Bank Act. Under the Currency Act, 1927, the surplus income earned by the Central Bank on its operations is payable to the Exchequer in accordance with the directions of the Minister for Finance. This surplus has been increasing in recent years because of the expansion of the bank's activities and because of the higher interest yields and now obtainable.
Up to now, the arrangements in force provided generally for the payment to the Exchequer of the surplus income three years in arrears. For instance, in the year ended 31st March, 1971, we took in an amount equivalent to the surplus income of the Central bank for the year ended 31st March, 1968. Thus, a balance accumulated in the Central Bank and it is this which I propose to take in, in full, this year. It is, of course, an exceptional once-and-for-all transaction, as I have already indicated to the House. For the future, only the annual  surplus will be available and it is the intention that it be transferred to the Exchequer in full in the year following that in which it is earned.
There have been references in the course of the debate to value-added tax and its possible effect on prices. As the House knows, the structure of rates chosen for the value-added tax has been selected specifically to correspond as closely as possible to the rates at present operating under wholesale and turnover taxes which value-added tax is replacing. This has been done specifically to avoid any impact on the level of prices generally. While there will be some minor price changes here and there, they should balance out in the aggregate and the total Exchequer yield from the new tax is estimated to be the same as that from the present wholesale and turnover taxes.
As regards food and clothing and other basic necessities, the rate of value-added tax, 5.26 per cent, will be the exact equivalent of the present effective rate of turnover tax and certainly can give no grounds or excuse for increases in prices of food, clothing and other basic commodities. The House will be aware that the National Prices Commission indicated that they propose to monitor a wide range of prices during the two months preceding and the two months following the introduction of value-added tax. I am quite sure that they will recommend swift action by the Minister for Industry and Commerce should they find that the tax is being used as a cover for unjustified price increases.
I think the House should know that the experience of other countries who have adopted value-added tax has been that price increases are not a problem where, as is the case here, the incidence of sales tax remains largely undisturbed. That is not the experience where there has been a substantial change in the incidence of tax. Where the situation is, as it is here, with the incidence remaining the same substantially, the question of price increases arising out of the introduction of value-added tax has not been a problem.
When I was introducing the budget  I pointed out that there were arguments against an expansionary budgetary policy as well as in its favour. I mentioned that the rate of price increase was still high and that increases in labour costs were responsible for a signaficant part of this inflationary pressure. Nevertheless, with high unemployment, and with the economy running at well below its capacity for the third year in succession, it was decided that budgetary policy should be primarily directed at improving the growth performance of the economy.
At the same time, I pointed out, very clearly I think, the Government's concern at the current rate of price increases and I spelled out the objectives to be borne in mind on the incomes front, namely, that settlements under the present agreement should conform fully with its letter and spirit and that the new national agreement should aim at doing better than its predecessor in moderating the upward trend in costs and prices. I referred to the valuable work being performed by the National Prices Commission since their establishment last October. I mentioned that the commission, in issuing their recommendations, try to ensure that the increased costs will be offset, as far as possible, through improvements in productivity and efficiency.
In order to ensure that non-wage incomes will be subject to the same sort of discipline as wages and salaries, the Government have introduced the Prices (Amendment) Bill to strengthen price control and to extend its coverage. While the Government have been endeavouring to moderate the rise in prices, I admit that there has not been the reduction in the rate of the increase of consumer prices which we would certainly have liked to see. One must, however, be realistic about the present situation and not expect an immediate cessation to a problem that has been world-wide in recent years.
There are some favourable indications. Allowing for seasonal factors, the quarter to quarter increase in  consumer prices has shown a slackening since the third quarter of 1971. Also, there was a sharp decline in the rate of increase in industrial earnings in the last quarter of 1971. If this trend continues, a faster deceleration in the rate of increase in prices should result. There is no justification for any suggestion that inflation is again accelerating.
Dr. FitzGerald: Would the Minister not agree that in the past his criterion has been year-to-year changes in the index and that this shows a bigger indication in the year ending in February than in the year ending in November or August?
Mr. Colley: ——a situation like this which has been going on over a number of years throughout the world it seems to me that that is unrealistic and, indeed, probably old fashioned, rather like the idea of budgeting from year to year to balance, no matter what. To say that you must take one year with the other and ignore what are the trends in between.
Mr. Colley: Year to year gives a trend, but quarter to quarter gives a more accurate picture of the trend in between the years. What we are concerned with is the question of what way is the trend. I know Deputy FitzGerald is not happy that I am able to point out that what we are doing is succeeding.
Mr. Colley: It is too bad if Deputy FitzGerald does not like it but I am  delighted that the steps we are taking are having effect and that people can hope for a decrease in the rate of price increases to which we have been subjected in recent years.
Dr. O'Donovan: A much more important point than that made by Deputy FitzGerald is that last year the Minister expressed serious concern regarding inflation but that this year he is contributing a good deal to inflation.
Mr. Colley: I would not like anybody to get the impression that I am not concerned about inflation. I laid considerable emphasis on this matter in the budget statement and stressed it again this evening, perhaps before the Deputy came in. I stress again that the whole strategy of this budget will have failed, which is not of any great importance but for its consequences, if inflation is not reduced gradually during this year. If inflation is to run wild the consequence of what we have done in this budget will not be to create new jobs but to pay some people in existing jobs vastly greater amounts of wages which will be negatived quickly by increased prices but which will make their firms so uncompetitive that many people at present in employment will lose their jobs. Inflation is a vitally important problem and Deputy O'Donovan knows as well as I that, like many other countries, we are suffering from this now old hat but yet relatively modern phenomenon of stagflation and it is in an effort to deal with both of these problems that this budget was conceived.
Mr. Colley: I will explain it again. The facts are that credit unions were always liable to tax under our general tax law and, following the passing of the Credit Union Act of 1966, under which they were required to register as industrial and provident societies or as co-operative societies, they became liable, in common with co-operative societies generally, to income tax and corporation profits tax on their surpluses. They were liable under the general taxation law and that law was not imposed by me. It goes back much further.
Mr. Tully: It does not go back all that far. I was on the National Co-operative Council when they passed a resolution to the effect that they would recommend that co-operatives should be taxed. I resigned then.
Mr. Colley: I am talking about the general tax law. The Credit Union Act was introduced in recognition of  the very important social role of credit unions and to assist the credit union movement to maintain its full potential. It was in recognition of this important social role that I proposed that they should be exempted and, as I have indicated, that the exemption would be effective from the date of their registration as credit unions. Therefore, the position is that, far from my trying to tax credit unions, as suggested by Deputy Tully, they were always liable to tax under the law as it stands and I am proposing to change the law so as to exempt them.
Mr. Tully: That is not the position. While they were considered liable for tax they were not paying tax as the Minister announced at some of his Saturday night meetings and as was reported in the papers the following morning. The Minister said it was proposed to consider taxing credit unions.
Mr. Colley: Let him have another look at it and he will find that I was giving consideration to the liability of credit unions for tax as it existed and the result of that consideration is what is in this budget. The Deputy misinterpreted the statement because credit unions were liable to tax at the time and the consideration that was being given was whether they should continue to be liable to tax.
Dr. O'Donovan: There is a very close resemblance here. The Minister is aware of the circumstances which give rise to my asking this question. I hope he will not think I am making a political point when I say that it is necessary that they should be exempted from income tax because of the enormous increases in the cost of hospitalisation that have come about through the efforts of his colleague, the Minister for Health.
Mr. Colley: If the Deputy means that the increased costs have come about because of the better services and better pay of people involved in the health services, I will accept that. However, that is not the point he is making. Let me say that I have a very considerable admiration for the role of the Voluntary Health Insurance Board.
Mr. Tully: I do not wish to interrupt the Minister, but in regard to the credit unions, if what he says is true can he tell us why a number of organisations, including members of his own organisation, requested him not to collect tax from the credit unions?
Mr. Colley: I think Deputy FitzGerald is not with us at all in this. Maybe Deputy FitzGerald would take a little time off to have a look at what the real position is and then talk to us about it. Maybe I had better explain in words of one syllable to the Deputy——
Mr. Colley: The Deputy will find that this is the position, and that being so, it was in that context that I made the statement that I was giving consideration to it. I have asked the Deputy if he will put down that question. Are we on the record?
Mr. Colley: While a number of Deputies welcomed the income tax reliefs provided in the budget, some of them expressed concern that the wife's earned income allowance was not increased because they felt that the tax code bears harshly on married women who take up employment and that this causes a shortage of labour in certain sectors. At present, the allowance is £74 and, in fact, it was substantially increased, by £29, in 1970.
Mr. Colley: I think we need to give a little more thought to this problem. I am not absolutely satisfied that the existing tax position of working wives deters women from working after marriage to the extent that is sometimes suggested. It is, of course, a factor and with certain people it does operate very much but there are a number of others with whom it does not operate nearly as strongly as is suggested.
Mr. Colley: There are other factors in it—the question of social attitudes, traditions and working conditions have to be taken into account. It is, I think, a position that is changing as we go along, but it would be a mistake to assume the extent to which this allowance and its alleged inadequacy operates to deter married women from working. I think we must recognise that it is being exaggerated to some extent. However, I would suggest that the recommendations of the Commission on the Status of Women will help to clarify some of this position, but there is another factor in this of which I want to remind the House, that is, that one of the strong arguments used, and used to me in pre-budget submissions, deputations and so on, particularly by industrialists, is that the relatively low level of this allowance means that they find it very difficult to get women workers. I want to remind the House that there are areas of the country which have a surplus of women workers which would be delighted to get a job for them and that some of the factories which suffer from this problem could well consider building a branch factory in an area of the country where there is an availability of women workers before they try to hit on the easy solution of increasing this allowance. It is one of the factors but not by any means the only factor to be considered and we ought not to lose sight of that.
Mr. Colley: Last year the sum of £6½ million was included in the pre-budget estimates and, in the previous year, a sum of £10 million was provided in the budget to meet estimated public service pay increases. In this year's budget, we have made provision  in the ordinary Estimates for the first phase of the 13th round. However, we did not make any provision in the ordinary Estimates for the second phase, that is, operating from 1st January next to 31st March, that part of the financial year. We did not make any provision in the Estimates for this because——
Mr. Colley: Not in the public service, I think—the vast bulk of the public service anyway. We did not make provision for this, primarily because of the difficulty of estimating accurately the cost of this second phase for those three months because this depends partly on trends in the consumer price index, but apart from that aspect of it, the second phase, for the three months, there is a number of claims from public service groups which are still under consideration in accordance with the provisions of the national agreement. These claims relate to anomalies between different groups of employees whose rates of pay in the past have been related. A number of these are in the pipeline; they are in different stages of negotiation or conciliation.
Mr. Colley: They are not being forgotten. At the time of the preparation of the budget, it was simply impossible, and indeed as of now it is still impossible, to say with any degree of accuracy, or with sufficient accuracy, just what would emerge, but in an effort to ensure that we made reasonable provision for both of these aspects, the second stage of the 13th round and these anomaly claims, we provided a figure of £17 million.
I can only say to the House that, on the information available to me, this is a prudent reserve but it is no more than that. There are certain circumstances, which I am not going to spell out in the House for obvious reasons, in which it could be an under-provision. In my opinion on the information available to me it is a prudent figure for us to provide. I attach considerable importance to trying to  provide as accurately as possible for the public service pay in the budget because failure to do so can lead us into supplementary budgets and the House can rest assured that no effort has been made by me to try to swell this figure excessively. It would have suited me far better if that figure had been smaller, but the figure was arrived at on a prudent estimation of the likely results of the factors I have mentioned.
It was stated by some Deputies that we did not do nearly enough for agriculture and the farming community in this budget. The budget provision of an extra £1.8 million is simply the latest of a comprehensive range of Government measures which have been implemented over the past six months. From December 1st last suppliers of milk to creameries received an average increase in price of 2p per gallon, which is worth over a total of £10 million a year to producers. Then the carcase meat industry received an increased subsidy and a loan likely to cost together £2 million in a full year. Capital grants were increased for farm improvements and for disease eradication at a cost of £4 million. Measures to benefit small farmers and crop growers were introduced and, finally, the Agricultural Credit Corporation increased their lending from £6.3 million to £13.5 million, with a further rise this year to £18 million.
The Government's aim in introducing these measures was to improve farmers' incomes and productivity and to prepare the industry generally for EEC conditions. Rather than wait until budget time, the measures were introduced as the need for them arose so as to enable farmers to plan ahead effectively. This is an innovation, if you like, but it is one which I think is well worthwhile and is far more realistic in relation to farmers' requirements, because the budget is prepared in relation to our financial year but the farmer's year is related to the seasons. The time that he wants to know what he is getting so that he can plan ahead is towards the end of the calendar year, and we have been trying to move in that direction in order to assist farmers to plan ahead.
Mr. Colley: They have too much sense for that. In addition to the items I have mentioned, we did, of course, provide in the budget for sectors which needed additional assistance. Pig rearers were the principal beneficiaries with a rise in guaranteed prices of pigs of 60p per cwt. at a total cost of £1 million. There was a sizeable allocation to benefit sheep farmers, and sums were devoted to horticulture, to small farms and to the implementation of EEC farm policy.
In 1971 the volume of gross agricultural output, including livestock changes, rose in real terms by 6 per cent. The growth in output was particularly notable in our main enterprises of cattle and milk but it was also apparent in other sectors. Milk intake at creameries reached a record of 533 million gallons with a return of £67.7 million to producers. Cattle stocks in June last were the highest ever recorded, over 6 million. Cattle prices rose by £1 a cwt. and output increased from 1,273,000 to 1,437,000.
Mr. Colley: This increased output was encouraged by the fact that export markets for dairy products, cattle and beef, were particularly buoyant. The indications are that, in the past year, the net income of the agricultural industry rose from £203 million to £228 million, an increase of £25 million. The response of the agricultural industry to this favourable climate augurs well, I believe, for its prospects under EEC conditions. As the recent measures to assist the industry become fully effective and as the industry increases its own investment in anticipation of entry to the Community I believe we can look forward to a further year of prosperity for farmers.
Again, on the EEC front, I should like to mention two aspects on the agricultural side, namely, land purchase  and farm structures which were raised during the course of the debate. Due to the—I am trying, now that the referendum is over, to choose a word that is not too offensive to my colleagues on the Labour benches—misrepresentation of facts mounted by some members of the Labour Party and their associates during the referendum campaign, I think these matters naturally caused some fears and anxieties in certain sections of the community and I should like very briefly to set things straight. The position in the EEC in regard to the purchase of agricultural land by non-nationals was set out clearly in the Government's recent White Paper on the EEC.
Mr. Colley: The directives which have been adopted up to date in this area by the Community are, as the Deputy says, listed in the White Paper in paragraphs 3.46 and 3.47. They are very limited in scope and would not pose any serious problems whatever for us in this country.
Mr. Colley: Agreed. That is the present position. However, the council has got a draft directive before it since 1969 which, if it were adopted, would, in effect, give nationals of a member state the right to acquire agricultural land in another member country on the same conditions as nationals of that country. I want to stress—and this has been stated on more than one occasion by my colleagues in the Government— that we have received assurances from the Community that this directive will not be adopted before our accession to the Community. Thereafter, this country as a member of the council, will have a full say on any action which might be taken on this draft directive and will thereby be able to insist that our interests in this matter are taken fully into account and protected.
Mr. Tully: The Minister is hardly being fair to himself. Every country  will be anxious to protect itself, but he is talking about the Rome Treaty and when he quotes what is laid down in it surely he must know that we cannot get a special arrangement for ourselves.
Mr. Colley: I am saying that we have been assured that that will not be adopted before our accession. Therefore, if it comes up for adoption after we accede, then we will have the right with every other country—and as the Deputy says every other country will want to protect its own too—to ensure that our serious national interests are protected in whatever step is taken by the Community, and until a new decision is made the position is, as the Deputy agrees with me, no real problem to us at all.
Dr. FitzGerald: No, no move, but the Minister must not over-state the  veto. It is there for the time being. There is no immediate prospect of its going, but it could go some time in the future.
Mr. Colley: Really, at this stage, I do not think we should be going back over the propaganda of the referendum. I am trying to get the facts on the record for those of our people who are concerned about this. I am merely spelling out what the position is.
With regard to the question of land structure and farm improvement, I am sure Deputies are aware that a number of very important proposals in this area were recently adopted by the Community. The more significant can be  summarised as follows: a variety of aids and incentives, such as interest rebates on investments, guarantees on loans and interest payments, priority in the allocation of land becoming available, and so on. These various aids and incentives will be made available to those farms which can, on the basis of a six-year development plan, achieve an income comparable with that obtaining from non-agricultural employment in the area concerned, taking account of the farmer's investment. This approach is an extension of the lines we have been following in our own small farm incentive bonus scheme and which is meeting with such notable succes. Naturally enough, there will be some farmers who, because of old age, or for other reasons, will not be willing, or indeed able, to undertake a farm development plan. There are two courses open to such farmers. They can stay on in farming and avail of the higher EEC farm prices or, if they are in the age group of 55 to 65 years, they can either sell their land to a land purchase agency, such as the Land Commission, or they can sell or rent their land to another farmer who is undertaking a farm development plan. Farmers who dispose of their farms in this way will get the full purchase price for their land or the full rent, as the case may be and, in addition, a pension of about £250 a year or £375 a year for a married man.
Mr. O'Hara: On a point of clarification, will the Land Commission be in a better position financially than in the past, when they have paid niggardly sums for land? Will funds be made available from EEC sources to help the Land Commission to pay a proper price for the land?
Mr. Colley: I think the Deputy will find that the Land Commission, and a great many of the questions arising here from time to time confirm this, may well have too great a bank of land, if you like to call it that.
Mr. Tully: There are a great many cats. Would the Minister say if it is correct that when a farmer leaves his land and gets a pension, when he reaches old age pension age the amount of the old age pension will be deducted from the amount he will get? He can only get a pension which amounts to a certain sum and he cannot draw an old age pension plus a pension from the Land Commission, or whoever it is pays it. Is that not so?
Mr. Colley: We are talking about the man who either sells or rents. He gets either the full purchase price or the full rent and, in addition, he gets this pension during the time he is in the age group 55 to 65. This is before his  old age pension entitlement and he gets it over and above the purchasse price or the full rent.
Mr. Colley: I have outlined briefly what is involved. Deputies will note these measures involve extensive changes compared with the proposals for structural reforms which were originally proposed in the Mansholt Plan in 1968. Of particular interest to this country is the fact that the only criterion of viability now is that of achieving comparable income and this is broadly similar to the Government policy outlined in the Second and Third Programmes of maintaining a reasonable relationship between farm incomes and those in other occupations. No particular size of farm is specified as a precondition for receiving aid. Furthermore, the options available to farmers will be entirely voluntary. There is no question of any farmer being forced out of farming. Finally, taxpayers will be relieved to know that 25 per cent of the cost of most of the aids and incentives will be met from Community funds.
Mr. Colley: As I say, a contribution of 25 per cent towards the cost of most of these aids and incentives will be made by the Community but this contribution can be as high as 65 per cent for certain areas, such as pensions, in those areas where the dependence on agriculture is higher and the output per capita is lower than the Community average. On these criteria it is likely that most of this country and in particular the western portion would fall into the 65 per cent category.
Mr. Colley: There was reference made in the course of the debate to the allocation for housing and ancillary services. Reference was made to the fact that the proportion of the 1972-73 public capital programme allocated for housing et cetera is less than in earlier years. I would like to put this into prospective by mentioning certain points. Firstly, the provision for capital expenditure on housing and ancillary services for 1972-73 is almost £50 million. It comprises £41.8 million for housing and £8 million for sanitary and similar services. This £50 million block of expenditure is the largest of the various constituents of the public capital programme and if Deputies would care to refer to Table 6 of the capital budget tables they will see that the nearest to it is the £37.8 million for industry. Even the provisions for industry and industrial credit combined do not quite reach the housing provision if account is taken of an element of £1.4 million of housing development which is in the provision for industry.
I might also point out that the capital allocation of nearly £50 million in 1972-73 represents an increase of almost £21 million as compared with 1967-68 and that this increase as compared with five years ago is among the largest under the various headings of the whole programme and it is surpassed only by the growth of the allocation for industry.
In this connection, and this is, perhaps, the most important part of any discussion in connection with allocation for housing, I should mention that the total output for 1971-72 is estimated to have reached some 15,700 dwellings. Output in 1967-68 was just over 12,000. The White Paper, Housing in the 'Seventies, envisaged a target of 15,000 to 17,000 dwellings per year by the mid-1970s and we have reached 15,700 in 1971-72.
Mr. Colley: The Deputy always misses the point. When it comes to the real point he uses a word or he does not hear a word used and he misses the point. Let the Deputy look up the record and he will see what I mean. I have had this ten times with Deputy FitzGerald.
Mr. Colley: There was reference made to a decline in exports from Shannon in 1971. According to the CSO trade statistics, the value of Shannon exports fell from £39.7 million in 1970 to £34 million in 1971, that is, a decrease of about 14 per cent in current prices. In constant prices the fall was about 20 per cent, the figure which was quoted by Deputy FitzGerald. The Shannon Free Airport Development Company attributes this fall, which was accompanied by a fall of about 18 per cent in imports into Shannon, mainly to economic recessions abroad, especially in Europe  and the United States. It had serious repercussions on Shannon because of its heavy reliance on international trade.
In their last annual report, SFADCO predicted that the decline in Shannon would continue up to April, 1972, after which the position would steadily improve. There are signs already that this prediction will come true. Imports into Shannon in recent months have shown an increase over the corresponding months of 1971 and this should be reflected in increased exports in the coming months.
There were a couple of points raised by Deputy FitzGerald in which he questioned certain things and I want to give him the answers. Firstly, he raised the question of a discrepancy in the growth rate for 1970 between official and OECD sources. The explanation is quite simple. At the time that data were being provided to OECD the latest national accounts estimates for 1970 were those published in the Review of 1970 and Outlook for 1971, which showed a growth rate of 1½ per cent in 1970. The 1970 estimates were subsequently revised by the Central Statistics Office and the figures published in National Income and Expenditure, 1970. These show a growth rate for 1970 of 2¾ per cent. If I could put it in a nutshell, the discrepancy in the growth rate figure for 1970 is explained by a revision of the national accounts. A growth rate of the order of 3 per cent in 1971 is shown by both the OECD and the official sources.
Mr. Colley: Deputy Desmond raised the question of the sales taxation on imported books. Over the past year I have given very careful consideration to quite a number of representations which I received concerning sales tax charged on books imported through the parcel post. I asked the Revenue Commissioners to examine the position and, following that examination, arrangements have been worked out whereby relief from sales taxes can be given in respect of books and other documents which are imported in particular circumstances. Because the assessment of tax on imported goods is made at the time of importation, arrangements for waiving tax at the point of importation would require two things: first, the revenue officer would have to satisfy himself that the circumstances of importation warranted relief and, secondly, the sender would have to indicate the circumstances of the transaction as well as the nature of the goods and their value. In practice such arrangements would not be workable particularly since many of the senders are non-commercial people and in the circumstances the only feasible way of granting relief is to levy tax at importation and to refund it in respect of non-commercial importations where tax would not be payable if the transaction had taken place wholly within the State.
Mr. Colley: On foot of these arrangements, the Revenue Commissioners will refund tax where the importer establishes entitlement on, for example, the following classes of transactions: importations free of charge of books for review, authors' complimentary copies, books and research papers on loan to Irish residents, books and papers exchanged by academic and similar societies, reports issued by international bodies, conference documentation and such items as copies of periodical reports sent abroad by the  Irish owner for binding. The concession also applies to non-commercial transactions on which tax has already been paid.
Mr. Colley: Will the Deputy wait for it? In what I have outlined I have taken care of most of the cases that have been put to me by members of the public but if I were to go further than this and allow the import of books free of sales tax as has been urged on me the effect of it would be to discriminate against Irish booksellers and publishers. I am not prepared to do that. Further, for the benefit of those who do not know and frequently carry on as though we were the philistines here who were taxing books as compared with our prospective partners I remind the House that books are liable to value-added tax in France at 7.5 per cent, in Belgium at 6 per cent, in Germany at 5.5 per cent, in the Netherlands at 4 per cent and in Luxembourg at 5 per cent. The rate proposed here is 5.26 per cent.
Mr. Colley: The Deputy should know what the British problem is: they must move much further than we have to take on value-added tax and he should know that they must take it in stages. He should not try to hammer me with the British problems.
Mr. Colley: The Deputy should grow up. Does he think it will continue like that? Look at what is happening  in the other countries. The other point made by Deputy O'Donovan—very correctly, I think— is that we propose to tax food, footwear and clothing at the lowest rate, 5.26 per cent, in VAT. I could not justify to anybody taking tax off books or newspapers while applying that tax to food, footwear and clothing. If somebody asks why I do not take the tax off food, my answer is we cannot afford it.
Mr. Colley: Deputy Nolan mentioned some cases in which people were getting reduced tax allowances. I cannot understand why this should be so. Although he may have given some indication in what he said of the cause. I shall certainly have any such cases investigated. He will appreciate that I could not reply on them offhand. I was intrigued to read Deputy FitzGerald's chronology of the plot to get rid of the NIEC. I think Deputy Desmond also had quite a lot to say on this. These Deputies are well aware that the absence of agricultural representation was a limitation on the relevance of the NIEC and that the NIEC itself fully endorsed the proposal to extend representation on the council to cover a wide spectrum of community interest. As I said previously, the mandate of the NIEC was terminated in the context of the establishment of a broader based national economic council which provided for non-political representation. This was discussed with the interests which would be represented on it. Nonpolitical representation was acceptable to all the parties involved with the exception of the Irish Congress of Trade Unions.
Mr. Desmond: The term “nonpolitical” was never in any document. There was a question of whether members of either House of the Oireachtas should be members of the NIEC, an entirely different matter. Just because you did not want Deputy FitzGerald on the old NIEC you were determined to screw everybody else off it. Let us be honest.
Mr. Colley: If the Deputy wants to regard the phrase “non-political” as not being equivalent to membership of the Oireachtas, I shall accept that. What I was referring to was membership of the Houses of the Oireachtas. That provision was accepted by everyone of the bodies concerned except the Irish Congress of Trade Unions.
Mr. Desmond: I am stating that it was a Government decision, that the various nominating organisations were informed that the Government would not accept members of either House of the Oireachtas and of the nominating bodies; it was the ICTU which made it quite clear that this was not acceptable. If the Minister could produce letters from the employers, the other organisations, the ICMSA and so on, stating that they could not accept the congress point of view, it would be rather interesting.
Mr. Colley: I think the Deputy is quibbling but I may be wronging him in saying that. Would he agree that of all the parties that were to be involved in the national economic council, only one, the Irish Congress of Trade Unions, said that it could not accept this condition that none of its nominees would be members of either House of the Oireachtas?
Mr. Tully: The Minister is aware that congress have, as a matter of principle, refused to be dictated to as to who they should nominate to any body over the years. The Government would think twice before dictating to the NFA.
Mr. Colley: As a means of trying to resolve the deadlock which emerged, further discussions were proposed, but the Irish Congress of Trade Unions would not even come to a meeting. In those circumstances——
Mr. Colley: That is not true. I want to repeat what I said before. I have already indicated to the Dáil that I am anxious to find a solution to this and I am prepared to meet the Congress on this matter, if they so wish. I have said that before and I am saying it again.
Mr. Colley: So far as this side or the far side of the Shannon is concerned, our future depends on the success of the basic strategy which we are trying to follow in the budget,  which means more growth and more jobs. As the Deputy himself said when speaking in this debate, the decision made by the people is going to assist considerably in creating the right economic climate for growth in this country, as well as directly assisting on the agricultural side which, of course, has to spill over on the rest of the economy.
I would like to repeat that our economy is growing at a rate which is slower than that which is within our capacity. Despite the continual rise in the number of jobs in industry, unemployment is at quite a high level, mainly because of factors which include the falling-off in emigration and difficulties in certain traditional industries, as well as in some others, such as textiles. On the positive side, the prospect of EEC membership will present a challenge, but also a great opportunity to avail of prosperous markets for our products. External confidence in our economy is very high as is evidenced by the strong inflow of capital and by our high reserves. There has, as I said earlier, been welcome evidence of an easing of inflationary pressure. While the national pay agreement is showing results, continuing moderation on the incomes front is necessary if competitiveness is to be preserved and if existing jobs are to be kept and new jobs created.
On three occasions since last October, the Government took action mainly through the capital budget to give a fillip to the economy in ways designed to secure and maintain a higher level of employment. The present budget represents a continuation of the use of budgetary policy to stimulate demand and to tide the economy over a difficult period. While the deficit envisaged for the year ahead is not the first to be experienced in the history of the State, it is the first to be planned as a matter of reflationary policy at the outset of the financial year. The concept of budgeting at the start of a year for a balance on the current budget, irrespective of the prevailing circumstances of the economy, is outdated. The modern budget should be used as an instrument  to the economic policy which is most suited to the particular time at which the budget is prepared, and for the year ahead. In our case, the position is that, as an economy, while we are not realising our full potential, we are at the same time, in common with many other countries, experiencing a fairly high rate of inflation. My basic budgetary objective was to boost our economic activity without aggravating inflationary pressures.
I am satisfied that the budget measures should achieve this end. The level at which current Government expenditure has been set, taken in conjunction with the increased public capital programme, will promote domestic activity, while the personal taxation reliefs should, by increasing after-tax income, encourage personal consumption and further economic expansion. The substantial increase in social welfare benefits and in pensions will moderate the effects of inflation on those groups in the community who are most affected by it. The company taxation relief will encourage investment and enable industry better to equip itself to take up the challenge and to profit from the opportunities of EEC membership.
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