Appropriation Bill, 1953—Second and Subsequent Stages.

Thursday, 26 November 1953

Seanad Éireann Debate
Vol. 43 No. 2

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Question proposed: “That the Bill be now read a Second Time.”

Acting-Minister for Finance (Mr. Aiken): Information on Frank Aiken  Zoom on Frank Aiken  There is one question that has been agitating the public mind for quite a considerable time, owing to certain statements made about it by various people, and there are some Senators here who, I think, can help me to clear up the matter definitely once and for all. I think that thereby very much public good will be obtained. It has been alleged that the reason this Government permits or authorises the Central Bank to invest funds in British securities is that the Government wishes to give the British cheap money, while, at the same time, charging much higher rates to local authorities who want to build houses, to the E.S.B. for electricity development, and to Bord na Móna for turf production.

I have over a number of years been trying to explain this matter to the people who make that type of allegation, to point out to them that there is no necessary conflict between a sufficiency of money at home and the Central Bank having reserves in the form of sterling securities in London at a cheap rate, or in New York in the form of liquid assets at a cheap rate, or, indeed, in the form of gold. I have been trying to point out that the fact that this country has reserves, whether held by the Central Bank in Government funds, or other institutions, and whether held in the form of long-term securities, short-term securities or gold, supports the ability of this country to make capital available for all sorts of desirable development. But that is denied and it is said that [114] the more the Central Bank invests in the form of British securities, the less money there is available for capital development within the country.

There are a number of Senators here on both sides of the House who have a knowledge of these matters and I appeal to them to help me to clear it up. The first question I want them to address themselves to is: Is there a necessary conflict between the holdings by the Central Bank of external assets in the form of British securities and the ability of the Central Bank, the banks or the Government, to produce funds for capital development within the country? If there is no conflict, I should be glad if that were stated authoritatively by some of the Senators here, to whom certain sections of the community, at any rate, look for guidance in these matters. We have a common interest, even though we have different political interests, in seeing that this matter is debated on the basis of financial facts. and not on the basis of political emotions or political propaganda.

In order to point this matter, I want to quote a question which was put when I was Acting-Minister for Finance in 1951, at a time when the Minister for Finance was not available.

It was on the 28th November, 1951. The Minister for Finance was asked a question which I propose to shorten. It was to this effect: Whether the governors and directors of the Central Bank have taken any steps to secure the approval of the Minister for Finance for “the investment in Ireland of at least a portion of the sterling assets lent by them to the British Government”. I want Senators to note that the suggestion in that question was that the Central Bank should sell its sterling holdings and invest the proceeds in Ireland.

I pointed out in the reply at that time that most countries in the world were glad to have liquid reserves of various kinds, gold and readily saleable securities in the different money markets of the world and that, indeed in London, there was at that time about £4,000,000,000 so held by Governments or institutions other than the [115] Irish Government and the Central Bank of Ireland. I pointed out that as long as we had external reserves they must be held by somebody in the form of gold or long-term assets in other countries.

I tried to point out the difference between an Irish £, which is a demand or claim on the goods and services in the possession of the Irish people or capable of being produced by the Irish people, and an external asset, which is a claim or a demand upon the goods and services of other countries, in the case of sterling a demand upon the goods and services of the British people or on anyone who will take a demand note for the goods and services of the British people in exchange for the goods and services which they sell to us.

In order to bring the matter into proper perspective, I quoted the other day——

Mr. Baxter: Information on Patrick Francis Baxter  Zoom on Patrick Francis Baxter  Would the Minister mind reading the reply?

Mr. Aiken: Information on Frank Aiken  Zoom on Frank Aiken  That would be too long. I will cover it in this. It is a very long reply. I gave the Senator the date, which is the 28th November, 1951.

Mr. Baxter: Information on Patrick Francis Baxter  Zoom on Patrick Francis Baxter  I did not completely follow what the Minister's reply was. I am sorry for interrupting him.

Mr. Aiken: Information on Frank Aiken  Zoom on Frank Aiken  The speech which I propose to make is a paraphrase of the reply and an extension of it. I quoted the other day the amount of liquid foreign assets which foreign central banks, institutions like the Exchange Equalisation Fund in England, a special account in Canada, and the American Federal Reserve held in the form of gold or foreign securities. Perhaps the Senators will bear with me if I repeat them here. They are all translated into terms of United States dollars. There would not be much use in quoting billions of rupees and francs, etc. The amounts are easier to follow when given in a common unit of account.

The Australian Government holds gold and foreign assets to the extent of 1,112 million dollars worth; India [116] holds 1,716 millions; South Africa holds 259 millions; Canada, 1,771 millions; Switzerland, 1,524 millions; United States, 22,275 millions; West Germany, 1,599 millions; Belgium, 1,043 millions; the Netherlands, 1,099 millions; France, 573 millions; New Zealand, 271 millions; Ireland, 218 millions, and Great Britain, 2,486 millions.

Is there any Senator here who believes that to the extent that these holdings are in the form of sterling securities it is to give cheap money to Britain they are held in that form? To the extent, say, that they are held in the form of Swiss francs, is it to give cheap money to Switzerland that they hold portion of the reserves in Swiss francs? Does Britain, for instance, to the extent that she holds portion of her foreign assets in the form of dollar bills or accounts in the American Federal Reserve Bank, so hold them in order to give cheap money to America?

That is a question to which I would like a direct answer by any Senator who speaks on it. Would he think it is for that reason that countries hold external assets whether in the form of sterling or in any other form? There has been some controversy—a lot of heat but not too much light occasionally—on the question of what happened to our external assets over the years.

I myself pointed out that in the years 1948, 1949, and 1950, when the present Government was not in office, there was an increase in the external assets held by the Central Bank of some £36,000,000. Indeed, I put the question again as to whether it was in order to give cheap money to England that the Central Bank in those three years increased their holdings of external assets by £36,000,000? Most informed people know that while the Central Bank's assets in those years increased by £36,000,000, the total of our net sterling external assets fell by over £60,000,000, notwithstanding the increase of £36,000,000 in the sterling holdings of the Central Bank.

I will give the plus and the minus figures because when the Central Bank was plus £36,000,000 in its additional [117] holdings of external assets, somebody had to be minus when the net amount was minus £59.5 million or, say, £60,000,000. Here is the break-down of the figures, of the change in the external assets over the years 1948, 1949 and 1950. The holdings of the commercial banks dropped by £13.1 million. The Central Bank holdings went up, as I said, by £36,000,000. The holdings of sterling assets in the accounts of Government funds went up by £6,000,000. Private holders realised £11.5 million; the sterling assets in the hands of private individuals went down by £11.5 million.

In addition, during those years, Marshall Aid was drawn on to the extent of £38,000,000. These and other inward capital movements increased by £39,300,000 which decreased our net holdings of foreign reserves by £39.3 million. When we add the plusses and the minuses—the decrease in the holdings of sterling assets of the commercial banks and in private holdings, the draw on the Marshall Aid, and the other foreign capital investments here, we get the position that over those years our net external assets dropped by £59.5 million or £60,000,000. At the same time, the Central Bank holdings went up by £36,000,000 and Government funds by £6.4 million.

I do not believe it was to give cheap money to the British Government that, during the last Government's term of office, roughly the period covered by the figures I have given, the Central Bank were permitted or encouraged, whichever word you like, to increase its holdings of sterling assets to the extent of £36,000,000. Neither do I think it was for that purpose that the holdings of British securities in the accounts of Government funds went up by £6.4 million. There was a good reason for all these movements. The over-all cause of the net decrease in our sterling assets was the deficit in our balance of payments over those years. I do not want at the moment to go into the desirability or otherwise of spending our external assets to that extent over those years but the net position was that they decreased by £60,000,000 in those years and the following year—the half in [118] which a Government other than the present one was in office, and had given orders which were not filled long after they had left office—we had another decrease of £61.6 million in our external assets, a total of practically £120,000,000 in the years 1948, 1949, 1950 and 1951.

I think there are Senators here who will agree with me that so long as this country has external assets, that is, national savings in the form of readily saleable securities or investments abroad, gold or any other readily marketable commodity, some person or persons must hold them. If we passed a law to-morrow by which we compelled the Central Bank to realise, say, £50,000,000 of its sterling assets and invest the proceeds in Irish Government securities or in some other way within Ireland, the first result would be to swell the sterling holdings of the commercial banks by an equivalent £50,000,000.

If we had, in response to that question on the 28th November, 1951, when we were asked whether the governor and directors of the Central Bank asked the approval of the Minister for Finance for the investment in Ireland of at least a portion of the sterling assets lent by them to the British Government, then said: “We are taking steps to see that the Deputy's request will be carried out, that the Central Bank will realise £50,000,000 of its holdings of sterling securities and that the proceeds are invested in Government loans to the extent of £50,000,000.” I would like to know if any Senator could deny that the first result would not have been that the holdings of the commercial banks would have increased by an equal amount, £50,000,000? I would like Senators who might deal with this question to take note of that and I ask them whether they confirm or deny that statement?

Let us take up the case of an individual. If I have £1,000 invested in British securities and want to take up some shares in an Irish concern, and if I sell out the British securities and invest them here, the result would be to swell the sterling securities of my bank in which I cash my cheque by £1,000.

[119] Supposing we leave the assets of the Central Bank alone for a while and we have a look at the sterling assets of the commercial banks. Supposing we made a law here which would conform with the general practice all over the world, that our commercial banks were not to hold external assets of any kind. Acting under that law, supposing we asked them to decrease their sterling holdings by £50,000,000, what would be the result? The result would be in the ordinary way to swell the assets of the Central Bank by £50,000,000.

Other countries have exchange equalisation accounts. They have something other than the type of reserveholding institution which we have in the Central Bank. Let us say that we established an exchange equalisation account and we decided thereafter that neither the Central Bank nor the commercial banks would be allowed to hold sterling assets. The only way they could be held then would be by the Exchange Equalisation Fund. That is, of course, if through a scare, the individual depositors of the banks did not take their money and put it in England.

We could if we so wished and if we thought it wise, pass another law, a law similar to that which was passed in Britain under which every holder of a foreign asset of any kind had to register and was not allowed to sell unless he delivered the proceeds into British Government control. That statement is not quite accurate because the British only made their citizens register dollar or hard currency assets. They did not make them register assets in other sterling area countries.

If we wished we could pass a law here—it would be rather difficult to implement in our circumstances—that no one, no institution or individual could own or hold foreign assets of any kind. If we did that we could say the Central Bank must not hold them, the commercial banks must not hold them and no private individual may hold them; but then we would have to set up another institution equivalent to the Exchange Equalisation Fund as the holder on behalf of the nation of those foreign assets.

[120] The fact which is not realised is that a foreign asset is a demand upon the goods and services of other countries in its essence and nature. It cannot be brought home—repatriated—unless the demand is exercised, unless it is used to pay for foreign goods and services. It is just foolish to say that we cannot have an increase in the volume vices, Irish currency, without decreasing our demands upon British or other foreign goods and services.

Again, I want to put this point— whether those dealing with it or not will agree with me or not. There is no necessary conflict between holding sterling assets by the Central Bank, the commercial banks or ordinary individuals and the making available to our people of a proper volume of money to enable them to do their exchange of the goods and services which they produce internally.

There has been a question as to the rate at which we should realise our foreign assets of all kinds. It was estimated some years ago, in 1945, that we had a net £220,000,000, approximately, of foreign assets. That is, we owned a sum of money abroad which was £220,000,000 more than we owed to foreigners. A sum of £220,000,000 sounds a lot of money to the ordinary individual. In terms, however, of national accounting it is, roughly, equivalent to half a year's national income. I do not think any individual —a farmer, for instance—engaged in production would think that it was too much to hold as a reserve a sum in the bank equivalent to half his annual income.

I myself am convinced that it is no bad thing in itself that we should have the remnant of that net £220,000,000 left with which we can buy machinery or services in order to help national development here. However I do not want at this stage to go into the desirability of liquidating all these external assets, or the rate at which that should be done. Neither do I want to go into any budgetary matters which might affect the level of those assets.

I would like to go back to my original point—that there is no conflict [121] between holding a certain reserve and having a sufficiency of money to enable our people to do their business. If we wanted cheap money for cheap money's sake and leaving out of account for the time being the consequences that would flow, we could if we wished have a fiduciary issue. It has been done in other countries. If we wanted cheap money for cheap money's sake, we could empower and indeed impose the duty upon the Central Bank of providing cheap money for the Government by way of short-term bills or even long-term securities.

We could, if we wished, pass a law to compel the commercial banks to take up a large amount of short-term bills. But to do any of these operations it would not be necessary—in the first go off, at any rate—to realise one penny of the sterling holdings of the Central Bank, the commercial banks or in the hands of private individuals. We all know, of course, that wisdom imposes a limit upon the amount of the volume of money that a Government creates directly, or indirectly, through these other institutions. Some people do not realise that, while an insufficiency of money is a bad thing, an over-sufficiency is even a worse thing and that in those countries in which Governments, for various reasons, could not or would not face the political unpopularity of collecting, through taxation, the money necessary to run the business of Government, and where they went to the Central Banks to discount billions of bills, the last case of the people was worse than the first. The fact is that inflation—that is, a surplus of money over and above that which enables the people to do their business in a reasonable way—is the worst form of taxation.

We could, if we wished, create or have created on Government Order, £100,000,000 to-morrow. We could have it created in the beginning of next April and the Government could, therefore, abolish all taxation. But the result of that would be to depreciate the Irish pound, the Irish shilling, in the hands of every individual holder.

Mr. Baxter: Information on Patrick Francis Baxter  Zoom on Patrick Francis Baxter  And to get the Government [122] put out of office for being a crazy lot of people. Would that not follow?

Mr. Aiken: Information on Frank Aiken  Zoom on Frank Aiken  It might not.

Mr. Baxter: Information on Patrick Francis Baxter  Zoom on Patrick Francis Baxter  Of course it would.

Mr. Aiken: Information on Frank Aiken  Zoom on Frank Aiken  It might not. We had a Government here in this country and it took some time to get rid of them. Anyhow, we will come back to that again. Take, for example, one country on the Continent that we all know of. You have a combination of circumstances there in which no one can take the political responsibility of taxing sufficiently to run the Government. They go to the Central Bank. The result is that their currency has been depreciating year after year until now it is hardly one-two-hundredth the value it was not so very many years ago.

Suppose we did not go to the full extent of the £100,000,000 but that we took a portion of it, as some other countries have done, and that we created £30,000,000, £40,000,000 or £50,000,000. Every sensible person and every reasonable economist will set his face against any increase, by whatever means, in the volume of money which is greater than the corresponding increase in production and exchange of goods. We could not, of course, if our national income doubled within a number of years, exchange our goods and services with the present volume of money and, as our national production and income went up, it would be only right and proper that the volume of money would increase in step. Simply to satisfy people who demand more money, irrespective of the consequences, to create money would have disastrous effects.

Money has to be found for Government expenses, for Government outgoings, in some fashion. If we abolished our present system of taxation, by imposing taxes where the Oireachtas decide that taxes should be placed, and went in for the alternative system of running the country on an increase in the money supply, it would be simply poisonous. Deliberate inflation of that kind is the worst form of taxation because it decreases [123] everybody's pound and everybody's shilling by an equal amount, whether the owner be rich or poor. The present system of taxation is selective. It is imposed upon the shoulders that can bear it.

I do not want to go any further than deal with this matter on the technical level and away from any budgetary considerations. I hope the Senators will help me to clear up this matter so that, for the future, we can talk realistically about our external assets and monetary matters. I hope that the progress of this country will not be bedevilled by catch-cries such as: “Oh, you want the Central Bank to give cheap money to John Bull in order to enable him to murder Mau Maus” or any of the other statements that have been made from time to time in that regard.

I hope that Senators will confirm my belief that there is no conflict between holding external assets that give us a big rate of interest, a small rate of interest or no rate of interest, and having a sufficiency of money within the country. We could hold all, if we wished to do it, in the form of gold, if the gold were available—and it is available on the free market of the world at a price at the moment. If we poached around, we could probably sell every penny held by every individual Irishman or institution for gold and hold it in the form of gold. I think that that would make it rather clear to people that the possession of the gold does not set a limit to the amount of Irish money that could be made available for capital development.

I trust that the Senators, in their remarks on this Bill, will help me to clear up this matter once and for all.

Professor Hayes: Information on Michael Hayes  Zoom on Michael Hayes  I am sure the Minister will not be very worried to hear that I do not propose to give him any assistance to clear up the rather abstruse matters with which he has dealt. I do not propose to answer any of the questions, because I had my mind made up as to the particular line of country I wanted to pursue to-day, and I intend to pursue it. Just as our [124] system of taxation is selective, the Minister's questions also are strictly selective and, if he does not get the answers he likes, he will select certain ones rather than others.

We are doing this Appropriation Bill at the end of November in rather peculiar circumstances. We should have had it in July and we did not do it in July because the Dáil did not finish the Estimates. It is not for us to say why the Dáil did not finish the Estimates—whether it was crassness and had management on the part of the Government or obstinacy on the part of the Opposition—but perhaps the history of Oppositions in which the Minister himself, I think, once played a part, might have something to do with the fact that, instead of finishing the Estimates and adjourning the Dáil in July, the Dáil is still doing Estimates and token Votes in order to have certain discussions. Doing this kind of Bill at this stage of the year reminds me of the Irish saying: “Praiseach ó aréir”—it is “Porridge from last night”, or recheated porridge, to endeavour to discuss these matters at this particular stage. We really should, if it were possible—and I think it would be, if people took counsel about it and were fairly reasonable, because everybody has a great deal of experience now—have the Estimates dealt with in summer and devote this time, the winter, from October to the end of March, to legislation, instead of to Estimates and Appropriation Bills.

This Appropriation Bill is based on the Estimates done in the other House and it gives the only opportunity this House has of discussing matters of administration and policy which may be discussed in detail upon particular Estimates in the other House. Looking through the Schedules to the Bill I find that a sum of about £10,500,000 is devoted to education and I should like to be allowed to deal with one or two matters which concern education in what I hope will be a non-controversial and constructive fashion.

There is a great deal of money spent on education in this country; there are a great many people engaged in it; and naturally there is a great desire that the money spent should be spent [125] to good purpose. If it were spent to good purpose it would, of course, have very fine results. There is a great deal of talk about lack of buildings for schools but it should always be remembered that a school is pupils and a teacher and that the teacher is the most important person in the school from the point of view of the pupil. The knowledge, the skill and, above all, the character of the teacher have an impact on young people and leave their mark. The teacher, therefore, should not be a misfit. He should, if possible, be satisfied, should be a person with a vocation and, if he is going to survive at all in his job, must be enthusiastic.

There has been visible in our primary schools for some years past a distinct shortage of teachers and I should like to address myself to that matter for a few moments. There are in the primary schools roughly 15,000 teachers, of whom a little over 2,000 are religious and a little under 13,000 are lay. There has been, to the great concern of the Minister for Education, of the teachers themselves and of everybody interested in education, a shortage for some years past.

The result of that shortage has been that an average of over 90 unskilled, untrained and, in some cases, completely unqualified people have been taken in every year because there were no trained and qualified teachers to fill their places. The shortage is due to several causes and I do not propose to argue these causes. It is due, to some extent, in the case of women, to the operation of the marriage ban, which, owing to the lapse of time, is now in full operation, and which causes a loss of, I think, about 40 women per year when they have reached the height of their efficiency, that is, when they are about 32 years of age.

There is always a shortage of men, although the training colleges are overcrowded. One sees vacancies constantly advertised, but there is a shortage of trained and qualified people and the result is that for some years past an average of more than 90 have been taken in. One has to remember [126] that the situation, unless something is done about it, is bound to get worse, instead of better, and that apart altogether from the wastage there is an urgent necessity, particularly in Dublin City, as anyone who knows anything about Dublin schools will realise, that classes should be made smaller and staffs increased. Some Dublin school classes, particularly in the lower age groups, are far too big for any person to handle, so we do need considerably more teachers.

One of the suggestions made is the building and equipping of a new training college. That is something with which the Minister for Finance will, of course, be intimately concerned and I should like to put it to the Minister, acting for the Minister for Finance, that before any step of that kind is taken, it would be well worth while to look into the whole question of the training of primary teachers. At present and ever since training was initiated, primary teachers are trained in a purely professional school, in a training college, entirely separated from any other people of their own age undergoing any form of educational training. In the case of pupils who go into the preparatory colleges, they get a four years' course, first, of secondary education during which they meet nobody but the few who are going for the teaching profession. To that four years' course in the preparatory college, which is equivalent to a secondary school for prospective teachers, they add two years in the training college.

I have said before and I take this opportunity of saying it again that that is extremely bad for people. It is extremely bad, first, that a boy should be asked to decide at the age of 14 that he is going to be a teacher. He very often does not know and cannot decide, and a good many of the misfits, of whom there are some, are due to the fact that the selection is made at too early a point. It would be much better if pupils were left in ordinary secondary schools, meeting ordinary boys and girls and if, as a training for teaching, they were given a university degree, did a university course and had the usual university contacts including—and this [127] I regard as of very great importance— the student contacts, contacts with other people pursuing other courses who intend to make their living in the country in a different way from teaching, which a university course would give. It is very important that the candidate teacher should get as wide an acquaintance as possible with the ordinary people of the country.

There would I know be certain difficulties of space, particularly at University College, Dublin, but, thanks to the Minister and his colleagues, steps are being taken, it seems, to remedy that position. I will deal with that in a moment. I should like to put it to the Minister, too, that a university training might well prove in the long run less costly, more broadening and more satisfying for the individual, and it could be made professionally just as good. Remember that 90 per cent. of our school-going population never get further than the primary schools. Upon them a great deal depends and nothing that we can provide for them really is too good. I suggest that before any new training college is built and before people are committed to a continuance of the present system an investigation should be held with a view to seeing whether there could not be a combination of university training and professional training which would produce a much broader, more satisfied and more competent teacher. The teachers themselves have frequently advocated that particular plan.

In order to meet the actual shortage at the moment, it has been suggested by the teachers' organisation that university graduates should be allowed to teach in primary schools to fill these vacancies. I would like to support this from my own experience in a different sphere. It would not apply to graduates of any kind because it is quite obvious that there are some degrees which would not be suitable for teaching in a primary school. One of the things I came up against in University College myself is this. A man gets a degree with first-class honours in Irish. He has been, as we always advise him to do, going to a [128] particular Gaeltacht, Connemara, Donegal or some particular area in Munster all the time. He would like to teach in a Gaeltacht school for a year. He has a first-class honours degree and is very good in the local type of Irish but the conditions are that he cannot teach in that school for a year. He cannot take any kind of job in a primary school. That is too rigid.

A situation has arisen when it would certainly be desirable that university graduates should be allowed to take up teaching in primary schools where there are vacancies for which no teacher trained under the ordinary method is available. That would make up for the shortage in a comparatively inexpensive way. It would provide arts graduates, men and women, with jobs which are better than some of the ones they go to now.

The Minister for Education would not need, if he took that interim step, to give way on the whole question of training. He might consult the university colleges, the teachers' organisation and the training colleges to see what steps should be taken with regard to special training for certain graduates. Some step is necessary to fill these posts. There should be a round-table conference if the principle were accepted. I know there are certain difficulties but I do not propose going into them at this stage. If the difficulties were faced by a conference of all the parties concerned, I think you would probably get a suitable scheme without any very great difficulty.

At the present time, no university graduate, whether pass or honours, and no matter how qualified he is in his subject, can teach in a primary school under any condition except he goes to a training college. Where there is a shortage of workers and where there are people seeking work who would be competent to do the work, the obvious thing to do would seem to be to put these people who are far on the road to being qualified in to work. I put that forward as a suggestion. It is one which would commend itself to the Department of [129] Finance because it would not be expensive. The particular problem is, I think, bound to get increasingly more acute.

There is another matter which ought to be considered in connection with the millions we spend upon education. At present there is a complete separation between our different branches of education. There is a primary branch, secondary branch and a vocational education branch. They are all administered by the Department in Dublin but by different sections, none of which touches the other at any point. They are manned by a different kind of teacher with different qualifications, different conditions of service, and different employers. There are different salaries and pension scales.

It is impossible, practically speaking, to pass from one to the other. It is very often accidental as to which one a person with a vocation for teaching gets into. Anybody who knows anything about teaching is aware that a good teacher, a person who has a flair for it, can probably teach in any kind of school. I suggest that their present situation is a bad one. It does not mobilise our whole teaching force into a national body. There may be certain difficulties. These difficulties are in the main historical.

Our primary schools are based on a British Act. They are controlled by managers but the teachers are paid entirely by the State.

The secondary schools depend on the Intermediate Education Act of 1878, which was, in my opinion, the greatest mistake the British made in this country. It broke their rule completely once it got into operation but that is another question. The secondary schools are entirely in the possession of private people and the State pays increments to teachers, the schools paying a basic salary.

Vocational schools are run under local vocational education committees which are composed of members of the local authorities and others and are responsible to the Department of Education and not to the Department of Local Government. It certainly [130] should be possible to sit down—it is not a controversial matter; it is not a political matter; and it is not even in the main a financial matter although a great deal of money is involved—and see whether we could not make better use of our national teaching force and whether our manpower and women-power in teaching could not be used to better advantage than it is at present.

Many primary teachers are extremely well qualified. Some of the best students who have attended evening classes in Dublin and elsewhere are primary teachers. I think there are several university professors who began as primary teachers and who succeeded in getting degrees and finally became university professors.

Here that is something which could be considered by the Department of Education and by the Department of Finance. It would bear fruit and would not involve any extra expenditure although I know that the three bodies are different and that considerable technical difficulties might arise in arranging them. Yet our experience is that when you have goodwill and see what you want it is not hard to get over these technical difficulties.

There is another point. The secondary schools depend, as they did in the British days, upon a grant from the Department of Education. I think that grant has remained stationary for a period of about 30 years. There can be no doubt that with the increase in building costs and the increase, apart from building costs, in maintenance and increases of all kinds that have come upon the people who manage the secondary schools, it is overdue that their case should be considered and that the case of their staffs should be considered as well. These staffs also include a fair number of people who are not qualified but remain on as teachers because qualified people are not available.

There is also another matter in connection with education which appears here. An Estimate was passed for a grant of £200,000 to University College, Dublin, towards the cost of certain properties at Stillorgan. I would [131] like to be allowed to say a word on that particular matter.

University College, Dublin, is, of course, the biggest college of the National University and the biggest university institution in this country from the point of view of numbers of students. I think from the point of view of catering for Irish nationals it is bigger or at least as big as all other university institutions in the TwentySix Counties. It has been singularly handicapped from the point of view of buildings. I am speaking of buildings alone; it has been handicapped in other ways as well from the very beginning. Its present buildings in Earlsfort Terrace were built after the first war had begun on a grant that was made available in 1909 and, of course, that was practically of no value for erecting buildings during the first war. It was to cater for 1,200 students. The number of students now is over 3,300 and the difficulty of getting a room at Earlsfort Terrace is the same now at 8 o'clock in the evening as it is at 10 o'clock in the morning. Nobody can deny that there is a very pressing and urgent need for a better building.

Consideration was given over a long period and in consultation with various Ministers and more than one Government as to what could be done. At one time, I think as far back as 1926 or 1927, the College of Science was made available; this is pretty well a part of Government buildings, and is one which the Government now urgently needs for itself. Over the last couple of years a site has been purchased in consultation again all the time with Ministers for Finance. It has been done in the only way in which it could be done, by private treaty and negotiation by people in the college who had to rely upon their own courage and their own business acumen and judgment to do that very difficult work.

It could not have been done any other way. It could not have been done after a public discussion in which the Minister for Finance, whoever he was, said he was going to buy land in [132] a particular place for University College. That would not have been a business proposition. What has happened has happened in the only way in which it could effectively have been done at all. It has meant very hard work for certain people, the president of the college, the professors of engineering and a member of the governing body who is a member of this House and sits on the Government Benches. They did great work to achieve the present position.

The position is now that in the Estimate which we are confirming in this Bill, thanks to the Minister and his colleagues, the college is enabled to pay for that site the sum of £200,000. The cost will, I think, be a little bit bigger. It should be clear to Senators that a university college site means something more than mere buildings in which to give lectures or hold meetings. It involves also hostels and dining halls for students. Hostels and dining halls would be the main foundation of what is called a residential university. It means also libraries; for a medical school it means proximity to hospitals and for an engineering school proximity to engineering workshops. Therefore, the matter is a very big one and the notion that it could be done, beginning from scratch and afresh, in some part of the country is not sound.

The site which has been made available is convenient, spacious and suitable. Everything has been done and plans have been drawn up which would enable the Government, with whom, of course, the last word must rest, to count the cost, weigh up the advantages and make a decision as to whether a building is to be erected on that site, at what place and in what manner. I think it it is fair to say also that the proposition is a good one because the land, if sold again, would not show any losses.

The need for a new college is urgent, and a decision is hoped for at a very early moment. It is realised, of course, that the matter is one of great complexity; the work would certainly take some years to complete and could not be done in a hurry. It would have to [133] be done slowly, a certain amount every year depending on the amount of labour, money and materials available. However, if it were completed it would put a crown upon Irish education. It would enable us to keep up with modern conditions, to supply scientific teachers and leaders and engineers without whom we cannot compete in the modern world. Without such a university we cannot properly man our schools.

There is one other aspect of this question which is worth mentioning. When the college had been completed and when Earlsfort was vacated, it would make available to the Government the present Earlsfort Terrace building which would be very suitable for Government offices. It is near Iveagh House, near the Board of Works, Government Buildings and Leinster House; it is adjacent to Iveagh Gardens, which is owned by the State and which offers a spacious and convenient place for amenities or extensions.

This matter did not fall for discussion in the other House, and I am mentioning it for the purpose of making certain things clear, and also for the purpose of saying a word of thanks to the Minister with a regard to what has been done already. It is the first step, and a very welcome step, in providing University College with a building which it sorely lacks. I hope I have not disappointed the Minister by not mentioning our external assets or the operations of the Central Bank or of the commercial banks.

There are people here who are quite ready to deal with all those topics. In the meantime, perhaps I have done better by sticking to something about which I happen to know something myself. I would recommend the Minister earnestly that he should take some steps to see that the training of primary teachers is investigated not with a view to making it more expensive but with a view to making it better both for the teachers and pupils. If he did that I think he would earn the gratitude of a great many people and it would bear good fruit in the future.

Professor O'Brien: Information on George Augustine Thomas OBrien  Zoom on George Augustine Thomas OBrien  When I came in this afternoon I did not expect such [134] an important speech from the Minister on the Appropriation Bill. In view of what he said, I feel it a duty to refer to the matters which he discussed. If I had had a little more notice that these matters were going to be raised on the Bill I could, perhaps, deal with them more adequately. At the same time, in spite of my lack of preparation, my mind regarding what I want to say is quite clear.

I can say that I entirely agree with everything the Minister has said. He said very little which I did not myself say in the Seanad in the last couple of years. The Central Bank, of course, is the depository of our main external reserves. It is understood that central banks in every country in the world either themselves or, as the Minister said, through an exchange equalisation fund, should hold external assets. That is one of the primary functions of a central bank and if our Central Bank did not discharge that function it would not be worthy of its title.

As the Minister said, the Central Bank could, if it wished, hold all its assets in gold. Under the Currency Act of 1927 gold could be held in the Legal Tender Note Fund. Gold at the present moment can be bought quite easily in the bullion market and it now can be obtained at the statutory United States price for the first time for several years. If the Central Bank wished to buy gold it would have no difficulty in doing so. In holding part of its reserves in British Government securities, although the rate of interest earned on them is low, it is earning a great deal more than it would by holding its reserves in gold. By holding them in gold they would be in an entirely sterile form, the gold would have to be kept in safes, insured and otherwise looked after; whereas the large British Government securities holdings are yielding quite a substantial revenue which—it is not sufficiently understood I think— ultimately mainly goes into the pockets of the State. The surplus income of the Central Bank is transferred to the State. Therefore, whatever is earned on those assets, when the Central Bank's expenses are paid, accrues to the benefit of the State itself.

[135] I entirely agree with the Minister that the holding of a large volume of external assets of this kind in no way limits the capital resources available for investment in the country. Capital for investment must come from the savings of the people. The savings of the people of this country are largely held in deposits in the commercial banks.

Whether the savings are contributed directly by individual people or by the commercial banks, the effect is really the same. The savings of the population are being rendered available for investment—usually in the form, nowadays, of Government securities. There is no evidence whatsoever in this country of a shortage of savings that would make it necessary to raid the Legal Tender Note Fund of the Central Bank. The commercial banks have abundant assets which are available for lending to the Government if the banks desire so to lend.

I dealt with this matter last year in this House. I pointed out that, if the Central Bank had power to lend to the Irish Government and if it elected to use that power, the only effect would be a once-for-all swap of external for internal assets, limited to a certain rigidly defined maximum amount. The most extreme monetary reformer would not suggest that the external assets of the Central Bank should fall to zero. Therefore, the amount that could be made available would be, perhaps, in the neighbourhood of 30 or 40 per cent. at the very most of the liquid assets in the Legal Tender Note Fund. A swap of that kind would involve the sale of existing sterling assets to somebody in the country—it might be individual people, it might be the commercial banks, it might be a Government fund—but, as the Minister said, sooner or later the effect would be to swell the external assets of the commercial banks at the expense of the external assets of the Central Bank. With that I agree. The point I really want to make is that all it would mean is that there would be a once-for-all exchange in [136] the Legal Tender Note Fund of external for domestic assets.

I said in the Seanad before that I do not think an operation of that kind would do very much harm; but I said then and I say now that I do not think it would do very much good. A mere swap of the assets in the Legal Tender Note Fund is really a matter of a technical nature of no great fundamental importance and it certainly would not increase the capital funds available for investment in the country. On that matter I am in complete agreement with the Minister.

It is not sufficiently realised by the public, I think, that the increase in the sterling assets in the Central Bank reflects the growth in the internal monetary circulation. Under the Currency Act, 1927, Irish currency can be issued only against sterling. When there is an expansion of Irish currency, the sterling assets in the Central Bank automatically rise by the same amount. This rise in the Irish monetary circulation may be caused by better trade or it may be caused by higher prices or by both; but, whatever it is caused by, it is an effect and not a cause of economic conditions. An increase in the Irish monetary circulation is not, in my opinion, a cause of any inflation in this country: it may be a reflection of an inflation—a matter to which I am going to return. The Central Bank has no right to refuse to issue Irish currency against sterling. Therefore, when the Central Bank increases its sterling assets it simply is doing what it is bound to do under the Currency Act of 1927: it is bound to issue legal tender notes in return for sterling. That increase in the monetary circulation almost certainly reflects the rise in prices in which, in this country at the moment, there is an inflationary element. I would go so far as to say— I would even go further than the Minister—in no way does the possession of these external reserves limit the capacity of credit expansion in the country. I think it helps it. I think the possession by any country of large gold holdings or large external holdings strengthens its currency, and by strengthening its currency it strengthens its credit, and by strengthening its credit [137] it makes it possible for Government and other borrowers to borrow more cheaply than they otherwise could. If there were any question of depreciation of the Irish currency in relation to sterling, the Government's borrowing difficulties would be greatly increased.

To come to what I had prepared to say to-day, before this important statement was made by the Minister. I would say there are signs in this country at the moment of a possible undue expansion of credit. Whether credit is being unduly expanded or not is a matter of opinion, but one thing is perfectly clear, namely, that credit is expanding. Therefore, the movements in credit which are taking place are not in any way inhibited by the increase in the Legal Tender Note Fund sterling assets.

I am afraid that the Appropriation Bill usually tempts me to indulge in a certain number of platitudes year after year—certain homely truths of a financial kind which I think it a duty to repeat, since sometimes a thing has to be repeated more than once before it is clearly stated. One of these platitudes is that a balance of payments ought to be balanced at the highest possible level and a Government Budget at the lowest possible level.

Applying that criterion, the present Budget for 1953-54 has topped the £100,000,000 mark for the first time on both sides of the account. I know that prices are rising and that that is a factor; but there is no getting away from the fact that the public revenue and public expenditure are both growing. There is no sign of any reduction. The National Development Fund will absorb £5,000,000. Health services will grow. Old age pensions will grow. There is no great hope of reduction of public expenditure except possibly on the side of efficiency in public administration. It would be interesting to know how much of the £3,500,000 mentioned in the Budget speech for economies in administration has, in fact, been realised. There is a great movement in Irish industry to-day associated with the Irish Management Institute to reduce costs, [138] to bring in efficiency experts, production engineers, accountants and so forth, to try to reduce the costs of running industry in Ireland. Has any similar operation taken place in Government Departments?

Another platitude which I feel called on to repeat is that a growth of Government expenditure, in itself, is not necessarily a bad thing. The burden of a Budget depends on the size of the national income of a country. You cannot say how much a burden weighs until you know the strength of the shoulders which are called on to bear it. On this matter, I should like to quote from an article in The Statist on 24th October last, which was written by the Minister for Finance. In the course of that article he stated that the expenditure of public authorities on current goods and services has remained from 1938-39 to 1952-53 at about 17 per cent. of the national income. Compared with other countries, that is rather a low figure; but, before we can congratulate ourselves too much on it, we must remember certain things.

In the first place, from 1938-39 to now we have incurred a great deal less expenditure on defence and military matters than most countries in the world. Secondly, our average income per head is rather lower and, therefore, the taxable capacity of the country is not very high. Thirdly, the national income is not rising (except in money terms) as fast as people would like it to rise. Therefore this 17 per cent.—although it has remained stable for 15 years—may perhaps, in our peculiar circumstances, be higher than perhaps 20 per cent. or 25 per cent. in countries differently circumstanced.

When we pass from the current to the capital accounts we find that the State has been spending at an increasing rate on capital development. Capital expenditure has been increasing more rapidly than current expenditure. State investment is proceeding more rapidly than private investment. In the article in The Statist the Minister for Finance says:—

[139]“State-financed capital schemes now account for well over half of the total net domestic capital formation.”

He goes on to point out the great growth in these schemes. In 1950-51, when the State capital Budget was presented in a comprehensive form for the first time, the total was £25,000,000. In the two following years it exceeded £30,000,000. In this year the State capital Budget provides for an expenditure of £39,000,000. The debt charges in respect of this State capital expenditure are growing very rapidly. The Central Bank Report for the year ended 31st March, 1953, page 13, draws attention to the fact that many of the assets which are ranked as assets in the Capital Account of this State are not earning assets. It says:—

“This increase in the service of the debt may seem surprising in view of the growth of Exchequer assets as revealed by the table but many of these assets yield little or no revenue to the Exchequer and consequently the cost of servicing the debt brought about by their creation falls mainly upon the taxpayer.”

These are undoubted facts. I do not find fault with them. I think there are certain circumstances in Ireland which justify a considerable amount of capital expenditure by or on behalf of the State. The history of the country is one of underdevelopment. A great deal of leeway has had to be made up since the Treaty to develop our national resources. Many of the national development schemes require very large amounts of capital. In their nature, they are large and indivisible schemes. Bord na Móna, the E.S.B., C. I. E. are all investments that require very large amounts of capital. The return in some of our investments is rather distant. Afforestation, drainage, land reclamation will yield a return but it will be some years before full return is realised.

There is a shortage in this country of the ordinary source of risk-bearing capital. There is no very rich class of people in the country with a large surplus income. There is no great industrial tradition. High taxation on [140] individuals and companies has reduced the amount of savings available for private investment. I should like to return to a suggestion I made in the Seanad before, namely, the possibility of appealing in a slight and by no means vicious way to the speculative instincts of the Irish public to try to raise some risk capital. I mentioned this matter in this House before but everybody who spoke after me disagreed with what I said. I can now quote a very respectable authority. I have here a copy of The Times of the 21st of this month. In it is a report of an address delivered to the Manchester Institute of Bankers by Lord Piercey, chairman of the Industrial and Finance Corporation. I need not quote the whole of this report.

The point I want to make is that this gentleman, who is a very prominent figure in the financial world, draws attention to the fact that there should be some method of canalising the large flow of small savings into risk-bearing securities. He points out that the figures show that there must be scope for additional thrift in England. He points out that the very heavy expenditure on drink, tobacco and entertainment shows that there is some margin still for saving. He points out that there is a good deal of spending on waste. He argues that, in order to get at that margin for savings, some attempt should be made to appeal to the speculative instincts of the people which are so strong in England.

He refers to the lotteries of the early 19th century and suggests that the time has come to inquire whether some sort of lottery loan could not be revived. I mentioned that matter in the Seanad before but nobody agreed with me. I still think that it is an idea that ought to be explored. In fact, I think it is an idea that will come into practice sooner or later.

I am quite prepared to admit, in the circumstances of this country, that a good deal of borrowing by the State is necessary. It is very important from the point of view of the credit of the country, I think, that borrowing should take place at the lowest possible rates. I repeat that the present currency [141] arrangements, with large external assets, help in keeping down the rate of interest. That is distinctly stated in the report of the Banking Commission. I agreed with the statement the time the report was made, and I agree with it still.

Another matter is that the period of Government loans must be related to the maturity of the investment they are meant to finance. Some of these purposes I have mentioned would take a long time to mature. For a Government to borrow even reasonably short loans for long period investments is possibly involving future Governments in difficult conversion operations. Short borrowing, either from the commercial banks or from the Central Bank, for purposes of this kind, would be entirely wrong.

What is more important than the terms or source of the borrowing is the use to which the borrowing is put. I feel that if the investment is right, the actual details of the borrowing are a matter of rather secondary importance. When I say “right,” I admit that it is a very question-begging term. It is very hard to say what is the criterion of right or proper investment.

In the days of full-blown capitalism, when practically all investment was left to private individuals, the profit test was a very good rough and ready guide. I suggest that public investment could be largely subjected to a profit test to-day, that the various types of public utilities in this country which obtain their funds from State sources could be subjected to very rigorous accounting, accounting of the same rigour as that applied to the private industrial company. There could be the same bona fide allowance for depreciation, writing down of stocks, interest on all loans, and so on, and in that way a certain amount of misplaced or misdirected investment might possibly be avoided.

I do agree in general that, in regard to public investment in this country, the mere short period profit and loss test cannot be completely applied. There must be a certain amount of not immediately remunerative investment [142] and a certain amount of investment of an amenity or social kind which does not provide any liquid return. That brings me to another platitude, namely that the selection of priorities for investment in this country should be made on a very determined and rational basis. The investment council recommended in the Banking Commission Report, which has never been set up, could, side by side with the Central Bank, fulfil a useful function in this country.

What should the tests of proper investment be? The first, of course, would be an increase in national production and, above all, an increase in production which would relieve the balance of payments. There also are certain clamant social amenities which cannot be postponed. Hospitals, schools and a certain amount of housing cannot be postponed for any financial consideration. One type of investment which should not get a high priority is investment that carries a high labour content. The fallacy that work is an end in itself, that employment must be given at all costs, is a very expensive fallacy for Governments or Ministers for Finance and for the taxpayers.

Applying the rough tests I have suggested, how does the present investment programme fare? I come back to the article by the Minister for Finance. The £39,000,000 in the present capital Budget contains over £10,000,000 for housing, over £6,000,000 for health services and over £1,000,000 for schools. In other words, a very large fraction of it is for non-productive investment, investment which certainly will do nothing, in the short period, to ease the balance of payments position. That is why the Central Bank at page 15 of the report make the following observation:—

“In recent years our capital market has been almost monopolised by borrowing for the public sector, much of it for purposes which, however commendable on social grounds, cannot be relied upon to improve real output and provide employment on a permanent basis.”

I suggest that investment of this kind can have inflationary consequences [143] and that it is the cause of the inflationary symptoms which are appearing in our system to-day.

I venture on another platitude, that the primary financial duty of a Government is to keep up the value of money, to keep up the value of the monetary unit, without which all contracts, all social services, all promises and all debts become mere unrealities. The rise in the Irish price level in the past 15 years has been mainly caused by circumstances outside the control of the Irish Government. Sterling at present has become very largely a stabilised currency. There have been, in the last year, disquieting symptoms in the Irish price statistics. When import prices have been falling, and when world raw material prices have been falling, many Irish prices have been rising. The figures on page 11 of the Central Bank Report bring that out quite clearly. I quoted these last week on the Supplies and Services Bill and do not propose to repeat what I said then. The Central Bank draws attention to these indices and, on page 17, comes to the conclusion that inflationary symptoms are developing in the Irish system:—

“Money incomes in many spheres have continued to expand without a corresponding rise in output and so have tended to inflate domestic costs, thus reducing our ability to compete in foreign markets and lessening the attractiveness of the country as a field for investment and for tourism.”

The Minister will agree with me that if inflation is in the system it should be squeezed out. When you come to squeezing out inflation you come to difficult questions of policy. The correct policy may not be popular. May I suggest that it may be the greatest duty of Governments sometimes to do things which displease rather than please the population; that a policy of mere bread and circuses may pay in the short run but not in the long run?

Again, of course, it is another platitude to say that in the long run an expansion of production will reduce the inflation but, as Lord Keynes used to say, in the long run we are all dead [144] and we have to regard the matter in a shorter period.

I do not want to weary the Seanad with a long discussion on this matter but I feel it worth saying that there are only four ways in which, in the short run, an inflationary condition can be reduced. One is by reducing private expenditure on consumer goods. There is not very much room for a further reduction there because taxation is very high. The only place where possibly a further reduction could be considered would be in relation to the remaining food subsidies, which might be allowed to be reduced gradually. The second thing that can be done is to reduce the amount of private investment. Everybody is agreed that there is too little private investment in this country and not too much and, therefore, nobody wishes to see private investment reduced. If there is inflation in this country it certainly is not caused by excessive private investment.

The third thing that could be done is to reduce public expenditure on current account. I have already stated that except for economies in administration there is very little hope. That brings me to the fourth, and I think relevant, possibility, a reduction of Government capital expenditure. I would prefer if possible to avoid a reduction of capital expenditure from every point of view. I think it could be avoided if capital expenditure was always pushed in the right direction. If all capital expenditure as far as possible could be concentrated on primary production, agriculture and, above all, on exports, and if the return was not too distant, it might be possible to maintain the existing amount of Government capital expenditure without at any rate increasing the amount of inflation.

In regard to some of the amenity capital expenditures I think the Government ought to try to see that it gets complete good value for the money it expends. The largest single item this year is housing. It is a matter of common knowledge that building costs are unreasonably high. I suggest that one method of reducing [145] inflation, while keeping up the supply of amenities, would be to make very serious inquiry into the possibility of reducing building costs. Another item that accounts for a great deal of capital expenditure is transport. Everybody knows that the Irish transport system is suffering from a redundancy of labour. If these nettles are not grasped, the possibility of pursuing capital investment without inflation will become very remote.

Another point I should like to make is that the more productive investment there is the more unproductive investment becomes possible. The more production is raised by investment in agriculture and the primary industries the easier it will be to justify investment in hospitals, schools and houses.

I do not wish to weary the Seanad more than I have done already but I should like to repeat that I felt bound to enunciate a number of platitudes. These platitudes are, I think, the commonplace of domestic housekeeping. I would end on this note by repeating another point of great importance which I made. That is that, now that outside sources of inflation have come to an end, any inflation that takes place in this country must be laid at the door of the Government. It is the duty of the Government in the interests of pensioners, debt holders, salaried workers and everybody with monetary claims to avoid inflation at all costs.

Finally, I would like to repeat what I said in the beginning. I agree with the Minister that the possession of large external reserves in the Legal Tender Note Fund in the Central Bank is a force which tends to reduce and not increase inflation. It strengthens our currency and credit and generally increases the economic stability and health of the nation.

Mr. Summerfield: Information on Frederick M Summerfield  Zoom on Frederick M Summerfield  Like Senator O'Brien, I find myself in almost complete agreement with the Minister's approach to this very important matter of our external assets. I feel grateful for the exposition he gave us. As the Minister put it to the House, I see the matter this way. If we pursue [146] the alternative policy to that pursued by the Government, there would be definite and immediate inflation with all its attendant evils. We had a masterly exposition of the effects of inflation from our worthy Senator O'Brien. Having paid those compliments I say that at a time when we are dealing with an Appropriation Bill which covers the expenditure of huge amounts of money we would be failing in our duty if we did not emphasise the immediate need for all associated with the Government of applying to themselves and their activities those formulae that they are so constantly preaching to the people engaged in industry.

I was glad to hear Senator O'Brien pay tribute to the great efforts industry is making to increase its efficiency. lower costs, increase production, which means reducing prices and in giving better value. In other words, build up and strengthen the industrial fabric of the State. I hope what I have to say will not be taken as carping criticism if I say there is still a considerable amount of feeling in industrial and other sections of the community that the Government has still a long way to go, this Government and its predecessor, before they will be as efficient as the industrial arm they are so constantly criticising. That is not conjecture. It is a statement of fact borne out by the daily contacts of one who has not merely his ears to the ground, but is tuned in to the criticisms of people who find themselves struggling hard under adverse conditions to increase their own efficiency and who at the same time have to meet colossal costs of government.

There was another point raised by Senator O'Brien. I think it is one which the people have not fully realised. Is it not far better to have whatever sum of money we have in London earning interest, no matter how small, than have good stored which earns nothing at all? That is one point which emerged which will educate the public mind and lessen some of the criticism made by people who really have not studied this subject very well.

I am now going to do as Senator [147] Hayes did, jump to one or two other things. I feel that the general financial position has been ably dealt with by Senator O'Brien. In regard to the grant for schools, I was appalled—that is the only word for it—when one of my grandchildren who attends a secondary school came home and showed me her fourth reader, identical in every respect with the standardised English secondary school reader. That is what my little grandchildren are being taught, that their national heroes are Nelson, Drake and Frobisher. Surely to God, after 30 years we can do something with schools which get a Government grant and which, in effect, cause compulsory Irish to be negatived by compulsory imperialism taught in English. That position still obtains. I showed the reader to many members of this and the other House and, like myself, they were staggered that such a thing could be possible, but it was the case. Anything I tried to do met with no result. I want the limelight of public opinion to be focussed on that because I am not content to have my grandchildren taught that our national heroes are those of another country.

I do not wish to be disrespectful to the English, but it is it not time we had our children taught who our own heroes are out of books made and produced in our own country? If my remarks succeed in putting an end to that state of affairs, I think they will have served some good purpose.

There is another matter—that of transport. We now come very definitely into the realm of economics. The business of Dublin is rapidly coming to a standstill. It is chaotic, and if something is not done quickly business in Dublin will be completely paralysed. Business houses and shopkeepers will tell you their customers of long years standing can no longer get near their premises. Everybody who uses the streets knows that because of the inadequacy of the bridges to connect one side of the city with the other and, furthermore, the necessity to control the moving traffic at times to permit pedestrians to cross, there are hold-ups which are losing this country sums of money that nobody can compute. Do not forget [148] that when you have thousands of vehicles at a standstill for hours you are burning not petrol but dollars.

The question of employment is raised and the necessity for giving all the employment possible. I do seriously suggest that it should be a matter of extreme urgency to survey the situation in Dublin. I happen to be a member of the Port Board and I know what is happening there. Steps are being taken, in conjunction with the corporation, to see what can be done about another bridge. I am suggesting it is not another bridge but several bridges, several subways and a whole series of overhead crossings should be erected to enable pedestrians to cross from one side of the street to the other with a reasonable degree of safety. That would not be just expending money for employment sake but to relieve a colossal amount of congestion which will save thousands of pounds and also valuable dollars and enable the taxpayers of this country—because everybody converges on Dublin these days—to walk about with a degree of safety that is not now possible. I will conclude by reminding the Minister of what I said at the outset. Speaking as an industrialist I feel that most of my colleagues are with me in maintaining a situation which is infinitely preferable to any alternative I yet heard suggested.

Mr. Baxter: Information on Patrick Francis Baxter  Zoom on Patrick Francis Baxter  Speakers who have gone before me have kept fairly rigidly to their own fields and I will try to do likewise. My competence to deal with problems in my own part of Ireland may not be enable me to make the interesting contribution to which we have listened from Senator Hayes, Senator O'Brien and Senator Summerfield. The matters with which they dealt are part of the nation's problems but even though these problems may have been discussed by them rather in the abstract, they cannot be separated from the people of Ireland.

Senator Hayes is interested, naturally, as an educationist, in the education of our young people, the training of their minds. Senator O'Brien, in the realm of economics, has spoken as he almost always does with [149] clarity and understanding on a rather complex problem. There are certain aspects of that problem which I would like to discuss but I am first going to try to deal with a few matters that are of particular concern to me.

Whether you speak of education or of the manner in which the nation's finances are being handled and the purposes for which these are being utilised, the truth is that these services, in so far as they are applied to the lives of the people through Government policy, are going to determine whether we will make progress, whether we will remain static, as we appear to be to-day, or whether we will just go further into a decline.

I spoke here last week, but I do not think the Minister for Industry and Commerce was too satisfied with my contribution. It is always difficult to be realistic about your problems and at the same time not stir the ire of a Minister who has the obligation cast upon him to use his particular Department and the powers vested in him for the uplift of the nation. Speaking of primary education, Senator Hayes told us that 90 per cent. of our children never got further than our primary schools. What Senator O'Brien's speech on finance amounted to was that, in the main, the finances of the nation must be utilised so as to do the best possible for this 90 per cent. of our children.

Senator O'Brien pointed to the wisdom of ensuring that where you had capital investment it was essential for the nation's progress that that capital should be invested so as to produce the goods that will enable us to increase our exports, and that on the strength of an economy like that you could carry a number of passengers; in other words, you could build hospitals, increase amenities, and so on.

If I were in the Minister's position to-day, or in that of any of his colleagues, I confess that I would be truly alarmed at the picture of the nation as I see it. We have here the figure which we are spending on old age pensions. That figure will increase in the years ahead. The people [150] are living longer, but what is tragic about it is that the proportion of old age pensioners to the rest of the population is going to increase year by year. Where are the 90 per cent. of the children who never get further than the primary school going to live in the future, and what are they going to do? I will not try to analyse this problem further now. I have done so in years gone by, as even Senator Quirke will admit. I have pointed to this problem of emigration many years in succession in this House. It has gone on under successive Governments and it is just frightening.

Senator O'Brien is quite right— where there is spending to be done we ought to invest to the limit in the development of agriculture. I do not quite agree with him that by investing in drainage, and land reclamation you will have to wait a very long time for a return on your investment. I do not think that is so. We have probably under water to-day an area equivalent to the extent of two existing counties —new land we could make in the country. We would get an immediate income from that land if you could use it. We may have to wait one year or two years, but certainly at the end of two years if it were properly handled it would be in full production, giving its maximum yield, much more than the owners have ever seen it produce before.

We certainly will not have to wait very many years for a return on our capital invested in drainage and land reclamation. We are not doing half enough of that. There is great need to accelerate the pace of reafforestation.

The main fact which stands out before all our eyes is that despite the increased capital investment which is going on, one year after another, we are failing to keep our people at home. Why is there no one to give an answer? There are dozens of answers. but combined I do not think all of them would be half the story. Unless we can find the answer to all this, we can carry on over the years the expense of expanding the capital investment programme, we can improve land [151] and build up towns and cities—but for whom? Not for the Irish, who seem to be much happier in other countries than they are in Ireland and many of whom I believe are prepared to take work and a type of employment and can be happy and satisfied in it, that they would not be satisfied with at home. That is part of our problem. Indeed, if analysed it may be the major part of our problem. However, we are doing nothing about it anywhere in the Oireachtas, though the problem needs to be tackled.

There are factors in rural life to-day which influence people as to whether they will stay and develop what they have, or fly away to another country. The majority of the farming community to-day lives in regions where their homes are practically inaccessible, owing to the nature of the roads over which they have to travel. I do not know how many Senators have tried out for themselves the conditions of many of the county roads, or if they know the conditions under which many of our people are compelled to live to-day. I know it is commendable to spend money on tourist roads. We want dollars and we do not object to sterling, especially if it is convertible into goods and if it does not depreciate so quickly that, having stored it for a while, when we go back to turn it over, we discover it would only buy 50 per cent. of what it would buy originally. If British tourists come they are welcome and we will see what we will do with their sterling when they put it on our tables. Irish people living on Irish farms, whether in Cavan or Cork, whether in Donegal, Mayo or Limerick, are finding conditions very difficult for them to-day. They have bad roads to traverse to get from their homes to fairs or creameries. As a result, they are becoming dispirited and discouraged and it is very difficult for many of them to keep their families with them in the country. That is an urgent problem. Perhaps some counties are worse than others—but it has not been tackled and it ought to be tackled.

Many well-meaning people speak about the things you have to do for [152] the country. The Oireachtas has the power to do things for the people. There are members of local authorities here on both sides of the House. Here is a sample of what you get. Water supplies are non-existent in many parts of rural Ireland. In my county we have been trying to spend certain limited sums out of our own resources to give conveniences to the country people—to erect pumps at national schools and in centres that would be convenient for groups of farmers. We have had to do that entirely out of ourown resources. If small groups of 20 or 30 families get together in a village or if larger groups get together in our small towns, all the local authorities are able to procure grants from the central authority to facilitate the installation of water supplies for those small communities. But if they are living out in the country, the local authority will have to provide that service out of its own revenue.

I do not think that is right. It is essential for us to encourage the people to remain in the country. Therefore, we must provide them with the services which normal civilised people require in these days. The absence of some of those services is a factor influencing the minds of the young people. I want to bring that to the notice of the Minister because I believe it is a problem that ought to be faced.

When I addressed myself to the situation under the Supplies and Services Bill, I indicated that I was not satisfied that in agriculture we had much evidence of progress—at least, such evidence of progress as I want to see. I am not satisfied that a declining population here will be able to sustain an increased burden of taxation year after year, the servicing of an increased capital investment and so on, unless our own revenue is correspondingly increased. I venture to express the opinion that, in the year ahead or in the next couple of years, we may conceivably have a larger volume of export of agricultural produce and receive for it a lower income than we have been receiving for the smaller quantity in recent years. I believe we ought to face that problem. The [153] Tánaiste indicated in a speech that if that should happen it would be wellnigh disastrous; yet it is something we may have to anticipate. I fear that something like that is confronting us and that it is not very remote.

I would like to ask the Minister to-day what he anticipates is going to be the consequence for the country of the decontrol of meat prices in Britain when that comes about in May next. What effect will that have on farm prices, on the price of cattle, pigs and sheep? Will we be able to hold the present prices or does the Minister anticipate a decline? What are we doing about it?

On the competence of our agriculturists to hold their own in a foreign market and to earn large incomes and thus obtain foreign exchange depends the ability of our industrialists to provide themselves with the furnishings that are necessary to enable them to go on with their job. Indeed, only for the slavish toil of our agriculturists— who sometimes get very little credit for what they are doing and who, although they form nearly 50 per cent. of the population, have to be satisfied with about 30 per cent. of the national income—quite a number of people who are boastful about the advance of industry to-day would be able to do very little if, indeed, anything at all, in industry. I doubt if the significance of the part that agriculture and our agricultural experts are playing in providing the nation with foreign exchange—which, in turn, provides us with raw materials—is properly appreciated.

It is essential to make a heroic, intelligent and co-ordinated effort to get more agricultural land into production and accordingly to increase the volume of our exports. I cannot see anything in our advance over the past couple of years to give us great cause for satisfaction. I am not quite clear what Government policy is at the moment in this regard. Last week, during the debate on the Supplies and Services Bill, I pointed out that while we had increased our tillage area under wheat we had a decline in the acreage under oats and barley which had the effect [154] of reducing very considerably the over-all improvement in respect of certain roots and grains. In spite of a great deal of very active propaganda, we had a net gain of 32,000 acres under tillage last year.

Frankly, I admit that I have to express great disappointment at that result. There are causes for it which must be analysed. Some figures in relation to our live stock have gone up and some have gone down. There is an over-all improvement, but it is only trifling in comparison with what we should be aiming at.

I have emphasised on many occasions here that we must speed up land rehabilitation. If I had my way, I should have many more machines and many more people working on the land project than we have to-day. No matter how the money or the capital is provided, we should be justified in spending it on this work—provided always, of course, that the men will work. On the whole, from my own experience and observations, I have no fault to find with the way men are working on that scheme. We should not put off this important work indefinitely. The sooner it is done the sooner we shall raise the productivity of the land. We may add to the productivity of the land by as much as 50 per cent., and that in turn will add to the volume of agricultural produce which we shall have available for export. If we raise the farm income we shall automatically raise the standard of living of other people as well.

I fear that we are about to witness a decline in the price of agricultural produce. If our contributions to the national exchequer and to the local exchequer and to the people whom we employ in every field of activity continue to increase while, at the same time, our own income diminishes, I fear that something will happen on the land which will make it difficult to hold even the small number of persons remaining on it to-day. Anybody sitting on the opposite benches who has a full appreciation of the situation will agree that what I have said is true.

Far from discouraging and making disparaging comments on the new equipment and machinery which we have imported for work under the land rehabilitation scheme—machines and [155] equipment which we never have seen working on our land before—and far from reducing in any county the number of persons employed at this work, we should do everything in our power to promote it. The more quickly we rehabilitate the land of our country the better it will be for our people as a whole. I do not believe that it would be a foolish investment. Some of the money may not be too well spent but at least you will have created something that will live after you. I think that we can profitably employ a much larger volume of capital for that work than we have up to the present. In addition, we can usefully employ many more persons on that work.

I regret the Minister is not present in the House at the moment because I should like some clarification from a person competent to do so of a statement made by the Minister for Industry and Commerce here last week. He was replying to the debate on the Second Stage of the Supplies and Services Bill. I do not know whether the following extract from his speech was in reply to a point made by Senator O'Brien or whether it was as a result of anything I said during that debate. Here is the extract as reported at column 62 of the Official Report of the Seanad Debates, Volume 43, No. 1:—

“There may be a difference of opinion as to what acreage of wheat it would be desirable to maintain in normal times. A Government committee which as shortly after the war decided that 250,000 acres would be ample to give us a reasonable security and to keep the tradition and knowledge of wheat-growing alive throughout the country. We got 350,000 acres of wheat last year and we may have 450,000 acres next year. There may be circumstances in which it may not be a bad thing to have that substantial increase, but there may also be circumstances under which it could be a financial burden.”

Which figure does the Minister for Industry and Commerce want? Does [156] he want 450,000 acres or 250,000 acres? I should like that point clarified at the earliest possible moment.

We have talked a great deal about the growing of wheat. In my view, we have gone too far altogether in emphasising its importance in our total agricultural economy. I think that it is unwise to do so and that it can have the effect of sending people off on a tangent, as it were: that is all it amounts to. When speaking of 450,000 acres or 250,000 acres, let us ask ourselves what acreage means when you have 11,000,000 acres to deal with. It is on the rest of the country that the strength of our economy must depend. In the last analysis is there much point in the growing of wheat and in lessening our acreage under oats and barley, thus necessitating the importation of oats and barley, or their equivalents, for our animals?

At another point in his speech, the Minister for Industry and Commerce referred to the cost of home-grown wheat. My impression, after reading the paragraph which I have just quoted, is that we are not quite clear what the future policy of the Government is with regard to the acreage they require under wheat. In any event, the Minister for Industry and Commerce said: “There may be circumstances in which it may not be a bad thing to have that substantial increase....” Are the circumstances with us? Are they anticipated or have they passed? Here is where we want Government direction about what agricultural policy is going to be.

Where do we stand, then, with regard to other aspects of policy? It is obvious to me—I do not expect the impossible—that we are going to have difficulties in regard to our live-stock shipments in the future and the prices we will obtain for them. We have security of price over a certain area of grain growing in the shape of wheat and root growing in the shape of potatoes. What is going to happen with regard to our dairying industry? Is there a solution for our dairy farmers in 1954. I should like to hear it, if there is. Are we going to have the same guaranteed price for milk in 1954 as obtains to-day?

[157] These are all considerations that weigh with the farming community. They are factors which play a large part in determining whether boys and girls are going to remain in the country or going to fly out of it. They determine the level of income of our farming community and the level of income determines their taxable capacity and the strength of our farming economy, as was so clearly and definitely pointed out by Senator O'Brien, determines the kind of national structure we are going to build here and the number of passengers we can carry. We are spending a great deal of money on health services and social services of one kind or another and we may be coming to the point when we are making provision to overspend, when the funds will not be available upon which to draw to provide ourselves with these services.

Unless there is a balancing up; unless there are people who can see the other side of the picture, and especially who can see the importance of the agricultural community to the nation, and the necessity for making every effort to put their land in a condition in which it is capable of giving to the country everything it is capable of giving; and unless Government policy and the capital investment programme is managed in such a way as to make this possible, all the other schemes of the Minister and the Government will fall by the wayside.

Professor Johnston: Information on Joseph Johnston  Zoom on Joseph Johnston  For very special reasons, I welcome the fact that the Minister for External Affairs is in charge of this Bill. At the same time, I think we must all regret the absence of the Minister for Finance and express the hope that he will soon be with us again, fully recovered to his normal health. It was perhaps a new departure when the Minister introduced his statement to-day by making some fundamental remarks about our general financial policy. I have nothing to add to what the Minister said or to the comments of my colleague, Senator O'Brien, except to welcome the Minister's statement and to express agreement [158] with both of them in all fundamental respects.

My approach to the subject matter of this debate is based on the belief that our major economic difficulties are due not so much to domestic policy as to external circumstances which we have done nothing to create and can do little to undo. It is because the Minister for External Affairs exercises, in that capacity, the function of implementing a wise external policy that I am particularly glad he is here to take part in this debate. The major cause of the high cost of living and the high cost of government is the fact that the world at present is bearing a terrific burden of rearmament. The richest country in the world is spending 50,000,000,000 dollars a year on that purpose and that cannot take place without having an effect on the standard of living of everybody everywhere.

May I illustrate the extent to which we share a common fate with regard to the high cost of living of which everybody complains? I get regularly an Economic Bulletin for Europe published by the U.N.O. I happened to look through it last night, and on page 48 of that Economic Bulletin for Europe, second quarter, 1953, I find a table giving particulars of the rise in the cost of living of 19 countries, including our own, based on the year 1948 as a standard year. Of these 19 countries, 11 had a greater increase in the cost of living than we had and seven had a lesser increase. Our cost of living in July, 1953, was 126 compared with 1948 as 100. Even Denmark, that model country, had a cost of living index of 127 and the United Kingdom a cost of living of 131—higher than ours. The point is that practically every one of these 19 countries showed a substantial increase in the cost of living and, therefore, we were the victims of some cause which was operating on an international scale. That seems to me to suggest that it is important that we should have an objective outlook on the European scene and have the wisest possible policy with reference to international affairs, however little we are able to influence the course of these affairs. Our material influence [159] may be very slight, but our moral influence may be considerable.

I should like to make a brief retrospect of the events which led to the present state of international tension. The second World War was fought— we were told at the time—to bring about the demilitarisation permanently of Nazi Germany and that policy seemed to prevail for about a year after the end of the war. About 1946, however, a diametrically opposed policy suddenly commended itself to the leaders of the Western Powers and it became the policy to revive Germany as the spearhead of a new military alliance, so that it seemed that so far from the second World War having been fought to destroy Nazi Germany, it really was fought to decide which of the capitalist nations of the Western World should have the honour of leading in a crusade for the final destruction of Russian Communism. In fact, it seems as if the policy advocated in the last year or two of the second World War by the late Lord Haw-Haw is now the dominant policy and it is a pity that he was hanged when he was because his advocacy of that policy would be most eloquent and typical.

I feel myself, therefore, in a mood of cynical disillusionment with regard to wars in general, and my general attitude is to recommend that this nation should advocate and pursue an attitude of pacific neutralism in any future question of world wars. It has been said that pins have saved the lives of a great many children by their not swallowing them, and in the same way, world wars have saved the lives of a great many small nations by their not swallowing the propaganda that would lead to their participation in such wars. I am sure the Minister deserves all possible credit for maintaining that attitude during World War II and I hope he will maintain the same attitude with regard to World War III. My general advice with regard to world wars would be the same as that of Punch to those thinking of getting married: “Don't.”

[160] It is a direct question of external policy whether we should join the so-called N.A.T.O. or U.N.O. or both. Even if we were a 32-county Republic I, personally, would be utterly opposed to our nation joining the N.A.T.O. as at present organised. To my mind, its present policy is utterly inconsistent with the principles of the U.N.O. The latter is an organisation I think we should join if the U.S.A. veto could be removed.

It remains to be considered what should be our practical attitude to the Communist menace which is the background of the rearmament drive that undermines the economic stability of all Europe. My attitude to the Communist menace is that of a person who regards himself as a disciple of the late Bishop Berkeley and, in more recent times, of people like George Russell and Sir Horace Plunkett, whose general outlook was that they sought to develop the capitalistic economy in which we live in the direction of a co-operative commonwealth and establish a principle of social justice in the economic relationships between the various classes of our capitalist society.

Communism is most apt to strike a diseased national economy. The best protection against the danger of Communism is to have a healthy and vigorous national economy. It is just like the danger from microbes. If your resistance is weak and low the microbe is apt to give you a disease but if you are vigorous and healthy and your resistance is good, you may very well escape. If the world should suffer the misfortune of a third world war it is much more likely to promote the spread of Communism than destroy it. As a result of the two world wars a vast addition has been made to the total number of people in the world who live in a Communistic economy to-day.

Even the large scale rearmament now taking place may strengthen the Communistic menace instead of preventing it. It is like the person who decides to commit suicide for fear he might get killed. The strain on the [161] economy of Western Europe is considerable. There is a real danger of an economic breakdown in France and Italy, and if an economic breakdown occurs in such countries the Communist propagandists would have admirable possibilities of pursuing their propaganda.

It is possible that the Russian Empire may seek to spread itself by military force over the whole world. Psychologically, I do not think the Russians are thinking of anything of the kind at the moment for the reason that they have a grimmer experience of two world wars than anyone else. They lost 10,000,000 of their citizens in the last war and their country was devastated. As I said, they have a grimmer experience of the realities of modern war than any people in the world and I think they are highly unlikely to contemplate war on the rest of the world.

An Leas-Chathaoirleach:  Would the Senator come back to home affairs now? He has dealt at length with world conditions and with affairs in the Far East.

Professor Johnston: Information on Joseph Johnston  Zoom on Joseph Johnston  I must say that I welcome the fact that the Minister and the Taoiseach lately broke bread with Sir Winston Churchill. I hope they took the opportunity of seconding his efforts to bring about a direct contact between the various major powers in the world who have in their hands the decision of the world's fate, including our own. I would regard any proposal to join N.A.T.O. as sheer madness, but I would welcome the success of any proposal to join the U.N.O.

Having exhausted my mandate from the Chair's point of view, though not, perhaps, from my own point of view, I would like to mention one or two other matters. As for capital expenditure, I personally am more interested in the objects on which public capital is expended than I am in the total amount of that expenditure. It is conceivable that we might spend £30,000,000 on foolish and ill considered objects without good results, whereas [162] we might spend £50,000,000 or more on a wisely drawn up plan of investment projects with nothing but good effects to the economy as a whole.

Therefore, I should like to emphasise the suggestion of Senator O'Brien that the really important thing is to have the right priority among projects of investment. I think that more consideration should be given by a properly qualified body to the order in which various capital expenditures on public account should take place. I notice that there is a considerable amount of public expenditure on straightening and improving our main roads.

That is all very well for the person flying through the country at 40 miles an hour but it coincides with the fact that the by-roads of the country are in a deplorable state of neglect. Many country people in many country areas find it impossible to use any kind of vehicle on these roads without the risk of a mechanical breakdown. It is not fair that the country people and ratepayers should have to contribute at all to the upkeep of the main roads which are mainly of interest to long distance traffic. Much higher priority of time and place should be given to expenditure on local by-roads and the higher priority now allotted to expenditure on the main national highways should be considerably reduced.

Another matter that arises in that connection is the proposal to build a new bridge at Athlone. That was referred to lately elsewhere. I only want to add my voice to those who deplore the building of a fixed bridge at Athlone making it impossible for anything but a small rowing boat to come from the upper to the lower waters of the Shannon. The Shannon, as a waterway, is one of our greatest national assets, potentially capable of considerable development in the interests of touring and holiday making generally, both for our people and our visitors.

Every year there is a regatta at Dromineer on Lough Derg and sailing boats from Lough Ree come regularly to that regetta. It is an important social function attracting people from [163] all over the country. It would be a calamity if any obstacle was put in the way of that natural intercourse between people on the upper and lower reaches of the Shannon.

I do not know whether the Minister has come across a book written by a very sympathetic Englishman called Rolt. The name of the book is Green and Silver. In it he describes a holiday which he took in 1947 in Ireland. With the help of a hired house boat he passed over not only the Shannon but also the Royal and Grand Canals. He gives a most delightful account of the voyage he made and of his contacts with the people in the various parts of the country. He might only be the pioneer of hundreds like him if only we developed this magnificient highway instead of strangling it by building a fixed bridge at Athlone. I hope nothing will be done which will permanently deprive the Shannon of one of its principal attractions.

In the course of that book he drew attention to the fact that he was able to proceed within a mile or two of Lough Allen but unfortunately what used to be a canal making possible navigation up to Lough Allen had been done away with by reason of the shortsighted attitude of the E.S.B. Some years ago the E.S.B., in order to lower the level of Lough Allen and get additional water for their power station, had dried up what used originally to be the canal connecting the upper reaches of the Shannon with the lake. The result is that it is no longer possible to navigate right up to Lough Allen.

That has considerable economic significance because on the shores of Lough Allen are the Arigna coal mines which are now producing coal in considerable quantities. However, the coal they are producing is piling up outside the mines and, owing to transport difficulties, they are unable to get rid of it in a way that would be highly desirable if they could use the water transport which is almost at their doorstep. The obvious thing to do is to restore navigation right up to Lough Allen and develop the Shannon waterway as the [164] means of carrying Arigna coal to all parts of the midland regions.

It should be a part of our national policy to develop all our waterways to the greatest possible extent. Nothing would do more to restore the economic situation of people living in that part of the world than a vigorous and successful development of the Shannon and other waterways for purposes of water transport.

Mr. O'Donnell: Information on Frank Hugh ODonnell  Zoom on Frank Hugh ODonnell  It is rather unfair to expect the Seanad to discuss this Appropriation Bill at such short notice. I hope the Minister will convey to the Dáil our feeling in regard to the fact that this very important Bill should be presented to us and discussed within a few hours. This is, so to speak, the annual general meeting of the Irish Republic. It is a very important meeting. It is a meeting of our shareholders generally at which we get an opportunity of conveying our comments, our criticisms or our applause to our managing directors and to the various managers of our Departments.

The most important department in a firm is the counting house, and it is the same with the Department of Finance in relation to the Government. In this regard, let me say that I am glad to see Mr. Aiken deputising for Mr. MacEntee. I also wish to join with Senator Johnson in hoping that Mr. MacEntee will soon be restored to his full health and back in harness again.

It is wise to deal with this Bill from the point of view that it is our annual general meeting. Apart from any Party or political point of view, we should simply put ourselves the question as to whether the managers whom we have appointed and who are removable, apparently, are doing a good job of work in running our firm. The discussion which has already taken place on this Bill has, to a certain extent, been of a highly technical nature and it has had very little human quality about it.

The final test of the adequacy of the managing directors and directors of this company is: have they given the ordinary man in the street as full a life as they possibly could have or might have under any other aegis? Has he got, as a result of the fact that he is alive, all his necessities as far as [165] they are available to him or has any artificial stringency been allowed to interfere with his securing these things? That is the basis on which we must discuss whether the Appropriation Bill is deserving of our support or not.

It is a difficult matter to assess whether this Government or any previous Government has failed or succeeded in giving the man in the street the share to which some of us at least think he is entitled. That is entirely and individual point of view and a matter for individual assessment. But when we get on to the technical manipulation of currencies and get away from the human aspect we are inclined to be led astray and to speak emotively, as it were, without very often speaking realistically although the Minister said we must speak realistically on this matter.

Let us consider this awful question of inflation. It is pointed out that it is the greatest bogey possible to people. I know of economists as eminent as Senator Professor O'Brien —I think the Minister himself has read some of them—who will agree that under certain conditions inflation is not a bogey at all. Senator Professor O'Brien said here a while ago a rather extraordinary thing. He said there was an inflationary tendency. But that presupposes—that is, if the general definition of inflation is accepted—a surplus of money over goods. Surely any of us engaged in commerce at the moment know that is not true. The average commercial undertaking—I am speaking generally because there are individual exceptions—whether it be the private distributing firms such as the grocer's shop in the back street or in the main street for that matter, or the manufacturing firm, is finding a decline in purchasing power. You cannot have two things as a corollary: you cannot have an inflationary tendency and a decline in purchasing power. No matter what the Central Bank may tell us—and figures can prove anything; that is the main trouble where figures are the criteria—the main criterion is the fact that the average [166] man and woman in the street are still grousing about the fact that they are finding it extremely difficult to live in this country. When Senator Professor Johnston puts up the argument that other countries have to bear an increased cost of living, that does not solve our particular difficulty.

I agree with the Minister that in certain circumstances external investment can have a virtuous quality but so long as there is unemployment and so long as the country needs to be developed, external investment has no virtue at all and its earning power, which was the reason given for it by my friend Senator Summerfield, should not count at all.

I think of Tom Moore's friend, Oliver Puff, who spoke in two different voices, when I hear Mr. Aiken speaking here in a slightly different voice from that of Mr. Lemass the other day. I am wondering if there has been a fusion of opinion upon this matter as to the dangers or virtues of external investment. It is evident that in the Government there has been a change in financial policy. I am glad that some of the policies advocated by some of the smaller and more intelligent Parties have been adopted by some of the Ministers.

Business suspended at 6 p.m. and resumed at 7 p.m.

Mr. O'Donnell: Information on Frank Hugh ODonnell  Zoom on Frank Hugh ODonnell  I do not want to recapitulate what I said prior to the Adjournment. I had said this was the annual general meeting of the Irish Republic. I would like to say something now I did not say then—I hope this bird's-eye view of the national position will be treated in a non-political and non-Party manner. National economy is bigger than Parties or politicians and I hope that any bitterness or recrimination will be avoided. I am prepared to admit that any other person here is as nationally minded as I am; and if I have a different point of view on finance or on the financial structure or administration, it should be accepted that I am entitled to that point of view and I should not be abused for having it. I say that because, unfortunately, on the last [167] occasion on which the Minister was here, when I expressed an opinion that was contrary to his, he had the misfortune to refer to me as one of those——

Mr. Baxter: Information on Patrick Francis Baxter  Zoom on Patrick Francis Baxter  Forget it.

Mr. O'Donnell: Information on Frank Hugh ODonnell  Zoom on Frank Hugh ODonnell  I cannot remember the exact term, but it was a rather opprobrious one. I hope that in referring to anything I have to say now, he will remember that I am talking in a strictly non-political and non-Party way. When speaking earlier, I said that the ultimate criterion as to whether a policy justifies itself or not is whether it is giving results to the people or not, in food, clothing, shelter and essential requirements. Senator O'Brien has returned to the House, so I would refer again to his statement about an inflationary tendency setting in. I said I thought it very difficult to reconcile his statement with the known fact that trade generally is complaining of a recession. If there is inflation, surely as a corollary it indicates there is a shortage of goods and increased purchasing power. That is not the position here at the moment. Whether it is reduced purchasing power or not I do not know, but it is a falling purchasing power. Many trades, including textiles, which showed some recovery three months ago, have relapsed to their former position, which shows that consumption or purchasing power has fallen. Whether that is due to the incidence of taxation or to the nondistribution of money, which the Minister has said the Central Bank by the authority of the House could produce if it wished, is a matter for debate. The fact of the matter is that trade has been falling for some time and that there is no sign of inflation to the ordinary man in the street. The figures which we get and look at en masse do not reflect that. Figures in themselves en masse do not reflect the way the ordinary man has to live.

The Minister referred to taxation and its incidence upon industrial progress and industrial investment. Senator O'Brien gave a quotation which showed that more than half of [168] the capital structure of the State was Government creation. Although this is a relatively young country, one could argue that that position was a necessary one because of our situation; but the continuance or growth of capital control by Governments is in itself a potential danger and may lead to a form of nationalisation which would not be quite in keeping with the democratic outlook of the Irish people.

Senator O'Brien said we had not many wealthy people, and consequently had not a high value investing public. That is true. In the main we have per capita quite an accumulation of savings here which I think is relatively high compared to European countries. I see my friend looking askance at me. I am thinking of the Scandinavian countries and probably Holland.

I cannot talk about France because it is difficult to say what the savings are there. However, you would find a higher amount per capita hidden away in reserve, as it were, in the Scandinavian countries and in Holland than in most other countries. That money is lying there dormant and, to some extent, our external assets might be better employed if they were invested in this country because they would help to solve some of the under-development from which our country still suffers.

Of this total sum of £111,000,000 odd which we are asked to vote this evening, I find it impossible, owing to the short time at my disposal, to find out what proportion goes on what I would term purely non-productive sources. It seems an appallingly high sum of money to have to invest for purely State administrative purposes. I should like the Minister to tell me, when he is replying, what proportion of that amount is devoted to productive sources—I am thinking now of short-term productive sources—and what proportion is devoted to purely administrative sources.

Senator O'Brien and Senator Summerfield indicated that it might be well if the Government employed some of the business acumen in the conduct of their own administrative affairs which they expect other businesses to [169] employ. Every day I see evidence of tremendous wastage in Government Departments. Like every other Senator and Deputy, I get on an average of from six to 12 letters per day from various Government Departments. When these letters reach me I find that each of them is separately franked. One would think that there would be a general register in this House which would make an ultimate saving. When I see evidence of minor wastages of that nature I cannot but feel very dubious about the position in regard to higher expenditure. Recently I learned, in relation to a certain Government-controlled industry here, that three very long-distance phone calls are automatically made each day to the centre or sub-centres, whether these phone calls are required or not. That is the sort of wastage in administration which I think Senator O'Brien and Senator Summerfield had in mind. I am well aware that the Minister for Finance would not favour it.

It should be possible to effect administrative savings. If I take it for granted that the total amount of this £111,000,000 will be devoted entirely to administrative purposes— and I know I am on a false thesis in so arguing—it seems a tremendously high proportion of our national income to hand over to a Government for administrative purposes. The question of making the administration as economic as possible should be thoroughly investigated. It has been known to happen that certain civil servants—some of whom are fairly high in the order of precedence—were seconded to other Departments and positions and forgotten about. I know myself of three men who were seconded by a certain Department to do a certain job. They completed that job in a short time and six months later they were still awaiting instructions from a particular officer in their original Department to go back to resume work there. I do not say that that often happens but an incident of that nature can happen in a big enterprise such as the State.

The State is a big enterprise and right through it there can be tremendous [170] wastage in the matter of efficiency of administration. I should like to emphasise that I am not talking on Party lines now. Any other Party in office might have to apply for a sum of money as large as that which the Minister is applying for to-night. After all our years here and all our talk about the economical way in which we live in our own country, practically one-third of our income is being apportioned in our appropriation accounts for administrative purposes. I am not saying that it is pure waste; it is not. The cost of running our State is heavy and in any event a good deal of the money comes back again in a productive form, one way or another. However, in relation to our national income it seems a high proportion.

We have heard arguments by Senator O'Brien and the Minister to the effect that external investment in itself is good and holy.

Mr. Baxter: Information on Patrick Francis Baxter  Zoom on Patrick Francis Baxter  He did not say “holy”.

Mr. O'Donnell: Information on Frank Hugh ODonnell  Zoom on Frank Hugh ODonnell  I hope he will forgive the paraphrase. Under certain conditions, they are probably justified in saying so. However, when you come down to the ordinary human factor and realise that this country suffers from the twin evils of unemployment and emigration, it is very difficult to reconcile oneself to the idea that external investment is good, no matter what it earns. I think that Senator O'Brien said the other day that the repatriation of our external assets should not occur unless they earn at home at least as much, if not more, than they are earning abroad, and that employment, in itself, is not a virtue. I would argue the very reverse. However, we should bring this House to the level of a debating society if Senator O'Brien decided to argue that point with me now. So long as external investment has, as a corollary, the twin evils of unemployment and emigration, it is nothing to be proud about and is, I think, an evil. I remember a time when many people who disagree with this point of view now agreed with me fully that, in certain circumstances, external investment is a bad thing. Would anybody tell me what [171] the safe limit is in regard to external investments? Senator O'Brien or the Minister mentioned that farmers would like to have half their annual income laid aside.

There is the question of the depreciation of currency—another aspect of our external investments on which one would like to talk a great deal. We could have a discussion on whether our external investments show only a monetary value and not a real value in comparison with what they represented years ago and whether it would be possible to convert them into machinery and other forms of goods which would help our internal national wealth. What is the value of our external investments now compared with their value then? Even if there were depreciation during the three years of the inter-Party Government in the value of our external assets which are invested to-day in capital investments of one sort or another, is it not better that they were brought in at the then price than at their price to-day?

Is there any virtue in leaving money, which per se has a depreciating value over which we have no control externally, invested, when to-morrow, due to a war in Jamaica, the break-up of the British Empire or some untold fanciful reason, the £ sterling might become of no value? What, then, about our external assets? Taking it at its lowest value, does it justify a single emigrant leaving our shores or a single man being unemployed here? It is all right to theorise about these things, but there are still people leaving the country and still people unemployed here.

When I hear people talking about inflation, I wonder what is happening. Industrialists like Senator Summerfield, others and myself are breaking our hearts to sell goods to people who want them. There is scarcely a member of this House who does not want something—it may be anything from a Volkswagen car to a packet of cigarettes. The demand is there and the goods are there, but the purchasing power is not there, and, so long as we have that condition of affairs, there is no inflation. There may be theoretical [172] inflation—Central Bank inflation, if I may so describe it—but, speaking realistically, there is no inflation.

There is a query which has been in my mind a lot that I should like the Minister to answer: what is the relationship between our external investments, on a percentage basis, and our requirements? In other words, what would be the safety margin, if a safety margin is required? Is there any virtue in having, say, £50,000,000 invested externally as against £220,000,000 which the Minister says is invested now and, if there is, what is it? Is there any virtue in having £10 as against £10,000,000 so invested? I want to find out what is the advantage to us as a nation, beyond that very dubious advantage mentioned by Senator O'Brien, the value of our credits. Senator O'Brien mentioned some currency which had depreciated 200 times. I am not quite sure of the country to which he was referring, but, if my impression is correct, it is a very small country.

Professor O'Brien: Information on George Augustine Thomas OBrien  Zoom on George Augustine Thomas OBrien  I did not say it; it was the Minister mentioned it.

Mr. Aiken: Information on Frank Aiken  Zoom on Frank Aiken  I did.

Mr. O'Donnell: Information on Frank Hugh ODonnell  Zoom on Frank Hugh ODonnell  I am sorry; I should hate to ascribe to Senator O'Brien what the Minister said. I wonder would the Minister tell us the internal position of that country? Has there been unemployment in it and emigration from it? We seem to be living with the old 17th century idea of economics, that it is a good thing to have a credit-worthy name in financial terms, whereas it can be a very bad thing in certain conditions.

Mr. Hawkins: Information on Frederick Joseph H Hawkins  Zoom on Frederick Joseph H Hawkins  They would be very imaginary circumstances.

Mr. O'Donnell: Information on Frank Hugh ODonnell  Zoom on Frank Hugh ODonnell  I will debate this matter with Senator Hawkins any time he likes.

Mr. Hawkins: Information on Frederick Joseph H Hawkins  Zoom on Frederick Joseph H Hawkins  Anywhere you like.

Mr. O'Donnell: Information on Frank Hugh ODonnell  Zoom on Frank Hugh ODonnell  There are indications that, so far as financial matters are concerned, there has been a slight progressive alteration in the point of view of the Government, and I welcome it greatly. I welcome the national [173] development scheme announced by the Taoiseach recently, and I particularly welcome the speech made by the Minister for Industry and Commerce on the Supplies and Services Bill. I am very glad that they have practically come full circle and I hope they will continue going that way. If they do so, apart from all the merely theoretical aspects of our financial life, we will have no more growth in emigration and will have solved finally the unemployment problem.

There is one matter Senator O'Brien referred to on which I should like to support him, the establishment of a national lottery. Whether we like it or dislike it, our people are, by their very nature, gamblers, and, in so far as it could be of benefit to the State, I suggest the Minister should give consideration to the suggestion for the creation of a State lottery. He has the skeleton there in the Hospitals' Trust. Limited, organisation which could provide the organisation for the establishment and running of such a lottery which would fill a desirable—or undesirable, depending on your point of view —national need. It would be a more painless form of taxation than the direct and indirect taxation system of the moment.

May I say here, as I said on a previous occasion, that I hope the Government at some time will consider the setting up of casinos here? There is a tremendous lot of wealth going into other countries which could very easily be diverted here. Some few years ago, when I was in Switzerland, I crossed over to Campione on the Italian side of the lake to investigate the running of the casinos there. I found that these casinos were a highly lucrative investment from the Government point of view and a great proportion of the profits from the casinos went to the Government in case of taxation in Italy. In this country, we have some ideal situations—Killarney, Glengarriff, Kilcroney and other places of scenic beauty and attraction —where people of wealth, American millionaires and wealthy English people, would be glad to spend their money. Ireland has something to sell them which is a little different from [174] what other countries have to sell. If the Minister would look up the amount of money which the Italian and French Governments get from these casinos— we know that for many years the Monte Carlo casino practically paid for all Government expenditure—he will realise that that form of Government investments might not be the least worthy.

This brings me to the question: when making investments, do we put first things first? It is proposed to spend £1,000,000 on, as it were, the reclamation—I was nearly about to say repatriation—of Dublin Castle. I have the greatest personal sympathy with civil servants who have to work in bad offices. It is proposed to spend a considerable amount of money on improvements to the Naas road, and, as a motorist, I have the greatest sympathy with anybody who has to drive on a bad road. At the same time, however, I see slums in Dublin City and bad housing conditions in various parts of the country.

Let me say in parenthesis that, due to this Government and all the Governments, there is still room for investment for what I call the poorer section of our population. I doubt whether it is a wise thing at this time of the day—I doubt if we would be justified—that we should spend money on the re-establishment of Dublin Castle. Is our whole capital programme directed towards the white collar worker or are we fooled by prejudice? I think that it is time we should ask ourselves that question. Quite a lot of people in this country who are outside of this—this applies to all Parties—think that the growth of capital investment is sometimes governed by the fact that it has a political atmosphere.

I think that is undesirable. I do not think it is always true either but it does raise interrogation marks in people's minds to hear that £1,000,000 is being spent on Dublin Castle in spite of whatever misery exists. This is our annual general meeting and I, as an ordinary shareholder, am entitled to say what I feel I should say. No matter what Party is in power, whether it be Fianna Fáil, Fine Gael or Clann [175] na Poblachta, some day somebody will have to get down to basic facts. There are still people who need things who are not getting them no matter what the Central Bank says.

There are still people in the country who have not got clothing, shelter or food. That is the human factor and it is the fundamental criterion upon which any Government will be judged. Until we have solved the problem of providing clothing, shelter and food for our people we will not have justified ourselves.

Professor Jessop: Information on William JE Jessop  Zoom on William JE Jessop  In approaching this debate I find myself almost in exactly the same position as Senator Hayes. I have not anything to say about the questions put by the Minister to the House in his speech but I have certain interests and some knowledge of a few items I would like to raise.

Like Senator Hayes, I am interested in education. I fully agree with him in urging the importance of supporting primary, secondary, vocational and university education. Senator Hayes referred to primary education. Again, I agree with him entirely. I think it must certainly be unsound to segregate people who are being trained to be primary teachers in the way it is at present done. I think they should be given the opportunity of a university education with the considerable broadening of outlook that that would have.

With regard to the secondary schools, a number of members of governing bodies has, during the past few weeks, been rather encouraged in the belief that, perhaps, we may at last get some increase in our capitation grants which have, as stated by Senator Hayes, remained stationary for the past 30 years. I note that there is a little feeling of uneasiness in certain quarters that in case this does come about it may some way or another prejudice the prospects of the secondary teachers themselves. I know of no governing body that would like that to take place. I hope that, when the Minister comes to increase these capitation grants, as we hope he will, he will not find it necessary to do that [176] at the expense of any future prospects the teachers may have.

Senator Hayes mentioned the qualities required of these teachers. Everybody who is in any way connected with running a school, and even those of us who have nothing at all to do with the running of schools, is fully aware of the debt we owe to our teachers. There is one particular group of teachers that I think deserve special merit—the young secondary teacher who is just starting on his career. This individual generally has just finished a university course of, perhaps, four years. He leaves the university to take up a job in a school. For the first two years of his work he does not qualify to be put on the incremental scale of the Government. Consequently, his salary is limited to whatever the school governing board can afford to pay him.

In this country that amount is generally small and it is very much smaller than the corresponding amount in England. The result is that we lose a considerable number of very promising secondary teachers who go to England on account of the difference in starting salaries. After some years, I think their salaries here are almost as good as those elsewhere. That is, when the teacher is qualified to go on the incremental scale, but in the interval of two or three years there is this very considerable difference. I think that acts greatly to their disadvantage. Something should be done to enable a better salary to be paid to these young teachers. It would have to be limited to a few years, because we must stimulate them to get experience and qualify so that they can go on the normal scale. If, during the interim period their salary could be increased even slightly, I think it would be greatly appreciated. In fact, I know it would.

There are one or two other matters which come into a rather different sphere—the sphere of health. I refer to medical education. When the Health Bill was being discussed in the House I suggested that there could be a good deal more spent on dental service in schools. The Minister, replying to that debate, said it was unfair to [177] suggest that there was any considerable amount of dental caries in school children. I would disagree with him there, but that is not really the point. My point was that such caries as there is in school children is not being treated.

I know the amount of caries is considerable. I know that not one school child in ten in certain districts in Ireland has any treatment whatsoever for his decayed teeth except that of having them pulled out. It could not be otherwise with the number of dentists employed in the school dental service. They are far too few in number to be able to do anything but examine the children's teeth, recommend dental treatment and extract the teeth that are too far gone to benefit by the scheme. That is an aspect of our services which needs to be expanded and needs a considerable amount of further support.

From the point of view of research, we have, of course, the Medical Research Council. It is capable of dealing with the general work of medical research in this country, but there are two or three border-line types of work with which it has not any direct concern. I should like to mention those so that they could be considered in future expenditure. One of these is the development in this country of special methods of investigation which have been used elsewhere and proved to be of value. The fact that they have been used elsewhere and proved to be of value means they are no longer research and, therefore, the Research Council, even if it had funds enough, could not really consider spending money on them.

On the other hand, every day doctors in hospitals and teachers in university departments read in their medical journals and in other journals of new work that has been done elsewhere which they would like to repeat here. The description in a journal is never enough to go on from the point of view of developing such work. It is necessary that somebody should go to the place where this work has already been done and see himself at first hand what is necessary. Almost certainly, special apparatus would have to be employed [178] and bought and, therefore, extra expenditure is required under that heading, too. I feel strongly that some funds should be made available to these various institutions through which that particular type of development could be encouraged.

Almost related to that is the position of the younger workers in research departments in this country. There is a very considerable amount of valuable work being done here by younger people in university departments and in other institutions here. As part of medical research it is essential that people engaged on it have free communication with each other and the more personal and direct that is the better. From time to time conferences are held where people interested in particular subjects gather together for the purposes of discussing with each other the work they are doing. At such conferences the representatives of Irish science are always in a small minority. The reason is not that they are not interested, that they have not work that they would like to talk about but if they want to go they must pay their expenses out of their own pockets. Occasionally it is possible to get a small grant from a university teaching department but that is the exception rather than the rule.

Now and again those of as who go to conferences—it is mostly the senior people who go perhaps because they are better able to afford it than the juniors—are asked about the work the junior people are doing in their country and asked why do they not come to meetings. We always have to make the same reply that they cannot afford it. Other countries subsidise the travelling expenses of its scientists to to these conferences but we do nothing at all in that direction. These are two points which I think are relevant to this discussion and I hope that when the proper time comes that they will be given consideration.

Professor Fearon: Information on William Robert Fearon  Zoom on William Robert Fearon  I agree most emphatically with practically everything all the other speakers have said but I would like to reiterate a grievance I have stressed in discussing this Bill in previous years. It has already [179] been touched on by some of the other speakers, that is, the shortage of time that has been allowed for this Bill. This is one of our rare opportunities in the year for discussing the fundamental financial foundations of our State and related matters. I have always had the impression, and I have had it again this afternoon and this evening, that we are being hurried. How on earth it is so arranged that there is always a rush about this debate, I do not know. There is a feeling that this must be got through very quickly; we all do our best to dispose of it and the debate suffers in consequence. Because it happens to be I a Second Reading debate it is a complicated discussion. Very elaborate technical economic problems are being raised by experts, problems in practical economics and theoretical economics and if it could only be in the form of a Third Reading or Committee Stage debate where you could discuss the things a little among ourselves it would be much better. Instead we just speak once and everything is handed over to the fortunate or unfortunate Minister as the case may be. I hope eventually we will be able to devise some method of handling this problem of this particular Bill in a more leisurely and perhaps a more satisfactory manner in which we can discuss it quietly among ourselves as well as flinging our suggestions at the Minister.

I agree with a great deal of the things the previous Senators have said and I do not intend to emphasise or reiterate them. There are two matters that might be touched on to which reference has not been made very much by previous speakers. I wonder if there is a limit to State spending? If this were a Committee Stage debate we could ask one of the economists to tell us. Every year the State spends more and more. When is it going to stop and what is going to be its limit? I presume its limit is a ratio between national income and State expenditure but to the ordinary person it seems as if the State is taking more and more out of our bank balance, our money box and our Post Office savings.

[180] I remember Shaw saying once when somebody asked what control we could have over our finances when we had our independence: “I am afraid you will find it only changes the colour of the necktie of the man who picks your pocket.” It is not so much a question of picking the pocket because there is not so much in the pocket, but as to where it is going to stop. We are seeing the extinction of the middle class and I am wondering whether eventually there is going to be two classes in the State and whether we are really being quixotic in trying to save and do other things like that.

State expenditure is undoubtedly going to increase enormously with the inception of State medical services. How that is going to affect us, both as ratepayers and payers of income-tax we would hardly like to speculate. The other point I would like to develop arose out of a remark by Senator O'Brien. I have been meditating for some time past the question of the food subsidies. The more I think of them the less happy I feel about them. I think that food should find its own level and if food is too dear it means that wages are wrong or that something else is wrong. In the past we regarded the golden sovereign as the unit of coinage and I feel some of Senator O'Donnell's troubles about external investments were only troubles arising out of a fallacy in connection with our association with the £ sterling. Our association with that unit can have various advantages but I wonder if we got hold of the right unit. Should the unit not be food? Should we not try to provide the necessary amount of food a person requires in order to keep himself alive?

There is the story as to how much land a man wanted and a man was sent around to encompass as much land as he could until sundown; of course, the man ran himself to death and the amount of land was proved to be merely six feet. The amount of food a man needs to keep himself alive is of fundamental importance and that should be our aim. As long as we subsidise food, as I said, we do not know where we stand. I hope the Minister in reply will touch on that question of [181] the ultimate abolition of food subsidies. I know we can put forward short-term arguments in favour of food subsidies but from the long-term aspect food should find its own level. If its price is wrong there must be something more fundamental wrong.

I hope next year when this Bill comes up for discussion we may, perhaps, have a larger frame within which speakers can contribute, namely, a Committee Stage or some other means by which we can discuss our own opinions as well as present them to the Minister pre-digested.

Mr. S.T. Ruane: Information on Sean T Ruane  Zoom on Sean T Ruane  I should like to raise certain matters on Vote 28— Local Government—that I feel call for attention at top level. On a previous occasion I spoke of the occasions when local bodies find it necessary to carry out structural alterations in institutions under their control or to discuss certain schemes to provide amenities for the ratepayers. I said then that quite an amount of useful work is unnecessarily held up by the Department requiring a consultant for such schemes. The local engineering staff are quite competent to carry out those works if they were entrusted to them. Consultants seem to have no use for schemes unless the cost runs into five figures. As a result, the rates are going up from year to year and many necessary works in the reconstruction or repair of institutions are held up because the members of the local bodies feel that the people would not be able to bear the heavy cost of the schemes these consulting engineers put forward when far less extensive and expensive ones would suffice.

Within the past year we found it necessary in County Mayo to discuss a matter of great importance to a village of about 84 inhabitants—the provision of a supply of drinking water.

The matter came before the council as a result of the scheme put forward by a consultant, where he made the cost of the first scheme £10,000 and then put forward a better one at £18,000. The people of the particular locality did not want anything like that and I assure you the local body did not want it either. The water [182] was available within a reasonable distance of the village. There was a stream running from a particular well that needed very little deepening to provide a bed for a piped water supply to the village. The consultant was asked on that particular occasion to prepare a less pretentious scheme, one that would cost £4,000 or £5,000. He was asked to have it before the council the following September. September and October came, but the people are still without water. If we were allowed to carry out the scheme through the help of our own engineering staff, it would have been done inside a month.

A clinic had to be built in connection with our county hospital some time ago. The contract price was slightly over £14,000 and the fees for the supervisory work, the clerk of works, the quantity surveyor and the consultant engineer, with the electrical fees, amounted to half the contract figure and brought the price up to £21,500. While the Department of Local Government stands over that system, progress will be retarded. I know the present Minister for Local Government referred to that matter in pretty scathing terms on one or two occasions, but we have no evidence yet of a change, in any of the applications for social amenities that come before us.

Another matter that arises on the point of consultants supervision is the fact that consultants do not consider the advisability of reconstruction. If there is a water supply in a town that gave excellent service for 40 or 50 years and that has disintegrated through lapse of time and there is a defective pipeline, the consultant scraps the whole scheme and drafts a new one and, of course, the cost is much greater than that of the reconstruction of the old scheme. I have before my mind at present a case where such a scheme was put forward by the consultant and it is now under construction for six years. The people in that locality are as far from the water supply to-day as they were from it when it started. Indeed, the whole work is looked upon locally as a joke, but a very expensive joke.

[183] Another matter that demands attention is the delay that elapses now regarding houses for which Government Grants-in-Aid are indicated before the final instalment of the grant is paid. That causes considerable inconvenience to those who build the houses. The building material is supplied on credit and in many cases the suppliers get only a month to pay for it from the source of supply. They are continually pressing those who build new houses to clear up the account and they cannot clear it, of course, until the final instalment is paid. Local bodies pay an additional grant to those who qualify for the Government grant and the local body cannot issue its grant until the Government grant is fully paid.

This year the sum provided under the Local Authorities (Works) Act for such a large county as Mayo is £12,000. It is a fairly reasonable amount but considering the amount of essential work already brought under the notice of our local survey staff that sum will not go any distance towards carrying it into effect. As a matter of fact it will create a certain amount of trouble in the county and it will be difficult to have unanimity on the local body as to how or where the £12,000 is to be allocated.

In regard to the survey of educational matters made by Senator Hayes and Senator Jessop this evening, I would point out how opportune that survey has been. No one was more competent to make such a survey than Senator Hayes, who all along has been in close touch with every phase of education—primary, secondary, vocational and university. He referred to the situation arising from the shortage of primary teachers—with which I am principally concerned—as “a crisis” and he pointed out the circumstances that led to that crisis. Of course crises do not occur overnight: they are always due to certain conditions or circumstances that carry on from year to year. The circumstances that led to the present crisis in education go back to the time when the system was administered by another country and [184] by a board that was indifferent to the requirements of the majority of the children of this country. At that time education had to be carried out in unsuitable insanitary buildings and teachers had to teach an overloaded programme very often under the supervision of an unsympathetic inspectorate.

Those of us who worked during that particular time looked forward to the benefits that would come under a native Government. I am sorry to say that we were disillusioned by the Governments of two Parties which we have had—both the Cumann na nGaedheal Government and the Fianna Fáil Government. As a teacher at the time pointed out, whereas Cumann na nGaedheal chastised the teachers with whips, Fianna Fáil used scorpions. Things drifted from year to year and eventuated in the strike in 1946. Many people deplored the necessity for using such a method of protest, but it was necessary in order to bring the attention of the authorities to the conditions under which primary education generally was administered in this country. I am glad to say that the inter-Party Government Minister for Education brought a new look to the system and that the relations now between the Department and the teachers are very amicable. The change of front which occurred at that particular time is, I am glad to say, being carried on by the present Minister, but I am afraid that the evil is of too long standing to be remedied all of a sudden. I know of no better way of supplying the remedy concerning the shortage of teachers than of adopting the suggestion put forward to-day by Senator Hayes.

Mr. Aiken: Information on Frank Aiken  Zoom on Frank Aiken  I am grateful to Senators O'Brien and Johnston for having dealt with the questions which I put to the House. I hope that their remarks will have a good effect. A large number of matters affecting various Government Departments were raised during this debate this afternoon. I am afraid that all I can do is to promise to call them to the attention of the Ministers concerned.

It is difficult for me, without a detailed [185] knowledge of the Department of Education, to deal, for instance, with the matter of the over-departmentalisation of the school teaching profession to which Senator Hayes referred. I do not know whether it would be good that there should be an almost automatic promotion of school teachers from the national schools until they reach the universities. I think, however, the Minister for Education is taking steps to widen the opportunity for employment in the teaching profession at the present time in order to fill the vacancies that exist for teachers here and there throughout the country.

Senator Hayes alluded to the £200,000 which is being made available in this Bill for the purchase of lands at Stillorgan. I think he told the Seanad that the university authorities had purchased this land and thought it was bought at a reasonable price and that it would not decrease in value. In purchasing, the university raised a heavy overdraft and the Government agreed to give them the money to pay off the overdraft for this particular purchase, without entering into any form of commitment about a future building programme. That would have to be decided with care and after full negotiation in respect of all the issues involved. At any rate, the Government agreed that the land should be purchased and should be held by the university authorities until all the conferences necessary have been completed.

Senator O'Brien advocated an investment authority of some kind in order to establish priorities for public investment. That would be rather a difficult task to give to a body of men outside the ranks of the Ministers and the Government. There are various considerations that have to be taken into account other than the profit test to which Senator O'Brien alluded. I take it that he was alluding to the strictly financial profit test. An investment authority, if it were given control over all public investment and had as one of its terms of reference that it must apply the profit test, might be able to do the job.

I think, however, it would be very [186] difficult to turn down the remedying of a great social evil such as bad housing, because it could not come up to that test. I think the Government, as the investing authority in the matter of public funds, has to take the responsibility of seeing that, even though the abolition of slums and the abolition of wretched housing conditions here and there throughout the country could not show a profit on a financial balance sheet, a proportion of our national resources is devoted to that very necessary work. It is absolutely necessary, from the point of view of our own self-respect, not to speak of the health of the inhabitants of these houses, that the Government should come forward and say that a reasonable proportion of the national resources must be devoted to clearing away these old dwellings and erecting new ones.

I am quite prepared to agree with Senator O'Brien that if we postpone projects which have a long-delayed profit in view, and concentrate altogether on investing our resources in projects that give us an immediate return in the way of an increased production, we could, in later years, more easily carry out a lot of the social capital developments that we would like to see carried out. However, the Government have to weigh in the balance whether it is good for the morale of the people that outstanding evils like bad housing should not be tackled at once, even though it has the immediate effect of bringing about a reduction in the standard of living that the people could otherwise afford, because, to the extent to which we put resources or energy into the building of houses or the improvement of roads, these resources and that energy are diverted from the production of goods for immediate consumption. I think our people, however, are prepared to allow the Government, through their operation of the financial business of the State, to divert some of that energy from the production of goods for immediate consumption or from capital projects which would give an immediate return to remedying such longstanding evils as bad housing.

Senator Baxter made one remark with which I do not agree. He said that [187] drainage was an immediately productive capital expenditure. Where a field of good soil is flooded and where it can be drained within a few months, it very quickly gives a return, but, in the case of a scheme of the drainage of land on a wholesale scale, if we were to put it forward as one of the principal applications of our resources, energy and capital we would delay the production of consumer goods for home consumption or export. In 1949, an estimate was made that we could drain 4,500,000 acres of land at a cost of £40,000,000 or £10 an acre. We know since that that was just a very bad prophecy because, at the least, the average would be much more than £40, or four times as much. Instead of being able to do it in a few years, it will take, even at the present rate of expenditure, which is several times that in operation up to 1951, a long number of years to drain anything like 4,000,000 acres, if, indeed, there are 4,000,000 acres in the country which require drainage operations.

It would be, in my opinion, much more profitable, rather than to attempt to drain all the land of the country within a couple of years, to spend our energy and resources in putting fertilisers and lime on land which is already drained and which would next year give us a very big return on the capital invested in these materials. I think it is true to say that if we could only get 90 per cent. of our farmers to come up to the production standards of the upper ten, we could double our agricultural production and we could do more if we brought the 95 per cent. up to the standards of the upper five.

One of the most immediate problems we have to tackle is to bring the status of our soil, in respect of its various elements, up to the standard required to give us maximum production. Take, for instance, lime. It is a material which is available in many parts of the country. We have the best limestone in the world and modern methods of grinding give us an opportunity of putting lime on all the acid soils of the country at a very cheap price. Indeed, when one thinks that lime costs the French farmer £4 per ton at the farm [188] and that our farmers can get lime delivered to them at 16/- per ton, one sees how fortunate our farmers are that they have at such a price the material necessary for putting on the land for the correction of acid conditions.

I must say that if I had my way it is one thing I would concentrate on— putting on first 12,000,000 tons of lime on the acid soils and adding the fertilisers, the phosphates and potash which would give the crops a good chance of growing. I must admit that I regretted that in 1948 and 1949 there was such an emphasis on the long-term project of draining the land instead of, in the first year, 1949, putting on the lime and fertilisers that would since have given us an increased production and resources for further investment in the land, such as drainage and all the rest of it.

Senator Johnston wanted to take me to the Volga, but I will go as far as the Bridge of Athlone this evening with him and no further. I read the book he alluded to with great interest, describing the author's voyage on the canals and on the Shannon. I agree with him about the bridge at Athlone. There was, in my opinion, a mistake made in the erection of the dam for the Shannon scheme in that the barge lift was made much smaller than the locks on other parts of the Shannon, and at some time or other, one of the things which would be good for the development of all that region of the country is the carrying out of the necessary works in Limerick to let large barges go up, the largest barges which would be supported by the depth of water, but that is a long-term scheme. For the moment, if there has to be a choice between capital projects I am afraid it will have to be one of those things that will have to be put off for a few years while we concentrate on those capital developments which will have a more immediate effect upon increasing our standard of production and thereby our standard of living.

I must say that I would put Senator O'Donnell's casino very much on the long finger in the line of capital projects. [189] We could put money into many other things which would be more desirable from many points of view.

Senator Jessop referred to the dental services in the schools. I think that that is one of the things that will be provided for under the new Health Act when it gets under way. It will provide school inspection and, dental services to prevent caries before it destroys the teeth. The whole Act is designed to make certain that the school inspection will be carried out and that the dentists will be made available to do that good job of work.

I know very little about the Medical Research Council but I heard the Minister for Health reply to some questions as to the amount of money made available to the Medical Research Council. That sum has been very much increased in recent times, I understand. I agree with the Senator that it would be good if out of this or some other fund opportunities would be given to young investigators either to repeat in their own laboratories the special methods of investigation which have been proved successful elsewhere; that they would get an opportunity of seeing the people who put them into operation or, at the very least, hearing them lecture at some conference or another. I am sure the Minister for Health would be sympathetic with that idea.

Senator Fearon referred to the rushed debate. Nobody regrets more than I the circumstances which brought this particular Bill to the Seanad on a Thursday instead of at the beginning of the week when we could spend a week debating the various items. It just could not be helped this year. I hope it will not occur again.

Senator Ruane referred to the costs of consultants. I agree with him that sometimes the costs of the fees paid to consultants can look very high but sometimes when you see a job botched you would be sorry that some good consultant had not been given an opportunity to give advice before the work was embarked upon. He said that he knew of one water scheme the cost of which was put up from £14,000 [190] to £21,000 because of consultants' fees. I know of one water scheme in a village which cost £25,000 and they still have not got a satisfactory supply. If they had spent a few thousand on a consultant he might have improved it. Certainly it is wrong for consultants just as much as any other section of the community to kill the goose that laid the golden egg if they are not reasonable in their fees. If they are not a number of local authorities will insist that the Department of Local Government should let them go ahead and take a chance without the consultant. I think those are the detailed points that I am in a position to deal with to-night.

Senators O'Brien and Jessop referred to the growth of the Budget. It is true that it has been growing every year over the past number of years and it is difficult to see how we can do very much in the line of cutting down. Over the last couple of years inspections have taken place. People trained in business methods have gone round the different Departments and have effected certain economies, but anything in the nature of a wholesale economy in the Civil Service is too much to hope for. Even though we save some staff, Government services seem to expand and there is very little possibility of saving very much in that regard.

One of the very important items in our national Budget at the present time is the service of debt, which is £12,000,000. I remember that when I was in Finance a few years ago it was £4,000,000. It is now up to £12,000,000 and that is a very big sum. I do not want to go into the reasons for its very rapid growth, but I think we should have a care to keep the service of debt within the capacity of our people to pay. If we have too much expenditure of an unproductive kind the service of debt is going to cost us more and more every year.

Mr. O'Higgins: Information on Michael Joseph O'Higgins  Zoom on Michael Joseph O'Higgins  Have not the Government announced their intention of floating a loan annually?

Mr. Aiken: Information on Frank Aiken  Zoom on Frank Aiken  Yes. Right from 1932 the Fianna Fáil Government have been floating loans in order to do the work [191] that is required to be done. Housing has to go ahead.

Mr. O'Higgins: Information on Michael Joseph O'Higgins  Zoom on Michael Joseph O'Higgins  I am not against it. I approve of it, but I want the Minister to reconcile his remarks about the £12,000,000 with the announced intention of the Government to float a loan annually.

Mr. Aiken: Information on Frank Aiken  Zoom on Frank Aiken  You could float a loan annually and invest the proceeds of that loan in projects that would bring in a sufficient annual income to pay the interest and sinking fund or you could use it in other ways to meet Government expenditure that should, particularly in an inflationary period, be met out of taxation. If you take the years from 1948 to 1951 there was an increase in the——

Mr. O'Higgins: Information on Michael Joseph O'Higgins  Zoom on Michael Joseph O'Higgins  In the capital development you were going to say and you would be right.

Mr. Aiken: Information on Frank Aiken  Zoom on Frank Aiken  ——State debt of £90,000,000. If that £90,000,000 had been invested in projects that would give an immediate return there would be no extra charge annually on the people. The fact is that the annual charge for the service of debt went up by £4,500,000 during that period. That may not sound very much to Senator O'Higgins but he will, perhaps, remember the Budget of 1947 in which I started out to collect £4,500,000 from beer and cigarettes and he was appalled at this extravagence of £4,500,000. It was only £4,500,000 for one year. On the other side of the account we gave it out in subsidies. I just want him to keep in mind the indignant speeches he made at that time as a standard by which to measure the increase in annual charges for dead-weight debt by £4,500,000 a year during the short time that a certain Government were in office.

As I said at the beginning, the points dealing with other Departments that I cannot refer to, I will bring to the attention of the Ministers concerned.

Question put and agreed to.

Agreed to take the remaining stages now.

[192] Bill passed through Committee, reported without amendment, received for final consideration and ordered to be returned to the Dáil.

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