Dáil Éireann - Volume 283 - 01 July, 1975

Financial Resolutions, 1975. - Financial Resolution No. 3: General (Resumed).

Debate resumed on the following motion:

That it is expedient to amend the law relating to inland revenue (including excise) and to make further provision in connection with finance.

—(Minister for Finance.)

Mr. Staunton: I was referring to the problem the country is facing from the point of view of educational policy and there not being sufficient employment to absorb school leavers this year. This is a very serious problem and worthy of discussion in any debate on the economy. The Department of Finance review refers to this very issue; there has been an increase in population, and projected increases for the next few years, with a higher proportion of our young people going through second and third level educational processes which aggravates the present problem with regard to unemployment. It will be necessary— I referred to this last year—to link our educational policy more closely to the needs of the economy in terms of employment opportunities. We must keep faith with school leavers so that they know what the reality is; even if it is not pleasant it is better that they should be informed.

Reference was made to this in a speech of Dr. McCabe in the lrish Independent; Dr. McCabe was the chief executive officer of Sligo educational committee and he now works with UNESCO. He referred to the fact that this year we will have about 50,000 school leavers. The problem is more acute this year because the leavers are more numerous, relatively well qualified and more politically [119] conscious. Employment opportunities outside the country are not as numerous as they were in the past. Dr. McCabe referred to a laissez faire approach in second and third level education which has aggravated the problem. This is true. It is not a political point and I hope Opposition Deputies will take note of that. The previous Government implemented policies which have led to this problem. The number of graduates who will qualify in medicine are far in excess of the capacity of the country to employ. There is a critical situation in the teaching profession which has resulted in pressures on the Minister in the area of the retiring age and untrained personnel. Many more teachers are qualified than the country can provide jobs for. Education is largely supported by State subvention and so one must question the situation.

The other day a professor in medicine suggested that countries anxious to employ doctors trained here should give some financial assistance towards their training. I agree with Dr. McCabe's argument about integrating educational planning in national development planning because the issue will be substantial in the future due to the increased population and a higher standard of education resulting in higher aspirations on the part of our young people. Policy needs to be linked more closely to demand if we are not to run into very serious difficulties and a great deal of cynicism and disillusionment.

I referred to the major problem where inflation is concerned. This is an evil it is very difficult to get across to the man-in-the-street because there is a vast gulf between the aspirations of our people and that which is economically possible. If inflation continues at a rate of 20 per cent plus we will lose the capacity to attract investment from outside.

As the Taoiseach pointed out very clearly on Friday, with recession right around the western world, opportunities for investment are available in many other countries and if our inflation rate is to proceed at double [120] figures we will lose the capacity to attract investment. In the long run, the man-in-the-street will suffer because some jobs will no longer exist and stagnation can develop and there will be no future for those at present unemployed and for the sons and daughters of those at present employed.

The future lies in a reduction of jobs or else in discipline and self-re-straint and through discipline and self-restraint the development of conditions which will attract investment from outside the country. In a country very much less developed than countries in the EEC we need manufacturing industry.

People will get hurt if there is restraint. It is all very well to generalise about governments or the EEC or the catastrophe that was started by the oil crisis. We are now feeling the effects of that crisis. We must get the message across that the Irish people are suffering and unless the Irish Government take adequate action conditions will get worse and there will be sacrifice and policies will have to be implemented which are unpalatable and which will affect householders.

The Employer/Labour Conference will consider what can be done. Some people suggest that we will have wage restraint if we have price control. There are problems in the prices area as anybody in business can tell you. There has been a spate of liquidations. Again, it is not an Irish phenomenon. It has been happening proportionately to a greater extent in Britain than here. Price control is difficult if it cuts profits and interferes with liquidity. Wage restraint, obviously, is vital. People will say that this cannot be done. When the chips are down, if the country is to survive and progress is to be made and if we are to consider future generations, we must accept that there will be a difficult time.

The Opposition have been upbraiding the Minister for Finance for introducing a second package of economic measures in the year 1975. I am not afraid to say that if the Minister for Finance sees the necessity for a third measure this year, we will support him in it. If measures are in the interest [121] of the economy they must be introduced and the Minister will have the wholehearted support of the members of the Government parties in any measures considered to be necessary in the interests of the economy in this very difficult time. I am not saying this in a political sense. It is not likely that there will be a general election for about two years and we can kick the football back and forth across the House. If measures have to be taken, they should be taken.

I am glad that the Minister has introduced the stimulus of an employment premium. This runs counter to some of the charges from the Opposition that we were fostering a dole mentality and that we were strong on social welfare and nothing else. I explained earlier that because of the enormous increases in the price of foods as a result of the increased benefits to the farming community whose incomes increased very substantially in 1973-74, we had to look after the people less well off. We did that and make no apology for doing so.

Leaving aside the inevitable political opposition to the measures introduced and looking at the response from vocational groups to the Minister's speech, there was a considerable amount of criticism but there was unanimity in regard to the employment premium, that it is a good idea. Its simple raison d'etre is that if there is a substantial number of unemployed, the State should introduce schemes whereby State subvention will be continued but in the form of employing people. That is desirable. For that reason it has been universally welcomed.

I have one or two reservations. I do not think it goes far enough. The premium as envisaged by the Minister will be a stimulus to manufacturing industry. It will not provide a stimulus to investment in new manufacturing industries from outside the country because the time span is about 12 months, whereas the time span in the case of a new industry from its conception until it is in production is about 18 months to two years. Thought should be given to the expansion of this premium as a further [122] means of attracting foreign investment.

I would welcome an investigation by the Government into the possibility of expanding the employment premium into areas other than manufacturing industry. Traditionally, it was the popular thing for politicians, especially in the west of Ireland, to push the dole. I represent the people there as much as anybody else. We do not want this. Certainly we want unemployment benefit in the absence of employment but primarily we want employment. There should be a cost benefit analysis by the Department of Social Welfare as to the possibility of developing work schemes in areas where there is a high level of unemployment benefit and unemployment assistance. The recipients are often under-estimated. Their dignity is not recognised to the extent it might well be. The vast majority of the people are keen to work. In the absence of work they will take whatever benefits are available. There is an extremely high level of State commitment in money terms in unemployment assistance and unemployment benefit. The possibility of developing work schemes should be explored whereby all kinds of work could be carried out such as cutting turf, trimming hedges, improving roads. There is a very high labour content in road work. If the large amount of money available for unemployment assistance could be channelled into providing work the nation, the Exchequer and individuals would benefit. There will be a ready response to such a scheme, not least from the very people I am speaking about and many of whom I personally represent in this House.

There have been some speeches of note from the Opposition. We had a great deal of criticism. We have not had suggestions. Deputy Haughey made a speech giving us his philosophy but there was no meat in it. Deputy O'Kennedy spoke. When the chips were down and they were challenged and asked what they would do, they did not have an answer.

The Minister is facing a dilemma. It is easy to suggest that stern measures should have been introduced [123] but this is not a simple age. Because of the constraints within which a Governments work, the national wage agreements, the cost of living index problems, venting one's own pique by introducing rigid measures which on the surface seem to be necessary, might not have been the thing to do, and we must understand the dilemma which faced the Minister. If we had introduced sterner measures by additional taxation, by increasing the cost of beer and cigarettes, he would have added to the cost of living index and he would not have got the frame of mind within the Labour movement to respond to that. He had to take what might be called an enlightened gamble, to dangle one or two carrots, to attempt to break through this inflationary spiral and to attempt to de-escalate wage demands in order to get this country on a sound footing. While my opponents may smile at this, it is a fact. We have been in Government for two years.

Mr. G. Fitzgerald: Is the Deputy saying it is wrong?

Mr. Staunton: I am saying it is a fact that the means by which the State arranges wage agreements is based on a policy which was introduced by the Fianna Fáil Government in the terms of arranging wage demands annually to follow precisely variations in the cost of living index. That was not the creation of this Government.

Mr. G. Fitzgerald: Is the Deputy saying it is wrong?

Mr. Staunton: Deputy Brennan championed private enterprises in his speech today. The private sector has had very specific problems.

Mr. G. Fitzgerald: Is the Deputy saying it is wrong?

Acting Chairman (Mr. M.E. Dockrell): The Deputy must be allowed to make his speech without interruption.

Mr. G. Fitzgerald: He has had his time.

Mr. Staunton: As Deputy Fitzgerald [124] has spoken for about ten minutes of my time, the Chair might consider allowing me those ten minutes. The Minister's dilemma must be recognised and if further measures are necessary they can be implemented. I am glad the Minister gave more information about the footwear industry, which is in dire straits. He said that an approach had recently been made to the EEC Commission with a view to the adoption of immediate arrangements which will enable the flow of imports to be regulated. I urge the Government to do what can be done in this sector. There has been a spate of redundancies, closures and liquidations due to unfair trading and the importation through Britain, of products from the Far East and Hong Kong.

Despite all these problems, there has been substantial investment by British securities in Irish Government investments. Investment has increased in the building societies. The Irish banks have shown confidence in the Irish economy by putting £40 million into housing in the next two years. This reminds me of a story about two American farmers who knew very little about finance. During the American depression they were talking about the lack of money. One said that there was no money left in the country. The other farmer said: “That is not the problem at all. I was talking to the bank manager today and asked him if there was any money left in the country. He said there was lots of money. He brought me into the bank vault and showed it to me. He asked me if I wanted some and I said I could do with some. He then asked me if I had collateral. I said I had not,”—he had never heard of collateral—“the manager then said sorry.” The farmer explained to his friend: “That is what is wrong with the country. There is plenty of money. We just have not enough collateral”. If we have not collateral that is serious. We have the collateral, the security; the light is at the end of the tunnel; we have the natural resources and the people to use them. We can turn this to our advantage if we exercise the necessary restraint and discipline.

[125] Mr. G. Fitzgerald: Nobody on this side of the House underestimates the present difficult economic situation which faces the country. Nobody in this House, in the light of our contributions, can accuse us of being irresponsible. Nor is the line adopted by the previous speaker, and by many commentators, which charges the Opposition with failure to put forward positive contributions towards healing or solving the problems which face us, correct. These are matters which are clearly the responsibility of the Government elected for the time being. If this nation is in the midst of an economic crisis, it is also in a sorry state because of the actions of a Government elected on a platform of 14 points and empty promises which have all been broken. It is unfortunate for the people that this Government, of many groups and sections, should be the Government charged with the responsibility of guiding the country's economy through a difficult period.

We have had many examples of the inconsistency of approach, such as in this budget or “package” as we were led to believe it might be. The Minister for Finance in his speech accepted that the main cause of inflation is an internal one, in other words, caused by his own and his Government's actions. He said—and this is probably exaggerated—that only 20 per cent of this inflation is caused by other countries. The Central Bank said, last year, that despite the Government's claims, at least 50 per cent of the inflation was caused by home factors. If it was 50 per cent last year, and 80 per cent this year, that surely proves the mishandling of the situation by the Government.

On Friday the Minister for Labour said all the problems were due to outside factors. Today Deputy Staunton tried to hang the hat of blame on every peg he could find, even on the peg of the previous Government who are almost two-and-a-half years in Opposition. We have had three members of the Government endeavouring to lay the blame in three different directions. This is further evidence of the lack of effort which exists.

[126] The Minister for Finance presented an entirely different image in his budget presentation of last Thursday from the Minister we have seen enter with almost a flourish of trumpets with his earlier budgets. Here was a man whose economic guidance and budgetary control of the country's economy was seen for what it was worth, and who was seen for his mistakes and failures. Each of these mistakes and failures was pointed out to him by the Opposition, not only during those debates but subsequently by Deputy Colley on Thursday last.

The Minister for Foreign Affairs obviously viewed with pleasure his colleague's dilemma. Here was the wonderful economist of Fine Gael days in Opposition. He expounded programmes for us on the media at every opportunity and in this House. He looked with derision on the plight of his colleague. I have no doubt that inwardly there was a certain amount of enjoyment at the fact that the man politically opposed to him within Fine Gael was charged with the responsibility of handling the nation's economy and its finance and, in two-and-a-half years, had handled it with disastrous results.

Despite charges from the opposite benches, this party have always been a responsible Government. We were prepared to take decisions vital to the nation's economy, vital to the welfare of the people of the nation. Whether or not these decisions were popular was never the criterion on which Fianna Fáil took such decisions. They did what they believed to be best for the people. The performance of the Government to date is poor, of course understandably so, because there are two parties in this Government. The Labour Party probably consist of four or five little parties forming a coali tion of their own.

Mr. J. Gibbons: The Communist party is very prominent in it.

Mr. G. Fitzgerald: It would certainly be included, and it would have a strong dimension there. In fact, it probably would have Government representation in the Cabinet.

[127] Acting Chairman: No matter how fascinating those thoughts may be they do not arise on the budget. Still less do they arise in cross-chats with Deputy Gibbons.

Mr. G. Fitzgerald: The difficulties within the Cabinet are obviously reflected in the budget. We were led to believe we were being given a package which would do something positive at last to boost our industrial activity, to boost our economy generally, with particular emphasis on employment. Industrial employment in this country is for the most part comparatively new. It has been a type of development with a mixture of State involvement and private enterprise, featuring possibly the entrepreneurial drive of many people particularly during the sixties. This was welcomed and encouraged by the Government of that time. It was frowned on by the Opposition of that time, now the Government. It was frowned on because they regarded these people as speculators. This is one of the reasons why Fine Gael and Labour—and, of course, the progressive wing of Fine Gael particularly, because Fine Gael have two distinct elements in their party—viewed these people with suspicion. They suspected them as people who were being supported by Fianna Fáil. Many of them were their own party supporters, but they regarded them as Fianna Fáil speculators.

That is the term to use about people who had the initiatives, the energy and the drive to do something worth-while industrially for this country and, above all, to provide the jobs we so badly needed, and need so badly at present. It was unfair that they should have been looked on with suspicion. This Government deliberately set out to clip their wings and to hinder them in every way and this is one of the reasons why we have had so many job losses within our economy. It is not enough to say this was caused by external factors. If we go over the percentage unemployment figures for the EEC countries in March of this year, we see Belgium at 6 per cent, Denmark at 12.2 per cent, Germany at 4.9 per cent, France at 4.6 per cent, Ireland at 8.4 per cent, Italy at 5.7 [128] per cent, Holland at 5 per cent, Great Britain at 3.4 per cent and Northern Ireland, despite its problems, at 6.7 per cent. We rank in second position after Denmark, a position I do not think any of us particularly likes to have.

It is also significant that very little emphasis has been laid by Government speakers to date on the unemployment situation. The number of people unemployed is over 102,000. This is 1st July, and I have no doubt that the figure for the first week in July will be in or around 102,000. I am sorry to say that by the end of July the figure will have rocketed much higher again and we must be really concerned about October and November. Everybody on this side of the House is equally concerned about the present state of our economy. If we do not have jobs for our people, if we do not have opportunities for our young people, we as a generation—and the Government charged with responsibility during a particular period cannot be let off the hook—and the Government must accept the full blame for that. The Minister said we must try to get off the merry-go-round of inflation. It is about time that he saw the light. It is about time he realised there were problems in our community of crisis proportions and that they were worsening, instead of giving out the propaganda we have heard for so long in this House that we had no crisis in any field, that we were only imagining these things. At this time of the year we have 102,000 unemployed, 35,000 more than when Fianna Fáil left office in February, 1973.

Mr. J. Gibbons: Without the school-leavers.

Mr. G. Fitzgerald: Without the school-leavers of which there are possibly 50,000. No matter what amount of talking is done, no matter what gloss is put on it, this is the reality of the difficult situation we are facing. There are a number of industries we have been screaming about for a considerable time. There is the building industry, the textile, footwear and the motor assembly industries. I am glad the Minister for Foreign Affairs is in [129] the House now while I talk about the textile and footwear industries. He has had vast experience of Europe over the past six months and, indeed, even further afield than Europe. I want to pay him this tribute. He is possibly the only Minister who has been a credit to us in Europe. I want to bring to his notice the fact that we are told in the budget in June, 1975, that urgent moves are now being made in Europe to obtain help for the footwear industry. The Minister said:

An approach has recently been made to the EEC Commission with a view to the adoption of immediate arrangements which will enable the flow of imports of footwear to be regulated in the interests of employment in the industry.

Mr. J. Gibbons: The penny dropped.

Mr. G. Fitzgerald: The penny dropped. In June, 1975, we are doing something immediately, something for which we have been pushing and pressing for 14 months now. It was obvious that both the footwear and textile industries were in serious difficulty in the early months of 1974. Yet our Minister for Finance states now that an approach has been made recently to the EEC Commission. I want to say to the Government: resign now because your commitment has not been one of concern for jobs of people. Obviously the Minister's approach to the EEC must not have been convincing. I presume that the Minister for Industry and Commerce, or whoever it was was charged with a decision, looked at a certain gamble that was involved. Undoubtedly there was a gamble. If certain barriers were imposed with regard to imports of textiles and footwear retaliatory measures could be taken with regard to some of our exports to other countries. I am talking about the import of textiles and footwear from Third World countries. I am speaking about countries outside the European Economic Community. There is no doubt about it that these imports have caused grievous problems here.

For example I had a Dáil Question last week answered by the Taoiseach, [130] to discover that in 1974, in textiles alone, in excess of £40 million worth of textiles was imported from countries outside the EEC. Of course that did not include imports by the back-door method from the UK. Surely the gamble was whether to try to preserve jobs here and risk the possibility of retaliatory measures being taken elsewhere. If he was thinking of gambling certainly his decision was incorrect and a fatal one for so many of our homes and workers. I would describe it as a betrayal by the Minister for Industry and Commerce of our ordinary working people.

Textiles is probably one of our oldest industries. It was built around small communities or, to be more correct, small communities were built around it, on the verges of cities, towns and villages. But the economy of a whole area was dependent on it. Most of our other industrial development is much newer than textiles. I have it in my own constituency, in areas like Blarney and Douglas, where unfortunately great numbers of extra people will be joining the unemployment queues this month; they will not return from their annual holidays. A strong enough case could have been made if the social problems caused by the closure of these industries was impressed on the EEC. I am satisfied that the Minister dealing with the problem was not sufficiently committed—perhaps because he is probably one of the wealthiest men in this House—to getting that measure through the EEC up to now. Yet the Minister for Finance tells us that we are now going off there; we are going to get immediate action. We as an Opposition are being charged with a responsibility; we have been screaming about this long enough and told that we were all wrong. According to the Minister for Local Government, there was no crisis in the building industry either. There was no need for us to scream about that. There must be something wrong, because here the Minister for Finance is giving additional money to the building industry. Of course, he has failed, he has failed to tackle the major problem in the private house-building sector, which was the increase in the SDA loan. It [131] has long been known to everybody, to every back bencher on that side of the House as well as front benchers, that £4,500 is no longer adequate for house purchasers. Our unemployment queues are growing, our housing waiting lists will grow too simply because the people's capacity to buy houses is deteriorating rapidly. I am afraid that anything that is done here now is done too late, has not tackled the major problem and that, additionally, these mortgages will cost the individual more money.

We are told by the Minister for Finance that we shall have 2,000 extra jobs in the building industry as a result. But what the Minister for Finance and indeed his colleagues must realise is that employment in that sector at present is approximately 20,000, or 6,000 more than it was at this time last year. Therefore we are being told now there was a crisis; we will do a little bit because the Opposition have been pressing us, and we have been screaming about the building industry for a long time too. There is no point in saying: what would you do? We are not there to do it; we do not have that opportunity. But I can assure the House that, given the opportunity, we will be—as we have done in the past—only too delighted for the sake of the country and that of future generations, to go back and try to rectify the mismanagement of men who are incompetent, not dedicated but who concentrate on dragging in red herrings and controversial issues across the priority that faces the Government at present.

Mr. J. Gibbons: Red herrings.

Mr. G. Fitzgerald: The Government should concern itself at present with the major problems of our society. For example we have the multi-channel, open broadcasting question—important in itself, of course, and naturally deserving attention. But, in my opinion, it is wrong to over-emphasise it, for one reason and one only, to try and drag in that red herring to cloud the major issues facing our country. I understand we also have a dabbling within the Army; dabbling to an extent that has never before [132] affected us. In other words, now not only are we reaching the stage that the Government put their own people into jobs in industry, State boards and everywhere else, but they will decide who gets promotion within the Army. This is the type of Government that we have at present.

Acting Chairman (Mr. M.E. Dockrell): The Deputy will agree that the Army vote does not arise.

Mr. G. Fitzgerald: I agree, Sir, that the economy and its state is the important issue.

Acting Chairman: Does the Deputy agree that the Army vote does not arise on this debate?

Mr. G. Fitzgerald: I was merely saying that in the interests of our country, these are the things that matter, our economy, its present position and employment——

Acting Chairman: May we come back to the debate?

Mr. J. Gibbons: Come back to the boys. I do not mean the 102,000 unemployed, Sir; I mean the boys, the Taoiseach's pals, within the Army——

Mr. G. Fitzgerald: I shall revert to the unemployment situation. The building industry has its options. For example, we have the danger of unemployment in Irish Steel in Cork. We have the Cork- and Dublin-based fertiliser industry taking a severe beating; loss of jobs again. Our unemployment figures are mounting and nothing positive being done.

This leads me to the employment premium on which I want to say a few words. I want to refer also to the promise of the Minister for Finance that the Minister for Labour would make full details of the proposed package available to the House. I say this to his credit: we were promised announcements by the Minister for Industry and Commerce, in the last budget. These announcements never became a reality. The Minister for Industry and Commerce never contributed to the budget debate; at least the Minister for Labour came this time. However, he had very little new to offer us. He [133] did not appear to have his homework done.

From a national point of view and from the point of view of the economy and being the national-minded party, the party of concern and drawn from the ordinary people I welcome any effort to increase employment opportunities for any section and particularly for the unemployed people at the present time. I am also satisfied that the Minister for Labour had not done his homework to the extent that he might have done. perhaps for many reasons. He was inclined to tell us that the officials of his Department were working on it. I believe that in that particular Department there are excellent officials. It is a Department that Fianna Fáil can claim they set up with great personnel. I wonder do those officials, excellent though they are, feel offended on occasions when the Minister for Labour goes travelling to various places? I cannot remember the person who once said of us that we fought every nation's battles but our own. With the present Minister one would be inclined to say that we are fighting every nation's economy but our own.

I would like to draw the attention of the House to the official Report of 14th December, 1972. The present Minister for Labour in Volume 264 stated:

Whatever the political pundits may think about the law and order issue and so on, the matter which really grips the ordinary people is the matter of prices, and it is on the rock of prices that this Government in the coming year, whenever the Taoiseach decides to send his band to the country, can be defeated.

Could we put that into the context of June, 1975 because it is very relevant? He went on to say, in referring to the then Minister for Industry and Commerce:

I will also say that he has been tireless—every man is entitled to exploit the talent he has and the Minister undoubtedly has a talent for travelling; he has travelled extensively around most of the continents of the globe in search of industry— in his travelling, as, a world traveller.

[134] Mr. J. Gibbons: And he brought home riches.

Mr. G. Fitzgerald: He certainly did.

Acting Chairman (Mr. M.E. Dockrell): I would like to remind the Deputy that remarks should be made through the Chair. Speech goes through the Chair and not through companions.

Mr. J. Gibbons: I was praising him.

Mr. G. Fitzgerald: It was intended for the House. I am sorry if I conveyed it otherwise. I am sure that you appreciate what I mean.

Acting Chairman: The matter is becoming somewhat confidential between Deputy Gibbons and the Deputy.

Mr. G. Fitzgerald: It was not intended like that. In fact I would like to be saying it from the top of Leinster House because I think these are very relevant remarks and one would tend to look on them as being directed at the present Minister for Labour.

Acting Chairman: I am not sure of the exact relevancy at times but, however, I have not pulled the Deputies up on it.

Mr. G. Fitzgerald: I think you will pardon me when you get my reason which is that one of those travels— we are back to the economy again— by the Minister for Industry and Commerce at that time was quoted in the House this morning when Deputy Lalor said that he had travelled to Bulgaria in late 1971 and as a result in 1972 our exports to Bulgaria were three times our imports. If we look back at the exploits of the Minister for Labour and his fishing trip to Australia we have not noticed any sod-turning or any new industrial enterprises from down under. Indeed I do not notice any worth-while improvement in our adverse balance of trade with Australia. The Minister for Industry and Commerce made a trip to the USSR not so long ago. It was heralded on RTE that he had received a wonderful order but I was looking at our textile imports from the USSR——

Mr. J. Gibbons: That was a fraternal visit.

[135] Mr. G. Fitzgerald: It must have been. The value of textiles, fibres and waste imported in 1974 from the USSR was £631,690. These textile imports affect our own industry. Our Ministers are not, I am afraid, bringing about the desired results of creating jobs and creating new industries, despite the difficulties. I am trying to convey that there is an over-concentration of effort in the wrong direction and not towards the main problems facing us. During this period, no matter what excuses the Government may make, no matter what irresponsible charges they may make against us, their duty is to tackle the difficulties of the times on behalf of the people who need their support most.

We lack leadership. This budget is another example of that. On Thursday last Deputy Colley quoted from his contributions to the January budget of this year and to the budget of last year and pointed out the measures that could have been taken. As I have pointed out, in the textile and footwear fields, the moves have been entirely too late. Even at this stage let us hope that they will save some part of the industry. This applies also to the building industry. I know a fair bit about the building industry. Indeed you, sir, being one of the nation's major suppliers to that industry, are well aware of the problems that exist there, not only in the private house building sector but also in the heavy industrial construction. This is an industry where employment could have been stimulated and more jobs could have been created.

I welcome the basic idea of the employment premium but I am sorry that there has not been a greater incentive offered to the manufacturing section within that employment premium. Why was it confined to manufacturing industry? Why was service industry excluded, where one would think that there would be a better hope of stimulating jobs? Why were local authorities not considered? I am sure most of them are finding difficulty in providing adequate funds to keep their men working during the year. [136] Why were they not considered? This could have been used to help local authorities to keep these men working. Road fund grants have been cut, the local improvement scheme grants, which Deputy Staunton referred to, have been cut. These are areas where this scheme could have been useful.

Another question I would like to ask is why was it a £12 premium? Is it possible that the Minister for Finance or the Minister for Labour decided this was the easiest way or did they not do enough homework on it? I would have thought that a more correct approach would have been a percentage premium rather than a flat £12, the reason being that I could see this being exploited by industrial speculators. I am talking about the man who may be paying comparatively low wages in the £20 to £24 region. Some of them are in rural areas. Assuming the employees recruited from the live register comply with the requirements, an employer is entitled to benefit to the extent of £12 per employee recruited up to March next.

As well as that, the genuine man who possibly is paying up to £40 per week, only gets the same £12 if he recruits that man in the same way. A percentage approach to it would have been wiser. Perhaps this was a fast thought-up idea. I am fearsome of some of the Government meetings held on the economy. We read grave Press announcements saying the Government were meeting to consider the economy and read on further to discover the Minister for Agriculture and Fisheries would be in Brussels, the Minister for Finance would be in Taranto, and the Minister for Labour would be in another European capital. We probably had one economic Minister left at home. Maybe this was hurried and was not properly thought out. Why were service industries and local authorities not considered for this scheme and why was it not operated on a percentage basis?

There is also the problem that it can create unfair competition. The man who will suffer in this instance is the man who has struggled to keep on his employees during a difficult [137] period. He struggled to keep on his men but his neighbour, who was possibly more ruthless, did not do so and reduced his work force. Now he can build up again. He can use this employment premium to build up his work force. He can get this premium and he can then enter into unfair competition with his neighbour or his competitors in a similar field. These are the drawbacks. However, any scheme introduced would not be free of criticism but more thought should have been given to this scheme which could have been used to greater effect. I hope it creates jobs because they are badly needed. With 102,000 unemployed and 52,000 school-leavers our plight is serious.

Another problem is that in the case of those who became unemployed— many have been under protective notice or on redundancy notice— after 20th June an employer is not entitled to avail of that premium. In that way it can discriminate against these people. I am worried about the speculator or the adventurer trying to cash in on a scheme that is well intended. I depend on the Department of Labour officials to handle this, despite the lack of attention that may, at times, be paid to them by their Minister, to the best benefit of the employment scene. One could describe it as “Richie's riches” but “Richie's riches” have become so scarce now— they are probably as plentiful as snow would be in this weather—that we have to be careful about their distribution. We cannot let it be seen that the scheme is being abused in any way.

I understand this was the problem that did arise on this premium when it was introduced by the UK. It was not a success mainly because it became a question of creating jobs to enable the premium to be collected rather than stimulating employment. I am worried about that and I am sure the powers that be will endeavour to ensure this does not happen.

Deputy Staunton, a sensible Deputy, one of the more sensible of his party, was obviously faced with a dilemma here. He was trying to back, because of party loyalty, the actions of his Minister. He encouraged the Minister, [138] if another budget was necessary, to introduce it again this year. The chances are of course that Deputy Staunton was guarding it because there is no doubt that this so-called package was designed last week as an election gimmick and that the incompetent and disinterested members who form our Government were prepared to ask the people to give them a mandate quickly. It misfired badly for them because the people now realise that they could no longer trust a regime who have neglected the economy so badly and, who have by their internal inflationary measures, not only now but in the past, created unemployment, job losses, and brought industry to its knees. They have refused to assist ailing industries to the extent that one wonders whether or not some of the people in the vital seats in the Cabinet were not determined to see our economy run down for personal reasons and to prove a certain type of “ology” they believed in. I am not interested in what type that “ology” might be. I am interested in a Government doing what is best for the people and letting that be their concern over and above any other problems, important though they might be.

We must remember that we have a problem in that, according to the 1971 census, the number of people under 14 years was 31 or 32 per cent. This is a figure we must take cognisance of. We must look at the plight of our 52,000 school-leavers this year. The numbers in that age group are too high to be played around with, but no effort was made to give any encouragement to them. The Minister for Finance in his references to inflation talked about the possibilities of emigration being available to them. If things are so bad in outside countries as he says they are where would they be emigrating to? Again, a lack of consistency.

He is talking about strategies being not without risk but one wonders what his strategy is. One is pretty sure that there is no plan and it is time the Government decided on a plan. The excuses they have offered are not sufficient or warranted to let them get away without preparing a plan. I [139] would be the first to admit that the plan may run into difficulties, it may need to be revised or adjusted, just as any budgetary plan within any company would have to be but this is a problem that must be faced by the Government. They must stop their shillyshallying, and stop their propaganda machine. The people are sick of this over-portrayal and over-play up of Ministers whose performance has been disgraceful. For the most part they are lazy, and lacking in interest—I am sorry it is the Minister for Foreign Affairs who is listening to me—and for the most part they have let down the working people of Ireland. This is the truth of the position. The Minister for Industry and Commerce is a very able man I am sure, a very well-read man, but he must be seen to be practical. If he had to concern himself with our off-shore resources that had to be done but he should not have done it to the detriment of the other vital affairs of his Department. He should have delegated those responsibilities. I could quote at length from what the Minister for Labour said when he was on the Opposition benches and it would be very relevant to the present holder of the office of Industry and Commerce.

I want to refer to the income tax belt at the middle class and the many white-collar and factory-floor workers who have been hit again by this imposition of taxation. The brazenness and the things that the present holders of office will say without turning a hair or without a smile on their faces are amazing. The Minister for Labour in this House on Friday said something to the effect that every budget in Fianna Fáil's time made whipping boys of the working people of Ireland. Surely this is the one time when the working people of Ireland have really been saddled—not delegated as Deputy Staunton said and there is a big difference—with responsibility for trying to implement a package. Deputy Staunton tried to tell us that the Minister was delegating certain duties to the Employer/ Labour Conference. In fact, of course, what is happening is that the Minister for Finance, just like his [140] colleagues, is shirking the responsibility that is his for the time being of guiding and directing, and that guidance and direction should not have come in the month of June but should have come 85 or 86 days earlier, perhaps even 100 days earlier, before the wage agreement was signed. This was the time for him to move. What is wrong with these people—and I am glad to see the Minister for Foreign Affairs here today, to welcome him back from Europe—is that they were waiting, waiting for something to fall from somewhere, for a miracle to happen to rescue our economy. I said when the Minister was absent that open broadcasting may be important, multi-channel may be important but it cannot be used as a red herring to be drawn across the vital issues affecting our people at the moment. The vital issues are the Government's responsibility. They are charged with them for the time being. Stand up to them; do not run from them. Get our people back to work. Get the wheels of industry moving. I am not interested in America's problems nor am I interested in those of Germany or anywhere else. I am interested in Ireland.

In a recent radio broadcast a prominent member of an electrical trade union said it was time for the Govment to stop talking about England, to stop talking about other countries. We have a problem. We have no jobs. We have no opportunities for our young people. That is what we want. This is what we want urgently.

Finally I want to say that the Minister for Finance in his production of this budget last week obviously tried to create an air of anticipation, anticipation of what he might do. Some of the things he has done are steps that we suggested long ago, desirable steps at that time, steps that could have been effective if taken early enough. I hope it is not a question now of not doing enough or doing it much too late.

I would like to hear somebody from the Government benches speak at length on textiles and footwear in particular, the lack of commitment there [141] is, the way they have been let down. One can see from the Review of 1974 and Outlook for 1975 issued by the Department of Finance that in the case of textile yarn, fabrics and so on, the value of imports for 1973 was £81.7 million. For 1974, it was £101.7 million; clothing, £25.7 million in 1973; £35.1 million in 1974; footwear, £7.3 million in 1973; £10.9 million in 1974. Let me ask before I finish what became of the “Buy Irish” campaign launched with such aplomb but I fear insincerity just before Christmas last year. It is incumbent on each Government Minister and each member of this House, both Government and Opposition, when he gets an opportunity to promote the sale and purchase of Irish goods to do so. I charge the Government that that was an effort before Christmas which was too late to be effective for the real Christmas trade. It was too late for that. It appears to have been abandoned since then.

I now appeal to the Government that at every possible opportunity each Government Minister should say: “Buy Irish goods, promote Irish goods.” It is the best type of patriotism. I can assure the Minister for Posts and Telegraphs that if he adopted that instead of many of the other schemes and the other ideas that he has been putting across, he would be doing more for the Irish people at the present time and in the future. It is not contrary to EEC to say “Buy Irish”. It can be done within the European context. I would also say that literature should be sent around to the schools by the Department of Education, getting it across to young people's minds the reasons why we and they should buy Irish. We are constantly reading articles in the newspapers. Recently a commentator in The Irish Independent said that he found it difficult to get Irish socks and, in fact, the only socks he could get were socks made by a company going out of existence this month. I refer to the 200 odd years old firm in Blarney in County Cork. The Government have no commitment to buying Irish, any more than they have commitment to any other aspects of our Irish culture or Irish language. [142] But “Buy Irish” is the best patriotism that can be impressed on young people from a very early age. It should appear on television continuously. It should be promoted at every opportunity. There are some car stickers around, but not half enough of them. I believe that, if it had been done and continued to be done a year or more ago when we first began to tell the Government of the problems in particular industries it would have helped in a big way.

Minister for Foreign Affairs (Dr. FitzGerald): Deputy Fitzgerald said that he and others on the other benches did not want to hear anything more about the rest of the world, that they only wanted to hear about this country. I am afraid that type of insularity is not open to us in present circumstances. Our problems and the possibilities of resolving them have to be seen in a world context, an international context, more particularly, naturally, in a European context and, of course, specifically in the context of our relationship with the United Kingdom, still our major trading partner, responsible for half our trade. It is no good trying to ignore this and trying to propound solutions and nostrums, in so far as the Opposition are doing anything as positive as that, and I do not know that they are—which do not take account of these realities. Anything we do must be within the limits of what is possible in this context. That is the first point that has to be made if we are to debate this matter seriously.

We are faced with an international situation of exceptional gravity. As the Minister for Finance said in his budget speech, it is a situation which has not improved as rapidly as people hoped. In fact, the improvement hoped for and propounded as likely by the leaders of major countries has not come about and is not coming about at the present time on any significant scale. Instead of finding ourselves, as we were told by many economic experts and by the leaders of the major countries, facing a situation where there was an upturn in the world economy, we find ourselves still in a position where the world economy [143] is stagnant. That limits our liability to act. It is not as easy to sell additional exports and provide additional employment; if the countries to which we are selling are buying less goods it is not as easy to do it as it would be if they were buying more goods. One cannot ignore that fact.

It makes it necessary for us to reconsider policies in so far as the extent of these policies were based on any assumption that there would be some recovery in the world economy. Fortunately for us, we had a certain scepticism about these forecasts. We did not take them as literally as perhaps others did and therefore, our plans and our efforts to sustain our economy, to achieve economic stability here and maintain employment, are not as much disrupted as they might have been had we taken quite literally all that was said six or nine months ago. Nonetheless, the position is worse than was foreseen, worse even than we, with a certain healthy scepticism, foresaw, and we have had to face this reality and try to operate within these constraints.

Our problem is basically one of transition from an inflation which was at one point almost exclusively imported from outside to a situation where the inflation is largly domestically generated. In our context, and indeed in that of Britain, this is a difficult transition because of the way in which incomes are negotiated, wages and salaries in particular and other incomes moving with them. The problem is greater in these countries than elsewhere, but the problem is particularly acute in Ireland because being so small the proportion of goods we buy from abroad is very much greater than in a larger country and imported inflation therefore hits us harder. The rate of price increase generated by the import inflation of 1973-74 was greater in Ireland than elsewhere and yet our position with regard to the manner in which wage and salaries are negotiated and the rate at which they increase is less favourable than in other countries. As a contrast, for example, with Germany, it is very marked indeed with incomes [144] rising here more than three times as rapidly as in any other country. We are therefore in a delicate and difficult situation and we have to try to find the optimum remedies to the problem.

The budget is designed to turn what has hitherto been in unfavourable conditions a vicious circle of rising prices, rising costs and rising incomes into a beneficent cycle in which prices move downwards and the need for rising incomes to keep pace with prices is thus diminished; and the possibility of people maintaining their living standards with incomes rising less rapidly is enhanced. That is the task we have to undertake. The budget has been designed to make optimal a major step forward in that direction. It is designed to do so by means of the provisions made sharply to reduce and, perhaps, virtually halt the increase in the cost of living during the present quarter. Of course, as the Minister for Finance pointed out, the success of such a tactic depends not just on a once-and-for-all reduction in the rate of growth of prices but upon that being related to and interacting upon the rate of growth of money incomes generally and specifically, because they are the largest single element, wage and salary incomes. What we are attempting to do is to be equitable, and therefore acceptable. Anything that applies to wages and salary incomes must apply at least equally to incomes from other sources, such as fees and dividends: these too must be controlled so as not to rise more rapidly than the incomes of wage and salary earners. Otherwise we could not expect or hope to achieve agreement on the necessary measures of restraint. This then is the tactic and it depends upon the package we have devised sparking off a sympathetic response amongst the social partners, as they are often called.

From some of the reactions to this budget one derives the impression that some commentators expected, or thought, it would have been right for us to have tackled the problem of rising incomes by brute force, by imposing freezes on increases in incomes regardless of the collective bargaining process, regardless of the views of the [145] different partners to the process of forming wage and salary and other incomes. Of course, such a tactic might have been possible; it was attempted by the present Opposition on one occasion, not with great success, but we thought it right, and I am convinced that we were wise and right in this, not to proceed by seeking to impose some kind of solution but by proposing a solution which would prove acceptable because of its commonsense character and because of its equitable nature to the different interests involved.

It seemed to us that if we could show that it was possible for us in at least one quarter to hold back the forward rush of prices by something like 4 per cent, it would be sensible and reasonable for all those in receipt of income to make do with an income increase 4 per cent less than what they otherwise would have sought and perhaps secured. This would leave them in exactly the same position as they would have been in terms of purchasing power but would, if it succeeded, strike a very major blow at inflation and could start this beneficent cycle of decelerating price increases, which is the essential objective of our policy.

We will have to see in the weeks ahead the response to our proposals. On the whole, certainly, I have been encouraged by the reactions so far. All those concerned have to consider seriously what is involved; they have to consider their responsibilities to the community and to members of their local organisations and have to decide whether, in their view, this Government policy is one that is worthwhile and worth supporting and, if so, to give it their support.

Some of the reactions to the budget, apart from those that seem to have implied an expectation of a wage freeze of some kind, amongst the general public have been ones of feelings that the budget was not as tough as it was expected to be. It is worth commenting on this. Leaving on one side the slight evidence this offers, not perhaps for the first time, that there was some element of masochism in our Irish nature, it is an understandable reaction because people faced [146] with a crisis feel that tough measures are to be expected; they expect to be asked to suffer in some way, so that they may get over the difficulty and reach calmer waters. The Government are faced with a problem in regard to this: what they were trying to do was, first of all, not to deflate the economy, not to cut back demand, because that would have aggravated unemployment. That is the first point, and therefore any measures the Government took must be ones which tended to increase economic activity rather than to depress it.

Tough measures designed to reduce purchasing power, to cut into the value of people's incomes in some way by increasing taxation would have had the opposite effect of what is needed. This is no moment to try to deflate an economy already excessively deflated. Therefore, although people may have felt psychologically that tough measures were necessary and expected that something should or would be done that would have in some way impinged upon their purchasing power, such a tactic would have been inappropriate in these sections, however psychologically satisfying it might have been for some, especially of course for the Opposition who would have been able, if such a policy had been adopted, very rightly to criticise us for proceeding in the opposite direction to the sensible one.

There is a further aspect of the problem, however, at a more technical level. What we are trying to do is bring down the cost of living or, perhaps, to be more accurate, to halt or at least to slow for a considerable period ahead the growth of the cost of living and the rise in prices. Under our tax system, the only taxes which do not have the effect of increasing the cost of living are income taxes. I suppose one could say also capital taxes, but our capital tax package has been arrived at with great care and I do not think this is the point to try to extort more money by increasing them above the level now proposed, nor, indeed, is this the view of the Opposition who for reasons best known to themselves are constantly advocating their abolition altogether. In any event, the amounts involved are small [147] and any attempt to get more money by that method would not have been particularly productive and it would have been undesirable. In that area we have introduced a major reform. Time is needed for it to be understood and it has to be seen to work before we start any playing around of that kind. Therefore the only form of increased taxation open to the Government without having the exact opposite effect to the one intended, that is the reduction in prices, was an increase in income tax. That, in fact, the Government did. I am not clear whether the Opposition feel we should have done more in that line, whether they are proposing that the increase in income tax or the surcharge should have been greater but I rather doubt that. I have not heard this voiced specifically from the Opposition benches, but then we have not heard any remedy voiced specifically. We have heard, and I will come to it in a moment——

Mr. J. Gibbons: The Minister should talk about the budget, not the Opposition.

Dr. FitzGerald: I submit I am entitled to refer to the arguments made by the Opposition earlier in the debate on the question of the budget. Otherwise it would be a curious debate indeed, and one which would not be understood by the people.

In these circumstances what was needed was a fairly significant reduction in indirect taxes or the introduction of subsidies, whatever combination seemed most effective for the purpose of keeping down prices. It was desirable that some of the additional money involved should be recovered, but only some, because the purpose of this, in addition to keeping down prices, is to stimulate economic activity not to cut it back. It is certainly desirable that some of this additional burden on the Exchequer should be recovered and the only mechanism open for that purpose was through income tax. I do not believe that a bigger surcharge in income tax would have been desirable or readily acceptable. When one comes to analyse the criticism which is implicit in much of [148] what has been said, and explicit in some of it, that the budget should have been tougher, although a psychologically understandable reaction, it is an argument which falls, both on the broad grounds of the undesirability of undertaking any deflationary activity at this time, and on the narrower technical grounds of the non-feasibility of finding additional taxation by any means other than income tax that would not increase the cost of living. Perhaps I have overlooked something. Perhaps there is some other consideration that the Opposition would wish to draw to our attention, but they have not done so so far. Until I hear such arguments as to how the budget should have been tougher, how this would have helped the economy, and how it could have been done in a way that would not undermine the double purpose of the budget of encouraging the expansion of demand and reducing the cost of living, in more precise form than I have hitherto, I will remain convinced that the budget package, within the limits and constraints imposed on us by the situation, is optimal or as near optimal as any set of fallible human beings, which we certain are, could possibly arrive at.

The Opposition's arguments have been interesting, if a little curious. They have stated that some of the things we have done were advocated by them. That is always a good line to take in opposition but it is a little difficult to follow when it is combined with an argument that having done what the Opposition said we should do we have produced a deficit of a larger kind than they would like to see. We have not been told——

Mr. J. Gibbons: Tell us the size of the deficit.

Dr. FitzGerald: As far as I recall the figure planned is for a £241 million current deficit. The various proposals made by the Opposition in January and now from Deputy Colley. Deputy J. Lynch and others, have included suggestions——

Mr. J. Gibbons: Concentrate on the budget, not the Opposition.

[149] Dr. FitzGerald: ——endorsement of the VAT cut, a proposal to abolish the wealth tax, an argument that income tax relief should have been higher, various strong arguments that the social welfare increases were too little, though they were several times larger than the maximum Fianna Fáil ever gave, and the argument that more should have been given to industry, I think £50 million was mentioned rather than £12 million. We have not been told, however—and I think it is something which the public will be entitled and interested to know — how all these things, some we have done and others we are accused and attacked for not having done, could have been achieved with a smaller deficit. This poses a slight arithmetical problem, perhaps not beyond the ingenuity of the Opposition, but certainly far beyond their oratorical powers to explain. In my view, an Opposition criticism — and having been in Opposition for quite a long time I am conscious of the difficulties of Opposition and of the deficiencies of arguments that one puts forward in Opposition at times—that arguments——

Mr. J. Gibbons: Like the little Dutch boy with his finger in the dam and he had nobody to blame for——

Dr. FitzGerald: The Deputy may think that is a relevant remark. Perhaps when he comes to speak he will explain in what way it is relevant.

Dr. Cruise-O'Brien: The boy in question is generally commended.

Dr. FitzGerald: Deputy Gibbons's response suggests his embarrassment at having had the question put to him as to how one can do all these things we have done — and so much more than Fianna Fáil could have done— besides giving reliefs, introducing taxes and giving more money out, and end up with a smaller deficit. If the deficit is too big, Fianna Fáil, in logic must either propose vast increases in taxation or must not be serious in some of their proposals.

Mr. J. Gibbons: Does the Minister——

[150] Dr. Cruise-O'Brien: Are repeated interruptions by one Deputy in order?

Dr. FitzGerald: They are customary from the other side of the House, although they occasionally come from this side of the House.

Dr. Cruise-O'Brien: I asked if repeated interruptions by a Deputy are in order.

Mr. J. Gibbons: The Minister is inviting interruptions.

Acting Chairman (Mr. Moore): The Minister on Resolution No. 3, without interruption.

Dr. FitzGerald: I have indicated the aim of the budget: it is not to deflate the economy but to expand demand. If any criticism is to be made of our earlier budgets, and they are, like everything else, open to criticism in the light of hindsight, it is that our reflationary efforts were not powerful enough. They were, of course, very much greater than Fianna Fáil's would have been. Every time we did something to try to keep the economy moving they criticised us and said this was the wrong policy. We should not have such large deficits. We should have more deflationary policies. That criticism was, of course, in the wrong direction. What we have to do is continue to react to a situation which, in world terms, has deteriorated unexpectedly throughout the period and to respond by trying, within the limits of what is feasible, to stimulate demand at home in order to maintain employment. Secondly to try to cut the price increases. This we have done effectively in the current period. Thirdly, to get the necessary adjustment to the terms of the national wage round which will permit a response on the income side to the measures we are taking on the prices side, because the national wage round, as negotiated, has an element in it — which I understand was proposed by the employers — of such rigidity in what is basically expressed as a form of indexation, as to virtually vitiate the indexation factor. To have an indexation system in which the range of possible movement is only within the narrow band 4 to 5 [151] per cent, is not really indexation at all.

What we have to do is to ensure, and to get agreement of those concerned to the proposal, that this element in the national wage round which is a serious deterrent to any Government in trying to hold down the cost of living and which if maintained would make any such effort dangerously inflationary, is adjusted so that, without any loss in purchasing power to those concerned, the holding down of prices can be reflected in a similar movement, or lack of movement, I suppose one should say, in incomes.

All this has to be achieved not merely so far as the incomes of wages and salary earners are concerned but for all incomes, including fees and dividends. As I said earlier equity demands that, and one could not reasonably expect support for this package unless it applied to all incomes. To attempt to limit it to wages and salaries income, which is what I think was attempted in various Fianna Fáil efforts at incomes policy in the past, is bound to fail and is something we would not attempt.

In this way we hope to start a beneficent cycle. That is not the whole of our budget effort because we are also concerned to undertake more direct measures to increase employment and to increase employment quickly. The additional provision for building by the Exchequer itself, and the arrangements negotiated with the banks which should produce many thousands of additional houses in the pipeline within the next 12 months, are very important elements in this. We are all aware—and the Opposition have rightly pointed this out over recent months—that the building and construction industry is of vital importance from an employment point of view. Of course, this is not the first upward adjustment we have effected in respect of building. Already since the January budget, additional money has been provided and here is another major injection which should have a very marked impact on the tempo of activity in the building industry and, therefore, on employment [152] in the year ahead. It is a very important element in the budget and one which I must say I particularly welcome.

Additionally, we have the premium employment payment which has, indeed, been well received on the other side of the House, where speakers have paid generous tribute to it as an imaginative effort. There have been criticisms of the detail of it which are always possible. No matter what scheme one introduces there is always a number of other ways one could have done it. What is important is to have a scheme which is not so complex that it will take a long time to implement. We are trying to get immediate results. We are trying to get the scheme into effect at once so that employers in the months immediately ahead will have the incentives to employ additional labour.

There was some misunderstanding on the part of Deputy Fitzgerald here when he suggested extending it to local authorities to enable them to keep people at work. The scheme, of course, is not designed for that purpose. It is designed for the more positive purpose of getting people into work who are at present unemployed. It is applicable only to such cases and that is why it has been concentrated upon the non-seasonal manufacturing industries where it will be much easier to get additional employment under way and to make this scheme work efficiently and quickly.

In addition to these provisions, there is also additional investment in telephones, in industry and in agriculture, supplementing what was included in the budget. This is necessary for many reasons. On the one hand, the rate of economic growth has continued, because of the external conditions we face, to be disappointing in this period and, indeed, the provision made already may prove to make less impact than we expected at the beginning of the period because of the movement of prices in the interval. Additional assistance here was desirable and has been provided.

May I make a reference at this point also to another element in the Government's policy in relation to social welfare? First of all, I should like to [153] emphasise how much has been done in this sphere already. I have just been looking, while listening to Deputy Fitzgerald, at the figures on Table 24 of the review of 1974 in the present “Outlook”. They show the increases that have taken place in the past three years in social expenditure, in public expenditure on the social services under various headings. These figures are expressed in current money terms and, of course, a very large part of the increase must be discounted to allow for price increases. We could go around saying: “We have increased spending on income maintenance and social welfare, two-and-a-half times” but, of course, quite properly the Opposition would reply that the cost of living has gone up in the period.

The only relevant comparison is the real increase, allowing fully for the price increases that have occurred and, on the basis of the price increases that have taken place this year already, and the anticipated increases in the next two quarters, the sum of money provided in 1975 for income maintenance, £365 million, shows an increase in real terms, and in terms of the purchasing power of this money, an increase of 50 per cent on the figure in the financial year, 1972-73, two-and-threequarter years earlier, the last period under Fianna Fáil. This is a real improvement in the volume of social welfare of 50 per cent.

Mr. Wilson: Would the Minister like to tell us where the money came from?

Dr. FitzGerald: It could be compared with as much as was achieved in the previous three decades. It is a remarkable performance and it is not limited to that part of the social services. Housing and sanitary services in real terms deflating by the consumer price index, which I think is the only general deflator one can appropriately use, show an increase of 33 per cent in the same two-and-threequarter years. There are increases also in volume terms of 20 per cent in the case of health and 10 per cent in the case of education. I emphasise the latter because Deputy Wilson has come into the House. Sometimes listening to him one would think we had cut back on education.

[154] Over the period since Fianna Fáil were in office expenditure in education has risen by an amount which, when you deflate it by the price index, shows a 10 per cent increase in volume terms in the purchasing power of this expenditure.

Mr. Wilson: And the numbers upon which it was spent, what is the percentage increase?

Dr. FitzGerald: There were more pupils in the period and that is one of the reasons it is increased in volume. I am looking at the figures on Table 24. I am not making a speech on education. I am sure the Deputy will speak on it in more detail. I merely want to emphasise that there is no category of expenditure on the social services which has not increased in volume terms during this period— some more than others but they have all increased.

Mr. Wilson: Fair play to the Minister. He helped to get the money for it, but his colleague on his left did not.

An Leas-Cheann Comhairle: Speakers are limited in this debate.

Dr. FitzGerald: I have always found my colleague helpful in any joint enterprise we have ever undertaken.

Dr. Cruise-O'Brien: Thank you.

Dr. FitzGerald: I was merely referring in passing to the actual progress over the past two-and-threequarter years as an introduction to what I was about to say which is that we have this commitment to maintain the value of social welfare payments during the course of the financial year. It was the practice under the previous Government to increase these payments once a year. This was defensible though not necessarily desirable in a period of a low rate of price increases. It would be quite indefensible if, in a period when prices increased by as much as 23.8 per cent, within the last 12 months, there were to be no review of social welfare payments during the course of the year so that the extra benefits given at the beginning of the year became completely [155] eroded, and that during the year, during the 12-month period, the real living standards of people in receipt of social welfare would be falling.

We have introduced this six months review for which, contrary to some suggestions made in an earlier part of the debate, provision has been made in the budget and, indeed, has been made, as far as I understand it, on a basis which could be more than adequate for the amount actually needed following the Government's measures to reduce prices. There is full provision for that. One can never be certain how any figures will turn out in a period of rapid inflation but, as far as it is humanly possible to judge at this moment, the provision made is adequate and there will be an increase in the social welfare benefits in the autumn in current money terms to at least maintain the value of these as they were previously, an innovation of this Government which will be maintained, and which will come to be looked back upon as a very important social innovation in years to come. People will remain grateful for the initiative taken by this Government.

I want now to come to another aspect of our economic situation related to the budget, the question of the overall or underlying strength of our economy. This is very striking. The difference between, for example, the Irish and British economies at this stage is much more striking than might appear from the superficial similarity of inflation rates. This is nowhere more evident than in the flow of capital which has been moving into this country from elsewhere. The total net capital inflow in 1973 was, I think, £81 million. In 1974 that rose to £370 million, a figure four-and-ahalf times as great. Of course, a good deal of this increase reflected increased borrowing by the Government and semi-State bodies. It is not to be dismissed on that account. The fact that the Government were able to borrow greatly increased amounts is itself evidence of confidence in the economy and, incidentally, in its management by the Government. The [156] increase in borrowing by the Government and semi-State bodies in this period was very significant. But when one takes it out and looks at the residue, that is, the money which came in of its own accord—quite separate from anything borrowed by the Government—one finds that, whereas in 1973, there was a net private capital inflow of £13 million in 1974 that figure rose to £129 million, ten times as great.

We are not talking of Government borrowing but that itself is a test of confidence. We are talking about people's private decisions as to where to put their money. This was in a year in which every effort was made by the Opposition, in their attempt to criticise the wealth taxes, to suggest, totally incorrectly, that there was an outflow of capital. In no period in the history of this State has the inflow of private capital been as great, in real or money terms, as in 1974. I doubt if there was any period in which the expansion of the private capital inflow was anything like ten times, even allowing for the fall in the value of money in the period, as in 1974, the year in which the Opposition attempted to suggest that there was a net outflow of capital from this country because of the wealth tax. The fact is that the measures we have taken in regard to wealth tax—the abolition of estate duties and the substitution of a reformed system of wealth taxation—is itself so well judged and appropriate to the needs of this country, is so equitable and contrasts so favourably with the tax systems in all the other countries from which money is pouring into this country, that we have had this massive inflow.

Recently I was handed a copy of a British stockbroker's report with regard to the Irish economy. For what it is worth, it is an indication of the views of people outside this country on our economy. I mention the main feature of it, which was to say to the people being advised by the stockbroker that the inflow of capital to Ireland is at present so great and is on such a scale—because of the favourable conditions there; and incidentally [157] the wealth tax was specifically mentioned, if I recall correctly—that it is inevitable that the Irish £ will be so strengthened by it that it will be value. Probably the British Government would have to do something about it. Therefore, get your money in quickly before this operation becomes difficult or impossible to undertake. I do not suggest that that is a correct analysis, but it is how our situation is seen from outside, and does contrast rather markedly with the views from the Opposition benches but facts are facts, stockbrokers' opinions are stockbrokers' opinions for what they are worth.

The fact is that the private capital inflow last year went up from £13 million to £129 million. It is difficult to get figures of this kind for periods of less than a year with any accuracy. I have tried to track down what the figure has been this year. I have not got complete data because I have not had the time since my return this morning to do all the necessary analysis. I shall just give a figure tentatively to the House for what it is worth. There are particular complications because of the intervention payments which are complicating all our balance of payments figures at present, making them difficult to interpret. It would appear that the private capital inflow for the first five months of 1975 is of the order of £35 million to £40 million. I do not want to put it more precisely than that but it would appear to be of that order.

Mr. Haughey: Why then did the foreign losses go down?

Dr. FitzGerald: Because the actual trade deficit in the period, as no doubt Deputy Haughey is aware, was £147 million. Of course, these five months of the year are months during which the tourist industry is not at its most active—although, indeed, the recent good weather should have given great encouragement. Consequently, the net invisible receipts in that period are below average. For that reason though with a low capital inflow one would expect capital reserves to fall. They fell only by £23 million, I think, in this period. That very small fall was due to the inflow of capital, some of [158] it consisting of Government borrowing, but much the greater part of it consisting of this autonomous private capital inflow, money coming in here from people who feel that this is the best place to have it where they can get the best return and where it is safest.

Mr. Haughey: How does the Minister calculate the £42 million?

Dr. FitzGerald: Thirty-five million pounds to £40 million. It is an approximate calculation which is related to the figures I have given—the trade deficit, an attempt to assess the net invisibles in this particular fraction of the year; an allowance for Government borrowing, intervention payments and the residual factor of private capital inflow. I do not want to be held to that precise figure because it is very hard to assess correctly, but the nearest figure I can get is £35 million to £40 million, the remarkable flow of capital into this country which any evidence we have suggests has been continued right up to the present time.

Mr. Haughey: Does the Minister not think that it is such an imprecise——

An Leas-Cheann Comhairle: There is a time limit on speakers' contributions in this debate.

Mr. Haughey: Does the Minister not think that it is such an imprecise calculation as not to be really worthwhile making?

Dr. FitzGerald: I put it forward as my personal calculation. I am not putting the weight of the Government behind it. The best assessment I can make is that it is of this order of magnitude. I have been making these calculations for a good while, not always with perfect accuracy, but usually to a reasonable approximation.

The evidence we have suggests that the capital inflow is continuing. That is a very important factor in assessing where we stand. Our economy is basically in better shape, thank God, than that of our neighbour. Our difficulty is, of course, that our neighbour's economy is not in very good shape at this time and this does affect us. [159] Clearly, what the immediate future holds for us depends on the type of measures which are thought necessary by the British Government to take to face its difficulties. This is something outside our control.

We can only hope that the measures taken are not, in their effects, so deflationary as to involve any further set-backs to our exports and, therefore, to employment in this country. But we must wait and see what comes on that front. In the meantime what is encouraging, as indicated by these capital flows, and, indeed, by such commentaries by stockbrokers or others is that our currency certainly is basically strong at this time, so much so that there has been that very considerable speculation about the possibility of revaluation. My view would be that revaluation at this point would be premature when our inflation rate is still so high. Our measures must be seen to start to work before we would consider anything of the kind, unless, of course, there was a really disastrous slide in the value of sterling. I suppose that might provoke a re-thinking but I am just giving a personal reflection on that.

I would think that some of this talk is premature. I mention it only as an indication of the kind of confidence there is in our economy and our currency. But all the talk has been of revaluation rather than of devaluation. If I remember, under Fianna Fáil, such talk as there was, and there was not much, would at certain times have been a bit the other way. I do not overstress that point. Certainly, this is the first time one had had a lot of speculative talk about a revaluation of the Irish £ vis-à-vis sterling. While that reflects significantly the weakness of sterling, it reflects also the absolute and relative strength of our £ aided, as it is, by the inflow of capital as a mark of confidence in our economy at this time.

I want to turn to the question of protection which has been raised from the opposite side of the House. There are certain facts to which we must have regard here. This country [160] is a net exporter in a number of these areas. The latest figures we have indicate that our net exports are increasing, in other words, our exports are rising faster than our imports. The unemployment faced in the clothing and textile industries is not, therefore, on the face of it, attributable to some deterioration in our trading arrangements, as our exports are keeping ahead of imports. Indeed, in textiles this is very marked. It is more marginal in the case of clothing though it is true in both cases. The problem is one of home demand. As we are, in fact, an exporter on such a large scale in these areas, as so many jobs are involved in the export of clothing and textiles, and as there are countries within the Community which have also shown signs of thinking of the possibility of seeking agreement of the Commission to protective measures, any action on our part of a general character designed to reintroduce a general measure of protection for textiles or clothing on a broad front would be very likely to provoke retaliatory action through which we could only lose because we export more than we import and because this balance in our favour is growing as our exporters are successfully expanding their exports at a faster rate than imports are rising. In those circumstances it is not necessary for the Government to seek a general measure of protection for clothing and textiles as a whole. It would be a very risky enterprise, which would be more likely than not to provoke a retaliation of the kind which would lose far more jobs than any jobs which could be temporarily recreated by protective measures.

The position in the footwear industry is, however, different. There one does not have the situation of net exports, and net exports improving. On the contrary, the trend is the other way. There we have now—much of the data has become available in statistical form only in very recent weeks —a very clear picture of an industry seriously hit by, of course, falling home demand, but unaccompanied by a similar drop in imports. It is not that [161] imports have been rising as such but they have not been falling in company with home demand and consequently the import share of the home market has been rising very rapidly, in the first four months of this year by 10 percentage points. This has contributed to a drop in production, which is significantly more rapid than the drop in consumption. It has contributed to the closure of a number of firms recently and the threatened closure of others in the very recent past.

It is these facts, now available to us in concrete, specific and in some instances statistical form for the first time, which make it possible for us to submit a case to the European Commission under Article 135 which we believe is a case that the Commission should accept as an irrefutable case for special action to be taken, just as some years ago the Commission authorised the taking of action in respect of French refrigerators threatened with Italian competition at that time. For us to have acted before we had this data, before we had figures showing this picture that I have outlined and the different elements in it, would in all probability have led to a rebuff, a refusal on the part of the Commission, which we could not reasonably have contested because in fact we did not have facts to show that the problem was one caused by imports—up to a certain point the problem was primarily one of shortage of home demand—and it is only now that we have these facts that we can go to the Commission with confidence that our case is irrefutable and confidence that the Commission must give it the consideration it deserves. If the Government had acted prematurely and thereby prejudiced their chance of securing the necessary degree of protection it would have been irresponsible, although we naturally had to accept the criticisms made by the Opposition—which they are perfectly entitled to make, and I am sure if I were in their place I would be doing the same thing—of the fact that we did not act more quickly. One has in these cases to wait for the moment when one's action can be effective. This I believe we have [162] done and I believe the Commission must consider our case favourably when they see the facts and figures we can now put forward.

With respect to the imports from outside the Community some remarks by Opposition Deputies have seemed to suggest an unawareness on their part of the fact that we are part of a Community with a common commercial policy, whose trade relations with countries outside the Community is regulated by the Community institutions and not by member States. It is not open to us, although there are in the transitional period certain specific exceptions to this in certain limited instances, to take measures on our own. We did, of course, last December approach the Commission with respect to the general problem of imports from Korea to the Community as a whole and have been pursuing this with the Community. They have been examining the position and trying to devise appropriate action in regard to that. Our own ability to react is limited unless dumping can be shown by An Coimisún Dumpála to exist in which case in certain instances some limited action is open to us individually, separate from the Community action.

It is a complex and technical field. I do not want to dwell on it as it is a matter which the Minister for Industry and Commerce is best equipped to deal with. I merely want to make these general comments to indicate the reasons for the Government's approach to the problem, the kind of considerations that have been at work and why the action that we have now taken is action that should be effected in that area and why we feel it is not open to us to take action at this time in regard to clothing which could be effective: first of all, because we could not argue that there is unemployment in Ireland being caused by the fact that imports are rising faster than exports. The opposite is true. Exports are rising faster than imports.

Mr. G. Fitzgerald: In certain industries.

Dr. FitzGerald: The pattern in regard to clothing is fairly uniform between the different sectors. I examined [163] the main headings in clothing and the data available suggests a more uniform pattern than I expected. I thought that it would be worth while examining them in detail with a view to seeing whether there were certain particular types of clothing in respect of which a different situation existed that would justify the kind of action the Deputy is seeking. I have to say that, having gone through the different categories, I could not find the necessary evidence there for that. The Deputy is right in saying that one should look at the items individually, not merely globally. I am afraid it did not yield the kind of information that would have justified us taking up the matter or would have given us any confidence in succeeding. The danger is, of course, if one makes a broad attack without taking any unilateral action in the matter this could provoke the very kind of retaliation which would be disastrous for employment in the clothing and textile industries which depend now, because of the success of adaptation over the years, to a very large degree on exports.

These are the considerations present in the Government's mind on these matters. I am glad I have an opportunity to mention them because I can quite understand the Opposition and public opinion generally being concerned about these matters and being anxious that we should be doing everything possible in this area within the limits imposed on us by membership of the Community, which affords us many benefits which are helping us to keep people in employment at present which we must not prejudice. I am glad I had a chance to mention these points.

These, then, are the main points I wish to make in regard to the budget. I will just sum up in three sentences. The underlying position of our country is favourable with a relatively strong currency, with a very significant continuing private inflow of capital. We have a problem with inflation, which has to be tackled by the kind of measures taken by the Government, which can only be effective if they meet [164] with full support from different groups in the community and especially those known as the social partners. With that support we could start a decelerating process in regard to prices, which would possibly quite rapidly help to resolve a large part of our unemployment problem, which we are tackling also by the specific measures contained in the budget with regard particularly to the construction industry and the premium employment payment. This then is the theme of my remarks which I put to the House as my own reflections on the budget, having had time to consider some of the criticisms made of it by the Opposition and in the papers in recent days.

Mr. J. Gibbons: Listening to the Minister for Foreign Affairs, whom we are glad to see among us again, one would think that he was not a member of the present Government at all. I suppose in a way there are some grounds for this suspicion because he is becoming rather an infrequent visitor to this country, I accept that his obligations as President of the Council of Ministers during the last six months inevitably took him away from his duties as a member of the Irish Government.

Dr. FitzGerald: The Deputy will be seeing a lot more of me in future.

Mr. J. Gibbons: During his pergrination about Saudia Arabia, Tel Aviv and all the rest of the places he remained a member of the Government who have got this country into a situation so hopelessly bad that there is nothing in the recent history of this country that is remotely comparable at all. Within the space of six months the amount of foreign borrowing done by the Government on behalf of the country has resulted in our being put in pawn to such an extent that I do not know how we are going to get out of it. I doubt if the Minister for Foreign Affairs knows either. Yet, in spite of his undoubted eloquent performance now the Minister for Foreign Affairs has not told us as his colleague, the Minister for Finance told us several times after the January budget, that we are now about to round the corner, that we have now reached the top of [165] the hill and can walk into the broad uplands. The Minister for Foreign Affairs——

Mr. Haughey: He flies again.

Mr. J. Gibbons: ——and one could read it in his face as he listened to his colleague, the Minister for Finance last week enjoyed his writhing in agony and pain, as he must have done, when he introduced this latest instalment of the selling of this country down the river. That is not a figure of speech in so far as the future of every man, woman and child is compromised for the worse for the foreseeable future by the incurrence of debt for reasons other than our development.

The Minister for Foreign Affairs had the decency to admit what the Minister for Finance has been denying steadily for 12 months, that the inflation which has been raging here for up to two years is largely generated by the Government. It is the Government, more than anybody else—the Minister for Foreign Affairs admits this—who were responsible. It is they who are, as a consequence, responsible for the necessity to make these fantastically large borrowings all over the world, wherever they can rattle their can. This is done in spite of the fact that the roll of the unemployed and the march to the labour exchanges is getting bigger daily and the queues are getting longer outside the labour exchange.

Listening to the Minister for Foreign Affairs one would think that everything in the garden was lovely. He told us he was seeking the optimal remedy. In the quest by the Government for the optimal remedy they have not come up with anything. Almost by confession the Minister for Foreign Affairs said they must try to hold back the forward rush of prices for a period. On the radio this morning we were told that briquette turf has been reduced and increased in price in the space of 24 hours. The result is that the price of briquette turf is higher than it was last week in spite of this magic wand of Deputy Richie Ryan, the Minister for Finance. The price of electricity has gone down and up in the last couple of days and the end product is that in spite of the removal of VAT from electricity, the briquette turf, their current [166] prices are higher than they were last week.

This petty fraud that is being attempted by the Government, and the Minister for Finance in particular, is represented as an attempt, in the words of the Minister for Foreign Affairs, to try to hold back the forward rush in prices. Do Deputies remember that in the heady days before the last general election when the same Minister for Foreign Affairs who, in spite of the fact that he was one of those referred to by the Taoiseach as a mongrel fox, had no difficulty in making the most solemn undertaking to the voters that prices could not only be stabilised but reduced.

Now for all their gimmickry and the fact that we are spending borrowed money at the rate of £4½ million per week to try to stem the onward rush of prices, the couple of examples produced in the last couple of days have demonstrated the fallacy of this gambler's throw. This budget is gambling with the lives, the livelihoods and the futures of every man, woman, and child here. Almost 52,000 are finishing in secondary schools but there is nowhere for any of them to go. Not only is there no work for them but there is no work for their fathers or mothers either. This fact seems to have been flitted over gracefully by the Minister for Foreign Affairs when he was demonstrating what a capable and able person he is.

My colleague Deputy Gene Fitzgerald paid a generous tribute to the Minister for Foreign Affairs, his nibs, and he congratulated him on the showing he made as President of the Council of Ministers. I saw him in the European Parliament in Luxembourg and there is no doubt but that he gave a tremendous performance, but is that what we want? Is it performances, however talented, that we want? Is it performances in the sense of there being a stage production? It would be far better if the Minister was half as glib and twice as effective. I would imagine that from cloud seven in Foreign Affairs, even at that remove from the Department of Government which I expect he would prefer to occupy and which he cannot occupy because he has displeased Deputy [167] Cosgrave, the Taoiseach, he would be more actively aware——

Mr. McMahon: He is still a Minister.

Mr. J. Gibbons: The Deputy can make his speech when I am finished but while I have the floor I will say what I wish without any assistance. The Deputy is not in this House very long and I do not think he will be in it much longer. While the Deputy is in the House he should try to keep the rules of order.

Mr. McMahon: The Deputy should remember how I came in first.

Mr. J. Gibbons: The Minister for Foreign Affairs came up with that hoary question, almost like the boy being caught raiding the jam tarts in the larder, what would Fianna Fáil have done in a situation like this? Does the Minister for Foreign Affairs not know that when we handed the finances of this country over to the Government there was a surplus situation as far as budgets were concerned? There was no necessity to wonder what to do with the masses of unemployed people because there were no such masses. The people, when Fianna Fáil were leaving office, were working and production was shooting upwards. Real earnings were shooting up along with them in a controlled and level way, not in the crazy way that they are toppling now, toppling with the courage and the confidence of the people. The people on whom our economy rests are the working people, the working farmers, the small entrepreneurs who establish industries and frequently man them on the floor as well. They are being squeezed in this budget. Their initiative, hard work and diligence is being squeezed, severely squeezed in this budget. No member of the Government has adverted to the fact that obtains in this country now, that for a great number of our workers it is an act of personal sacrifice, which many of them do make, to stay in employment at all. It is no longer profitable for a great number of people to [168] work at all. This situation has been contrived by the Coalition and is being fed by the Coalition. The number of people who are working is diminishing steadily and those taxpayers are being loaded up in order to aggravate that situation. Certain Ministers of the Government have been going about the country blowing about the wonderful social services we have. Social services are essentially an emergency system to look after workers who have lost their jobs. Nobody on this side of the House as we have shown by our record, would deny that the obligation rests upon the community as a whole to see that men who lose their employment through no fault of their own are properly compensated. The responsibility to see that their numbers are kept within manageable proportions rests with the Government and nobody else, the responsibility to see that at no time will it be more profitable for a man to be unemployed than it is for him to be employed. The Government know this to be so but they have not the gumption or the moral courage to admit that it is so.

The Minister made reference to the need that existed to stimulate sources of employment. By what means can the employment, let us say, of local authority roadworkers be guaranteed when under the January budget the amount of money provided for road works was exactly the same amount as last year, despite the fact that roadmaking costs 30 per cent more now than it did then and that as a consequence there will be a 30 per cent drop in the amount of road work done? In the most recent budget the road fund has been cut. It is inevitable that there will be disemployment of road workers in the coming months. It is well known that local authority activity in providing work has dropped very sharply since the reign of the Coalition began. Amenity grants have been abolished altogether. On the other hand, planning permissions have been lobbed out by the Minister for Local Government right, left and centre, like snuff at a wake, and some of the most scenic areas in the country have been [169] destroyed so that the Minister for Local Government can cater for his political friends.

It is becoming clearer and clearer that the Government base their whole philosophy on Dickens' Mr. Micawber. They are plainly waiting for something to turn up. The Minister for Foreign Affairs within the last hour has said that the economic pundits last year said that there would be an upturn in the spring of 1975 and the pundits were wrong. Nothing turned up. Now we have a holding operation to hold back the onward rush of prices for a few months, again, like Mr. Micawber, to see if something will turn up. The only turn up I can see is an increase in the unemployment figures. There will be a turn down, however, in the amount of productive work being done. There will be a turn-up in the amount of taxation exacted from the everdiminishing cadre of working people in the country. They will be squeezed whiter and whiter as the people who are mistakenly called “the middle classes” in this country are being squeezed. The words “middle class” has a connotation outside this country which is totally different. It connotes a considerable measure of economic well-being. When we use the expression we mean those people who are above subsistence level, people who earn over £40 a week, possibly over £35 a week. Those are the people that the Government feel it is now permissible to squeeze harder. If the Government continue to exercise deterrents against initiative, to punish initiative by extra taxation eventually they will drive many of these, especially small independent family-owned businesses, out of business. Several industries in my own constituency have been squeezed to the wall by the activities of the present Government.

Not once did the Minister for Foreign Affairs, who is probably the best economic brain in the Government, in his contribution mention agriculture, our primary industry. Before I leave the Micawberism of the present Government may I remind them of another maxim of the same Micawber. It concerned the borrowing of money. He believes that if your situation is that [170] your income is £20 a year and your expenditure is £19.19.6. the result is happiness but if your expenditure is £20.0.6. the result is misery. Micawber's lines of delineation were very narrow indeed. Three years ago when we, as a Government, raised the first foreign loan of £20 million, Dr. FitzGerald, Minister for Foreign Affairs screamed to high heaven that this was the high road to inflationary ruin and destruction. He did not say anything today when the amount of foreign borrowing that is to be undertaken by the Government is put in the area of about £250 million. That money is not to be used for capital development as ours was. It is to be used to subsidise butter, milk and bread. Who will pay for the borrowed money and the interest when the show is over? Is this not merely bread and circuses? Subsidise the price of bread now with money borrowed from the Arabs at a rate of 14 per cent per annum. Where will the money to pay the repayments come from.

Even the Minister's wildest speculations and hopes saw a reduction of only some 20,000 in the numbers who would otherwise be unemployed, but an inevitable rise at any rate in the next six months to 120,000 or 125,000 unemployed. This is the financial feat the master juggler has performed with his borrowed money trying to steady the onward rush of crises even for a short period.

One wonders when one looks at the budget what the Government's priorities are. We have heard the Minister for Industry and Commerce, who visits us infrequently, talk about the onward situation. That is being monitored. We have heard him talk about getting the mix right. That is also being monitored. I wonder is the mix right, the mix that gives an unemployment figure in the next six months of 125,000 to 130,000 people and an unprecedented borrowing rate —and they will borrow within the next six months, if they are able to get the money. Is the mix right when you have 130,000 unemployed, leaving out the 52,000 school leavers who will also be unemployed? Is the mix right when besides this you increase your foreign borrowing and use the money [171] borrowed for all kinds of current expenditure, borrowing at the unprecedented rate of £250 million so far, and only six months of this year have passed. The likelihood is that the figure will have doubled before this time 12 months, or even before the end of the budgetary year.

Let us have a look now at what the Government have done. A sum of £10.5 million is being provided for housing. The Minister for Local Government has been screaming inside and outside this House, regardless of what the building trade said and regardless of the fact that there were 5,000 building workers unemployed, that they never had it so good. Nevertheless, the Government in their wisdom decided to give £10½ million extra for housing. They decided to give £8 million for telephone development and £5.2 million to see what could be done to help industry. A great many things could be done to help industry. Every day the House sits we have questions being asked, questions addressed to the Minister for Industry and Commerce and statistical questions addressed to the Taoiseach, questions tabled by this side of the House, and only this side of the House, about the most recent closures of factories. I am very much afraid £5.2 million will not get these factories going again.

What did the Government provide for the principal industry, the one that provides the greatest volume of exports? Remember, agricultural exports are produced in toto inside the country. It is not a question of merely processing imported material and its re-export. The Government provide for agriculture £3.4 million and they do not say what they are going to do with it. This throws an interesting light on the priorities of the Government. We know they have other priorities. If we look back over the record of the last 2½ years we find what is really important to the Government. One of the first things they did was to gerrymander the constituencies in order to ensure, whether or not the people wished it, they would manage somehow to remain the Government of this country. [172] They wish to frustrate the wishes of the majority. I tell them now that cock will not fight. The people are waiting to get their hands on this crowd of very dishonest individuals who form the Government and they will answer Deputy Tully, Minister for Local Government, and his colleagues bluntly. We discovered in the last few days that high on the Government's priority list is providing jobs for the boys and “by the boys” I do not mean the 120,000 outside the labour exchanges; I mean the Taoiseach's friends in the Army and the friends of individual Ministers who are dragged into the civil service——

An Ceann Comhairle: This is a budget debate, as the Deputy will appreciate, and as such it is confined to taxation, expenditure and kindred matters.

Mr. J. Gibbons: I was discussing the priorities of the Government in the context of the budgetary provisions.

An Ceann Comhairle: The Deputy was adverting to matters not appropriate to a budget debate.

Mr. J. Gibbons: It is not appropriate to discuss the provisions of the budget?

An Ceann Comhairle: No, no——

Mr. J. Gibbons: Why? Is this not the budget debate?

An Ceann Comhairle: The matters to which the Deputy was adverting are not proper to this budget debate.

Mr. J. Gibbons: Would you not agree that in the context of unprecedented Government-manufactured economic disaster it would be permissible, if not to discuss Government priorities, at least to try to determine why the time of this House is dissipated in discussing things like Bills which will not be supported by the members of the Government, or red herrings produced by the Red Minister for Posts and Telegraphs about a second TV channel? However, since you say it is outside the relevance of this debate. I will say no more. I certainly think that the fact the Government provided only £3.4 million of [173] their borrowed Arab money in order to relieve the situation in the primary industry, which is in a state of ruin as a direct result of the activities of the Government, is a very good example of what they think is important; they will spend twice as much money on telephone development as they will on rescuing the agricultural industry.

I would ask the Minister for Agriculture and Fisheries if, having got the money, they will devote all of it to strengthening, and that is all it will do, the brucellosis eradication scheme? This is very, very urgent because in 1978 we will not be able to export any cattle unless the country is free of both brucellosis and tuberculosis. Since the change of Government practically no progress has been made in the eradication of disease. On the contrary, the whole scheme of eradication has fallen into disarray.

Possibly one ought to sympathise with the Minister for Agriculture and Fisheries in the companions who sit with him and sympathise also with him in his efforts to enlighten his academic colleagues on the problems which beset this primary industry. It bears repeating that not any man on the Government front bench, Minister or Parliamentary Secretary, is a man of the land. None has any connection—good, bad or indifferent— with our primary industry. The most valuable national asset we have got, the Irish cattle herd, is being rapidly destroyed by this Government. Cattle numbers are diminishing rapidly as a result of the idiocy, and criminal idiocy at that, of the way in which the farming industry is being handled. Calves can be bought for £2 or £3 and in the last couple of months their value was diminishing rapidly. When we were leaving office the price of young cattle was three times what it is now; and the price of fertilisers was one-third what it is now. Is it any wonder that among the many hundreds of thousands of people going to the labour exchange, thousands will be fertiliser factory workers? The consumption of fertilisers has dropped by 40 per cent in the last 12 months as a result of the idiocy of the present Government. I would call the way the farming industry [174] is being handled at present criminal idiocy.

Calves can be bought for £2 or £3. In the last couple of months, they were given away for auction fees. That happened in Bandon Mart within the last month. A pen of ten calves were sold for the auction fees and no more. We had meticulously and carefully built up our beef herds as a valuable part of our cattle economy and a necessary adjunct to the dairy herd. It was a means of rearing in the fastest and most efficient way possible the calves which were the byproducts of the dairy industry. Tens of thousands of cattle have been totally destroyed by the present Government. That is why one cannot sell a calf, except for export. It is almost like what people did in famine times: they ate the potato seed and left tomorrow to look after itself. This is the way this industry is being handled. I grew up with it and know a good deal about it. There is no man on that side of the House who could talk to me about the cattle trade which that Government have destroyed. It does not pay to breed cattle any more when the price of calves can be as low as £2, and it costs £3 or £4 for a good insemination. It does not pay to have a good bull, so bad bulls are being used. The herd is being mongrelised and nothing is being done about it.

There will be no need for policemen, watchers or spotters if it is uneconomic to produce fat cattle, This will be another legacy of this spendthrift Government. In spite of these facts the only measure the Government could think of to assist our farmers was, in my opinion, quite rightly to tax them in the same manner as other people. But with that, they were subjected to the extra penal tax that rises steadily year by year and has no regard for a man's liabilities, of the rates on his land. It is an outright disgrace to inflict this second tax on farmers over the heads and advice of the farmers' organisations who have been so lenient with the Government. In spite of that, the farmer who trys hardest will pay the most. It will not pay any longer to work hard and develop land, especially rundown land. [175] I understand that business better than any Government Deputies.

There are thousands of men who devoted their lives to the slow and patient build-up of fertility of their farms, the expansion of their production and making fertile places that were once barren. They have a right to complain especially when they are being robbed of their life's work by the Government, elected by the people. If that were not enough, fertiliser and other incidental costs are trebling while their incomes are being divided by three. Even on the Department of Agriculture's own figures, farm incomes fell last year by 30 per cent. On the Institute figures, the average income of farmers last year was £1,500. The Government's response is to introduce not only double taxation but treble taxation. If a farmer such as myself wants to give his land to his son, in the way farmers usually do, he will have to do it in the knowledge that that son will be dragged into the ground by the taxation debt imposed by this present Government. One could go on at great length about this.

The sheep flock which has been reduced in numbers by 20 per cent since the present Government took office, is well on the way to destruction. The same chaos obtains in the pig herds. The smaller producers are being backed to the wall steadily year by year by this Government. This Government is a failure either by their ineptitude or by sheer ignorance. They know nothing whatever about the people of the land for the very simple reason that they all come from the city.

Considering the pathetic contribution in this most recent budget—the budget, incidentially, should be put by the official notetakers in inverted commas because it is a misnomer to refer to the spendthrift, crazy borrowing of money ad lib abroad for current purposes and call it a budget—it is obvious that we are pawning the country.

Last week agriculture was dismissed with a sum that, in comparison to the total, was nugatory. In that context possibly the Minister would tell us that [176] he will seek and get the changes needed in the farm modernisation scheme in Brussels that are at present depriving of assistance our farmers, who require assistance most. Will he point out to the Commission that the weight of the assistance provided by the Community is being devoted to the wrong people?

Possibly he will tell us also that in the cheap trick carried out by the Government in the application of the disadvantaged areas scheme, by the introduction of a second list of priorities, a second intense skimming off of disadvantaged areas, he will devote some money to its augmentation.

I doubt that it is commonly known even in this House that the disadvantaged areas scheme is a contributory scheme for which the Government must bear 75 per cent responsibility. The other 25 per cent will be provided by the Community. In that context, the Minister told us here some months ago that the only money he had available for this scheme, apart from the suppression of existing schemes, was £6 million. Obviously to spread that ridiculous little sum over the 12 western counties and to all of the Province of Connacht, west Munster and the three Ulster counties would go very thin indeed.

The Minister was questioned here on this subject this afternoon. Being one of the better characters in the Government he was very discomfited by the questions he was being asked. In some cases he did not answer them at all. The facts are brutally simple. The Department of Agriculture and Fisheries are not going to do anything at all worth a damn for the people in the disadvantaged areas. They will do nothing at all, however small, except give the EEC headage grant of £12, in the really depressed areas. Surely that is the least they could do. There is no way in which the Government could try to do less and succeed. This is the shameful record of this Government, they who are the guardians of public morality. You may recall the posters on the lamp posts: “Cosgrave puts the nation first”—even before Captain Daly.

[177] Mr. McMahon: Or Captain Kelly.

Mr. J. Gibbons: I understand the Taoiseach has a private chapel where he withdraws from time to time to thank God that he is not like the rest of men. I wonder will he go into it again——

Mr. McMahon: He still has his team of Ministers.

Mr. J. Gibbons: ——and pray for the decency to get out before the country is ruined. I want to warn the Minister for Agriculture and Fisheries about some serious matters that will be causing great concern in this country and in the EEC generally. One is the accumulation of a mountain of dried skim powder. While the exceptionally dry weather this year may reduce the dimensions of the problem in reducing the quantity of milk supplied to creameries, nevertheless there is the distinct possibility that intervention will be limited in the case of dried skim powder as it has been limited in the case of beef. I want to ask the Minister to go to the Government and say that the incomes of dairy farmers, as a result of the Government's activities, have been reduced by the value of a calf. In an intensive dairy farm where there is a livestock unit to the acre, if you reduce the income from the sale of calves you get a product of about £40 per acre. It is by that amount that the dairy farmer's income will be reduced. They should have regard to the declared intention of the Commission of introducing what is rather delicately called co-responsibility for surpluses which means a penalty for over-production. The producer is penalised if there is what the Commission decide is a surplus position.

This, of course, will be translated into a reduction per gallon in the price of milk paid to creamery milk suppliers. It is inescapable because one of the products of the long, dry summer will be a short-fall in the amount of milk supplied to creameries. This will make it more difficult for the large co-operatives to service their very considerable debts. One can see in the coming months a demand being made by co-operatives willy-nilly on the [178] suppliers to pay that piper too. I should like to have the benefit of the Minister's observations on these very important subjects.

I will try to put some thoughts before the House on the rake's progress of this collection of gentlemen we call the Irish Government. I should like not only them and the House, but the people as well, to take careful note of the most remarkable part of the whole effort. It is the abdication of power by this Government and this House, and the placing of that power, which was given to them by the votes of the people, in the hands of others. The final decisions with regard to the functioning of this budget, or its annulment, rest not with the democratically elected representatives of the people any more but with the Employer-Labour Conference and, in great measure, with the decisions to be made by the trade unions.

It begs the question of what is the function of this House at all, what is the function of the Government at all, when the vital final decisions are being taken outside these walls. Is that not the real moral of this whole sorry effort?

The Taoiseach, Deputy Cosgrave, has threatened to withdraw the nice bits of the package unless the package is accepted as a whole by all concerned. That, in my opinion, is abdication. It is dereliction of duty. Surely it is not the exercise of legitimate power by the person to whom that power was given and by the Government who support him. The Government are so timorous that they tout around constantly and strive ceaselessly to please all of the people all of the time. Any politician worth his salt knows this is not possible, and not even desirable, because it will inevitably fail. In this case it involves the total abdication of the power solemnly given to the Government by the people and the passing of that power into the hands of people without the right to exercise it which is the effective Government of the country. Even out of the mouths of people like the Minister for Foreign Affairs who rejoiced so wickedly in the discomfiture of the Minister sitting in front of us, this Government have [179] failed and the best they can hope to do is to try and stem to some degree by reckless borrowing, not unemployment itself, but the rate of the increase in unemployment. There is one other thing they can do and I sincerely recommend that course to them. It is only three years ago since the Taoiseach, then Deputy Cosgrave, denounced some of his colleagues at the Fine Gael Ard-Fheis in Cork as subversives. They are sitting beside him now as colleagues in Government. In the same speech he denounced some of his own Fine Gael colleagues for the now famous or infamous reason of their being mongrel foxes.

When Deputy Ryan was introducing his financial trick last week—

An Ceann Comhairle: The Minister for Finance.

Mr. J. Gibbons: One of the leading foxes was laughing at his discomfiture over here. The last thing I would ask him to do is end it.

Mr. R. Ryan: I would crave the chair's indulgence to refer to a criticism of my absence from the House during Question Time today. I was necessarily absent introducing the Second Stage of the Appropriation Bill in the Seanad. Needless to say, there was no discourtesy intended to this House. I am sure that those who criticised me in my absence, not being aware of my obligations elsewhere, would, on reflection, wish to withdraw. I do not blame them for their criticism. It might have seemed like discourtesy and apparently my duties elsewhere were not brought to the attention of the House at the time. Incidentally, for the same reason I shall have to absent myself from this House later this evening, probably in the course of Deputy de Valera's address and he will understand that no discourtesy is intended.

Major de Valera: As far as this Deputy is concerned, there will be no complaint. I understand the duties that fall on a Minister although, not having been there myself, I am totally unaware of what the Deputy is referring to. I can understand that the [180] Minister has commitments he must honour. He has attempted to be many things in his time, politically, but I do not think he or anybody else can yet aspire to the ambition of that great Irish politician, Sir Boyle Roche. I assure the Minister I will understand and what I say will be on the record of the House.

In more normal circumstances I would be very tempted to be very severely critical of this Government and of the Minister for their handling of national affairs, for the circumstances that have brought us to the impasse we are in. Nevertheless the situation is so serious now that, while not condoning or excusing or in any way, “ex majore cotelo”, detracting from what has been said on this side of the House in relation to this latest manoeuvre of the Minister and the Government, I do not intend to pursue the exposure and the laying of responsibility in the way I would were the situation not so serious. I shall content myself with this remark, the situation is, to say the least of it, a very unfortunate coincidence: in the history of the three Coalitions that I have seen in office in this House, we have faced, in each case, a situation of near disaster which necessitated serious remedy and to some extent could have been avoided by concerted action in time. I am not exaggerating when I say that the current crisis is from the national point of view the most serious I have seen in 30 years in this House.

Apportioning blame is perhaps not the most effective way of doing things at present. However I should like to point out, in a spirit of understanding rather than of criticism, that what was wrong in all three cases has been a lack of decision in government, stemming from the fact that there are elements in government who, basically cannot agree on effective action at the appropriate time. The present Minister, is what I may call a “Left-winger”—and I say that without disparagement of his party—cannot go far enough to the Left to link up with the Leftwingers of his colleagues on the Labour side. The Rightwingers in Labour cannot go far enough [181] Right to link up with their opposite numbers in Fine Gael. That probably accounts for our present position; probably it accounts for something that characterised all three Coalitions, namely, a euphoric optimism in their first two years: everything will turn out all right; the turn is around the corner. Unfortunately, the up-turn does not come round the corner in time for them. I say these things, I hope, as objectively as I can.

I turn then to join with Deputy Gibbons in pointing out that, unfortunately, whatever Government is in office power is passed largely from this chamber and from even the Government in power. One of the pathetic things about the Minister's own speech is that that emerges throughout. I am not saying it does not come through in Ministerial statements dealing with similar problems in the whole of western Europe. At least where there is a Government which can do something, actions are taken and some element of control enters in.

The Financial Times this morning contained a table setting out the extent of the fall in sterling against other European currencies. An examination of these percentages gives some indication of the places where government is still effective. The whole picture of sterling is a reflection of somewhere where the power has passed from the Government elsewhere. Our neighbour has had the same type of problem and indeed for a while perhaps we were ahead in our inflationary trends but they have caught up on us. This evening the Chancellor of the Exchequer in England announced a 10 per cent ceiling on increases for wages and dividends and, except that he has been a little bit more positive than our Minister, you see the same pattern. Meanwhile, although there has been a slight recovery in the value of the pound from its lowest today one sees the disastrous effect that that kind of situation can have. Now, to this extent, I can certainly sympathise with the Government. More than ever the economic situation is outside their control. We criticise them for not dealing with [182] the local factor. I hope, before I conclude, to deal with how we might have dealt with the local factor. There is no denying that in our own immediate environment there was a serious recession and there were economic forces at work that would set the whole economy on a course to disaster.

We hear talk about inflation, employment, crisis, incomes and so forth but nobody seems to be able to make a simple analysis of this. Everybody seems to be afraid to say what the problem clearly is because in that statement one has to face unpalatable truths and then more than ever, one lacks the courage to come out and say what should be done because it would be politically unpopular. Many of the English papers, in relation to the situation in regard to the pound today commented on the amount of talk and the paucity of action. While this talk is going on the situation continues to deteriorate so perhaps, elementary and all as it may be, it may be no harm to try to see exactly what we are trying to cope with when we say that we are the victims of inflation. I am not going to try to follow the Minister. In his budget speech or elsewhere he raised the question of what was a symptom and what was a cause where inflation is concerned. The first classic trouble about inflation is that when you are a country such as we are dependent so much on imports, the first thing that is bound to happen is that the cost to you of whatever you import will rise rapidly. That means the cost of your raw materials, the cost of your industries, the cost of your economic activity is increasing and the natural result, of course, is an increase in prices.

That specifically relates to what I might term as raw materials directly related to a particular industry. If one is producing a commodity with essential raw material coming from abroad specific to that industry, if the price of that raw material goes up, one of two things have to happen. Within the industry itself counter-balancing economies or adjustments have to be found or else the price goes up. It is as simple as this. If I am making tin [183] cans and I have to import the sheet metal to press these cans out of and I am selling them at a certain price, if the price of the metal that I punch these cans out of goes up then I have either to find an adjustment within my own organisation, some way of cutting costs elsewhere or else, inevitably, I have got to put up the price or sell at a loss. When I say at a loss I mean at an uneconomic price. I will come to the question of profits in a moment. There is no other way out of it, argue as you like. This is where theoretical economists, and I am afraid administrators, getting lost in the higher realms of economic thought can very often forget fundamental facts like these.

However, without developing that very elementary point further, it is sufficient to say that inflation in the environment is bound to produce this kind of effect in the first instance and this, of course, has been a factor in the situation. It is impossible to say where to start because this economic set up has been going a long time and I am not for a moment suggesting that at the present moment that this was the simple sequence of affairs. I have to cut in on the circle somewhere to start and I just choose that point. As I say it is a circle, maybe the whole thing is interacting and I cut in at this point to start.

Right, then the price goes up. If this happens in a sufficient number of industries the cost of living, as commonly understood, goes up, especially if they are industries that affect the individual. As soon as that happens then there is demand for an increase in wages and wages go up. As soon as wages go up another cost is put into that industry making tin cans. The firm manufacturing tin cans has not only to face the extra cost of raw material, it has to face the extra cost of wages, so prices go up again. This rapidly gets to the stage where it is uneconomic.

This is a perfectly simple economic operation. Basically it is as simple as this, but note that I have said that it has started off by being primed by external inflation. The type of inflation with which one has been fairly well acquainted over the last 75 years or [184] more, certainly since the first World War, is compounded very much by another type of external inflation. That is the effect of a general inflation in the sterling environment which is triggered off by the energy situation. Even with what has been happening in the last 24 hours there is a major contribution by the unloading of sterling in certain quarters. When that happens there is an increase in the price not only of what the individual manufacturing industry needs—like the hypothetical factory making tin cans. Another factor which comes in affecting everybody including the factory is the cost of oil, energy and fuel which not only hits the individual purchaser but also hits that industry.

Returning to my factory making tin cans, not only is there an increase in the price of raw materials, and the increase in the wages, but there is also an increase in fuel and energy costs, and the price goes up again. Inflation starts to work this way and prices rise.

If at that stage internal inflation could be held one might get by but that does not happen. What happens instead is that there are wholesale demands for wage and income increases and the so-called spiral becomes very steep. There are demands for wages, economic unrest and it rapidly comes to the point where in that tin can factory costs are beating sales. They are not able to sell their product domestically or abroad in sufficient quantity at a price that will compensate for the increase in costs. When that happens there is borrowing for non-productive purposes because in that case people are borrowing to pay incomes or to meet working costs that are not of a productive nature. When it reaches that stage there is a limit to the borrowing and the only solution is either laying off staff or liquidation.

I have tried to put this in the simplest of terms because that is what has been happening. I freely concede to the Minister that the whole process is largely primed and supported by factors in the sterling environment, factors outside his and the Government's direct control. Nevertheless, [185] that is no excuse for not facing the facts and trying to do what we can. If, without putting a tooth in it, we tried to get every citizen to understand what that process is and understand what is involved for them in it, we would be doing something. I hasten to add that the tin can factory I have been referring to bears no relation to any industry. I take that factory as a hypothetical example.

Any of us who have any experience of business find the same simple factors working. If we could make everybody, manager and worker, understand this then perhaps we would be on our way to get the support necessary for the action to be taken.

Human beings today seem to be apt to try not to see the unpleasant and to insist on the impossible. One impossibility that cannot be realised indefinitely in a free democratic economy is that if one cannot balance one's revenue and expenditure to the point that will leave one the necessary profit to provide for the future and survive that industry is suffering from a terminal disease. The symptoms will be unrest among workers, laying-off of workers, further disruptive elements creeping in to the situation, frustration for its management, finally ending in lay-offs and, probably, liquidation. I am stressing this because to appreciate this fact is fundamental. Unfortunately, however, the situation is not as simple as that. This is what I would call a sore spot set in an ailing body and the ailing body is the sterling environment.

A further serious consequence follows leading to the same conclusions. This inflation is ultimately destructive of the viability of individual manufacturing firms or of any productive industry, for example the building industry. Not only does this inflation work as I have indicated in these cases but especially where in a country such as ours we have to live and trade in our environment, there is a second disastrous consequence which leads to the same result—competitiveness.

The British economy will, ultimately, [186] if it does not control its rate of inflation, pay the penalty in decreased competitiveness. What happens is that one prices one's products, especially exports, out of the market. In such an inflationary situation as we have we have dear imports putting up our own cost of living, accelerating or rather steepening the spiral that I mentioned, accelerating unrest and wage and incomes demands, while, at the same time, it depresses the opportunity to sell abroad, it makes competitive export more difficult. This is a further consequence that has to be faced where inflation is concerned.

One unfortunately does not even stop there. One has to take into account the whole balance of society at this point. Once what has happened gets under way then the whole community is involved, and in our community in this country particularly we have a very large proportion of people engaged in administration in the State service living, so to speak, on the productive elements in our society. Now all the different elements are absolutely necessary and they have all their places and this is not the time to go into the question of the relative proportions of distribution of resources or personnel or anything else as between productive industry and administration except that perhaps I might be permitted to comment that since everything depends on the production of real wealth every care should be taken to foster productive industry and if that is looked after then the administrative side will get a corresponding benefit where as if the opposite approach is taken, to say the least of it, the camel will begin very shortly to live off its hump. I am afraid that is what we are at at the moment. We are living off our hump; our economic hump.

This brings in the next element of the situation, and that is taxation. Perhaps I have been a little bit long in my introduction but the Minister will pardon me since I am speaking on a budget and it is the traditional practice of all Ministers for Finance to tease the House, the Press gallery and everybody else for an hour with general statements such as I have made before he comes to the meat of his budget.

[187] Mr. R. Ryan: It is not often we have a captive audience.

Major de Valera: I think there is a little bit of the striptease in it too. In every case a striptease at the end is a most disappointing act and in the Minister's case, completely unrevealing. That little bit of levity, I hope, will not mar the seriousness of the approach I want to take on this.

Mr. R. Ryan: I was not bent on exciting people anyway.

Major de Valera: I hope the Minister does not feel that I am being unreasonable in stressing this but I would like to remind him, if he does, that I had the experience, the day after his budget, of listening to the comments over the radio of the spokesman for the Opposition on the subject and the Taoiseach immediately afterwards on the news and I would have nearly got the impression that they both belonged to the same party. They were certainly plugging the same line as regards the reality of the situation. I have no desire to cloud the issue at the moment, I am merely pursuing a point of political advantage.

I want to comment on taxation here. Here is where I fault the Minister in this budget and in his whole approach to this. The budgetary policy of the Minister and his Government in the last two years has been grossly inflationary, I would be tempted to say cynically inflationary. I know the temptation to Governments in cases like this. First of all they have to find the money. If there is an inflationary environment and if there are demands for higher incomes and higher expenditure all round the State cannot avoid it. There is a temptation for a Minister for Finance to see in an inflationary situation, particularly inflation of incomes, some compensation in the fact that the bigger the incomes the bigger the rake off in PAYE and other taxes to him. That does not get away from the fact that the whole policy that was there, the whole approach, was inflationary and we are now at the stage where the Minister [188] has in effect to borrow for housekeeping purposes, and that is very similar to the position of the hypothetical factory where it becomes necessary to borrow for wages and deficiencies in revenue, which sets one on the course to liquidation. If the Minister feels that that is not a fair comment I would like to have his answer.

Full employment and adequate real wages depend in the last analysis on healthy economic activity and in our system on what I might call selling at a profit. Now I know the word “profit” is a dirty word to some of the Minister's supporters and perhaps even to some of his colleagues, but all that profit means is that there is a balance over when you account for what you get in and what you pay out, and that balance over represents a gain to the community and will, in most cases, be used to produce further gains and to stimulate and finance further economic activities and, where you have that situation, then you will have as near as you can have full employment and wages will mean something. But, if you fail in balancing your revenue and your expenditure, employment will suffer. I have pointed out how it suffers with short time, lay-offs and ultimate unemployment, and all in the face of rising living costs. That is what we are experiencing today.

Here again I am entitled to say that I think the Government were too optimistic in their approach to this problem some time ago. Instead of a positive lead and a hard grind to try to protect ourselves as far as possible from the inflationary storm about us and, above all, to try to secure the safeguarding of employment, we had instead a concentration on the relief of the unfortunate victims of unemployment. This is necessary. Let me not be misunderstood; if people are thrown out of work and are on the dole, through no fault of their own, we all have to help them out. The trouble is that it is a pity there should be people in that position, and my criticism of some of the Minister's colleagues on their emphasis on such matters as social welfare is that they have lost [189] sight completely of the desirability in the first place of concentrating on and securing employment, even if that means a certain sacrifice on the part of those employed and even if it means not doing as much as one would want to do in other circumstances.

The first priority should have been to keep people working. Not only is that economically desirable, because people who are working are presumably contributing to economic wellbeing, but people who are not working, and are being supported while they are not working, are just being supported and are being put in a position where they are unable to contribute and therefore become a liability. Worse than that, anybody who has been put out of employment or who is unemployed will tell you it is humanly degrading. People do not wish to be unemployed. Most decent people want to be employed and want to work. Unfortunately things have gone so far now that we may be breeding a generation who will not know what working is and who may be educated into not working before we have corrected the situation.

The Labour Party particularly should take to heart the primary priority importance of having the maximum number of people working and let that maximum number be encouraged in their own interests and in the interests of the community to bear the burden, if necessary, of further development in the confidence that they will share first, that others will share with them and that the burden of supporting others will pass from them. Here, while we have been doing all the talking and applying all the palliatives, we have the immediate tangible effects of inflation upon us. We have prices —I suppose it is too early to say they have reduced the standard of living but that is what we are coming to—which will reduce the standard of living of all those who are working and we have unemployment that is a hardship on those suffering it and a burden on those who are supporting it.

As I said, of those who are unemployed not one wants to be the object of charity, not one wants to be in the position of being supported. But what can a person do if the opportunity for [190] activity is denied him? It was logical, therefore, and I think it was unavoidable, that the Minister should have to make certain provisions in regard to the alleviation of unemployment by improving social welfare benefits, and so forth; but that does not alter the fact that a radical readjustment of the situation as it is seems to be called for.

The Minister, obviously, in this particular budget attempted to deal with prices. Frankly, I do not think it will be effective. Having seen the experiments in subsidies both in this country and elsewhere over the past 40 years resorting to such a device at this stage is an indication of a serious deficiency. When it comes to the net accounting of what it has meant to the housewife or the head of the family, the wage earner who is supporting the family, or even to the Minister himself as the housekeeper, so to speak, of the State, I wonder what long-term benefit will accrue? It is probably too early to forecast what may happen prices in some areas. To take the individual bits of news at the moment and the omissions of the Minister, as well as his inclusions, I think it is a little bit premature to forecast but I doubt that subsidies can provide an answer in the long term.

I should, perhaps, differentiate here between local and environmental inflation. In the earlier context I approached it from the point of view of the general inflation in the environment and I freely admitted that this was something over which the Minister had little control. He could hardly control the price of imported raw materials, for instance. One has to recognise that of necessity the price of energy has increased and the Minister has to that extent to cope with factors and compensate for factors outside his control. But there are factors within our own control that could have been controlled, and one of them is our wages/costs spiral. Now this will not be a popular thing to say but, if it is true, then the Minister should say it. He will have the information on a wider and more reliable basis than I have. I am rather inclined to think that in very many industries here which have been setting the trend in [191] this question of local inflation the cost of the increase in wages has been a very large factor in the increase in the cost of products and in the decrease in profitability of practically all commercial labour intensive organisations whether State-controlled or in the so-called private sector.

The figures I have seen for some industries indicate that although the prices of raw materials have significantly increased the costs of salaries and wages have increased in greater proportion. In the resultant price increases, the cost of wages and salaries has contributed more than other costs. In most labour intensive industries, if they are efficiently run, there will be three major sources of expenditure costs, namely, raw materials, salaries and wages, and something I may group generally as other costs. That would include transport and communication costs and similar items. I will leave taxation alone for a while.

As I say, much as the price of raw materials may have increased, even in a labour intensive industry that is using oil as a source of energy to any great extent, costs will certainly have increased, but probably not as much as salaries and wages. Transport and other costs will have increased. If they are not using fuel directly they are using electricity, which is fuel used in another way, but channelled through the ESB.

This, I think, is the pattern—I would be glad if the Minister would tell me if I am wrong. But if this is so, what is happening here is that environmental inflation is being compounded by local inflation. Would people be better off if we could obviate local inflation? Could we cope better with the environmental one? Personally I think we could. If we could hold our labour costs and prices down, the Minister would automatically be able to hold his administrative costs down. Again we get back to the basics, the productive industry.

All this may seem very remote and academic, but unless it is faced in this way we will go on talking and as [192] Deputy Gibbons said, all power will pass from this House and from the Ministry, and all leadership will pass from it also. Leadership is the responsibility of this Government and I would like to see who is going to supply it.

The Minister talked about his earlier budgets and said they were intended to float the economy over the rocks of recession into the floodtide of world economic recovery. Was that not a bit of fantasy? The floodtide of world economic recovery may fail to float our economy if we do not do something to float ourselves at the moment. He also remarks that particularly in the United States recovery “will be founded on their own internal strength rather than a growth of world trade.” It will, and that is what is going to happen everywhere and it is then that the world recovery will come, and it is time we took notice of that lesson. Our recovery will depend to a large extent on our own strength or will, and our ability to cope with our problems. We cannot wait for world recovery to float us on a full tide.

Frankly I feel that although they have said all these things the Government do not really realise what are the basic and fundamental things to be done. What has been happening in this House within the past year? We had a disguised budget introduced in December and that brought the Minister money. We had a budget in January.

Acting Chairman (Mrs. Hogan O'Higgins): I would like to remind the Deputy that he has only two minutes left.

Major de Valera: Thank you. Let me say this in two minutes to the Minister. Tell the country the truth, the whole truth and nothing but the truth. Have the courage to get up and say in plain language just what is wrong and what is the only cure and, having said so, have the guts at least to recommend firmly a course of action. A final criticism of the budget I hope in one minute would be this. It is not strong enough or [193] positive enough to revivify employment particularly in the housing area. It is ambivalent and indecisive where the questions of incomes and taxation are concerned. Committing oneself to a deficit position and the borrowing that will be entailed—a deficit of the magnitude the Minister is compounding is wrong in the present situation. The Minister should take our advice and tell his people the truth, the whole truth and nothing but the truth. That will require courage. He should then have the guts to say what should be done, not talked about. That is their responsibility as the Government. Until that is done we will not float over the rocks, we will wreck on them.

Mr. Leonard: Recently the newspapers talked about the Minister presenting his second budget. In point of fact since April, 1974, this is his fourth budget. We had a budget in the autumn of last year increasing the price of TV licences and postal charges. We had a December budget increasing the price of petrol. This was followed by the January budget. It looks as if shortly we will have a monthly budgetary solution to our economic problems. This budget is unsatisfactory in so far its final approval rests with parties outside this House. Even a school child could tell the Minister that any problem is easier of solution if tackled in time. The proverb: “a stitch in time saves nine” is very appropriate in this case. It is a pity that the Government had to wait until the unemployment figure was over 100,000 to take this belated action. It is increasing daily. While we on this side of the House have to make allowances for the inability of the Coalition Government to make up their mind quickly, if they make it up at all, the inaction of the Government certainly must set a record for Coalition Governments in the matter of slowness of action. Recently we had the spectacle of the Taoiseach shouting about disaster and at the same time assuring this House that there was nothing at all to worry about. When you go through this budget the first impression you get is that the Minister seems to have forgotten [194] that any place outside of Dublin exists at all. From his attention to agriculture you would think it was a very small industry. We would hope that the Minister and the Minister for Agriculture and Fisheries would put this £3.4 million to the very best possible use. The first thing that comes to the mind of any person who comes from a rural area, and who is familiar with farming, is the drop in fertiliser usage.

During the war there was a scarcity of fertilisers. Following that, farmers started to apply for advice from agricultural instructors. They then realised the benefits to be derived from the utilisation of fertilisers. Driving through the country over the past number of years you would see the greenness of the fields and the benefits the farmers were deriving in healthy and plentiful crops, root crops, hay and grassland. Recently there was a report that there is a drop of 40 per cent in the usage of fertilisers. Three years ago we reached an all-time record in our application of fertilisers and at that time it was generally accepted that we were not using half enough. We now have the sorry situation that there is a drop of 40 per cent. The most noticeable drop has occurred in counties where the use of fertilisers is essential. Men are working on limited acreages and, in many instances, on land which is little better than marginal. When you realise that the most significant drop is in those areas, that brings home to you the seriousness of the situation.

There is also, coupled with that drop in usage, the fact that the drop is occurring mostly in potash and phosphate which is the basis of it. In nitrogen the drop is not nearly as noticeable, and the result is that by the application of nitrogen without sowing with phosphate and potash we would very soon impoverish our land. It would very soon bring home to us the harmful effects of such an operation. Coupled with that we have, through grant aids and otherwise, very large milk separating stations and plants for processing milk products. We have also large skim milk [195] processing plants. They were put into operation to cater for an increasing supply of milk. We find now that many of those plants are working under capacity with equipment which cost colossal sums of money in the expectation of a steady increase in the intake of milk to those processing plants. If this fall-off in fertiliser continues it will have serious consequences for our economy because the farming and industrial economies are intertwined and, if one fails both fail.

The Department of Agriculture and Fisheries have produced a booklet entitled “Have Enough Winter Feed”. It is well written, presented and factual, but the crunch is that the cost of the fertiliser required to ensure that there will be enough winter feed has increased also. These massive increases have occurred continuously since the Minister for Industry and Commerce partially withdrew price controls prior to Christmas, 1973. We drew to his attention the dangers inherent in such action, but he persisted. By way of parliamentary questions and debate he managed to put forward arguments justifying his action. The justification of that action is a 40 per cent drop in the use of fertilisers. All the documentation the Minister for Agriculture and Fisheries can turn out asking farmers to use more fertiliser at its present prohibitive price will not wash with our small farmers.

I ask the Minister for Finance, in conjunction with the Minister for Agriculture and Fisheries, to take a serious look at the drop in the use of fertilisers and see if part of the money provided for agriculture could be utilised to alleviate that situation. There is also the follow-up of the drop in usage of fertilisers—a very large reduction in the work force at fertiliser factories. A large number of them have gone on short time and it is expected, in one factory, that there will be 200 unemployed.

Another point I should like to make now that there is some money available for agriculture is the possibility of a subvention to alleviate the plight of grass-seed producers. They have met the Minister for Agriculture and [196] Fisheries. The excuse he gave them was that he had not the money available. Due to the large imports of seed from countries outside the EEC we have, by allowing that seed in, jeopardised our grass-seed industry. It may not cover the larger region of the 26Counties but it is an important cash crop to County Monaghan. There are also a sizeable number of growers in Counties Donegal, Louth, and North Dublin. The situation obtaining at present is that we have 970 farmers growing grass seed in County Monaghan, which represents 16 per cent of the farmers of the county. They grow a total acreage of 2,500, the estimated value of the crop being £130,783. They have been growing it for a number of years under contract. The contract price ranges from £12 to £15 per cwt, but mostly in the £12 bracket.

I raised this matter by way of parliamentary question with the Minister for Agriculture and Fisheries. On that occasion, when I asked if he would make funds available to aid the Irish Rye-grass Machiner's Association so that they could in turn, honour their contracts with growers of grass, he replied that he had no funds at his disposal for that purpose. In the course of supplementary questions on that day I drew the Minister's attention to the cheaper seed being imported from countries outside the EEC.

Acting Chairman (Mrs. Hogan O'Higgins): The Deputy seems to be going into great detail with regard to matters pertaining to the Department of Agriculture and Fisheries. Perhaps he would address himself more to the budget.

Mr. Leonard: I should like to finish this point. The Chair will understand that the number of people involved, 970, or 16 per cent is very important. When I posed a question to the Minister with regard to the licences from those countries outside the EEC, he said it was not necessary to have such an import licence. This is one matter the Government should examine very closely: that is, if countries outside the EEC can import grass seed here over which we have no control regarding [197] quality, if they can dump it here without licence that is indeed a serious matter. In later years, if the grass seed industry is allowed to decline and we remain dependent on seed not even controlled in so far as that it can be imported without licence, that will have very serious effects for us.

There has been a submission to the Minister for Agriculture and Fisheries for an immediate restriction on grass seed imports, voluntary or otherwise; also that all grass seed contracted be purchased at the contract price even if such require aid, subsidy, special grant or some other arrangement. I ask the Minister to give that very close consideration.

When we were discussing health matters recently we appealed to the Minister for Health, who had curbed the spending on capital projects in health board areas for this year, to make money available for projects which were approved and which were very necessary in those health board areas. It was felt, when this budget was being introduced, that the Minister would have provided money for that purpose because it would have been very beneficial in so far as it would create employment and we had a lot of capital projects approved in the health board areas where they were needed. We also have the situation in in the health board areas where they have to extend their overdraft accommodation and increase it substantially. This certainly will have a serious effect on the future of the health services. We are not alone neglecting the capital projects which are approved but also the day to day running of those health boards if they are providing the money by increasing their overdraft accommodation.

There is another serious aspect in this budget, that is the increasing of the housing loans. It was a great pity that at the present time the Minister had to increase them and at the same time reduce the period of repayment. Many people who are erecting their own houses are feeling the pinch because they are working on short time.

In my own county we have continuously appealed to the Minister for Industry and Commerce to do something [198] in regard to the imports of shoes and the serious situation that has arisen in the shoe industry. The axe fell eventually in Carrickmacross when the factory employing over 200 closed down. In that town in the early 1970s we had not one employable person signing at the employment office but now we have over 500. I ask the Minister for Industry and Commerce to provide money quickly either to resurrect that industry even on a small scale or to provide an alternative industry for the people in that area. When men who were in steady employment year after year find themselves with a very bleak future as far as employment goes it is definitely bad for both mind and body. The Government should do all that is possible to get the people back to work. That should be the number one priority. While I welcome the assistance given by subsidies on butter and milk, would it not have been better if the complete subsidy was put on the butter rather than having to apply it to butter and milk individually? While most people use both the full subsidy on butter would ensure a substantial reduction in the price and would probably mean an end to butter smuggling.

We certainly welcome the employment premium which should help industries and those on short time. If the Minister extended it to cover those engaged in agriculture it would have been of immense benefit not alone to people who are unemployed in rural areas through loss of industrial employment but it would have been of great benefit in projects like small drainage schemes and land reclamation. If the employment premium scheme was extended to local authorities it would probably mean a very substantial increase in the funds but from a farming point of view it is a great pity the Minister did not extend it to cover agriculture. While there are points in this scheme we welcome there are others we ask to have examined before the distribution of the funds. The primary objective and the desire of the Fianna Fáil Party is to get the country back to where it was a couple of years ago and to get full employment.

[199] Mr. Griffin: I will be brief but I should like to compliment the Minister for Finance for introducing a very fine package. It is very finely balanced and I congratulate him for the measures he has taken. I hope that the appeal he has made to the social partners and all concerned will be met with the drive that he hopes for. It has been criticised by the Opposition, some saying that it is too mild, but I respect their opinion. However, knowing the ability of our Minister and the Cabinet in general, I know that they have weighed up all measures and at this point in time these are the best measures they think will put our economy back on the road to full growth and full employment.

Inflation, as the Minister said, is the monster of the seventies and were it not for inflation I have no doubt that our economy would be pressing ahead but, unfortunately, this problem is not only internal, it is global. I would accept the criticisms of the Opposition if, looking at other countries, particularly across the Irish sea, we saw that their economies were booming while ours was lagging behind. This monster of inflation is affecting every economy so that they are budgeting for a zero growth in their national productivity.

I welcome these measures. Given goodwill and the co-operation of our social partners they will help to maintain employment and preserve our living standards. We are passing through the most serious economic difficulties since the foundation of the State. This position has been accentuated by, first, decimalisation. Our people are inclined to associate the new penny with the old coin with the resultant increase and tendency towards inflation. That was the first step towards this spiral of inflation. Secondly, our entry into Europe. Up to then we had a protected economy and that economy was then at the mercy of the most sophisticated European economies. Our entry into Europe, good and necessary as it was —I still am a committed European— accentuated this drive, this onward move towards the spiral of inflation. [200] It was crowned in September, 1974, with the oil crisis. Of all the causes or reasons for inflation this was the most important one. We know how much it costs our economy to service the extra cost of oil importations.

We are linked with a weakening sterling. Daily we see how the £ is losing value on the stock exchange. I agree with the Minister that the time is not ripe to sever our connection with sterling. Whatever the reasons in the past or at this time our interests are best served by maintaining our connection with sterling. The Minister mentioned three-quarters of the reasons for inflation last year were imported but, unfortunately, this year only 20 per cent of the reasons for inflation are imported. The other 80 per cent are domestic problems. I agree with the Minister that for the moment we should not consider our break with sterling. If we did break we would have to seek a link with another currency. This is not the time to do so. We would lack the confidence in the world markets and it would be a gamble that might or might not pay off. If it did pay off our inflation might not be much improved but if it did not it would be a gamble that would lead to economic disaster and ruin.

We are told that to break with sterling would possibly give an immediate advantage in that we would not be importing inflation vis-á-vis our connection with Britain. That imported inflation only amounts to 20 per cent and the other 80 per cent of the reasons are within our own shores. This package has spelled out to the people what measures we all must take to counter inflation. The Government of the day have only limited power nowadays. There are forces extraneous to the Dáil that also play an important role. This is the message I get from reading this package. It is an appeal to those involved in employer/labour relations, to everybody that we can go forward if we are prepared to accept a temporary self-discipline. If we are not we will continue in our mad rush towards inflation and, ultimately, economic ruin. I am so old fashioned as to think we have it still within ourselves to rise [201] above this difficulty. We can get that patriotic effort from all concerned. A little effort from everybody involved, the employer, the labourer, management and everyone involved in the manufacturing or the services would mean that we could ride over this difficult period. That is the message. It is an opening of the heart to the people by the Government explaining in simple terms the difficulties the economy finds itself in.

It is easy to be wise in hindsight and to say that such a measure should have been taken but with the economic ground changing so rapidly it is difficult to plan in advance. All we can do is to offset the dangers as they appear on the horizon and, hopefully, when inflation and the economic scene settle down we can go in for this long-term and medium-term planning.

In this paper our Government have outlined the dangers in which we find ourselves. The Cabinet have called for the co-operation, the goodwill of our people and I know that co-operation and goodwill will be forthcoming.

The twin aims of the measures are to maintain our level of employment and to preserve our living standards. Unfortunately, the employment figures leave a lot to be desired. Perhaps the reasons are not obvious but heretofore the emigrant ships resolved and solved a lot of our unemployment problems. Unfortunately, with our partner across the Irish sea also in dire difficulties, that solution is no longer available to us. These measures I hope will give at least 15,000 to 20,000 extra positions.

I am glad to note that there is to be no reneging on or abandoning of the national agreement. If we are to have any economic stability we have to rely heavily on this national wage agreement. Any interference with it or any undue altering of it would be counter-productive. We must stand by the principles of the national wage agreement and our people will be prepared for a short term to ask for less and to be less demanding until the economy has recovered.

Inflation is the monster of the [202] 1970s. No economist in the world has come to grips with it. The expected up-turn in mid-1975 has not materialised. We now look to a year from now for this up-turn. These measures have been introduced to resolve our difficulties until the hoped for up-turn occurs. The net effect of this package is expected to be a reduction in the consumer price index by 4 per centage points. The national pay awards are now linked with the consumer price index. For every point that the consumer price index is reduced there will also be a reduction in the national pay awards. In the past our economy was able to bear the national pay awards, but if they are to be linked this year with the consumer price index and the increase in the cost of living our economy will not be able to bear them.

Side by side with this package I would ask the Minister and his Department to advocate a buy Irish campaign, not a periodic spurt as heretofore but a concerned effort by all throughout the year to encourage the people to buy Irish products. I would also ask him to impress on the people that with every imported item they buy they are putting the jobs of Irish people in jeopardy. I think it vital that the people realise that our home market is essential. We cannot afford to buy imported goods leaving our home manufactured goods on the shelf. I would hope that this buy Irish campaign would be carried on relentlessly right through the year so that it would be ingrained on the minds of the people that their first loyalty is to home produced products and that if they purchase imported products the livelihood of the Irish people could be at stake. There is a belief among our people that Irish manufactured goods are not up to standard. I would hope that our factory workers and industrial workers would strive to uphold the design and the manufacture of goods so that they can compete in every way with imported goods. If we could get this message across to the Irish people we would have resolved in some way the difficulties that exist in our clothing and footwear industries. Housewives [203] who have a limited weekly budget will naturally buy articles that are cheaper. They cannot be blamed for that. They have to make their weekly budget stretch as far as possible. If this point were put across to them properly I have no doubt they would hesitate to buy imported products.

The additional capital expenditure allocations amounting to £27.1 million are welcome, especially the £10.5 million extra for housing. We made a promise in the 14-point plan that we would press ahead with the housing programme. It is the Minister for Local Government's proud boast that in the two years he has surpassed the figure of 25,000 houses. The figure for the third year also appears very encouraging. I especially welcome that extra allocation of £10.5 million and the £8 million towards telephones. Deputies on both sides of the House have been inundated with requests for telephone installations. Unfortunately there is a waiting list of two or three years. This extra £8 million will make some impression on the waiting list. The telephone is now a necessity for both the urban and rural dweller. Farmers need telephones to contact veterinary surgeons and fertiliser factories. It is time-consuming for people to have to leave their place of employment and travel three or four miles to a telephone kiosk which may, perhaps, be out of order. I hope this £8 million will help to relieve the present position.

The £5.2 million for industry is also welcome, especially the money allocated to the Gaeltacht. I would like to congratulate the Minister for the Gaeltacht on his magnificient work in revitalising the Gaeltacht and restoring the faith and pride of the Gaeltacht people in their localities and their language. This extra money will help him to continue this work.

The £3.4 million to agriculture is also very necessary, particularly when we realise the difficult period the farming community went through in 1974. If this spell of good weather continues for much longer they may have other unexpected problems to cope with. I [204] hope this £3 million will help to alleviate the pressures on the agricultural sector.

I would like to add my voice to those of the people who are a little disappointed that the employment premium did not apply to the farming community. Coming from a rural constituency, I am fully aware of the hardships endured by the farming community. This employment premium scheme would have given some help to the farmers. Perhaps the Minister may reconsider applying this premium to the agricultural community. It would help productivity. I have no doubt that there is not a farmer, especially in the Golden Vale of South Tipperary, and elsewhere, who would immediately, and with profit, employ a worker. I know it has to be on a full-time basis but the farming community would jump at this opportunity if it were granted to them. I would earnestly request the Minister to apply this premium to the farming community. It will be welcomed in manufacturing industry. But, man for man, a man employed on a farm will give as much, if not more, productivity than his counterpart in manufacturing industry.

The subsidies are very welcome. The recent increase in CIE fares met with considerable opposition. Those who have no transport of their own have to rely heavily on CIE. The increase in May last placed an undue burden on great numbers of people who have to commute daily to and from work. It put an added cost on them. This subsidy is, indeed, welcome. The whole purpose of this package is to reduce the cost of living and I can see no finer way of doing just that except through the medium of these subsidies. This is a concrete effort at reducing the cost of living and I hope it will meet with the response the Minister has requested from the people involved. I hope they will reduce the various items by the subsidised amount so that the effect will be seen and reflected in the consumer price index.

The zero rating where clothes and footwear are concerned is especially welcome. These industries have gone [205] through a traumatic period, mainly because of imports and our losing competitiveness on foreign markets. The zero rating will help the industry and the domestic consumer market. It should give relief both in the footwear and the clothing industries.

No taxation measures are painless and those surcharged to the extent of 10 per cent will find fault, but it has been fairly levied; those who are best able to pay are being asked to pay. I have no doubt these people, if they examine the case carefully, will see they are being fairly charged and realise that the 10 per cent extra is not exorbitant. It is in their interests that inflation be curbed; rising incomes are no good if inflation outpaces those incomes. I believe those who are being asked to pay will see the righteousness of the case.

Some are concerned about the changeover to the PAYE system. They fear they will be charged double tax in the one financial year. Perhaps the Minister, when replying, would explain in more detail when, how and where this scheme will operate. They are, concerned that they might be unfairly treated. Perhaps the Minister may be able to evolve a system whereby they can pay over a specific period.

This budget is a fine package. The measures taken are aimed primarily at maintaining employment and preserving living standards. The Opposition, if they are honest must see that these measures are absolutely essential. I have no doubt there are men of goodwill in the Opposition who can see that these measures are absolutely essential and that the Minister was as fair as he possibly could be. I have no doubt these measures will have the impact and the effect expected. Our people are not, perhaps, as aware as they should be of the dangers of inflation. We are a little remote and we are as au fait with world problems as we should be. Thinking people who realise the dangers of inflation will see in these measures a first step to curbing this ever-increasing inflationary spiral. Some may argue that the measures are not severe enough. Others will say that they are too severe. I think [206] our Minister struck a correct balance. Considering the state of the economy, anything more severe would be counter-productive and might accentuate that which he is trying to reduce, the cost of living and the rise in prices.

If the Minister is given the co-operation of all sectors of the economy, I have no doubt but that these measures will be the first step towards curbing inflation. If we can even this year reduce our cost of living to the 20 per cent which, in normal times, would be frightening, as a first step, then next year and the following year we can reduce it further and bring it down to an acceptable single digit, hopefully somewhere under 10 per cent.

I congratulate the Minister on this package and I hope that when he winds up this debate he will explain a few items that need more explanation, and will especially consider the point I raised about extending the premium to the farmers and also the question of income tax on those who heretofore were outside the PAYE scheme.

Mr. Noonan: Listening to the Minister for Finance when he introduced the budget last week, and to most of the speakers from the Government benches one would think that questions of inflation and rising prices were something new, something that was unknown in the past. It is now apparent that everybody, particularly the Irish people, heard about inflation before this Government. Listening to Deputy Griffin and thinking back to the contribution to the first budget debate of 1975, one would be forgiven for saying we heard all this before.

In January, the Government and the Minister for Finance in introducing the budget, promised us the complete answer to all our problems. We have seen over the past five months what has developed as a result of the January budget. We have seen inflation increase, the standard of living reduced, unemployment figures shoot up to an unprecedented record, and the forecast for the future with regard to unemployment is that it will reach a still [207] higher figure in the months ahead, notwithstanding the suggestion by the Minister for Finance that what he has ordered in this budget will have an effect on the economy or on the unemployment position.

As I stated previously in this House, the indications are that we are likely to have a third budget in 1975. The Irish Times of June 27th wrote, “The Government has failed”. That is an independent view, not my view, although it is held on this side of the House. We have realised this long before now. It goes on to state that the second budget of the year does not meet the pressing needs of an economy in crisis. The much vaunted package means that the inflation rate is cut from 24 per cent to 20 per cent this year and unemployment is lowered by between 15,000 and 20,000 below the level it would otherwise have reached. This is according to the Minister for Finance and his budget statement and figures. The Irish Times goes on to say that the implication is that when unemployment stops its seasonal rise towards the end of the year our official unemployment level will be between 115,000 and 120,000 instead of a projected 135,000. Again that is if the Minister's package is to have any effect on this. It goes on further to say that even the most fervent Government supporter can hardly claim these figures as successes for Government policy. Finally, it says that the truth is that there was no Government economic policy worth the name before yesterday's budget nor is there an economic policy now. These are the views of an independent writer which are shared by a great number of the Irish people.

In this recent package the Minister for Finance has promised us a complete answer to all our problems, particularly our economic problems. One would ask, and be forgiven for asking how these problems arose in the first place. The problems are old because of the failure, indecisiveness and lack of cohesion in the Government to provide worth while leadership and policies. Some time ago they called for a national partnership. What does one [208] mean by a national partnership? It means that all sections of our community come together to solve our problems. Did the Government play their part in solving their problems in this national partnership they preached about? The answer which is apparent to everybody is “No”.

This package which was produced by the Minister for Finance was long thought about and in his opinion will help solve our economic problems. As I stated, the predictions are that in 1975 we will see a third budget. Looking at the Minister's package and more particularly at the first sentence of his statement that we have witnessed and are still seriously affected by the most dramatic turnabout in the economic fortunes of the western world since the late 1920s, in the past under a Fianna Fáil Government, we had economic crises, we had inflation, we had world problems, but the major difference between now and then is the fact that at that time we had a Government who were united in their efforts and were interested in solving the problems that beset the country. At present, we have a Government who are not showing leadership. What they have introduced is too little and too late. The Government may blame inflation, they may blame outside influences, but that does not take the responsibility away from the two parties who now form our Government.

The Minister has cut the prices of several of the basic commodity items and has removed value-added tax from clothes, electricity, fuel, clothing materials and footwear. When we examine the consequences the removal of VAT will have on the price of fuel, we see that it will have no significance at all. On the one hand VAT is taken off and on the other hand increased prices are allowed. VAT is taken off electricity but there is an increase of 18 per cent in electricity charges. This is not a fair and honest way to treat the Irish people.

It is also interesting to note the high prices of these items and the economic emergency they have caused in the past. These remedies are too little and too late. They have not reached the [209] kernel of the economic problem. They could be compared with a doctor treating a circulation problem by rubbing the hands to increase circulation in the extremities without treating the basic cause of the circulation problem. This is the best example I can give of the Government's policy and their approach to our economic problems which, by the way, are not caused by outside influences as Government speakers would lead us to believe.

At least 50 per cent of our problems are within our own control. The Government have failed miserably to control these problems and, indeed, to show any leadership in controlling them. What the Minister for Finance has introduced may help—and I stress the word “may”—to bring down some of the soaring costs which we have seen under this Government, but it depends on outside influences and outside decisions taken by people outside the Government. In other words, the Minister for Finance says: “I will do this if somebody else does that”. This shows lack of real leadership. This is the very kernel of the problem.

The Minister said he will increase income tax in the middle and upper ranges by a surcharge of 10 per cent. Once again this hits at the people who are making a strong effort to increase their living standards and, as a by-product, to improve our economic chances by their hard work. In the Minister's pandering to the fringe elements in the Labour Party he must hit someone. He said that he is bringing civil servants within the PAYE scheme. He stated this as a throwaway line, but my information is that this will result in a substantial tax hike for the people who administer Government policy and on whom he depends for great help in fighting our economic problems. Why was not strong action possible in the normal budget earlier this year? Was the pressure from the Labour element of the Government too great? Was he simply afraid to move, or is it possible that he and his Government are so indecisive and so blind that they could not see the need for these measures earlier in the year when [210] they would certainly have had some effect on the economy? He makes the move now, however late, however weak that move is. As I say, he treats the symptoms and ignores the causes of the problems. The enormous danger of the way he has arranged this package is that he has gambled on changes in the national wage agreement; in other words, he is not in control of his own resources. His package and remedies for our ills depend on decisions being taken elsewhere. Of course this is interesting but also extremely dangerous for this democratic country of ours. The employer/labour group—and in this sense I mean union groups—have not shown any inclination, in this national emergency, to look to their own future in any terms. They have so far shown no inclinations to accept a cutback in their salaries and wages. I hasten to add that I do not blame these people for these decisions because, while there is need for everyone here to act together to pull the country out of its present problems, the Government have not given leadership themselves in this respect. When there is lack of leadership by government, there will be indecisiveness throughout the ranks.

Over the past couple of years the Government have continually spoken of a national partnership but ignore the fact that leadership is essential also. We need a leader; we need a head of Government; we need a Taoiseach who would be seen to be leading in this effort. We need a Taoiseach in the public eye who vocally and otherwise encourages our people to join together under him in a national effort to avoid any further decline in our economy. When one reads the papers we see cur leader engaged in other type of work. Being accustomed to a Fianna Fáil Government in the past and to seeing a Fianna Fáil Taoiseach as the leader in this country showing himself to the public, one can see that in the past, notwithstanding the problems that beset this country—and we had problems and outside influences; we had worldwide recession, worldwide inflation—nevertheless under strong government and good leadership, we [211] were able to pull through in a short time.

We are all aware that lack of leadership by the government constitutes the very cornerstone of our problems. We know also that the Taoiseach, first of all, has problems within his own party which must be time absorbing for him. When one examines the composition of the Government and watches their actions one sees that there are problems facing the Taoiseach and while he is solving them he has neither time nor energy left to demonstrate the leadership we all seek. While we sympathise with him in his difficulties, it must be recognised that in the situation in which the country now finds itself it is imperative that we have a leader who will have the co-operation of his Government and the co-operation of his party if our problems at present are to be solved.

But we see no leadership being shown at present. Any economic resurrection in this country must have a leader, a leader who is seen to lead, who is necessary and is prepared to come to grips and take the necessary decisions when decisions are to be taken. That is one of the root causes of our present inability to move. While we cannot, as responsible representatives, fail to applaud and encourage cuts in commodity prices, the easing of value-added tax, increased house loans, we must again in all responsibility account for the lack of attention to the root cause. We must point to a leaderless people. We must point to the failure, to the lack of courage shown by the Government in failing to tackle these difficulties earlier this year when action could have been much more effective and we could have some of the hard times over us. It is not enough to cry in the wilderness. We must be prepared to show the necessary leadership and to avail of opportunities to prevent any further decline in the economy.

The Minister referred to the further capital injection in regard to the housing industry. Everybody, except the Government, realises that there is [212] a major crisis in the building industry. This is apparent in the light of the unprecedented number of people who are unemployed in that industry and also the lack of employment in the ancillary industries.

The interest rate on loans from local authorities through the local loans funds has been increased from 10 to 11 per cent and the repayment period reduced from 35 to 30 years. The Minister for Finance has once again hit the people who are the bedrock of the economy in so far as their monthly, half-yearly or yearly loan repayments will be much greater than heretofore because of the inincreased interest rate and the shortening of the repayment period. The income limit for these loans has remained static for over two years. There has been no increase since May, 1973. The amount of loan that can be allocated by a local authority has remained static at £4,500 for the past two years while inflation has been running at around 23 per cent per year over that period. If £4,500 was correct in 1973 it certainly is not correct today. The guidelines with regard to income limits have remained static over that period. That limit was set in May, 1973 and has remained at the same level of £2,350 over that period. This requires urgent attention and amendment by the Government. An average three-bedroomed house costs between £7,000 and £7,500 at present. Where will the person who builds his own house get the remaining money? I ask the Minister for Lands to use some influence on his colleagues in the Government to have increases made in that respect.

The Minister for Finance made very little reference last Thursday to agriculture which is the bedrock of our economy. It employs something in the region of 28 per cent of our population. Are decisions in regard to agriculture to be made elsewhere? The Government must realise that inflation and rising prices also affect the farming community. They must realise that there are other influences at work, climatic and otherwise, affecting the farming community. Yet they have brought farmers within [213] the income tax net. Not many farmers are within the tax net so far but this is the tip of the iceberg. We will find that if the Government remain in office the income limits will be introduced and more and more of the farming community will find themselves within the income tax net.

The Government have also introduced a wealth tax which will affect our primary producers. What is the approach of the Government, particularly the Minister for Finance in his budget statement, to their commitment to agriculture, the bed rock of our economy? A mere £3.6 million. The spending of this sum has not been worked out but we, and farming organisations, would like to see a progressive and worthwhile policy by the Government towards the encouragement of more people into agriculture and of more young farmers to remain on the land. These worthwhile policies are lacking by the Government. They were lacking in the Minister's budget statement last Thursday. Therefore, it is important for this Dublin based Government primarily to consider that Ireland exists outside the suburbs of Dublin.

Milk producers are being asked to accept a decreased price per gallon of milk supplied to their co-ops. The answer given by the co-operatives for this is that costs have soared, inflation has hit the manufacturers and the cooperative societies. This is caused by the Government's lack of action to fight these problems when the need arose. The Minister for Lands should point out to his colleagues in Government that the farming industry needs a further injection of capital if it is to continue to give the service and production as it has done in the past. With this financial encouragement and a worthwhile policy on agriculture by the Government, this section of our community will continue to give the service they have given in the past.

We all realise that a major part of our total exports are agricultural. For that reason and for reasons of the balance of payments the Government should give greater attention to that section of our community. Over the past 12 months the Government introduced [214] taxation measures resulting in our farmers being asked to pay taxes in addition to those they are already paying in the form of rates on their land.

Value-added tax was removed from food and other items and a subsidy on butter was introduced but six months ago the Government removed the subsidy from butter which increased the price. Now they put a subsidy of 10p per lb on butter and say this is great work. As I indicated, the cause of our ills and problems and the cause of the decline in our economy has been due in the main to indecisiveness, lack of leadership and lack of cohesive policy within the Government to tackle our problems. Courageous action is needed. I hope, even at this late stage, we will get the leadership which has been lacking in the Government over the past two years. Unfortunately, we are lacking in this leadership. It is difficult to find the very good points in the budget. We praise the points which will help the economy but we cannot give praise while our country needs a leader who can bring us out of our problems and difficulties. This leader can only be sought on this side of the House, on the Opposition benches, at present.

I should like to refer to an article in The Irish Times of 27th June, 1975 which stated:

Thus, by late autumn, the Government may be forced to take further action to curb inflation. Already, there is talk of an unprecedented third budget in the current year.

It is highly questionable if the Government can afford again to step in with further subsidies. Some of the most startling information revealed yesterday by the Minister for Finance is the precarious state of Government finances.

Again this brings me back to the point I have already made with regard to the lack of decision when decisions had to be made, lack of action when action had to be taken. It brings me back to the matter I have mentioned time and time again over the past 40 or 45 minutes: the lack of leadership in this Government. The sooner the [215] people get an opportunity of looking once again to these benches for leadership, the sooner this country will recover from the doldrums and from the lack of decision and, in particular, the lack of leadership.

Mr. J. O'Leary: There is no doubt but that inflation has been the cause of the major problems here during the past few years, the more so as the Coalition Government have failed completely to make any effort of any kind to check inflation. In other EEC countries efforts were made to check inflation quite some time back. Efforts were also made in practically every country with the exception of England. The Taoiseach stated on a few occasions recently that much of our inflation today is of a domestic nature. The Minister for Finance in his budget statement said other countries, including our partners in the EEC, have taken action, in some cases quite drastic and unpopular action, to curb inflation. The public generally cannot understand why this Government did not take action over the past few years to curb inflation. I believe the reason why action was not taken was that the Government did not want to do anything unpopular.

They have been trying to be all things to all men for too long, and that has caused the great difficulties in which the people now find themselves. I believe the people have been and are fully aware of the ravages of inflation and its effects over the past few years. They knew what was happening. The only people who did not realise what was happening—who pretended not to realise what was happening—were the Government. The Minister mentioned some rather frightening items of public expenditure. He said one-fifth of public expenditure is accounted for by debt service charges which increase both with rising capital costs and interest rates and he further stated that the large capital repayments needed because of borrowing to meet the deficits can only be arranged on a short-term basis.

We, in Fianna Fáil have been continuously arguing against borrowing [216] large sums to meet big deficits and to pay for day-to-day non-capital items. Had the Government not rushed headlong into this kind of action a few years ago, we would not now be in the mess in which we find ourselves. The Government started off badly with two badly planned budgets, one in 1973 and another in 1974. They granted various increases for numerous purposes right across the board and they did not make provision for the money to pay these increases. This meant they had to resort to borrowing and we now find one-fifth of public expenditure being required for debt service charges. There is no greater way of encouraging inflation than the very tactics adopted by the Government in the budgets of 1973 and 1974.

Before the 1975 budget it was pretty well known, because of various leaks, what form the budget would take and we, in Fianna Fáil, advised the Government then to take some of the actions they are taking now, six months later; but six months is a long time in a country in which inflation is rampant. Had the Government done as Fianna Fáil advised in 1973, again in 1974 and, once more, as late as last January, we would not now find ourselves in the sorry plight in which we are today. The unprecedented increase in the price of petrol on the say-so of the Minister for Finance last November or December did nothing except add to inflation. We were not told at that time what the £30 million odd revenue as a result of the increase would be used for. In order to see clearly the full effects of the maladministration, the lack of foresight and planning by the Government, one need only look at matters at local authority level. Even a substantially increased allocation of money this year will not do the same amount of work as last year.

In roads, for example, many county councils fear that it may be necessary for them to lay off permanent road workers as early as the end of September or October this year. I believe this will happen, particularly when we take into account the cost of materials and labour which, as a result of inflation, is 36 per cent above last year's [217] level. In other words, local authorities should get grants equivalent to 136 per cent of the 1974 grants to do the same amount of work done in 1974.

In housing we have the very same situation. Housing costs have increased considerably during the past few years. The extra millions of pounds being provided this year will no more than build the same number of houses as were built last year. The Minister for Local Government admitted that.

We must remember—and this is very important—that the real significant break through in the increased number of houses being built here was brought about by Fianna Fáil during the period 1971 to 1973 when the number jumped from 15,500 to 21,500, an increase of 6,000 per annum in a period of two years. I do not consider the performance of the National Coalition anything to boast about because they increased the number of houses to the 25,000 mark, particularly when the services were provided, the ground work was laid and the plans were there to build more than 25,000— 26,000 houses per year.

Again, we know that were it not for inflation and the fear of the Government to curb inflation, many more houses could have been built in recent years. I am amazed that no additional money was provided here for sanitary services. If we are to plan for the future development of this country, it is vital that expenditure for sanitary services should have a very high priority. We should bear in mind that the provision of water or sewerage services will not alone provide more service sites for houses, schools and industry but, the more land that is serviced the better the chance of keeping down the price of land per acre to the local authority, who requires that land for building purposes, to the Department of Education or any other State Department who requires that land for building purposes.

The Government missed out badly by not providing more money for local improvement schemes. I thought this budget would be used as a vehicle for providing more money for these schemes, for the very simple reason [218] that they have a high employment content. The labour force for the carrying out of these schemes is recruited from the local labour exchange. I was very surprised the Government did not provide £500,000 or so for these schemes which, when divided among the local authorities, would be of some significance in the effort to reduce unemployment and also would help to provide the ultimate aim to have all private and accommodation roads subtantially improved with a tar surface.

The effect of the recent budget on applicants for housing loans is frightening. It will impose a great hardship on many of these applicants. It was bad enough to increase the rate of interest which will be charged to the borrowers from 10½ per cent to 11½ per cent, but to add insult to injury, the repayment period was reduced from 35 years to 30 years which may have nearly as great an impact on the repayments as the increase of 1 per cent in the interest rate.

I will be very much surprised if at the end of the present financial year the banks have lent £20 million for house building. At the moment, it appears that the banks have no real scheme prepared. We must remember that the interest rate, 12½ per cent, is extraordinarily high for the man in the income group up to £2,350. The interest on a loan of, say, £7,500 at 12½ per cent for one year would come to approximately £937, approximately £18 a week. Only the wealthy can afford this type of loan. We must also bear in mind the fact that in order to qualify for such a loan, a man must have a bank account for a period of at least six months. We should understand this reason. But I believe that only the wealthy can afford a loan of £7,000 to £8,000 over a 20-year period at 12½ per cent. All this is due to the fact that the Government took no action whatsoever to curb inflation and to deal adequately with the main problems during the past two years or so.

I cannot see this budget doing very much to reduce the high unemployrent rate, particularly when we take into account the thousands who will be looking for employment in addition to [219] the 103,000 unemployed. These are people who have now left school. There seems to be no forward planning by the Government. It is vital that there should be physical and economic forward planning bearing in the mind the fact that 31 per cent of the population are now under the age of 14 years. This is a vital statistic and it shows clearly the path which should be followed by any Government who gives serious consideration to planning.

I was rather surprised that more money was not put into the building industry. We must remember that the construction industry has a high employment content. I understand that in the construction industry the value of materials imported accounts for about 25 per cent, which is much lower than it is in other industries with the same amount of employment content.

I cannot understand why the Minister decided to change over to PAYE for State employees. I should think that the various unions representing the various State employees should have been consulted beforehand, and some arrangement should have been made with these unions so that they would not be in the confused state in which they are now. Many employees believe they may be forced to pay two years' tax in one year. This should be phased in over a period of years and certainly the unions representing the various employees within the civil service, the teachers, the Garda, and the Army, should be consulted and some agreement should be worked out.

I am amazed that there seems to be a very significant cut-back in the provision of improved educational facilities at this stage in the development of this country, bearing in mind the high percentage of young population we have today. I am also amazed that the Department of Education and the Government are not pushing school managers and other people charged with the operation of schools, to be continuously striving to improve the facilities in these schools and, where necessary, to prepare plans.

[220] An Leas-Cheann Comhairle: This is not appropriate to the financial resolution.

Mr. J. O'Leary: The Minister and the Government should have provided more money in this budget for educational purposes, and particularly for the improvement of schools and for the building of new schools at a time when we have such a young population.

An Leas-Cheann Comhairle: Matters which could be discussed on an Estimate are not appropriate.

Mr. J. O'Leary: Nothing really significant is being done to try to prevent goods from coming into this small country from the third countries, from the countries outside the EEC. Every effort should be made to stop these goods from coming in. The Government should be making greater efforts to get exports into the third countries, and to avail of the various EEC transport subsidies schemes for doing so. The vast majority of these imports could be prevented. Where there is a will, there is a way.

I am surprised that no additional money has been put into the fishing industry, despite all that was said in this House during the past six months or so. It is vital at this stage to provide money for fisheries and to plan for the next decade or so, and particularly for the next four or five years. It will be necessary to provide money to enable our fishermen to go out in the largest possible fishing boats and fishing fleets to the limit of our fisheries. By 1982, when we will be renegotiating our terms of entry into the EEC so far as fisheries are concerned——

An Leas-Cheann Comhairle: This is detail which would be appropriate to an Estimate.

Mr. J. O'Leary: I understand, but I am just trying to point out that, unless the money is provided now for this purpose, the foreign trawlers may then be allowed to fish right into our shores. We will not be able to prove to the EEC that we have made the effort to get our fishing fleets out far enough to [221] operate to the limit. We will not be able to defend our limit unless we get the money to do so now and in the years ahead. Money should have also been provided for the improvement of piers and harbours around our coasts.

An Leas-Cheann Comhairle: All of this would be appropriate to an Estimate. If the Chair were to allow detail appropriate to Estimates to be discussed we would not have the matter we are discussing dealt with. Matters which are appropriate to Estimates may not be dealt with on a financial resolution like this.

Mr. J. O'Leary: I am very disappointed with the manner in which the Minister has treated our agricultural industry, which is in a depressed state at present. I am surprised also he did not avail of the opportunity of his budget statement to spell out in detail how the Government intend operating the EEC disadvantaged areas scheme. The vast majority of farmers in the designated areas are waiting from day to day for an announcement from the Government as to how the scheme will be operated within their districts. It is most unfair to these farmers, who want to plan ahead, that the Government will not say how this scheme will be operated. I believe that the reason is simple—the Government and the Minister for Agriculture——

An Leas-Cheann Comhairle: Surely the Deputy would agree with the Chair that this is something that would be relative to the Estimate on Agriculture?

Mr. J. O'Leary: I believe the Government should have provided money in this budget to help agricultural industry.

An Leas-Cheann Comhairle: But matters appropriate to Estimates may not be discussed on this provision. That is the point the Chair is trying to get across. Perhaps the Deputy would keep generally to the financial resolution.

Mr. J. O'Leary: There is a reference to agriculture in the financial resolution. The Minister did provide some money for agriculture in this budget. I am surprised he did not [222] avail of this budget statement to spell out in detail how the EEC disadvantaged areas scheme would be operated. I suspect the reason is that the Minister for Agriculture and Fisheries has not been given the money by the Government to back up EEC grants in the operation of this scheme. This is the general belief amongst the public and particularly the farmers.

Very little has been done in this budget to help industry and to attract more industrialists here. I believe that recent Government statements and their insistence on implementing the proposals contained in the Wealth Tax Bill will have, and have had, the opposite effect and that many industrialists are now very cautious of moving into this country.

I was surprised at the decision to remove VAT from footwear and textiles. It should have been removed from home manufactured footwear and textiles. As the position obtains home manufacturers are in no more advantageous a position in relation to outsiders than they were before the budget. That proves to me that the Government have no real plan or programme to provide more jobs. As far as the footwear and textile industries are concerned, the position is very serious. The Government should have reduced VAT on homemanufactured goods and have spelled out in detail how they intended to endeavour to curb imports of similar goods from third countries. The Government must immediately tackle the task of curbing footwear imports from countries with which we do very little business. It is possible to do so particularly when we hear in mind that the importation of these goods has a tremendous adverse impact on the unemployment situation here.

The removal of VAT from ESB charges will not be of any significant help. Again the Minister and the Government should have availed of this budget to state their policy as far as further subsidisation of electricity to new homes is concerned. There are numerous instances throughout every county and every district where persons seeking electricity supply [223] for new houses must pay capital contributions of up to £1,000. The Minister should have taken some action in this respect. There has been some working committee considering this matter for a considerable period in the Department of Transport and Power. I was under the impression many months ago that their report was imminent and that the Government would take immediate action on their proposals.

This budget did nothing to improve the sorry position in which the tourist industry finds itself. It is too late in the year now to be talking about the 1975 tourist year. But some indication could be given as to what the Government intend doing to encourage more tourists here during the coming year. If we can improve our tourist position substantially, it would be of tremendous benefit to our whole economy. The failure of the Government to curb inflation has had a serious adverse effect on our tourist industry. This failure which caused rising prices and, again, the Government's failure to implement strict price control, was one of the principal causes of the failure of our tourist industry during the past two years.

The Government have again added insult to injury by deciding to proceed with section 10 of the Wealth Tax Bill. This means that many hoteliers who show an operational loss in any particular year and if their assets reach the threshold or are over it must pay this wealth tax at the rate of 1 per cent per annum on the assets despite the fact that they are showing an operational loss for that year.

The general public are amazed at the vague statement by the Minister as regards the reduction in rail fares. These are only being reduced I am [224] told now around Dublin and around some of the other cities where there is a regular transport service. The obvious area in which to reduce the rail fares is in respect of the long distance rail services.

One of the principal reasons why the Government have failed to live up to their responsibilities, to do the job they were elected to do, is that the Taoiseach and the Government cannot decide what policy to pursue. They do not know whether to proceed with the doctrinaire socialist policy on the one hand or the free, private enterprise society on the other hand. This seems to me to be one of the reasons why the Government did not take decisions on economic matters at vital stages during the past two years. They always took the easy way out knowing well that the day of reckoning would come. I still believe that they are taking the easy way out.

The public believe that the Government appear to be confused and that they are trying to confuse the public. This must be evident when one considers their indecision in crisis situations over the past two years when no action at all was taken when action was definitely required and also on the numerous occasions they tried to be all things to all men when it was clearly required in the public interest that they should act in a responsible manner. The people look forward again to the day of a single party Government under Fianna Fáil who have the leadership, the ability, the capacity and the unity of purpose to get the wheels of the country's economy back on the rails again.

Debate adjourned.

The Dáil adjourned at 10.30 p.m. until 10.30 a.m. on Wednesday, 2nd July, 1975.