Dáil Éireann - Volume 231 - 29 November, 1967

Committee on Finance. - Vote 6—Office of the Minister for Finance (Resumed).

Debate resumed on the following motion:

That the Vote be referred back for reconsideration.

—(Deputy T.F. O'Higgins).

Mr. Cosgrave: As I was saying before progress was reported, we consider that the immediate impact of devaluation is adverse and that certain new measures are called for to offset the adverse effects in order to get our economy moving again and to protect the weaker sections of the community from the hardships that devaluation will bring if suitable remedial action is not taken. We can detect no sign in the Minister's statement or in Government statements that the Government are alive to the urgency of this problem. In fact, it is difficult to understand why the Government are impervious to the economic effects of devaluation and, in particular, to the social effects.

During the past two years, particularly since the false economic boom that was created in 1964, the effect on the economy of restrictive measures has been particularly severe. These effects were pinpointed by the references made, not merely by the Economic Research Institute, but by the NIEC Report, and in particular in the comments contained in Report No. 11 of the NIEC. That report adverted to a number of factors which contributed to the situation, such as the excessive rise in incomes, the avoidance of which in the future would require a planned development policy, a planned policy for wages and incomes. It referred to the excessive aggregate growth of demand requiring effective action in future to prevent demand rising at an excessive rate particularly when it was stimulated by Government policy. It also adverted to the need for a flexible banking and credit policy.

I refer to these comments which [1051] have been referred to already in the debate, because they confirm the comments that were made and the remedies which were proposed in the policy document Towards a Just Society published by Fine Gael in respect of Government economic and credit policy. The failure of the present Government to institute an incomes policy, to control its own expenditure and to operate a flexible and effective credit policy necessitated and resulted in the deflation of the economy in 1965. This deflation or restictive policy, as I said earlier, was so severe that during the first half of 1966 and, indeed, for a great portion of that year, it brought the economy virtually to a halt. When the Minister speaks of a growth in this year in the gross national product levelling up to what was the target laid down in the now defunct Second Programme account must be taken of the fact that a great deal of slack had to be filled in due to the failure in 1965 to measure up and, indeed, last year the economy showed a growth of something like only three-quarters of one per cent. I think the up-to-date figure shows that it was less than one per cent.

The Economic Research Institute commented severely on the fact that this policy of restriction or deflation had continued for much longer than was needed. The time has now come to get the economy moving again. Faced with that situation, with the exception of the relaxation of hire purchase restrictions which was announced belatedly, the Government have done nothing. Time has passed and no action has been taken or was taken to stimulate growth. In fact, but for the comments of the Economic and Social Research Institute no action whatever would have been taken by the Government.

It is well to quote the comments of the Institute on the economy during the last three years. The Institute commented that an unstable boom was allowed to develop in the early part of 1964 and to continue until the middle of 1965, that the increase in money earnings could not be regarded as the sole cause of the boom which took [1052] place because consumer credit was allowed to rise pari passu with industrial earnings; that had hire purchase controls been tightened and the growth of personal advances been checked early in 1964 the rise in personal consumption would have been modest.

Similarly, they said, the jump in Exchequer expenditure in 1964 cannot be attributed solely to the increase in wages and salaries; that the increase in the volume of Government expenditure in that year was the highest in the period under consideration; that had action been taken to offset the increase in wages by some curtailment in the volume of Government consumption rather than to augment it by an expansion, the pressure of Government spending on final demand would have been less severe.

The report went on to say that the authorities were mistaken in 1964 in failing to counteract, by appropriate policies, the volume of public expenditure and the availability and attractiveness of consumer credit. The action that should have been taken in the fields of credit control and public spending in that year was finally forced on those in authority in the middle of 1965. The Institute report went on to say that the action taken was probably too vigorous; it was clear, and this was pointed out at the time, that the restrictions introduced in 1965 were maintained for too long. The final comment was the most severe: “Official mistiming has aggravated, if not indeed caused, the economic difficulties of Ireland since 1964.”

I mention these things because I believe the time has now come for a review of the methods and system by which economic policy is operated. We have had admissions from the Government that the Second Programme has been abandoned, abandoned because the review has been postponed. Efforts have been made to confuse that review with the annual review next year. Action must be taken now to stimulate the economy in order to ensure that deflationary and depressive policies operated in Britain will not creep in here and operate to affect our economy in circumstances which are entirely [1053] different. In that regard it is, I think, well to point out that, if we take the import figures for September and October, we see there has been an actual decline despite the relaxation in hire purchase and the impression created that hire purchase facilities are now more liberal. Actual import figures show a drop for September and October. Allowing for the rise in the cost of living, retail sales for that period indicate that the measures taken to stimulate the economy have not been sufficient. Some more radical measures are necessary to pull our economy out of its present depressed state. National expenditure on investment and on consumption has risen very little and the living standards of our people have been unnecessarily depressed over the past 18 months.

The question is: what action should be taken now to stimulate the economy? We are in a different position from that of Britain. A mere decision to relax hire purchase is not of itself adequate. It is for that reason we advocate effective action in respect of social welfare designed to cushion social welfare recipients against the increase in the cost of living. Nobody suggests that the tax cuts recommended should be other than temporary; they should be designed to offset the increase in the cost of living as a result of dearer imports.

One of the immediate effects of devaluation will be to increase the cost of a number of products, particularly oil products; this will push up distribution costs, thereby affecting transport costs generally and impacting on the national transport undertaking. Tobacco will be affected. Normally a relaxation in respect of tobacco, for a number of reasons, including that of health, might not be recommended, but some relaxation is essential in present circumstances. We are not wedded to one particular commodity more than another except from the point of view of stimulating the economy and, in particular, reducing taxation where it impinges most heavily and where it affects adversely the less well-off sections in the community. Despite the fact that our interest rates are being kept at one per cent lower than Britain—that [1054] decision was originally taken by Deputy Sweetman as Minister for Finance—the rise in interest rates will put up the cost of distribution. It will affect house building and therefore house purchasers. Many have commented on the adverse aspect of devaluation in relation to housing. Imported timber is mainly used in house building; indeed, it may be exclusively used in housing construction. The rise in interest rates must affect house building.

Many problems arise. Earlier this year there was widespread concern at the decision of building societies to raise interest rates. The present basic grant under the SDA loan system, with minor variations, is the same as it was 20 years ago when building costs were substantially lower. Again, we are not wedded to any particular form of assistance; the only qualification is that it must be effective.

Another matter that arises is the question of the annual Budget. This is looked upon now as out of date. Here we have had numerous mini-Budgets. We have had action taken by the Government from time to time increasing Post Office charges, increasing charges for this, that and the other. This action has been divorced entirely from the Budget. If we are prepared to take action imposing penalties and additional burdens then we should likewise take effective action to the extent necessary to stimulate the economy. For that reason we believe it is unrealistic to wait until the Budget in March or April next without taking action to stimulate the economy in the interim.

The question of the sterling link has been debated here. There are few topics on which there is more sentimental nonsense talked than there is on the sterling link. That does not mean that the present position should not be reviewed clamly and as a financial and economic matter rather than a sentimental one. It is an economic fact that more than threequarters of our trade is with Britain. That means that any action taken by the British Government must affect our economy.

We have had, in the course of this discussion, to consider the present position whereby, by statute, we retain [1055] parity with sterling. I believe, as was said in the course of this debate and even here this evening on an entirely different topic, that the time to consider this is when there is no immediate crisis. Such matters are better considered when there is no impending crisis or urgency. As I understand it, there was an announcement some time ago by the Central Bank and the Department of Finance that new banking legislation was on the way. If there is one criticism that can be levelled against the Central Bank it is that it is too lethargic in its action and that criticism can also be expressed against the Department or the Minister for Finance.

Decisions affecting business and commerce must be taken quickly if they are to be effective and if the action is to be of benefit to the interests concerned. I believe that one of the criticisms expressed in the report of the Economic Research Institute and implied in the report of the NIEC, if not expressly made, I think, in one comment in it, was that the action taken was too long-delayed to have effect; that, in some cases, action was too severe and, in others, because it was too long-delayed, was ineffective.

The present development over devaluation highlights the need for this country to make strenuous efforts to diversify our exports. We have undoubtedly so endeavoured in the past and negotiated a number of bilateral trade agreements. With the idea that EEC membership was a possibility in the reasonably near future, action to review and revise these agreements was deferred or postponed. It is now quite obvious, and I think we must face it, that the possibility of EEC membership has receded. We must see what steps can be taken to secure either through bilateral agreements or through direct negotiations, alternative outlets for our exports. It is, therefore, essential that the question of trade in general be considered in its widest context.

The question I was commenting on— action in respect of legislation to deal with this problem—should be considered [1056] detached from a crisis or a situation such as now exists or was present in the past week. Nothing is less conducive to economic progress than panic or uncertainty. In the past week, we have seen across the water scenes the like of which have not been witnessed since the 1929 financial crash. At the same time, the lethargic approach, the traditional approach, of the Central Bank is entirely inappropriate in modern conditions. After an announcement that legislation is being drafted, action should follow introduction of the legislation. I want to urge that this problem should be considered on its merits and, if necessary, to give this country statutory powers which would enable a government, by Order, to take a decision rather than have it copper-fastened in a particular piece of legislation.

One of the matters the Minister adverted to in his speech was the effect this would have on our trade. I believe this decision now makes it imperative that we review the Anglo-Irish Free Trade Agreement. That agreement was initially negotiated and accepted on the understanding that it was an essential preliminary to ultimate membership of EEC. If we continue under the existing terms of the agreement, and with EEC possibilities getting dimmer and obviously being more remote than they were or we were led to believe they were, then it is essential that we examine the effects of a continued reduction in tariffs in respect of industrial goods. All the comments that have been made on devaluation would appear to indicate that while the prospects in respect of agriculture, in respect of livestock, in respect of foodstuffs, may be reasonably satisfactory, the prospects in other respects, in respect of industry because of the increased cost of raw materials, and so on, must mean that we should review and avail of the provisions in the agreement to review the effects of them at the earliest possible date.

The effects of devaluation make it essential that we review this agreement, particularly bearing in mind the continued reduction in tariffs and the emphasis now being placed in Britain on increasing exports. The steps being [1057] taken there to provide an incentive for industrial exports will have repercussions on industry here and may well affect employment and cause problems for which immediate action is essential.

In the course of the debate, reference was made to the decision to transfer certain Departments or sections of Departments to provincial areas. I want to try to find out from the Minister and the Government if there is any plan for decentralisation. In 1957, when Senator Dr. Ryan was made Minister for Finance, he announced in his first Budget a plan for reorganisation of the Civil Service and promised a reduction in the number of civil servants. That plan is now like the Second Programme. It has disappeared under the carpet. If the numbers are taken, it will be found that there are now not fewer civil servants but more civil servants. When that decision was taken, it was welcomed by newspapers and commentators as imaginative and progressive and every adjective considered suitable was applied to it. It is as dead as mutton. In 1966, the present Taoiseach, when Minister for Finance, announced the establishment of the Devlin Commission to review the position.

Now, obviously without any plan, without any thought as to the problems and, worst of all, without any consultation with the interested bodies representing the civil servants concerned, a decision was taken to locate some undefined section of the Department of Lands in Castlebar and some section of the Department of Education in Athlone. I think everybody accepts, and it was made clear in the course of this debate, the desirability of securing a proper spread of economic development throughout the country. The present situation in which most growth is concentrated in the area immediately around Dublin while large parts of the rest of the country are left in decline is highly undesirable. That situation has developed because of a lack of long-term economic planning over many years. It can only be remedied by the adoption of a properly thought out plan and by implementing Government policies designed to bring about [1058] permanent and continuing economic development.

These policies are needed not only in the agricultural but in the industrial fields. To suggest they can be solved by spreading Government Departments around the country is both dangerous and irresponsible, because not only will this action not contribute significantly to solving the underlying problems of these areas but serious damage could be done to the efficiency of our public service at the very time when the Government are urging industry, agriculture and other interests to become more efficient either to face the competition of free trade or the competition inherent in membership of the EEC.

Deputy Lemass, when he was Minister, particularly Minister for Industry and Commerce, criticised the fact that in his earlier years as Minister his Department was located in different buildings. He waxed eloquent on the delays, the frustrations and the problems which militated against the effective running of a Government Department because it was dotted all over the city. Here, without any plan, we propose to dot different portions of Government Departments not in the city but piecemeal in the country. It is essential that we have the highest standard of efficiency in the public service. What I want to know is: when are the Government going to adopt a plan and stick to it? We had the Ryan plan in 1957 and we had the present Taoiseach as Minister for Finance establishing a committee in September, 1966. I do not know who is the father of this plan; apparently the parentage is divided.

The committee set up by the Taoiseach as Minister for Finance was to inquire into the operation and working of the public service. It is now being provided with certain additional assistance, according to the Minister. The issues involved in the committee's investigations are so far-reaching that before taking any final decision, there should have been an exhaustive public discussion. It is obviously unsatisfactory to take a decision of this character in advance of the report of [1059] the Devlin Commission. Experience has been that traditionally various branches of Government are concentrated in the capital city to be in close proximity to Parliament, to have public advisers available for the Ministers and to ensure that they will be reasonably accessible when required for consultation and discussion.

There are, of course, other objections to the proposal. We have consistently urged the need for administrative devolution but there is no evidence that there is to be administrative devolution. At present a variety of functions are administered by the Department of Local Government which act in a restrictive way on local authorities from exercising their responsibility. Housing schemes, water schemes and a lot of schemes of a particularly local character come up time and again for examination and discussion with the Department of Local Government and inevitably delays occur. Even with the best will in the world, not to mention the restrictions which Ministers have been operating in recent years to prevent or delay housebuilding programmes being put into effect, the result is delay and frustration. Apparently that situation is to continue.

That is the type of situation in which proper devolution of authority and responsibility could be regarded as effective policy but merely to send a couple of sections of several Departments to some provincial centre is a political decision taken for a political reason. I am all in favour of building up provincial centres, but on a sound basis and not on the basis of a political decision to keep a centre satisfied until after the next election. The general experience of Deputies and Senators who are members of local authorities and, indeed, of members of local authorities who are not Deputies or Senators, is that local authorities are frustrated by the number of occasions on which matters have to be referred for decision to the Custom House, and by the complication created by the fact that the manager in most cases is not certain whether he is the servant of the local authority or the servant of the Minister for Local Government. Under [1060] the Act, the manager is subject to the local authority but experience has shown that a great many managers are trying to do a tight-rope act, keep the local authority on hands and not offend the Minister for Local Government.

This particular policy appears to have little to recommend it. I suppose one town feels as much entitled to this as another. It seems extraordinary that of all the Departments, it was decided to transfer the Department of Lands to the constituency of the Minister for Lands and to transfer the Department of Education——

(Interruptions.)

Mr. Sweetman: And to his town as well.

Mr. Cosgrave: The Department of the Gaeltacht would be particularly suited for location in the province of Connacht and there would be a great deal to be said for having it in Galway but it is to be left in Earlsfort Terrace. If ever there was a justifiable case for transferring a Department, there is one for the Department of the Gaeltacht, and Galway would be the appropriate place in which to have it. However, that is digressing.

There is an even more fundamental question involved. What consultation has taken place with the staff associations concerned? As I understand it, they were told by the Minister that this scheme was proposed and that consultations would begin. There is undoubtedly a great deal of uneasiness among civil servants who have family and other commitments. This is not a question that can be regarded as a simple one. Civil servants are buying houses and paying off mortgage loans; they have arrangements made to educate their children; they have them booked into schools or some of them are attending universities and other institutions; they have a whole multitude of personal and family commitments, entered into on the understanding and reasonable assumption that they would be stationed in a particular place and, in the main, stationed in Dublin.

I suggest that if this operation is [1061] proceeded with, and if decentralisation is carried through, it should be on a phased basis, allowing time for adjustment and allowing for volunteers as well as for new recruits who have not settled in Dublin and who would not have the same commitments or undertakings to go to new centres. Dislocation of families or homes would thus be avoided.

Most Deputies are familiar with the provisions of the Treaty whereby under Article 10—admittedly in different circumstances—civil servants were allowed to retire. There were similar provisions made when the railways were amalgamated in 1924 and subsequently in the 1944 Transport Act and in the 1951 Act, although I must say experience of the working of the redundancy provisions in these Acts has not provided any example that could be followed in detail. But the principle involved, both under the Article 10 arrangements and also in the railways, is to allow civil servants who found their conditions were worsened to retire and provide compensation. Also under the County Management Acts provision was made for certain board of health officers to retire when those Acts came in.

Those aspects of the matter require very serious consideration. The other aspect is that some action should be taken by the Government to acquire sites and to ensure that housing and site prices in the towns concerned will not rocket by reason of speculators acquiring sites and taking advantage of the serious position in which a number of civil servants will find themselves.

There is another matter I wish to advert to. It is the question of providing adequate facilities for the Opposition to carry on effectively the work of the Dáil in modern conditions. The Minister is in the fortunate position that he was never in Opposition and most of his time here he has been in office. Only Deputies who have had responsibility for a reasonable period in Opposition—this applies in the main to Front Bench responsibility—can fully understand and appreciate the magnitude of the work that has to be undertaken by Deputies to provide [1062] themselves with some sort of assistance and brief comparable with that available to the Government through ministerial Departments.

Undoubtedly in other times this was not as necessary because the business of Parliament was less complicated and the various aspects of legislation were less numerous. The number of statutes which had to be examined and details collected was less. The reports of different bodies and organisations on economic and social matters were far less numerous. Whether that was a good thing or bad thing is not the question. The fact is that nowadays this assistance is necessary if the Dáil is to work effectively. This question has never been properly examined, or when it was examined many years ago, the pressure of Parliamentary business was very different.

The problem for Front Bench Deputies who have the responsibility of acting as spokesmen on Government Departments to brief themselves without the skilled personnel readily available to the Minister imposes on Deputies a very severe burden. It imposes physical and mental burdens. It is essential, if discussion is to be continued at the level it should be and matters considered in an informed way, that some service should be provided. It is true that for many years an allowance has been paid to the Opposition for these purposes. It is entirely inadequate and was never intended for the amount of work it is now necessary to do to discharge effectively the responsibility of an Opposition.

That matter requires to be reviewed. It is only fair to say that, no matter who has the responsibility of carrying on the Opposition for a particular time, this is not in any sense a service providing a personal benefit to the people concerned. It does not involve personal financial gain. The only gain is that it enables them to be briefed by providing them with an up-to-date service essential for the effective working of the Dáil. For that reason it is a matter which should be reviewed. I know it has been discussed on a number of occasions. But there is no doubt, now that we have experience of the [1063] working of the Dáil for many years and in particular of the complexity of modern legislation, that some action should be taken to deal with it.

The last thing I want to say is this. In the course of his introductory speech, the Minister said he had followed the lines taken by the inter-Party Government of 1949 and had followed what had been done in Britain because he regarded it as the right action in the circumstances. There is only one thing he has to do to complete the job and that is to do as Mr. Callaghan did: resign.

Mr. Clinton: The effects of devaluation have been discussed in considerable detail. There is general agreement on all sides of the House that there was nothing that could be done in the present circumstances except devalue. Certain views were expressed about the rather bland way in which the Minister dealt with this matter and the way he put it over on television. That did not surprise me. I have had the experience of sitting opposite the Minister and hearing him make very bland statements when he had no case at all. It did not surprise me, therefore, that he was able to put over something that was not exactly true: that this was going to have partically no effect on anybody, that things would continue as they are and that if there was any increase in the cost of living, it would be extremely slight indeed.

The Minister has tried to get the people to accept that view. It might be a good thing if they did, but I do not think the people in the lower income bracket will accept it when they know that increases in the prices of essential commodities are inevitable. They are not going to accept that this sacrifice must be made when no example is forthcoming from the top. It is foolish to expect that this is going to have no effect and that there will be no further demands arising out of this whole situation. I do not want to go into this in detail but there are aspects of it that have not been mentioned.

One that occurs to me is in relation to agriculture. Straight away the cost [1064] of imported proteins will go up by 7 per cent and the cost of other feeding grains will go up. The Minister has made no mention of what the Government propose to do to counteract the effect of this. It is going to have a very serious effect on the pigs and bacon industry—an increase of £7 per ton on imported proteins and an increase on a considerable quantity of other imported feeding stuffs. Have they any plans whatever to produce a source of protein at home? Is there any experimental work being done on the possibility, for instance, of providing protein from grass through maceration and separation of the digestible and indigestible proteins? This is something that has been done in other countries. There is nothing here that could be done of more value than to follow what we know has already been achieved in other countries. This would not only be a valuable source of protein for pigs but also possibly for young ruminants.

The Minister, as a former Minister for Agriculture, will be familiar with what is known as slurry feeding of pigs. This provides an example of a situation where we could do an enormous job. We are researching in many directions where we have the results already in other countries. This is a type of research in which we could become involved here and profitably involved, because nothing has been started on it. An immense amount of money has been spent on research in other fields from which we shall not get immediate results, and it has now become extraordinarily urgent. When the cost of imported protein is going to go up by £7 a ton immediately, this is the time to get research going. The plant wherewith to decide whether or not this is possible is a comparatively inexpensive piece of equipment, is something that could be established in one of the pig producing co-ops, and should provide valuable information and a valuable source of protein from Irish raw materials.

We go from that to fertilisers. Some people seem to say very positively that fertilisers will increase in price automatically as a result of devaluation. My view is that is doubtful enough. [1065] The fact that ICI have started to establish themselves here is a good thing, and although it is hard to know what will be the outcome of the present situation. I am hoping it will not result in higher prices for fertilisers or, if it does, that the increased costs will not be very significant.

There will, however, be an increase in the cost of imported grains and imported wheat. The House has a right to know from the Minister what will be done about these things. What will be done to counteract these effects? Is it proposed to increase all grains in the coming year and, if so, by how much? The people are entitled to know these things at this point of time. Every year we have the same delay in relation to these decisions and farmers do not know whether to plough or not. It is at a critical time like this that this House should be told the facts. We should not be brushing them under the carpet and saying this will have no illeffects, that in the long term this will be an advantage, get the people to accept that and make the sacrifices, and hope they will forget the whole thing. They will not forget. A far better attitude and the one that would be expected from a responsible Minister and from a responsible Government would be to say: “We are aware this is going to happen. We cannot avoid it happening. It is the direct outcome of devaluation and we are prepared to overcome the effects by increasing the price of grain and by experimenting with other sources of supply of the various commodities that will become more expensive as a result of this decision to devalue the pound.”

This sort of information has not been provided and it is quite unfair blandly to come along and give so little information about the Government's future intentions in relation to the problems that will inevitably arise as a direct result of the decision to devalue the pound, with which, I think, all sides of the House are more or less in agreement.

Mr. T. O'Donnell: It is not my intention to hold the House very long, because Deputy O'Higgins and Deputy Cosgrave dealt extensively with the whole question of devaluation [1066] and the other aspects of the Minister's speech. I just want to make a few comments on this whole business. First of all, I am convinced the Minister has been far too complacent about the possible and probable consequences of devaluation. There is no doubt whatsover that the Minister exaggerated the advantages and minimised the disadvantages of devaluation. He certainly created the impression in his television interview, following on the announcement of devaluation, and in his speech, that devaluation would make very little difference to us in this country. However, over the past ten days, there has been almost daily new evidence of the ways in which devaluation is beginning to affect the cost of living and the cost of production in industry and agriculture.

My main criticism of the Minister is that at this stage, ten or 11 days after devaluation was announced, there are far too many questions of vital interest to this country which still remain unanswered, and the Minister in introducing this Estimate for his Department did not make any attempt to answer them. I shall be more specific in referring to the important questions that remain unanswered. On Thursday, 23rd November, I asked a question of the Minister for Transport and Power, as to what would be the likely consequences, if any, of devaluation on our export industries at Shannon Airport. These are industries which vitally affect the people of my constituency, and the Minister, in his reply at column 684, volume 231, of the Official Report of 23rd November, 1967, said:

It will be some time before the full effects of devaluation, beneficial or otherwise, can be assessed either for the country as a whole or for the export industries at Shannon Airport. Export industries at Shannon Airport and elsewhere should tend to benefit from devaluation though there may be temporary difficulties in some cases.

Further on, in answer to a supplementary question by Deputy Donegan, the Minister said:

I am not prepared to give any further answers to the question [1067] because this requires assessment by the industries concerned and it would be quite impossible for me to speculate on what the ultimate detailed effects will be on individual industries at Shannon.

The Minister, in his speech introducing this Estimate, has not thrown any more light on this matter.

I asked the Minister for Agriculture and Fisheries a question on the same date, 23rd November. I asked him what will be the likely consequences, if any, of devaluation (a) for the dairy products export industry and (b) for the cattle trade. In his reply at column 689, volume 231, of the Official Report the Minister said:

The prices obtainable for Irish exports of dairy products to Britain, which is the predominant market, are not directly affected by devaluation but there may be a certain indirect gain arising from the fact that some of the other principal suppliers of dairy produce to that market have not devalued.

In a supplementary question, Deputy Dillon pointed out that our two main competitors on the British market for dairy produce, Denmark and New Zealand, had both devalued and that, therefore, the Minister was completely off the mark when he attempted to argue that devaluation might bring “a certain indirect gain arising from the fact that some of the other principal suppliers of dairy produce to that market have not devalued.”

It seems to me that there is a lack of information. Certainly I am not satisfied that there has been a detailed analysis of the possible effects of devaluation on industry and agriculture, or tourism, for that matter. More and more people are asking more and more questions as to what will be the effects of devaluation on this, that and the other thing. It is pretty certain now that the Minister underestimated the situation when he said that devaluation should not have the effect of increasing the cost of living by more than two per cent. We have seen in the past few days reports of increases in the price of certain commodities and it would seem [1068] that the price of other essential items of food and so forth will also be increased.

The whole situation is indeed very vague. I hope that when the Minister is replying to this debate he will endeavour to answer some of the questions which are being posed by the people, and some of the questions which have been posed by Deputies here. It is essential that these questions should be answered and the Minister for Finance is the person who should be able to answer them.

I believe that the only sector of our economy which stands to benefit from devaluation is the tourist industry. It would seem that devaluation is putting us in an advantageous position in relation to the American tourist market. I hope the Government have plans to take advantage of this position, and that the tourist promotion efforts in the North American continent will be intensified. The position regarding the effects of devaluation on the British tourist market is very uncertain at the moment, due to the unfortunate epidemic of foot and mouth disease. We do not yet know what the outlook there is. It is vitally essential that the Government in their tourist policy should endeavour to capitalise on and take advantage of the North American market because the tourist industry is now playing a very large role in our balance of payments position.

Many people are worried about the possible effects of devaluation on the price of houses. Deputy Cosgrave dealt in detail with this question. Due to the fact that the building societies have increased their interest rates recently, it is vitally essential that there should be no further increase for a good while to come. Another matter arises here. How will devaluation affect our industrial development policy and particularly the steps the Government have taken to attract foreign industrialists to this country? Will this be placed in a more advantageous position or will it be put at a disadvantage? I have particularly in mind the Shannon Industrial Estate and the fact that recently it was announced that nine new industries would be established [1069] there over the next 12 months. I want to know, and the people I represent want to know, whether devaluation will have any effect on these proposed new industries.

I am concerned about another consequence of devaluation, that is, the fact that it may result in increasing the cost of living. I am particularly worried about the effect it may have on the hundreds of old age pensioners and other pensioners who are living at near subsistence level, and in many cases at starvation level. I am conscious of this fact because recently a survey was carried out in my own city, Limerick, into the conditions in which old age pensioners are living. We were horrified to find out from that survey that a considerable proportion of the old age pensioners living in Limerick were living on the verge of starvation. I shudder to think what even a small increase in the cost of living would do to this unfortunate section of our community. This applies also to widows and orphans and social welfare recipients. I want to endorse what Deputy T.F. O'Higgins said last evening when he called for an immediate increase in social welfare benefits and in pensions. It should be the aim of the Government, and particularly the Minister whose Department are responsible for implementing the economic policy of the Government, to have every effort made to counteract whatever disadvantages may follow from devaluation. We should use whatever benefits have accrued from it to the best advantage.

The other main point in the Minister's speech dealt with decentralisation. I must confess that I am not very impressed by the reasons put forward by the Government for moving two Government Departments to the West. I suspect that this move was influenced mainly by political considerations. While there are many arguments in favour of decentralisation, I want to say I do not believe that the transfer of two Government Departments, one to Athlone and the other to Castlebar, will solve the economic and social problems of the west of Ireland. The problems of the West, emigration, [1070] depopulation and lack of industrial development, will not be solved by the mere transfer of some hundreds of civil servants from Dublin. The problems of the West have been discussed time after time and year after year in this House and outside it. The Minister makes brief reference to the question of western development in the opening part of his speech. I want to say that I have no faith or confidence whatsoever in the ability of this Government to solve the economic and social problems of the west of Ireland or, for that matter, of rural Ireland. I have pointed out here and want to repeat that, to my knowledge, from the research I have done into the whole question of rural depopulation, this is the only Government in western Europe who have failed to tackle the problem of rural depopulation.

Mr. Haughey: Do not talk nonsense.

Mr. T. O'Donnell: In that matter, this Government have a hopeless record and now as a last resort, dictated by political expediency, they have decided to move two Government Departments to two centres in the west of Ireland.

The problems of the West can be solved by a realistic, dynamic Government policy which will ensure that the natural resources of the area are developed, that the small farmers will be given a chance of earning a livelihood on their holdings, that the rural towns and villages will be encouraged to establish small industries. This is the way that rural depopulation can be counteracted and this is the way the West can be saved.

I am not impressed by the argument that the transfer of two Government Departments will solve the economic and social problems of the west of Ireland, but, while we are on this question of decentralisation, I should like to ask the Minister on what grounds and by what process of reasoning were the two Departments selected for transfer?

Mr. Dillon: One, because it was Deputy Michael Moran's and the other, because the Department wanted to get as far away from its Minister as they could.

[1071] Mr. T. O'Donnell: In view of the fact that the Minister for Education is from Limerick, one would have imagined that it is to Limerick the Department would be transferred. Surely, if there is an argument for transferring a Government Department to rural Ireland, the first and the obvious and the logical Department for transfer is the Department of Agriculture? I should like the Minister to give us some additional information as to the reasoning which led to the selection of the two Departments for transfer and the selection of Athlone and Castlebar as the towns to which they would be transferred.

The final remarks I want to make relate to an important aspect of the work of the Minister's Department. As far as I am aware, the Department of Finance is the Department concerned with economic planning, or economic programming, as the Minister prefers to call it. I was rather amazed that the Minister last night made very little reference, if any, to the Government's examination of the causes of the failure of the Second Programme for Economic Expansion.

Mr. Dillon: He was burying one and in labour with the other.

Mr. T. O'Donnell: We have had the First Programme and the Second Programme, and, according to the Minister and other Government spokesmen, we are to have a third.

Mr. Haughey: Yes, and a fourth and a fifth and a sixth, please God.

Mr. Dillon: He has litters of them and they will all be buried.

Mr. T. O'Donnell: They will all be bigger failures than the First and Second.

Mr. Haughey: What was wrong with the First Programme for Economic Expansion?

Mr. Dillon: It was a fraud and a cod.

Mr. T. O'Donnell: The Second Programme was a complete fiasco.

Mr. Haughey: The Deputy has just [1072] said that the First Programme was a failure. In fact, it exceeded all its targets. It increased the gross national product by 23 per cent.

Mr. Dillon: And brought on the greatest recession we have seen in our time——

Mr. Haughey: You need not talk about recessions.

Mr. Dillon: ——when the farmers were hungry.

Mr. Haughey: What about 1956?

Mr. Dillon: Go away.

Mr. Haughey: That is your only answer.

Mr. Dillon: Oh, no. I am going to speak for about an hour when Deputy O'Donnell has finished. You need not be a bit uneasy.

An Ceann Comhairle: Deputy T. O'Donnell.

Mr. T. O'Donnell: The Minister made very little reference to his or the Government's intentions regarding the whole approach to economic development. In view of the failure of the previous programme and the fact that a third programme is on the way, it is vitally essential that a new approach should be adopted to this question of economic development. Something more than the mere fixing of targets and writing out of programmes is necessary. As has been pointed out in one of the reports of the National Industrial Economic Council, there is no use in fixing targets unless the means of achieving these targets are clearly worked out. It is vitally essential to get away from a mere academic exercise, which the Second Programme was, and to get down to the hard facts of reality. Not merely should targets be fixed but the road by which the targets can be reached should be clearly marked out.

Mr. Dillon: What has become of the First Programme for Economic Expansion and the second one and when are we to get the third? Do you not see that the man is enceinte with [1073] the third? It is about to be delivered any day but the delivery will take place on the grave of the second and he has the impudence to tell us that the First Programme was a success.

Mr. Haughey: Of course, it was.

Mr. Dillon: It was the cloak of respectability thrown over a disreputable period of inflation in this country which brought upon us the worst depression that I remember since the Economic War. That is the fact.

Mr. Haughey: The year 1956 was the worst year.

Mr. Dillon: Get away out of that. In 1956, we had a situation in this country in which we had too many houses. We had no tenants to go into them.

Mr. Haughey: Because you had no people.

Mr. Dillon: And we did that deliberately and, in 12 months, we not only restored the balance of payments but we produced the first surplus in the balance of payments seen in this country for 20 years.

Mr. Haughey: You are a fraud.

Mr. Dillon: And that was the position we handed over to the Minister's predecessor.

Mr. Haughey: You are a fraud.

Mr. Dillon: There is no use abusing me. Abusing me cuts no ice.

Mr. Haughey: You started off with the abuse.

Mr. Dillon: And, if the Minister imagines that acting the bullock, because he has a majority in the House, intimidates me, he can think again.

Mr. Haughey: You started off with the abuse.

Mr. Dillon: He will listen to the truth now and to all the fraud for which he and his Party are responsible.

[1074] Mr. Haughey: You started off the abuse.

Mr. Dillon: Wait a minute: the Minister will listen whether he likes it or not.

Mr. Haughey: You started the abuse.

Mr. Dillon: The Minister introduced his Estimate with a flourish on the subject of decentralisation and he had the impudence to tell us in his opening speech that he “set up a group in September, 1966, with the following terms of reference:

“Having regard to the growing responsibilities of Government, to examine and report on the organisation of the Departments of State at the higher levels, including the appropriate distribution of functions as between both Departments themselves and Departments and other bodies.”

The Chairman of the Group is Mr. Liam St. J. Devlin. The other Irish members are persons prominent in business and the public services. A member with special experience in the organisation field has generously been made available by the Norwegian Government.

You, a Cheann Comhairle, will be interested to hear:

The Group began their activities in October, 1966, and have been very active since that date. To help them in their deliberations they have, with my approval, engaged the services of an international management consultancy firm. The main charge against this provision is the cost of the consultants. I hope to have the report of the group next year.

And, while he is waiting for the report, Education is gone to Athlone and the Land Commission is gone to Castlebar. Is there any strange coincidence here that Deputy Michael Moran, Minister for Lands, lives not too far from Castlebar and that Deputy Lenihan, Minister for Justice, lives not too far from Athlone? Could we look around the constituencies of all the Ministers and see the excogitations of [1075] Mr. Liam St. J. Devlin being anticipated before he has time to report, with the assistance of his Norwegian consultant, and his foreign firm of business advisers?

Fraud is a loathsome characteristic in any Government, but it is something we are becoming accustomed to in this country in dealing with the Government we have at present. Modest fraud is depressing but arrogant fraud for a Government like this, supported by an absolute majority in this House, is a menace to free institutions in this State. I know the result of the proposal to send the Department of Education to Athlone and the Department of Lands to Castlebar. We will end up with two Departments of Lands and two Departments of Education. We will have one sitting in Castlebar and another doing the work here in Merrion Street. We will have one Department of Education down in Athlone and another doing the work in Marlborough Street. Nobody imagines for one moment that Mr. Donogh O'Malley, Minister for Education, is going to take up residence in Athlone, Anyone who thinks that has another think coming.

I know Deputy Michael Moran, Minister for Lands, is “lepping” to take up residence in Castlebar, Belmullet or the Aran Islands, if he has any prospect of retaining the Ministry of Lands. He knows blooming well that the hatchet men are out for his scalp. They are waiting to get him and the struggle to put the Ministry of Lands in Castlebar is a desperate last effort to give poor Michael another chance.

Mr. Haughey: You are an “ould” fraud.

Mr. Dillon: What an edifying contribution to the discussion on the economic state of Ireland.

Mr. Haughey: What about yours?

Mr. Dillon: We have heard frequently of the general accents of the Dublin gurrier.

Mr. Haughey: This is very edifying.

Mr. Dillon: I was born and bred in North Great George's Street and I [1076] regard myself not only as a Mayo man but a Dublin man too: a gurrier, no.

An Ceann Comhairle: I do not think the Deputy should refer to the Minister——

Mr. Dillon: Oh, I am not referring to the Minister as a gurrier. I am only expressing amazement that a resident of Clontarf, who has graduated to Portmarnock, should use the language of the gurrier.

Mr. Haughey: You are wrong on both counts and I do not resent the title “gurrier” at all.

Mr. Dillon: That shows you are not a native of Dublin. You are only an import. If you did understand its meaning, you would resent it bitterly. I want to emphasise that I never said the Minister was a gurrier because I know from whence he comes, but I resent his using the language of the gurrier for it is the language of the gutter.

Mr. Haughey: Do you mean you can call me a fraud and my actions fraudulent——

Mr. Dillon: I do not think I referred to the Minister as a fraud.

Mr. Haughey: Your whole speech.

Mr. Dillon: I can charge the whole Government with fraud and a more fraudulent action it would be hard to find from here to Vladivostok, and you can travel on foot the whole way.

This, Sir, is a gimmick. It is not a bad gimmick because it is surprising how much talk it creates. Naturally it creates talk in a town like Castlebar in Mayo and in Athlone and the vicinity of Athlone. It is a good gimmick, decentralisation. But, to show you the fraudulent essence of it, there could be more decentralisation tomorrow morning by a simple regulation, without moving a single civil servant from Dublin. There could be more decentralisation by one simple regulation than all this transfer of civil servants and their families and the duplication of Departments could possibly create.

[1077] If we want decentralisation—I take it that is the purpose of the gimmick —here, Sir, is the way you can decentralise in the morning. Wind up the Department of Local Government. Every housing scheme, every drainage scheme, every activity of every local authority in the country is formulated by their staff of engineers, surveyors and experts. It is then submitted to the Department of Local Government. It is all gone over again and it all goes back to the local authority; and the Minister says they are to have half a million pounds to carry out a programme of housing, but “Show us your plan”. And the plans come up and the plans go down, and the plans come up and the plans go down, and the houses that were going to cost half a million, by the time they finish going up and down, up and down, cost £650,000 or £700,000 because, by that time, the Government have managed to depreciate the value of money that much.

Declare tomorrow that the responsibility of the Minister for Local Government begins and ends by determining whether a responsible local authority is entitled to build houses, or to make drains, or to provide water, or to carry out some scheme; and, once he has determined and approved the expenditure of the money and the raising of the loan, the terms on which it is to be made, let him then say to the local authority: “Now go and build the houses; now go and put in the drains; now go and carry out the water scheme.” And, if that is not satisfactory, let the ratepayers vent their wrath on their own local representatives who have wasted their money.

There is decentralisation. If, Sir, you do that, you will transfer out of the Custom House two-thirds of its occupants. You will throw down to the local authority the work it is supposed to do, and it will not cost the Exchequer one sixpence. And no family in the public service needs to be disrupted. But, of course, that proposal has no appeal for this Government. There is no gimmick in it. There is no announcement that we are going to build a metropolis in Athlone. There is no announcement that Deputy [1078] Michael Moran will build an office block costing £1 million, with all its appurtenances, in Castlebar. But if you want decentralisation that this country can pay for, there is one way to start it. I venture to swear, if Mr. Liam St. J. Devlin knows anything about his business, we shall not have to call on a Norwegian or a body of foreign business consultants—and, if the truth were told, neither the Norwegian nor the foreign body of consultants know B from a bull's foot about the problems that concern this country. Why the heck we have to go to a Norwegian or to a body of foreign consultants to help us to run our country is a mystery to me.

I do not mind bringing in business consultants to advise us on the reorganisation of the internal office workings of any Department of State: I think it is a very sensible thing to do. But surely to God, with a Parliament, with local authorities and with one of the best Civil Services in the world, we are able to run the day to day business administration of this country, without having to go to Norway or to a body of foreign consultants? I do not see the Norwegians coming to us and asking us to run Norway. If they came to the Minister and asked him to advise them on how to get the elks there to grow longer horns, would it not be for our Minister for Agriculture and Fisheries to say to them: “Go home and ask your own veterinarians to advise you. We have not had elks in this country for the past 2,000 years and our elks grew horns without help from anybody.” It makes me sick.

I hate their business gimmickry. I hate the fraud that is becoming the common currency of our public life. I think there is a certain dignity about the resignation of the British Chancellor of the Exchequer which was announced tonight. I think there is a certain proud consistency in a man, who has pressed a policy for his government in good faith and fought for it with great courage and resolution, declaring, when that policy has been frustrated by events, that he desires to be relieved of his responsibility as soon as the head of the [1079] government to which he belongs is free to relieve him of his duties.

Here, I feel the Minister for Finance has a very special responsibility in introducing his Estimate on this occasion inasmuch as he announced that his introduction of the Estimate was designed to provide the Oireachtas with an opportunity of discussing the consequences of devaluation. I think he has a special responsibility to tell the House and the country what the event of devaluation really means. Let us face it: if we are to speak not only as citizens of this Republic but as citizens of the world, as participants in a common field, shared by the democracies with whom we are proud to march, devaluation of the currency of sterling at this time, under pressure, is an unmitigated disaster for freedom in the world.

I want to remind Deputies of the words of a very distinguished man who should be no stranger to those who have taken an interest in Irish economic affairs. I want to quote here the words of the late Per Jacobsson who, as Deputies will remember, came here to assist in the deliberations of the first Banking Commission.

Mr. Haughey: A right job he made of it.

Mr. Dillon: He subsequently was widely esteemed, you know, as the Secretary of the International Bankers.

Mr. Haughey: He was the greatest reactionary of them all.

Mr. Dillon: Here is what he has to say. I shall also quote the Minister's favourite economist, Keynes, and let us choose then between the pair of them. I set Jacobsson against Keynes. Here is what Jacobsson had to say:

It seems to be a lesson of history that without stable money neither justice nor progress can be assured, and that the human spirit cannot give of its best for it is harassed by all the uncertainties to which rapidly changing money values give rise. Nations, too, must have their self-respect (which is something other than nationalistic pride), and enjoy [1080] the esteem of other nations but this cannot be obtained without the benefits of a sound economy.

Mr. Haughey: Quote Adam Smith next.

Mr. Dillon: No, I shall quote the Minister's favourite economist, Mr. Keynes. The elevating thought Mr. Keynes has to contribute to similar considerations is this. In passing, I may remark that Keynes is reported once as having said that the perfect standard of good manners for a gentleman attending a party is to maintain precisely the same level of sobriety or inebriety as the rest of the company. I do not want to expand on the moral concepts which inspire Mr. Keynes. If the Minister would wish to investigate this more closely, I can recommend him to the current biography by the man who wrote Eminent Victorians, Mr. Lytton Strachey. There he will find, in the flowing correspondence of the Bloomsbury Group, the moral standard of that distinguished thinker of which the Minister is an economic disciple—and I say “economic” advisedly. There are two men in the history of this world, in our time or in the centuries to which we belong, who have wrought great havoc on the public mind. The first is Jean Jacques Rousseau who, with his detestable neo-pelagian delusions of the perfectibility of mankind demoralised the philosophy of the nineteenth century. The second is Keynes. Keynes is the man who sought to make inflation respectable. Keynes is the man who has preached the economic doctrine that a little heroin is an excellent thing, that a little of what you fancy does you good.

Mr. Haughey: You should have kept the statue of Queen Victoria outside on the Lawn.

Mr. Dillon: My foot. It stood outside for 20 years while your Party were in office. We shifted it in 20 months, respectably and without any brouhaha or blowing it up. We carted it away on an ass and cart and put it up in the yard in the Castle and we made no hullaballoo.

[1081] Mr. Haughey: You kept a few of our ideas.

Mr. Dillon: That is the problem. The Minister is a disciple of Keynes and the disciples of Keynes take the view that controlled inflation is a necessary part of progress. I want to make this clear. We might as well speak of controlled drug-taking as of controlled inflation.

I want to recapitulate for the House the truth about inflation. I want to put it on the record that inflation:

is the prince of thieves, robbing the defenceless and passing by the experts in the manipulation of money. It is the broad high road so pleasant to travel until it reaches its destination of anarchy, begotten of the collapse of money as a store of value. Then, indeed, Fisher's equation operates to destroy the foundations of a free society until in the ensuing anarchy people turn to authoritarian forms of government to arrest the breaking up of society; and all too often the society discovers too late that inflation has destroyed freedom, and that the price paid politically to restore stability has been the surrender by free men of their birthright of freedom, with the prospect of generations of struggle and perhaps bloodshed to get it back.

You may think that those are exaggerated words but when I hear them, I look not only to the left but to the right. How many Deputies were looking at BBC television on the night devaluation was announced? I wonder were the Labour Party looking at television the night devaluation was broadcast.

Mr. M. O'Leary: We were.

Mr. Dillon: They did not understand what they heard.

Mr. M. O'Leary: Do not be presumptuous.

Mr. Dillon: The President of the Confederation of British Industries came to give us the benefit of his advice and he was asked what would be the best thing to do. His answer was: shut [1082] down Parliament for six months. You cannot run big business; you cannot run something as big as a Government, if you are subject to the daily invigilation of the common people. That is one side of the story. The alternative is that we should not have a Parliament at all; we ought to have a one-Party State run in the interest of the people. I remember the time when the Minister's Party—he was not in it then— believed in the one-Party State. I remember fighting in the streets of this country for the right to differ from Fianna Fáil. I remember the time when my right to speak was protected, not as it ought to have been, by the Garda Síochána, or the forces of the State, but by the Blueshirts.

Mr. Haughey: I do not remember but I thought they were Fascists.

Mr. Dillon: Did you? It shows how little you know.

(Interruptions.)

Mr. Dillon: Leave me to deal with him. I know all his background and all belonging to him.

Mr. Haughey: They are as good as yours.

Mr. Dillon: Every bit as good. I would be honoured to come from the Minister's stock. Do not let there be any illusion about that. I make no reflection on him. I hope the Minister will prove himself worthy of the stock from which he comes. I hope to think that had he been active in public life, I could not have taken this example from my own experience of the effort to establish single Party Government in this State. Do not imagine that because there were those who broke that effort down, who smashed it and who cowed those who sought to suppress free speech—do not imagine that because we, a Celtic people, had the spirit and courage to defend free speech and to vindicate it at great cost, free speech or freedom is safe the world over. This House should note and well remember the glaring and incomprehensible combination of the President of the French Republic and the Cominform today. I do not understand [1083] it. I regard the President of the French Republic as a great and distinguished figure to whom it would be almost improper to refer in our deliberative Assembly, were it not for his activities affecting the lives of every citizen in every State in the world.

It fills me with horror and dismay when I see him throwing not the puny power of France, which is insignificant, but the mighty prestige of a great soldier and a great President into the struggle of the Cominform to undermine the foundations of freedom all the world over. I wish I knew the reason. I wish I could tell it. I wish I could argue with him but I do not know and I have not met anybody who could tell me. A most careful study of the statements of the Ministers of the French Government give me no clear indication of what is happening in the Elysee Palace.

Is there anybody who knows why the President of France should try to strike at the foundations of the currency of the defender of freedom in the world? If the United States of America should suffer an embarrassment to qualify her power of resistance, who can benefit? Who, who loves freedom and individual liberty, can hope to benefit? And yet for that very purpose, one of the greatest free men living, President de Gaulle, has linked his hands in the bloodstained hands of Moscow in a common effort to destroy the integrity and independence of the United States and its capacity to act.

Let us face the facts: there are two world currencies in the world today. It is an illusion to speak of gold as a world currency; it has not been that for years. There are two great world currencies, dollar and sterling, and it is all cod to be comparing the devaluation of our currency, in step with that of Great Britain, with the devaluation of sterling itself. We devalued sterling because we had to devalue sterling. We devalued sterling for exactly the same reason as we devalued it in 1949. Let the Minister of Finance in 1967 mark it well. There was no fraudulent pen to fill the columns of the popular press in this country with articles designed [1084] to misrepresent the Irish Government and mislead the Irish people. What was the title of Deputy MacEntee's article?

Deputies: “Diddledum-dandy.”

Mr. Dillon: I wonder did the Minister for Finance expect that we would publish an edited version of “Diddlumdandy”? If we had not, does he ask himself the question sometimes: what is the difference between the politics of today and those of 20 years ago? The difference is a gap in credibility. Twenty years ago, our people believed what their public men said. It is becoming more and more true that they find it hard to believe anyone in public life now.

We devalued because Great Britain devalued and we had no other course open to us. Denmark and New Zealand also saw it. It is all nonsense to say we are dragged at the tail of the British pound. We can change the parity and value of the Irish pound in an hour of legislative time any time anyone wants to. Any Deputy can bring in a Private Bill in the morning to change the parity of the pound. Let us argue out here the pros and cons. Let us once and for all make an end to the fraudulent pretence that our right to fix the parity of the Irish pound is in the control of the Bank of England or anybody else. It is controlled by the Oireachtas of the Republic of Ireland, and nobody else has anything to say about it. If we maintain parity with the British pound, it is because we think it is expedient for Ireland to maintain that parity. Of course, it is; in just the same sense as it is expedient for New Zealand and Denmark to do it.

I have just been given that dirty publication for which Deputy MacEntee was responsible in the press. We know how to use it. It will suit very well as a doormat.

Let us distinguish between the devaluation we carried out, which any sane man or woman will realise we had to carry out without any cavil or hiccuping about it, let us contrast that with the devaluation of sterling by Great Britain. I have watched with [1085] sympathy and admiration the struggle of the Government of Great Britain to defend sterling. I would invite the special attention of the Labour Party to this. The Government of Great Britain are a socialist Government. Whether we agree with them or not, none of us will deny the reality and validity of the convinced socialism of Harold Wilson, the Prime Minister; of Brown, the Foreign Secretary; of Callaghan, the Chancellor of the Exchequer, as he was; and of Jenkins, who has now become the Chancellor. We all know that struggle to save the pound and to maintain its parity was carried on by them in an atmosphere of wide incomprehension among their own most ardent supporters. But they knew what is unquestionably true, that it is impossible to overlook the fact that this is the third devaluation of the British pound in 35 years.

I have seen them all. Remember the international financier, unlike individuals amongst us, never grows old. They know in persona or vicariously what I know, my father knew and my grandfather knew. I heard the protesttations of Sir Stafford Cripps from his sick bed. I remember Ramsay McDonald waving a pound note in the British House of Commons and warning the House of Commons that, if they departed from the gold standard, that pound would shrink to half its size. I heard the spokesmen of Wilson's Government protest in Geneva on the Saturday before the fatal Friday that it was no part of the plans of the British Government to devalue the pound.

That is in my lifetime alone. Roll back the pages of history from that fatal day in 1931 when this began. The farther you go back, the more remarkable it is that the currency of England was the standard of the world. Who can say that today? If I have to record that fact, I record it with profound regret, because the demoralisation of an international monetary unit is a catastrophe for freedom and free men everywhere. I admit freely that I hoped and believed that catastrophe could be averted; I hoped that while the rich were shifting their money, as I knew they would shift it in preparation for [1086] such a contingency, and while the poor were preparing themselves to live on their incomes, which I knew would shrink, I still hoped and believed that the resources of freedom still could be mobilised effectively to burn the hands of the speculators in money and to preserve the purchasing power of the wages of those who labour that they may live. But I was wrong. Largely as a result of the approach, incomprehensible to me, of the President of France, there has been brought upon us this unqualified catastrophe.

Now, some astute operators may go back to what I said 20 years ago as Minister for Agriculture when we devalued in 1949. There is nothing I said then that I would not have nailed upon Nelson Pillar, if it were there, or on the Post Office for anyone to read. I said two things, and I was proud to have the late Bill Norton and some of his colleagues with me in saying them. One thing I said is that the price of bread would not be allowed to rise. I can remember I had authority from the Government of this country to say that, whatever the cost, one thing is certain: the price of bread will not be allowed to rise. But in 1949 Great Britain stood in a far different case from that in which she stands today.

Mr. Haughey: Jacobsson is gone out the window.

Mr. Dillon: He has Jacobsson on his conscience, and I do not blame him.

Mr. Haughey: You threw him out the window with that statement.

Mr. Dillon: We are not now dealing with an ignoramus. I give that to the Minister for Finance. When I speak of Jacobsson and when I speak of Keynes, he knows what I am talking about. Look back to 1949—that interjection, incidentally, was designed to break the thread of my discourse; it should be unnecessary to remind the Minister of his folly in attempting the impossible—Great Britain then faced the world with all the burdens on her of having defended freedom singlehanded for 12 months against the Nazis while the Americans stripped her [1087] of every penny she had. Do not let us forget it. For 12 months England stood alone. Deputies will remember with edification that we were then neutral, but at least in those 12 months, we did not steal up behind her to strip her naked of all but the armour she bore against the Nazi foe. Everyone in this House knows I am pro-American, and proud to proclaim it, and perhaps the marshall Plan did something to redeem the reputation of the United States for that bestial act of plunder. I do not deny that Lend-Lease did something to repair that shameful deed, but let us not forget that in 1949 Great Britain had the right to say: “For 12 months we fought off the common enemy with one hand, and we fought the battle for the United States of America who were not yet prepared to fight their own.” England was hungry in 1949.

A Deputy: 1939.

Mr. Dillon: 1949, after the War. I was in England. England was hungry. I remember going into one of the most fashionable clubs in Pall Mall and being told all that was on the menu was fish-pie. I never knew such fish swam in the sea as were produced in the fish-pie served to me in the Reform Club in Pall Mall. I was criticised because in 1948 I said to the British in the course of the trade negotiations: “What do you want?” They said: “We want a supplier. We want eggs.” I said: “We will drown you in eggs.” Yes, I was proud to say it, and we did. We sold millions and millions and millions of eggs to England. They would have taken everything we had, but we had to control most strictly the export of butter, the export of bacon and the export of meat, because if we had opened the doors, Great Britain would have swept the larder clean. Her people were hungry. She had stood before the world fighting the cause that Per Jacobsson speaks of even at the cost of asking all her people to go hungry. This was because in the glorious years —and perhaps General de Gaulle might remember this—she harboured General de Gaulle and many other free [1088] men who, if they had not England, would have nowhere else to go.

But today, in 1967, she is the affluent society. She proclaims before the world that she has one of the highest standards of living of any people on the earth and yet, in voluntarily adjusting her exchange rates, she is reluctantly forced off the exchange rate on foot of which she borrowed millions not only from the foreigner but from her own poor. That is something people here forget only too readily. Where do the funds of the Prudential, the funds of the Pearl, the funds of every industrial life assurance company in Great Britain and Ireland go? As to a large proportion, they go into Government Funds. It is conceived to be their duty to take their share of Government securities. What are those funds? They are the savings of the poor. What are the deposits in the Post Office? What are the deposits in the savings banks? I am not talking about the joint stock banks. Wherever the savings of the poor are, there the thief of inflation gets his full share. Have you ever met a rich man yet who has his money in an industrial life insurance company? Have you ever met a rich man yet who had invested his money in the Post Office except up to the level at which he gets exemption from income tax and corporation profits tax, and that means up to £2,000? We may take a bit of satisfaction from the fact that he has lost some of the advantages of that operation in the course of the past fortnight. But have you ever seen the savings of the rich invested in the savings bank?

I sometimes almost feel despair that it is the very representatives of those who are being most ruthlessly robbed who rejoice most noisily about the act of robbery. I cannot help feeling when I listen to some of the members of the Labour Party talk about price inflation and devaluation——

Mr. Corish: What is the Deputy for?

Mr. Dillon: I am for stability of currency.

Mr. M. O'Leary: Control of dividends.

[1089] Mr. Dillon: Let us talk another day about a prices and incomes policy and the means of getting stability of currency. I would talk of it now if it were relevant. I am for stability of currency because I know that with instability it is the poor who are robbed and the rich who are made richer. I have seen the rich in this city and their heads wagging with their stockbroker as to how they would hedge for the past fortnight, and I have walked out and seen the man sweeping the streets or working the pneumatic drill, and if you asked him: “What is the effect of devaluation going to be on your wages?”——

Mr. Corish: He does not know.

Mr. Dillon: He does not know, and he will not understand it when it comes. What will happen is that he will give his wife the usual £5 or £6 to get the groceries. When she goes to the shop, she will find that when it comes to buying the 2 lbs of sugar, she will not have enough money for it. When she tells her husband, he will say: “I gave you the same amount as I gave you last week.” She will say: “I bought no more than I did last week but I had not got the price of the sugar.” I do not know what the price of sugar is, say, 2/4d per lb, and he will give her the 2/4d and say: “I do not know what you are doing with the money.” And she will not know what she is doing with the money. If at that stage I appear at the door and say: “Excuse me, Mr. McCarthy, would you mind my telling you about the game with the money,” and read Per Jacobsson to him and proceed to explain what inflation is——

Mr. M. O'Leary: He will be gone out the back door.

Mr. Dillon: That is the tragedy. Why do I describe it in such detail? For the reason that I want to impress upon the Minister for Finance that because these things are true, he has upon him a very exceptional responsibility of telling the people it is true and explaining to them what a catastrophe devaluation is.

This devaluation has not been born of any just sacrifice for freedom. It [1090] has not been born of any burden that had to be borne beyond the resources of the British people. This devaluation derives directly from the same source of conduct as was followed by our Government under the pretence of the first plan for economic expansion— “programme” was not that the word? —the first programme for economic expansion, a cloak of respectability to throw about inflation which I regard as the economic whore of society.

Mr. Haughey: Did the Deputy not say that it was General de Gaulle?

Mr. Dillon: The First Programme for Economic Expansion was simply a disguise for the revolt of inflation that it begot. The Second Programme for Economic Expansion was born of the pious hope that a little inflation would be a useful thing, and then the needle began going into the arm oftener, and oftener, and oftener, until eventually not only the Minister and the Government but the whole of our people were put under restraint to wean us off the drug. Mind you, no Minister of State gave up his saloon car. No Deputy of Dáil Éireann lost any part of his £1,500 a year, including myself, but my neighbours in Monaghan, and my neighbours in Mayo, brought their cattle to the fairs and could not sell them.

People living five in one room, eating and sleeping, were told that they must continue to live in that room. People whose houses in this city were rat infested and damp were told that no Corporation inspector would be allowed to look at them, but that Rachmann would be along in due course and he would buy them up and they could live in them until they fell down.

Mr. Fahey: That was 1956.

Mr. Dillon: Demosthenes has now arrived and he will have all tomorrow to challenge what I have to say.

What will be the consequence of devaluation in this country? I will tell you. It will mean a rise in the cost of living. If you try to particularise on that at this stage it is quite impossible to do so. Fifteen per cent has gone on [1091] transport already. There is a substantial rise in the price of timber for house builders. There is a rise in the price of oil. That was absolutely inevitable. I want to remind the House that there will be a rise in the cost of building, and a rise in the cost of building means a rise in the rents paid by every young couple in this country who seek to build a house for themselves and their families.

I want to warn the House about something of which the Minister speaks very euphorically. This is one of the tours de force of the Minister's statement. At page seven of the statement with which he was courteous enough to furnish us the Minister said:

Striking a balance within the effects of devaluation on the import and export side of the external accounts, one can say that there need be no substantial alteration in the balance of payments position as a result of devaluation. Even if some disimprovement takes place, this can be faced since we are at present in surplus.

If we are selling the furniture and the contents of the house we can say with every dissolute drunkard that we are at present in surplus if we still have the upright piano and the spring of the bed, and as long as we have them we need never be hungry.

Having delivered himself of that pearl of economic wisdom the Minister went on to say that among the principal commodities we import from non-devaluing countries are crude and partly-refined petroleum—and may I say in parenthesis that I do not give a damn about that—wheat—again in parenthesis that is most insignificant when we consider that 50 per cent of the domestic loaf is made from imported wheat—coal—I suppose that does not matter and the Minister's acquaintances largely depend on electricity and gas—fertilisers and certain animal feeding stuffs, tea, tobacco, certain fresh and dried fruits, wines and brandy and various raw materials. Do I see the front bench of Fianna Fáil beginning to look alarmed?

Mr. Coogan: Whiskey on Sunday.

[1092] Mr. Dillon: The fact that stout and whiskey are not likely to be directly affected would not interest so aristocratic a company. The final words which really deserve to be recorded in letters of gold are “wines and brandy and various raw materials.”

This is their grandiose gesture for the sweeping under the rug of all the problems confronting Irish industry arising from devaluation. Do we propose to grow rubber in the Botanic Gardens? Shall we export Irish botany suiting made from wool shorn from a Connemara ewe? Is the Minister aware that 50 per cent of the footwear we export have composition soles? When we make carpets for export is it not true——

Mr. Haughey: There is a depression in the world wool trade in case the Deputy has not heard.

Mr. Dillon: I am aware of that.

Mr. Haughey: Find out where rubber comes from.

Mr. Dillon: I am aware of the fact that there is a depression in the price of wool. Possibly the Minister does not recall that our carpets are made from domestic wool. They are one of the few commodities we do make from domestic wool. Carpets now contain 50 per cent man-made fibre. I could go on with the list of raw materials which this country has to buy in order to export.

I freely admit that these problems confront Great Britain in an even more acute way than they confront us, but they are problems of a formidable character which it is only natural for us to pretend are not confronting us as a result of this catastrophe of devaluation. I think some Deputies have already referred to it. We are going to benefit in the price of meat and cattle. I hope the presence of the Minister for Posts and Telegraphs gives us promise of his personal attention after 10.30. It will be a pity if he goes away now when we know he is here so late. But, in regard to dairy products and in regard to a variety of other products such as cheese and dried milk, [1093] this country is not only going to find itself in exactly the same position as it was before from the point of view of competitiveness but it is going to find its problems complicated by the fact that New Zealand has outdone us in the matter of devaluation. Quite distinctly, they announced that when they were going to devalue, they were going to keep in step with Australia rather than with Great Britain. Only the sophisticated realised that the Australians, when they decimalised their currency, had already carried out a devaluation of approximately 5 per cent. We are going to be about 5 per cent worse off against New Zealand than we have been heretofore and that covers butter and lamb in the British market.

I want to try to emphasise this if I can to Dáil Éireann: the strictly economic consequences of this devaluation are relatively—and the operative word is “relatively” — insignificant. I find them relatively so insignificant as to make it difficult to concentrate my mind upon them. The real tragedy of this development is the threat it constitutes to free society all the world over. Make no mistake about it, without stable currency we are on the road in this country and every other free country in the world to unstable government, unstable society and the grave danger of totalitarian regimes from the right or the left.

I think it is appropriate that I should end what I have to say by recalling again the words with which I opened my reference to the problems that confront us now. I set the wisdom and the foresight and the experience of Per Jacobsson against the fairytale and dreams and corrupt mentality of that child of Bloomsbury, Keynes. I reject his illusion that the heroin of inflation is healthy for society if taken with restraint and I accept without qualification this definition of the indispensable foundations of ordered society in a free country:

It seems to be a lesson of history that without stable money neither justice nor progress can be assured, and that the human spirit cannot give of its best if it is harassed by all the uncertainties to which [1094] rapidly changing money values give rise. Nations, too, must have their self-respect (which is something other than nationalistic pride), and enjoy the esteem of other nations; but this cannot be obtained without the benefits of a sound currency.

Does it not seem odd that we should associate with something so noble, so indispensable to human dignity, as freedom, currency and coin?

An Leas-Cheann Comhairle: Will the Deputy please give the reference to that last quotation?

Mr. Dillon: It is a reference to a quotation from a Per Jacobsson lecture delivered by M. Frére and I have referred to it before, Sir, at Volume 223, No. 5, column 811. But it is not so strange, as I notice and I wonder do other Deputies notice, that in this country now there is one business that is thriving and multiplying amongst us, money changing. Have you noticed that in this city of Dublin, nearly every corner site is now occupied by a hire deposit company or a firm of merchant bankers or a foreign bank? Did any of the Deputies see Mr. du Cann, the ex-leader of the Conservative Party of Great Britain, tell of his youth on television? He said: “I had not long left school when I learned that if you wanted to get rich, there was no need to work. There was no need to produce. All that was necessary was to deal in money.” Did you hear him? He said that and he said it quite unselfconsciously. Have Deputies noticed how many more people in this country have begun to deal in money? They do not work as we used to understand the term. They do not employ.

Mr. Corish: They are like the lilies of the field.

Mr. Dillon: They are not like the lilies of the field because they are never naked and they are not clothed by the finger of God. They get their clothes in Savile Row where they are sold. But, is it not time that Deputies began to wake up to the fact that in our capital city, as in so many other capital cities in the world, the richest men amongst us are the men who deal [1095] in money and they have the impudence to tell us now that if we invigilate them too closely, they will devalue the currency and, if that does not teach us our lesson, they will close Parliament for six months? There are money dealers in this city who feel much the same way. There are people who are buying property in this city and waiting for rats and the damp and the falling plaster to drive out the tenants so that they can pull the buildings down and sell another part of Ireland for money that can be profitably invested not where rust will not reach it but in a metal which they trust the rust cannot corrode.

A nation that falls further and further under the domination of the money changers is headed for destruction. I look back with satisfaction to the time when I was a member of a Government—aye, and before that: let the truth be told—when the foundations of the State were laid and when the Government of our country controlled the money changers. I look back over the whole panorama of our history and recall that the aspiration of our people to freedom was rooted in the belief that it was the sovereign will of our people, and not that of any minority of money changers, that should rule this country for the benefit of all. I think that has changed and the more money ceases to be a reliable store of value and a universal medium of exchange, and the more it becomes incumbent upon all those who earn it to pass it on for goods before it loses value, the greater becomes the power of the money changers in the market places.

I always come back, a Leas-Cheann Comhairle, to the tragedy that what I know, and what very few Deputies in this House understand, of such complex matters is virtually inexplicable to the masses of our people, or, indeed, to any free people on the earth. How much heavier is the burden on us, who know the truth and who have accepted the responsibility of preserving freedom, of making democracy work, of telling the prototype of the President of the CBI that Parliament was not going to shut up for six months. I [1096] heard him say it. He can deny saying it until the cows come home. It was not a question of reading it in the newspapers. I saw his lips proclaim it: I heard the words.

We cannot effectively forewarn those whose freedom is in peril. We cannot show them the enemy and make them recognise him because the disguise of the money changer is infinite both in variety and effectiveness. We, who do know, have in this House a very grave responsibility, and so has every free Parliament in the world, to sound the tocsin against the catastrophic attraction inflation and devaluation have for those who do not understand their inevitable consequences.

Mark these words: there are thousands of small shareholders, relatively small shareholders, who are looking to the Stock Exchange every day for their couple of hundred pounds, which has gone up by £50, and they feel a kind of euphoria rising in them. They have got £50 for nothing. There are farmers whose cattle have gone up 20 per cent in the last fortnight. There are thousands of simple people who believe that here is the crack through which the trade union movement can break for higher wage rates for them. And that euphoria is associated in their minds, just as it was in the Kildare by-election and the Cork by-election, with inflation and devaluation.

Ninety per cent of the ordinary people of the country who are going about their day's work and have not time to excogitate either economics or finance, find the present experience of inflation and devaluation quite an agreeable exercise. They cannot connect its inevitable consequences with the true cause.

I warn this House that we should not be worrying primarily—I say “primarily”—about the economic consequences of this deflation; relatively they are insignificant. But what we should be worrving about, what we should be telling those who trust us is that it is—

...a lesson of history that without stable money neither justice nor progress can be assured, and that the human spirit cannot give of its best if it is harassed by all the uncertainties [1097] to which rapidly changing money values give rise. Nations, too, must have their self-respect (which is something other than nationalistic pride), and enjoy the esteem of other nations; but this cannot be obtained without the benefits of a sound currency.

This devaluation is a catastrophe for freedom. I only hope and pray that the ramparts the United States of America seeks now to erect against a further devaluation catastrophe on a far wider scale will stand firm and protect us from being overcome.

I ask myself, when I think of 14.3 per cent devaluation: is it enough? Is it enough to get us back on to the rock of stability? And the fact that I find myself asking that question again and again, I desperately apprehend, provides the answer. The whole purpose of our exercise was to make sterling the strongest currency in the world, a currency on which there should be no further question of an early devaluation. Is there a Deputy in this House who would pledge his honour that sterling now is standing on a rock?

I wish he could. Devaluation has hit three times in 35 years. But there have been respectable intervals between the various defaults. There have been alibis for all but the last. There can be none for any future default on Great Britain's obligation. Whether we have to follow hereafter is something on which we ought to be reflecting now.

I want the House to remember the events of last week, shaking the foundations of the freedom of the world. There is one bastion left. May God protect her: the USA.

Mr. P. Belton: I consider that the Minister had to devalue. Once Britain devalued, we could not remain as we were. New Zealand devalued by 19 per cent. Had we adopted that percentage, we should be in the same position as New Zealand, and indeed Australia, from the point of view of the meat market, the butter market and the cheese market in Britain. We should also have been closer to the Netherlands and had some advantage, in fact, over them. It would also have given us [1098] an advantage over Britain in that countries which did not devalue would set up factories in Ireland rather than in Britain.

I do not know if the Minister was free to decide on the figure but, since New Zealand was apparently free to make her own choice, I do not see why we should not have done likewise. He also mentioned that we had a right to do it. He took as examples Israel, Spain and Denmark. He said they were competent Governments, that they devalued and so should we. I do not think they devalued for the good of England or Ireland.

Israel devalued because quite a good bit of English money is being invested there at the moment and there were losses of 14.3 per cent on it. Israel also has a semi-tropical climate. Most of the countries that did not devalue have such a climate and can produce tropical produce such as citrus fruits and various vegetables. Israel, therefore, has a market in England and Ireland. Their competitors—Brazil and South Africa, for instance—have not devalued and there is the question of charges for delivery of goods. Therefore, Israel devalued for her own good and nobody can blame her for doing so.

The Canary Islands have semi-tropical weather all the year round. Spain is the one country in Europe that has such weather 11 months of the year. Strangely enough, brandy is one of Spain's bigger exports to South America but sherry is one of its main exports. There is a surplus of sherry at the moment and the biggest buyer is Britain.

Spain is now in a better position to compete in the American market against the home-produced sherry of America. She exports wines and brandy. Her brandy goes mainly to South America but some of it comes here. Spain may now get some of the market from the French people. Her wines are already a lot cheaper than the French ones and this will increase her sales in this country and, I presume, in Britain. Furthermore, most of Spain's citrus fruits such as grapes, and so on, can be exported to Britain and Ireland whereas the continental countries would [1099] have their own citrus fruit and would not be interested in Spanish exports.

Denmark devalued eight or nine per cent, basically to hold most of her market in Britain. New Zealand have now devalued 19 per cent. They have an advantage of five per cent over us on the British market.

In his statement in this House and on television, although I did not see him on television, the Minister has tried to lead us to believe there is very little effect in this devaluation. In actual fact, it works out at two per cent, we are told, but, on television, Mr. Wilson said it would be three per cent. He also said devaluation was the only alternative at the moment and that he has tried to avoid it for three years. Nevertheless, according to the Minister here, it is not really of much significance at all.

If it is of no significance, why did all the other countries that have not devalued not follow suit? The reason is apparent. They can now invest in the devaluing countries with a start of 14.3 per cent premium. They can now get better value for their money in the sterling area. The leeway of 14.3 per cent works out at a lot more, in actual fact.

At the moment, the United States are fighting hard to save the dollar. Whether or not the value of the dollar will fall, I do not know, but, over the past 20 years, by artificial support or restraint, whichever it may be— I myself think it was by artificial support—they were able to buy into practically every big manufacturing industry in Britain and Europe because they had a strong dollar against continental money. I think we shall see the same thing happening now and that the countries that have not devalued will invest in the countries that have devalued.

The Minister said the balance of payments is improving. This is very good but he never adds anything to offset it. He does not say there are grants for machinery at the moment, that there are tax concessions which will go in the Free Trade Area in 1980 [1100] and earlier if we join the Common Market. He also said Irish and British goods will replace those from non-devaluing areas. This will be very small. Most of the goods we import from such areas are basically raw materials which Britain cannot supply or else produce grown in other countries such as oranges, citrus fruit and various vegetables that cannot be grown in these two countries. These raw materials will have this 14.3 per cent added to their cost and, when added to the raw material against the final product, will make a difference in the price of the finished article produced here, and in a country that imports the raw material.

The Minister made another statement which I cannot understand at all: “The non-devaluing countries will keep their prices down from the point of view of competition.” This is completely wishful thinking. If, as the Minister expects, there will be extra production in Britain and Ireland, there will be fewer sales by the devaluing countries to us than there have been. If this happens, it means we cannot import at the same price. They must increase their price because they are sending in less. If they were sending in more, then maybe the last lot could be sold at a dumping price. If we take away any of their business, their prices must go up automatically.

I consider that we shall have to export 20 per cent more goods to the non-devaluing countries. My reason for saying so is that we have increase in petrol and handling charges which will increase freight charges and handling charges at the other end. There will be higher interest rates. Most people who deal with continental firms or firms in any outside country have a certain amount of credit. This credit they can use. They can borrow a certain amount. They must pay interest on it. The extra cost of raw materials will also add to our prices here. The extra cost of raw materials in England, due to the withdrawal of the rebate, and the extra ten per cent corporation profits tax, will also increase the cost in Ireland. In order to get the same amount of money as we have been getting from our exports, we will have to increase [1101] exports by 18 or 20 per cent but on that percentage we will have transport charges to pay.

Progress reported; Committee to sit again.