Seanad Éireann - Volume 57 - 18 March, 1964
Central Fund Bill, 1964 (Certified Money Bill) — Second Stage (Resumed).
Question again proposed: “That the Bill be now read a Second Time”.
Professor O'Brien Professor O'Brien
Professor O'Brien: What I was saying when the debate on this Bill was adjourned was that any reversal of the inward flow of funds into the country might create difficulties in the balance of payments and might reduce the liquidity of the banking system by depriving it of some of its external assets. This point becomes relevant in view of the fact that according to the report of the Central Bank, bank advances here have been increasing rapidly in recent years. Last year the increase in bills, loans and advances was ten per cent over that of 1962 which was the same as the increase in 1962 over 1961. This shows a very considerable increase in the demand for credit partly from the Government but partly from all sorts of private bodies. The report of the Central Bank classifies these various advances by saying that there is practically no type of trade or industry that is not borrowing more from the banking system now than it was a few years ago.
There has also been a considerable increase in the amount of hire purchase debt; in other words, the community as a whole, public authorities and private borrowers, are becoming more and more indebted. Therefore, anything in the nature of a sudden withdrawal of funds from the country might possibly create some difficulties for the banking system. I want to make it perfectly clear that there is no sign of any such difficulty at the moment. The external liquid assets of the commercial banks are adequate to meet any possible calls which could be made upon them. I want to clear up a point on which there has been a certain amount of misunderstanding, that is, in regard to what can be considered  as liquid assets of the banks at present. The banks' external assets are classified in the consolidated balance sheet separately, but in addition to these assets, the banks now have deposits with the Central Bank and also have exchequer bills which can be rediscounted on demand by the Central Bank and these, for all practical purposes, amount to sterling assets. Therefore, if these are taken into account, the actual liquidity of the banking system is higher than appears from a mere view of the external assets set out in the consolidated balance sheet.
I want to make clear that there is nothing in the nature of a dangerous position in the Irish banks at the moment. But I want to make the point that a large inward movement of credit, if it suddenly became reversed to the extent of becoming what is known as “hot money”, might create certain difficulties for the banking system and for the balance of payments which would call for correction and which would be very adverse to the continued progress of the country. I want to make abundantly clear that I do not suggest for a moment that there is any pressure of that kind at present and that the published figures of liquidity actually underrate the true liquidity because they do not take into account deposits with the Central Bank and exchequer bills which can be rediscounted by the Central Bank and which, for all practical purposes, are sterling assets.
The increase in real capital formation of the country has continued at a surprisingly high rate. The report of the Central Bank says that the amount of capital creation in 1963 was higher than in any previous year and that the amount of capital goods created at home and imported from abroad increased considerably. If one looks at the trade returns, one finds that of the total imports in 1963 producers' capital goods amount to 15 per cent; consumer goods, 21 per cent and materials for further production, 59 per cent. Of the latter a large amount were used in export industries and therefore figure later in the export figures. I know that the figures I have given do not add up to exactly 100  because there are one or two minor categories I omitted. The point I am making is that, side by side with the great increase in borrowing, there has been this remarkable increase in capital creation, that is to say, in investment.
At the same time as we have this increase in investment, there has been a remarkable increase in consumption. This may be the result of people buying before the imposition of the turnover tax last November. That would account for a certain amount of urgency in buying possibly, but other figures, retail sales and the number of new cars registered throughout the whole year, show a steady increase in consumption last year. Both consumption by the public and investment increased during the year. This great increase in expenditure could be inflationary and could have an adverse effect on the balance of payments. If the high rate of wages, as I said earlier, were to bring about an increase in cost and if the increase in money incomes were to bring about an increase in consumption there might be pressure on the balance of payment caused by the diminution of exports and increased imports. It cannot be sufficiently emphasised, even at the cost of repetition, that the crux of the Irish economic situation is the danger to the balance of payments caused by a continuance of inflation. I do not suggest that inflation as yet has got to the point of being dangerous but there are danger signals. The rise in income is proceeding rapidly and all that indicates that both costs and consumer incomes in the country are increasing and both types of inflation may possibly be on their way.
When we come to consider the question of where the savings came from to finance all this increased investment, it is satisfactory to know that the Central Bank comes to the conclusion that there was a great increase in savings during the year. The deposits in the commercial banks—by that, I mean deposits on deposit account as apart from current account—failed to rise but there may have been a reason for that not entirely unconnected with the Budget of last year. But the amount of savings in the Savings Banks, in  Saving Certificates and Prize Bonds was higher last year than in the previous year. This, of course, only represents monetary savings. There must be a great deal of savings which do not figure anywhere in monetary statistics. There was a very large amount of savings from abroad. Investment in Ireland last year was largely financed by inward movement of capital. The saving was done by foreigners of various countries and the investment was done in Ireland.
These are all different aspects of saved capital coming into the country and being invested in one way or another. Therefore, between the entire monetary savings and the import of capital, the vast amount of capital investment which took place here was possible without any diminution in the external savings by Irish holders. It was therefore entirely satisfactory and did not involve any running down of the accumulated external savings of Irish savers.
I do not wish to delay too long on the Report of the Central Bank, but I should like to quote the conclusion to which the report comes to regarding the conditions in the country in 1963. It says:
The tentative calculations indicate that the recent slackening in the pace of economic expansion has been arrested during 1963 and that the economy is moving ahead encouragingly. When the tentative national expenditure figures are adjusted for the measurably smaller rise in prices generally, an increase from 2.5 per cent in 1962 to about 4 per cent in 1963 emerges in real terms; and the economy has entered 1964 on a promising note of rising industrial exports and production.
Therefore, in discussing the background of the Estimates, the year 1963 can be given a clean bill. On the figures published by the Central Bank, we can learn that the country was moving in the right direction.
When we come to the Central Fund Bill, to which the Estimates really apply, the conclusion of the Central Bank regarding the present year is a little less optimistic. There are two  sentences in the Quarterly Bulletin which I shall read:
The trends disclosed in the preparation of the tentative assessment for 1963, taken by themselves, suggest that 1964, however, will be a more difficult year. Above all, the continuing and accelerated upward movement in monetary incomes contains serious economic risks, especially as regards external trade and payments.
That bears out what I have already said and is also corroborated by the Quarterly Report on Ireland published by the Economist Intelligence Unit for February of this year, from which I shall read one sentence:
Although gross national product will probably rise at an annual rate of more than four per cent in early 1964, prospects for further expansion are uncertain because of the risk of inflation.
The Central Bank and the Economist Intelligence Unit are agreed on that. Both point to the same danger—the risk of inflation by rising incomes and rising prices.
So far I have been dealing with the background against which the Estimates must be studied. I now come to the Bill itself, which brings the Estimates before the Seanad in the only way the Estimates are in fact brought before us. Nobody need be surprised at the increase in public expenditure: public expenditure in every country in the world is increasing and therefore the fact that the Estimates for the coming year are higher than last year need not be cause for surprise.
The Book of Estimates shows that the amount required in the coming year is £156 million—£16 million more that the amount in this financial year included in the Estimates, together with Supplementary Estimates. In order to get the total Government expenditure for the coming year, certain additions must be made to that sum. The Minister stated in the Dáil that the cost of increased salaries to the public service under the ninth round would come to about £7 million, that the cost of the Central Fund services will be up by £3,500,000,  bringing the Central Fund services up to about £33 million. Grants to the Road Fund will be another £9 million approximately.
Therefore, it is not incorrect to say that the amount required for current expenditure in the coming financial year will be something between £205 million and £210 million. This is the amount which the Minister will have to find from taxation. As we all know, the very word “taxation” must not be mentioned in this debate on the Book of Estimates: this comes later in the debate on the Budget. However, I risk being told I am out of order by making use of a single sentence to the effect that there is no reason to believe that important additional taxation will be required to balance the Budget.
One thing I should like to say which is not out of order, I submit, is that the Budget must be balanced. In other countries, people are arguing in favour of Budget deficits. In the USA it is the fashionable remedy for the prevailing unemployment that there should be a deficit Budget. There is nothing in the Irish situation at all that would justify a deficit. The pointers in this country are all in an inflationary direction and if anything were appropriate to the Irish situation, it would be a surplus rather than a deficit Budget.
In the United States there is a fear of deflation and therefore a large amount of informed financial public opinion is in favour of deficit budgeting. In the United Kingdom, signs of inflation are appearing and many of the best economic commentators are in favour of a Budget surplus. Whatever may be said for a Budget surplus here, there is nothing to be said for a Budget deficit. Therefore, it may be said that the total amount for the current services, about £205 million, will have to be met by taxation.
What our taxation will be will be obvious when we see the Budget next month, and it is not proper for us to discuss it now. It is outside the scope of this debate. When we come to capital expenditure, we are largely in the dark about the amount required. The only part of the capital expenditure  which we know is the very small part known as voted capital expenditure, that is to say, the capital expenditure which is called “above the line expenditure”. When the Budget is introduced, we will be told the Minister's proposals regarding the capital expenditure below the line which will, as it always is, be considerably greater than that above the line. As far as one can judge from the Estimates, the increase in capital expenditure above the line is justifiable on the ground that it all happens to be for truly productive purposes. It is of a productive nature. We hope that, when the capital expenditure below the line is revealed next month, it will also prove to be equally productive in nature.
I should like to say again what I said earlier today: that this division of capital expenditure between above-the-line and below-the-line is rather out-of-date. A discussion of public finances would be facilitated if there could be a clear-cut distinction between current expenditure, on the one side, and capital expenditure on the other. There should be a current Budget and a capital Budget. At the moment the capital Budget is divided into two parts —the above-the-line capital Budget, which appears in the Estimates we have before us, and the below-the-line capital expenditure which will not be revealed to us until next month.
That is the position: that we will be expected to find about £210 million of taxation in the coming year and that also we will have to borrow a large but unknown amount to meet the capital expenditure of the Government. That brings me back to the question I asked at the beginning of my speech: are these amounts the country can afford? I would remind the House of the analogy I drew between the individual and the nation. When one is dealing with an individual one asks the questions: What is his income? How much of his income is he spending? On what is he spending it? Until we have answers to those questions, we do not really know whether that person is conducting his affairs in a prudent manner or not. It is the same in the case of the nation.  We have to ask what is the income of the country. Are the Government spending at a greater rate than the increase in income and, if so, on what are they spending? Until we answer those questions, we cannot really say whether the estimates of expenditure are justifiable or not.
One thing we can say with safety is, without entering into any detailed statistics, that the rate of increase in Government expenditure is greater than the rate of increase in national income. The national income last year went up by about 4 per cent. The rate of Government expenditure is going up at a higher percentage than that. But that, of course, is, as I said, really a sign of the times. If you take almost any other country in the world you will find the same thing. Governments are doing more and more today, and to find that the ratio of public expenditure to national income is getting larger is not in itself a condemnation of the financial policy of the Government.
Actually, we all know that between now and this time next year the amount spent by the Government will be more than the amount in the Estimates. Of course, there will be errors of overestimation. At the same time, we all know that the Supplementary Estimates which will be introduced in the coming year will far outweigh the allowance made for overestimation. Therefore, the amount which will be spent by the Government in the next year will be more than the £210 million to which I have referred. This is really inevitable. It is not a matter for which the Government deserve any blame. It is partly the result of rising prices. Prices are rising in this country and in other countries. Incomes are rising; costs of all kinds are rising. Every private individual finds the cost of running his house going up; every businessman finds the cost of running his business going up. There is nothing exceptional, then, if the Government find the cost of running the public services going up also.
Furthermore, the Second Programme for Economic Expansion, which was very fully expounded by Senator Dooge today, involves a good deal of Government expenditure. How much we really  do not know, because the Second Programme is still slightly mysterious. We are waiting to get details. So far we have only had volume one, and until we get volume two, until we know the actual amount to be spent in different directions, we shall not know the true nature of the Second Programme. However, there is one thing I think it is fairly safe to prophesy: it will involve an increase in Government expenditure of one sort or another. Therefore, we can answer the first question that the Government are spending a larger fraction of the national income than they spent last year or in previous years.
The second question is: on what is it being spent? Is it being spent on something productive, something which will add to the national income of future years; or is it simply being used for redistribution, for social services, for building up the standard of living of classes of people who, for one reason or another, are not able to maintain themselves at a decent standard of living? The answer to that question must also be hazardous. It is very largely a matter of opinion. A good deal of the additional expenditure is of a truly productive nature, As I said earlier, nothing is more productive as an investment than the education of the people. A good deal of the additional expenditure is on education of one sort or another. But, as I have also said in this House previously, expenditure of that kind takes a long time to fructify. In the long run it will, of course, pay dividends, but in the short run it imposes a burden on the taxpayer without any equivalent return. There is also another type of expenditure which is very much in the same category—State expenditure on agricultural production. The increase in the subsidies to agricultural production will in the course of time produce a result; but, as I said already, agricultural production is slow to increase and, therefore, the actual benefits we can receive from this type of expenditure may be rather delayed.
There are other items in the Estimates which are productive, judged by  any standard—grants to the Export Board, grants to Bord Fáilte. All these are productive things, which in due course will yield a benefit to the country. But it must also be admitted that a certain amount of the additional expenditure is of a social kind. I am not condemning it on that account. I am not saying a Government should not redistribute national income or should not come to the assistance of the weaker members of the community. But there is a clear-cut distinction, when we are dealing here with the national accounts in a hardheaded way, between expenditure which will yield some sort of monetary return to the State and expenditure which will not yield such a return. A good deal of the additional expenditure, although perfectly justifiable, will not yield any monetary return.
When one comes to answer the second question I have asked—how is the money being spent?—one can only give conjectural answers. Some of it is being spent on productive measures and some of it is being spent on socially desirable but non-productive measures. It is being spent to compensate pensioners for increased wages and prices and to lift the standard of living of the less well-off members of the community. These are all perfectly proper objects, with which we all agree, but at the same time, looking at it as hardheaded businessmen, these are types of expenditure for which the Government get no immediate return. Therefore, all we can really say is that the share of the national income being spent is increasing and that part of the increase is being spent on socially desirable but unproductive services.
However, one might express the opinion that current expenditure is within the capacity of the country. It would be pessimistic for anyone to say the country is living beyond its means. It is perfectly true that expenditure is going up, but many individuals spend more this year than last year without necessarily being imprudent. On the whole, looking at the picture generally, I think the current expenditure forecast in these Estimates is within the capacity of the country.
When we come to capital expenditure  we are really in the dark. We do not know what it will be, but I am prepared to give the Minister the benefit of the doubt. I am prepared to admit that the greater part of that capital expenditure will be productive, possibly in the long run, possibly in a generation or so. It may be on agriculture or it may be on education that will yield a dividend in the future, but it will impose an increase in the charges for the Central Fund Services in the coming years.
Here again I hope I am correct in saying that whatever capital expenditure is likely to be undertaken is within the capacity of the Government to borrow. As I said many times, the country is at the moment a creditor country with an inward movement of money. There is more money coming into the country than going out, and the capacity of extending credit is being increased. Therefore, unless the Government do something very wild in the sense of vast increases in expenditure on defence—of which I do not see any signs at the moment—we may say that capital expenditure will be within our means.
I should like to conclude by saying that I have tried to strike a note of optimism. I have tried to state that both current and capital expenditure are not excessive taking all the circumstances of the country into account, but I should like to qualify that by saying that these optimistic assumptions depend upon the present trend not being suddenly reversed, In recent years the trend has been favourable to this country, and that any deterioration in the position of the country either at home or abroad— any increase in our inflation relative to that of other European countries— might create a dangerous situation.
Therefore, while I think the Government have every reason to be satisfied with our projected expenditure, I do not think there is any room for complacency. If wages and price movements are allowed to get out of hand, if prices are allowed to go on rising as they have been rising in recent times without any stop, then, of course, a dangerous situation might arise. If the favourable circumstances which I  have described of the inward flow of capital were reversed, or if the purchasing power of our customers abroad were to be interrupted by some slump, if inflation in other European countries were to slow down while ours still went ahead, there would be a very difficult situation in the balance of payments which would not enable the Second Programme for Economic Expansion to be implemented.
As Senator Dooge pointed out very clearly, the basis of the Second Programme for Economic Expansion is that we can tolerate a deficit in the balance of payments. If we were to find ourselves in a position in which we could not tolerate a deficit in our balance of payments, then the Second Programme for Economic Expansion would have to be drastically revised. It is accepted as national policy at the moment, and I think everyone approves of it, but it depends on the country being in a healthy condition, and remaining in the healthy condition in which it has been for the past five years. The Government must admit that to some extent they have been lucky. The circumstances of the past five years have been favourable to their two programmes, but if the trends suddenly reversed their luck would seem to have turned. Therefore, it is the duty of the Government to set their face against any additional inflation.
I should not like to sit down without saying that every advance which we have had in this country cannot be credited to the Government. The ordinary businessman who has actually run his business, and the ordinary individual worker who has done his day's work, are as much entitled to credit for the advances of the past five years as the Government who have, to some extent, planned them. I would equally say that any foolish greed either on the part of businessmen or trade unions might upset the policy of the Government. As Senator Dooge said in his very interesting speech, the Government can control the economy only within limits. The Government have been rather lucky in the past few years. World trends have been favourable, and the behaviour of the business people and the trade unionists in Ireland has been reasonable on the  whole. But if those conditions were reversed we might find ourselves in considerable difficulties over which the Government would have no control. Therefore, the future of the country and our capacity to meet the increases in current and capital expenditure, depend not only on the Minister for Finance but on all of us: on every individual and, in particular, on the employers and trade unionists whose duty it is to try to preserve a rational incomes policy in the next few years.
Mr. Desmond Mr. Desmond
Mr. Desmond: Section 3 of the Bill gives power to the Minister to borrow up to £71,172,504 and states that he may “issue any securities bearing such rate of interest and subject to such conditions as to repayment, redemption or otherwise as he thinks fit.” I should be interested to know the rate of interest that would be paid on borrowings of that size. The interest paid appears to be a big problem. The Minister has to lend money to local authorities and other people and the rates of interest have to be fixed. There are low rates of interest to such concerns as the Post Office where the interest rate is 2½ per cent. The interest rate is also 2½ per cent in our savings banks. There do not appear to be any complaints about the rates even though it is true that they go back over a long period and it may be that one is entitled to have the position examined to see if the rates are fair. The masses of the people, perhaps not the people having all the wealth but people having certain savings, at any rate, put their money there and the State have the use of it. The Minister is in control there, and rightly so, and the money can be put to very useful purposes. Then money is also put into other places. It is put into, say, our commercial banks. They pay, I think, a much lower rate of interest except, of course, when the industry is putting in a big sum: in that case the interest rate is raised. That they lend the money again to anybody who wants a loan and is reasonable security for it. Finally, at the end of the year, they check up to see how they have balanced out for the year.
 I notice that four banks this year published their accounts. The first bank had a profit of £126,248 after paying all debts, including bad-debts, and paying the shareholders and directors. The second bank had a profit of £376,944. The third bank had a profit of £49,520 and the fourth bank had a profit of £99,105, making a total of £651,817 between the four banks in profits after paying everything that it was necessary to pay.
We do not say for a moment that the banks should not work safely and efficiently but were these profits got because of the rates charged on whoever got the money? A bank is a money institution and profits are made in this way.
What is the comparison between the bank and the Post Office? The Post Office is not a profit-making institution. The Post Office Savings Bank is for the benefit of the people who lodge their savings which are available to them any time they require them. I should like to know what views the Minister has on the comparison between the banks and the Post Office Savings Bank.
One portion of our banking institution charges a higher rate of interest for loans. The people who get a loan have to meet the loan charge whether they have invested in land or in housing. In most cases a person pays back very much more than he borrowed. That applies even in local government. A man builds a house. The State gives free grants. Despite the free grants, if a man gets a loan he has to pay 6½ per cent or more on the loan for the house. He is under a very definite hardship, especially today with rising costs of materials. The rising costs of materials mean that he needs a bigger loan. He gets a grant and if he is lucky, he gets a supplementary grant, too, but he pays back nearly twice the amount he got by way of loan. He is finding that a definite hardship and he complains about it because of the difficulty of meeting the total costs out of his weekly earnings.
It might be said that earnings have increased, that people got a rise of 12 per cent, and so on, but that does not  meet the increased outgoings. His hardship is much greater than the compensation. The purchasing power of the people in general has been reduced by virtue of the fact that prices have risen. No matter what small percentage increase a person may have got, and some people did not get 12 per cent, it does not come anywhere near the increase in the cost of living. Social welfare recipients did not get 12 per cent but they have to meet rising prices with the result that their standard of living is gradually dropping. That is a serious position.
The price rise is much more than the 2½ per cent turnover tax imposed since 1st November last and which was introduced in the Minister's last Budget. In a good many cases, the increase in prices is 12½ per cent. I know of receipts which show that what was formerly purchased for 20/- was increased in price by a substantial amount—not 2½ per cent but much nearer to 12½ per cent. I notice that the Fair Trade Commission are keeping an eye on the matter but I do not see any action. I have not seen that any step has been taken to keep control in that matter and that is serious for people who have to purchase.
Is it correct that the public debt at the end of March, 1963, was £506,710,604, which is practically 12 months ago? Is it correct that we have to finance that debt to the extent of £28 million odd? Because of the high interest rates for the use of money, it is bound to be a heavy burden and the State has to meet the debt which is increasing each year. Has the Minister power to take more control in this matter or has the Central Bank power to fix a policy for State finance and the financial position in general? I should like to know more about the position. The Minister should have power in matters of that kind because the hardship is increasing each year and is bound to continue to do so.
Professor Quinlan Professor Quinlan
Professor Quinlan: I am happy in approaching the Estimates for this year to be able to begin by congratulating the Minister on a number of improvements in the Estimates this  year over the previous year. It has proved, I think, that there is some use in raising issues here and in keeping at such issues. In the past few years I have made a special plea here for private agricultural schools. I showed that they were not being treated fairly compared with the State agricultural schools and in general had not shared in the previous eighth round increase. I am very happy, therefore, to find in the Estimate that the Minister has more than made up for this and has given increases of the order of about 22 per cent, or so, to these very deserving schools in Pallaskenry, Warrenstown, Gurteen, St. Patrick's, and the others.
Even with this increase, the Minister and the nation are getting a bargain because one could educate nine students in any of these schools for what it costs to educate one student in any of the State schools. I do not argue now that the cost is too high in the State schools. The real point is the marvellous job that is being done in the private agricultural schools. I advise the Minister to continue the good work he has begun this year, to give something really worthwhile next year; then the nation will be able to sit back, confident that everything is being done to foster the most progressive force we have in the expansion of our economy.
Another item of Government policy that concerns me is the grant to Maynooth College. There is a sizeable percentage increase this year, an increase of the order of 37½ per cent. Nevertheless, the amount given is a mere pittance and I appeal to the Minister and, through him, to the Government, to make a worthwhile investment in the education given in Maynooth College. Maynooth should not be left out of the investment in education. I believe that there we shall get better value per £ invested than anywhere else in our educational system. From the point of view of international prestige, many of the members of the staff of Maynooth College stand very high in international esteem and are quite capable, if given the tools, of doing even greater work internationally for our reputation, and not merely in science, for which Maynooth is famous anyway, in philosophy,  theology, and so on, but also in the arts. Maynooth is doing a spectacular job.
Acting Chairman (Mr. Sheldon) Acting Chairman (Mr. Sheldon)
Acting Chairman (Mr. Sheldon): I think that would be more appropriate on the Appropriation Bill.
Professor Quinlan Professor Quinlan
Professor Quinlan: I mention it in connection with general educational policy. I believe in making the appeal to the Minister at the first opportunity that offers. There are other aspects of Government policy which have to be considered. Building programmes are under way in the universities. The provincial colleges in Cork and Galway are now moving into line and we hope the Government will appreciate the importance of these centres in the general educational framework.
There are many suggestions I should like to make to the Government in this regard. First of all, there is little use providing buildings unless the Government also provide the means to enable the colleges to equip and staff the buildings and ensure that the staff are able to give of their best in the service of the nation. If the Government ensure that, then the staff members, I feel sure, will not be found wanting. We are disturbed naturally by what seem to be inconsistencies in policy. Try as we may, we cannot discover from the Book of Estimates or by way of statements from the Ministers concerned the basis on which Government policy operates in regard to grants to universities.
There is, I think, general acceptance of the principle that, if one produces more, one gets more aid to bring about that increased production. In University College, Cork, there has been a spectacular increase in the number of students. Numbers have gone from 1,500 two years ago to 1,700 last year and 1,900 in the current year. That is an increase of almost 30 per cent in two years. Yet the increase in the grant represents an increase of only 15 per cent. I suggest the Government should take account of an expansion like that and give appropriate recognition by way of grants. That, of course, will not be enough  because, to use the familiar phrase, we have got to close the gap.
There are a number of gaps. The most significant is that between Queen's University and ourselves. The amount provided per student in Belfast, which is on the British scale, is quite spectacular. On a comparison basis, we are providing only about half as much per student as compared with Belfast. I am leaving out of account the amount given by way of scholarships, and so on. The amount is far higher in the North. On the university proper side, it is only half as much. Therefore, in any planning we do, we should plan very seriously with a view to narrowing the gap and eventually closing it. A ten-year minimum target should be aimed at for the purpose of closing the gap. In other words, we should aim at doubling the effective value of the support given to the universities. That would mean a ten per cent increase per annum over the next ten years. That should not be beyond our resources. It will, of course, ensure that we will be able to make the full return on the investment in new buildings today. I suggest these two aspects be kept in mind.
There is another gap also that the Government should seriously consider closing. I refer to the gap between Cork and Dublin and Galway and Dublin. Because of shortage of resources, these places have fallen considerably behind in salaries as compared with the capital. I doubt if the Government would really like to see these constituent colleges treated as second-class institutions. That is another problem we should face up to in the next few years, ensuring a rough equality with comparable posts in the capital. The Minister for Finance should concern himself with that aspect of the matter. I know the Minister for Education is seriously concerning himself with these points. We have, indeed, been highly impressed by his dynamic approach to the whole problem. We look now for big things both from the Minister and from the various committees and commissions that are due to report.
I think we can say that the nation is firmly convinced that investment in education is one of the best long-term  investments we can make. On that score, the Minister should be congratulated on the successful settlement he has made with both the secondary and primary school teachers over the past year which has given them a considerable increase in position. That is only as it should be. I believe the Government appreciate that a contented teaching profession in the primary and secondary schools is the foundation stone for any real advance in education. A very good start has been made there and I suggest to the Minister that he might consider using many of the teachers for holiday surveys in various aspects of the educational structure that may be necessary in the coming years. This work would be well worth while and work to which teachers could make a substantial contribution. Of course, they should be adequately rewarded for the work they do in such periods.
Again, I would appeal to the Minister to use his good offices to see that relations between the Secondary School Teachers Federation and the Government, especially the Department of Education, are put on a more rational basis. It does no good to have those mutual recriminations that have been a feature of the past couple of years. The Government owe a great debt to the Secondary School Teachers Federation for the valuable pioneering work they have done in compiling information about educational requirements and provisions here and contrasting them with those elsewhere. It is not good enough for any Department to try to rebut those figures by ridicule. These are serious figures and I suggest they should be treated in a serious way. If there are loopholes or inconsistencies in them, by all means show them, but treat this work as that of dedicated people who are imbued with the ideal of the advancement of education and who are really doing outstanding service in the secondary schools.
Senator Dooge made a very fine speech this afternoon on the Blue Book and the new plan. I am sure we all look forward to reading this speech which has some excellent analyses and that we shall all find it  stimulating and worth while. I do not intend to go over the ground with which he dealt so comprehensively. I merely want to take this opportunity of complimenting him on the work he did.
Turning to the agricultural side of this Blue Book, I must express grave disappointment with this part of the Plan. Recently a very interesting paper on the Methodology of the Plan by Professor Ryan was read at the Statistical and Social Inquiry Society which shows the cross-checks which were engaged upon. In fact over 60 groupings in industry were investigated. Full use was made of the CIO reports and, in general, the approach was very logical and straightforward. However, when it comes to agriculture the same logic does not seem to persist because we find in Professor Ryan's paper the statement that, by and large, the figures taken for agriculture were those given by the Department of Agriculture. It does say there were some discussions on the figures but we are not left very satisfied that those discussions were adequate. For one thing, the figure arrived at, 2.7 per cent, is away below any estimate the National Farmers Association or the Agricultural Institute would make of our potential; in other words, it considerably underestimates what we are capable of achieving in agriculture. To put it another way, it strikes a mean figure that hits the worst of both worlds.
For the past ten years our increase has been scarcely one per cent. Now 2.7 per cent is proposed which, of course, is a substantial improvement on the past ten years. In fact it is such an improvement percentage wise that I do not think it can be realised unless there is a considerable change psychologically and otherwise in the approach to agriculture. If we make that psychological change in our approach to agriculture, then we should be able to achieve not 2.7 per cent but four or five per cent, which is really worth while and which would give a real impetus to our economy.
When I say four or five per cent, I am not talking wildly. We can go back to the Secretary-General of OEEC who visited this country in 1960 and who in reach of the ordinary farmer. Then  an excellent address gave it as his opinion that where we were falling down on the job in agriculture was that our target was not high enough. He said we had, according to his experts who had studied the situation, the infra-structure necessary for a substantial advance in agricultural production and he felt that if we aimed at four, five or six per cent, we would achieve it. He would not have made any rash statements with the full authority of OEEC behind him.
Since then, the Agricultural Institute has got into its stride and produced spectacular achievements. In their centre they are able to get an average of 500 gallons per acre milk production whereas the normal average is about 140 or 150. With management, that could easily be brought within the  we can look at what England estimates she can do. Since the war, England has had a spectacular expansion in agricultural production which has increased at the rate of over five per cent per annum. It might be said she has taken up a great deal of her potential; yet her plan for the period 1964 to 1970 calls for an increase of 3.5 per cent for agriculture. Therefore, despite the extent to which she has expanded, she proposes to expand percentagewise more than we propose to do in the coming six years.
The Seanad adjourned at 10 p.m. until 3 p.m. on Thursday, 19th March, 1964.
Seanad Éireann 57 Central Fund Bill, 1964 (Certified Money Bill) — Second Stage (Resumed).