Willie O'Dea (Limerick City, Fianna Fail)

I welcome the opportunity to contribute to the debate on this important matter. The kindest remark I can make about the document with which we have been presented is that it constitutes a gigantic anti-climax, particularly in the context of the boasting, pose-striking and breast-beating we witnessed and the grandiloquent phrases such as "Labour's way or Frankfurt's way" and "Not a red cent" to which we were treated prior to the general election. The document before the House is extremely minimalist in nature when one considers the process that was undergone in respect of its production. It appears to be a prelude to the jobs initiative, about which we will be informed on Tuesday next. The latter has all the signs of being a damp squib. However, I hope I am wrong about that.

Apropos the jobs initiative, the Minister for Enterprise, Trade and Innovation, Deputy Richard Bruton, appears to have a problem with regard to leaks from his Department. These leaks are very unusual in nature. Those of us who have had the privilege of running Departments have been the victims of leaks. I refer to circumstances where, for example, someone - be it a civil servant, an adviser or someone else - might give a document to a particular journalist. What is happening in the Minister for Enterprise, Trade and Innovation's Department represents a peculiar form of leaking. Information has been given to several journalists and great pains have been taken to ensure that the relevant material received the widest possible exposure. There has also been a process of serial leaking whereby information has emerged in instalments on successive days.

I do not know what the House will debate on Tuesday next because we are all quite well aware of what the jobs initiative is going to involve. If I were of a suspicious frame of mind, I might state that the leaking is spin that was officially authorised. As I am not of such a frame of mind, I will not accuse the Minister of that. Regardless of the number of times one leaks or publishes information, one will not take the bare look off it.

One of the features of the EU-IMF programme of financial support for Ireland is the restoration of the minimum wage. I wish to make it quite clear that I am wedded to the notion that people who work should be properly paid. People who work for the minimum wage, whether it be €7.40 or €8.40 per hour, are not particularly well paid. I have taken cognisance of the difficulties faced by employers at present and I listened carefully to what the previous speaker, who is an employer, said.

The problem we face is that the new minimum wage will be approximately 30% higher than the comparable wage in the UK and Northern Ireland. It will, in fact, be the highest minimum wage in Europe. There are two types of people one can take off the dole queue. The first type is young single people who have relatively low skill levels. The vast majority of individuals of this sort with whom I am acquainted would love to obtain work, even for a minimum wage of €7.40 per hour. Why then are we making it more expensive for employers to offer them the opportunity to leave the dole queue? How does such a move contribute to restoring competitiveness to the economy?

It is quite wrong for the Minister for Finance to state that the change in the rate of employers' PRSI will compensate for this. It will not do so. According to the various leaks - I suppose they cannot all be wrong - the proposed change to employers' PRSI will mean that for someone being paid up to €356 per week, the rate of such PRSI will fall from 8.5% to 4.25%. As a result, someone who offers a person employment on the minimum wage will save 4.25% of the wage they will be paying. However, they will be obliged to pay out 13% because that is what the increase from €7.40 to €8.40 per hour represents. In net terms, these employers will be worse off to the tune of 9% or €25 per week regarding a minimum wage paid to someone who works 37.5 hours per week. That is the position in respect of young single people.

There is already a system in place to protect married people who have children or other familial responsibilities. This takes the form of the family income supplement. If my calculations are correct, a person with one child who is in receipt of family income supplement and who enters employment on the minimum wage and works 37.5 hours per week is, in gross terms, supposed to gain €37.50 per week. However, he or she will only gain approximately €9 per week.

According to replies given provided to my colleague, Deputy Michael McGrath, it will cost the State something of the order of €400 million to do what is proposed. As a result of the Government's decision to the effect that this change must be revenue neutral, the money involved will have to be taken from elsewhere in the economy. We will, therefore, take a certain amount out of the economy before putting an equivalent amount back into it. We do not know from where this money will come. We do not know whether it will result from tax increases, spending cuts or whatever. However, it will have to be removed from the economy and goodness knows what impact this will have on jobs. This single reform could mean that we will end up in a worse position than when we started.

When he is replying, I would like the Minister to respond to one question. The programme for Government appears to state that the level of employers' PRSI will be halved in respect of wages up to €356 per week. Does this mean that the old rate of 8.5% will apply in respect of the tranche of people's wages over and above €356 or will the new rate simply apply to wages up to that amount? If the latter is the case, there will then be an inducement to every employer to artificially drive down wages that are slightly in excess of €356 per week. Why would they not do so in order to avail of the new rage of employers' PRSI?

The programme also refers to joint labour committees, JLCs, regulated labour agreements, etc. However, this is only the vaguest reference. On 29 March, the Minister for Enterprise, Trade and Innovation stated that JLCs and the minimum wage increase are inextricably linked. In other words, we should take no notice of the fact that the minimum wage is being increased because the Government is going to restore lost competitiveness through introducing fundamental changes to the regulated labour agreements.

It is interesting that on 14 April, the Tánaiste and Minister for Foreign Affairs, Deputy Eamon Gilmore, contradicted the Minister and stated that the two are not linked at all and are entirely separate. The Tánaiste also stated that one is not dependent on the other. He refused to say whether there will be any substantial changes as a result of the current inquiry into the JLC-created agreements. When he is responding, will the Minister for Finance confirm whether the Government has received the Duffy report, which relates to the type of arrangements to which I refer? If it has been received, when does the Government propose to act upon its recommendations? When will the two sides of the Cabinet agree to a common approach to this matter?

The only element of surprise regarding to the document before the House is what it does not contain. For example, the programme for Government contains a commitment to renegotiate terms and to replace emergency funding from the ECB to the Irish banks by way of a fixed medium-term facility in order to bring confidence into the system. Our masters in Frankfurt gave the Minister, Deputy Noonan, a flat "No" and he accepted that and came home with his tail between his legs. The fact is that deposits are still leaving the Irish banking system. That cannot be gainsaid. I have had a number of queries over the last few weeks from people I normally regard as sane, straightforward, honest and sensible on whether it is still safe to leave money their money in Irish banks. There is no confidence in them.

Where are we in respect of the reduction in the 5.8% interest rate? This is about 3% more than is being paid for the money. I understand the matter is going to a meeting of ECOFIN Ministers, and I wish the Minister for Finance the best of luck in his attempts to renegotiate that. We will have to do something for this hard-pressed economy. There was much talk about burning bondholders, and we heard statements such as "not a red cent" and "Labour's way or Frankfurt's way". The Minister for Finance came back from Frankfurt and said on "Morning Ireland" that Frankfurt had said "No" and that the debate was over. Now we know whose way it was. It was always Frankfurt's way and the Government always knew it would be.

What about the commitment to compel banks to reduce interest rates on variable mortgages by 0.25%? That commitment was firmly given before the election. We have heard nothing about it since. What about the situation regarding the famous strategic investment bank? That will never see the light of day. Another part of the low-hanging fruit of the programme for Government is gone.

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